24 July 2007
Characteristics of Australia's leading public & private companies
Media Release
Australia's top 50 public and private companies rate favourably on a measure of long term viability but differ significantly in a range of other measures, potentially placing pressure and risk on creditors and investors who don't understand the differences.
The findings are from a Dun & Bradstreet (D&B) study titled "Risk & Performance: Characteristics of Australia's leading public & private companies", which examined characteristics of Australia's top 50 public and private companies as defined by annual sales.
Dun & Bradstreet is Australia's leading credit reporting, business intelligence and collections company and has financial data on more than 2 million public and private companies in Australia.
The D&B study reveals that:
- the public companies are considered to have less chance of failing than the private companies, although the gap is small, as measured by the DRS (Dynamic Risk Score)
- the public companies achieve higher profit margin, greater return on equity (ROE) and greater return on investment (ROI)
- the private companies have lower debt to net worth ratios and a higher return on assets
- the public companies are more likely to pay trade accounts in a severely delinquent manner as measured by the DDS (Dynamic Delinquency Score)
- a fifth of the top 50 public companies have been approached to recover a debt; compared with only 5% of the top private companies.
Christine Christian, Dun & Bradstreet CEO, believes the Risk & Performance: Characteristics of Australia's leading Public & Private companies study highlights the need for all Australian businesses and investors to know more about where they are placing risk.
"Whether you are assessing customers or investment opportunities you need to ensure you have as much information on risk and performance as possible," said Ms Christian.
"Investors and businesses have long been aware of the importance of financial information about public companies. However data such as court action and payment history, which can be important indicators of business strength and sustainability, have been largely ignored.
"When assessing a private company, information has been traditionally more difficult to access but as the influence of private companies on the economy grows, data about these organisations becomes increasingly important.
"If a business is considering taking on a new customer it is important to know whether they can and do pay on time. If investment is the focus, headline financials tell you some of the story, but evidence of poor cash flow management or legal action could be a sign that your investment is at risk."
Ms Christian believes that business and investors should actively seek out as much data and analysis as possible on companies they may deal with.
The D&B study also finds that:
- NSW has half of the top private companies
- in Victoria there is a higher proportion of public to private companies than any other State
- the public companies are larger employers than their private counterparts
- over a third of the top public companies have had legal action against them over the past 5 years
- a higher proportion of the top 50 public companies are in mining; transport; communications & utilities; and finance, insurance and property than for the top 50 private companies
- a higher proportion of the top private companies are retail; wholesale; and construction.
D&B has Australia's most comprehensive financial database and the study used its globally recognised DRS and DDS tools for risk and delinquency analysis.
For further information, or to arrange an interview please contact:
Danielle Woods
D&B PR Manager Australia & New Zealand
+61 2 8270 2926
About D&B
D&B is the world's leading provider of business-to-business credit, marketing and purchasing information and receivables management services. D&B manages the world's most valuable commercial database with information on more than 130 million companies.
Information is gathered in 193 countries, in 95 languages or dialects, covering 186 monetary currencies. The database is refreshed more than one million times daily as part of D&B's commitment to provide accurate, comprehensive information for its more than 150,000 customers.
The Australasian operations were bought out by the senior management group in August 2001. It was the first MBO of a wholly owned subsidiary in D&B's history worldwide.
Today Lazard Carnegie Wylie owns an approximate 90% stake in DBA and the local management team a 10% stake.
Strategies for future growth include developing DBA's commercial and consumer credit referencing business; expanding its receivables management outsourcing business; maintaining its lead in the development of unique credit and risk scoring products; and developing new products specifically tailored to the Australasian market. DBA currently employs over 500 people in Australia and New Zealand.
