client story 12 Africola 5 risk insurance 16

5 Africola
A dash of daring, the ingredients of Africola's success
story
12 client
Hayes, transforming the family farm for the next generation(s)
insurance
16 risk
What would happen if your stay-at-home parent/carer was sick or disabled
ISSUE THREE
An advice, news and lifestyle magazine for clients
Hood Sweeney
Serving South Australians
for 40 years
africola5
coaching8
A dash of daring and a measure
of solid business sense, the ingredients
of Africola’s success.
Summer Board Games:
Professional Development in Disguise.
Charcoal beetroot
with saltbush
11
hayes12
Transforming the family farm
for the next generation(s).
Front Cover
Richie Hayes
Director
Rocky Hill Table Grape Pty Ltd.
risk insurance
16
financial planning
22
What would happen to your household
and savings if your stay-at-home
parent/carer was sick or disabled?
High prices mean high risk, not high
rewards in global markets, warns
Hood Sweeney Securities.
suntrix18
onboard24
EQ not just IQ the magic ingredient
in Suntrix success.
Surf’s up for Glenelg’s Onboard thanks
to some savvy software choices.
Disclaimer
This magazine is intended as general information only. It does
not purport to be comprehensive advice. Readers should seek
professional advice before acting in relation to these matters.
|1|
Welcome
Welcome to our third edition of Life + Toil, our lifestyle magazine
packed full of client news and articles about financial sector issues.
It’s the first of our publications for
2016 — our 40th birthday year, which
is shaping up to be very exciting with
client events, celebrations and an
upcoming bumper edition of Life + Toil 4.
Like many of our clients and our merger partner, Shearer & Elliss,
we’ve come a long way from our beginnings as a small
accounting firm to becoming one of South Australia’s most
successful professional services firms. We’ll bring you stories
about the financial journey of some of our long standing
clients, highlighting the changing face of business in
South Australia.
Hood Sweeney prides itself on supporting clients throughout
their financial journey, and we love to bring you stories of their
successes. Life + Toil a commitment to bringing client stories
from South Australian business that are getting on with the
job; stories that often fly under the radar.
The third edition of Life + Toil features innovative farming
family, the Hayes family, which is restructuring the family
business as part of a smooth succession plan. The Hayes family
has built four businesses for the four siblings from the original
family farm, which has historically been based on a cattle
station outside of Alice Springs.
|2|
We meet South Australian solar energy company Suntrix’s
co-founder and managing director Jenny Paradiso, who
has stewarded the business into new markets and new
products, based on a philosophy that prioritises a deep
understanding of what customers want. We also learn how
surf shop owner Erica Modra, and her husband, former
Adelaide Crows footballer Anthony Modra, are transforming
their Glenelg business Onboard with the latest business
management software.
We hope you enjoy the third issue of Life + Toil — stay
tuned for the next 40th birthday bumper edition to be
released mid-year.
Please let me know if you require any more information
or an introduction to any of our specialist areas.
Chris Stewart
Managing Director
|3|
|4|
africola
A dash of daring and a measure of solid business sense,
the ingredients of Africola’s success.
It takes a certain sort of daring to open a new restaurant in a
small city with more restaurants and cafes per capita than any
other Australian city, and which under-indexes in young people
and highly paid jobs.
Under the circumstances, you might be tempted to tame your
ambition and play it a bit “safe”.
Yet chef Duncan Welgemoed and designer James Brown, the
team behind the theatrical Africola restaurant on Adelaide’s
East Terrace, did just the opposite and in the process, have
earned a string of accolades and devotees.
Inspired by the African cola, they have produced something
out of the box, with a kitchen that’s equal parts theatre and
dish production, an eclectic menu featuring African dishes that
many Adelaideans cannot pronounce and a culture of constant
innovation.
“We are pretty dedicated and we push forward — we don’t
stagnate and run the same concept or menu time in and
time out. It’s a refined experience every time you come back,”
Duncan says.
Africola has won a number of awards since its launch in 2014
and has been listed in Gourmet Traveller’s top three South
Australian restaurants. It has rapidly established itself as an
integral part of the restaurant community, frequent flying-in
leading chefs for collaborative dinners open to the public.
“We strive for ultimate quality. Ever since I’ve been here we’ve
won quite a few awards — we have been quite prevalent in
the media. The quality of the cooking and the food speaks
for itself, service is wicked; our success is based on that, really,”
Duncan says.
“We do a lot of collaborative stuff with chefs across the country
who come in and do dinners at Africola. We’ve done 12 of these
dinners which are always sell outs. When they come down we
all collaborate — we all share ideas,” says Duncan.
“It’s pretty unique not just for Adelaide but for Australia. We
have this ever evolving restaurant and the critics say whenever
they come in that it just keeps getting better, and better and
better because we keep refining what we are doing. We keep
up with certain trends and certain ingredients.”
|5|
"There has been a real change in the culture
in Adelaide and it has become the centre
of cooking; it’s really pushing the boundaries."
The secret, Duncan says, is blending the exciting with the
staples. And despite the hype about creative use of meat,
the menu is one of the more accessible, drawing on premium
bespoke South Australian produce.
“With our menu, even though it does seem a bit weird
and wonderful it is actually pretty solid. I mean, one of our
dishes is the cow’s head but we actually have more fish and
vegetables on the menu than just grilled meats when you
look at it. It’s actually more accessible than a lot of restaurants
in South Australia.
The menu has also got a strong following from the health
conscious, including paelo king Pete Evans, and an army of
loyal female clients who constitute about two thirds of diners
each night.
“Our menu is what people should be eating — it’s a vegetable
focus with meat almost as a garnish. It’s a sustainable way of
eating and that’s why we do have a lot of vegans and a lot
of paleos and health conscious people who eat here. We do
use the best vegetables, the best meats — all sustainable,”
Duncan says.
Yet like all overnight successes, Africola is built on the
foundations of years of previous achievement; Duncan was
the head chef for acclaimed Bistro Dom and James Brown
impressed with McLaren Vale winery Alpha Box and Dice
and Hotel Mexicola in Bali.
Despite the popular culture perception that being a chef
is all about the art of cooking, the success of Africola is largely
due to pragmatism.
“I suppose you have to be extremely dynamic, not just as
a chef but as a business operator. You can’t just stay behind
the stoves, unfortunately,” Duncan says.
“When friends and I opened restaurants all around the country
at the same time, we thought we would be in the kitchen
constantly chopping onions, cleaning down and everything
else. But the business side does take you away from the kitchen
duties. You have to think about the accounting, staffing and
menu writing and also being quite a media presence to
generate the bookings to get your jobs. Little did I think
I would ever be a publicist,” he says.
So in a business sense, Hood Sweeney’s financial team behind
the scenes, providing advice on taxation, business structure
and financing, is almost as much of a key player in the project
as the floor staff who are its public face.
“We work really closely with Hood Sweeney with all our
accounts. We have struck up an excellent relationship…they
are just as much a part of our team really than the people
on the floor,” Duncan says.
And in continually striving for the cutting edge,
Duncan says the new breed of Adelaide restaurants is changing
the landscape.
“Five years ago we really struggled to keep young people in the
hospitality industry — they all wanted to move away because
it wasn’t dynamic. There has been a real change in the culture
in Adelaide and it has become the centre of cooking; it’s really
pushing the boundaries. Now more of those people are staying
to set up their own business, which is great,” he says.
Photography Credit: Andre Castellucci
|6|
|7|
coaching
Summer Board Games:
Professional Development in Disguise.
Whiling away the summer holidays
with that great Aussie tradition, playing
for sheep stations in your favourite
board game, might seem like childish
fun but there are plenty of lessons for
your business in the strategising,
says Hood Sweeney’s Director of
Consulting and Performance Coaching,
Simon Starr.
Analysing the different tactics and their
outcomes in these games is not only
a good way to sharpen your strategic
thinking but this analysis also can be
applied to business and life, he says.
Take for example, the board game
strategy Simon adopted in coaching
his son’s footy team a few years ago.
“One of the principles of coaching 12-15
year olds that I adopted was to give
everyone a fair go. This is easier if you’re
just happy to give everyone a run
regardless of the result. As a performance
coach though I am success-oriented and
enjoy empowering the boys with belief
in themselves and an understanding that
success is a learned habit,” Simon says.
Simon Starr
Director, Consulting & Performance Coaching
“Let’s face it everyone enjoys success
more than failure so if we can help them
understand the mechanics of success and
how these differ from the mechanics of
failure then the coaching extends beyond
the footy field.”
|8|
With this in mind, Simon began to think of
each match as a game of chess, deploying
players with varying skill levels to benefit
the team as a whole and provide everyone
with a fair go.
“We had some good players in the team,
a bit like the back row on the chess board.
We also had a few who were new to the
game or relatively unskilled. These were
our front-row pawns; not as influential as
the back row but they still had a role to
play and could contribute significantly to
our success. Rarely do you see the Queen
win the game on her own,” he says.
“So each weekend’s game became a
game of chess: forward planning and
positioning of players to ultimately create
‘check mate’ — that is, hopefully being
in front at the final siren. This was a very
helpful way of thinking because we were
starting with the end in mind. The game
then became about positioning for this
moment.”
The value of this approach, Simon says,
was that it gave the team tactical agility
and clarity about what each team
member would do to fulfil their given
role in the team.
“Let’s face it everyone enjoys success
more than failure so if we can help them
understand the mechanics of success and
how these differ from the mechanics of
failure then the coaching extends beyond
the footy field.”
By tethering to a future position, or being
clear about our goal, the team was able
to try new things. It could also be flexible
about how it was going to meet the
longer term objective and the team was
able to avoid becoming reactive to what
was happening in the moment.
“Having a common purpose and outcome
meant it became much more about how
we played the game as a team, yet within
that framework the individuals continued
to develop,” Simon says.
Understanding the role of individuals
in a team and being clear about how
everyone contributes to meeting a
target or goal, has the effect of removing
individualism, he says.
“It delivered real-life micro-lessons in
sacrifice, team-oriented goals, discipline
and support. It also forced me, as the team
leader, to think laterally, stay true to the
philosophy, and communicate in a way
that engaged everybody.”
This has important implications in a
business sense too. Although most teams
in life aren’t required to give everyone a
fair go, nearly every team — whether it’s
a sports team or your work team — has
this mix of abilities.
“The types of attributes we developed
as a footy team and the outcomes we
achieved by using the lessons of the chess
board can apply to any team building,”
says Simon. “Many people do not realise
the strategic skills they already have which
they could bring to their business and
their team.
“This approach of drawing tangible lessons
from life to business enables you to create
great experiences for people, and helps
them achieve a goal, create a moment,
shift a habit or build a legacy,” he says.
To find out more about our Consulting and Performance Coaching contact
Simon Starr on 1300 764 200 or [email protected]
|9|
equipment
Charcoal BBQ
Food processor Deep pan for frying
Tin foil
Ingredients
6 large beetroot with stem and leaves attached
(cut the stems off the bulb and the leaves off the stem and set aside)
250g unsalted butter
5 shallots peeled and roughly chopped
150g chicken stock
2 large cloves of garlic
1 glass of red wine
100ml extra virgin olive
5 thyme sprigs picked down
1 bunch of saltbush picked down and stalks discarded 100ml red wine vinegar
50g caster sugar
2 bay sprigs
150g sharp sheep’s milk cheese
500ml canola oil
Method
Wrap three of the beetroot in tin foil. Light the BBQ and once the coals are ashed over,
place the beetroot among the coals and rotate every 15 minutes until the beets are
really soft. It’s ok if the outside of the beetroot burn and char as the real goodness
comes from the centre. Set aside to cool. Once cool, peel and toss in a little extra virgin
olive oil, sea salt, thyme and black pepper. Set aside at room temperature. With the remaining beetroot, roughly chop and add to a hot pan with 1/2 the butter,
1/2 the garlic and shallots. Shallow fry until the shallots are soft, deglaze with the red
wine and reduce until it’s totally evaporated. Add the stock and cook out until the
beetroot are soft and starting to slightly caramelise. Purée on high in the food
processor and add the rest of the butter. Puree until emulsified and glossy. Season
and keep warm.
Wash the beetroot leaves thoroughly and pat dry with a tea towel. Brush with olive
oil and season with sea salt and char on the BBQ until the leaves are cooked and
slightly crispy. Bring the vinegar, bay and sugar to the boil, add the beetroot stems and leave to cool.
The stems will take on a rhubarb texture.
Place the canola oil in a deep pan and heat to 180 degrees, add the salt bush to the oil
and quickly crisp up. Take out the hot oil and drain. Season with sea salt.
Spoon the purée onto a plate and smooth over the centre, add the charcoal beetroot,
leaves and stems, finish the dish with the crispy salt bush and crumble the sheep’s milk
cheese over to finish. | 10 |
Charcoal
beetroot
with
saltbush
Thank you to our client, Africola, for supplying this recipe.
| 11 |
hayes
Transforming the family farm
for the next generation(s).
| 12 |
“It’s our lifestyle, it’s our home — and we
try and make money out of it. It’s turning
sunshine into money, we hope.”
Farming in the deep heart of Australia — cattle country east
of Alice Springs — might be about tradition but it’s also about
turning your hand to whatever is required to get the job done.
It’s this pragmatism, combined with some timely financial
advice and a few good ideas, that have transformed the historic
Undoolya Station, home to five generations of the Hayes family
since 1906, into a modern agribusiness.
“There’s too many stories of wealth being lost because of
stupidity and rivalry in the family. We don’t wish to see that
happen because we are all passionate about what we do here,”
says eldest brother Richie Hayes, Director of Rocky Hill Table
Grape Pty Ltd.
“It’s our lifestyle, it’s our home — and we try and make money
out of it. It’s turning sunshine into money, we hope.”
Taking a strategic approach has allowed the Hayes family to
diversify, enabling the four Hayes siblings to leverage the family
farm without selling it off.
He admits dividing up the spoils between four siblings cannot
always be fair but it has to be workable for the future of the
family enterprise.
They’ve created four businesses: a table grapes and food
production, a second cattle property and a spare parts business
in Alice Springs — achieving patriarch Jim’s wishes to have it all
sorted before “he falls off the perch”.
“You lift your lip up and get on with it. It is what it is. Everybody
has their own issues,” he says.
| 13 |
“We are all in business together but all
have our own agendas and livelihoods.
We all have our own passions that we
want to pursue but we need to stick
together.
“It’s very easy, given the seasonality of
agriculture to be driven by the wrong
agenda, you really need to have the right
structures in place that enable you to
plan for the future,” says Scott.
“It certainly helps to have it all written
down and nutted out. We have to know
what we are doing and where we are at,”
Richie says.
“It’s very important to have a robust
succession plan in place, included
documented agreements which outline
the agreed steps to be taken should
something happen to a partner through
death or disability or should they want
to exit the business.
Senior director of accounting and
business advisory at Hood Sweeney,
Scott Young, an agribusiness specialist,
says the Hayes family enterprise was
typical of many partnership models
built on family relationships, lacking the
business structures and rigour needed to
ensure it could continue into the future.
Increasingly, he says, farmers are
recognising the need to treat the farm
as a business enterprise— not simply
their home and a job.
“The family also wanted to have a clear
understanding of the options available
to provide for the next generation and
ensure the ongoing viability of the
family enterprise,” he says.
Hood Sweeney is working with the
family to create a family board that
will provide direction to the four
business units and allow them to
be independently.
| 14 |
Financial restructuring has also
supported a shift from the core business
of cattle farming into the sometimes
more lucrative table grapes business and
potentially into other food production
for Richie Hayes at Rocky Hill, on a
2000ha freehold niche in the 14000 sq
km station.
“In the 1970s we found some pretty
serious water on Undoolya Station and
we had lucerne here for 15-20 years but
eventually the money wasn’t there. We
were approached to get a water license
but that took seven years.
“In 2002 we put in 60 acres of table
grapes because we are able to get them
at just the right time into the market.
Eventually we bought the partner out,
the manager racked off and I became
a grape grower,” he says.
It’s a precarious business managing
the 48 degree heat at picking time and
timing production to meet the market
gap between the end of the Queensland
grape season and before the Sunraysia
season.
The project has consumed considerable
capital, drilling for water and supplying
electricity to carve a food bowl from the
red dust. It also has formidable recurrent
costs in wages, water, power and freight.
But when it works, the grapes business
earns double that of a cattle station,
employing over 100 people at certain
times of the year and grossing $4 million
when the stars align.
And there are more opportunities
on the horizon. After much lobbying
for a quicker turnaround on a new water
allocation than the last, the Hayes family
has recently acquired an allocation
of water.
“There are a lot of people interested in
what we are doing at the moment and
we are yabbering to some people from
NSW and Queensland about producing
whatever will grow here,” Richie says.
Yet he warns that much depends on safe
passage through the regulators.
“The bureaucracy in the government is
absolutely crippling the country. That’s
my big gripe.…They have no wish to
see any development in the NT possibly
Australia. It is absolutely frustrating to the
degree that it’s becoming impossible to
work in the system.
“I haven’t asked for a single cent out of
the government. I don’t want anything
out of the government. I just want to get
on and do what I want to do,” he says.
| 15 |
risk insurance
What would happen to your household
and savings if your stay-at-home
parent/carer was sick or disabled?
If you are a 1-income family, chances are
that you have income insurance for the
main breadwinner in case they become
sick or disabled and were unable to work.
But, statistically speaking, you are less likely to have insurance
to cover the unpaid partner if they could not perform their
invaluable work at home, says Hood Sweeney’s Life Risk
Insurance specialist Mark Mullins.
“Many people underestimate the value of a stay-at-home
parent yet a typical stay-at-home parent works an average
of 90 hours a week. Imagine how much this might cost to
buy into the household if that parent could no longer work,”
says Mark.
“You might suddenly need to factor in meals, childcare,
housekeeping, laundry and administration support —
all of which can be expensive.”
“The last thing you need is financial worry when you are facing
the major illness or disability of a loved one,” he says.
In fact, a survey conducted by Salary.com estimates that stayat-home parents/carers should be charging $115,000 per year
for their work.1
Households need to ask what might happen to their savings
and income if their stay-at-home parent/carer prematurely died,
became totally and permanently disabled or suffered a critical
illness and was unable to work.
Not many people are at the point that their financial position
would be secure if the main breadwinner had to stop work
to care for children or the stay-at-home parent, says Mark.
They might also need to find additional funds to pay for any
medical expenses and home modifications as well as to pay
for a cleaner, meals, nanny/childcare or home-help.
“Death, Total and Permanent Disability and Trauma insurance
provides a pre-determined lump sum if a person dies, becomes
totally and permanently disabled or has a critical illness. This
provides your family with some breathing space to stabilise
and maintain your existing lifestyle,” Mark says.
1
http://www.forbes.com/sites/jennagoudreau/2011/05/02/why-stay-at-home-moms-should-earn-a-115000-salary/
| 16 |
Having the right insurances can also provide a range of benefits
on top of a pre-determined lump sum in the event of premature
death, total and permanent disability or trauma.
Policies can provide a Terminal Illness Benefit which pays the
death cover sum insured if you are diagnosed with a terminal
illness likely to result in death within 12 months or they can
provide partial benefits if you do not meet the full trauma
definition, Mark says.
“We often forget to put a value on work that doesn’t come with
a payslip but it pays to calculate what you would need to keep the
household ship afloat if the homemaker could no longer do their
job,” he says.
It might also be worthwhile to consider insuring your children
because having a child critically unwell or injured also places
incredible strain on the household finances.
It’s important to ensure that you regularly review your insurances
to ensure that they are able to support your current situation.
Hood Sweeney’s Life Risk team works to understand your
situation and to find the right insurance package for your
household.
Mark Mullins
Associate, Life Risk Specialist
For more information contact
Mark Mullins on 1300 764 200 or
[email protected]
Authorised Representative 323919
Hood Sweeney Securities Pty Ltd
AFSL No. 220897
| 17 |
suntrix
EQ not just IQ the magic ingredient in Suntrix success.
You might think that building a solar
energy company to become a national
multimillion dollar business is a leftbrain exercise but for Suntrix co-founder
and managing director Jenny Paradiso,
the right brain creativity and emotional
intelligence has been equally important.
There has been a large element of intellectual rigour applied
in transforming an idea Jenny and her husband David Hille had
while looking for an affordable high quality solar energy system
for their own home eight years ago.
But Jenny says the real secret of their success in establishing an
Adelaide-based solar business, which designs and installs solar
energy systems and manufactures monitoring units has been
its focus on understanding what people need.
“You don’t just go into a business for money — you do it for
passion and that’s what we did; we did it for passion. Our
business is about looking to inform our customers and giving
them all the information they need to work out what’s good
for them. It’s about educating them, not just about renewable
energy but about really simple things — heating and cooling
and energy efficiency, buying local — all those things that we
think are really important,” Jenny says.
The business has come a long way since Jenny, a former
librarian and David, a technically minded customer of solar
energy who developed a bespoke solar energy system,
decided to take what they knew to the market.
| 18 |
The emotional side of doing business is often underestimated,
Jenny says, but this quality, and empathy for customers and
staff, is a powerful motivating force.
“We realised there were a lot of people out there like us who
were looking for good value for money products, someone
who knew their stuff, honest people with integrity, especially
in the solar industry because you get a lot of cowboys out
there,” she says.
“I worked in public libraries for quite a few years and then I
worked in library software servicing state libraries, national
libraries, universities and then I went on maternity leave and my
husband and I decided to start a solar company because that’s
what you do when you are about to have a baby,” she laughs.
Suntrix was born from a passion for renewable energy and
a conviction that they could make a difference to their
customers.
“We don’t just throw the panels on the roof and say thank you
very much, see you later. We design the systems. We have an
in-house, full time PV designer and that’s what he does — he
looks at the best location, he looks at how they should be
strung, the panels should be laid out. He looks at the best
inverter to go with the client’s needs and we educate our
clients and inform them so that they can make the decision
that’s best for them.
“We have a commitment to our employees and to our
customers and that alone got me through some of the really
tough times because you are not just giving up on yourself if
you give up. That was a really strong driver for me on those
really tough days — the days when I had a toddler and a
newborn — when I thought I don’t want to do this anymore;
it’s too hard.
“At that stage we already had a number of employees and
hundreds of customers and it wasn’t a simple thing just to
say I’ve had enough and tell everyone they didn’t have a job
anymore. And there were all those customers who gave us
a chance when we were small and untried and untested.
I had a great commitment to those people.
“People do feel a connection and we have a great team
because of it…I’ve always said: people do business with people
and the people are really important — more important than
the business. The reason we do well is because of the people
we have,” Jenny says.
| 19 |
| 20 |
And, she says, the strong relationships
Suntrix has with other businesses are
equally important — businesses like
Hood Sweeney for example — who are
“always at the other end of the phone
when you need them”.
Under Jenny’s stewardship, Suntrix has
weathered a contraction in the solar
energy market and continued to grow,
expanding into Queensland, New South
Wales and Victoria where it has just
finished installing solar energy systems
to every fire station in the state.
Suntrix was awarded the Telstra SA
Business of the Year and the Telstra SA
Medium Business of the Year in 2013 and,
in July 2014, Jenny won the Ernst and
Young Entrepreneur of the Year Award
(Emerging Category) for the Central
Region. She also is a member of the
Clean Energy Council (CEC) PV Leadership
Committee and a board member of
the not-for-profit Cure4CF Foundation
which supports the work of a leading
gene research therapy team towards
developing a cure for cystic fibrosis.
“The challenges have changed over the
years. The reason we are still around is
that we’ve diversified. We started in the
residential space and we now mainly
service business and commercial. We
have developed and provided new
products such as our monitoring. And
although we have our main operations
in South Australia, we’ve expanded
interstate so we are also in Victoria,
Brisbane and New South Wales,” she says.
Suntrix has also developed innovative
products such as a monitoring system
that sends clients an email or a text if their
solar system is not working.
“We’ve found that if something does go
wrong, a lot of the time people don’t
know until they get their next electricity
bill but by then it has cost you several
hundred dollars at least. This will tell
you within 24 hours if you’ve got an
issue,” she says.
The MyWatt monitoring system retails
for less than $200 and, already, there are
sales to Europe and plans to manufacture
it in Australia if sales volumes increase.
"We have a commitment to our employees
and to our customers and that alone got
me through some of the really tough times
because you are not just giving up on
yourself if you give up."
| 21 |
“We have only recently started in Victoria
and that’s booming for us at the moment
and we are doing a lot of work for
councils…it’s definitely a different climate
to South Australia. I’ve realised that if
you can do business in South Australia,
you can do business pretty much
everywhere,” Jenny says.
“We will continue to expand but we
are doing it softly, softly. We’ve definitely
got more opportunities interstate and
also in the size of the system. We are
looking at more large scale systems and
the commercial side of our operations
are definitely developing more
rapidly,” she says.
“I’m very confident about the future
of solar. It changes all the time but it is
definitely worth doing without a doubt…
particularly for commercial operations —
it’s amazing how much of a difference
we can make for their standard operating
expenses.”
financial planning
High prices mean high risk, not high rewards in global markets,
warns Hood Sweeney Securities.
Finding value stocks has never been
harder, a Hood Sweeney investment
seminar has heard.
That’s why you need to focus on the
fundamentals of individual stocks and
look for quality businesses trading at a
discount. For most investors, this means
relying on professional investment funds
to do the research, the forum heard.
Hood Sweeney directors Tony Michaels
and Adrian Zoppa hosted an expert
panel including Erik Metanomski, Chair
of the Hood Sweeney Investment
Committee, Co-founder of Magellan
Financial Group Chris McKay and
Managing Director of Folkestone
Property Group Greg Paramor.
Investors should be very wary of
chasing yield or income in a market
which has been overinflated by central
banks expanding the money supply
and propping up property and stock
markets since the Global Financial
Crisis of 2007-08, they said
Tony Michaels
Senior Director, Financial Planning
Authorised Representative 259128
Hood Sweeney Securities Pty Ltd
AFSL No. 220897
“In my experience and beyond my
experience, in the history books that
spans 150 years, the conclusion I come
to is that this world has never seen such
a disconnect between physical assets
and the amount of capital looking for
a home,” Mr Metanomski said.
| 22 |
The investment committee said in this
environment it was even more important
to look for value and study the detail
of individual companies.
“When prices are higher you need to
be more careful. It’s an important point
and it’s probably counter intuitive. Our
approach is to immerse ourselves in the
detail,” Mr McKay said.
The seminar heard that global conditions
were likely to continue to make it tough
for many businesses in the foreseeable
future.
“Don’t put your children’s inheritance
on China being our saviour”,
Mr McKay warned.
Having spent time in China and India
recently, Mr Metanomski said it was
unlikely that these economies could help
to drive growth in Australian exports any
time soon.
China’s economy appeared to be in
worse shape than commentators had
reported publicly and it was difficult
to see where the predicted 6.9 per cent
GDP growth would come from, he said.
China’s exports for the year to date were
down 8.8 per cent, imports were down
10 per cent and imports from Australia
were down by 27 per cent.
And it was clear that trade with India would remain difficult for
the foreseeable future.
“If you go to parts of Asia, they look at Australia as being
pretty fair value but we look at it as being pretty damn
expensive,” he said.
“I’ve been talking to business people and officials in India
and the country has enormous potential but it is rife with red
tape and to actually allocate a significant amount of capital to
business in India you would put a very high risk factor on that.
I cannot imagine India will replace China [as a trading partner]
over the next 5-10 years,” Mr Metanomski said.
Online retailing which is around 12-13 per cent of total retail
spending had affected returns from retail property, particularly
in mid-range and smaller shopping centres, Mr Paramor said.
Food home delivery would also have an impact, with
distribution centres the beneficiaries at the expense of
supermarkets.
Neither could investors expect that prices in the resources
sector, particularly the oil sector, to rebound any time
soon, despite oil prices hitting a 6-year low. Most resources
companies’ balance sheets were still insulated by hedged
positions, the panel said and it was too soon to look
for bargains.
The investment committee members said they would hold
cash rather than rush into an overpriced market.
Australia was a particularly difficult environment in which to
invest, characterised by high prices, high debt levels and patchy
economic conditions around the country. This made it difficult
to adopt the traditional defensive investment strategy of
investing in blue chip stocks.
“Everyone is always drawn to a fall in the market particularly
when they see it picking back up again and they think all the
pain is all over,” Mr Metanomski said.
“The biggest trap for value investors is that we have to wait
for opportunities to invest while we see prices go up…It’s not
about how many investments you make, it’s about the quality
of investments you make,” he said.
“People in Australia say banking sector is a defensive position
but with debt to equity ratios of 95 per cent, it is extremely
vulnerable — it’s about as vulnerable as you can get,” Mr
Metanomski said.
“You should avoid the train wrecks that set you back…If you
lose 30 per cent on an investment and you’ve got to make
50 per cent somewhere else just to cover what you’ve lost
on that investment,” Mr Metanomski said.
The forum heard there were complex conditions in Australia’s
property market, creating high risk and limited returns.
“We are concerned about the world and markets but if we
find something that gives us sufficient potential return above
the risk we are taking whatever the world looks like, we’ll buy
it,” he said.
“Yields in Australian real estate for office building, industrial,
shopping centres, hotels … are the lowest I’ve seen them,”
Mr Paramor said.
On value
On commercial property
Value stocks are becoming harder to find as markets are
being inflated by central banks printing money and the
low cost of debt.
Generally overpriced, low yield.
On currency
Some gains to be had in office property Sydney and
Melbourne.
Smaller retail centres and supermarkets under pressure
from online shopping.
$A is likely to trend lower.
Many international investors are taking a blended position
and are not repatriating profits.
On the macroeconomy
No genuine growth drivers on the horizon.
On oil prices
China’s economy is weaker than publicly recognised
and debt levels are high.
More pain for this sector as companies have been artificially
protected by hedged positions.
India remains a precarious trading partner due to red
tape and corruption.
Europe and US conditions remain volatile.
If you would like to know more about Hood Sweeney’s value investment approach to preserving
your capital, speak with Hood Sweeney’s Financial Planning team on 1300 764 200.
| 23 |
onboard
Surf’s up for Glenelg’s Onboard thanks
to some savvy software choices.
“I would sit up at night doing research about
different point of sale technology, business
management software and what accounting
packages there are out there… and that’s
where I learnt what is important in retail,”
Erica says.
| 24 |
It might be difficult to regard the ancient
art of surfing as a high-tech activity but
operating a surf-shop — Onboard at
Glenelg — certainly is.
Like many women of her generation, co-proprietor Erica Modra
has embraced business technology to establish a new career in
business. She manages the business with her husband, Anthony
and she often works from their Fleurieu Peninsula home or
the car, as she juggles the business with her jobs as an exercise
physiologist and mother of two young children.
She admits that the surf shop career is an accident stemming
from a casual suggestion to her husband 22 years ago that he
take up surfing as a form of stress management as he embarked
on his AFL career. This somehow led them to embrace the surfing
lifestyle and a share as silent partner in the surf shop at Glenelg
18 years ago.
Yet, after watching the business, which currently employs 12
casual people, struggle with their existing IT systems, Erica was
determined that it should become a leading-edge business,
equipped with the right tools.
“I would sit up at night doing research about different point
of sale technology, business management software and what
accounting packages there are out there… and that’s where
I learnt what is important in retail,” Erica says.
She introduced a suite of technological solutions for managing
receipts and invoices, staff rostering and wages almost
immediately after she and Anthony took over full ownership
of the Glenelg surf shop in September 2015, aiming to add new
energy to the business and ensure its profitability.
And with advice from long-standing accountant, Hood Sweeney’s
Eddie Taylor, senior director of Accounting and Advisory, Onboard
implemented the Xero accounting package, along with Receipt
Bank which captures emailed and scanned receipts and invoices.
They also used Deputy for rostering.
| 25 |
All of these platforms integrate with the new point of sale
system Retail Express and the business also outsources
the workplace health and safety and staff management
documentation, policies and procedures to Employ Sure.
Now, thanks to these new systems, Erica is able to import
receipts and invoices into the Xero accounting software via
Receipt Bank, saving hours in time-consuming data entry.
“As soon as we took ownership of the business I was finally
able to implement so many platforms I’d been researching
and Hood Sweeney helped to analyse our business, summarise
options in the market place and helped me consolidate the
best choices for our particular business,” she says.
The Deputy software allows staff to enter their availability for
the roster remotely via an app on their smartphones. Erica can
use it remotely to plan rosters, monitor who is working and to
approve the payroll which is calculated in 10 minutes — down
from two hours manually. And Deputy automatically draws
appropriate pay rates from the Xero accounting package.
“As a business I want things to be replicable and streamlined
and we could not do it without better systems and because
we live [on the Fleurieu Peninsula] I need to be able to work
from home.”
“It means that our business will be more efficient and profitable
and it can focus on the things that make the business
productive — which is not sitting there managing accounts,”
Erica says.
| 26 |
Next Erica will be launching Onboard’s new Retail Express point
of sale system, with a state-of-the-art web-store and a move
to a new show room in the Marina Pier. “It has taken months
to get ready for this, but the move will help us finally eliminate
the paper, improve inventory management and streamline the
experience for our customers” Erica says.
“But I’m really proud of Anthony’s commitment to maintaining
this South Australian business and its people,” she says.
“It means the workplace is more enjoyable — the staff love
using our app to clock on and off and to send staff memos and
messages. If you want to attract good people, you need the
good tools to let them shine,” Erica says.
This attention to profitability and excellence is helping to
position the business for future expansion after weathering
some dark days in retail. “It hasn’t been an easy time recently
and we still have a long way to go.” Says Erica
“Managing the change and helping staff prepare for the new
systems has been a priority. Every day is a step closer and
it’s so exciting when you first start using a new system and
experience the way it will free up your time and you realise
what you’ve been missing.”
Erica says the next innovations planned for the business are
aiming to change the experience not just for staff but for
customers too. “That will be the best part” she says. “It’s a
challenge — retail at the moment — no doubt,” she says, “but
Anthony and I are a good team and our staff team is impressive;
they are embracing the business changes and thriving in
their roles.”
Free gifts for
Life + Toil readers
Simply visit Onboard Surf Co at Marina
Pier Glenelg and mention this article to get
two FREE one hour Stand Up Paddle Board
hire to use at your chosen time, PLUS a free
surprise gift (while stocks last).
Offer expires 30 September 2016.
Follow onboardsurforiginals on Instagram
and Facebook for more great offers.
| 27 |
Meet the
Hood Sweeney
Contributors
Chris Stewart
Managing Director
[email protected]
Simon Starr
Director, Consulting & Performance Coaching
[email protected]
Tony Michaels
Senior Director, Financial Planning
[email protected]
Adrian Zoppa CFP®
Director, Financial Planning
[email protected]
Authorised Representative No. 259128
Authorised Representative No. 239866
Hood Sweeney Securities Pty Ltd AFSL 220897
Hood Sweeney Securities Pty Ltd AFSL 220897
Mark Mullins
Associate, Life Risk Specialist
[email protected]
Authorised Representative No. 323919
Hood Sweeney Securities Pty Ltd AFSL 220897
our featured clients
Hayes
Africola
Suntrix
Onboard
| 28 |