WORKPLACE drug testing organisation, The Australian Drug Detection Agency (ADDA), knows there is a lot of misinformation about both the prevalence and real effects of drugs on work performance. Among the most misunderstood by employees is the capability to detect recent drug use.

The ADDA Queensland team, led by Calum Davie (second from left).


From long experience, ADDA sees the problem as a workplace health and safety issue above all else. Now the organisation is becoming concerned about the health and performance effects of workers increasingly using elaborate, and some exotic chemical methods, to avoid drug use detection.

"We've seen just about every trick in the book for workers trying to cheat," ADDA Queensland managing director Calum Davie said. Part of ADDA's role, Mr Dvie said.

"Some try the so-called remedies on-line. Some local providers offer what they call ‘guaranteed' products that are said to provide a clean result.

"The reality is that much of the online advice is flawed and the ‘guaranteed' products, on ADDA's results alone, should be creating long lines at the refund counter," Mr Davie said.

Mr Davie said many workers were under the misapprehension that drugs can be detected by a urine test for months afterwards.

Mr Davie said cannabis can be detected up to 30 days after use but that applies only for heavy users (around five joints per day).

Most drugs - such as amphetamines, benzodiazepines, ecstasy and opiates - are generally only detectable between two and four days after use.

"Having said that, recent developments with hair testing can show a history of up to 90 days of drug use," Mr Davie said. "ADDA are currently experiencing a growing trend in employers choosing to use hair testing, especially during the pre-employment phase."

"Employees have to concentrate, and just can't afford to be at risk of being impaired by the effects of drug taking," Mr Davie said.

Calum Davie, ADDA managing director


"People's livelihoods are at stake. If someone is not on their game, you're going to have a much higher chance of someone being killed or seriously injured in a workplace accident.

"And that's not including the down-time for that business from having to close the workplace down for an investigation.

"Trying to cheat at a drug test is not worth it. In the end, you're cheating your fellow employees who are entitled to work in a safe environment."

Mr Davie said ADDA Queensland is fully compliant National Association of Testing Authorities (NATA) accredited on-site testing provider, under the standard AS/NZS 4308:2008. Much of its work is now part of regular processes for major construction and mining companies.

ADDA is considered to be a leader in its field, Mr Davie said, providing specialised services for companies that conduct on-site workplace drug and alcohol testing, as well as pre-employment testing.

"At ADDA we work closely with our clients to not only help them develop drug and alcohol policies, but we also encourage companies to provide a supportive environment to help their employees who have a drug or alcohol problem," Mr Davie said.

ADDA is a 2013 Member of Queensland Leaders, the organisation helping to mentor and develop the next generation of leading companies headquartered in Queensland.

Tel: 1300 4 DETECTION.



CORPORATE Travel Management (CTM) has taken business travel and 'cloud' computing into the clouds with the success of its two industry-leading enhancements to the CTM online booking tool - full integration of Wotif hotel inventory and post-ticketing changes online.

Jamie Pherous - CTM puts enabling technology in the hands of its business travellers.


These technological enhancements from CTM are industry firsts across the Asia-Pacific region, aimed at providing Australia and New Zealand’s corporate travellers with the highest level of flexibility and convenience in the online booking environment, according to CTM CEO Jamie Pherous.

Wotif hotel inventory is fully integrated with CTM’s Global Distribution System (GDS) online booking tool, u-book, providing mobile access to Wotif hotel inventory, seamlessly integrated with GDS content.

Mr Pherous said CTM clients now had access to the largest hotel inventory in Australia and New Zealand with the biggest range of room types and rates.

Both Wotif and CTM are headquartered in Brisbane, contributing to the speed of development and refinement of the system.

CTM’s head of product development, Ben Wheeler said the company was excited to be one of the first travel management companies (TMCs) worldwide to bring these enhancements to its clients.

“By integrating Wotif hotel inventory with our Global Distribution System, CTM has opened up a number of new cost saving benefits for travellers at the click of a button,” Mr Wheeler said. “These include access to new and improved accommodation options in metropolitan, regional and rural areas, and the choice of additional room types.”

He said in one simple step, travellers enter their basic hotel search into CTM’s online booking tool and the new technology will source and display all available GDS and Wotif inventory combined into one easy-to-read list.

Users can then prioritise their search results by hotel name or hotel chain according to their preferred hotel partners, maximising policy compliance and cost savings by aligning bookings to their negotiated supplier deals.



Another Asia-Pacific first launched a few months ago is CTM’s development of online flight changes post-ticketing for domestic Australian and New Zealand GDS bookings.

CTM clients can now change their pre-ticketed domestic flights online at the click of a button.

"Until now, once a fare had been ticketed it was a lengthy and manual process to make a simple time or date change,” Mr Wheeler said.

“But now, the re-booking process has been moved online and our clients can easily update their booking in a simple and seamless process. It’s a first for TMCs in the Asia Pacific region and a unique and valuable benefit to our customers."

He said the process was simple, time efficient and aligned to the client’s travel policy to support compliance and maximise savings. Ticket re-issue and revalidation is automated, enabling round-the-clock access to flight changes online.

“This new enhancement is totally transparent, with all change fees displayed up front so there are no hidden costs; the price displayed is the price you pay” Mr Wheeler  said.

Mr Pherous said CTM continued to invest in developing industry-leading products and services which add value to clients’ travel programs and improve efficiencies for business.

Mr Pherous said CTM now employs more than 500 staff across Australia, New Zealand and the US with offices in Brisbane, Sydney, Melbourne, Toorak, Perth, Gold Coast, Auckland and Denver. CTM is a Queensland Leaders Partner Company, helping to mentor the next generation of leading companies based in Queensland, and is the first IPO to come out of the Queensland Leaders network.




FEDERAL Treasurer Wayne Swan’s delivery of his latest Budget has been labelled as his ‘swan song’ by Michael Knox, chief economist and director of strategy at RBS Morgans. Mr Knox blames the deficit on over-spending, not revenue declines, as Mr Swan painted in his Budget speech.

Michael Knox, RBS Morgans

“We balance the Budget by spending less than we earn,” Mr Knox said in his Budget review. “We all know that in a perfect world, income would rise so that we could afford whatever we wanted to spend.

“However, most of us have learnt that in the real world, we have to reduce our spending to no more than our income. That is how we balance our budget.

“The Treasurer has told us that incomes did not rise as rapidly as he hoped. He therefore blames incomes for the reason he could not balance his budget.” Mr Knox referred to a chart of Australian Government Sector spending as a percentage of gross domestic product (GDP).

“This is drawn from Table 1, page 10-6 of Budget Paper No.1,” Mr Know pointed out. “In the period of the previous government, payments fall from 25.1 percent of GDP in 2000/2001 to 23.1 percent of GDP in 2007/2008. This is the level of spending when Wayne Swan first strode to the Treasury benches.”

Mr Knox said spending would “never be as low again as it was in 2007/2008. Over two years to 2009/2010 it rose to 26.1 percent of GDP. Only then did it peak,” he said. “It then began to decline. In 2013/2014, it has declined to 24.5 percent of GDP. This is still 1.4 percent of GDP higher than it is when Wayne Swan took office in 2007/2008.

“The result is that in 2013/2014, Wayne Swan produces a deficit of 1.1% percent of GDP. If spending was the same as in 2007/2008, the result would instead be a surplus of 0.3 percent of GDP.”

Mr Knox said the concerning issue was that even in trying to claw back into surplus, The Labor Government’s Budget would not return to the inherited spending levels.

“It is important to note that even out in the distant year of 2016/2017, spending is still estimated to be 23.8 percent of GDP,” Mr Knoz said.

“This is still 0.7 percent higher than it was in 2007/2008.”

*RBS Morgans is an Industry Expert member of Queensland Leaders, the organisation mentoring business leaders and the next generation of leading companies based in Queensland.


QUEENSLAND Leaders member InterFinanical has helped century-old Australian family timber business, Moxon Timbers, to successfully renegotiate debt facilities that were challenging the business.

InterFinancial led the company through a competitive process that achieved improved flexibility in facilities, pricing and an increase of debt facilities by over $7 million.

“Having InterFinancial along not only showed how serious and professional we were, we were able to talk to people with whom we had no relationship, got some competiton into the process and improved the day-to-day reporting requirements,” said Moxon Timbers managing director, Tony Moxon.

InterFinancial acted as an adviser to Moxon Timber to organise working capital finance to primarily fund stock and debtors.

They also utilised term debt to fund the distribution centre and head office at Stapylton in Queensland.

Then astute use of asset finance was utilised for specific plant and equipment. Moxon

Timber Moxon Timber is a privately owned company that was established in 1903 by the Moxon family.

The company’s Australian operations are based at Stapylton and additional offices are located at Melbourne and Sydney.

In the 1980s the company expanded overseas, establishing businesses in the United States and New Zealand.

Since this expansion, Moxon Timbers has continued to grow both domestically and overseas, opening businesses in France and Chile in 2006 and 2007 respectively.

The company currently employs moe than 120 people, operating globally, and supplying timber to customers including Bunnings, Mitre 10 and Bretts Hardware.



Queensland Leaders inspires the next generation of leading companies. Image

It does this by sharing the experience and leadership of Industry Partners in conjunction with the knowledge and experience of Industry Experts.

Each year Queensland Leaders selects 25 private growth companies to become Members.

Each selected Member company undertakes a 12 month Executive Series where they receive the skills, knowledge and capital to become the next generation of leading companies headquartered in Queensland.

Queensland Leaders assists Member companies to achieve sustainable growth, manage succession planning and access debt and equity capital for future growth opportunities.

These Members undertake the Queensland Leaders Executive Series with a focus on skilling up the founder and senior executives of the organisation.

The Executive Series provides Members with exclusive access to strategic, investment and other market opportunities. Once the Member companies have completed the annual Executive Series, they become Alumni Members and stay engaged with the network for a further two years.

Queensland Leaders has launched a series of new initiatives in recent times, one being the Leaders Resource Centre.

The Leaders Resource Centre provides Queensland Leaders companies with access to the most relevant and timely knowledge, networks & information to utilise at any time.

This valuable resource includes digital presentations, ‘Leaders Insights’ interviews and full social networking opportunities with the broader network.

The Leaders Resource Centre is exclusively available for those associated with Queensland Leaders.

Queensland Leaders is pleased to unveil the Member companies for the 2013 series.


Queensland Leaders 2013 Member companies:

The Australian Drug Detection Agency (ADDA)

Baseline Training

Corporate Protection Australia Group


EPIC Employment Service

Flinders Group

Foresters Community Finance

HMG Hardchrome



JBM Projects

Market Savvy


Neil T Fallon Services

Nordon Cylinders

O2 Environment + Engineering

Power-Choice Energy

Power Pumping

Richard Jay Laundry Equipment


Thew & McCann

Travel Concepts + The Cruise Centre

Uniline Australia

VAE Group




ACTIVITY and values in Australian mergers and acquisitions have ticked up slightly across the Engineering & Mining Services, Food & Agribusiness, and Information & Communication Technology industries, according to the latest research by InterFinancial Corporate Finance.

Mergers and acquisitions are on a light growth trajectory.


InterFinancial's industry dashboard reports revealed multiples in the Engineering & Mining Services (EMS) sector were improved from December. At the end of January, the EMS sector traded on a forward PE of 9.6-times, compared with the ASX200 on 15.0-times. 

Food & Agribusiness (F&A) multiples improved slightly from December, according to InterFinancial, a company listed on the Queensland Leaders Industry Expert panel. At the end of January, the F&A sector traded on a forward PE of 14.6-times, compared to the ASX200's 15. 

Multiples in the Information & Communication Technology (ICT) sector improved slightly from December in line with general market improvement, although the sector continues to trade below the market. InterFinancial research found, a the end of January, the ICT sector traded on a forward PE of 13.5-times, compared with the ASX200's 15.0. 

InterFinancial, a specialist corporate finance advisor to mid-market companies, has particular insights and expertise in the area, through providing independent commercial advice to both listed and unlisted companies concentrating on mergers and acquisitions and sourcing private capital and strategic advice.

While the measures are useful, some of the specific activity InterFinancial has tracked recently is of great strategic interest to business leaders. InterFinancial has provided a summary, by industry sectors:


FLSmidth has divested non-core Ludowici activities. The sales concern the Industrial and Infrastructure businesses, consisting of Water, Seals, Industrial Rubber and Engineered Rubber. No details were provided on the buyer or sale price.

EnerMech, the UK-based energy sector services company, acquired Valve Tech Engineering. The Melbourne based business provides servicing, engineering, modification, testing and supply of valves to the oil and gas, power generation, petrochemical and refining industries throughout Australia. EnerMech MD Doug Duguid said the company will invest £10m in its Australian business over the next two years and plans to open bases in Gladstone, Brisbane and Karratha to better service oil and gas, power industry and mining clients.

SKM is said to be in advanced talks with a US party for a buyout of the company, reported the Financial Review. SKM has been rumoured to be considering a sale for over two years, and has annual revenues of over $1b.

Hyder Consulting acquired BCH Engineering, a WA-based company which provides engineering services to the Oil, Gas, Mining, Resources, Marine, Civil Infrastructure, Land Development and Industrial sectors. Hyder acquired the company to develop relationships with clients in the Pilbara region. The deal size was not disclosed.

Clough acquired e2o, a provider of specialised commissioning, completions and hazardous area inspection services to the energy and resources sectors. The acquisition will cost $14m, with an up-front payment of $9m and an additional $5m in cash and shares paid over a three-year period, subject to performance criteria. For FY14, e2o is expected to contribute EBIT of over $5m.

Germany based DEKRA acquired Russell Consulting International (RCI) in Melbourne. RCI provides consulting services in safety, occupational health and safety, and sustainability, primarily to resource companies. It employs over 30 people and has annual revenues of over $15m.

Titan Energy Services has continued its expansion in the CSG sector with the acquisition of Hofco, a directional drilling equipment and down-hole tool rental provider. The business was acquired for $21.7m, and will be funded by an entitlement offer to existing shareholders and a placement to sophisticated investors. Hofco is expected to make EBIT of $5.1m for FY2013.

Scotland based Global Energy Group acquired Vertech Group, the Perth based offshore services business. Vertech provides a wide range of specialist services to offshore drilling, construction, maritime, production and repair and maintenance contractor customers. The size of the deal was not disclosed.

US based Jacobs Engineering is seeking international acquisitions, according to CEO Craig Martin. Mr Martin said the group is focused on China, Australia and Brazil, with a preference for the oil and gas, mining and some niche markets. Jacobs has a market capitalisation of over US$6b.

Fyfe is looking to expand through mergers and acquisitions, according to managing director Mark Dayman. In particular, the company is seeking to expand its offices into NSW and WA, where it is targeting work in the oil and gas industries. Management is also considering establishing an offshore work unit which would give it the ability to target work internationally, including in North America and Asia. For CY2012, Fyfe had revenue of $67m.

Macmahon Holdings Limited confirmed it has received a new proposal to acquire its construction projects from Sembawang Australia.

Wilson Transformer Company, the private Australian manufacturer of transformers, is eyeing international bolt on acquisitions of electronic monitoring and controlling devices manufacturers.

Bradken, the consumable products manufacturer and supplier to the resources, energy and freight rail industries, is actively scouting for targets in South America where it is underrepresented. This is to support its core mining products and processing units.

Coffey announced an interim EBITDA of $15.9m for the six months to December 2012, up from a loss in the prior corresponding period. Managing director John Douglas commented that the turnaround of the business remains on track, and that the result was positive in the context of a slower mining sector. No outlook was given for the full year period.


VO2 Partners and Arlon Group made an equity investment in The Chia Company, the world's largest producer of Chia, to support its growth and global expansion. Chia is the highest plant based source of Omega 3,  fibre and protein. The Chia Company has developed the only fully traceable global supply chain for Chia, with every product traceable back to the paddock on which it was grown. Terms of the deal were not disclosed.

Patties Foods has appointed advisors to help it acquire domestic frozen food brands, CEO Greg Bourke said. The Melbourne-based company has a market capitalisation of over $200m, and is looking to grow its brand portfolio through acquisitions. The target may be under-capitalised and does not need established supply chains, as Patties can bring the target onto its existing distribution channels. Bourke said an acquisition could be between $20m-$200m. Patties is also looking to enter the US, UK, and Asia markets.

The sale process for Elders Rural Services continues, with an information memorandum believed to have been sent to potential buyers during the month. Elders put its rural services business up for sale last year rather than enter merger talks with Ruralco. Ruralco is now believed to be among the parties considering an acquisition.

Little Lion Group, the private dairy farming business, has seen interest from a number of parties who will make site visits in January and February, according to a source. The company is running a process to sell its 13 dairy farms and 20 percent of its new 35,000 tonne milk dryer in Smithton. The asking price is around $75m.

 The administrator of Australian Sugar Cane Feeds (ASF), a privately held sugar cane-based animal feed developer, is seeking expressions of interested by 1 February. ASF collapsed during January with $13m in debt. The company is owned by 80 shareholders, along with China-based majority shareholder YinMore. A potential buyer could be a sugar mill company who could turn the plant into a juice mill, where the juice could then be supplied to food and beverage companies.

Agvantage, the animal health products business, has been sold to Landmark, the Australian Financial Review reported. The report said that the acquisition makes clear that Landmark, owned by Canada's Agrium, is eager to be involved in the manufacturing of generic animal health products. The deal size was not disclosed, but it is believed to have been small.

Nuseed, the Australia based firm engaged in producing and marketing canola varieties of seeds, and a subsidiary of Nufarm, has acquired a 51 percent stake in Atlantica Sementes, the Brazil based firm specialising in sorghum and sunflower seeds, for BRL 25m. Atlantica currently has a workforce of 45 employees and reported sales of BRL 11.5m in 2012.

Global natural health and beauty products company Comvita, has acquired the olive estate business of Organic Olives Company in Coominya, Queensland.

PrimeAg has agreed to the sale of the Crooble aggregation, the MacIntrye Downs, Mullala and Milchengowrie properties with an option to sell one of either the Lower Box or Warra properties to US-based TIAA-CREF Global Agriculture.

Rowena Foods, an Australia-based ice-cream manufacturer, has been put up for sale, the Australian Financial Review reported.

Namoi Cotton and Louis Dreyfus Commodities Group have formed a joint venture for cotton marketing and commodities packing services. The Joint Venture will hold Namoi's cotton marketing and commodities packing assets, for which Namoi will receive $30.4m. Namoi will also raise $3.7m from the issue of new shares to Louis Dreyfus. The joint venture is the outcome of Namoi's cornerstone investment strategic initiative which commenced in early 2012.

Australian Premium Dried Fruit (APDF), a private Australian dried fruit processor, is looking for a joint venture or strategic partner to enter into the fruit paste food category, managing director Alan Williamson said. The company has been approached by potential buyers in the last 12 months, but Williamson said shareholders will only begin exploring an exit in three to five years, and could even just transfer ownership to employees. In the meantime, APDF will focus on entering new food categories like fruit paste, cake mixes, diced peel and apricots. It is also poised to become a distributor to supermarkets in Australia. APDF has annual revenues of around $20m.

Copack Beverage, a beverage contract packer, has appointed an advisor to assist with a strategic review, said chairman Barry Upson. The current owners are exploring a trade sale or a stake sale to fund expansion, and were seeking to close a deal by the end of February. The company has an estimated value of around $25m. Copack currently only operates three packing lines, mainly for canned and bottled beverages such as energy drinks, carbonated soft drinks, juices, cider and canned wine.

Mobandilla Land Company, the Australian cotton aggregation, has entered receivership. The business has $27m in assets and owes around $18m to NAB and ANZ. The group's properties are intended to be sold under the stewardship of PPB.

Inghams, the Australian poultry group, is expected to ask advisers to pitch for a potential IPO of the business, following the failed trade sale in 2012.


Major shareholders in ASG Group believe ASG is still engaging with its unsolicited suitor. In December it was reported that ASG expected to draw a line around discussions with the suitor by the year end. One shareholder noted that the Christmas/New Year holiday period, the fact that the suitor is foreign and that ASG has complicated contracts adds to the complexity of diligence. Major shareholders said that despite further delays in reaching a conclusion with an unsolicited suitor, they still had no reason to doubt the sincerity of the unidentified bidder.

Hexagon AB, leading global provider of design, measurement and visualization solutions, has acquired Listech, a Melbourne-based software development company dedicated to increasing the efficiency, accuracy and productivity of professional surveyors and engineers. Listech was fully consolidated as of February 1, 2013. The acquisition will not have any visible impact on Hexagon's earnings in the short term.

Electronic payment software solutions and services company GFG Group has formed a strategic partnership with Australian specialist IT solutions and services delivery provider, Attra. The partnership boosts service delivery to existing and new clients and sharpens GFG Group's competitiveness in key emerging markets. Attra specialises in providing independent software testing, application management, portfolio migration, integration and consulting services to clients in the banking, finance and payments industry. Its clients include multinational banks, financial institutions and card processors in 19 countries across five continents.

Lexmark International has announced the acquisition of Acuo Technologies LLC, a recognised leader in high performance software and services for clinical content management, data migration and vendor neutral archives, for a cash purchase price of approximately $45 million. Acuo Technologies, when combined with Lexmark's Perceptive Software healthcare software solutions, will enable customers to deploy a single, enterprise-wide access platform for clinical content via any electronic medical record system.

Coventry Group Limited (CGL) through its wholly owned subsidiary Managed System Services (MSS) has acquired Multipro IT with effect from February 1, 2013. Multipro IT is a fully integrated IT and Communications company offering Managed Services, Projects, Consulting & Advisory and Business Solutions to small to medium sized enterprises predominantly in WA.

Experian Plc, the listed Ireland based company that provides data and analytical tools to organizations and consumers, has acquired Pacific Micromarketing Pty Ltd, Australia based company provider of marketing solutions through surveys, records, and analyses database, from PMP Limited, for a consideration of US$6.5m.

Sensis Pty Ltd., the Australia based provider of advertising, commercial search, information management, mapping, and information technology solutions has acquired Australian Local Search Pty. Ltd., the Australia based company engaged in operating online directory of Australian businesses, from News Limited, the Australia based company engaged in operating as an online newspaper publishing company, for undisclosed consideration.

Inabox Group, the Australian wholesale telecommunications company is aiming for a full IPO on the ASX in mid-2013. The company turns over about $50m in annual revenue and is hoping to raise around $2-3m through a full float, with the proceeds to be mostly used for working capital and to complete a "highly complementary acquisition", a source familiar with the situation said. Inabox is aiming to raise a relatively small amount of capital because it is essentially looking to complete a compliance listing, and will predominantly be targeting retail investors.

Technology One is looking to open a new office in Singapore. Executive chairman and CEO Adrian Di Marco said that over the next 12 months, the company is planning to penetrate Singapore, which is close to its existing Malaysia office and is a sizeable market to tap into. The company is also present in New Zealand and the UK, a market which the company plans to expand further by opening two extra offices over the next 12-24 months. Di Marco ruled out selling the UK division despite it reporting losses of A$1.3m in its 2012 annual report.

Madison Technologies, the Queensland, Australia-based manufacturer and distributor of communications hardware and wireless products, will kick off an acquisition hunt in six months time, CEO David Redfern said.  Based on past deals, it takes Redfern about a year to find the right target, and a couple of years to integrate the assets and staff into Madison, which recorded FY11-12 revenues of close to A$60m.

BuildingIQ, a private Australian energy management software company, could seek additional equity and strategic investors in late 2014, said founder and CEO Mike Zimmerman. The company, which recently secured US$9m from strategic investors to continue its US growth, could seek additional funds for further US growth and to enter other global markets, he said. The company has raised A$15m to date.

It was reported that Pronto Software could be the next Australian ERP software target for acquisitive offshore IT players. Managing director David Jackman said the Victoria-based company fields takeover approaches on a weekly basis, mostly from bankers representing offshore private equity firms.

Mahindra Satyam (formerly Satyam Computer Sevices) is now looking for acquisition targets in Australia and the EU, The Business Line reported. According to the paper, the Indian IT company is currently sitting on an INR33.11bn (US$621.44m) cash pile, which Satyam intends to use for making buys in engineering services, healthcare, and manufacturing verticals.

REA Group, the Australian online real estate classified group, is interested in buying Deutsche Telecom's digital classifieds business, Scout24. Last month various news organizations claimed Deutsche Telecom had begun talks with advisers and buyers about the Scout24.

* About the researchers: InterFinancial was formed in 1987 and is the Australian firm of Clairfield International, an international corporate finance partnership that provides advisory services to clients ranging from family businesses to large multinational corporations and private equity funds.


GRAHAM TURNER - usually better known, and happy to be addressed by, his nickname, 'Skroo' - heads up a world-leading travel organisation, Flight Centre Ltd and its 36 brands, with more than A$13billion turnover last year (2011). Even though his career path, and his inclination, is to take the lead on things he believes passionately about, he treads careful steps worn by experience, intuition and paying attention to those he affectionately calls "Flight Centre people".




That seems quite an admission from Graham ‘Skroo' Turner, who controls possibly the world's most successful travel retail organisation and brand, Flight Centre. But it turns out, Skroo Turner sees his role as enjoying a constant education in how to do things better and make better decisions.

He lives, learns - and has no problem correcting bad decisions.

In this case, he was talking specifically about the re-emergence of the once-ditched business travel brand, The Corporate Traveller, which has re-emerged as one of the stars of the 36-brand organisation and a driver of profitability in the bedrock corporate travel segment for Flight Centre.

"There's no doubt we made a mistake by consolidating the brands," Mr Turner said. "It's interesting. It's not so much the outside public, it's inside.

"You consolidate the brands and everyone starts wanting to provide the same sort of product. There are clearly different markets within it. It's logical to consolidate the brands, but if you do need to provide different products and different services to different customers then having a brand is a good way to do it - and mainly for (our) internal sake. Externally, people aren't too worried, necessarily, what the business is called.

"Internally, if you want to deliver a different sort of niche product, having a brand is often the way to do it and it is getting that distinction between what is a brand and business, and what is actually a branded product."

Brands, branding refreshment, customer expectations and client attraction are always discussion points when Skroo Turner is around.

The judicious application of common sense, defiance of conventional wisdom and astute marketing are some of the constants Mr Turner has imbibed in the organisation. He remains intrigued by and focused on marketing.

"Obviously you have some of these big brand owners like Gillette or Kraft and they have all their other products branded," he said. "Kraft itself is a brand name, but then they have their other branded products, Vegemite, within the product brand and they are not branded businesses in their own right.

"It's the same thing we have discovered ourselves. You don't want a different brand for every {expletive, another peculiarly endearing habit)  product, but with different groups of customers certainly, and for internal sake having the different brands, we've found it quite important for focus.

"We knew cruise, for example, was a growth market and had been for a long time and it's really taking off. Until we had our own brand that we really focussed on, we couldn't grow cruise as a product very successfully even within Flight Centres.

"Now we've opened Cruiseabout shops, we've got better buying power and we've now got 30 or 40 Cruiseabout shops. They are exclusively cruising, but we've got Flight Centres doing cruising as well ... you get the rub off on a product basis, as well as having a brand that you are really focussing on."



Mr Turner is a voracious reader - and he reads a lot about marketing. "There's a really good book out at the moment, I think it's called Branded Customer Service (by Janelle Barlow and Paul Stewart)."

He says he learns a lot from such marketing books and articles, but you get the feeling much of it tends to reaffirm what he knows, instinctively or experientially.

"Essentially, it's not only the logo and the brand and the USP but it's also important that when you are servicing specific sorts of customers you have specific product effectively for that sort of customer," he said, thoughtfully.

"So you take that back, to make sure your people are aware of that. It's interesting for example in corporate travel, your typical sales person will try to gravitate up the line so that their key market might be in the $50,000 a year accounts, but they just creep up and up because bigger accounts are more noteworthy and more exciting and this sort of thing."

He said that kind of perceived upward mobility by business development managers (BDMs) can work against the brand, instead of sticking to the knitting and meeting real needs. From the BDM's perspective, it may be a climb for more income.

"Possibly, but it is not necessarily the case," Mr Turner said. "As (BDMs) they get more experience they want to go for the bigger stuff and it's not necessarily the best way to go. They might be pitching a model that is not suitable for the bigger ones."

(Corporate Traveller) is basically our SME offering. It depends on you as a customer. Do you want to be treated as an SME or do you want to be treated as a big company? Because it's not so much the volume they do.

"An SME customer to us is a high touch, a little higher margin, than what we call TMS, Travel Management Services, which is our FCm Travel Solutions, a model which is generally done on some sort of service fee or transaction fees rather than commission or margin. It's a somewhat different pricing model and it's a different ‘touch' model as well.

Mr Turner said generally the customer starts recognising the ‘fit'. Staff will move along different corporate travel brands to suit themselves.

"A lot of it will depend on the level of reporting they want too. How much one-on-one high touch service they want, the reporting they want and how much account management they want. In other words, making sure they know exactly what everything is costing them and how much in total.

"For an SME, if you are spending $50,000 a year on travel, that's basically what you need to know - who is spending what and what they are travelling on. It's not complex.

"If you are spending $10million, the CFO is probably involved and, he wants to know, is it increasing or decreasing and who is travelling first, business, or economy class. Whether you are getting the best fares of the day or not, and those sorts of things. So you need much more detail of contract and so on in that sort of situation."

Flight Centre's business travel brands, Corporate Traveller, FCm Travel Solutions, Flight Centre Business, Stage & Screen Travel & Freight Services (for the entertainment industry) are all high service operations that assist and educate client businesses on how to maximise value and savings from travel budgets.

"It's one of the easiest pitches you can do - especially to someone who is managing their own travel, just by showing them how much money they are wasting," Mr Turner said.

He gave as an example a chat he and former Virgin Australia CEO Brett Godfrey had over lunch with BOQ chief, David Liddy. While Mr Liddy's personal travel was organised through a Flight Centre brand, most people in the organisation were booking their own travel over the web. The two travel experts were astonished that this was the situation at BOQ, and put a very convincing financial case to Mr Liddy in a compelling way. It simply had not occurred to the organisation how much money could be saved - not to mention the added value and duty of care issues addressed by Flight Centre consultants.

Mr Turner said these were very easy cases to make as they were provable and deliverable savings to be made for businesses of all sizes - "often we find businesses do not have a procurement person and even if they have a procurement officer, they may not actually be very good (in a specialised area such as travel)."



Success in the corporate travel area also drove the company's expansion into Asia.Flgiht Centre brands now operate in 10 countries.

"That's' where we started off, really. We bought a business in China seven to eight years ago, and Hong Kong before that (AOT) - and they were essentially corporate businesses. The one in China was a joint venture with the Beijing City Council (China Comfort Travel). Singapore, we opened ourselves, but we also bought out another guy there, but it's still only a really small operation at this stage. We set up our own in Dubai and in India we bought Friends Globe Travels.

"Second  biggest growth area is the States at the moment and third biggest is the UK, then Canada and all of those are growing reasonably well. Our US is still developing - our corporate is growing strongly but our leisure is struggling a bit for profitability - it's just about break even. Corporate's quite profitable."

In the US, Flight Centre bought Liberty Travel and GoGo Vacations.

"I think we settled in February 2008 - so the timing wasn't great," Mr Turner said of the onset of the GFC.

"We've taken our costs out and we made a small profit last year and we've been building our corporate up. We're getting there. There's a lot of potential there and, you know, we might make $5-10million there this year. But we should be making $40million and the UK will probably make $20-30million this year, so it's quite a big business. But places like Dubai,we have only been going there a few years and we should make a few million dollars this year.

"And everything is profitable, even if only just in the States. That's where it's at."



Mr Turner is never complacent, despite being one of the few travel retail companies in the world that is doing well.

He likes to point out that Flight Centre earns about two percent on its turnover and on that basis, he quipped, "the car business" and banking "look pretty good to me ..."

The margin for error, he said, is small.

"We had an executive team meeting this morning. We've been through a GFC and I think we learned a few lessons. It's a matter of keeping liquid, keeping your cash reserves up. Head down and bum up sort of thing.

"Who knows. It might come to nothing and just be continuing up and down as per the last few years, but you just never know, either. I think it's wise to be cautious, fiscally, in business at the moment."

He said business leaders still needed to adjust to the post-GFC environment.

"It was interesting because during the GFC we didn't have a lot (of borrowings) either. We were carrying nearly a billion dollars in cash, but we still had borrowings. There is an element of customer funds in it.

"We still had some borrowings of a couple of hundred million. It was because you weren't really prepared for it - and the banks were panicking. I think our experience was the same as a lot of businesses. You got put under a lot of pressure by the banks even though fiscally you were very strong. It is one of those things that I think every business has got to be aware of.

"I think for that period its was never truer than, I think, the only people they wanted to lend to were people who didn't need it."

He said liquidity was a strong element of the Flight Centre business ethos.

"We have a treasury department and we have quite a bit of settlement in different  currencies and in different directions," Mr Turner said. "We don't speculate on currency, but we do have to buy currencies and sometimes there is a better time to buy it or sell it than others"

Flight Centre has made significant money in the past out of property sales, such as its former Brisbane headquarters, but is not a property-based organisation, such as McDonald's.

"We've never really had much real estate and we still don't. But we had quite a bit of success a five or six  years ago with our head office in Brisbane, which we bought for $11million  and sold it three years later for $35million or something.

"So we did do a few other properties like that and then of course the GFC comes and that put us under a bit of pressure as we would have preferred to have that cash. So we still have a few properties which are basically growing in value, but it's a classic case of leave property investing to the property investors and now we have fairly strict guidelines on what we can hold our cash in."

One space Flight Centre is definitely courting, however, is cyberspace.



Flight Centre's online strategy is a clever mix of online and offline ‘touchpoints' with clients. Mr Turner said Flight Centre's future was an online-offline interplay born of experience in many markets.

Fligtht Centre matches digital service with travel consultant contact.


"Obviously over the past 12 years (online) has taken a significant chunk of the market, particularly in the States," he said. Flight Centre stakes its claim in both the internet and bricks and mortar.

"The deal are there, but they are basically the same as a bricks and mortar shop. We will tend to have a better deal (overall). A lot of the airlines don't like online travel agents. They would prefer people book online, but by using their site, so that's their main focus.

"We are working more and more to have an online, offline interplay. So you book online and you are allocated a travel consultant who can do any of your other stuff, or someone you can ring if anything goes wrong."

There was aabundant proof of the value of this strategy when Qantas grounded its fleet late last year.

"Like, Qantas gets grounded and we did 5000 re-bookings on that Sunday. A significant number of them weren't our customers either. I think people get to see that there is an advantage in having a relationship with a person rather than just an online relationship.

"The online offline relationship is important to us now and it is going to become more important as time goes on. A fair bit will be able to be transacted online, if that's the way you want to do it - or if you prefer, in person as well.

"Most people will transact online as well as with the shops. They prefer to do the longer haul more expensive and more complex transactions with a person, generally. The simple easy stuff they will do online, either with us or directly with the supplier."

Flight Centre was accused of having a slow start in website delivery, allowing and Webjet to get the jump on them. But as it has payed out, Flight Centre has positioned its brands solidly through astute buy-outs of websites matched with its own development. The Quickbeds site, in opposition to Wotif, is a good case as one of its key advantages is the high use it gets from its own consultants.

That online capability is about to accelerate, especially in terms of customer service.

"We are just in the throes of putting in what is known as Universal Desktop, which is a desktop for our consultants which has a lot more capability than the old green screen and that has the capability of recognising customers when they come in aroudnt he world. There is still work going on with the online offline interplay. So if they have transacted with us, over the next 12 months when they come online they will be recognised, but even if they have not transacted with us, they will be allocated a bricks and mortar consultant as well. Then it is up to them whether they want to use the consultant and it's up to the consultant to decide if they've got something they can offer that customer that they might not have done..

"Our Quickbeds is going very well at the moment. It's still a fair way away from Wotif, but it's going well. And that's a b2c as well as a b2b, so consultants use it extensively as well.

"But Quickbeds has got to stand on its own two feet," Mr Turner said. "The thing about those sort of sites is that we can feed it from a range of different hotel banks. Some of them are our own. We direct negotiate some 25,000 hotels now, through what we call FCGP - Flight Centre Global Product.  That's been an important part of our US strategy and purchase.

"We've got all of the US, Caribbean. Mexico and Hawaii direct contracted. We've also got Australia, New Zealand, Asia South Africa and as time goes on all our contracting and hotels will be linked. So, with Quickbeds you will be able to get the best rate from three or four different sources.

"The main thing is it's not just having a better range, it's having a better margin, because you are direct contracting more stuff. There's two elements, what price you are offering the customer and what margin there is. So it's a combination of those two things.

"There's no point having a good margin if the price is not competitive. But our direct contracted rates, which is an FCGP (Flight Centre Global Product division, its contracting group), they would then have their 20-25 percent margin. But sometimes the (rate) may not be as low as the last-minute type. That's the best way to get us the lowest price and the biggest margin. That will be in by early 2012."

So while the online space is highly competitive, it is the bricks and mortar and strong travel product management that again gives Flight Centre a long-term advantage. But Mr Turner is not yet content with online.

"I don't think we are doing it (online) ideally ourselves. Certainly by mid or late 2012, we should have a lot of this integrated or co-ordinated. Then it's a matter of just improving it."

Flight Cente sees online as yet another way to engage with potential customers for its other brands and branded products.

"There's no disadvantage for us either. Except, it's not easy technology. Despite how everyone talks about technologies and how easy things are to do, the fact is that there are not many technologies out there that are perfect at the moment."



For a fellow who often claims not to understand or trust new technologies, he spends a lot of time thinking of ways to make technology work better for the Flight Centre businesses.

"There are two aspects we're focusing on now," Mr Turner said.

"Building a better mousetrap. Whatever we are doing now, doing it better, quicker, faster and harder if you like. There is still a lot of potential to improve, to build a better mousetrap with our current businesses and systems.

"Then," he said, " its the future strategy. What business in 3, 5, 7 years is going to give us $10m-$20million worth of profit. It may not exist now or it may be minimal. So that's really the two major broad ways we are focussing.

"Interestingly, a significant number of those opportunities are in our business. It's just, how do we get them to be a significant part of the business?"

"There are two ways we will get that growth. One is using our existing travel businesses and perhaps expanding them vertically more.

"The retail travel brand might have a high street trading and it might have an online transactional site that go together, then you have the wholesaler - like Infinity - and you have FCGP, which is the contracting arm which might even pre-buy product or even charter aircraft or whatever. But then you might have the ground operator.

"So as our customers go to Phuket, Fiji or whatever, you get more margin out of either contracting or doing tours or things that people do and pay money for when they are on the ground. That's one area of expanding that vertical impact."

Flight Centre's exploratory step into that area is Touring UK, a ground tour operator.

"In travel, tour operating might be one. Or bikes- or recruitment - areas we've got small businesses in now (99 Bikes and EmploymentOne). It's really whether we feel we can deliver those lumps of extra profit and whether we get an RoI on the money we have to spend to get there. Even in travel, these are niche businesses, and in corporate we have got the major brands. There might be an opportunity by offering a wider range of product.

"Then we have things like CiEvents, which is an events organiser. And they have various areas like the creative side of it, the artwork side of things, so you have your niche brands like Cruiseabout and MyAdventureStore.

"So there is a whole network of different opportunities and it's really about being a bit smart about how you identify the ones that are really going to be able to grow and get big lumps of extra margin or profit into it," Mr Turner said.

"It is going to be a lot about the people who are running those niche brands or, but more at a senior level - my team-it will be about vertical integration and the acquisitions that will make a big difference. So it just depends."

While Mr Turner and the leadership team are always on the lookout for internal businesses to develop, the track record with acquisitions has been generally positive.

Mr Turner said acquisitions were always based on their development value and market share, not a financial arbitrage play.

"In the past that may have been some of the rationale for some of our decisions, but now it's got to be strategic. It has to fit in with what we are trying to do long term. They tend to be smaller, more niche things now that we'll look at.

"We've had reasonable acquisitions over the past 15 years and most of them have been positive," Mr Turner said.

"Generally they take a lot longer to integrate and get them to where you want them to be than you think at the time. But it does allow you to get to the stage where you can then grow organically. Which we are generally more successful at and you can get to RoI more rapidly than  in acquisitions.

"In the 11 countries we are in now, they (acquisitions) are all profitable. Some of them we have bought corporates, some of them we have set up our own corporates and some of them we have bought retail and in some set up our own retail.  It's a combination of getting to the stage where you can grow organically.

"You've got the skills set and you've got the basic system, business model. For example, we are just opening Flight Centre shops in Singapore and we just used to be corporate there - same in India, same in Dubai, same in Hong Kong.

"You need one or the other established before you can really start up the other. So we have a lot of opportunity to start up the retail now right throughout Asia. In India we've gone from no shops to about 15 shops there."

If there is a consistent currency that's needed for success in new markets, Skroo Turner qualifies it as "perseverance".

There's a lot of things where you say, how long is this going to take us? Liberty GoGo (US) in the first year we lost about $30million and  the next year we lost about $10million and in the third year we had a small profit.

To get an RoI on it will be at least another 4-5 years. But that's part of the fun of doing business and if all you did was just stay in Australia and just focus on growing organically in certain areas and cautiously, you could end up getting great RoIs and so on, but it wouldn't end up being much fun.

"Not much of a challenge. Although sometimes you do wonder ...

"That's the thing, That's what business is about. Take some risks but not too many. It's not just about being absolutely a slave to the RoI - but not forgetting that either."

As Skroo Turner likes to say, you live and learn.



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