Sydney Top Companies 11-20

Sydney Top Companies 11-20

Health, energy, alcohol and air travel were four of the sectors driving upward movement through the list of Sydney’s Top 20 publicly listed companies in 2022, most notably Origin Energy (ASX: ORG) which surged 11 spots into 15th position, buoyed by a takeover offer from two prospective North American investors. 

Also illustrative of the demand for energy that has been heightened since Russia’s invasion of Ukraine, infrastructure player APA Group (ASX: APA) - which owns 15,000 kilometres of natural gas pipelines – jumped eight spots into 16th place.  

Westfield operator Scentre Group (ASX: SCG) has shown bricks-and-mortar retail is still alive and well by holding firmly to its 11th rank, although hospital operator Ramsay Health Care (ASX: RHC) is certainly hard on its heels. 

Woolworths’ bottle shop spin-off Endeavour Group (ASX: EDV) has also proven it can hold its own, and no amount of consumer discontent can take the wings out of Qantas Airways (ASX: QAN) as travel demand bounces back. 


11. Scentre Group (SCG)

Scentre Group CEO Elliott Rusanow
Scentre Group CEO Elliott Rusanow

Real Estate
2021 rank: 11
Market Cap: $15.2b
1H22 revenue (operates on a calendar year): $1.18b
1H22 profit (operates on a calendar year): $479.8m
Listed: 2014
CEO: Elliott Rusanow
CEO salary: $1.8m (fixed remuneration)

Eased restrictions and enthused shoppers have proven to be the perfect combination for Scentre Group (ASX: SCG), which saw new top boss Elliott Rusanow take over two months ago. 

Operating 42 Westfield centres in Australia and New Zealand, the retail property giant recorded 391 million customers so far in 2022 - a 16.7 per cent year-on-year lift. With more consumers walking through its centres, it comes as no surprise that sales also surged by 73 per cent to hit $6.4 billion in the third quarter.

Rusanow - who spent three years as Westfield Group’s CFO before joining Scentre in 2019 - has filled the shoes of former Scentre CEO Peter Allen. Slated to retire in 2023, Allen served as the group’s leader for more than eight years before announcing his departure in February. 

Continuing to look within its own ranks, Scentre also promoted director of finance and capital markets Andrew Clarke to take over Rusanow’s role. 

However, some transitions were more welcomed than others. In April, 18 per cent of shareholders voted against the return of non-executive board member Catherine Brenner, who only started with the company earlier this year. 

Brenner was formerly with AMP (ASX: AMP) and was cleared of any wrongdoing in that company’s fees-for-no-service scandal, however the Australian Shareholders Association has taken umbrage with her position with the Westfield operator. 

During the July half, the company rode a retail sales boom as spending across its properties surged more than $800 million to $12 billion.  

Scentre Group recorded an operating profit of $540.5 million for the six months to 30 June this year, up 17.5 per cent year-on-year. The result was built on an 8.8 per cent lift in group revenue to $1.18 billion.

“The past year has reinforced how essential our Westfield Living Centres are to people and communities,” Scentre Group chair Brian Schwartz said during the group’s AGM in April.

“We are very proud of our team, particularly how they kept adapting to the changing conditions, keeping our centres open and safe.”

A pipeline of redevelopments is also in the works, with the group investing $355 million toward Melbourne’s Westfield Knox in order to offer shoppers a greater mix of premium fashion and lifestyle brands. The former Myer store will be replaced with a range of new retailers, including Woolworths (ASX: WOW) and Aldi.

There are even plans for a full-sized basketball court, swim school, Knox library, as well as a new fresh food market. Stage 1 of the project, which will open next month, is currently 96 per cent leased.

In February, the group completed its $55 million (SCG share: $28 million) project to revamp Westfield Mt Druitt in Western Sydney - adding rooftop entertainment, leisure and a dining precinct. 

Work on behalf of Cbus Property to design and construct 101 Castlereagh Street in Sydney’s CBD is also on track, with completion expected next year. 

Scentre has commenced a $33 million investment at Westfield Penrith, which will repurpose a former Target store to make way for a new Coles supermarket, as well as a large-format entertainment offer and upgrades to the centre’s elevator systems.

Since the start of 2022, Scentre Group has completed roughly 2,464 lease deals, including 1,547 renewals and 917 new merchants. More than 200 new brands have been introduced into the portfolio. 
 


12. Ramsay Health Care (RHC)

Ramsay Health Care CEO Craig McNally
Ramsay Health Care CEO Craig McNally

Health Care 
2021 rank: 13
Market Cap: $15.14b
FY22 revenue: $13.74b
FY22 profit: $379.2m
Listed: 1997
CEO: Craig McNally
CEO salary: $5,69m

As Australians head into the silly season with high COVID-19 case numbers but little restrictions to curb transmission, one company that’s preparing to bear the brunt of hospitalised cases is Ramsay Health Care (ASX: RHC). 

As one of Australia’s largest private hospital operators, RHC felt the impact of COVID-19 restrictions particularly hard, and was still grappling with rules well into February of this year. 

When announcing its FY22 results, RHC said the financial impact of COVID-19 during the period was the most severe of the pandemic, mostly due to the high prevalence of the virus in the community and strict restrictions imposed on elective surgeries. 

This led to a major disruption of activity levels and an increase in labour and PPE costs for the hospital operator, the value of which hit Ramsay to the tune of about $264 million. 
 
It set Ramsay up to being an ideal takeover target - shares were trading at mediocre levels and the company wasn’t on its strongest footing. 
 
It was a consortium of investors led by US firm KKR that saw the opportunity for what it was worth, launching a $20 billion takeover bid in April 2022 - at the time representing a 37 per cent premium for shareholders. It also valued Ramsay higher than pre-COVID levels, when RHC shares were trading at close to $80 per share. 

Complications about the deal structure led to that bid’s downfall; KKR elected not to seek due diligence access which was a requirement to progress the proposal.  
 
An alternative offer was put forward - one described by Ramsay as ‘materially inferior’ - and again KKR walked away from it after the hospital operator released its FY22 results which didn’t impress the investment firm. 
 
The KKR deal wasn’t the only failed merger for Ramsay. Prior to the total takeover bid, RHC received a US$1.35 billion bid from IHH Healthcare Berhad to acquire the company’s 50:50 joint venture with Sime Darby Holdings Berhad. 

That deal, which would have seen IHH acquire the JV that operates three hospitals in Indonesia and four in Malaysia, fell apart a few months later in September. 


13. Cochlear (COH)

Cochlear CEO Dig Howitt
Cochlear CEO Dig Howitt

Health Care 
2021 rank: 15
Market Cap: $14.17b
FY22 revenue: $1.65b
FY22 profit: $289.1m
Listed: 1995
CEO: Dig Howitt
CEO salary: $4.36m

A world leader in implantable hearing solutions, Cochlear (ASX: COH) has sold 700,000-plus devices and captured more than 60 per cent global market share since it was founded in 1983.

Pioneered by Australian ear surgeon Professor Graeme Clark, cochlear implants are available in 180-plus countries, with the company having a direct presence in 30 and employing roughly 4,500 staff worldwide.

A global deferment of elective surgeries due to COVID-19 made Cochlear one of the worst-affected businesses due to the pandemic. But instead of making cuts, the company turned to investors in March 2020 to raise $800 million so it could navigate market uncertainties and continue to reinforce its position as a global leader in hearing implant solutions.

The decision by Cochlear to ramp up inventory in anticipation of supply chain shortages proved pivotal to bolstering its revenue by 10 per cent to a record $1.6 billion in FY22. All regions and product segments tracked above pre-COVID levels, helping the company’s underlying NPAT soar 18 per cent to $277 million.

However, statutory net profit dipped by 11 per cent to $289 million, even though it had $12 million in one-off gains, primarily relating to the revaluation of brain monitoring tech company Epiminder.

FY22 saw Cochlear invest more than $200 million into research & development (R&D) - around 13 per cent of sales revenue - as many new products such as the Nucleus 8 Sound Processor launch into the market. 

It also saw Cochlear welcome the ‘Living Guidelines’ initiative, which is an international taskforce of over 50 leading cochlear implant professionals, academics and cochlear implant users tasked with delivering clinical guidelines. 

With hearing impairment affecting one in six Australians, the government introduced reimbursement for remote programming of auditory implants, including cochlear and bone conduction implants under the Medical Benefits Schedule.

The Center for Medicare & Medicaid Services – a US federal agency - also expanded its payment coverage in September to fund cochlear implants for people with severe hearing loss.

In April, Cochlear agreed to acquire Danish competitor Oticon Medical for $170 million, which will help lift its patient base by 75,000 hearing implant recipients if the deal goes through. The agreement followed Demant – which is Oticon Medical’s parent company – announcing it would exit its hearing implants business activities.

However, at the time of writing the Australian Competition and Consumer Commission (ACCC) has raised concerns about the proposed deal, noting the companies are two of a few globally that manufacture and supply devices used to treat more advanced hearing loss.

“Market feedback has indicated that demand for these devices is likely to increase and so it is important to ensure acquisitions in this market do not lead to higher prices or reduced innovation over time,” ACCC chair Gina Cass Gottlieb said.

If the deal does go through, Cochlear estimates integration costs - which include the development of compatible next generation sound processors - could range from $30-60 million.

Cochlear also announced progress on its environmental, social and governance (ESG) goals, noting the company had achieved 41 per cent female representation among its senior and executive management roles.

The group also plans to reach net zero by 2030 within its operations and has transitioned five out of six manufacturing facilities to 100 per cent renewable energy. Cochlear has also committed to invest $100 million to $150 million over four to five years in cloud-based technology to improve efficiency and agility.

“As we look to the future, we remain confident of the opportunity to grow our markets,” Cochlear CEO Dig Howitt said at the AGM in October. 

“There remains a significant, unmet and addressable clinical need for cochlear and acoustic implants that we expect to continue to underpin the long-term sustainable growth of the business. 

“Our clear growth opportunity and strategy, combined with a strong balance sheet, mean we are well placed to create value for our stakeholders now, and over the long term.”


14. ASX (ASX)

ASX CEO Helen Lofthouse
ASX CEO Helen Lofthouse

Diversified Financials
2021 rank: 12
Market Cap: $13.66b
FY22 revenue: $13.66b
FY22 profit: $508.5m
Listed: 1998
CEO: Helen Lofthouse
CEO salary: $2m plus incentives

The appointment of Helen Lofthouse as CEO of ASX (ASX: ASX) came with some challenges for the first woman to ever lead the Australian Securities Exchange.

The ongoing challenge of introducing its CHESS (Clearing House Electronic Subregister System) replacement, a new platform for the clearing and settlement of share trades, had been one of Lofthouse’s main priorities and a legacy of former CEO Dominic Stevens who departed at the end of July after six years in the job.

The blockchain-based replacement of the 25-year-old CHESS settlement technology was unceremoniously dumped last month after years of planning, leaving ASX with an impairment of up to $255 million to digest in the current year.

The CHESS replacement program was announced by ASX in 2017, aimed at bringing the share trading settlement process into the digital age. However, implementation has faced several delays with the most recent announced in August, just days after Lofthouse’s appointment. ASX announced the new CHESS platform needed to iron out issues with the software.

ASX walked away from the CHESS replacement after commissioning Accenture to undertake an independent review.

After abandoning plans for a CHESS replacement, Lofthouse reiterated how complex the undertaking is and declared that ASX had ‘some work to do’ before updating and consulting with stakeholders.

“We all agree that new CHESS must be implemented safely and with the functionality to serve the market’s needs,” Lofthouse says.

The CHESS debacle came at a cost to departing CEO Stevens who was hit by a 40 per cent cut in his short-term variable reward payment in FY22. Stevens still managed to walk away with a $4.54 million salary in his final year, up only marginally from a year earlier.

Stevens left ASX on a high note with record revenue in FY22 hitting more than $1 billion for the first time, thanks to a record 217 IPOs and $159 billion in capital raised by listed corporations during the year.

The second half was especially robust, although the momentum has failed to continue into FY23 with monthly activities well down on the previous year.

Lofthouse, who was previously group executive for markets and has been with the ASX for almost seven years, says she understands the need to ‘remain highly attuned to the evolving needs of our customers’. She has listed risk management, people and culture among her priorities as new CEO, as well as technology.


15. Origin Energy (ORG)

Origin Energy CEO Frank Calabria
Origin Energy CEO Frank Calabria

Energy
2021 rank: 26
Market Cap: $13.6b
FY22 revenue: $14.46b
FY22 loss: $1.42b
Listed: 1961
CEO: Frank Calabria
CEO salary: $5.49m

If Origin Energy’s (ASX: ORG) share price is any guide, an aggressive $18.4 billion takeover offer by a Brookfield-led consortium for the diversified energy group is far from a done deal.

While the proposed $9 per share offer, the third by Canada’s Brookfield Asset Management and US energy investment group EIG since August, has been backed by the Origin board, Australia’s competition watchdog is expected to take a close look at the takeover.

A successful bid is expected to see Brookfield walk away with Origin’s domestic power and gas business, which is Australia’s largest integrated generation and retail company, while EIG’s MidOcean Energy would snare the group’s LNG assets. It would be an effective split of Origin Energy’s business operations.

Brookfield says the buyout and privatisation of Origin Energy is consistent with its strategy of investing in opportunities to ‘generate a meaningful contribution to the energy transition, including the responsible decommissioning of existing thermal assets and build out new clean generation for the benefit of all stakeholders’.

The Canadian giant sees Origin Energy positioned to play a leading role in Australia’s transition to renewable energy and Brookfield has noted it has a $20 billion war chest to make it happen.

It doesn’t hurt that Origin Energy is also forecasting solid growth in its energy markets in 2023 and 2024, with the latter expected to see benefits from higher wholesale electricity prices flowing through to consumer tariffs.

Brookfield has shown a keen interest in the Australian energy market after failing to secure AGL Energy earlier this year when it teamed up with Atlassian co-founder Mike Cannon-Brookes. The climate-activist billionaire has since exerted his influence at AGL through his significant shareholding in the group.

The latest $9-per-share offer for Origin Energy from Brookfield is up from the original indicative price of $7.95 cash per share announced on 8 August 2022 and $8.70 on 18 September.

Origin’s shares have failed to trade close to these notional bids largely because of the competition hurdles that Brookfield will need to clear before a deal can proceed.

Brookfield already owns Victorian electricity and gas transmission operator AusNet, the state’s dominant player in the market, and a half share of smart metering company Intellihub. It is possible that Brookfield may have to sell its stake in AusNet for an Origin Energy buyout to succeed.

The company posted a hefty loss of $1.42 billion in FY22, reflecting a $2.19 billion non-cash impairment.


16. APA Group (APA)

Utilities
2021 rank: 24
Market Cap: $13.3b
FY22 revenue: $2.7b
FY22 profit: $259.71m
Listed: 2000
Acting CEO: Adam Watson
CEO salary: $1.48m plus incentives

Investors have been cooking with gas this past year thanks to higher prices, so it’s not surprising to see Australia's largest natural gas infrastructure business, APA Group (ASX: APA), move higher on the Sydney Top Companies list in 2022.

APA Group has regained its place in the top 20 after a solid performance that was capped off by the group’s $773 million acquisition of Basslink from receivers.

Basslink owns a 370-kilometre undersea electricity cable connecting Victoria and Tasmania. The company was placed in receivership by Singapore’s Keppel Infrastructure Trust following an ongoing dispute with its customer Hydro Tasmania leading to debts of $105.3 million owed to both Hydro Tasmania and the Tasmanian Government.

The acquisition of Basslink has been described by APA Group’s acting CEO Adam Watson as ‘consistent with APA’s strategy to increase its electricity transmission footprint and to play a leading role in the energy transition’.

APA has previously stated its ambition to play a pivotal role in energy transition by delivering energy security through its gas infrastructure and renewable energy generation asset portfolios.

Chairman Michael Fraser told shareholders at the APA annual general meeting in October that the transition to net zero meant a need to further invest in gas infrastructure.

“Over time, we believe a combination of natural gas, renewables and other technologies will provide the most economical, secure and rapid pathway to reaching this goal,” Fraser said.

There were a couple of shocks for APA investors this year, predominantly from the departure of former CEO Rob Wheals who stepped down in September after 14 years with the business, including three at the helm.

Wheals’ departure coincided with APA’s decision to abandon ambitions to expand into the US, with the company previously eyeing opportunities that it believed would deliver improved margins. With the Basslink acquisition completed, APA is now focusing on its domestic operations.

Wheals says the decision to leave was swayed by an ‘intense couple of years’ in the energy industry which were made more challenging by the pandemic.

“This together with the decision not to pursue an acquisition in the US, has led me to conclude that now is the right time to move on,” he told shareholders.

Watson is filling in for Wheals, who walked away with a $3.99 million remuneration package in FY22, until a replacement is found.


17. Endeavour Group (EDV)

Endeavour Group CEO Steve Donohue
Endeavour Group CEO Steve Donohue

Food & Staples Retailing
2021 rank: 18
Market Cap: $12.62b
FY22 revenue: $11.59b
FY22 profit: $495m
Listed: 2021
CEO: Steve Donohue
CEO salary: $4.14m

After demerging from retail giant Woolworths (ASX: WOW) in FY22, pubs and retail liquor operator Endeavour Group (ASX: EDV) has been hitting its strides amid some notable challenges.

While gains by its Dan Murphy’s and BWS divisions offset pandemic-related setbacks in the hotels division last financial year, Endeavour has been inadvertently caught up in the looming crackdown on casino operators. Specifically, it is facing the same incoming rules as casino operators for its hotel gaming machines in NSW, Victoria and Queensland.

While Endeavour doesn’t provide a breakdown of gaming revenue from its hotel operations, the prospect of cashless gaming impacting gambler spending has been hanging over hotel operators for some time.

A robust surge of 90.8 per cent in hotel revenue for the September quarter reflects a solid three months for Endeavour when trading was normalised compared to the first quarter of last financial year.

Although Endeavour has yet to address the impact of new rules for poker machine gambling, the rules in NSW could see gaming become completely cashless with players needing to register for a government issued gambling card to play.

Cashless gaming is also planned for Victoria and Queensland in the wake of damaging inquiries into the casino operations of Crown Resorts and The Star Entertainment Group (ASX: SGR).

Among the positives for the group is the upcoming festive season which will be its first since the end of 2019 that hasn’t been tainted by lockdowns. CEO Steve Donohue says the group is preparing for a ‘big Christmas season’.

“It will be the first, restriction-free festive season in three years,” he says. “Function bookings are already strong in our hotels, and we have a good supply of a great range of products to meet all tastes, trends and price points in our retail offers over the holiday season.”

Meanwhile, Endeavour Group farewelled Bruce Mathieson Sr from the board in June this year as the billionaire pubs baron, who turned 78, called time on his corporate career. But with a stake of about 15 per cent in Endeavour Group, the Mathieson family is still represented with Bruce Mathieson Jr joining the board in his father’s place.

Endeavour’s key business assets include those of the former ALH group which was owned by the Mathiesons before being merged with the former Woolworths division.


18. Qantas Airways (QAN)

Qantas Group CEO Alan Joyce

Transportation
2021 rank: 22
Market Cap: $11.63b
FY22 revenue: $9.11b
FY22 loss: $860m
Listed: 1995
CEO: Alan Joyce
CEO salary: $2.23m

For Qantas (ASX: QAN), the past 12 months have been filled with aborted take-offs, long runways, and turbulent skies.

Having taxied into 2022 with a tank filled with optimism about the future of international travel, Qantas’ hopes were quickly dashed once the reality of opening borders and letting the population go maskless in public became clear.

A quick skim of Qantas’ ASX announcements from December through to February tells a tale of a company realising its direct flight back to pre-COVID levels would be anything but that - instead it was filled with stopovers and delays.

But most of that is ancient history. With restrictions now eased and international travel back in full swing the company is anticipating a half year underlying profit of more than $1 billion. Not too shabby for a company that was uncertain whether it could even fly travellers in and out of Perth for Christmas this time last year.

Qantas however answers to more than just shareholders - it has plenty of customers, many of whom became acquainted with ‘post-COVID’ travelling this year.

Though issues around lost luggage, cancelled and delayed flights and expensive airfares were not a Qantas-specific issue, the airline copped plenty of flack online for its poor customer service.

While the airline is more recently boasting its ranking as the most on-time domestic airline in October, its budget subsidiary Jetstar had the lowest on-time arrival rates of all the major airlines in Australia, at 64.4 per cent in October. That airline will soon land a new CEO in Stephanie Tully, replacing Gareth Evans at the end of the year.

Further, the company has been hit with industrial action by some workers, most recently Qantas domestic cabin crew who filed applications with the Fair Work Commission to vote on industrial action over fatigue concerns and threats to outsource work.

In late-November, Qantas said more than 6,500 employees - or 33 per cent of those covered by an industrial agreement, have signed up to a post-COVID enterprise bargaining arrangement.

This includes a newly finalised three-year agreement with Jetstar pilots as part of its improved pay policy, which is pending approval by the Fair Work Commission.

In the background of this commotion, Qantas sought to add a third airline to its stable - that being regional carrier Alliance Aviation.

Announced in May, Qantas - which already owns 20 per cent of the target - is looking to acquire the fly-in fly-out (FIFO) operator for $919 million. The suitor said the deal would enable it to “better serve the growing resources sector” considering Alliance’s presence in the charter flight services space.

The corporate watchdog put those plans on pause in August, announcing its concern that the acquisition would lessen FIFO competition in regional Australia. The ACCC is expected to release its determination on the issue in March 2023.


19. Insurance Australia Group (IAG)

CEO Nick Hawkins
IAG CEO Nick Hawkins

Insurance
2021 rank: 19
Market Cap: $11.61b
FY22 revenue: $18.4b
FY22 profit: $347m
Listed: 2000
CEO: Nick Hawkins
CEO salary: $2.27m

Insurance Australia Group (ASX: IAG) may not be the biggest insurer on the ASX but it does have the distinction of being the largest insurer of Australians, with 8.5 million customers on its books across its brands including NRMA, RACV and CGU.

IAG CEO Nick Hawkins hopes to lift that customer number by one million by FY26.

Disasters including severe floods in NSW and Southeast QLD contributed to an overflowing of natural peril costs in FY22, which were $354 million above the original allowance.

“Across Australia and New Zealand, claim lodgements relating to extreme weather events in FY22, more than doubled over the prior year,” the CEO said in the group’s annual results released in August.

“To deal with the increasing severity and frequency of extreme weather events, we have put in place our largest to date perils allowance, increasing it by 19 per cent to $909 million for FY23.”

One might expect that against this challenging backdrop IAG’s results would have gone down in FY22, but instead they flipped from a $427 million loss to a $347 million profit.

Part of this improvement is explained by a $200 million pre-tax release from the business interruption provision relating to potential COVID-19 claims, but strong underlying performance was also behind the uptick.

“We are on track to deliver against our strategic priorities. Our customer numbers in the NRMA Insurance business grew as we rolled out the brand in Western Australia and South Australia and brought customers over from our intermediated brands,” Hawkins said at the time.

“Our New Zealand business saw a solid increase in GWP (gross written premium) over the year, and our Intermediated business has been reset and positioned for growth under a new leadership team with deep experience and expertise.”

Chairman David Armstrong says the group plans to increase the number of women in senior roles to 50 per cent by 2023 – a milestone that shouldn’t be too difficult given four of its 10 senior executives are women at the time of writing.

Armstrong also notes climate as a critical area of focus “because of the direct link between changes in climate and the impact on our customers, and on our business”.

“We manage our response to climate change risks and opportunities through our FY22 -24 Climate & Disaster Resilience Action Plan,” he said at the group’s AGM in late October.

“This includes our ambition to reach net zero across all emissions, Scopes 1, 2 and 3, by 2050, across our direct and indirect operations in keeping with the UN Paris Agreement goal to limit climate change to +1.5°C.

“For Scope 1 and Scope 2 emissions, we have made good progress, with a 54 per cent reduction against our 2018 baseline.”


20. Washington H. Soul Pattinson and Co (SOL)

Washington H. Soul Pattinson and Co

Financials
2021 rank: 16
Market Cap: $10.19b
FY22 revenue: $2.78b
FY22 loss: $12.9m
Listed: 1962
CEO: Todd Barlow
CEO salary: $3.73m

Investment group Washington H. Soul Pattinson and Co (ASX: SOL) has been a solid performer for investors for decades and, despite a stellar financial result over the past year, its shares have not moved in step.

Soul Patts, Australia’s second-oldest listed company, has a diversified $9.9 billion portfolio comprising various asset classes, including listed equities, private equity, venture capital and property.

Total assets were boosted over the past year through the acquisition of former listed investment group Milton Corporation and its $3.6 billion portfolio.

However, while Soul Patts’ net asset value per share growth beat the All Ordinaries Index by 20.2 per cent, the group’s share price fell 21.3 per cent in FY22. In effect, its portfolio performance beat the company’s share performance to the tune of 35.1 per cent.

The underperformance of Soul Patts shares has been blamed on a one-off non-cash goodwill impairment of $984.6 million due to the Milton merger. The impairment led to Soul Patts posting a statutory loss of $12.9 million in FY22.

The near $1 billion impairment was equal to the goodwill created by the Milton acquisition, which as a scrip-based purchase was to be calculated using the Soul Patts share price of $38.20 on the date of the acquisition.

This led to a temporary increase in Soul Patts’ share price above that level in September last year, ahead of the settlement of the deal. Soul Patts says the share price increase at the time did not represent ‘any future quantifiable economic benefits available from the acquisition of Milton’.

Regardless of the share price drop, a repositioning the company’s portfolio, which saw the group as a net seller of equities in FY22, has boosted Soul Patts’ liquidity levels by about $735 million to pursue new opportunities.

Among the stocks the investment group sold were fellow Sydney top companies Commonwealth Bank of Australia (ASX: CBA), AGL Energy (ASX: AGL), Woolworths (ASX: WOW), Brambles (ASX: BXB), Westpac (ASX: WBC) and Charter Hall Group (ASX: CHC).

Acquisitions included Aristocrat Leisure (ASX: ALL), Macquarie Group (ASX: MQG), Domino’s (ASX: DMP), Computershare (ASX: CPU), Carsales.com (ASX: CAR), Ramsay Health Care (ASX: RHC) and IDP Education (ASX: IEL).


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Market caps are based on the close of trade, 2 December, 2022. This list was prepared with information provided by the ASX.

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