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Australian Equities Portfolio

Here, There and Everywhere (positive impact) last week announced the favourable outcome of a long-running legal case with the Australian Tax Office (ATO).

This has seen its share price rally by 37% since the announcement and approx. 22% for the financial year to date.

The company has had a potential legal liability of $195 million hanging over its share price, in a dispute over the tax treatment of the sale of assets in New Zealand.

It announced that it has entered a settlement with the ATO for $71m, leaving a net amount payable of approx. $21m.

The result has been the unwinding of a considerable ‘uncertainty’ discount that has hung over the stock. Our position reflected a probability-weighted view of the outcome.

This paves the way for the company to continue on its growth path.

A clear attraction of HT&E as an investment has been the significant surplus assets and cash it holds. This includes its stake in Soprano (approx. $110m), Hong Kong outdoor business (approx. $30m), stake in Luxury escapes (approx. $18m) and cash realised through the sale of its stake in oOh! Media ($49m) this week.

These surplus assets leave it well-positioned to capitalise on a media sector that is consolidating (as evident by Seven West Media’s acquisition of Prime Media Group this week) and pursue acquisitive growth, in addition to funding its growth options in digital media (e.g. podcasting).

Optionality in surplus asset