BEST SMALL CAP COMPANY
Domino’s Pizza Enterprises
Operating completely separately from American entity which owns the brand name, Domino’s Pizza Enterprises has harnessed social media and mobile communications to drive its business forward and deliver a 25.7% increase in net profit after tax to AUD26.9 million (US$28.17 million) in 2012.
The company launched two new ordering platforms. In May it introduced Facebook ordering and followed this a month later with a catering service aimed at large groups. These added to Dominos’ strong stable of mobile and social media systems including iPhone and Android apps, which have allowed it to cut costs. In 2012, 40% of its orders came from mobile orders.
However on-the-ground stores remain a key part of Dominos’ franchise, and it added another 24 throughout 2012 to take its total for Australia and New Zealand to 559.
While the two countries account for over 60% of the company’s AUD264.9 million revenues, it is diversifying geographically. In 2006 it bought the existing operations in France, Belgium, the Netherlands and Monaco. These businesses have performed well, expanding to 38 stores in total and registering a like-for-like store sales rise of 6.3%.
If that wasn’t enough, one of Dominos’ outlets broke the Guinness World Record for the most pizzas made in 24 hours by a team. They managed to bake 7,539 pizzas.
Investors are obviously happy as Dominos’ share price had risen 35.95% in the year to November 29, and has generated gains of 228.44% over the past five years.
BEST MEDIUM CAP COMPANY
Super Retail Group
Retail is a challenging industry to be in at the best of times, let alone in the face slower economic growth. But Super Retail Group has been a standout in the consumer discretionary space.
The company, which operates a multiple brands in mainly in the sport and lifestyle sectors, has seen its share price risen 69.75% in the year to November 26 compared to an increase of 9.06% for the ASX 200. Meanwhile for the fiscal year 2012 it generated profits after tax of AUD83.5 million up 50% on the previous year.
And at a time when the economic cycle has been trending downwards Super Retail Group has been able to expand. In September it bought a 50% stake in VBM Retail, the licensed merchandise arm of sports licensing agency Velocity Brand Management for undisclosed amount and the following month it reached an agreement with private equity firm Archer Capital to by Rebel Sports for AUD610 million.
Even its staff appears to be happy, with retention levels rising to 71.5% this from the 59% recorded in 2006.
Super Retail’s eight brands include Amart Sports, BCF Boating Camping Fishing and Ray’s Outdoors and part of its success is a result of its concentration on a particular sector.
“It has been expanding its business into lifestyle activities, the type of things that people continue to spend money on regardless of what’s going on in the economic,” notes one equity analyst specialising in the consumer space.
BEST LARGE CAP COMPANY
Telstra
Australia’s largest telecommunication group can boast a neat 30% rise in its share price during 2012. It marks a sharp reversal from its fortunes in a the wake of the global financial crisis of 2008 and 2009, when it not only had deal with a worsening economic situation, but was also under fire from customers and regulators.
Telstra hired a new CEO in 2009 in the form of David Thodey (see below) and since then its fortunes have revived. For the fiscal year 2012 it posted a 5% increase in net profit to AUD3.42 billion (US$3.5 billion) up from AUD3.2 billion the year before. The share price has also risen to 28.83% in the year to November 27.
Investment in customer services has paid dividends. During the 2012 fiscal year it managed to boost its subscriber base by 13% to 13.8 million and add 1.6 million mobile users. Moody’s also calculates that it retains a 46% market share based on subscriber numbers of the three biggest players in the Australia (Telstra, Optus and Vodafone Hutchinson Australia)
Although under an agreement with the government the company is losing its monopoly on copper access networks – under which the majority of Australia’s telephone connections were serviced by the company even if the end user wasn’t a direct customer – it is forging ahead with winning new business.
In October Telstra announced it had secured a communications contract though to be worth around AUD150 million with Australia’s Department of Defence. It is also offsetting any losses from the copper networks by through its growth in mobile and digital users.
The only bad note the company hit in 2012 came in November when it was hit by an fire at one of one of its exchanges in south west Victoria. The fire affected 60,000 customers, but it stepped in quickly to offer retail customers compensation. The future remains bright for Telstra.
BEST EXECUTIVE
David Thodey, chief executive officer (CEO), Telstra
Telstra’s chief executive David Thodey took on a huge challenge when he joined the company in May 2009. His predecessor left the company with shares wallowing around the AUD3 markets, customers were unhappy and the government was threatening to break up the company if it did not let go of its monopoly on copper access networks.
Three years later and Telstra’s shares have rebounded to AUD4.27 as of November 29, there is a renewed focus on customer services and the company is back in the government’s good books having won a multimillion dollar contract from the Department of Defence.
Despite the increasing competitive environment, Telstra managed to maintain its dominant market share during 2012 and it is winning new users. It added 1.6 million of new mobile customers with mobile revenue growing 8.5% to AUD8.7 billion.
One of Thodey’s biggest successes was to negotiate an end of its monopoly of fixed line business with the government. The business had generated regular income for the company, and Telstra faces increasing competition as a result.
But Thodey managed to negotiate a deal whereby Telstra receives payments from the government as it transfers its network. These could add up to as much as AUD3 billion, helping to at least temporarily offset any losses.
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