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Lateline Business -

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(generated from captions) conduct the defence of an

suggesting that. I'm simply

asking whether you'll be giving

the US Government, when

Vice-President Cheney is here,

some kind of deadline by which

a trial must take place? There

is already a timetable in

place. My point to - well to

Robert Gates, the Defence

Secretary the other day was

that we wanted that timetable

to be adhered to and for the question, on trial. Alright, a final quick

their hearts? Well, I'm not

surprised because I think in

the very short term leader of the Liberal Party as to the Prime Minister, the

from the lead ters Labor

Party had before and so there's

a lot of interest in that. The

test for Mr Rudd is going to be

in the end a quite he's in

proposition favour of every single

forward. Now I think that is

beginning to come through. the end Mr Rudd will have to

you can't be in favour

in favour of one

security policy and opposed to

another and opposed to the

other and in fair of the other

and continuing changing your position. In I think at the

There's been another

development in the James Hardie

legal saga with the chairman

and two directors quitting

their posts early. Meredith

Hellicar, Michael Brown and Michael Gillfillan have brought

at forward their plans to resign

Australian securities and - think those welcomed the decision. I don't

thing. I think it will allow

James Hardie to now focus on

its business operations issue only and not a bigger it's

about an education campaign so

that people aren't still

exposed to asbestos. The

resignation letters all cite

the potential for a perceived

conflict of interest. The James

Hardie company is one of the

co-defendants in the ASIC

action and corporate law expert

Professor Ramsay says that give

asclue as to why now was the time to non-executive

directors might be arguing that

it twaz very management of the company, the most senior executive officers of the

company that failed in their the

non-executives may argue that

they're not responsible. Ms

Hellicar, Mr Brown and Mr Gillfillan have vowed to fight

the ASIC charges when the case begins Federal

Government's plan to ban

convention al light bulbs

within three years has sparked

more debate on climate change.

From 2009 the power hungry

incandescent globes we're used

to will no longer be sold.

They'll be replaced by more

efficient lighting. The

Opposition has welcomed the

initiative but says the focus

should be on big business and

government, not the energy

consumption of individuals.

Sarah Clark reports. Malcolm

Turnbull ub veiled his bright

idea in the classroom. We want

to phase these light bulbs out,

they're out of date. Surrounded

by the next generation, on on

he says doing away the standard

light bulb will help every

household do its bit for the

planet. You will cut your leck

tris tribill by nearly two

thirds. It's a substantial

saving but the most important

part of the achievement really

is that it reduces greenhouse

gas emissions. The fluorescent

light bulb with cut Australians

emissions by 800,000 tonne

asyear. They use 20% of

electricity to produce the same

consumers will have no and by 2009

choice. We need to do anything

to save greenhouse gases. A

I think lit long-term investment, you know,

long-term investment, you know,

But the cost could be a little

hefty up front with a price tag

of around $5 but these ones

last six times longer than

their predecessor s. The

industry wants some

exemptions. For example, refrigerators, exemptions. For example,

ovens, none of them can really

accommodate a compact

fluorescent lamp so inevitably

there must be some

exemptions. The Opposition and

the Greens are on board. I

think it's a good idea and when

good ideas are put forward I'm

prepared to give them a tick.

This is the right way to go. I

think any effort on energy

efficiency is a good idea but

it's really tiddley winks

around the edges of a hugely

snint problem. With 12% of

Australia's household emissions

produced by electricity, it's a

A quick look at the ether.

That's all from us. 'Lateline

Business' coming up in just a

moment. If you would like to

look back at tonight's

interview with Alexander Downer

or any of our stories or transcript, you can visit our

website. But now here's

'Lateline Business' with Ali

Thanks Tony. How low

can they go? Virgin Blue eyes

off a new low-cost carrier but

warns the arrival of rival

Tiger Airways won't mean rock

bottom fares. It will provide a stimulus, it will stimulate

those markets that the

discounts go into but it

doesn't necessarily mean that

$10 or $40 fares are

sustainable. Any half wit in

the industry knows you've got

the fill your aeroplanes with

some yield that actually makes

some money. You can't give it

all away for a dollar. The

super boom, the cash pouring

into superannuation is boosting

returns for the money managers.

And a nice drop, the boss of

Fosters says his company is an

attractive takeover target. We

are the number one player.

We've got almost 50% of all

alcohol consumed in this

country has a Fosters label on

it. That's got to be attractive. To the markets

and in a subdued session with

Wall Street closed, local

stocks finished flat. The All

Ords managed to break even for

the day. Earlier in the session

the ASX 200 nudged an intraday

record before losing ground. In

Japan the nick Kay edged hitss

way to a 15-year high. The Hang

Seng was closed for Chinese new

year. As you heard in

'Lateline', today has been

another momentous one in the

long-running saga of James Hardie industries with the

resignation of three directors.

But were they right to quit and

what would it have meant if

they'd stayed? Andrew Robertson For

James Hardie Industries, the

process of severing links with

the past was already well under

way. Today's resignations mean

the last ove those involved in

the events to ASIC lays charges

have left the board. It's a

clean break and it's one that

enables both the company and

Meredith Hellicar and the other

two directors to deal with

their own defence in a

constructive manner through the

Fill Spathis

provides advietion to

superannuation funds who invest

in big companies such as James

Hardie. He believes the

financial wellbeing of James

Hardie would become an issue if

Meredith Hellicar, Michael

Brown and Michael Gillfillan

remained as directors but were

distracted by the proceedings

against them. It really goes to

an issue of capacity to be able

to manage responsibilities at

the same time that these

processes are under way. Adding

to the situation is the James

Hardie itself was also charged

by ASIC meaning that some

directors would be in the

situation of having to defend

the company and defend

themselves. Michael Adams is

the dean of law at the

University of Western Sydney

and says that's a huge conflict

of interest. Where the

directors are held to be

potentially liable with the

company who is covered by

insurance, so it is more appropriate that they step

aside, they can get independent

legal advice and mount their

own defence. Ian Ramsay is

another leading academic in the

area of kor rat law as well as

the conflicts of interest, he

believes there's a more

pragmatic reason why Meredith

Hellicar, Michael Gillfillan

and Michael Brown had to go. It

might mooent mean when we get

to court each of the defendants

are actually blaming each other for and of

course that means that they

could be in strong disagreement. And then there's

the issue of other board seats.

Meredith Hellicar, for example,

is also a director of AMP. As a

matter of practicality I could

foresee, especially in the

light of the One-Tel

litigation, the HIH litigation,

these are massive complex

matters. I think I would be

resigning so I could really

focus on this matter. Opinion

on whether today's three

resignations from the James

Hardie board were necessary is

not unanimous. The Australian securities and investments

Commission has told the ABC it

wasn't pushing for them saying

it was a matter for company.

While the Institute of Company Directors believes they should

have stayed t a least until the

matter went to court. Just

because somebody is brought to

court for an accusation of some

kind of other, doesn't

necessarily mean that they

should leave. They're serving

their company and they can

await the outcome of the

court. Sitting in the middle is the Australian share holders

Association which represents

retail investors. It believes

the issue of quitting or

staying is full of grey

areas. Director acting in good

faith and having taken the best

accredited professional advice

acts to support a board

proposal, it would be very hard

to imagine then that having

done that he has then misled

the market or misled shareholders. The sting in the

tail for all 10 former James

Hardie directors now facing

legal action is that if the

court finds them guilty, they

could be personally liable for

any penalty. Insurance may

cover the defence costs in

putting up the defence, but if it is unsuccessful and the

court orders a payment to be

made, then the insurance is not allowed to cover those civil

penalties. As the James Hardie

board regroups, American John

Barr has become acting chairman

while Telstra chairman Donald

McGauchie, the only Australian

non-executive director of

hardies will add to his

considerable workload by

becoming Deputy chairman. Investors marked down

Fosters shared 5% today after

the beverage giant reported

searnings below market

forecasts. First half profit

rose a less than expected 11%

to $363 million after one-off

items including asset

a move to combine

the sales teams into a single

network proved disastrous for with

Australian wine volumes down

11%. Fosters also had to deal

with problems with the

restructure of the group

following the acquisition of

Southcorp in 2005 and we'll be speaking with chief executive

Trevor O'Hoy later in the

program. Australia's baby

boomers and their large

contributions to super funds

helped two leading financial services companies record

strong results today. Suncorp

Metway and axe arksz reported a

jump in profits based ton

strong domestic stock market

and the increase in the amount

of money going into super

funds. Suncorp Metway may be

one of Australia's largest car

and home insurers, but its

growing superannuation division

helped it reach a healthy half-year profit. The company

record add profit of $527

million, up 16% way a-above It's wealth management business

contributed to this, jumping

28%. Suncorp-Metway wasn't the

only financial services company

doing well today. AXA Asia

Pacific also post add big

result. Overall profit after

tax is up 25%, 677.8 million

and our underlying operating

earnings are up 24% to 454.5

million and that's a key

measure of the underlying performance of the business so we're pretty happy about

that. AXA is Australia's fifth

largest funds manager. Its

initiative to divide up excess

capital have been welcomed by

both analysts and shareholders.

Investors will receive a final

dividend of 18 cents per share,

up 45 % to last year. AXA is

also embarking on a $250

million share buyback

scheme. We've had a big year in

terms of acquisitions so in the

last 12 months, subject to the

approval of the winter the

transaction at the AGM we will

have done a billion dollars

worth of acquisitions over the

last 12 months and

notwithstanding that we end the

year with a very strong balance

sheet which has enabled us to

do three significant capital

management initiative. Australia's superannuation and managed

funds are now worth $1 trillion

which is only expected to

increase even further this

year. While the market

predicted a strong result for AXA, analysts say wealth still

haven't seen a noticeable rise

in super inflows. The industry's been expecting leading up to the Federal

Government changes to

superannuation tax laws on 1

Hasn't started yet. They

are adamant it will come

towards the end of zwroin which

is when the window closes but

so far it's a normal year for

super in a strong bull market.

There is the question of what

will happen to super inflows if the share market corrects

before the end of June. It

might discourage some retail

investors from topping up their

super as much as they're

planning to now. Baby boomers

still have five months to

invest their money and

companies such as AXA are

certain they will. The exact

amount of monies pouring into

funds will be calculated and

released by the industry in

April. Full-year earnings at

pokies maker aristocrat slipped

more than 2% to $239 million

after new laws in Japan

limiting payouts hurt sales

last year. But ex-Japan, the

world's second biggest maker of

poker machine, delivered a 27%

jump in profit gaining share in

key marks including North

America. Aristocrat has seven

new games approved and eight

more in the pipeline which the

company says will help it

regain a slice of the Japanese

market. Given that the

opportunity for the industry is

in the vicinity of 1.5 million

units we would like to think we

can carve out a reasonable

share of that market. Shares

fell 3% despite the company

forecasting strong earnings

growth this year. Virgin Blue

says it's considering starting

a new low-cost carrier as well as launching an international airline. Plans for

international expansion with

flights to the US from next

year, are well under way with

Virgin on the brink of signing

an order for seven new

long-haul aircraft. News of the

aircraft deal came as the

company reported a massive 81% jump in first half profit

buoyed by a move into the

business mark and the airline

says it expects full-year

earnings to be 60% higher. With

the proposed industry of a Singapore-backed Tiger Airways

into the domestic market and

Virgin's move away tr the

traditional low-cost model,

it's now weighing up starting a

new carrier. I spoke to CEO

today. Bred Godfrey welcome to

the program. Thank,

Ali. Impressive profit growth

with more to come but as you

say yourself no airline is

bullet proof, is there anything to dampen

not

necessarily in the short-term.

I mean in terms of things that

we can actually influence. I

think from the competitor point

of view the market seems to be

in sync. Fares are relatively

low but still better than they

were for us two or three years

anything can happen and

you know SARS brought two of

the biggest airlines to their

knees. It would be pretty

arrogant to think that it's a

lay down me zair, it certainly

isn't. In this half you earned

12% more revenue on every

flight. Is that pretty much as

good as it gets? I think so. I

think it surprised us a little.

It's very hard to predict these

days because we've actually

tried to move the model into a

new space and so, you know,

we're sort of - we're

estimating as we go along to we've seen, you

know, 2% and 3% increases by

other airlines in not just

Australia but the rest of the

world. The market in general

has improved but for us 12% was

- we're pretty happy with that

When we look at your

fleet upgrade as well as the

777s for the US market, you've

got 20 other aircraft on order,

is there room for another

offshoot to keep your broader

offer, the so-called new world

carrier model but perhaps start

a no frills option for

regional, for shorter

hops? Well it's something we've

contemplated over many months.

In fact probably over a year

now. New world carrier has

propelled us into the corporate

markets and has been, I think

at this stage, the indications

would be a success. When we go

further on, it's making us

compete with Qantas. There St

JetStar and there are some

other holes out in the market

that we believe could be filled

in the next couple of years so

I would rather us look at that.

We're not saying we're going to

go out and set up an ultra cost

low-cost airline, we're just

saying we think there is an

opportunity within 12 to 18

months if we keep moving in the

direction we are, we will be

spilling traffic. There's no

doubt about we're spilling it

today. What I'd rather do is

sorry to be a bit greedy but

have some of that as well. We

see one of two options here.

One is we look at a new

low-cost airline which we've

got the capacity coming in in

the third and fourth quarter of

this year to contemplate starting or alternatively we

take delivery of these

aeroplanes an future airpleens

fully seated out as 189 seats

rather than the spaishts ones

we have today and that gives us

a 5% to 6% seat cost

saving. We're talking here a separately listed business? I

don't think so. In fact I don't

think it would be a separate

business unit. May end up being

a separate brand. It may be

crew and operated by pretty

much what we have today buzz I

think our people are pretty

efficient and our wages are

pretty fare. I'm not sure we

need to go and look to undercut

in those areas. I think there

are some simple things we could

do that could allow us to

operate this thin more

efficiently if we said it was

going to be purely and simply

focused on secondary airports

or leshure markets and - but

that's just all in the mix today and we'll probably have

some more comment on it I'd say

in perhaps three to four months

time. You've been looking at

the options for 12 months but a

new business could it not be

away of going head-to-head with

Tiger Airways if that gets off

the ground? Look, I can't deny

that that doesn't sort of

figure in the thinking here but

it is quite fair to say that

this is something that we have

been working on for a little

while. It's kind of an obvious

opportunity, as I said, we

don't fly out of places like

Avalon at the moment and we do

think there are certain markets

that we could put more capacity

into. You can't discount Tiger,

can you? I'm not discounting

them. I mean I very much get

excited about the possibility

of level playing field

competition. It will provide a

stimulus, it will certainly stimulate those markets that

the discounts go into but it doesn't necessarily mean that

you know $10 or $40 fares are

sustainable. Any half wit in

the industry knows you've got

to fill your aeroplanes with

some yield that makes sop

money. You can't give it away

for a dollar. Do you think

Tigher will work? There may be

room for them. I guess to be

frank, let's wait and see what

they come out with. I don't

want to discount any

competitor, I think that would

be silly but I'm saying I'd

much rather be sitting here in

my position than coming in in

their position. That goes back

six years as well. There was a

nearby, there was an

opportunity. I don't think

there is a wide open door they

predend. Airfares are down 40%

an when they they're talk about

$10 fares they're talking

ab-Asia, where labour laus an

tax rates are different. It's

going to be a different battle

f that's what it turns out to

be n this neck of woods. Your major shareholder Toll

Holdings, is due to review its

more than 60% ownership by

midyear and today you admitted

that in the past you've looked

at a management buyout, any

private equity boffins been

knocking on your door? Oh,

zblsh that's not a no. Well

it's not a no. It's not a no but it's not a serious yes

either. Look, very clearly I

wouldn't - if the Virgin group

and toll were willing to stay

in and help develop the

business as they're doing, I

have no interest whatsoever. If

it ended up in a situation

where we felt that it was going

into the wrong hands or we felt

that the strategic direction

was going to change, yes, it's

fair to say that it had been

things that had been considered

by management but rest assured,

we're very happy with the

shareholders and the board and

so again, it comes back to, I

think the business is in good

hands at the moment. Brett

Godfrey, many thanks for

joining us. Always a pleasure,

thanks, Ali. OneSteel has post

add 17% jump in half year

profit despite rising costs and

increased competition from

imports. But Australia's second

biggest steel maker says the

industry must consolidate to

survive and it's pressing ahead

with plans to join forces with

smor gan steel. Neal Woolrich

reports. China's economic boom

has been a fillip for many

Australian companies,

especially in the resources

sector but for others like

steel maker bs it's been a

mixed blessing increasing

demand for finished product bus

at the same time driving up raw

material costs. OneSteel has

post add net profit of $98

million for the December half,

up 17% on the prior year. Look,

I think it was a really solid

result. I think achieved

against the backdrop of rising

costs and pressure s on labour

and materials, they've done

very well. They've produced a

solid financial performance and

they're continuing to build the

business. Peter Arden says

demand from China and India

will keep steel prices high and

competition from imports is

easing, but he argues the

planned merger between OneSteel

and smor gan steel should go

ahead, especially after arch

lor and Mittals formed the

world's biggest company. It

individual steel makers. Steel can't afford a whole lot of

is a globally produced,

globally traded product. We are

competing against a lot of very

efficient producers overseas

and if we expect we can do it

with a lot of little player,

we've got it wrong. To be a

competitor against imports, to

be a viable competitor and

offer the range of products an

services that our customers

require, we really need to keep

making those structural changes

and working on improving our

ability to compete, our ability

to innovate and be able to keep

pace with the increasing

demands of our customers. And

some remain puzzled that the

company's main supplier,

Bluescope blocked the original

merger proposal. I think they'd

be better directing their

efforts into building their

business and their footprint in

Asia than worrying unduely

about protecting a lit m bit of

domestic production. We're

focused on progressing the

transaction we had in place, it

would have been good if we'd

been able to reach an acceptable outcome with

Bluescope but that wasn't to

be. Another company on the

march overseas is Sims Group.

High demand for scrap metal has

pushed it's first half profit

up 77%. The company plans to

add to its recent UK

acquisitions with a new

recycling business in the

United States. Neal Woolrich.

Well if you're not warn out

with profits here are some of

the other key results out

today. Higher costs and weaker

sales saw Amcor report a 14%

drop in half-year earnings.

Takeover target APN news an

media posted a 7% rise in its

annual result. A 12% hike in

interim profits couldn't stop a

slide in shares in property

trust and developer Mir vack

group. A sale of assets doubled

full-year profit at oil and gas

producer Oil scam search. Funds

management group IOOF boosted

its first half result by over a

third and a $15 million write

down dug into Centennial Coal's

first half earnings. The move

by Rinker's board to reject

Cemex's $15.5 billion takeover

bid may have been vindicated by

a takeover play in the US

building sphri overnight.

Vulcan Materials has paid $11.3

- 11.3 times forecasternings

for Florida Rock compared to

the 8.8 times earnings Cemex is

offering for Rinker.

The Australian competition an

consumer commission has blocked

Santos's $960 million bid for

Queensland zbas company. The ACCC says the deal would

significantly reduce

competition in gas supply in

southern Queensland. The ruling

makes it more likely that a

rival offer from AGL Energy

will proceed. Billionaire Bruce

Gordon has 13th richest man and owner of

regional broadcast esh WIN TV

has raised his stake to 14%.

Shares in Ten, Australia's

third-ranked TV network, closed

2% higher at

liked? Solid operationally we good as you would have

have two or three issues which

we've spoken to the market

about but importantly

strategically absolutely in

tack and on line. A couple of

the operating issues that have

come through are this unique

multibeverage model, the sales

team that we've introduced is -

while it's working in 70% of

our customer base is there

pockets regions in channels

where it's not so we've made

some alteration. The back end

of it is going along superbly

and you saw the business

withstand some very heavy input

companies costs that other beverage

think let's say 18 months it's

in Eck lip yum. What saved you

in this half, particularly the

offshore markets the Europe

around Americas that have been

growing strongly s that

momentum sustainable? I think

two things. The momentum is

very strong in North America

cha is 25% of our profit, it's

half of all the wine we sell

around the world. That market's

in serious growth. It's got

volume growth and value growth

greater than volume. So it's

really going up the premium

curve. That's 25% of our

earnings. So we're well placed

there. In the UK, about a

quarter of our business is

doing particularly well but a

tougher market, but still

showing growth. I think the

real thing that you see out of

this half , we did very poorly

in Australian wine, can't

escape that. But it's not fatal

anymore. The Australian wine

drinker only contributes less

than 8% of earnings for the

Fosters Group today. 20 years

ago if we lost two percentage

points in Victorian beer it

would have been almost the end.

So the shape of the group is

changing. You say that, but

there's a lot of scepticism out

there. Your shares have been

whacked pretty hard

today? Reasonably hard but

bouncing back. 18 months after

the merger with Southcorp is

most of the rationalisation now

complete, are there any big

hits still to take? No, I'd say that's one

markets the price of gold has markets the pricuRCPhh=ftened

softened and warmer weather

across Europe and the US has

seen little change in oil

prices. Now for a quick look at

tomorrow's business diary.

Reserve Bank boss Glenn Stevens

will make his debut before a

parliamentary committee. There

are more earn wtion woodside

petroleum's annual profit due.

We'll get the latest numbers

from freight and logistics

giant Toll Holdings and updated

profits from blood plaz nah

specialist CSL as well as results for Tabcorp

holdings. Before we go, a look

at what's making news in the

business sections of tomorrow's

papers. The age examines Virgin

Blue's change in flight plan

away from its no frills mod e.

The Australian says the bad

news from Fosters is drawing

attention from private equity

traders. The 'Financial Review'

leads with the boardroom clean

out at James Hardie and the 'Sydney Morning Herald' says

Virgin Blue is casting a

nervous eye at new arrivals

into its market. And that's all

for tonight. As I leave you

SOMBRE MUSIC