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Macroplan Dimasi Executive Director Brian Haratsis presented "Pilbara Cities - Halfway there or a long way to go" at the Karratha and Districts Chamber of Commerce and Industry's fourth annual Pilbara Pulse Economic Summit.
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Pilbara Pulse 2014| 23 July 2014
Pilbara Cities
Presented by Brian HaratsisWednesday 23 July 2014
Halfway There or a long Way to Go?
One day Alice came to a fork in the road and saw a Cheshire cat in a tree. “Which road do I take?” she asked. “Where do you want to go?” was his response. “I don't know,” Alice answered. “Then,” said the cat, “it doesn't
matter.”- Lewis Carroll, Alice in Wonderland
Pilbara Pulse 2014| 23 July 2014
Pilbara Cities Region
Canning Basin
Pilbara Pulse 2014| 23 July 2014
Future Role of North West¢ Integrating economies
of Pilbara and Kimberley with the Mid West
MID WEST
PILBARA
KIMBERLEY
•Integrated economies
•Floating construction workforce
•Supporting service sector
•Movement of goods
3
Pilbara Pulse 2014| 23 July 2014
Pilbara Cities Vision (2009): Key Objectives
Population Base (2011) 2035 (Vision target
date)Vision Targets
Pilbara Region Total 59,894 ? 130,000 Karratha 16,476 ? 50,000 Port Hedland 4,393 ?South Hedland 9,375 ?Newman 5,478 ? 15,000 Tom Price 5,460 ? 8,000 Onslow 667 ? 2,000
50,000
Pilbara Pulse 2014| 23 July 2014
Key Programs Specified in Vision¢ Infrastructure Co-ordination
¢ Land Availability
¢ Community Projects
¢ Economic Diversification
Pilbara Pulse 2014| 23 July 2014
Pilbara Vision: Broader Objectives Context
¢ Attractive and sustainable communities
¢ Port of Port Hedland 247 Mt ($40Bn) to 500 Mt
¢ Advanced Projects ($107 Bn)
¢ Further Projects ($194Bn)
¢ Value of Minerals and energy produced (2018 est) $211Bn
Pilbara Pulse 2014| 23 July 2014
Pilbara Vision; Potential Objectives¢ Attractive - (Population growth/ length of stay/ education
level)¢ Sustainable
© Economic – business growth, Gross regional Product, employment/ FiFo)
© Social – health, education© Environmental – Compliance
¢ Other – (Regional/ Global Competitiveness)
Pilbara Pulse 2014| 23 July 2014
ABS Measures of Progress
Pilbara Pulse 2014| 23 July 2014
Regional Cities Victoria Growth Framework
¢ To cater for an expected population of 1,030,500 residents by 2031, Regional Cities Victoria partnered with the Victorian Government and Macroplan to develop the Regional Cities Growth Strategy (RCGS) framework.
¢ The framework provides a consistent guide to regional growth planning as well as a comprehensive planning tool that will assist Regional Cities make informed decisions on the services and infrastructure that they need to continue to offer highly-livable and productive cities.
Pilbara Pulse 2014| 23 July 2014
Regional Cities Victoria Growth FrameworkThis Chart outlines the factors taken under consideration by RCV and Macroplan in their analysis
Pilbara Pulse 2014| 23 July 2014
Regional Cities Victoria Growth FrameworkThe following is a summary of the key messages outlined in the report:1. Not all Regional Cities are the same – they function in unique ways, grow organically and respond differently to a variety of economic and
market forces.2. A framework is needed for defining and measuring the many and varied determinants of change across all Regional Cities to inform
decision making about future priorities for growth and funding decisions.3. The Growth Framework presented in this study provides a logical pathway for interpreting various determinants of change as well as key
focus areas for investment and policy action to achieve sustainable growth:v Primary, secondary and tertiary measures of activity and performance are identified in the Growth Framework for measuring current
activity and establishing how Regional Cities will grow in the futurev The historic context, size and structure of regional economic systems is identified as important as this defines the role of key variables
and future growth potential of Regional Citiesv The relative position of a Regional City in the business cycle, including local and international economic contexts is important for
targeting actions at capacity building initiatives and/or future-proofing actions4. Understanding the broad characteristics of each Regional City having regard to a wide range of variables, is important for establishing
common themes, strengths, weaknesses, opportunities and threats now and in the future.5. Clearly defining the economic value chain that underpins Regional Cities is critical in understanding future priorities for investment and
State and Local Government policy/regulatory actions.
Pilbara Pulse 2014| 23 July 2014
Regional Cities Victoria Growth Framework6. The Growth Framework focuses on those variables in the value chain which may be influenced directly and indirectly through investment
and policy actions to facilitate growth among Regional Cities over time, namely:
v Economic Value & Scalability
v Land, Infrastructure & Natural Systems
v Community Infrastructure & Services
v Environmental Sustainability
7. The Growth Framework identifies specific investment and policy related actions or drivers which may be used to influence these variables directly and indirectly at the Regional City level, including:
v Investment – public, private and not-for profit
v Policy and regulatory actions – international, national, state and regional
8. The Diagnostics Tool comprises four assessment themes mapping to the Growth Framework and establishes Regional City aspirations addressing primary, secondary and tertiary indicators.
9. Upon completion of regional diagnostics analysis using the Diagnostics Tool, an individual Regional City will be able to clearly identify areas for strategic action in order to achieve its future aspirations.
10. The Growth Framework and Diagnostics Tool identified in this study will greatly assist in developing Regional Growth Plans.
Pilbara Pulse 2014| 23 July 2014
Key Complexity: Extreme Cyclical Volatility in WA
% Growth Growth No.Western Australia (June 2012) 3.4% 79,000
Recent Peak Growth (2012) 3.4% 79,000
Recent Low Growth (2004/05) 1.6% 32,000
Decade Low Growth (2001/02) 1.2% 22,000
Australia Current Growth (2012) 1.7% 370,000
Australia Peak Growth (2009) 2.1% 442,500
Pilbara Pulse 2014| 23 July 2014
Cyclical population equation¢ WA’s Net Interstate Migration position has been
dependant on the economic cycle
-6,000
-4,000
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
1996
-97
1997
-98
1998
-99
1999
-200
0
2000
-01
2001
-02
2002
-03
2003
-04
2004
-05
2005
-06
2006
-07
2007
-08
2008
-09
2009
-10
2010
-11
2011
-12
2012
-13
Pilbara Pulse 2014| 23 July 2014
Measuring Progress
1. Inputs – assess completion of major projects
2. Outputs – assess outcomes of investment
¢ How to set benchmarks?
Pilbara Pulse 2014| 23 July 2014
Measuring Progress: Inputs¢ money spent is not the best
measure of success
Type of projectGovernment Commitment
($M)
Project Cost($M)
Additional / improved accommodation 133.9 225.4Additional development potential 206.7 208.1Improvde / additional economic infrastructure 293.7 440.7Improved / expanded community facilities 165.7 194.9
Port Hedland Total 800.0 1,069.1
Investment Year of completion Government Commitment ($M)
Project Cost($M)
East End Urban Village (planning due dilligence) ? 1.2 ?
Waste Water Treatment Plant (relocation of Port Hedland & Upgrading South Hedland) 2014 118.0 118.0
Community Centre & Library (study and desing) 0.7 1.4
Multi-purpose Recreation Centre 2012 11.1 34.1
Osprey Service Worker Accommodation 2013 20.5 91.0
South Hedland High School upgrade 2013 13.4 17.4
Town Centre Revitalisation 2013 77.0 77.0
South Hedland Bowling Club upgrades 2.5 4.0
Mairnutharntu Maya apprentice hostel 2014 8.0 19.0
Hedland Service Worker Intervetion Package 2013 93.4 93.4
Kariyarra Mugarinya Joint Venture Housing Development 2014 12.0 22.0
Hedland Health Campus 2010 138.0 138.0
South Hedland Underground Power Project (under PUPP) 2014 32.2 43.0
South Hedland Site and Transmission Works; Power Station 2014-15 117.0 138.0
Port Hedland water study (under WCBS Project) 12.0 20.0
PHPA Main Street Jetty Project 7.5 9.7
Wedge Street upgrade 2013 2.6 5.2
Port Hedland Infill Sewerage Program 2012 7.9 7.9
Marina development 2016-17 112.0 152.0
Utah Point 2010 120.0 225.0
Pilbara Maritime Common User Facility Feasibility Study (Lumsden Point) 2013 5.0 5.0
Port Hedland Total 912.0 1,221.1
Pilbara Pulse 2014| 23 July 2014
Housing Market Analysis: Port Hedland / South Hedland
Source: Western Australia Planning Commission, MacroPlan.
Table 5 – Apparent gross yield (based on advertised rents and sales as at March 2014)Gross yield (% pa)
Port Hedland South Hedland
One bedroom 7.40% 7.32%
Two bedroom 9.35% 8.87%
Three bedroom 7.30% 8.30%
Four bedroom & larger 9.94% 10.37%
Median sale price
Medianrent
Gross rental yield
Capital CitiesSydney $610,000 $458 3.90%Melbourne $515,000 $337 3.40%Brisbane $445,000 $402 4.70%Perth $514,000 $425 4.30%
Regional Port Hedland $1,010,000 $1,460 7.52%South Hedland $610,000 $1,300 11.08%Karratha $690,000 $940 7.08%Onslow $910,00 $1,900 10.86%
Table 6 – Gross rental yields comparison (based on advertised rents and sales as at March 2014)
Source: Western Australia Planning Commission, RP Data (March 2014), MacroPlan.
Sydney, 3.90%
Melbourne, 3.40%
Brisbane, 4.70%
Perth, 4.30%
PortHedland,
7.52%
SouthHedland, 11.08%
0%
2%
4%
6%
8%
10%
12%
Gro
ss re
ntal
yie
ld
Residential market summary | Port Hedland
• The residential market in Port Hedland remains strongindicating a high level of demand despite the windingdown of some projects and a shift in employment fromconstruction to operations.
• Prices, rents and yields have all eased from the peaks of2012, however, these all remain high, particularly whencompared to other areas.
Pilbara Pulse 2014| 23 July 2014
Housing Market Analysis: Karratha
Source: Western Australia Planning Commission, MacroPlan.
Gross yield (% pa)
Karratha
One bedroom 6.99%Two bedroom 7.32%Three bedroom 6.96%Four bedroom & larger 8.26%
Table 7 – Apparent gross yield (based on advertised rents and sales as at March 2014)
Median sale price
Medianrent
Gross rental yield
Capital CitiesSydney $610,000 $458 3.90%Melbourne $515,000 $337 3.40%Brisbane $445,000 $402 4.70%Perth $514,000 $425 4.30%
Regional Port Hedland $1,010,000 $1,460 7.52%South Hedland $610,000 $1,300 11.08%Karratha $690,000 $940 7.08%Onslow $910,00 $1,900 10.86%
Table 8 – Gross rental yields comparison (based on advertised rents and sales as at March 2014)
Source: Western Australia Planning Commission, RP Data (March 2014), MacroPlan.
Sydney, 3.90%
Melbourne, 3.40%
Brisbane, 4.70% Perth, 4.30%
Karratha, 7.08%
0%
1%
2%
3%
4%
5%
6%
7%
8%
Gro
ss re
ntal
yie
ld
Residential market summary | Karratha
• The residential market in Karratha has declined in thepast few years indicating a low level of demand after theshift in employment from construction to operations.
• Prices, rents and yields have all eased from the peaks of2012, with a 30 per cent drop in dwelling prices.However, these all remain high, particularly whencompared to other areas.
Pilbara Pulse 2014| 23 July 2014
Measuring Progress: Outputs
Source: Mackenzie (2011); BREE (2013); Hurst (2013).
Pilbara Pulse 2014| 23 July 2014
Pilbara Pulse 2014| 23 July 2014
Measuring Progress: Outputs
Pilbara Pulse 2014| 23 July 2014
Measuring Progress: Outputs¢ Backcasting/forecasting
© Understanding Growth Patterns
Expectation Reality
Prog
ress
Prog
ress
TimeTime
Pilbara Pulse 2014| 23 July 2014
Measuring Progress: Outputs¢ Comparison With Other Regions/ Regional Towns
© Gap Analysis
¢ Forecasting
© Population
© Capital expenditure
© Output
Pilbara Pulse 2014| 23 July 2014
Pilbara Development Timeline1950 Townsite of Wittenoom gazetted Wittenoom1952 Lang Hancock flies over the Pilbara region1960 Australian Government changes restrictions on iron-ore exports Australia wide1961 West Australian government announces that iron-ore exploration permits will be allowed Western Australia1962 CRA geologists identify Mount Tom Price deposits Mount Tom Price1964 Oil was discovered in commercial quantities by West Australian Petroleum Pty Ltd Barrow Island
Dampier and Mount Tom Price - construction commences at locationsConstruction commences on the town of Goldsworthy Goldsworthy
Dampier - Tom Price railway works commence Hamersley IronAsbestos mine closed at Wittenoom Gorge]] Wittenoom
Rio Tinto open their first Iron Ore mine in the Pilbara Mount Tom Price mineTom Price to Dampier - first fully loaded ore train
Dampier - first shipment of ore loadedIron ore discovered at Mount Whaleback Newman
Hamersley Holdings Limited shares on the ASX1968 BHP Billiton establish an Iron Ore mine near Newman Mount Whaleback1969 Developments of community at Karratha begin1970 East Intercourse Island connected by causeway1971 Townsite of Wickham gazetted Wickham
Cape Lambert port opened Cape LambertTownsite of Newman gazetted Newman
Townsite of Paraburdoo gazetted ParaburdooTownsite of Pannawonica gazetted Pannawonica
Dampier Salt commences operations Dampier1974 North West Coastal Highway from Geraldton, Western Australia to Port Hedland completely sealed1975 Cyclone Joan - flooding in Pilbara and damages Hamersley Rail1977 Tom Price, Paraburdoo, Dampier and Karratha combined population passes 15,0001978 Meektharra to Newman section of Great Northern Highway upgraded. Great Northern Highway
1965
1966
1967
1972
Date Event Location
Pilbara Pulse 2014| 23 July 2014
Pilbara Development TimelineDate Event Location
1981 WAPET discover gas off the Pilbara coast with the drilling of the Gorgon 1 well Gorgon gas project1983 Karratha Airport opens Karratha1984 North Rankin A Gas Platform commissioned North West Shelf1989 Newman to Port Hedland section of Great Northern Highway upgraded. Great Northern Highway1989 BHP Billiton open Iron Ore mine near Newman Jimblebar mine1990 Rio Tinto Group opens Iron Ore mine in Hamersley Range Channar mine1992 Rio Tinto opens another Iron Ore mine in Hamersley Range Brockman 2 mine1993 BHP Billiton open another Iron Ore mine near Shay Gap Yarrie mine1994 Rio Tinto opens another Iron Ore mine in Hamersley Range Marandoo mine1995 Goodwyn A Gas Platform commissioned North West Shelf2001 Broken Hill Proprietary Company Limited and Billiton plc merge to form BHP Billiton2004 Rio Tinto opens another Iron Ore mine in Hamersley Range Eastern Range mine2006 Gold Mine opens near Whim Creek and is closed in 2008 Indee Gold Mine
Rio Tinto open another Iron Ore mine in Hamersley Range Hope Downs mineTownsite of Wittenoom officially abolished by gazettal Wittenoom
Fortescue Metals Group commence mining Iron Ore in the Chichester Range Cloud Break mine2008 First train runs on Fortescue railway Fortescue railway2009 Pilbara Cities Vision Launched Pilbara2009 Fortescue Metals Group open new Iron Ore mine in the Chichester Range Christmas Creek mine2010 Rio Tinto open another Iron Ore mine in Hamersley Range Brockman 4 mine2011 The Woodside Pluto project begins producing LNG Woodside2012 Boolgeeda Airport is an airport serving the Brockman 4 mine opens Brockman 4 mine2013 Fortescue Metals Group opens its third mine Soloman Hub
BHP Billiton’s opens another iron ore mine at Jimblebar mine Jimblebar mineAtlas Iron officiallys open its fifth mine Mt Webber Mine
2007
2014
Pilbara Pulse 2014| 23 July 2014
Backcasting: Adapting to Structural Change
¢ Start-Up (1960-1995) – Initial Investment (Japanese underpin)
¢ Major Periods of Stagnation (1995-2006)
¢ International Competition (Brazil/ Vale) 1995-2015
¢ Globalisation (Baosteel/ Aurizon) 2015-2035
Pilbara Pulse 2014| 23 July 2014
Measures of Progress¢ Pilbara Vision
¢ Major Investment
¢ Housing Prices
¢ FiFo
¢ Other critical issues
Pilbara Pulse 2014| 23 July 2014
Measures of Progress¢ High Indigenous income in mining
Pilbara Pulse 2014| 23 July 2014
Competitive PilbaraTheme of Comparison Pilbara's Rank Amongst
Regions
Institutions 15
Infrastructure and Essential Services 52
Economic Fundamentals 1
Human Capital 55
Labour Market Efficiency 11
Technological Readiness 23
Business Sophistication 45
Innovation 24
Market Size 51
Natural Resources 3Source: Insight – Regional Australia Institute
Pilbara Pulse 2014| 23 July 2014
Regional Key Data: ABS¢ Data tracked in regions
Pilbara Pulse 2014| 23 July 2014
Pilbara Population Growth¢ Pilbara Population, Stacked by SA2, 2003-2013
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Ashburton (WA) East Pilbara Karratha Newman Port Hedland Roebourne South Hedland
Pilbara Pulse 2014| 23 July 2014
Pilbara Population Growth
Current population
Population target 2035
Required growth rate 2013-35
Growth rate 2003-2013
Population in 2035 if Current
growth rates continue
Population target
shortfall
Port and South Hedland 15,125 50,000 5.3% 1.9% 23,319 26,681
Karratha 18,945 50,000 4.3% 4.7% 54,484 -4,484
Newman 6,099 15,000 4.0% 4.1% 15,368 -368
Pilbara Pulse 2014| 23 July 2014
Conclusion¢ Pilbara success requires better measures of progress
¢ Reached a new ‘floor’ in Pilbara Growth
¢ Next cycle will include slower growth plateau but average population growth over the period likely to be significant
Pilbara Pulse 2014| 23 July 2014
Conclusion¢ Key Infrastructure Investment Phase (2015-2025)
© WHERE WOULD WE LIKE TO GO?
¢ Key Trigger Point - City building/Regional Economic Diversification (2025-2030)
© Karratha Population @ 30-35,000
© Port Hedland + South Hedland Population @ 20-25,000
Pilbara Pulse 2014| 23 July 2014
The Port of Port Hedland¢ The PHPA Continues to Break Export Records
ALSO KARRATHAASK DIMASI RE RETAIL SPENDNUMBER OF NEW BUSINESSES (SEE ABS)
Pilbara Pulse 2014| 23 July 2014
Mining Australia – commodity prices
Pilbara Pulse 2014| 23 July 2014
Economics Australia – business sector
Pilbara Pulse 2014| 23 July 2014
West Australian Capital InvestmentCapital Expenditure by Industry, Quarterly
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
Jun-
1989
Feb-
1990
Oct
-199
0
Jun-
1991
Feb-
1992
Oct
-199
2
Jun-
1993
Feb-
1994
Oct
-199
4
Jun-
1995
Feb-
1996
Oct
-199
6
Jun-
1997
Feb-
1998
Oct
-199
8
Jun-
1999
Feb-
2000
Oct
-200
0
Jun-
2001
Feb-
2002
Oct
-200
2
Jun-
2003
Feb-
2004
Oct
-200
4
Jun-
2005
Feb-
2006
Oct
-200
6
Jun-
2007
Feb-
2008
Oct
-200
8
Jun-
2009
Feb-
2010
Oct
-201
0
Jun-
2011
Feb-
2012
Oct
-201
2
Jun-
2013
Mining Manufacturing Other
$ M
illio
ns
Pilbara Pulse 2014| 23 July 2014
ResourcesNumber of Advanced Projects - Australia
Source: BREE Resources and Energy Major Projects April 2014
Pilbara Pulse 2014| 23 July 2014
Region and Town Comparison¢ Population growth rates, Pilbara SA2s, 2004-2013
Karratha NewmanPort
Hedland RoebourneSouth
Hedland Ashburton East
PilbaraPilbara
SA32004 6.0% 7.1% -3.4% 3.9% 0.8% 7.1% 10.7% 4.4%2005 5.9% 8.4% -3.4% 3.8% 1.0% 4.9% 9.6% 4.2%2006 7.0% 8.6% -1.6% 4.6% 2.2% 4.8% 9.3% 5.1%2007 2.4% 2.3% -0.5% 3.2% 0.7% 4.4% 18.0% 3.5%2008 3.0% 2.3% 1.8% 3.4% 3.3% 6.8% 17.6% 4.9%2009 3.3% 3.1% 3.7% 4.3% 4.5% 6.2% 16.0% 5.4%2010 3.3% 1.6% 3.0% 1.9% 3.6% 5.6% 10.0% 4.1%2011 4.6% 0.6% 4.5% 4.1% 2.4% 7.5% 9.5% 4.9%2012 5.5% 4.8% 2.3% 2.5% 3.0% 4.1% 2.5% 3.9%2013 5.6% 2.2% 1.5% 2.5% 2.9% 2.9% 2.1% 3.3%
Pilbara Pulse 2014| 23 July 2014
Region and Town ComparisonPilbara Bundaberg Hervey Bay Mildura Shepparton Bunbury
Western Australia Australia
2004 4.4% 1.9% 6.0% 0.3% -0.2% 1.9% 1.4% 1.1%2005 4.2% 2.4% 4.9% 0.6% -0.1% 3.5% 1.6% 1.2%2006 5.1% 2.4% 4.8% 1.1% 0.6% 3.4% 2.0% 1.4%2007 3.5% 2.0% 4.6% 0.6% 1.0% 1.3% 2.7% 1.8%2008 4.9% 2.4% 4.1% 0.6% 1.3% 3.1% 3.1% 2.0%2009 5.4% 1.8% 3.6% 0.5% 1.7% 3.3% 3.2% 2.1%2010 4.1% 1.2% 2.2% 0.5% 1.3% 2.4% 2.3% 1.6%2011 4.9% 0.7% 1.2% 0.4% 0.8% 2.4% 2.7% 1.4%2012 3.9% 1.4% 1.5% 0.7% 1.0% 3.1% 3.6% 1.7%2013 3.3% 0.6% 1.2% 0.9% 0.7% 2.9% 3.3% 1.8%
Average Growth Rate 2004-2013
4.4% 1.7% 3.4% 0.6% 0.8% 2.7% 2.6% 1.6%
Pilbara Pulse 2014| 23 July 2014
Region and Town Comparison
Pilbara Pulse 2014| 23 July 2014
Measuring Progress: Setting Criteria¢ 2015-2025 – Infrastructure Phase
© Projects
© Market Gaps
© Facility Gaps
¢ Post 2030 - Economic Diversification Phase© Business Openings
© Service sector jobs
© Gross regional Product
© Sector specialisation (e.g. Maritime Services, Mechanical engineering, Port management and development)
© Sustainable employment and population
© Global Networks
© Basic Infrastructure
Pilbara Pulse 2014| 23 July 2014
Projected Employment Growth Across Northern Regional WA 2012-2017
1.91.8
1.51.4
1.11.0
1.00.9
0.80.7
0.70.4
0.10.1
0.00.0
0.00.0
-0.2
-0.5 0.0 0.5 1.0 1.5 2.0
Health Care and Social AssistanceConstructionRetail TradeEducation and TrainingProfessional, Scientific, Technical ServicesTransport, Postal and WarehousingManufacturingMiningAgriculture, Forestry, FishingWholesale TradeOther ServicesAccommodation and Food ServicesRental, Hiring and Real Estate ServicesFinancial and Insurance ServicesArts and Recreation ServicesPublic Administration and SafetyAdministrative and Support ServicesElectricity, Gas, Water, Waste ServicesInformation Media, Telecommunications
Employed Persons ('000s)
Pilbara Pulse 2014| 23 July 2014
X Factors¢ Australia becomes moderate world power in energy, minerals and
defence, Pilbara becomes critical¢ From FiFo to local work forces¢ Emerging markets/growth in Asian middle class stimulates faster
growth¢ Karratha International Airport becomes the northwest hub airport¢ Federal Government develops rational ‘Develop the North’ policies¢ Pilbara services major Kimberley expansion¢ Marine services hub emerges
Pilbara Pulse 2014| 23 July 2014
Thank you.