Inheritance best put towards new home

Plan ahead: Do your sums now to find what savings and investment approach will bring you the best future.My husband and I would like your advice on what to do with a lump sum of about $250,000 inherited from my late mother. We are both 31, own our house ($400,000) and have shares (about $60,000) and an investment property (about $250,000). We have no debt. We have no appetite for risky shares with this money as it has sentimental value. We have an eight-month-old child and plan to have another soon. We are keen savers and are financially disciplined. I do not plan to return to work for several years and we would like to send the children to a private school. We anticipate moving to a more expensive area in four to five years, closer to the school. C.K.
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You don’t mention any savings in superannuation and, since this is the best tax shelter available, you should be building this during the next four decades.

However, in the shorter term, over the next five years, you want to be looking for a home near the school you mention, and planning how to meet the school fees.

A top school costs upwards of $20,000 a year these days, increasing as the children approach year 12.

You don’t mention your combined income so I can only assume you are able to meet the fees out of your income. Accordingly, I suggest that you use your inheritance to fund your new home.

You might as well do it now since, if the economy continues to grow we can only assume that so will property prices. Then you can get to know the neighbours in the years before the kids start school. If there is any money left over, put it aside to be used when rearing your children, which always costs more than expected.

I am 30 and my wife is 26. My annual income is $126,000 and my wife makes $20,000 pa. We have $190,000 in her saving account, which gets about 4.4 per cent interest. We also hold $11,000 worth of Australian shares. We are renting and paying $430 a week. We manage to save $4000 to $5000 a month. We have yet to buy our first home. Should we buy our first home or keep going as we are and keep building a deposit for our first home or any future investments? K.B.

You have between three and four interesting decades, the most exciting of your life, of work ahead of you, during which you can receive your work-related incomes and plan what to do with the excess, if any.

Your long-term goals should be to retire in a fully paid-off home in which you want to live and have enough to live on, a target of $1 million being a good start.

In between, you want to educate children, if any, and enjoy life as much as possible, which might include expensive overseas holidays, depending on your tastes.

With a high income, you are well on the way. Perhaps your first step is to buy a home, using your current savings as a deposit, acknowledging that the first home you buy will probably not be your last.

If you can do this and also contribute a total of about 15 per cent of your combined gross income into super, for example 5.75 per cent salary sacrifice over and above your employer’s 9.25 per cent compulsory contribution, that too would be a good start, at least until the children leave home.

If you can meet your mortgage, super and family commitments and still have money left over, start a share portfolio focusing on large companies offering above-average franked dividend yields in your wife’s name, as she is in a lower tax bracket.

I will inherit a home unit from my parent, who bought it in 1982. It became his family home for a number of years, but in recent years has been rented out by him. When I inherit, I intend to continue renting it out. When the property is finally sold by me, would capital gains tax be based on the date of my inheritance or based on its value in 1982? Also, could you confirm if the term ”assets” in probate includes cash when forms ask you to list assets. R.D.

Because your parent owned a pre-1985 property, it doesn’t matter whether he lived in it or rented it out, it remained exempt from CGT.

When you inherit it, it becomes a post-85 property subject to CGT with a cost base equal to the value as at the date of death. If you live in the property, and claim it as your prime residence, it will remain exempt from CGT. However, as you plan to rent it, it will be subject CGT when sold.

And yes, the term ”assets” includes all items, including cash, shares and the like.

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Clive Palmer backs down in mine court case

Clive Palmer has backed off from his attempt to put the Australian subsidiary of his estranged Chinese business partner Citic Pacific into liquidation, suddenly withdrawing the legal action and agreeing to pay costs.
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Mr Palmer claimed last week that Citic’s subsidiary Sino Iron, which is building a $11 billion magnetite iron ore project on tenements owned by Mr Palmer in the Pilbara, had ceased paying him ‘‘normal administrative costs’’ that had been paid without issue to date.

Mr Palmer’s Mineralogy alleged Citic’s Sino Iron owes $13.4 million and moved to wind-up the company.

Sino Iron has vigorously denied the claim, describing it as an abuse of process.

It appears to have won this skirmish.

Before a hearing on Tuesday in the Federal Court in Perth Mr Palmer backed down.

“Mineralogy has received advice in an undertaking from Citic Pacific to Sino Iron which meets Sino’s debts,” a spokesman for Mr Palmer said in a statement.

“The undertaking is an increase from $US4.2 billion to $US5.65 billion. This undertaking takes away any concerns over Sino being insolvent.

“As a result of this undertaking, Mineralogy has withdrawn its application in the Federal Court in Perth seeking to have Sino placed into liquidation.”

Citic welcomed Mineralogy’s “change in position”.

In submissions made the Federal Court, Sino Iron disputes the scale of Mineralogy’s $13.4 million administrative budget, which was $11 million more than expenditure incurred in 2011.

Budgets were forecast to rise in 2012 and 2013 based on expansion of administrative functions at Cape Preston port, which did not occur.Citic’s Sino Iron project has been riddled with delays and cost blow outs amounting to $6 billion.

Sino Iron argues Mineralogy’s administrative functions are largely unchanged and disputes the $13.4 million claim by Mineralogy.

“Sino Iron has refused to pay the purported 2014 budget amount because it is disputed; not because Sino Iron is insolvent,” the company said in submissions to the court.

The company’s court submission’s also outlines concerns expressed to Mineralogy about the budget process via a letter to Mr Palmer’s company on January 29.

“A budget encompasses more than simply a spreadsheet with numbers in it,” Sino Iron wrote.“A properly prepared budget should include a detailed breakdown of the proposed expenditure together with a justification as to why that expenditure is required and an explanation of how the figures have been derived.”

Sino Iron’s submission shows Mineralogy’s budget included $5 million for port operational costs and $4 million for staff costs.Sino Iron said it had a letter of support from Citic Pacific, which confirms its Hong Kong parent will continue to advance funds. Citic has provided a $US5.6 billion loan facility, of which Sino Iron had drawn $US1.52 billion.

Mineralogy will pay Sino Iron’s costs.The $11 billion Sino Iron project, which Palmer and Citic signed off in 2006, has been plauged by cost blowouts, delays and building acrimony between the business partners. Mr Palmer has taken legal action against Citic over the payment of royalties from the project and the pair have fought over who has security over the port through which the magnetite is to be exported.

Mr Palmer won that legal battle earlier this month. Citic is appealing the decision.

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Banker’s death casts new shadow over work conditions

The death of a junior investment banker in Hong Kong comes after a number of recent finance industry deaths. Photo: Tamara VoninskiThe death of a junior investment banker in Hong Kong is expected to raise fresh concerns about the pressures of working in global finance, following a number of recent incidents.
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In a statement, JPMorgan Chase & Co’s Asia headquarters said a 33-year-old man with the last name Li jumped to his death from the skyscraper roof of the US investment bank on Tuesday.

“A sad and tragic incident occurred in Chater House, Hong Kong … which is currently being investigated by the police. Out of respect for those involved, we cannot yet comment further,” JPMorgan Chase & Co said in a statement reported by the Financial Post.

Witnesses say police tried to stop Li, a junior investment banker, from jumping from the 30-storey building, to no avail.

The circumstances surrounding his death are not clear at this stage.

Co-workers in neighbouring offices circulated pictures on social media of him standing above the company logo on top of the building in central Hong Kong.

The death of Li comes after a number of recent finance industry deaths.

In January, a 39-year-old JPMorgan vice-president died after falling from the roof of the bank’s European headquarters in London.

Later that month, London police also found William Broeksmit, a 58-year-old former senior executive at Deutsche Bank AG, dead in his home after an apparent suicide.

And in early February, an investigation was launched in the US into the death of 37-year-old Ryan Crane, a JPMorgan Chase & Co employee.

Crane worked at the New York-based bank as executive director of a unit that trades blocks of stocks for clients. He is understood to have died from unknown causes in his Stamford, Connecticut, home.

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Rio Tinto workers trade pay rises for job security

Australian Workers Union national secretary Paul Howes has praised the agreement. Photo: Alex Ellinghausen / FairfaxMining giant Rio Tinto has struck a significant workplace agreement with the Australian Workers Union that forgoes guaranteed pay rises in exchange for better job security and protection of conditions.
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The deal – reported by The Australian newspaper – which Rio and the AWU last night both applauded for its flexibility, covers workers at the company’s Bell Bay aluminium smelter in Tasmania which, in 1994, was the first major plant in the country to be de-unionised.

The agreement, approved by a ballot of workers, retains common law contracts and a performance pay structure that does not provide for across-the-board annual wage increases.

While the AWU had previously argued that process operators at Bell Bay were paid significantly less than mainland workers doing the same job, the union modified its approach given the struggling state of the aluminium sector.

AWU national secretary Paul Howes said the agreement promoted certainty for Bell Bay employees “without creating any adverse working conditions that would damage the company’s performance”.

“It’s actually really a model for how workers and employers can work together during tough economic times to make these plants more productive,” Mr Howes said.

“This is an agreement and arrangement which demonstrates that the union movement is able to move with the times.”

Rio agreed last year to end two decades of hostilities and resume bargaining with the AWU after the union succeeded in using the Fair Work Act to demonstrate a majority of the smelter employees wanted to be covered by an enterprise agreement.

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Lisa Ho mulls Myer comeback

Australian designer and fashion icon Lisa Ho. Photo: James AlcockFashion designer Lisa Ho, known for her silk and satin evening wear and cocktail dresses, is turning her sights to the casual wear market as part of a deal with Myer.
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Ms Ho, whose private company collapsed last year with debts of almost $20 million, is in talks with Myer to join its stable of ­”exclusive brands”, which includes the likes of designers Leona Edmiston and Toni Maticevski.

Talks are afoot but it’s believed Ms Ho – who once enjoyed a cult ­following among international ­celebrities – would put her name to a “diffusion” range of work and casual wear, including dresses, skirts and shirts in easy to wear prints.

These products would sell at lower prices than Ms Ho’s evening wear, which once fetched five-digit prices.

Myer chief Bernie Brookes is believed to have been in talks with Ms Ho for several months and is keen to do a deal soon so the new range is ready for the spring/summer season, which kicks off in August.

It is understood the new range would sell in Myer stores, rather than stand-alone shops. Ms Ho previously had concession stores in David Jones and stand-alone stores in locations such as Paddington’s Oxford Street and Melbourne’s Chapel Street.

Myer was one of 20 parties that initially expressed interest in Lisa Ho when the company went into voluntary administration in May last year.

However, Lisa Ho’s accounts were in such bad shape that none of the potential buyers were prepared to make an offer.

Ms Ho’s administrators, HLB Mann Judd, have since been selling stock on clearance sites such as GraysOnline, and Ms Ho, who was one of the company’s biggest creditors, has been forced to sell personal assets.

Myer has outlaid at least ­$70 million over the past few years buying brands such as Trent Nathan, Jack & Milly and Bauhaus to build a range of private label or exclusive brands, which now account for 20 per cent of sales. Lisa Ho would help fill a gap in Myer’s portfolio.

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Boxing live: Geale v Wood

Live coverage as Garth Wood takes on Daniel Geale at Sydney’s Hordern Pavilion for the IBF Middleweight Pan Pacific title.
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You are live here at the Hordern Pavilion with Michael Carayannis for the Geale versus Wood fight.

Plenty of Paul Gallen’s teammates in the crowd already. The likes of Michael Gordon, Eric Grothe Jr, Daniel Holdsworth and Nathan Gardner are here to watch their captain in his professoinal boxing debut.

Lauryn Eagle has lost her fight against the inexperienced Shari Ranger. She went down 58-56 on all three judges cards

Eagle’s ex-boyfriend Todd Carney was watching on as he waits for Cronulla skipper Paul Gallen to step into the ring.

Small crowd in at the moment – I haven’t been at the Hordern Pavilion since 2000 when Anthony Mundine, in his second fight beat Kiwi Nik Taumafai.

A little trivia on Taumafai – he went on to fight two more times after his loss to Mundine….without a win.

The next fight will be a crusierweight bout between Brad Pitt and Emosi Solitua. The fighters are preparing to enter the ring now

Thoughts on Brad Pitt’s nickname being “Hollywood?”

Wow! Massive KO victory to Brad Pitt in the first round

Plenty of concern being shown for Solitua. He is very very groggy

Solitua still being attended to in the ring. He is now sitting up but is not in a good way.

Wow that was a massive, massive shot by Mr Hollywood

Solitua has been helped to his feet but still seems dazed. Plenty of concern being shown for him by his corner

The win is Pitt’s 15th and he remains undefeated. For Solitua it was his first loss in his five fight career.

Aside from the main event and Gallen stepping into the ring, I’m looking forward to the Kerry Foley and Robert Berridge fight for the PABA light heavyweight title

Foley hasn’t fought since the two had a draw in 2011. Since then Berridge has gone on to beat the highly rated Serge Yannick and Daniel McKinnon

Before that though, we have Jake Revill fighting Shane Quinn. Both fighters are in the ring now null

Revill, from NZ, is undefeated from his seven fights while Quinn has one loss from eight bouts. This is listed to go six rounds

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Alcoa announces closure of Point Henry aluminium smelter

Alcoa has announced it is closing its aluminium smelter in Port Henry. Photo: Joe ArmaoMalcolm Maiden: Don’t bother playing the Alcoa blame gameShorten calls for assistance package
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Alcoa has announced that it will shut its Point Henry aluminium smelter and two rolling mills, costing a total of 980 jobs.

Alcoa said the smelter, where 500 workers are employed, would cease operation in August.

Additionally, a Geelong rolling mill along with a rolling mill and recycling centre at Yennora in Sydney would close by the end of the year with the loss of a further 180 jobs.

The closure moves the contraction of the Australian aluminium smelting industry up another notch.

The 50-year-old smelter had no prospect of becoming economically viable, the company said in a statement.

The announcement is the latest in a series of job losses in the manufacturing sector, following on from decisions by Toyota and Holden to pull out of their manufacturing operations in Australia.

“We recognise how deeply this decision impacts employees at the affected facilities and are committed to supporting them through this transition,” Alcoa chief executive officer Klaus Kleinfeld said.

“Despite the hard more of the local teams, these assets are no longer competitive and are not financially sustainable today or into the future.”

The Point Henry smelter faced global issues that could not be influenced by state government support, Victorian Premier Dr Denis Napthine said.

Dr Napthine told Fairfax Radio, 3AW he had spoken to Alcoa of Australia’s managing director Alan Cransberg and had been told the state government could not influence the decision to close the Point Henry smelter and the rolling mills in Geelong.

‘‘I was told that there was nothing further the state government could do,’’ Dr Napthine said.

‘‘That these are world issues that are beyond the capacity of state governments,’’ he said.

Dr Napthine said the government through its Geelong Industry Fund was promoting employment in the region but it was primarily Alcoa’s responsibility to assist its own workers. He said the company had a ‘‘good record’’ for ‘‘looking’’ after its workers.

Geelong Mayor Darryn Lyons said it was an horrific day and ”another kick in the teeth” for the city.

He said he held concerns about redundancy entitlements and opportunities for workers to retrain, and called on the federal government to help.

”It’s not only about the 600 or 700 jobs that are going here, there’s a lot of supply chain jobs going as well … we need emergency funding and we need it now,” he said.

”This is a devastating day.”

Mr Cransberg told media a final decision was made at a board meeting Tuesday morning.

He said the smelter was no longer competitive because of the high Australian dollar, low commodity prices and lack of reinvestment in the facility.

“It’s tough. People were sort of expecting the announcement but there’s still a shock when the announcement comes,” Mr Cransberg said.

“This is a horrible day.

“These are big decisions to make and I and the company understand how difficult it is for our employees, their families, our contractors and our many community partners.”

The Alcoa managing director said the company “remains very committed to Australia”.

“Our operations in Western Australia are amongst the best in the world anid we will do all we can to ensure our remaining facilities… remain sustainable in the future.”

The Gillard Labor government gave the smelter financial assistance to ensure it continued to operate beyond the last federal election and its closure, once that assistance finished, was widely expected.

It follows the closure earlier of the Kurri Kurri smelter which was located in the Hunter valley, in NSW.

Opposition Leader Daniel Andrews said Victoria was in the grip of a job crisis.

“Our biggest companies are closing their doors while Denis Napthine stands by and does nothing,” Mr Andrews said.

“Ford, Holden, Toyota and now Alcoa. How many thousands of jobs will have to go before Denis Napthine realises he needs to get a jobs plan?

Alcoa’s smelter in Portland, Victoria, and its bauxite and alumina refining operations in Western Australia, will continue to operate.

The closure would result in a $250 million post tax charge being booked, of which the ASX-listed Alumina’s share would be 40 per cent, in line with its shareholding in the smelter.

The smelter will cut Alcoa’s aluminium output by 190,000 tonnes.

Australian Workers Union state secretary Ben Davis said the situation in Geelong, with 800 job losses at Alcoa, was now as bad as the Latrobe Valley when the State Electricity Commission was privatised and Newcastle when BHP pulled out, given there already significant job losses at Ford, Boral, Target and Qantas at Avalon.

He warned there would be social dislocation with people set to lose their houses and relationships breaking down because of the stress of unemployment.

‘‘These people will not be able to find manufacturing jobs in Geelong, or any job for that matter,’’ Mr Davis said.

‘‘We don’t want Geelong to end up like the Latrobe Valley and Newcastle were,’’ he said.

‘‘It’s hard to over egg the omelette, it’s that bad, it’s quite possible Geelong will go into recession.’’

Liberal MP for Corangamite Sarah Henderson said the company should have given workers more notice.

”Frankly to close the smelter in August is not good enough,” she said.

AMWU New South Wales Secretary Tim Ayres said: “This is the next wave of blue-collar job losses in western Sydney. There have been jobs flowing out of the Toyota and Holden decisions and a series of closures over the last few months,” Mr Ayres said.

He said the firm is the only aluminium recycler in NSW, churning through 55,000 tonnes of scrap metal each year.

“What this means about NSW is it puts a question mark over whether we can recycle aluminium,” Mr Ayres said. “Recycling uses 5 per cent of the energy needed to produce aluminium. All of our scrap aluminimun will have to be exported.”

Mr Ayres said the Abbott and O’Farrell governments had shown “hostile indifference” to the plight of manufacturing workers, which was creating a “jobs crisis in NSW and particularly in Western Sydney”.

with Anna Patty

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Catch-up Red Bull faces testing few days

Bahrain International Circuit, Sakhir: Mark Webber could never quite embrace playing second fiddle to Red Bull’s four-time world champion Sebastian Vettel, although Australia’s new man taking on formula one’s poisoned chalice may this week discover it can have some benefits.
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In fact for the next two days, Daniel Ricciardo gets to sit back to see if Vettel’s car works.

The German champ will run on Wednesday and Thursday, after a hectic few weeks in the factory trying to find design solutions for Red Bull’s shocker at last month’s testing in Spain. Ricciardo will then take to the Bahrain circuit for round two of testing on Friday and Saturday after Red Bull’s engineers have had 48 hours of fine-tuning Vettel’s RB10.

Overheating issues meant Vettel and Ricciardo managed just over 20 laps between them at Jerez, while other leading teams managed more than 200. It’s certainly not the start Ricciardo would have anticipated when he won the prized seat alongside Vettel at the constructors’ championship winning team, but it also gives the sunny West Australian youngster the chance to show his new team the adaptability and down-to-earth calmness that has propelled him to the upper echelons of the sport.

This year formula one has introduced a raft of rule changes, including introducing V6 turbo engines, new energy storage systems that provide an electric boost and regulations that change aerodynamic designs. So far it’s been Red Bull who are seen to be behind in getting their set-up right, an unusual situation given the other big talking point in F1 is the decision to award double points to drivers at the final race of the year. That rule follows Vettel’s recent domination of the sport and a feeling that changing the points system at the end of the season could help keep the title fight alive down to the wire.

Then again, who would bet against Red Bull’s chief designer Adrian Newey solving all the recent problems and Vettel ultimately scooping up those extra points at the end of the season? Certainly not Mark Webber, who recently pondered the likelihood of skittish cars in 2014 in a video for the website autosport and noted: “It’s probably not what people want to hear at home, but I think that helps Sebastian. That’s right up his alley, that’s perfect for him.”

And while the new technical regulations mean much of the focus in testing has been on the cars themselves, expect tyres to also become a talking point as teams start to find the time to evaluation how Pirelli’s new compounds are performing.

Rarely out of the spotlight last season, the type manufacturer’s motorsport director Paul Hembery issued a statement on Tuesday saying he expected there’d be a lot more information after this week’s test.

“The first test of the year in Jerez was all about the teams getting their first taste of a very different set of technical regulations, so as expected running was limited and evaluating tyres was not a priority,” Hembrey said.

“On top of that, winter conditions in Europe – even in southern Spain – are not representative of the race conditions we will generally encounter throughout the rest of the season. In Bahrain, we’re expecting better weather and more running, which will allow ourselves and the teams to assimilate more data and knowledge of the tyres.”

Andrew Tate travelled to Bahrain courtesy of the AGPC

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BHP doubles profit to $9b

BHP Billiton’s productivity agenda has grown profits strongly in the first half of the 2014 financial year, with the miner reporting an underlying result that was 31 per cent better than last year and 12 per cent better than expected.
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The $US7.8 billion underlying result was well above analyst expectations, and has allowed BHP to raise interim dividends steadily, but not spectacularly, from US57¢ to US0.59¢.

The significant improvement in profitability was put down to BHP’s investment in higher production and improved efficiency at its existing operations, while pulling back spending by 25 per cent.

The company estimated its productivity campaign had achieved cost and volume efficiencies worth $US4.9 billion so far, and promised to continue growing that number in the second half.

As part of that agenda, hundreds of BHP staff lost their jobs and some mines were closed.

The $US7.8 billion underlying profit was a clear improvement on the $US5.68 billion underlying earnings that BHP announced one year ago, and it further builds on expectations that BHP will grow full year profits in fiscal 2014 for the first time since 2011.

A consensus of analysts had expected underlying earnings to be $US6.95 billion, while UBS had predicted $US6.88 billion.

Attributable profit was 81 per cent higher than last year’s half year total at $US8.1 billion.

BHP chief executive Andrew Mackenzie said the company was making good on its promises.

‘‘The commitment we made 18 months ago to deliver more tonnes and more barrels from our existing infrastructure at a lower unit cost is delivering tangible results,’’ he said.


The US59¢ dividend was slightly more frugal than the US60¢ that UBS had expected, but was consistent with the US2¢ rises seen in each of the past two sets of February results.

In a reference to BHP’s progressive dividend policy, chief executive Andrew Mackenzie said the dividend rise was “in line with our practices”.

Under those practices, BHP is typically more inclined to give a significant boost to dividends at its full year results in August.

Holders of BHP’s Australian shares will be paid the dividend in Australian dollars, meaning that local shareholders will get a much bigger dividend that last year once currency fluctuations are taken into account.

The Australian currency has fallen in value by close to 11 per cent since February 2013, meaning the dividend is close to 9¢ higher than last year in Australian dollar terms.

BHP has subtly hinted that a round of special dividends or share buybacks could be possible within about six months.

BHP has tied such a round of ‘‘capital management’’ to debt milestones, saying previously that it could consider such special returns to shareholders once net debt had reached $US25 billion.

Net debt was standing at $US27.1 billion this morning, but was forecast by BHP to fall to about $US25 billion by the end of the 2014 financial year.

Mr Mackenzie confirmed this morning that such special returns were still possible so long as the debt reduction was achieved.

‘‘It is bringing towards us a discussion of capital management, that of course is a decision that the board have to take, and if we deliver that level of indebtedness towards the end of this financial year I will come back to you at the full year with the authority of our board to talk about future capital management,’’ he said.

In note published shortly after the results were announced, UBS analyst Glyn Lawcock said buybacks were the most likely form of special return.

‘‘We believe capital management would be in the form of an on market share buyback,’’ he said.

When combined with Rio Tinto’s forecasts last week, the 2015 financial year is looming as a potentially strong one for shareholder returns across the major miners.

Rio indicated its improved result had created options for it to consider capital management in February 2015.

Major commodities

The significant jump in profit was achieved despite revenues across the group growing by just $1.9 billion to $US33.94 billion.

Iron ore remains BHP’s most lucrative commodity in terms of both revenue and profit, despite iron ore prices reaching their peak almost three years ago.

Underlying earnings from the division were $US1.7 billion better than the same period in 2013, on the back of a 19 per cent rise in production, better than expected iron ore prices and the declining dollar.

BHP said efforts to remove bottlenecks and other inefficiencies from its iron ore supply chain had boosted earnings by more than $US300 million.

Revenues and underlying earnings were slightly lower in the copper division, despite production of copper rising by six per cent.

The increased mining and refining could not counter a 7 per cent slide in received copper prices.

The petroleum division managed to grow revenues, but was slightly less profitable than the first half of 2013 on the back of close to $US700 million worth of depreciation charges, rig termination charges and other costs related the reduced activity in the shale gas fields of Arkansas and Louisiana.

US gas prices have caused more than $US3 billion worth of impairments at BHP over recent years, which would have made the 13 per cent rise in received gas prices all the more welcome.

A recent cold snap has sent US gas prices to their highest levels in four years, and BHP said strong demand was likely to persist for some time.

“With storage rates now below the historical, seasonally adjusted five year minimum inventory level, short term prices should be supported as gas will need to be reinjected into storage capacity when demand comes off its seasonal peak,” the company said.


One notable change over the past year has been the performance in BHP’s non-core commodities; Nickel, Aluminium and Manganese.

Those three collectively made a $US108 million underlying loss in the first half of fiscal 2013, which became a $US3.5 billion loss once impairments were included.

The divisions have sprung back into profitability this year, collectively reporting an underlying and final profit of $US148 million.

The improvement was achieved despite sliding prices for all three commodities, and based on efficiency gains and good fortune in the form of a stronger US dollar.

Despite a recent rise in Nickel prices on the back of a material export ban in Indonesia, BHP said high inventory levels would prevent a major rise in the price.


BHP was upbeat about the direction of the global economy, saying ‘‘the balance of risk to global growth was skewed to the upside’’.

The miner noted stability in Europe and improvements in the US, but said volatility was likely to be seen in China as the government gradually introduced tighter monetary environments.

China buys most of Australia’s iron ore, and Mr Mackenzie said while demand should continue to be strong in the near term, the long anticipated wave of supply was starting to hit the market and would have an impact on iron ore prices within a year.

“Our conclusion is that there is more supply coming into the iron ore market than there is demand growth,” he said.

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Craig Thomson guilty on some charges, acquitted on others

Former federal MP Craig Thomson has been found guilty of some of the fraud and theft charges against him, but acquitted of others, by a magistrate.
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Magistrate Charlie Rozencwajg returned the mixed verdict on Tuesday after overseeing the trial against Thomson, who was accused of misusing union funds while head of theHealth Services Union.

Craig Thompson

Thomson, 49, showed little emotion as he sat in the front row of a packed court room as Mr Rozencwajg handed down his verdicts in Melbourne Magistrates Court.

Mr Rozencwajg found Mr Thomson guilty of charges related to using union funds for sexual services, of making cash withdrawals with his union-issued credit card, of buying cigarettes and firewood for his then wife and for some charges related to paying for travel for his then wife.

Thomson was also found guilty of charges related to using union funds after he left the HSU and had become the federal MP for Dobell.

But some of the charges related to the travel for his then wife were dismissed, as were charges related to buying for in-house movies at hotel rooms.

The verdict followed a trial held before Mr Rozencwajg across December and January, after Thomson first appeared in court more than one year ago.

The allegations against Mr Thomson were first raised almost five years ago.

Thomson was accused of using HSU credit cards and a Flight Centre account to accrue more than $28,000 in personal expenses, including sexual services, adult films in hotel rooms and flights and cigarettes for his then wife between 2002 and 2007, when he was the union’s national secretary.

He was also accused of using union funds to pay for personal items after he left the union to become the Labor member for the NSW seat of Dobell in 2007.

He lost the seat in last year’s election, standing as an independent.

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