2016 SYDNEY TOP LISTED COMPANIES 41-50

Written on the 25 November 2016 by Lin Evlin, Paris Faint, Chelsey Landford, Nick Nichols & James Perkins

2016 SYDNEY TOP LISTED COMPANIES 41-50

THIS is your access to the definitive list of Sydney's Top Listed Companies, compiled by the editorial team at Business News Australia.

This is the first of what will be an annual list of companies that are some of the heavyweights of Australia's business scene.

More finance companies round out the top 50, while a couple of media companies also enter the fore.

41. Vocus Communications
ASX: VOC
Market cap: $3.27b
CEO: Geoff Horth
FY16 profit: $101.7m
FY16 revenue: $830.8m
Staff: 5,000
Listed: 1999

TELECOMMUNICATION SERVICES

JUST like its rival TPG, Vocus Communications suffered a sharp decline in market support despite posting impressive figures in its annual report.

Profit surged 461 per cent while underlying EBITDA jumped 318 per cent to hit $215.6 million, as stakeholders were sated by the issuing of dividends at 8c per share, up 300 per cent.

Despite this, the company has dropped from a high of around $9.50 in June to $5.30 per share in November. However, unlike TPG, Vocus has a strong prediction for future earnings growth, at around 50 per cent in FY17.

While Vocus was beaten to a deal with iiNet by TPG, it recently secured Nextgen Networks for $806.7 million. This includes the Australia Singapore Cable and the North West Cable System developments.

Vocus CEO Geoff Horth (pictured) says Nextgen Networks delivers Vocus one of Australia's largest national fibre backhaul networks, which complements his company's existing networks.

"The acquisition will connect Vocus' metropolitan fibre infrastructure to Nextgen Networks' inter-capital fibre network, creating a national network connecting capital cities, regional and remote areas, owned and managed by the Vocus team," he says.

The company's performance in FY16 has been attributed to several factors including broadening product ranges, growth in demand for broadband and host of successful mergers and acquisitions.

"We continued to increase our operating leverage from our national fibre network, focusing corporate sales on high-yielding metropolitan locations and diversifying our corporate and small business product ranges," says Horth.

"Our New Zealand business also demonstrated strong organic growth with 55,000 net new services added in Australia over the full year contributing to an increase in our NBN market share from 5.1 per cent to 6.4 per cent."

The company acquired Amcom at the beginning of the financial year, merged with the M2 Group in February and announced the acquisition of Nextgen Networks in June 2016.

Fuelling the company's drop in market cap in the past six months is the resignation of two of the company's directors and its CFO.

Vocus CFO of seven years Richard Correll also announced his resignation, with the board offering its thanks for his instrumental part in the company's success over the past few years.

 

42. QUBE Holdings
ASX: QUB 
Market cap: $3.25b
MD: Maurice James
FY16 profit: $86.5m
FY16 Revenue: $1.3b
Staff: 4358
Listed: 2007

INDUSTRIALS

INVESTOR sentiment dropped after Qube's FY16 performance fell short of analyst predictions.

The logistics giant posted an 18 per cent slide in underlying net profit to $86.5 million due to difficult conditions in its ports and bulks division, after four major contracts were terminated or restructured.

However, a number of strategic acquisitions during the period still position the company on solid ground heading into the new year.

QUBE purchased Asciano's Patrick container terminals in August through a 50-50 joint venture with Canadian group Brookfield Infrastructure.

It also procured full ownership of the Moorebank Intermodal Terminal in Sydney's south-west, buying out Aurizon's (ASX:AZJ) 33 per cent stake for $98.9 million.

The group will raise $300 million for general corporate purposes through seven-year unsecured, subordinated notes.

 

43. Platinum Asset Management
ASX: PTM 
Market cap: $3.20b
MD: Kerr Neilson
FY16 profit: $200.9m
FY16 revenue: $344.6m
Staff: 29 (investment team)
Listed: 2007

FINANCIALS

VOLATILITY in global financial markets impacted the profit performance of Kerr Neilson's (pictured) Platinum Asset Management this year.

Revenues were down and costs were up, largely due to staff and business development activities.

The financial services company recently launched two new products aimed at helping investors both domestically and abroad invest in offshore equities markets.

Platinum Asia Investments raised $293 million and listed on the ASX in September, while three new Ireland-based funds under the Platinum World Portfolios Plc banner sought to push the Platinum brand into offshore markets by targeting large institutional investors.

The company says the current investment climate is at odds with its investment style, which has led to a sub-par returns from its largest fund.

However, over the past five years Platinum says its funds in Europe, Japan and Asia have outperformed their competitors.

While broadly weaker returns have led to net redemptions, Platinum describes this trend as 'transient'.

The company had $23.8 billion in funds under management at the end of August 2016. A fall in the company's share price led Platinum Asset Management in September to announce a buyback of up to 10 per cent of its shares.
 
 

44. Whitehaven Coal
ASX: WHC
Market cap: $2.99b
MD & CEO: Paul Flynn
FY16 profit: $20.5 million
FY16 revenue: $1.1b
Staff: 843
Listed: 2007

ENERGY

Having focused on cutting costs, increasing production and paying down debt during the tough operating conditions of the previous 12 months, the sudden coal price recovery came as a welcome surprise for the Whitehaven Coal.

The company has bounced back from a low of $0.355 per share in February to be trading at $2.83 in late November.

The coal price recovery, caused by China's decision to cut some supply, added the spark Whitehaven needed to heat up its business.

The company achieved record production of more than 20Mt in FY16 at its Gunnedah Basin mines, which was boosted by the opening of the Maules Creek mine. This is most of the way to achieving Whitehaven's FY18 goal for 23Mtpa coal production, which is double what the company achieved in FY14.

Whitehaven's $20 million profit was its first since 2012. It also reduced costs to $56/t and reduced its debt by $77m. A further $35 million has been wiped off the debt in the first half of FY17.

EBITDA increased 72 per cent to $224.1 million, off the back of a 3 per cent increase in operating margin.

Chairman Mark Vaile (pictured) says more than 40 per cent of all new coal-fired power plants globally use higher efficiency and lower emissions (HELE) technologies requiring higher coal grades, and this is what Whitehaven produces.

"As a supplier of some of the highest quality coal in the world, Whitehaven Coal is well-placed to meet increased demand for cleaner coal," says Vaile.

"Our world-class Maules Creek and Narrabri assets are producing the high-quality coal which gives us a major competitive advantage in the premium growth markets of Asia.

"With an encouraging price environment in recent weeks, we are quietly confident of another successful year ahead for Whitehaven Coal, one that firmly cements our position as Australia's leading high-quality coal company."

 

45. Link Administration Holdings
ASX: LNK 
Market cap: $2.67b
MD: John McMurtrie
FY16 profit: $42.4m
FY16 revenue: $775.8m
Staff: 4300
Listed: 2015

INFORMATION TECHNOLOGY

IN ITS first annual report since listing on the ASX late last year, the Link Group delivered a strong profit result of $42.4 million.

Outperforming its prospectus forecasts across the board, the Link Group also announced increased revenue margins from a pre-IPO $588.3 million in FY15 to $775.8 million in FY16.

According to managing director John McMurtrie (pictured), the company reaped the benefits from a number of accomplished milestones throughout the group's three divisions - fund administration, corporate markets and core IT services.

These include the complete integration of seven of the eight Superpartners funds to the business offering, and several acquisitions including HCE Haubrok AG in Germany and the Aon fund administration business in New Zealand.

McMurtrie emphasises the group's commitment to growth by aiming to further penetrate existing markets, form new product and service innovations and expand the alliances and acquisitions base.

"As a global company with a strong balance sheet, high-value IT systems and a continued focus on technology, we are well positioned to deliver on our growth plan," says McMurtrie.

"There will always be challenges, but our people, our investment and our fiscal strength has created good momentum for the years ahead."

 

46. Investa Office Fund
ASX: IOF 
Market cap: $2.61b
Executive director & CEO: Johnathan Callaghan
FY16 profit: $493.8m
FY16 funds from operations: $176 million
Staff: 300+
Listed: 2000

FINANCIALS

INVESTA Office Fund wrapped up the 2016 financial year on a $493.8 million net profit high, up 175.6 per cent on the previous year.

Results were underpinned by boosts in asset valuations across the office landlord's $3.6 billion-plus portfolio, as a result of strong leasing outcomes in Sydney and Brisbane.

In August, the company announced it was in talks to acquire a 50 per cent stake in the broader Investa Office management platform, valued at $10 billion. Morgan Stanley sold the platform last year to the unlisted Investa Commercial Property Fund (ICPF) for $90 million.

It was the latest move in a year-long acquisition saga that saw Cromwell Property Group (ASX:CMW) obtain a 9.8 per cent interest in the trust and investors vote against a proposed $2.5 billion takeover bid by Dexus Property Group (ASX:DXS).

The failed deal prompted the appointment of four new directors to IOF's board and the resignation of fund manager Ming Long, independent board chairman Deborah Page and independent directors Peter Rowe and Peter Dodd.

Moving into the new year, the fund says its portfolio is well positioned for long-term growth with improving tenant demand in Brisbane, Sydney and Melbourne, and it has forecast a 2.1 per cent increase in funds from operations on the FY16 period.

 

47. Seven Group Holdings
ASX: SVW 
Market cap: $2.56
MD & CEO: Ryan Stokes
Staff: 4,300
Profit after tax: $197.8 million
EBITDA: $340.8 million
Listed: 2010

INDUSTRIALS

THE ramp up in mining production over the past year has benefited Seven Group Holdings through its investment in industrial services business WesTrac, which is one of Australia's largest CAT dealerships.

As MD and CEO Ryan Stokes (pictured) says in the 2016 annual report, 'we benefited from the ongoing demand for parts and services created by the high level of mining production'.

Statutory profit after tax rebounded to $197.8 million in FY16, compared to a $359.1 million loss the previous year.

This was above guidance and analysts' forecasts, as was the lower-than-expected drop in EBITDA to $340.8 million.

Stokes says the turnaround is due to benefits from restructuring programs in the group's industrial services division to drive profitability and operating productivity.

As a result, the group is trading at an all-time high of $9.11 on the ASX, up 61.81 per cent since April 2016.

The group still owns 35.3 per cent of Seven West Media. Channel Seven maintained its position as a dominant television channel, buoyed by the Olympics, but the group has acknowledged that advertising on television is flat, or declining, and is also declining in its print assets.

Through its energy division, Seven West Group also owns Longtom and Echuca Shoals, with part ownership of Beach Energy, Crux, and Bivins Ranch.

 

48. Macquarie Atlas Roads Group
ASX: MQA 
Market cap: $2.34b
2016 rank: 48
CEO: Peter Trent
1H16 profit: $54.2m
1H16 revenue: $378m
Listed: 2010

INDUSTRIALS

MACQUARIE Atlas Roads Group sped into the second half of CY16 with interim profits up 34 per cent to $54.2 million.

Results were driven by proceeds from the toll road operator's sale of its 22.5 per cent stake in the Chicago Skyway toll road, coupled with higher toll revenue from the Dulles Greenway in Virginia and France's Autoroutes Paris-Rhin-Rhone.

Chief executive Peter Trent (pictured) says the group will 'keenly' consider buying out the remaining share of the 22km Dulles Greenway, 50 per cent of which it already owns.

In September, Macquarie Group sold half its 20 per cent stake in Macquarie Atlas in a deal worth $282 million. The sale comes amid speculation that the investment bank, which has externally managed MQA since 2011, could soon move to cut its remaining ties.

The group announced an interim dividend of 9c per share, with an expected full-year distribution of 18c.
 
 

49. Worley Parsons
ASX: WOR 
Market cap: $2.25b
CEO: Andrew Wood
FY16 profit: $23.5m
FY16 revenue: $7.79b
Staff: 35,000
Listed: 2002

ENERGY

WORLEY Parsons is highly exposed to oil and gas and mining, two industries which have been at the bottom end of the respective price cycles in recent years, but despite this, the company has staged a market cap fightback this year.

Worley Parsons is trading around $9 per share, a long way from its pre-GFC heyday of $53.82 per share, but still more than triple its 52-week low price of $3 recorded in February. There are questions marks over this recovery, however, as 13.4 per cent of its shares are owned by short sellers.

The Worley Parsons hydrocarbons sector reported an aggregated revenue decline of 20 per cent to $4.266 billion, margins were also down to 7.7 per cent from 9.1 per cent.

The minerals metals and chemicals sector also suffered significant revenue declines, but increased margin.

"Our customers continued to face difficult market conditions as the ongoing weakness in commodity prices led to further declines in capital and operating expenditure across the resource and energy segments," says CEO Andrew Wood (pictured).

In response to the tight business conditions, Worley Parsons has worked to improve its productivity and in FY16, it lowered overheads by $170 million compared to the prior year.

"We have more to do to reduce our costs. We have increased our overhead reduction program target to a total of $350 million in annualised savings by the end of FY17, compared to the $300 million we outlined in February 2016," says Wood.

In August, the company expected trading to remain challenging, and it doesn't expect to see benefits of cost reductions until the second half of FY17. However, things have changed since August, particularly the surprise bounce in coal prices and the election of Donald Trump.

"Against this backdrop, we continue to win new project work with 85 significant awards secured during the financial year with a total contract value in excess of $2.8 billion, including in the strategic growth areas of Advisian and Project Management Consulting," says Wood.

On 17 November, the company announced that it had secured a five-year engineering, procurements and construction management services contract with Qatar Shell for the Pearl Gas to Liquids (GTL) and associated facilities in Qatar.

Pearl GTL is the largest producer of GTL products in the world, and is capable of producing 140,000 barrels of GTL products each day, as well as 120,000 barrels per day of natural gas liquids and ethane.

 

50. Event Hospitality and Entertainment
ASX: EVT
Market cap: $2.22b
MD: David Seargeant
FY16 profit: $130.2m
FY16 revenue: $1.28b
Staff: 8,000
Listed: 1962

CONSUMER DISCRETIONARY

BIG screen equalled big profits for Event Hospitality and Entertainment Ltd this financial year.

The parent company of the Event cinema chain reported a 19.6 per cent increase in profits to $130.2 million, steered by a line-up of box office blitzes, including Star Wars: The Force Awakens, Deadpool and Spectre.

The group's Hotels and Resorts subsidiary posted strong performances by its QT and Atura brands, with another two QT hotels scheduled for opening in the new financial year.

Upcoming movie releases will largely shape future performance. The period kicked off to a sluggish start, with the Ghostbusters remake grossing $217 million at the box office, far short of its $300 million breakeven point, and Disney's Alice Through the Looking Glass and BFG disappointing.

A fully franked dividend of 31c per share was announced, bringing the year's total to 51c per share, up 6c on the previous year.
 

 

 


Author: Lin Evlin, Paris Faint, Chelsey Landford, Nick Nichols & James Perkins

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