It is not common that the Melbourne Top Companies list has too many changes to its make-up of key players, but 2022 is an outlier as consolidation gobbled up so many over the past year.

In 2021 there were just three companies that were new to the list. This year there are nine, seven of which are in the bottom section nipping at the heels of Melbourne’s usual suspects.

Two IPOs that are shaking up the finance world – Latitude Group (ASX: LFS) and Judo Capital (ASX: JDO) – could become more regular participants if they’re able to reverse the negative trends they’ve witnessed since listing in April and November respectively.

Most of the new entrants witnessed huge surges in their share prices on the back of strong performances, most notably #50 Arena REIT (ASX: ARF), a childcare property owner that has seen its fortunes increase by 55 per cent. Other double-digit rises were seen for jewellery retailer Lovisa (ASX: LOV) at 32 per cent and downsizer retirement property operator Lifestyle Communities (ASX: LIC) at 22 per cent.

Many short-sellers were smashed during the pandemic as they underestimated the sharp rebound that took place thanks to heightened stimulus spending globally, by L1 Long Short Fund (ASX: LSF) has proven there are still gains to be made through the practice with Peloton and AGL Energy among its more notable targets.

Webjet (ASX: WEB) has been able to stay in the air even though the tourism recovery has been more protracted than expected, and like Computershare (ASX: CPU) which was buoyed into #11, a healthy connection to share trading digital infrastructure has been a boon for Iress (ASX: IRE), up eight spots in 2022 with its shares rising by more than a quarter over the past year.

41. Iress (IRE)

SOFTWARE & SERVICES
2021 rank: 49
Market Cap: $2.23b
FY21 revenue: $595.94m
FY21 profit: $73.79m
Listed: 2000
CEO: Andrew Walsh
CEO salary: $3.37m

With plans to double its net profit by 2025, share market software and information services group Iress (ASX: IRE) caught the attention of a potential suitor last year, namely European private equity group EQT.

The indicative offer of $15.90 per share valued the company at more than $3 billion and the Iress market capitalisation nearly reached that level after the potential bid was revealed.

EQT pulled out of the buyout plan in September after the parties said they couldn’t agree on a transaction. The potential suitor accommodated the company by revealing it didn’t encounter any ‘red flags’ during its due diligence process, simply admitting it was unable to sufficiently confirm its ‘investment hypothesis’ to proceed with a full bid.

Notably, EQT’s Asia-Pacific chairman Thomas Von Koch described Iress as a market leader with an ‘impressive, technology-focused business with strong market share and a very loyal customer base’.

Iress chairman Roger Sharp couldn’t have said it better himself, affirming that the company has a positive outlook due to a ‘strong operating businesses, favourable industry trends and growth investments’.

Iress software is used by more than 10,000 businesses and 500,000 customers globally who are serviced by teams based in Asia-Pacific, North America, Africa, the UK and Europe, as well as Australia.

Strength in Iress’s Asia-Pacific markets in the second half, as well as higher contributions from the North American and mortgage businesses, helped drive FY21 net earnings 24 per cent higher.

CEO Andrew Walsh says the latest result affirms the growth targets for Iress of more than doubling NPAT by 2025. Although Iress shares have pulled back from the highs reached before EQT walked away from a potential buyout, the company is looking forward to continued growth. Management is confident the company will achieve profit upside of between 7 and 10 per cent in constant currency terms this year across its business segments.

42. Bapcor (BAP)

CONSUMER DISCRETIONARY
2021 rank: 42
Market Cap: $2.12b
FY21 revenue: $1.76b
FY21 profit: $118.56m
Listed: 2014
CEO: Noel Meehan
CEO salary: $1.07m (plus incentives)

What began in late November with an announcement by automotive-parts retailer Bapcor (ASX: BAP) that long-time CEO Darryl Abotomey was retiring had descended into a boardroom stoush two weeks later.

Abotomey had been with Bapcor for 10 years and headed the business since 2014 when it was floated by Quadrant Private Equity. The November announcement revealed he would retire as CEO on 28 February this year as part of a planned orderly transition of leadership.

That all changed in a flash when, on 6 December 2021, the board revealed a ‘marked deterioration’ in the relationship between board members and Abotomey.

With the share price already hammered by news of his departure on 23 November, the stock’s value fell further as news broke of the in-fighting at the executive level. The shares have been languishing at near two-year lows ever since.

A unanimous decision by the Bapcor board saw Abotomey’s retirement from the company made immediate on 6 December after the board declared his position as CEO had become ‘untenable’. The finer details of the fallout remain unclear, although Abotomey is understood to have had strong support from major shareholders who were rattled by his early departure. Company founder and major shareholder Garry Johnson is among those who felt Abotomey was poorly treated by the board.

Under Abotomey’s leadership, Bapcor shares rose fourfold to hit a high of $8.60 in June last year, driven by consecutive years of underlying annual profit growth.  

Bapcor responded by elevating chief financial officer Noel Meehan to the CEO’s position while a search for Abotomey’s replacement continued. They made Meehan’s position at the top permanent in February.

Bapcor is one of Australia’s largest car parts, equipment and accessories providers owning a network of high-profile brands, including Autobarn, Autopro and Burson. The group has 1,100 locations across eight countries in the Asia Pacific region, that includes its 25 per cent interest in South-East Asian auto-parts group Tye Soon.

The company's operations have benefitted from the broad-based surge in vehicle sales across its operating regions. The tide has turned a little for the group in the first half of FY22, with the Bapcor reporting a 14.7 per cent decrease in NPAT to $57.7 million despite a 1.9 per cent increase in group revenue as Victorian and NSW lockdowns affected the business. However, the wholesale division continued to record solid revenue and earnings growth.

43. Webjet (WEB)

CONSUMER DISCRETIONARY
2021 rank: 45
Market Cap: $2.10b
FY21 revenue: $38.5m
FY21 loss: $156.6m
Listed: 1997
CEO: John Guscic
CEO salary: $2.44m

Online travel group Webjet (ASX: WEB) has returned to positive monthly cashflows as travel markets begin to recover globally.

The company is also benefiting from a leaner corporate structure following two years of tightening its belt during the pandemic, with costs in the first half of FY22 to the end of September down 31 per cent on pre-COVID levels and the group broadly on track to be 20 per cent more cost efficient at scale.

CEO John Guscic says Webjet’s strategy of targeting new domestic travel markets while international borders were closed helped profitability to rebound. This includes the expanding presence of its WebBeds business, an online intermediary between hotels looking to fill hotel rooms and travel provider clients, in North America.

Profitability returned to the group’s Australian domestic leisure market in the first quarter of FY22 as travel markets rose as interstate border restrictions were eased.

“The opportunities are significant with pent up demand evident globally as we see travel snapping back as markets open,” Guscic said after the release of Webjet’s half-yearly results.

“Our reduced cost base, enhanced technology and strong customer service ethos, in conjunction with a culture of constant product innovation, places us in a powerful position to capture bookings as the recovery continues.”

Webjet is keen to capitalise on pent-up demand for international travel in 2022, believing that when markets finally rebound, they will come back stronger. The group’s third quarter of FY22 was already tracking better than the second quarter.

That has led Webjet to declare it will be back to pre-COVID booking volumes by the second half of FY23, most likely from October this year to March 2023.

North America, and some key markets in Europe and the Asia-Pacific, were already tracking better than pre-COVID. That included Russia, although this is based on figures before the Ukranian conflict.

Webjet notes that some of its markets are still at 10 per cent of normal transactions, which gives it confidence in a sharp rebound when these markets fire up. Guscic also says the company’s strong capital base puts the group in prime position for strategic acquisitions as they arise.

Webjet more than halved its net loss in the first half of FY22 to $61.8 million as revenue surged 145 per cent to $55.4 million. The FY21 full-year revenue and profit in the factbox above are for the nine-month period from 1 July 2020 to 31 March 2021, reflecting the company’s new 31 March year end.

44. Lovisa (LOV)

RETAIL
2021 rank: NEW TO LIST
Market Cap: $2.09b
FY21 revenue: $288m
FY21 profit: $24.8m
Listed: 2014
CEO & MD: Victor Herrero
CEO & MD salary: $1.3m (base salary)

As one of Australia’s leading retail specialists in fast-fashion jewellery, Lovisa (ASX: LOV) operates more than 580 stores across 15 countries.

Founded by BB Retail Capital and former managing director Shane Fallscheer, who stepped down in October 2021, the business opened its first store in Queensland in 2010 before expanding to New Zealand, South Africa, Singapore and Malaysia within the space of a year. 

Based on a model that ensures trends are quickly identified, Lovisa has developed a vertically integrated business model, developing, designing, sourcing and merchandising 100 per cent of its Lovisa branded products.

Adopting trends made popular by celebrities, social media influencers, and the latest runway shows; the business makes jewellery available for mass consumption as quickly as possible at affordable prices. This model is underpinned by high gross margins (averaging more than 75 per cent) and enables the jeweller to stay on-trend by being highly responsive to customer demands.

Its centrally operated software provides further insights into trends, inventory, and staffing, further optimising the offering.

With 73 per cent of stores now based outside Australia, Lovisa looks to strategically open its stores within shopping malls in cities with high-density populations with large pedestrian traffic volumes.

Acquiring German jewellery wholesaler Beeline in November 2020 for $97 million added 80 stores to Lovisa’s global network and opened up six central European markets.

After a strong sales recovery across most of its markets in 2021, revenue for the half-year was up almost 50 per cent, at $217.8 million, although parts of Europe and Asia struggled as they were still impacted by COVID. 

Accelerating its digital capabilities at the onset of the pandemic, online sales continue to grow, up 36 per cent in 1H22, proving a significant upside opportunity for the business.

"I’m thrilled to take over running the Lovisa business in such a strong position, and we are very pleased with the performance for the first half despite the ongoing challenges and disruptions we face globally from COVID," new CEO Victor Herrero said after the release of the half-yearly results in February.

"The team have performed well through this period and have the business well-positioned for the next phase of growth, with the strength of our balance sheet putting us in a great position to take advantage of future opportunities as they arise."

Herrero was appointed CEO after spending 13 years with the Inditex Group, one of the world’s largest fast-fashion retailers.

Total sales during the first eight weeks trading in 2022 were up 61.7 per cent on the same period in FY21, although cost pressures remain in global logistics because of worldwide shipping capacity constraints.

45. Judo Capital (JDO)

BANKS
2021 rank: NEW TO LIST
Market Cap: $1.94b
FY21 revenue: $89.7m
FY21 profit: $31.1m
Listed: 2021
CEO: Joseph Healy
CEO salary: $1.1m (base salary)

Unlike competitor neobank 86 400 which decided to buddy up with Big Four bank NAB (ASX: NAB) in early 2021, Judo Bank has gone it alone to the public markets, listing on the ASX in November 2021.

It was an historic moment, not just for Judo which opened itself up to a massive investor base, but for the ASX itself which hosted what was the first fully licensed Australian banking IPO in 25 years.

Judo’s total IPO size was $657 million, and with an offer price of $2.10 per share the company commenced trading with a market capitalization of $2.3 billion.

Not bad for a company that only received its banking license in April 2019.

According to CEO and co-founder Joseph Healy, Judo exists as a banking alternative for Australian SMEs that have been waylaid by larger lenders.

“Australian SMEs have been unable to secure the lending they need and the service they deserve to support and grow their businesses,” Healy said when the company listed.

“They have been forced into a model that required them to contact their bank via a call centre; use their homes as collateral for business loans; and contend with a “computer says no” approach to lending.

“Judo Bank’s IPO will mean more SMEs will have access to a relationship bank that listens, understands and boldly backs their business.”

This approach to marketing the digital bank as a viable alternative to the few options previously available to SMEs appears to be paying off too.

Per the company’s latest financial health check, Judo says its lending book grew by 38 per cent to $4.85 billion as of 31 December 2021.

Further, the company brought in $73.5 million during the half – lapping at the toes of the group’s revenue figure for the entirety of the previous financial year which was $89.7 million.

Though IPO costs crushed the group’s overall profits (posting a loss of $16.1 million), Healy said he was pleased with the half on the whole, noting he was expecting major growth during 2022 as Judo aims to hit a lending portfolio of between $15 and $20 billion.

“We are expecting 2022 to deliver the strongest business credit growth in 14 years,” Healy said.

“It continues to be an exciting time for Judo. We are highly focused on strengthening our existing high quality SME customers, as well as servicing new customers.”

46. Waypoint REIT (WPR)

Founded in 2016, Waypoint REIT (ASX: WPR) is Australia’s largest ASX listed real estate investment trust and owner of 433 fuel and convenience retail stores across Australia.

Formerly known as Viva Energy REIT, the petrol station owner changed its name following the sale of Viva Energy’s (ASX: VEA) 35.5 per cent security holding in the company on 21 February 2020 for $734.3 million.

"VVR [Viva Energy REIT] has performed exceptionally well since its listing, and as the main tenant of the vehicle, we look forward to continuing future opportunities to grow with VVR," Viva Energy chief executive Scott Wyatt said after the sale.

"By realising our equity in the vehicle at an attractive price, it also provides us with an opportunity to provide substantial returns to our shareholders and to continue to support our strong balance sheet.”

In 2016, Viva Energy separated its stapled securities into an investment trust asset, VVR, following its acquisition (then called Shell Australia Limited) by a Vitol-led consortium.

With an investment portfolio now worth more than $3 billion, Waypoint aims to maximise long-term income and capital returns by reinvesting in its core portfolio and continuing to purchase new sites that meet the business criteria.

The vast majority, 96.6 per cent, of Waypoint’s retail income still originates from listed fuels supplier Viva Energy. Viva Energy supplies approximately one-quarter of Australia’s downstream petroleum market and has the sole rights to the Shell brand to sell retail fuels in Australia.

Occupancy of its fuel stores reached 99 per cent at the end of 2021, with Waypoint expecting rental income from existing fuel and convenience retail tenancies to grow in line with contracted annual rental increases.

In FY22, the business targets $150 million worth of asset sales while exploring further opportunities with Viva Energy to reinvest in the core portfolio. 

“Waypoint REIT’s FY22 guidance continues to be underpinned by the portfolio’s 3 per cent weighted average rent review and assumes $150 million of asset sales and $100 million of associated capital management initiatives during the year,” Waypoint CEO Hadyn Stephens said. 

“Waypoint REIT is also pleased to announce its long-term portfolio diversification strategy as a means to broaden avenues for growth, reduce sector/tenant concentration and improve ESG (Environmental, Social, Governance) metrics.”

Although rental income in FY21 grew only slightly to $163.2 million, and while expenses were reduced, the business recorded a 58.5 per cent increase in statutory net profit (of $443.6 million) following property valuation gains during the year. Underlying this figure, cap rate compression in metro areas outside of capital cities doubled during the second half of the year to 28 basis points.

COVID did not materially impact the business as its significant tenants were considered to operate essential services and stayed open during the pandemic. However, carbon emissions from operations reduced from 81.1 tonnes to 25.4 tonnes in FY21, mainly due to reduced travel during COVID.

The business aims to maintain a neutral carbon emissions status throughout FY22 after offsetting FY21 emissions by donating to South Pole’s EcoAustralia product. The company has piloted five EV charging points in Australia during the past year.

47. Latitude Group Holdings (LFS)

FINANCIALS
2021 rank: NEW TO LIST
Market Cap: $1.86b
FY21 revenue: $987.9m
FY21 profit: $160.9m
Listed: 2021
CEO: Ahmed Fahour
CEO salary: $1.8m (plus incentives)

Consumer financier Latitude Group Holdings (ASX: LFS) makes its debut in this year’s Melbourne Top Companies list after completing a $2.6 billion IPO in 2021.

The company was formed after a private equity consortium, comprising Värde Partners, Deutsche Bank and KKR, bought GE Capital's Australian and New Zealand consumer finance business in 2015. The GE Capital brands included Nissan Finance, AVCO Financial, Hallmark Insurance and Australian Guarantee Corporation, a century-old business best known as an equipment financier for businesses and households.

The IPO for Latitude was pitched at $2.60 per share, but despite a strong market debut the shares have had little success in the year since they listed. The shares are now trading about 30 per cent below the prospectus price, even after the company posted a 256 per cent increase in net profit to $160 million in FY21.

Latitude is led by former Australia Post boss Ahmed Fahour and is still majority owned by the private equity partners who hold a 66.3 per cent stake. The group’s appetite for growth was evident early on as Latitude snapped up Melbourne-based personal loan fintech Symple Loans for $200 million late last year.

Latitude followed this up in January this year with plans to extend its reach into the buy-now-pay-later (BNPL) sector through a $335 million deal to acquire the consumer finance arm of Humm Group (ASX: HUM).

The deal will boost Latitude’s receivables to more than $8 billion though an expanded customer base of more than five million people and a network of over 70,000 merchants. In comparison, the group’s existing LatitudePay (BNPL) customer base in Australia and New Zealand grew 42 per cent in FY21 to 539,000 accounts.

Humm Group CEO Rebecca James will lead the combined group’s BNPL business. Fahour, who is credited with a big turnaround in the Australia Post business, anticipates further consolidation in the BNPL sector following the $39 billion buyout of Afterpay by US giant Square Inc. (now known as Block Inc.).

48.Lifestyle Communities (LIC)

PROPERTY
2021 rank: NEW TO LIST
Market Cap: $1.80b
FY21 revenue: $138.7m
FY21 profit: $91.1m
Listed: 1998
MD: James Kelly
MD salary: $600,000

Targeting a cohort of like-minded retired, semi-retired and working downsizers, Lifestyle Communities (ASX: LIC) markets itself as an alternative to the “asset rich” approach to retirement, which may not always provide a financially viable income stream.

Since the first homeowner moved into its inaugural Brookfield community in 2005, by the end of last year more than 4,000 people over the age of 50 had chosen to downsize to a Lifestyle Community low-maintenance home.

These homes allow residents the chance to us any surplus proceeds from the sale of their previous property to pay off debts, supplement retirement income or boost super. 

Offering security within gated communities, residents are enticed with a promise of cheaper living costs in a supportive community of like-minded people, alongside peace of mind away from the stresses of tending to larger homes and gardens. 

Homeowners at Lifestyle Communities own their own homes and lease the land via a weekly site fee and a deferred management fee. The weekly site fee is approximately 20 to 25 per cent of the aged pension after receipt of the Commonwealth Rental Assistance and after Lifestyle Communities takes a 54 per cent margin.

Purchasing its first property in 2003, the business now owns 24 communities across Victoria in various management or development stages. It has a 56.5 per cent occupancy across its portfolio, with three of every five homeowners being women. The business indicates sales were impacted by the COVID-19 pandemic and associated restrictions in Melbourne.

“The supply chain in the construction industry has come under substantial pressure in the last few months, and our construction team and our supply partners have done an outstanding job leveraging loyal relationships built over many years to keep our build program on track,” said managing director James Kelly at the release of the half-yearly results in February.

“Our digital transformation is in full swing, and we were pleased to launch the new website in October and our new finance system in January.”

LIC’s net profit almost doubled to $27.5 million for the first half of the 2022 financial year, coming off the back of an increase of 333 homes-under-management and 68 resale settlements, which attracted a deferred management fee.

Maintaining its focus on Melbourne’s growth corridors and key Victorian regional centres, in the December half the business agreed to purchase and develop three new sites in Phillip Island, Merrifield, and Ocean Grove.

The business has access to more than $100 million in cash and undrawn facilities, with subsequent refinancing not due until June 2025.

49. L1 Long Short Fund (LSF)

INVESTMENT FUND
2021 rank: NEW TO LIST
Market Cap: $1.74b
FY21 revenue: $915.9m
FY21 profit: $514.2m
Listed: 2018
Joint MDs: Raphael Lamm & Mark Landau
MD salary: Undisclosed (paid directly by company’s investment manager L1 Capital)

Founded in 2018, L1 Long Short Fund (LSF) is one of six investment strategies controlled by global investment manager L1 Capital.

L1 Capital, the Melbourne-based hedge fund, was established in 2007 and is led by co-founders and joint managing directors Raphael Lamm and Mark Landau, who also manage the investment portfolio of L1 Long Short Fund.

Prior to co-founding L1 Capital, Landau was an investment manager in the Smaller Companies Fund at Invesco, while Lamm was a portfolio manager at Cooper Investors. Both hold commerce degrees from Monash University.

Aiming to deliver strong, positive, risk-adjusted returns over the long term, the LSF portfolio predominantly comprises of long and short positions in Australian and NZ securities. Global securities of up to 30 per cent of the portfolio’s gross exposure are permitted.

Delivering a high dividend is not a primary objective of the investment strategy. Instead, the investment strategy uses a fundamental, bottom-up research process to identify mispriced securities with the potential to provide attractive risk-adjusted returns.

“After one of the most volatile and challenging years of our investment careers in 2020, we had hoped for a more stable market backdrop in 2021,” LSF’s latest quarterly report confirmed.

“Unfortunately, 2021 proved to be almost as eventful with the emergence of the Delta and Omicron variants of the COVID-19 virus extending the impact of the pandemic and continuing to add unprecedented volatility to financial markets.

“Given the challenging macroeconomic backdrop, as well as the continued headwind to our investment style (value and cyclicals underperformed growth stocks for the 5th consecutive year in 2021 and 10 out of the last 11 years in Australia), we are very pleased to have delivered robust returns for our investors, with the portfolio generating a net return of 30.3 per cent in 2021.”

After returning a loss of $21.6 million in 2020, LSF spectacularly returned to profit in 2021, earning $514.2 million after-tax.

During the early stages of COVID in January 2020, LSF reduced some of its cyclical exposure by exiting positions in energy and travel-related names and added a few short positions linked to China and the travel sector. Although helpful, the strategy proved insufficient, and the management team admitted in hindsight to making a mistake after believing the pandemic would largely be confined to Asia.

Winning the 2021 Australian Alternative Investment Award for the best listed alternative product for LSF was recognition of the turnaround in the fund’s performance.

The top contributing shorts in recent years include Australian energy company AGL Energy (shares fell 57 per cent during the time the fund was short between April 2019 and June 2021), Peloton (fell 55 per cent between August and November 2021) and US consumer retail company Williams Sonoma (down 19 per cent between November and December 2021).

The fund’s key long contributors in 2021 include US chain Bed Bath & Beyond, Australian industrial group Downer, gaming and betting company Entain, News Corp, QBE, Telstra, US bank Wells Fargo and Australian winemaking business Treasury Wine Estates (position exited up 50 per cent).

50. Arena REIT (ARF) 

REAL ESTATE
2021 rank: NEW TO LIST
Market Cap: $1.70b
FY21 revenue: $60.3m 
FY21 profit: $165.4m 
Listed: 2013 
MD: Rob de Vos 
MD salary: $1.07m 

With more than $1.1 billion worth of childcare centre properties to its name across the country, Arena REIT is widely viewed as a shock-proof investment due its sector’s essential community service status and rising land values generally.  

The group’s latest half-yearly tripled year-on-year due to a $153 million uplift on property valuations from both its early learning centres and smaller healthcare portfolio, as well as the effects of acquisitions and development projects, and a 3.6 per cent average like-for-like rent increase. 

The accessibility and affordability of childcare has arisen as a key political background amidst rising living costs for Australians, which may also bode well for the company and its $122 million pipeline of 19 early learning centre projects. 

“Early learning and healthcare services are integral to improving community outcomes,” managing director Rob de Vos said following the half-yearly results release. 

“This important theme underpins Arena’s portfolio value proposition which provides long term income predictability with the prospect of income growth with inflation protection.” 

These conditions helped bolster the ARF share price by around 56 per cent over the past 12 months, backed as well by the Federal Government removing the annual cap on the childcare subsidy alongside a commitment to invest $1.7 billion to facilitate better access to early learning services, which will take effect in March 2022. 

By the end of 2021 Arena had $26 million in cash or cash equivalents as well as $155 million in undrawn debt capacity to fund ongoing and future projects. 

“Arena’s balance sheet gearing and expanded debt facilities fully fund the development pipeline with capacity to deploy capital into further growth opportunities,” chief financial officer Gareth Winter said. 

CLICK BELOW FOR THIS YEAR'S TOP 50

      Market caps are based on the close of trade, 18 March 2021.
This list was prepared with information provided by the ASX.