29/01/2019 - 16:08

Iron ore boosts private companies

29/01/2019 - 16:08

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SPECIAL REPORT: Western Australia’s iron ore industry has reshaped the BNiQ ranking of the state’s largest private companies.

Iron ore boosts private companies

Western Australia’s iron ore industry has reshaped the BNiQ ranking of the state’s largest private companies.

The latest update to the BNiQ listing of Western Australia’s largest private companies has once again highlighted major shifts in economic activity.

Some of the private companies that feature near the top of the list simply were not operating 10 years ago.

Conversely, many of the names that featured 20 years ago, or even 10 years ago, no longer exist or have gone through massive changes.

The list is now dominated by companies linked to the iron ore sector, building and contracting.

None are larger than Gina Rinehart’s Hancock Prospecting, which generated annual revenue in 2018 financial year of just more than $6 billion.

It has a diverse portfolio of mining and agricultural assets but most of its revenue comes from its 70 per cent stake in iron ore miner Roy Hill Holdings and its 50 per cent stake in the Hope Downs joint venture with Rio Tinto.

Roy Hill on its own features at number two, with revenue growing strongly last year to $3.8 billion as it sustained annual production from its namesake mine at around the nameplate capacity of 55 million tonnes per year.

Other prominent businesses that owe their high ranking on the list to iron ore include Minderoo Group, AMB Holdings and Wright Prospecting.

Andrew and Nicola Forrest are using Minderoo to pursue a wide range of commercial and philanthropic activities, with the money ultimately coming from his one-third stake in Fortescue Metals Group.

Wright Prospecting is jointly owned by the children and grandchildren of Peter Wright, who partnered with the late Lang Hancock in the 1960s to open up the Pilbara iron ore sector.

Its income is primarily from mining royalties and stems from a deal struck with Rio Tinto in the 1960s.

The full extent of Wright Prospecting’s income only became clear this month after the private company lodged 20 years of financial statements with the Australian Securities and Investments Commission.

It’s latest audited report, for the year to June 2018, showed revenue of $193 million and a net profit of $127 million.

Over the nine years to June 2018, the company paid annual dividends averaging $138 million.

The beneficiaries are AMB Holdings, owned by Mr Wright’s daughter Angela Bennett, and VOC Group, owned by grandchildren Leonie Baldock and Alexandra Burt.

AMB Holdings is also on the list of private companies. AMB is essentially an investment company and generated annual income of about $291 million in 2016, according to the ATO.

The builders

Many of WA’s largest companies operate in the residential and commercial building sectors.

The largest of these is the Buckeridge family’s home building, manufacturing and contracting group BGC Australia, which is ranked third.

The group was built up by its founder, the late Len Buckeridge, with annual revenue growing five-fold over the past 20 years – from $470 million in 1999 to $2.5 billion currently.

BGC is set for a change of ownership this year after Mr Buckeridge’s children decided to put it up for sale.

Dale Alcock’s ABN Group has achieved similar percentage growth over the past two decades.

Its annual revenue has lifted from $162 million in 1999 (when it was known as Alcock/Brown-Neaves Group) to $910 million presently.

Doric/Jaxon Consolidated, Pindan, Julian Walters’ JWH Group and Zorzi Builders also feature among the state’s 30 largest private companies.

Mining and construction contractors are another major category for large WA private companies.

These include Byrnecut, Georgiou Group and Ertech.

Big changes 

The private companies that sat atop the BNiQ list 20 years ago have all been through major changes in structure or ownership.

Janet Holmes a Court’s Heytesbury was listed as the state’s largest private company in the 1999 edition of Business News’ Book of Lists, with annual revenue of $1.35 billion.

Many of its assets, including a stake in construction contractor John Holland, its trucking business and its theatres in London, were sold to cut debt.

Heytesbury today has two core businesses – the Vasse Felix winery and cattle stations – and is owned and run by Janet’s son, Paul Holmes a Court.

Number two on the list was Multiplex Constructions, which grew to be a powerhouse under the leadership of its founder, the late John Roberts.

Multiplex spent several years listed on the ASX, after raising $900 million in one of the state’s largest stock market floats in 2003.

It was subsequently acquired by Canadian investment giant Brookfield, and continues to be one of Australia’s dominant construction companies.

Third on the list was car retailer Automotive Holdings, which listed on the ASX in 2005 and has proceeded to expand across Australia and New Zealand.

With the benefit of its ASX listing, and after multiple acquisitions, its annual revenue has grown from $1.1 billion in 1999 to $6.5 billion last financial year.

Kerry Stokes’ Australian Capital Equity still exists by name but its core assets, notably the Westrac Caterpiller dealership, are now part of listed company Seven Group Holdings.

A review of the lists over the past 20 years highlights the number of private companies that have been the subject of trade sales.

These include dairy producer Peters & Brownes, Joe Ricciardo’s JR Engineering Services, department store chain Aherns and car retailer DVG Automotive Group.

The Rae family’s petrol retailer Gull Petroleum and the Paino family’s food services business Sealanes have also been sold to trade buyers.

There have also been a couple of notable failures – Ric Stowe’s Griffin Group, which had extensive coal mining and pastoral interests, and beef producer EG Green & Sons.

Continuity

Against this backdrop of change, it’s worth highlighting the private companies that have achieved continuity over the past 20 years.

These include Perron Group, which is a major property owner and is the distributor of Toyota vehicles in WA.

Founder Stan Perron passed away late last year but he established a board and management team that ensured the group was able to continue operating smoothly.

Car retailer John Hughes has a different approach – he continues to be very hands-on at his businesses, which generate annual sales of nearly $500 million.

A notable addition to the list is technology-led gaming company VGW Holdings, which was established in 2010.

Its annual revenue skyrocketed last financial year to $380 million from $99 million in the previous year, as uptake of its games Chumba Casino and Global Poker took off.

With a workforce of about 400 people, many of whom are in Perth, VGW has become an unlikely leader in the local tech scene.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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