Article by Mark Beyer courtesy of Business News, Perth.
New data details the expansion of Andrew and Nicola Forrest’s private company, Tattarang.
THE rapidly changing nature of Western Australia’s business sector is highlighted by the extraordinary growth of the state’s largest private companies.
Among them is Andrew and Nicola Forrest’s diversified investment company, Tattarang, which has completed a dazzling array of takeovers and has numerous growth projects on the go.
While a distant second place and many billions of dollars in revenue behind the state’s largest private company – Gina Rinehart’s Hancock Prospecting – Tattarang’s performance this past year is notable for the details about its operations the company has shared for the first time with Business News.
Both Hancock Prospecting, which has doubled revenue during the past two years, and Laurence Escalante’s online gaming business VGW Holdings, the state’s third largest private company, publicly disclose the scale of their operations through their annual financial returns with the Australian Securities and Investments Commission.
Tattarang is not subject to the same disclosure requirement but told Business News its annual revenue had increased to about $5 billion.
The main source of income is dividends paid by Fortescue Metals Group, courtesy of its 36 per cent shareholding in the iron ore miner.
For the year to June 2021, Fortescue dividends paid to Tattarang soared to a whopping $2.76 billion.
Since then, Fortescue has paid a further $2.38 billion to Tattarang.
In total, since June 2018, Fortescue has paid $7.37 billion in dividends to Tattarang.
That massive dividend flow is the fundamental reason why Tattarang has been able to pursue an extraordinary range of growth opportunities.
Its biggest operating business is Harvest Road Group, formerly known as Harvey Beef.
Like most parts of Tattarang, Harvest Road is on a rapid growth path, with revenue jumping by 43 per cent to about $600 million in FY21.
That followed 22 per cent growth in the previous year.
Harvest Road is also a big investor, most recently buying the historic New Norcia Farm late last year.
Its new acquisition is just 33 kilometres from Koojan Downs, where Harvest Road is spending $80 million establishing the state’s largest cattle feedlot.
In total, Harvest Road has development projects under way to process 300,000 head of cattle annually.
It is also a big investor in aquaculture.
After Harvest Road, Tattarang’s largest operating business is Adelaidebased bootmaker and clothing retailer RM Williams.
It contributes more than $200 million in annual sales.
Apart from Fortescue, Tattarang’s main source of income is dividends from its various investments.
Based on data supplied by the company, these would amount to about $1.5 billion.
It also earns unspecified income from its other operating businesses, which include property developer Fiveight, hospitality arm Z1Z and Squadron Energy.
Another rapidly growing part of the group is Wyloo Metals, which recently outgunned BHP in a bidding war for Canadian nickel miner Noront Resources.
Wyloo will pay $673 million for Noront, illustrating the group’s financial muscle.
Not everything goes Tattarang’s way, however, with its unsuccessful bid for Tasmania’s Huon Aquaculture last year a rare failure.
Tattarang’s recent deals illustrate its diversity.
It bought Yallingup’s Cape Lodge and Byron Bay’s Gaia Retreat and has invested in local nickel miner Western Areas, medicinal cannabis play Emyria, emerging telco Swoop, and fibre infrastructure company Fibreconx, These pale next to its big projects.
Most notably it is an investor in Sun Continued on page 28 From page 27 Cable, which is developing a $30 billion solar energy project linking the Northern Territory and Indonesia.
Another big project backed by Tattarang is the planned LNG import terminal at Wollongong, designed to supply extra gas to industry on the east coast.
Given this level of growth, Tattarang has become a significant employer with a total of about 2,000 staff across Australia, mostly at RM Williams (800 people) and Harvest Road (670 people).
The total does not include the 200 staff at the Forrests’ philanthropic arm, Minderoo Foundation, which shares Tattarang’s head office at the Old Swan Brewery.
Hancock plans Tattarang’s capacity to invest in growth projects is matched, if not exceeded, by Hancock Prospecting.
Hancock’s latest financial statements show revenue surging to $16.6 billion and net profit nearly doubling to $7.3 billion.
The biggest contributor was its subsidiary, iron ore miner Roy Hill Holdings.
Hancock’s very strong profits have allowed it to repay the big debts it took on to develop the Roy Hill project.
Hancock had net assets of $20.4 billion at June 30 while its gearing ratio (debt to equity) has been cut from 55 per cent to 1 per cent over the past three years.
That gives it enormous capacity to pursue expansion.
While Hancock has interests in agriculture, its growth projects are overwhelmingly in iron ore.
Early this month, it lodged documents with the Environmental Protection Authority for a 20 million tonnes per annum iron ore project at Mulga Downs in the Pilbara.
This would include a rail spur linking to the Roy Hill railway, which carries nearly 60mtpa to Port Hedland.
In addition, Hancock is keen to proceed with development of its Murray’s Hill operation, a 5mtpa mine with a life of up to five years.
Hancock’s wholly owned subsidiary, Atlas Iron, is also focused on growth, with its 10mtpa McPhee Creek project progressing through a feasibility study.
To support the planned mine developments, Hancock is pursuing an expansion of shipping infrastructure at Port Hedland.
It announced late last year an agreement with Chris Ellison-led Mineral Resources to jointly pursue the development of a new iron ore export berth at Port Hedland’s South West Creek.
The agreement proposed that Roy Hill, which already operates two berths at South West Creek, would help develop the new berth and provide rail haulage and port services.
A longer-term opportunity for Hancock is the Hardey iron ore project.
Just before Christmas, Hancock announced an agreement to conduct a feasibility study into the project, which was part of the Australian Premium Iron joint venture.
Hancock’s partners in the venture comprise Chinese state-owned steel maker Baowu, South Korean steel giant POSCO, and US commodities trader AMCI.
Hancock will lead the development and operation of the mine subject to a final investment decision.
Another long-term opportunity is the Mt Bevan magnetite project in the northern Goldfields.
Hancock agreed last year to fund an early-stage assessment of Mt Bevan, which is owned by junior explorers Legacy Iron Ore and Hawthorn Resources.
Outside of iron ore, Hancock has a big investment in a polyhalite project in England, is seeking approvals to build a coal mine in Canada and is exploring for copper and gold in Ecuador and Victoria.
Its has also invested in several ASX-listed companies, including lithium play Vulcan Energy Resources and medicinal cannabis stock Little Green Pharma.
Tech success While Hancock and Tattarang trace their success back to iron ore, the little-known VGW Holdings is a very different business.
Established by former financial planner Laurence Escalante in 2010, the company has become a global success story with online gaming products.
Like most technology startups, it traded in the red for most of its life before reporting a maiden profit in the year to June 2018.
Since then, earnings have gone off the charts.
Its revenue jumped last financial year to $2.2 billion, putting it near the top of our listing of private companies.
Just as impressive was its net profit, which jumped last year to $294 million.
The company has attributed its rapid growth to COVID-19 lockdowns, which meant its customers – most living in the US – were stuck at home and looking for things to do online.
VGW’s expansion has lifted its employee numbers; it has 200 staff in WA, making it the state’s largest tech company, and a further 700 staff around the world.
Slow builders While VGW has enjoyed rapid expansion, most of the big private companies in WA have emerged slowly over several decades.
A prime example is underground mining contractor Byrnecut, led by executive chairman Steve Coughlan.
The company was established in Kalgoorlie in 1987 and remains privately owned.
Its biggest direct competitor, Barminco, was established around the Australia and ABN Group also rank among WA’s largest private companies.
Both have experienced rapid growth over the past 18 months, on the back of a surge in housing construction.
They have also had to grapple with the associated problems of labour shortages and rising costs.
BGC is the biggest home builder in WA, with 4,205 starts in FY21, and is also a big manufacturer of building materials.
Combined, its annual revenue is about $1.3 billion.
ABN is the state’s number two builder with 3,150 starts, but also has a same time but is now part of ASX-listed Perenti Global.
Byrnecut operates in 13 countries and its consolidated revenue has grown to about $2 billion.
It employs 5,500 people globally, including 3,800 people in WA.
Home building competitors BGC big operation in Victoria, where it had 2,195 starts last year.
Its annual revenue comes in just behind BGC, at $1.2 billion.
ABN managing director Dale Alcock expects revenue to plateau this year after last year’s surge in activity.
“This activity has led to an increase in construction completion times due to supply chain disruption, material shortages and stock outs, together with a severe shortage of skilled labour,” Mr Alcock said.
“We continue to actively address these constraints and forecast our revenue will plateau in FY2022, as the volume of commencements normalises as all jobs that have qualified for stimulus grants have commenced.” Other private companies that feature high on the list of WA’s largest include Wilson Parking and education services provider Navitas.
Contractors such as CFC Group and Georgiou Group are also among the state’s largest private companies.
$7.37bn FORTESCUE DIVIDENDS PAID TO TATTARANG SINCE JUNE 2018
VGW HOLDINGS REVENUE: $2.2bn > VGW is a specialist online gaming company > Founded by Laurence Escalante in 2010 > It has grown exponentially in recent years > Employs 900 people globally > Its biggest market is the US > FY21 profit was $294m
WA’s Largest Private Companies HANCOCK PROSPECTING REVENUE: $16.6bn > Gina Rinehart’s Pilbara powerhouse is by far WA’s largest private company > Revenue doubled in past two years on high iron ore prices > Hancock nearly doubled net profit to $7.3bn > The group’s biggest earner is 70%-owned Roy Hill Holdings > Roy Hill posted annual revenue of $10.1bn > It employs 3,370 people in its mining operation > 100%-owned Atlas Iron lifted revenue to $1.7bn
NAVITAS REVENUE: $817m > Delivers education services at 120 campuses globally > University-focused programs smashed by COVID > Vocational training and geographic diversity provide an offset BYRNECUT REVENUE: $2bn > Underground mining contractor established in Kalgoorlie in 1987 > Its operations span across 13 countries > Employs 5,500 people globally > Ranked as the largest mining contractor in Australia > Has 3,800 people in WA BGC AUSTRALIA REVENUE: $1.3bn > WA’s largest home builder > 4,205 housing starts in FY21 > Expanded manufacturing operations last year by acquiring Midland Brick > Has sold non-core property assets over past two years as Buckeridge family weighs up possible sale ABN GROUP REVENUE: $1.2bn > Led by managing director and owner Dale Alcock > Australia’s 2nd largest home builder > 5,345 housing starts in FY21, split across WA and Victoria > Employs 2,055 people nationally
TATTARANG REVENUE: $5bn > Andrew and Nicola Forrest’s ‘family office’ is expanding rapidly > Its biggest asset is 36% of Fortescue Metals Group > FMG dividends more than doubled last year to $2.7bn > Agribusiness arm Harvest Road Group lifted revenue to $600m > RM Williams recorded annual revenue of $200m > Tattarang earned nearly $1.5bn in investment income > The group employs 2,000 people across Australia PERRON GROUP REVENUE: $716m > Diversified investment company with blue-chip portfolio > Includes major shopping centres and office towers > Toyota distribution rights is a big money spinner Data & Insights TO SEE THE FULL LIST OF 130 COMPANIES businessnews.com.au/bniq/private-companies CFC GROUP REVENUE: $670m > Core business is trucking operator Centurion > Other business arms include civil contractor Cape > Led by chairman Philip Cardaci, the group employs more than 1,000 people GEORGIOU GROUP REVENUE: $628m > Diversified contractor expanding on east coast > Core business is construction of civil infrastructure > Work in hand rose last year to record $1.3bn WILSON PARKING: REVENUE: $1bn > Perth-founded company with national operations > CBD car park usage hit by COVID restrictions > Employs 1,185 people nationally.
