Friday, February 10, 2012
Xero Scores Investment From Second MYOB Founder
Accounting software group Xero has scored an investment from yet another founder of industry leader MYOB, with Brad Shofer upping his stake in the company following a $NZ18 million investment from Craig Winkler.
The move makes Shofer one of the company's top 20 shareholders, in a transaction that included trades with other firms including Sophrosyne Capital and Matrix Capital Management. It also comes just days after Xero raised a further $15 million.
Shofer left MYOB 20 years after founding it with Winkler, but has been no stranger to investments. Last year he contributed an unspecified amount to taxi mobile app Ingogo.
Xero Australia managing director Chris Ridd told SmartCompany this morning the investments from two founders of the company's major competitor is a "significant" development.
"It's very exciting that we have two founding partners of MYOB, who nurtured that company for quite awhile, and it's just a huge vote of confidence," he says.
"I'm certainly relatively new to the accounting industry, but Craig Winkler is held in great esteem. I think Brad represents the same, and we have these significant entrepreneurs from the early days of the business who are still making an impact."
Shofer said in a statement he's been impressed with what Xero has been able to achieve, and is particularly excited for more global opportunities.
"When I compare the space today with how it was in my MYOB heyday, I see one important difference relating to international expansion."
"At MYOB, we attempted to make an impact in the large markets of the US and UK, however the model was not easily scalable and we had limited success. With the advent of the cloud, this goal is now much more achievable and I think this is where the real opportunity lies. I see a bright future for Xero."
Shofer says the additional funds will be used to help push global expansion, although warns the company is keen to do so at a reasonable pace.
"We want to take more market share, and that's the significant thing. The ability to move forward with this capital really helps us, and not just in Australia or New Zealand."
"The investment just really helps our profile, and validates our strategy. Their attention is directed towards the cloud, and they're prepared to make that investment."
Xero has been active in the investment and acquisition space as well. Last July it acquired a small online payments company, Paycycle, and last week it also raised $15 million from investors and bought New Zealand company Max Solutions.
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Online Retail Carbon Pricing On ACCC’s Hit List For 2012
The competition regulator has warned that it will be taking a strong look at online sales and the relationship between bricks and mortar and online sites, as part of a broad-ranging agenda this year.
In a speech delivered last night, Australian Competition and Consumer Commission chairman Rod Sims said problems with online sales were on the watchdog's hit-list for 2012, as well as raising the awareness of business and consumers about new consumer laws.
"The online economy provides many opportunities, but brings with it many risks," Sims told the Law Society of New South Wales, Corporate Lawyers' Committee.
"I still sometimes find businesses that think consumer law does not apply if you are trading online."
"On the other hand, some 'bricks and mortar' businesses seem to think anything goes when it comes to preventing competition from new online players."
The comments come as the ACCC reminds businesses and consumers of their rights and responsibilities under the new national Australian Competition Law, which provides statutory consumer guarantees. The regulator says its evidence suggests that some businesses, including high-profile ones, either don't understand their obligations, or if they do, breach them.
It also follows reports in SmartCompany that some suppliers are trying to curb the growth of online retailers by refusing to supply them with product, and by attempting to manipulate prices.
Sims revealed that more than $11.2 million in penalties have been awarded by the Federal Court since July 2010, with two cases subject to appeal, under the new consumer laws. The ACCC has also issued 75 infringement notices since the law took effect, with more than $450,000 in penalties paid.
Sims says the results suggest that "some businesses are only slowly recognising the need for accuracy and honesty in advertising and claims they make to consumers or customers".
"Too many businesses still have a long way to go before they meet legal and public expectations regarding accuracy and honesty in dealing with consumers," he said.
The ACL contains penalties of up to $1.1 million for corporations and $220,000 for individuals, as well as infringement notices.
In a wide-ranging speech, Sims reiterated the ACCC's intention to take on cases where the outcome before the courts is less than certain, and said the watchdog would be vocal about changes in law it thinks are necessary. "If we see a need for the law to be changed we will say so, publicly, so everyone can engage in the debate," he said.
Other areas of focus for the ACC will be:
Raising understanding among consumers as to what they are entitled to, such as consumer guarantees.
Unconscionable conduct, which applies to both consumer-to-business transactions and many business-to-business transactions, and is defined as conduct that is irreconcilable with what is right or reasonable and it must show no regard for conscience. Areas such as door-to-door energy sales, and perhaps in the dealings of some major businesses with their suppliers are tipped.
Misuse of market power by firms which have substantial power in order to substantially damage or eliminate their competitors.
Vulnerable consumers; that is, consumers with low financial or language literacy, people in remote locations, and with restricted access to advice or services, and indigenous people.
Misleading and deceptive conduct generally, particularly in relation to price rises flowing from the carbon price's introduction in July.
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James Hardie Says Australia Court Dismisses Tax Court Appeal
Australia's James Hardie Industries said on Friday the Australian High Court has dismissed the Australian Taxation Office's appeal against a tax battle that James Hardie won last year. The tax office must now refund A$248 million ($267.99 million) plus interest estimated by James Hardie at about A$63 million and a portion of the legal cost, the company said in a statement.
If the refund is received before March 31, James Hardie said it will contribute 35 percent of the refunded amount to its asbestos compensation fund in July 2012. The government's tax claim arose from computation of net capital gains arising from an internal restructure carried out in 1998.
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Australian Equities Market
THIS MORNING
Market declines, driven by TLS and BHP.
OVERNIGHT MARKETS
Stocks drifted higher as investors weighed a Greek refinancing deal and continued improvement in the US labour market.
The Dow Jones Industrial Average closed up 6.51 points, or 0.1%, to 12890.4. The Standard & Poor's 500-stock index gained 1.99 points, or 0.2%, to 1351.95, and the Nasdaq Composite edged up 11.37 points, or 0.39%, to 2927.23.
Technology and consumer-staple stocks led sector gains. United Technologies led among Dow members, rising 2.5%.
Stocks received an initial boost after Greek leaders reached a consensus on austerity measures to secure a bailout. If the deal is adopted, Greece will receive US$172 billion to keep it from defaulting on debts next month. Final details are still being worked out.
In the US, separate readings on jobs and business activity were better than projected. Initial unemployment claims fell more than expected last week, down 15,000 to 358,000, compared with a consensus estimate of 370,000. And US wholesale inventories rose 1% to US$473.17 billion in December from the prior month, more than the expected 0.5% increase, a signal businesses restocked at the end of last year to meet rising demand.
In corporate news, Diamond Foods tumbled 37% after the company said the company's audit committee concluded that financial statements for fiscal 2010 and 2011 will need to be restated and noted "material weaknesses" in the company's internal controls. The company said it was taking corrective actions, including appointing a new chief executive, chief financial officer and chairman of the board.
Groupon slumped 14% after the company reported a fourth-quarter loss against expectations of a slight profit.
Lorillard's fourth-quarter earnings jumped 20% as the cigarette maker reported higher shipments and gains in Newport and Maverick brands. Shares gained 9.7%.
YESTERDAY’S MARKET
The local market closed slightly lower, recovering from a low in the wake of a jump in China's inflation. The All Ordinaries fell 6.6 points on Thursday.
The S&P/ASX 200 weakened 7.8 points - finishing the day slightly lower. Losses were led by the materials sector, down 0.7 per cent and the Telco sector, down 2.0 per cent, both driven lower by market heavyweights BHP and TLS. Positive movers for the day were LNC (+$0.09) and AUT (+$0.17). Big losers were SGM (-$1.06) and OST (-$0.055).
In company news, Telstra (TLS -$0.07) reported that first-half profit rose 23% as it continued to attract more customers and make cost savings; Stockland (SGP -$0.06) Group reported a 28% drop in fiscal first-half net profit, which it blamed on difficult property-market and economic conditions and a hedge write-down; Tabcorp Holdings (TAH +$0.05), said first-half net profit from continuing operations climbed 14% on year to $189.3m; and Ramelius Resources (RMS +$0.015) plans to buy a gold deposit in Western Australia state from South Africa's Gold Fields for $10m (US$10.8m) in cash and a production royalty.
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Thursday, February 9, 2012
ACCC Concerned, Retailers Don’t Understand New Consumer Guarantee Obligation
The competition regulator says it's concerned that retailers are confused about consumer guarantee obligations that took effect this year.
Under Australian Consumer Law, a replacement for state and territory laws phased in through 2011 and 2012, consumers are granted the right to a refund, repair or replacement for faulty products that don't do what they advertise.
The laws stipulate that goods must be of an acceptable quality when sold, fit for the specified purpose and matching any description. They must also match any sample or demonstration model.
"The key messages for businesses are that these guarantees are set under law and exist irrespective of whether a voluntary, manufacturers or extended warranty is offered," the Australian Competition and Consumer Commission says.
"Businesses must be aware of what remedy should be provided, in particular, who gets to choose the type of remedy – this will depend on how serious the problem with the good or service is."
Peter Strong, executive director of the Council of Small Business of Australia, says it's impossible to understand everything, so it's not surprising that many didn't understand the new laws.
"In most cases it's not an issue, and most of us understand what to do because it's a natural honest thing to do. Any problems are around confusion rather than trying to do the wrong thing," he says.
The consumer guarantees apply to:
Goods and services that cost less than $40,000.
Goods or services that cost more than $40,000 but are normally acquired for domestic, household or personal use or consumption.
A vehicle or trailer primarily used to transport goods on public roads.
The comments follow last year's Australian Consumer Survey that estimated that Australian businesses spent a total of $6.6 billion annually to deal with problems where they have a legal remedy for the consumer, excluding costs to replace or repair products.
The report also found that:
The most common problems are poor customer service, high or unexpected fees and delayed or undelivered goods or services.
A quarter of consumer problems raised with businesses remain unresolved.
74% of consumer respondents who experienced a problem in the previous two years took some form of action to try to resolve the problem, mostly through contacting the business.
52% of consumers were satisfied by the business' response.
Problems are estimated to cost Australian consumers $14.2 billion annually based on time spent and direct costs.
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