Sydney Top Companies 21-30

1 October 2020, Written by Matt Ogg, Nick Nichols, David Simmons and Camilla Jansen

Sydney Top Companies 21-30

Sydney's Top 50 companies are leading the pack in Australia's largest city and leaving a lasting impact on the economy.

We reveal 21-30 on the list which largely consists of heavy-hitters in the property, construction and energy sectors.

Despite COVID-19 impacts, including a $2.7 billion loss, Qantas (ASX: QAN) has maintained its position at number 25.

On the other end of the spectrum, logistics software specialist WiseTech's results (ASX: WTC) have continued to go from strength to strength despite negative sentiment spurred by shortselling reports. 


21. Stockland (SGP)

Real Estate
Market Cap: $
9.02bn
FY20 revenue: $2.81b
FY20 loss: $14m
Listed: 1987
CEO: Mark Steinert
CEO salary: $2.45m

Stockland (ASX: SGP), Australia's largest listed developer, punctuated the end of FY20 with the announcement long-time CEO Mark Steinert was retiring after 7.5 years in the role.

The date of his departure has not been revealed, but Steinert says he will stay on to ensure a flexible period of transition as the group manages the COVID recovery period.

The biggest impact on Stockland's divisions this year was felt in its $6 billion retail portfolio, which comprises 30 retail centres.

Mandated hardship relief measures for small to medium sized tenants, those with annual turnover of less than $50 million, affected 30 per cent of the group's commercial property portfolio. Overall, though, the impact on the company's FY20 earnings was not significant when compared to other more vulnerable industries.

Like many listed companies, Stockland withdrew its full-year guidance in March as it weighed up the impact of COVID-19. The shortfalls from its property portfolio were partly offset by gains across its master-planned residential communities.

There was a big rebound in inquiries from homebuyers in May and June. Stockland reported inquiries from homebuyers held up well throughout the year, particularly the first-homebuyer segment. However, the company sees continued pressure on its Melbourne development portfolio in the first quarter of FY21.

Some 5,300 residential lots were settled during the year, with government stimulus for first-home buyers supporting sales. 

It was generally business as usual on the acquisitions front with contracts exchanged for the $415 million purchase of the undeveloped portion of The Gables, a 293ha master-planned community at Box Hill in Sydney.

In 2019, the group acquired two office buildings in North Sydney at 118 and 122 Walker Street, for $121 million, providing an amalgamation opportunity as its already owned an adjacent office building.

Stockland also bolstered its balance sheet after raising $790 million in long-term and short-term debt to arm itself against any further COVID-19 disruptions.


22. Mirvac Group (MGR)

Real Estate
Market Cap: $
8.58bn
FY20 revenue: $2.31b
FY20 profit: $558m
Listed: 1999
CEO: Susan Lloyd-Hurwitz
CEO salary: $2.4m

In February, Mirvac (ASX: MGR) delivered a quickfire $102 million windfall to a Chinese-Australian partnership in exchange for the opportunity to create a $1 billion master-planned community on the landmark site of the Channel Nine studios at Willoughby on Sydney's lower north shore.

Mirvac paid LEPC9 Pty Ltd, a joint venture between Hong Kong-based Euro Properties and Sydney's Lotus Group, $249 million for the prime 3.2ha site which has been home to the Nine Network for six decades.

Only two years earlier, in 2017, LEPC paid just $147 million for the site in a leaseback deal with Nine, which has since moved to new premises in North Sydney.

In June, Mirvac lodged plans for 460 apartments across 10 mid-rise towers on the former Channel Nine property.

This latest deal has proved Mirvac to be a prolific developer of landmark sites in Sydney. It follows the successful redevelopment of the former headquarters of NSW's harness racing industry, Harold Park, in 2014.

The Willoughby purchase was just one of the big-ticket projects announced by Mirvac in FY20, most of them located in the NSW capital.

In May, Mirvac's joint venture with Coombes Property Group secured City of Sydney approval to build the city's tallest residential building in George Street. The $700 million tower will deliver 507 apartments over 80 storeys.

At the end of 2019, Mirvac, in partnership with John Holland, was selected by the NSW Government to deliver Sydney Metro's $800 million integrated station at Waterloo. It also bought the former Melbourne Convention Centre site in the Victorian capital's Flinders West precinct for $200 million.

This is part of what Mirvac's diversified portfolio proposition, where a downturn in retail property was offset by relative stability in its industrial, commercial and residential assets.

Although the bottom line was 43 per cent lower in FY20, it was only by 5 per cent at the operating level. Mirvac estimates the net impact of COVID-19 on its business to be $118 million. Cost savings, including a 20 per cent reduction in remuneration for the executive leadership team over the final quarter, retrieved a net $29 million from the bottom line.


23. AGL Energy (AGL)

Utilities
Market Cap: $
8.49bn
FY20 revenue: $12.16b
FY20 profit: $1.01b
Listed: 2006
CEO:  Brett Redman
CEO salary: $2.31m

After abandoning a $3 billion takeover bid for Vocus Group (ASX: VOC) in mid-2019, AGL Energy (ASX: AGL) still managed to secure two smaller acquisitions in FY20 as it sought to expand its reach into the telecommunications and energy sector.

Vocus owns the Dodo and iPrimus brands, but AGL withdrew the offer at the due diligence stage within a week of launching the bid and determining it didn't offer value to shareholders.

AGL Energy is an integrated service provider supplying 3.9 million customers with retail and wholesale gas, electricity and telecommunications services.

The company's most recent acquisition in August this year was the $115 million buyout of Click Energy Group Holdings Pty Ltd, a wholly owned subsidiary of Amaysim Australia Ltd (ASX: AYS). The deal for the energy business excludes Amaysim's mobile business and data base, but it shores up AGL's ambitions to have 4.5 million customer services by 2024.

In September 2019, AGL finalised the acquisition of Infratil's (ASX: IFT) 80 per cent stake in Perth Energy for $53.3 million. The business is a major independent energy retailer in WA that owns and operates the 120 MW Kwinana Swift dual fuel peaking power station.

While the year ended well for AGL, with a 12 per cent increase in statutory net profit, it didn't start well. The Australian Energy Regulator took the company to Federal Court alleging it had breached some of its obligations under the National Electricity (South Australia) Act.

FY20 also saw the company detail the timeframe for its planned closure of the Liddell power station, with the first unit set for shutdown in April 2022.


24. WiseTech Global (WTC)

Information Technology
Market Cap: $
8.35bn
FY20 revenue: $429.4m
FY20 profit: $160.8m
Listed: 2016
CEO: Richard White
CEO salary: $1m

Shares in global logistics software specialist WiseTech (ASX: WTC) are yet to fully recover from short seller criticisms a year ago that have been ongoing, but the group still managed to lift profits by 3 per cent in FY20.

This growth was significantly lower than the 17 per cent surge in EBITDA, but this is partly explained by a write-down of goodwill on purchased companies including Containerchain, as well the renegotiation of more than 20 acquisition earnout obligations.

Apart from short seller attacks from J Capital which predicted much larger write-downs than WiseTech reported, the company has also had to cope with volatility in global logistics markets from late January through to May as a result of COVID-19.

But the company's founder and CEO Richard White projects a 22-42 per cent increase in EBITDA in the current financial year, buoyed by a turnaround in fortunes since the start of winter with user numbers for WiseTech's CargoOne logistics software platform hitting close to pre-pandemic levels in July.

"The COVID-19 challenges faced by the global logistics and supply chain sectors are accelerating the longer term trend towards consolidation and integration," said White.

"Within this environment, we are seeing increased demand amongst large global logistics service providers for our technological and digital solutions that drive efficiencies and productivity improvements.

"WiseTech is ideally placed to address this growing demand, with our logistics execution technology and 40 development centres delivering seamless, global capabilities that improve productivity, functional depth, data integration and visibility, regulatory compliance and value for over 17,000 customers worldwide."


25. Qantas Airways (QAN)

Industrials
Market Cap: $
7.64bn
FY20 revenue: $14.25b
FY20 loss: $1.96b
Listed: 1995
CEO: Alan Joyce
CEO salary: $1.7m

Australia's iconic airline Qantas (ASX: QAN) has become an emblem of the economic destruction wrought by COVID-19; hundreds of aircraft grounded, 6,000 redundancies, thousands of baggage handler jobs under review and a potential head office relocation in the wings.

CEO Alan Joyce's remuneration fell by around $8 million this past financial year, but that is small change compared to the $2.7 billion loss of which more than $1 billion came from the impairment of Qantas' A380 fleet that normally fly its international routes.

As a drastically downsized division, Qantas International has seen its CEO Tino La Spina depart, demonstrating just how serious the group is about slashing costs and staying afloat to avoid the fate of its overseas counterparts.

Domestic competitor Virgin Australia has entered administration and will be handed over to Bain Capital, but in terms of major international carriers like Qantas there have been multi-billion-dollar bailouts from Lufthansa to Air France-KLM to American Airlines, while South America's largest carrier Latam Airlines filed for Chapter 11 bankruptcy.

"It's devastating and it will be a question of survival for many," Joyce said of industry-wide problems.

"What makes Qantas different is that we entered this crisis with a strong balance sheet and we moved fast to put ourselves in a good position to wait for the recovery."

That balance sheet has also been lifted by a $1.47 billion capital raising, and more recently a 10-year $500 million unsecured bond issue.

From the Australian Government the flying kangaroo received some $267 million in JobKeeper payments in the lead-up to June 30, along with $192 million in support for minimum viable network and government repatriation flights, $36 million from the Australian Airline Financial Relief Package, and further benefits from overseas governments.

"Recovery will take time and it will be choppy. We've already had setbacks with borders opening and then closing again. But we know that travel is at the top of people's wish lists and that demand will return as soon as restrictions lift," Joyce said.


26. GPT Group (GPT)

Real Estate
Market Cap: $
7.6bn
1H20 revenue (operates on calendar year): $244.5m
1H20 loss (operates on calendar year): $519.1m
Listed: 1971
CEO: Bob Johnston
CEO salary (2019): $4.33m

With the 2019 calendar year nicely wrapped up, GPT Group (ASX: GPT) was looking forward to building on the momentum into 2020.

By May, when GPT Group was holding its AGM via webcast for the first time, it was clear the landscape had changed dramatically.

The REIT sector took a battering from the global pandemic and any group with retail and office assets was particularly hard hit.

GPT is one of Australia's largest diversified property groups with investments totalling $24.5 billion in office towers, shopping centres and logistics warehouses.

It was also one of the first Australian property groups to reveal the extent of that battering with an interim net loss of $519.1 million for the six months to the end of June.

The company offered investors a microscope for its interim result, giving them insight into the changes that took place between the March and June quarters. This would accentuate the impact the COVID-19 lockdown had on its business.

After a robust start in the first quarter, by the end of June the office sector was showing signs of continued weakness including tenants delaying any new leasing decisions. The retail portfolio saw a significant reduction in cashflow as rent negotiations continued.

However, logistics saw an increase in occupancy from 98.6 per cent to 99.8 per cent as online shopping gained in popularity.

GPT Trust has deferred several projects as the fallout continues to be assessed. This includes the 300 Lonsdale Street office project in Melbourne, the expansion of Melbourne Central retail centre and the Rouse Hill Town Centre in Sydney. Lonsdale Street is earmarked for the development of Australia's largest timber building to be positioned above Melbourne Central.


27. Lendlease Group (LLC)

Real Estate
Market Cap: $
7.59bn
FY20 revenue: $13.29b
FY20 loss: $310m
Listed: 1962
CEO: Stephen McCann
CEO salary: $4.22m

Lendlease (ASX: LLC) announced plans to dump its trouble-plagued engineering business at the end of 2019, and the reasons for doing so were made clear after it was hit by two separate class actions in 2020.

The division has been a perennial problem for the international property and investments group over many years with writedowns hitting the company's share price in late 2018 and again in February 2019.

This triggered the class actions against Lendlease, one led by Maurice Blackburn in April and the second by Phi Finney McDonald just four months later in August.

The class actions allege that Lendlease breached its disclosure obligations by failing to inform the market of issues within its engineering division as far back as October 2017.

Lendlease completed the $180 million sale of its engineering division to Acciona Infrastructure Asia Pacific in September this year. Ironically, Lendlease will retain the North Connex project in Sydney and the Kingsford Smith Drive upgrade in Brisbane which were to blame for the division's cost blowouts in the first place.

The restructuring costs of the sale hit the Lendlease FY20 bottom line by $368 million along with a $19 million goodwill impairment.

Meanwhile, Lendlease formally added two major projects to its development pipeline in FY20, namely the Thamesmead Waterfront in London and a partnership with Google in the San Francisco Bay area. The residential-led projects have a combined end value of $37 billion.

The group raised $1.2 billion through an institutional placement in the second half to bolster its capital position in response to COVID-19. A further $1.3 billion was secured through a new debt facility.

"This is a further step in our global geographic foothold strategy, expanding WiseTech's lead in customs clearance and border clearance, which continues to grow in importance for world trade," said White.

"This transaction follows our recent acquisition of CargoIT, a leading customs management solutions provider in Sweden, and our European foothold acquisitions in Belgium, Germany, France, Ireland, Italy, Netherlands, Spain, and Turkey."


28. Origin Energy (ORG)

Energy
Market Cap: $
7.57bn
FY20 revenue: $13.15b
FY20 profit: $86m
Listed: 1961
CEO:  Frank Calabria
CEO salary: $3.58m

Origin Energy (ASX: ORG), which operates one of Australia's largest power-generation businesses, faced a competitive environment domestically due to a fall in wholesale electricity prices and the regulatory environment for retail pricing.

To combat these pressures, Origin announced plans this year to acquire a 20 per cent stake in UK-based Octopus Energy with a view to adopting the company's Kraken technology platform. Origin says this will benefit its retail business by reducing energy costs, increasing renewable and improving customer service.

The deal, worth $507 million, will see Origin's 3.8 million retail customers transferred to Kraken over the next two years. It's part of a strategy by Origin to reduce retail service costs by $100 million this financial year. 

Octopus copped some flak over the deal for aligning itself with Origin and its fossil-fuel legacy.

However, Origin CEO Frank Calabria remains an advocate for green initiatives as long as they get 'energy right' for customers, the community and the planet. Calabria sees the trend towards electrification gaining momentum, particularly in the transport sector.

To that end, Origin this year launched a two-year electric vehicle smart charging trial with a view to helping the Australian market take up EV usage. Through a grant from the Australian Renewable Energy Agency, the company is rolling out 150 smart chargers in New South Wales, Victoria, Queensland and South Australia.

More broadly, Origin says COVID-19 reduced electricity demand in Australia by 5-10 per cent over the fourth quarter of FY20. Along with the rise in renewables and the pressure on gas prices due to lower global demand, it says this will reduce the near-term outlook for gas and electricity prices.

Meanwhile, long-time Origin chairman Gordon Cairns retired in FY20 after seven years in the role, to be replaced by Scott Perkins who has been on the Boal board since 2015.


29. Coca-Cola Amatil (CCL)

Food, Beverage & Tobacco
Market Cap: $
6.88bn
1H20 revenue (operates on calendar year): $2.18b
1H20 loss (operates on calendar year): $8.7m
Listed: 1970
CEO: Alison Watkins
CEO salary (2019): $5.48m

The company sells a product that looks like coal juice, or coke by any other name, but it turns out Coca-Cola Amatil (ASX: CCL) actually does have an interest in the 'black gold' of the mining industry.

The beverage group has surprised the market after becoming embroiled in Glencore's royalty dispute with the Queensland Government over the Rolleston open-cut coal mine in the Bowen Basin. 

Glencore alleges the government has no right to $54 billion in mining royalties paid since 2009 because the land was transferred away from the state more than a century ago.

Coca-Cola Amatil receives royalties from the mine through a subsidiary which owns land that forms part of the mine.

In August, the beverage maker was forced to clarify its position through an ASX announcement where it revealed it has received about $80 million in royalties from the mine since 2014. The windfall is classed as other revenue in its balance sheet a handy $4.8 million in 2019 and $1.2 million in its latest H120 accounts.

Coca-Cola Amatil may have to repay those royalties should Glencore win the case, so it's no surprise that Coca-Cola Amatil frothed over the issue. It plans to defend its rights to the royalties.

A little money on the side is handy in tough times like these when CCA has reported a hit to revenue in H120 from floods, fires and COVID-19. Indonesian operations were also affected by severe floods and the pandemic, which led the company to record a non-cash impairment of $101.2 million on that division.

The company has not given any guidance for full-year profits as it focuses on reducing its cost base with the December quarter critical for its FY20 results.


30. Seven Group Holdings (SVW)

Industrials
Market Cap: $
6.08bn
FY20 revenue: $4.56b
FY20 profit: $115.8m
Listed: 2010
CEO: Ryan Stokes
CEO salary: $4.15m

Seven Group Holdings (ASX: SVW) might be most well-known for its media arm, but the Kerry Stokes founded company operates in a plethora of industries including industrial services, oil and gas.

It is this diversification that CEO and managing director Ryan Stokes said saw the company through the economic and social disruption caused by COVID-19.

The company finished FY20 with trading revenue of $4.56 billion and underlying earnings of $740 million, up 2 per cent.

"Today's result reflects a strong performance from our operating businesses and the robustness of our diversified model," said Ryan on the announcement of SVW's FY20 results.

The company's industrial services portfolio delivered solid growth, with WesTrac executing a standout performance.

In addition, the company's exposure to industrials, via its growing investment in Boral, positions the company well for the post-COVID infrastructure boom to come. CEO Stokes joined the Boral board after SVW boosted its stake in Boral from 10 per cent to just under 20 per cent.

"Our disciplined focus on operational cash flow combined with an increasingly diversified exposure to end markets means we are successfully navigating through the current uncertain times, and commence Financial Year 2021 with a strong balance sheet to pursue growth opportunities that complement our existing core businesses," said the CEO.

With regard to the company's media arm, Seven West, advertising revenue dipped during the worst of the pandemic period, but the group managed to offset losses with cost savings of $170 million and the re-negotiation of its AFL contract providing a further $87 million in savings.

In late 2019 the company attempted to merge with Prime Media, the owner of regional media assets.

However, that merger was blocked by shareholders, with SWM emerging with just a 14.9 per cent stake in the company.

This year the company also sold magazine business Pacific Magazines to Bauer Media for $40 million, and SWM's Perth HQ for $75 million to Primewest.


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Author: Matt Ogg, Nick Nichols, David Simmons and Camilla Jansen

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