commsec august 2015 reporting season - full results

Craig James – Chief Economist (Author) Twitter: @CommSec Savanth Sebastian – Economist (Author) Twitter: @CommSec Produced by Commonwealth Research based on information available at the time of publishing. We believe that the information in this report is correct and any opinions, conclusions or recommendations are reasonably held or made as at the time of its compilation, but no warranty is made as to accuracy, reliability or completeness. To the extent permitted by law, neither Commonwealth Bank of Australia ABN 48 123 123 124 nor any of its subsidiaries accept liability to any person for loss or damage arising from the use of this report. The report has been prepared without taking account of the objectives, financial situation or needs of any particular individual. For this reason, any individual should, before acting on the information in this report, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice. In the case of certain securities Commonwealth Bank of Australia is or may be the only market maker. This report is approved and distributed in Australia by Commonwealth Securities Limited ABN 60 067 254 399 a wholly owned but not guaranteed subsidiary of Commonwealth Bank of Australia. This report is approved and distributed in the UK by Commonwealth Bank of Australia incorporated in Australia with limited liability. Registered in England No. BR250 and regulated in the UK by the Financial Services Authority (FSA). This report does not purport to be a complete statement or summary. For the purpose of the FSA rules, this report and related services are not intended for private customers and are not available to them. Commonwealth Bank of Australia and its subsidiaries have effected or may effect transactions for their own account in any investments or related investments referred to in this report.

Economics | August 31 2015

An unremarkable earnings season Corporate Profit Season Each earnings or profit-reporting season CommSec tracks all the earnings results of ASX 200 companies

to obtain a comprehensive picture of the aggregate health of Corporate Australia.

This earnings season has been totally unremarkable. That isn’t something that you are supposed to say – you are supposed to highlight a ‘theme’ – but that is the undeniable conclusion at the end of a five week period when major companies have reported their financial results for the 2014/15 year. Profits didn’t soar nor slump. Same for dividends and same for cash levels. But that is entirely understandable when you consider the unremarkable performance of the Australian economy over the past year.

CommSec has assessed the results of the 143 companies that have reported full-year (FY) earnings (results for the twelve months to June 2015) and the 27 companies that reported half-year results for the six months to June 2015. Almost 82 per cent of those reporting full-year earnings (FY companies) reported a profit – below average. But almost 61 per cent improved their profit results – above average. And encouragingly 85 per cent of FY companies lifted or maintained dividends. Cash holdings of all the ASX 200 companies that reported earnings fell by around 10 per cent over the year to $101 billion. But excluding eight large companies, cash levels actually rose by 5.4 per cent.

A year of two halves At the end of the interim earnings season in March (results for the six months to December) we concluded

“Effectively companies have been in consolidation mode.” Still we noted that “Clearly it would have been difficult to better the results of the past two earnings seasons.” Frankly the two previous seasons (half-year profits to December 2013; and the full-year results to June 2014) were excellent.

So how do we assess the results of companies reporting earnings in the year to June 2015 (FY companies)? Simply it has been hard work for companies, especially in the first half of the year, although conditions improved in the second half. It is that old sporting analogy – it was a game of two halves.

Over the past six months, consumer spending has been above average and housing activity has been strong. Also late in that first half of 2015, operating conditions, confidence and spending all improved in the business sector. The Aussie dollar has also come down, improving the outlook for globally-focussed companies.

The last six months of 2014 were tougher. If that wasn’t the case then the Reserve Bank wouldn’t have needed to cut interest rates in February and May 2015.

So it has been harder work for a number of the listed companies. Especially companies in the resources sector, and especially energy companies, iron ore and steel producers. But consumer-focussed companies have had fewer reasons to complain. And companies dependent on

Economic Insights

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Economic Insights: An unremarkable earnings season

home building have done well.

That is not to say that the financial health of Corporate Australia has deteriorated markedly. It hasn’t. It is just that the operating environment has been tougher. Harder to generate revenue, harder to generate profits and harder to improve the bottom-line results.

But dividends have generally been maintained or increased. Cash levels are still high, although there have been notable cases of companies paring cash levels. The majority of companies are still reporting statutory profits, while debt levels remain low and conservative.

An earnings season devoid of key themes Earnings seasons tend to be characterised by a

central theme, or themes. But that wasn’t the case with the last earnings season concluding at the end of February. And that has been the case with the latest earnings season. Companies have not generally been slashing costs, although resource companies in particular have certainly been aiming at improving productivity and efficiency.

A number of companies have identified significant “impairment charges” or write-downs and provisions in their profit and loss accounts affecting bottom-line results (Worley, Seven Group, Seven West Media, Beach Energy, UGL, South32).

Companies that are dependent on activity in the resources sector have highlighted the tough operating conditions (UGL, Boart Longyear, and Arrium). The housing construction boom has been positive for many (Sunland, Cedar Woods, and Folkestone). There were a few ‘turnaround’ stories, notably Qantas – although this was previewed at the interim earnings period. There were a few standout results such as Aurizon, Austal (not in the ASX 200) and Newcrest.

Two packaging companies (Pact Group and Orora) achieved cost savings, thus serving to boost bottom-line profit results. Recall Holdings highlighted the benefits of the “solid platform established after the demerger.”

Outlook statements are always going to vary from company to company and industry to industry. But probably on the back of a better economy in the first half of 2015, companies were generally positive on the period ahead. Interestingly the optimism was shown by some companies that reported “challenging” conditions over the past year (Coca Cola Amatil, Cabcharge and ARB). Some companies were more cautious (Seven Group). Some companies noted mixed prospects ahead (Worley Parsons). And both Transpacific and Pacific Brands expect further challenging market conditions.

Companies continue to be focussed on either lifting or maintaining dividends. But there is no sense that companies have blinkers on with a single-minded determination to pay dividends at all costs. Rather companies are competing for the affection of current or prospective shareholders. Cash levels are still healthy, giving companies scope to maintain dividends. But that doesn’t mean that reinvestment of earnings back in the business

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is being shunned. Certainly there continues to be conservatism. But the results on dividend payments are not markedly out of kilter with overall financial performances.

And it is worth noting another trend that was identified in the last reporting season – the volatility or variability of bottom-line earnings results. Of the 143 FY companies, just under a third reported statutory earnings results (net profit after tax) that were more than 100 per cent above or below results from a year ago. In some respects that is to be expected given the tough conditions in mining, energy and engineering sectors but favourable conditions in housing-dependent sectors and some consumer-focussed businesses (Harvey Norman, JB Hi-Fi).

The 2014/15 profit reporting season (twelve months to June 2015) The only way to assess whether the recent profit-reporting season has been a success or failure is to add up the

numbers. And that’s what we’ve done. It’s certainly not a case of comparing results to the expectations of analysts due to continuous disclosure and because companies are routinely successful in managing expectations. And the expectations of analysts are really only there to provide a reference point for the short-term investment direction of individual companies.

Instead investors want to know how Corporate Australia is fairing more broadly. And you can only know that by aggregating and dissecting the key metrics of all the companies.

So to the numbers. CommSec has assessed the results of 143 companies from the ASX 200 index that reported earnings for the year to June 2015.

In aggregate, revenue grew by 0.4 per cent to $579.3 billion while expenses grew by 3.1 per cent to $477.6 billion, leading to a 31.9 per cent fall in net profit to $35.9 billion (in the half-year earnings to December, profit fell by 26.2 per cent).

But as noted, there has been a sharp lift in the variability of bottom-line earnings. And some companies have chosen to take “impairments” to bottom-line earnings. Stripping out ‘outliers’, we estimate that underlying aggregate revenues rose by 2.0 per cent, expenses rose by 2.2 per cent and aggregate profits fell by 3.0 per cent.

The bad news is that only 117 of 143 companies (81.8 per cent) reported a profit – below the long-term average. But of companies reporting profits this season, 71.7 per cent lifted profits, compared with 65 per cent in the interim reporting season. And just short of 61 per cent of all companies actually improved bottom-line results.

In the last earnings season (six months to December) cash levels fell by 10.1 per cent. In the latest results, cash holdings were down by 13.6 per cent. But 74 companies lifted cash levels and 69 cut cash levels on a year ago. Excluding ‘outliers’, cash levels were up 3.9 per cent on a year ago.

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In fact if you put all companies together (170 companies) total cash earnings were $100.7 billion. Of these companies, eight large companies have each reduced cash holdings by a $1 billion or more. If these ‘outliers’ are excluded, then aggregate cash levels actually lifted by 5.4 per cent.

Dividends have been complicated to some extent because a number of companies have indicated that they will pay special dividends or return cash to shareholders but not pay a formal “final” dividend. Including special dividends, dividends rose in aggregate by 6.5 per cent despite variable profits and lower cash reserves. And 89.5 per cent of all companies chose to pay a dividend, above the long-term average of 83.7 per cent. Of all companies issuing a dividend, 63 per cent lifted dividends, 22 per cent maintained dividends while 15 per cent cut dividends.

The interim 2015 profit results (six months to June 2015) So how did the companies reporting half-year 2015 results fare? As is always the case this is a much smaller

sample, just 27 of the ASX 200 companies reported annual profits for six months to June 2015. In aggregate, profits totalled $12.6 billion, down 45.5 per cent on a year earlier (excluding Rio Tinto and Scentre Group, down 20.5 per cent). Importantly every company reported a profit – an extraordinary event. But 16 of the 29 lifted profits compared with a year ago, down from 18 (of 29 companies) in the full-year reporting period.

Excluding outliers, aggregate sales in the six months to June fell by 0.3 per cent while the cost of sales or expenses fell by 1.6 per cent. Earnings per share rose by 3.3 per cent, dividends rose by 3.5 per cent and cash holdings fell by 0.5 per cent to $31.4 billion. All but one company provided a dividend with all companies that paid a dividend electing to lift or maintain dividend payments.

Outlook When we assessed the interim reporting season in March 2015 our forecast for the ASX 200 in June 2015 was

5,900-6,100 points with the ASX 200 projected to hit 6,000-6,200 points by end year. Our June forecast was realised early (the ASX 200 stood at 5,948 as late as April 28). But the Greek debt crisis, bank capital raisings and concerns over the Chinese economy have white-anted the ASX 200 in the period since.

Total returns on the Australian sharemarket – as measured by the All Ordinaries Accumulation index (XAOAI, dividends plus share price changes) – hit record highs on April 27 at 51,568 points. On August 28, the XAOAI was 10 per cent down from record highs. Currently total returns on Australian shares are down 2 per cent on the year.

Corporate Australia is at the cross-roads. Earnings have been hard to generate in the past year, and if anything this is likely to continue. The ‘speed limit’ for the economy appears to have fallen from around 3 per cent to at least around 2.75 per cent. At the same time, the Chinese economy continues to mature with the growth rate for the economy understandably expected to slow over coming years. China is rebalancing away from production to consumption, but at the same time the Indian economy doesn’t seem poised – at least not yet – to go down the ‘Chinese path’, that is, recording strong rates of investment and production.

Australian companies are in strong financial shape. The main criticism is that too many companies are comfortable staying on the treadmill – paying out dividends rather than expanding, investing, looking for merger or acquisition opportunities or embarking on major exercises to boost productivity or efficiency. The strong shape of Corporate Australia, growing population, proximity of Australia to the fast growing Asia region and weaker Aussie dollar won’t be lost on foreign companies looking for takeover targets. That has already been apparent. But further acquisitions of Aussie companies may raise community concerns.

In a cyclical sense, we expect that the better economic momentum generated in the first half of 2015 will continue over the next six months. Annual growth of consumer spending is above long-term averages. Businesses are spending. Residential building is at record highs and housing will drive the Australian economy over the coming year. A lower Aussie dollar will also help lift business activity.

The Aussie sharemarket is slightly over-valued (5-10 per cent) on the basis of forward price-earnings, and earnings will remain hard to come by over the coming year. The Australian sharemarket may struggle over the next few months before lifting later in 2015. We currently expect the ASX 200 to stand at 5,650-5,850 points at the end of 2015 with the index lifting to 5,850-6,050 by June 2016.

Craig James, Chief Economist, CommSec; Twitter: @CommSec Savanth Sebastian, Economist, CommSec; Twitter: @CommSec

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4 August 2015

PROFIT REPORTING SEASON

Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 ("CommSec") is a wholly owned, but non-guaranteed, subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 ("the Bank") and both entities are incorporated in Australia with limited liability.

This information is directed and available to and for the benefit of Australian residents only and is not a recommendation or forecast. This information has been prepared without taking account of the objectives, needs, financial and taxation situation of any particular individual. For this reason, any individual should, before acting on the information on this site, consider the appropriateness of the information, having regards to their own objectives, needs, financial and taxation situation, and, if necessary, seek appropriate independent financial, foreign exchange and taxation advice. CommSec, and its related bodies corporate, do not accept any liability for any loss or damage arising out of the use of all or any part of this information. We believe that this information is correct as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness

commsec.com.au/reportingseason Twitter: @commsec

SUNCORP GROUP (SUN)

RESULTS FY15 FY14 CHANGE

Net Profit After Tax (NPAT) ($m) 1,133 730 55.2%

NPAT ($m) Consensus 1,140

General Insurance NPAT ($m) 756 1,010 -25%

Bank NPAT 354 228 55%

Special Dividend ($) 0.12 0.30

Final Dividend ($) 0.38 0.40

Total Annual Dividend ($) 0.88 1.05

Suncorp Group (SUN) meets expectations despite more natural disasters

Suncorp Group reported that net profit after tax (NPAT) met consensus expectations, rising by 55.2% to $1,133 million compared to $730 million for the same period last year.

The group reported a strong performance in the banking business which was driven by improvements in lending growth and the Net Interest Margin (NIM). Bank lending grew by 3.9% while impairment losses were down substantially, falling by 53.2%. Non-performing loans were down by 20%. Bank NPAT rose significantly to $354 million compared to $228 million for the same period last year with the NIM rising to 1.85% from 1.72% a year ago.

The General Insurance business reported a 25% decline in NPAT to $756 million from $1,010 million a year earlier. The result reflected the worst year for natural disasters in SUN’s history totalling $1,068 million which was $473 million above the full year allowance. This included the net impact of around $650 million from five major weather events in Queensland and New South Wales. Gross Written Premium (GWP) was flat at $8,872 million. Personal Insurance GWP reduced by 2.5%; Commercial Insurance GWP grew by 2.2%, while Compulsory Third Party (CTP) GWP grew 5.9%

Suncorp Life reported a NPAT of $125 million, an increase of 35.9%. Underlying profit was $113 million, up 34.5% which benefited from cost controls which helped operating expenses fall by 7.3%.

SUN declared a fully franked, final dividend payment for the period of 38 cents per ordinary share and a 12 cent special dividend per fully paid ordinary share. The record date for the payments is Thursday August 13, 2015 with a payment date of Tuesday September 22, 2015.

5 August 2015





BWP TRUST (BWP)


Total Income ($m) 144.9 127.4 +14%

Total Income ($m) Consensus 143.4

Underlying Profit ($m) 101.6 92.0 +10%

Underlying Profit ($m) Consensus 101.3

Final Distribution (cents) 8.17 7.88 +3.7%

Final Distribution (cents) Consensus 8.17

Total Annual Distributions (cents) 15.84 14.7 +7.7

BWP Trust (BWP) posts a solid result and trades near record high

BWP Trust (BWP) posted a $101.6m Underlying Profit for the 12 months ended 30 June 2015 and was in-line with the market’s expectations.

BWP is a listed managed investment scheme which invests in commercial real estate throughout Australia. The majority of its properties (80 of 82) are Bunnings Warehouses tenanted by the Wesfarmers owned hardware chain. Wesfarmers is also BWP’s largest shareholder.

The result was boosted most by rental growth from its existing property portfolio and additional rental income from developments completed over the year. While borrowings rose by 8.2% to $485.4m, the cost of debt fell thanks to lower interest rates. BWP generated $71.6m from the divestment (sale) of six non-core properties.

In terms of developments and purchases, BWP spent $124.6m to buy the Australind Bunnings Warehouse site in WA and completed the development of Manly West, West Ipswich, Brendale and Maribyrnong Bunnings Warehouse stores.

An 8.17c Final Distribution was declared as expected. The ex-distribution date was 26 June 2015 and will be payable to eligible investors on 27 August 2015. BWP had flagged distribution details in late June and has a 4.8% yield.

BWP shares were unchanged following the result, however are rising for the fourth consecutive year and have improved by 21% Year-To-Date. BWP is near all-time highs on the ASX.

6 August 2015





DOWNER EDI LIMITED (DOW)


Net Profit After Tax (NPAT) ($m) 210.2 216.0 -2.7%

NPAT ($m) Consensus 205.0

EBIT ($m) 309.7 341.1 -9.2%

EBITDA ($m) 562.8 607.5 -7.4%

Total Revenue ($m) 7,430.1 7,734.6 -3.9%


Final Dividend ($) Consensus 0.13

Downer EDI Limited (DOW) – Headwinds from the resource sector continue

Downer EDI provides engineering, construction and maintenance services. The group relies heavily on the domestic

resource sector to generate revenue. The mining facing business provides a range of services through each stage of the mining lifecycle. EBIT for the division fell by 20% to $1.59 billion reflecting factors such as the continued decline in commodity prices, the early termination and completion of contracts and the reduced volumes on existing contracts.

Another leading contributor to revenue is the Engineering, Construction and Maintenance (EC&M) unit. The unit provides design, engineering and construction services to a range of industries including oil and gas, commercial infrastructure, power generation and mining. Full year EBIT fell by 28% to $51.5 million due to a downturn in the resource sector and the impact on DOW’s consultancy businesses and the underperformance of projects in Western Australia.

DOW’s rail division builds freight and passenger trains in addition to providing operations and maintenance services. EBIT for this division rose by 4.8% to 27.5 million, although revenue fell 13% to $873 million. The lower revenues were due to the completion of passenger manufacture contracts and the increased EBIT was driven by productivity improvements and lower restructuring costs.

Providing guidance for the 2016 financial year has proven difficult for DOW with the group saying it is hard to predict the flow of uncontracted revenue, which is slightly higher than it was this time last year. For the 2016 financial year, Downer is targeting NPAT of around $190 million.

Downer declared a fully franked final dividend of 12.0 cents per share, payable on 17 September 2015 to shareholders on the register at 20 August 2015.

6 August 2015





RIO TINTO LIMITED (RIO)

RESULTS HY15 HY14 CHANGE

Underlying earnings (US$m) 2,923 5,116 -43%

Underlying earnings Consensus 2,66

Iron ore earnings (US$m) 2,099 4,683 -55%

Impairments (US$m) 421 843

Capital expenditure (US$m) 2,474 3,845 -36%

Net earnings (US$m) 806 4,402 -82%

Final Dividend (USc) 107.5 96.0 +12%

Rio Tinto Limited (RIO) HY15 tough half but cost control helped RIO beat expectations

RIO posted a 43% fall in HY profit to US$2.9billion ahead of market expectations. The result was impacted by lower commodity prices (down US$3.6billion over the year) but partly offset by favourable exchange rates, lower energy costs and higher sales volumes. RIO confirmed its view that global growth is set to continue because although China’s transitioning into a major developed economy has slowed, it is occurring off a higher base.

RIO’s iron ore division earnings fell 55% to US$2.1billion even though their production of 154 million tonnes was 11% higher than this time last year on the ramp up in the Pilbara. RIO’s low-cost advantage helped the company withstand the iron ore price slide - 1H15 cash unit cost was $16.2/t (21% lower than $20.4/t in 1H14). RIO’s bauxite and aluminium business did well with aluminium earnings up 67% and diamonds & minerals delivering strong margins despite challenging market conditions.

RIO’s focus on financial and operating discipline helped deliver first half cost savings of $641million. By delivering a CAPEX lower than the market had expected, RIO helped to improve their balance sheet in the short term, but in the long term they do need to ramp up spending on projects to boost future output and returns.

RIO’s dividend was in line with market expectations of USc107.5 and will be paid out on 10 September 2015

7 August 2015





VIRGIN AUSTRALIA HOLDINGS LTD (VAH)


Revenue ($m) 4,749.0 4,307.0 +10.2%

Revenue ($m) Consensus 4,605.0

Underlying Loss Before Tax ($m) (49.0) (211.7) -

Net Loss After Tax ($m) (93.8) (353.8) -

Net Loss After Tax ($m) Consensus (93.8)

Interest Bearing Liabilities ($m) 2,762.2 1,950.7 +41.6%


Virgin Australia Holdings (VAH) expects to return to profitability in FY16

Virgin Australia (VAH) posted a $93.8m loss for the 12 months ended June 30. The result was a $261.8m improvement on 2014 and in-line with consensus. VAH flagged the result a week earlier.

The result was held back most by its underperforming International business, which posted a $69m loss over the year; $23m worse than FY14. Its Domestic unit improved earnings by $226m, generating $218m in profit. Low-cost carrier, Tigerair Australia has lost $8.6m from the date of its full acquisition by VAH on 17 October 2014. Its Velocity Frequent Flyer loyalty business increased earnings by $81.2m; adding 900,000 customers over the year.

The airline announced an overhaul to its international operations, ceasing services from Perth, Melbourne, Adelaide and Bali. Tigerair is expected to pick up these routes. This decision is due to weak demand for premium air travel. Supplementary Trans-Tasman routes will be added.

VAH hasn’t been profitable since 2012, but is eying a return to profitability in FY16. Tigerair is expecting full profitability this year and its International unit by next year. The market estimates profit of more than $100m for its next annual result. With Australia’s second largest airline still not in the black, no dividend was declared. February 2008 was the last time VAH shared its profits.

VAH shares were unchanged following the result. Its 11% improvement over the past year is a substantial underperformance compared to Qantas (QAN). QAN shares have tripled in 12 months.

10 August 2015





ANSELL LIMITED (ANN)


Net Profit After Tax (NPAT) (US$m) 188 157 +19.7%

NPAT Consensus (US$m) 185.4

Revenue (US$m) 1,645 1,590 +4%

Revenue (US$m) Consensus 1,785

Earnings Before Interest & Tax (US$m) 245 84 +191%

Final Dividend (US$) 0.23 0.22 +4.5%

Final Dividend (US$) Consensus 0.23

Ansell Limited (ANN) – Outlook statement clouds result

Ansell (ANN) has reported an increase in underlying Net Profit After Tax (NPAT) of almost 20% to $US188 million. The underlying result excludes a one off restructuring cost of $US123 million. Factors driving the result included an encouraging performance from the emerging market business, which makes up 24% of total sales. Sales for this segment rose by only 2.4%, however by excluding the contribution of Russia and Brazil, sales rose by 12.4% (challenging economic conditions in the latter jurisdictions saw sales fall by 37% in Russia and by 7% in Brazil).

In broad terms the results was shy of consensus expectations in terms of revenue although the biggest impact on the share price, was the outlook offered by ANN. The group was cautious in its outlook due to the influence of volatile currency markets and the impact of higher rates of taxation.

ANN indicated that if currency markets maintain levels seen towards the end 2015, Earnings Per Share (EPS) will be negatively impacted by as much as 20 cents p/share. At the same time the underlying tax rate is seen rising to as much as 21%. However positive contributions to the performance of the core business are expected to include the continued delivery of restructuring benefits, contributions from completed acquisitions and price increases which will partially offset the impact of currency movements. Together these elements are predicted to have a positive influence of between 10-20 cents per share which will see FY16 EPS in the range of $US1.05- $1.20 compared to $1.225 in FY15.

ANN declared a final dividend of 23 cents p/share for a full-year payout of 43 cents. The final payment has a record date of 17 August 2015 which will be made on 10 September 2015.

10 August 2015





BENDIGO AND ADELAIDE BANK (BEN)


Cash earnings ($m) 432.4 382.3 +13.1%

Statutory NPAT ($m) 423.9 372.3 +13.9%

Statutory NPAT ($m) Consensus 436.5

Total income ($m) 1,550 1,441 +7.6%

Total income ($m) Consensus 1,560

NIM (%) 2.20 2.24 -4bp


Bendigo and Adelaide Bank (BEN) earnings up 13% but numbers did not impress.

Bendigo and Adelaide Bank (BEN) posted a 13.1% lift in FY earnings and a 14% lift in net profit after tax. The BEN result was disappointing as the regional bank’s cash profit, especially in the last 6 months of the FY15 were below market expectations. Over the year BEN saw a strong build in business and rural revenues (Rural Finance Corporation joined the group and as a result has significantly increased the depth of BEN’s agribusiness offering) but profits from its wealth unit fell.

Expenses were down as the firm continued to focus on efficiencies but its bad debts were up from $30M in 1H15 to $38m in 2H15. BEN's Net Interest Margin (NIM) fell in the second half of the year and fell 4bp over the year, reflecting the competitive lending environment and the 50bp cut to the cash rate by the RBA in 2H15. The increase in 2H15 BDD expense was primarily driven by the $15.9M collective provision for Great Southern (a class action agreement approved by the Supreme Court of Victoria).

The July 2015 APRA announcements on changes to risk weights on mortgages has positively impacted the competitive environment. BENs Tier 1 funding lifted by 15bps to 8.17%.

BEN will pay out a final dividend of $0.33 on Wednesday September 30, 2015.

10 August 2015





JB HI-FI LIMITED (JBH)


Sales ($m) 3,652.1 3,483.8 +4.8%

Sales ($m) Consensus 3,632.0

EBIT ($m) 200.9 191.1 +5.1%

Net Profit After Tax (NPAT) ($m) 136.5 128.4 +6.4%


Final Dividend ($) 0.31 0.29 +6.9%


JB Hi-Fi Limited (JBH) improves earnings despite cautious consumers

JB Hi-Fi (JBH) posted a slightly better than forecast $136.5m profit for the 12 months ended 30 June. The result was driven by strong sales at its 173 Australian stores over the second half and the rollout of new sites.

Software sales (music, games & movies) fell 8.2% over FY15, while what it defines as hardware & services (i.e. everything else) rose strongly and accounted for 83.3% of revenue. Sales at its 14 New Zealand stores failed to contribute to the result, with revenue down 0.1%. JB Hi-Fi Home – its 2012 launched home and kitchen appliance unit continues to expand. A strong property market has prompted the opening of 4 new Home stores over the year to 43 stores.

Online sales surged by 16.9%, although still only represent 2.4% of the retailer’s total sales. There were ~1.2m visitors to JBH’s website each week in FY15.

JBH has announced an on-market buy-back program worth ~$16m, purchasing as many as 0.8 million shares from September to December 2015. This capital management is a little lighter than what the market had expected, although it highlights JBH’s strong cashflow and balance sheet.

A final dividend of 31.0c/share fully-franked was declared, payable to eligible investors on 11 September 2015. The ex-dividend date is 26 August. JBH currently has a 4.5% yield. Looking ahead to FY16, JBH plans to open 6 new stores, to convert 16 existing stores to JB Hi-Fi Home and for ~$3.85bn in sales. Sales growth in July was 7.6% above revenue from a year earlier. JBH shares surged following the result and are up more than 30% since 1 Jan 15. JBH is ~10% below all-time record highs.

11 August 2015





TRANSURBAN GROUP (TCL)


Net Profit After Tax (NPAT)($m) (373) 252 -248%

Underlying Profit After Tax ($m) 45 252 -82.1%

Revenue ($m) 1,860 1,150 +61.7%

Revenue Consensus ($m) 1,660

Proportional EBITDA ($m) 1,017 934 +13.1%

Total Final Distribution ($) 0.205 0.18 +13.8%

Final Distribution ($) Consensus 0.20

Transurban Group (TCL) reports FY loss due to acquisition of Transurban Queensland

Toll road operator Transurban (TCL) has reported a full year net loss of $373 million. The loss was driven by the significant transaction and integration costs related to the acquisition of Transurban Queensland (TQ). Excluding these significant items, a lower statutory profit was influenced by higher depreciation and amortisation charges associated with the consolidation of Transurban Queensland, their US assets and the Cross City Tunnel.

Revenue was underpinned by contributions from new assets including: TQ which generated $247million, The Cross City Tunnel which brought in $55 million, 95 Express Lanes generating $24 million and further growth in TCL’s existing assets of $118 million.

TCL said it expects to deliver double digit growth in distributions again this year providing FY16 distribution guidance of 44.5 cents per share, which would be an increase of more than 11% compared to 2015.

TCL had previously declared its final distribution of 20.5 cents per share bringing the full year payment to 40 cents per share. The record date for determining entitlements was 30 June 2015. The payment date is 14 August 2015.

11 August 2015





BRADKEN LIMITED (BKN)


Sales ($m) 965.9 1,135.2 -15%

Sales ($m) Consensus 958.6

Underlying EBITDA ($m) 136.1 173.3 -21%

Underlying EBITDA ($m) Consensus 137.0

Unadjusted Net Loss after Tax ($m) -241.3 21.5

Underlying Net Loss after Tax ($) 33.9 55.1 -38%

Final Dividend ($) Nil 0.26

Bradken (BKN) No surprises – full year loss and merger talks continue.

Mining and engineering services firm Bradken (BKN) reported a net loss after tax of $241.3Million broadly in line with market expectations. There were no real surprises in today’s numbers as Bradken has been consistently updating the market over the last 6months with the details of its restructure costs, write-downs and possible takeover news.

Bradken updated the market in late June by stating that they expected a FY15 underlying EDITDA of $136-$138Million and today posted $136.1Million in earnings. The result was impacted by restructuring and impairment costs while being boosted by one off property sales.

Bradken’s sales fell by 14% to $965.9Million due to competition in rail wagon sales and the pullback in the mining sector, which impacted demand for BKN’s services and products. Bradken expects the rate of decline in the resources industry CAPEX to slow in the current financial year as the company has seen order intake trends improving.

BKN said its restructuring is largely complete and its balance sheet has strengthened on the back of its $70Million Redeemable Convertible Preference Securities (RPS) to Sigdo Koppers and CHAMP. BKN said merger talks are continuing with the Sigdo’ Magotteaux Group - the current exclusivity period is set to expire on August 29.

Bradken management agreed not to pay out a final dividend to shareholders in line with expectations.

11 August 2015





COCHLEAR LIMITED (COH)


Sales ($m) 925.6 804.9 +15%


EBIT ($m) 206.4 149.6 +38%

Net Profit After Tax (NPAT) ($m) 145.8 93.7 +56%


Final Dividend ($) 1.00 1.27 -21%


Cochlear Limited (COH) missed profit forecasts despite strong earnings growth

Cochlear (COH) posted a weaker than expected $145.8m profit for the 12 months ended June 2015. Sales at the world’s largest maker of inner-ear hearing implants also fell short of consensus. The result was driven by favourable currency moves and a 3.2% rise in unit sales of its Cochlear implant systems.

The Australian dollar’s depreciation against the greenback over the year boosted sales by $32.7m, as COH earned 83% of its sales offshore. Revenue in the Americas (its largest market) surged 26% on FY14 and accounted for 43% of sales. 40% of revenue was earned in Europe (second biggest market) and COH generated just 17% of income in Asia Pacific.

Note that despite the 56% surge in earnings, the result came off a low base from a challenging 2014. Profits slid sharply by 29% in the prior year when regulators stalled the release of its Nuclear 6 implant – a device designed to automatically adjust to ambient noise.

COH shares slumped following the weaker than anticipated result. Outgoing CEO Chris Roberts will be replaced by COH’s head of North America, Chris Smith at the end of August. COH declared a $1/s fully franked dividend, payable 1 Oct 15.

Looking ahead, COH’s profit guidance for FY16 is for NPAT between $165m to $175m at FX rates of ~US$0.75. This represents between 13% and 20% growth in earnings.

12 August 2015





AGL ENERGY LIMITED (AGL)


Sales ($m) 10,678 10,445 +2.2%

Sales ($m) Consensus 10,380

EBITDA ($m) 1,505 1,330 +13.2%

Underlying Profit ($m) 630 562 +12.1%

Underlying Profit ($m) Consensus 585


EPS ($) 0.333 0.982 -66.1%

AGL Energy (AGL) posts a 62% fall in statutory profit as expected

AGL Energy (AGL) released a FY15 result that was at the top end of market guidance. AGL posted a 61.8% fall in statutory profit to $218M down from $570M. The company initially updated the market in July that it would declare a $435M write-down for the one off impairment cost related to its upstream gas assets. In their official result, AGL added the $117M costs associated with the Macquarie Generation acquisition resulting in total significant items of $578M.

AGL had already told the market that it is in the process of restructuring its business to allow for it to cut down on operational costs and streamline its retail energy business. AGL has already said it is looking to sell off another ~$1B worth of underperforming assets by the end of FY16. It expects pre-tax restructuring costs of approximately $20M that will be recorded as significant items in FY16 and expects to see a reduction of $100M in real sustaining CAPEX by FY17.

AGL posted a small lift in gross margin per customer account up to $198 from $187 the previous year even with a 1.7% slide in the number of AGL retail clients to 3.7Million.

AGL will pay a final dividend of $0.34 p/share in September 2015. AGL said it will provide formal guidance of its FY16 earnings outlook at its Annual General Meeting (AGM) on 30 September 2015.

12 August 2015





OZ MINERALS LIMITED (OZL)


Sales ($m) 390.1 351.0 +11.1%


Net Profit After Tax NPAT ($m) 51.8 (7.4)


Earnings/(loss) Per Share (cents) 17.1 (2.4)

Interim Dividend ($) 0.06 0.10 -40%

Interim Dividend ($) Consensus 0.10

OZ Minerals Limited (OZL) returns to profitability despite softer copper prices

OZ Minerals (OZL) posted a $51.8m profit for the 6 months ended June 2015. Despite the return to profitability its earnings, sales and dividend fell short of the market’s expectations.

The South Australia based copper and gold miner’s result was driven by a 59% lift in copper production, together with improved operational efficiency and productivity at its Prominent Hill mine. Earnings were held back by recent copper price weakness (copper price slumped by ~20% over the half). More than three quarters of its revenue was generated from the sale of copper. Gold production fell to 57,664/oz over the half; contributing around $11m less to revenue than 12 months earlier.

Lower waste movement has helped reduce mining expenditure over the half, while favourable currency fluctuations added $14m to underlying profit. $8m in restructuring costs (incl. employee redundancy expenses) held back the result slightly.

An unfranked interim dividend of 6c/share was declared, payable 24 September and has a 2.8% yield. OZL shares are down on the result and are trading near five-month lows. The miner’s shares are still slightly outperforming the broader Australian market.

Looking ahead, the company expects production to finish at the upper end of guidance with 110,000 to 120,000 tonnes of copper likely for 2015. It expects a ~4.5% fall in production over 2016 and 2017 and a more substantial fall in 2018.

12 August 2015





COMPUTERSHARE LIMITED (CPU)


Net Profit After Tax (NPAT) ($m) 153.6 254.5 -39%

Net Profit After Tax ($m) Consensus 156.17

Management NPAT 332.7 335.0 -0.7%

Management EBITDA ($m) 554.1 540.6 +2.5%

Revenue ($m) 1,971.25 2,015.11 -2.2%

Final Dividend ($) 0.16 0.15 +6.7%


Computershare Limited (CPU) write-downs and lower earnings forecasts weigh on CPU

Computershare (CPU) has reported a full year statutory net profit after tax of $153.6 million, which represented a fall of 38.9% over the previous corresponding period. The fall was mainly a result of the non-cash impairment charge of $109.5 million which was booked against the value of the UK Voucher Services business.

Earnings were also negatively impacted by the strengthening of the US dollar during FY2015 and the Group’s effective tax rate has increased from 21.8% for the year ended 30 June 2014 to 35.3% in the current financial year. At the same time maturing deposits which were reinvested at lower yields and a fall in the Canadian and Australian cash rates also impacted earnings. Other factors that weighed on the result included the loss of Serviceworks’ largest client and a major sub-servicing contract in the loan servicing business, the sale of Highlands Insurance LLC and increased regulatory costs, particularly in the US and the UK.

In contrast corporate actions in Canada and Australia, improved results in Hong Kong and the Indian mutual funds business helped mitigate the weaker earnings outcomes. Cost management, synergies from previous acquisitions and lower financing costs were factors that favourably impacted full year earnings.

Looking to the year ahead, CPU expects underlying business performance to be broadly similar to FY15, however, the impact of the stronger USD and the anticipated lower yields on client balances are again expected to create significant earnings headwinds. The business is also anticipating increased costs including those associated with investments in product development and efficiency initiatives. Taking these factors into account the Company expects Management EPS for FY16 to be around 7.5% lower than the previous year.

A final dividend of 16 cents per share, franked to 25% was declared with a record date of 20 August 2015 and a payment date of 15 September 2015.

13 August 2015





TELSTRA CORPORATION LIMITED (TLS)


Sales Revenue ($m) 25,845.0 25,119 +2.9%

Sales Revenue ($m) Consensus 25,967.0

Net Profit After Tax (NPAT) ($m) 4,231.0 4,275.0 -1%

NPAT ($m) Consensus 4,233.0

Earnings Per Share (c) 34.5 34.4 +0.3%

Final Dividend ($) 0.155 0.15 +3.3%


Telstra Corporation Limited (TLS) posts slight fall in profit as expected

Telstra Corp (TLS) posted a 1% drop in profit to an in-line with consensus $4,231m over FY15. Australia’s largest telco’s revenue continues to be driven by its Mobile division. Profit was partly held back by the sale of its CSL Hong Kong mobile business in May 2014, which added $561m in profit from its sale in the FY14 result.

Mobile continues to be its biggest earner, accounting for 41% of sales. New mobile client subscribers rose 298k to 16.7m over the year (7.2m above Optus and 11.4m more than Vodafone). TLS is expected to raise spending in its Mobile business by an additional $500m over FY16.

The strongest growth in revenue was in its NAS (Network Application & Services) division, which contributed $2.4bn to sales and surged 23.2% over the year. Despite the unit’s solid growth it only accounted for 9% of total revenue. NAS’ jump in revenue has easily offset its decreasingly popular Fixed line unit. NAS provides network services for both corporate and government customers domestically and internationally. Foxtel from Telstra (previously Premium Pay TV) revenue rose 9.4% to $662m. The result was boosted by close to 20% growth in subscribers and competitive pricing (Foxtel’s basic package pricing was almost halved in late 2014). Streaming services like Netflix are estimated to have as many as 800k subscribers in Australia. The merger of iiNet & TPG could add further competition in the broadband space.

A 15.5c/share fully franked dividend was announced, payable to investors on 25 Sept. A Dividend Reinvestment Plan has been introduced by TLS for this payment. TLS has a ~4.9% yield. Although TLS undertook a successful $1bn buyback in 2015, no additional capital controls were announced. Looking ahead, TLS’s FY16 guidance was slightly disappointing to the market - forecasting low-single digit growth in underlying profit.

TLS shares fell in response to the result; however has surged in recent years partly thanks to its dividend payments. TLS shares have more than doubled in value over the past five years.

13 August 2015





TABCORP HOLDINGS LTD (TAH)




Underlying Net Profit After Tax ($m) 171.3 149.4 +14.7%

Total Revenue ($m) 2,155.5 2,039.8 +6%

Total Revenue ($m) Consensus 2,143.0

EBIT ($m) 334.6 321.7 +4%

Final Dividend ($) 0.10

Tabcorp Holdings Limited (TAH) full year profit jumps by almost 15%

Tabcorp (TAH) has reported Net Profit After Tax (NPAT) for the financial year of $334.5 million, which was 157.5% above the previous financial year. The result was bolstered by tax benefits relating to licence payments in Victoria and Trackside product in NSW. The impact of the former was a benefit of $128.9 million, and a $120 million benefit associated with the latter. In addition to interest income, the benefits totalled $163.2 million. NPAT from continuing operations for the financial year excluding these income tax benefits and related interest was $171.3 million, which was 14.7% above the previous financial year. Total revenue was $2,155.5 million, which was 5.7% above the previous financial year.

TAH’s operations are comprised of three businesses: Wagering and Media, Gaming Services, and Keno. Wagering and Media was the stand out performer with revenues in the period rising to $1,856.9 million, an increase of 6.9%. Operating expenses, including one-off ACTTAB acquisition and integration costs, were $381.7 million, up 6.8%. EBITDA was $375.8 million, up 7.2%.

Gaming Service revenues edged higher to $99.6 million, up 1.5%. Operating expenses were flat at $31.2 million, while EBITDA was $67.6 million, up 0.9%. Keno revenues were $199.0 million, down 2.4%, impacted by jackpot activity. Operating expenses were $44 million, up 6.8% and EBITDA was $66.4 million, down 8.0%.

TAH declared a final dividend of 10 cents per share. This dividend will be fully franked and payable on 24 September 2015 to shareholders registered by 20 August 2015. The ex-dividend date is 18 August 2015.

13 August 2015





GOODMAN GROUP (GMG)


Revenue ($m) 2,356.6 1,679.0 +40.4%

Operating profit ($m) 653.5 601.1 +8.7%

Operating profit ($m) Consensus 651.2

Statutory profit ($m) 1,208.0 657.3 +83.8%

Earnings Per Shares (EPS) (c) 37.2 34.8 +6.9%

Final Distribution (c) 11.1 10.35 +7.2%

Final Distribution (c) Consensus 11.1

Goodman Group (GMG) profit surges thanks to property revaluations

Goodman Group (GMG) has posted an 84% surge in annual profit to $1,208m – driven most by $710m of favourable asset revaluations. The global property group’s operating profit (which strips out revaluations and one-offs) was $653.5m; a more modest 8.7% rise and in-line with consensus.

GMG enjoyed slightly higher profits across its three business units – Investment, Development and Management. More than half its earnings were generated from Investment, 35% from Development and 17% from Fund Management.

GMG is continuing progress with its ‘urban renewal strategy’ – essentially working on rezoning its industrial property portfolio and selling to residential property developers - with more than 35,000 apartments in the pipeline domestically. Its Management unit posted a 7% rise in earnings to $125.2m with AUM (Assets Under Management) rising by 12.5% to $25.2bn. As far as the Development business is concerned, GMG posted a 19% rise in ‘work in progress’ to $3.1bn.

An 11.1c/share final distribution was previously declared, payable to investors on 26 August. The ex-dividend date was on 26 June, meaning investors purchasing shares today are no longer eligible to receive the final distribution.

Looking ahead, GMG said it’s expecting earnings growth of 6% in FY16, while further reducing debt. GMG shares rose following the result and are outperforming the broader Australian market.

13 August 2015





MIRVAC GROUP (MGR)


Total revenue ($m) 2,151.9 1,974.2 +9%

Total revenue ($m) Consensus 2,150.0

Profit ($m) 609.9 447.3 +36%

Operating profit ($m) 454.8 437.8 +4%

Funds from operations ($m) 468.2 448.1 +4%

Dividends (distributions) ($) 0.049 0.046 +6.5%

Operational EPS ($) 0.123

Mirvac Group (MGR) reaps rewards through strong housing market

Mirvac Group’s (MGR) 2015 full year result came in at the top end of the company and market’s

guidance. Strong demand in residential and commercial property boosted the result. Positive returns and increased valuations of newly purchased assets also allowed Mirvac’s operating profit

to beat market expectations. Development profit margins lifted to 10.7% from 8.6%. MGR is targeting 12% development return on invested capital (ROIC) by FY17 after posting 11.1% in FY15. Mirvac listed a 23.6% improved residential gross margins.

Mirvac’s Net income increased by 36% to $609.9million, with the value of all properties on its books totalling $172.1Million. Mirvac’s occupancy in its investment portfolio is now just below 97%, with an average lease expiry of 4.5 years.

Today Mirvac said it is looking into the possible acquisition of the Investa Office Management Platform, alongside part ownership of Investa Commercial Property Fund, Investa Property Trust and Investa Office Fund.

Mirvac announced it is expecting FY16 operational profit of between $470- $482Million. This is slightly below market guidance, with earnings per share (EPS) to normalise back to $0.127- $0.13.

Mirvac will pay a distribution to shareholders of $0.49 a share on 26 August 2015

17 August 2015





NEWCREST MINING LIMITED (NCM)


Net Profit After Tax (NPAT) ($m) 546 -2,221

Underlying NPAT ($m) 515 432 +19%

Underlying NPAT ($m) Consensus 481.6

EBITDA ($m) 1,673 1,514 +11%

Revenue ($m) 4,344 4,040 +8%

Gearing (%) 29.3 33.8 -13%


Newcrest Mining Limited (NCM) – No dividend as gold miner returns to profit

Australia's largest gold miner Newcrest Mining (NCM) returned to profitability in 2015 after write-downs dominated the performance of the group in 2014. NCM reported a Statutory Net Profit After Tax (NPAT) of $546 million compared to a loss of $2.2 billion in the previous corresponding period.

Increased production and lower costs were a feature of the 2015 result. Excluding one off items, underlying

profit rose 19% to $515 million - an increase of $83 million reflecting the contribution of the higher production from Cadia East which enjoys larger margins and the net benefit on revenue of a lower Aussie dollar against the US dollar. A total of 82% of Newcrest’s sales revenue continues to be attributable to gold. Gold revenue of $3,555 million was 6% higher than the previous corresponding period largely due to a 5% increase in the average realised AUD gold price.

NCM’s All-in Sustaining Cost (AISC) of $941 per ounce sold in the current period was 4% lower than the

corresponding period, reflecting lower costs of extraction in addition to higher by-product revenue associated with higher copper sales volume. This was partially offset by the 9% deterioration in the average Australian Dollar against the corresponding period (which Increased USD-denominated costs). The ASIC of $US789 per ounce sold was 12% lower than in the corresponding period.

In the outlook for 2016 NCM expects group gold production to be in the range of 2.4 to 2.6 million ounces;

copper production is expected to be in the range of 80 to 90 thousand tonnes. Total capital expenditure is expected to be in the range of $700 to $825 million, while total exploration expenditure is expected to be in the range of $60 to $70 million.

17 August 2015





CHARTER HALL RETAIL REIT (CQR)


Revenue ($m) 201.2 184.5 +9.1%

Operating earnings ($m) 110.8 105.3 +5.2%

Operating earnings ($m) consensus 141.0

Operating earnings per unit (c) 29.7 29.6 +0.3%

Statutory profit ($m) 162.5 85.2 +90.7%

Final Distribution (c) 13.8 13.65 +1.1%

Full Year Distribution (c) 27.5 27.3 +0.7%

Charter Hall Retail REIT (CQR) profit boosted by favourable property valuations

Charter Hall Retail (CQR) posted a weaker than expected 5.2% rise in operating earnings to $110.8m for the year ended June 30. The 90.7% surge in its statutory profit was driven by $66.8m in favourable property valuations and a 9% rise in gross rental income. CQR is heavily focused on supermarkets and the non-discretionary part of the retail market, particularly in rural areas.

CQR generates more than half of its annual base rent from leasing properties to Woolworths and Wesfarmers subsidiaries. Over the year, two supermarket anchored shopping centres were purchased for $97.1m in QLD and SA at an average yield of 7.2%. Two major redevelopments were completed in VIC and QLD while six non-core retail properties were sold for $37.6m.

The property group entered a trading halt ahead of a capital raising announcement this morning. The REIT (Real Estate Investment Trust) aims to raise $50m via an institutional placement to help purchase two shopping centres worth $94.9m. The first is the Goulburn Plaza centre in NSW, with Coles and Kmart as anchor tenants. The second is Katherine Central in NT, which has Woolworths and Target Country as major tenants.

A 13.8c/unit distribution has already been declared, payable to eligible investors on 31 August. The ex-dividend date was 26 June. Looking ahead, CQR said it expects FY16 operating earnings between 30.25c and 30.75 cents per unit; a 1.8% to 3.5% improvement on FY15.

CQR shares are in a halt today, however are up by only ~1% so far this calendar year.

17 August 2015





AURIZON HOLDINGS LIMITED (AZJ)


Revenue ($m) 3,780 3,822 -1%

Revenue ($m) Consensus 3,860

EBIT – Underlying ($m) 970 851 +14%

EBIT – Underlying ($m) Consensus 972.3

NPAT - Underlying ($m) 604 523 +15%

NPAT - Underlying ($m) Consensus 595.3

Final Dividend ($) 0.139 0.085 +64%

Aurizon Holdings (AZJ) Reports stronger NPAT and dividend for the year

In FY15 Aurizon Holdings (AZJ), posted a slight decline in revenue but a solid 139% lift in

statutory profit. It has been a big year for the transportation company following its restructure and retrenchment in FY14. The downturn in mining transport volumes led to $386Million in impairments.

Aurizon’s above rail unit posted a strong result as the company worked on improving pricing for new and renewed contracts with clients. Its rail division posted steady volumes and lower fuel costs contributed to this result.

AZJ’s share price has lifted 9.5% this year, as they have focused on cutting costs and diversifying business units. Aurizon saw a small rise in its earning margin due to these changes up to 25.7% and above their target of 25%. They expect its earning margin to hold at 27% in FY16 as they plan to find additional corporate cost savings of $43Million. Their CAPEX spend for FY15 was in line with forecasts at $1.1Billion and the company received a net benefit on the sale of Redbank to the value of $36Million

Aurizon has forecast flat coal haulage volumes and lower iron ore volumes for FY16. Aurizon’s dividend payout ratio policy has been increased to 70-100%. AZJ will payout a 2H dividend of $0.139, it will be 30% franked after the last two dividends were unfranked.

18 August 2015





SYDNEY AIRPORT (SYD)



Revenue ($m) 594.7 568.4 +4.6

Revenue ($) Consensus 598.0

Earnings Before Interest & Tax (EBIT)($m) 347.2 307.1 +13%

EBITDA ($m) 488.3 459.0 +6.4%

EBITDA ($m) Consensus 483.3

Final Distribution ($) 0.125 0.115 +8.7

Sydney Airport (SYD) international passenger numbers boost first half profit.

In the first 6 months of 2015 SYD reported a 4.6% increase in total revenue to $594.7million. This was comprised of growth from several business units - Aeronautical revenue, which grew by 4.6% to $247.1million. International passenger growth which has been a feature of recent years and remained in place over the first half of the year grew by 2.8%, while domestic passenger numbers grew by 1.7%. Additionally, retail revenue increased 3.9% to $129.9million, property and car rental revenue grew 4.8% to $101million, and car parking and ground transport revenues grew by 8.7% to $72.2million.

The growth in passenger numbers was helped by improving load factors which rose 3.5% and by strong passenger demand particularly from China. Chinese nationals were again Sydney’s fastest growing market, up 16.8% year to date. Growth in Chinese travellers through Sydney Airport accounted for 60% of foreign nationality growth. Australian nationality travellers, the largest market at approximately half of all international travellers, grew by a robust 2.1%.

SYD highlighted the formal nine month consultation period with the Australian government had finished in relation to the Western Sydney Airport. The government may deliver the confidential notice of intention which sets out the material terms for the development and operation of the airport by the end of the year. Sydney Airport will then have between four to nine months to respond.

Sydney Airport has paid an interim distribution of 12.5cents p/share. The distribution represented an 8.7% growth on the prior period. The group said it remains committed to growth in distributions over the long term, thus distribution guidance has been upgraded from 25cents to 25.5cents p/share for the full year.

18 August 2015





QBE INSURANCE GROUP LIMITED (QBE)


Gross Written Premium (US$m) 8,692.0 8,491.0 +2%

Net Earned Premium (NEP) (US$m) 6,229.0 6,947.0 -10%

Insurance Margin (%) 8.6 7.6 +1%

Catastrophe claims (US$) (552.0) (690) -20%

Net Profit After Tax (NPAT) (US$m) 488.0 392.0 +24%

Interim Dividend (A$) 0.20 0.15 +33%

Interim Dividend (A$) consensus 0.20

QBE Insurance (QBE) posted a rise in profit and continues with divestments

QBE Insurance (QBE) posted a 24% rise in first half profit to US$488m for the six months ended 30 June. The result was below consensus and impacted by the sale of a number of non-core divisions to better focus on its core business.

QBE completed the sale of its troubled Argentine workers compensation unit on 10 Aug 2015, which is expected to result in a US$73m loss. The disposal of the Mortgage & Lender Services business is expected to complete on 30 Sept 2015 and its exit from the US LPI (Loan Protection Insurance) business in the 2H of the year. Recent divestments have held back written premiums but should be positive for results going forward. Gross written premiums (payments made by customers for insurance policies) from its Australia & New Zealand business were a drag with a lack of growth in the division.

Catastrophe claims fell US$138m over the half. Natural perils were relatively benign in the northern hemisphere (especially Europe) although rose closer to home. Catastrophe claims costs jumped due to a higher frequency of weather-related claims in Australia. Cyclone Pam, which devastated Vanuatu in March cost US$85m (most significant cost), followed by the NSW east coast storms in April which cost US$61m and Sydney’s hailstorm in late April which cost US$39m.

A fully franked $0.20/s interim dividend was declared, payable to investors on 2 Oct 2015. The insurer is targeting a higher payout ratio of its earnings to 65% (a 15% rise on previous ratio). Looking ahead, QBE has reiterated its margin guidance of between 8.5-10.0% and downgraded a number of earnings forecasts. QBE expects GWP for the year of between US$15.2bn and US$15.6bn (approximately 2% less than previous estimates). QBE shares are up 27% so far this calendar year.

18 August 2015





INVOCARE LIMITED (IVC)

RESULTS 1H15 1H14 CHANGE

Revenue from continuing operations ($m) 211.9 199.5 +6.2%

Funeral Volume Growth +3.6%

Occupancy and facilities expenses ($m) 14.24 13.11 +8.6%

Profit before income tax ($m) 27.37 29.52 -7.3%

Profit After Tax ($m) 18.51 20.85 -11.2%

Profit After Tax ($m) Consensus 18.50

First Half Dividend ($) 0.1575 0.1575

InvoCare Limited (IVC) reports record first half earnings but profit hit by expansions

InvoCare (IVC) The largest funeral, cemetery and crematorium operator in Australia, New Zealand and Singapore posted a lift in revenue over the first half of 2015 helped by a 2.5% lift in funeral case volumes. InvoCare’s profit was hit by higher operational costs and the one off costs associated with the acquisition and transformation its new US chain.

IVC’s new CEO Martin Earp, started on the 1st of May 2015, stated that: “The business remains robust, with good results in the comparable operations, in Australia and Singapore.

Over the last 2 years Invocare has seen competition building in the industry as new entrants win market share and push service costs down. However the aging population (with the number of Australians aged over 65years expected to double by 2055) and an average annual increase of 1% in the number of deaths over last 30 years the market continues to grow. The introduction of prepaid services has also grown the business in Australian with approximately 15% of all IVC Australian funerals now being prepaid.

The company stated that its comparable sales for July increased by 5.9%. IVC expects the losses from its US unit to grow to US$3M by the end of FY15 as it spends more on understanding the business. IVC expects FY15 CAPEX will reach approximately $24M.

Invocare will pay an interim dividend of $0.1575, unchanged (Y/Y) on October 9 2015.

19 August 2015





WOODSIDE PETROLEUM LIMITED (WPL)


Revenues from ordinary activities (US$m) 2,556 3,551 -28%

Production Volume (Mmboe) 42.0 46.5 -9.7%

Sales Volume (Mmboe) 43.4 44.7 -2.9%

Underlying Profit (US$m) 679 1136 -40.2%

Underlying Profit (US$m) Consensus 649

Earnings per share (EPS) (US$) 0.83 1.34 -38.6%

First Half Dividend (US$) 0.66 1.11 -41%

Woodside Petroleum (WPL) - A tough start as expected as WPL cuts dividend by 40%

Woodside Petroleum had reported a slightly better than expected result for the first half of 2015. The company already flagged the impact of the lower oil price to the market. WPL said “we remain on track to achieve our vision to become a global leader in upstream oil and gas and deliver superior shareholder returns.”

WPL restated that it has produced 42.0 Mmboe in 1H15 down 9.7% year on year. It also reaffirmed its FY15 output target of 86-94mmboe. Woodside’s operational revenue fell 28% better than the market has expected. Even with the planned turnaround at Pluto, unplanned outages, and the impact of cyclone activity over the period, WPL’s net profit fell 38.6% over the year. However this was a better result than others in the sector.

Woodside continues to make roads with its productivity program and is now targeting $800million in ongoing benefits by 2016. WPL’s acquisition of interests in the Australian Wheatstone LNG and Balnaves oil projects will add significant near-term and immediate production to its portfolio. Woodside’s North West Shelf Project (NWS) gas division is performing well and WPL successfully renewed sales contracts over the half.

WPL’s total debt now stands at $3.971billion and the company said it has sufficient liquidity to fully fund current committed activities. WPL will pay US $0.66 dividend on the 23rd of September 2015. WPL’s dividend payout ratio remains at 80% of underlying earnings.

19 August 2015





STOCKLAND (SGP)


Revenue ($m) 2,114.0 1,935.0 +9.2%


Funds From Operations ($m) 657.0 573.0 +14.7%

Underlying Profit After Tax ($m) 608.0 555.0 +9.4%


Net Profit After Tax ($m) 903.0 527.0 +71%


Stockland (SGP) profit surges on favourable property revaluations

Property group Stockland (SGP) posted a 71% rise in annual profit to $903m. The result was driven by $297m in favourable revaluations of its Commercial Property assets and $80m from the sale of its stake in Australand. Underlying profit (which strips out one-off items) rose by an in-line with consensus 9.4% to $608m.

Its three most important portfolios in order of contribution to earnings are Commercial Property, Residential and Retirement Living. All three business units delivered growth in earnings. Commercial property (which includes 42 retail centres, 24 business parks & 10 office buildings) accounted for 70% of operating profit. The retail portfolio (the biggest earner in the Commercial unit) recorded the strongest specialty sales growth in four years of 7%.

Residential made up 23% of earnings to $166m, with profits up 73.5%. SGP settled 5,876 lots over the year – a 12.6% rise on FY14. SGP is the largest residential developer in Australia. The low interest rate environment and substantial demand has been helpful. Retirement Living generated just 6.5% of profit; however has grown by 19.9% over the year. SGP is one of the largest retirement living operators in Australia, with over 9,300 units and another 3,400 units in the development pipeline. Two non-core villages were sold, while eight were acquired in SA – a strong market for retirement living. Improved sales are likely as an ageing population continues to downsize.

A $0.12/security final distribution was declared, payable to eligible investors on 31 Aug 2015. SGP has a 5.7% yield, although distributions are unfranked meaning payments are yet to be taxed. Looking ahead, SGP expects to lift underlying profit by 6-7.5% over the year ahead.

19 August 2015





ARRIUM LIMITED (ARI)


Net Profit After Tax (NPAT) ($m) (1,918.2) 205.4 -1,036%

Underlying Loss After Tax ($m) (6.7) 296.3 -102%

Underlying Loss ($m) Consensus (19.7)

Revenue ($m) 6,085.6 7,006.6 -13.1%

Underlying EBIT ($m) 6.0 497.0 -99%

Underlying EBITDA ($m) 351.0 864.0 -59%

Underlying EBITDA ($m) Consensus 341.0

Arrium Limited (ARI) continues to battle the headwinds of weak steel and iron ore markets

Arrium (ARI) has reported a steep full year loss reflecting falling iron ore prices and weak steel markets. The group reported a net loss after tax (NLAT) of $1,918 million, which includes previously announced asset impairments of $1,653 million and restructuring costs of $146 million.

In underlying terms, which removes the impact of one off items, the group reported a NLAT of almost $7million for the year, down from an underlying Net Profit After Tax (NPAT) of $296 million for the prior financial year. The Mining business suffered in the face of the average iron ore index price falling from US$123 per dry metric tonne (dmt) in FY14 to US$72 per dmt in FY15, a 41% fall. ARI’s average realised price for the period was US$59/dmt CFR a fall of 47% from US$111 dmt in 2014. As a result, mining revenue fell 43% to $889 million, from $1,569 million in the prior year due to lower prices, while export volumes remained at 12.5million tonnes which were comparable to the previous year. The average loaded cash cost for the year was A$45.7 per wet metric tonne (wmt) compared to A$48.2 wmt.

The mining consumables business was helped by solid demand in the markets of North and South America. Grinding media, which account for most sales volumes in the segment were up 3% on the prior year. Underlying EBITDA for Mining Consumables increased 13% during the year, rising from $187 million to $211 million helped by the stronger volumes and stable margins. The steel business reported flat sales revenue compared to the previous year at $2,870 million, as increased volumes were offset by a lower average selling price. Full year EBITDA rose 22% to $62 million.

The iron ore miner and steel maker did not declare a dividend for the year ended 30 June 2015.

20 August 2015





TATTS GROUP LIMITED (TTS)


Revenue ($m) 2,919.8 2,868.3 +1.8%




Underlying NPAT ($m) 255.8 226.6 +12.9%

EBIT 420.3 414.5 +1.4%

Final Dividend ($) 0.075 0.055 +36%

Tatts Group Limited (TTS) lotteries carry the year as wagering revenue slips

Tatts Group (TTS) has reported an after tax profit of $252 million, an increase of 25.7%. Underlying profit (from continuing operations) for the group rose by 12.9% to $255.8 million. Both measures were below market expectations.

The result was underpinned by growth in the lottery business with revenue up 2.8% to $1.98 billion translating to a 5.8% increase in EBITDA to a record of $313.6 million. EBIT grew by 5.9% to $287.5 million.

Wagering revenue experienced headwinds as a result of continuing competition generated by domestic bookmakers and international entrants. As a result revenue for the segment fell 1.5% to $632.9 million from $642.3 million in 2014. The segments digital strategy continued to gain traction with sales rising 12.5% to now comprise 25.7% of total wagering sales, compared to 23% in 2014. The increase in digital sales was balanced by an 11% fall in phone sales although digital sales growth outpaced the phone sales decline by 4 to 1. Fixed-price betting revenue on racing was up 21.8% and held win rates in line with those achieved in FY14. Fixed-price betting revenue on sport was up 4.8% with the book lifting its win rate.

TTS declared a final dividend of 7.5 cents per share bringing the total annual payment for the FY15 to 16.5 cents, an increase of 22.2% compared to 2014. The record date for the payment of the dividend is 3 September 2015, payable on the 5 October 2015.

20 August 2015





ORIGIN ENERGY LIMITED (ORG)


Total Group Revenue ($m) 13,804 14,518 -5%

Total Group Revenue ($m) Consensus 13,970

Revenue continuing operations ($m) 11,550 12,363 -6.6%

Expenses continuing operations ($m) 11,917 11,909 +0.7%

Underlying Profit ($m) 682 713 -4%

Statutory (Loss)/Profit ($m) (658) 530


Origin Energy (ORG) reports a full year loss as expected and weak future guidance

Origin Energy (ORG) reported a statutory loss of $658Million for FY15. ORG posted a $705Million impairment charge due to the slide in oil and gas prices which decreased the value of its assets and the value of its Contact Energy investment. Origin had updated the market on these expected impairment charges throughout the year. The removal of carbon tax credits cut ORG’s revenue by a further $832Million.

Origin Energy also announced it will look to cut more spending and has initiated a company-wide project to further improve efficiency and reduce cash costs by $200 million from FY17. Today they announced they will be cutting almost 800 jobs in the near future.

Origin plans to cut CAPEX growth even after affirming its plans to spend $24.7Billion on its new J/V (with ConocoPhillips) East Coast gas export project

Origin said it expects earnings in the energy markets to be flat in FY16 and that they expect margins to be slimmer on its Liquid Natural Gas (LNG) related contracts.

Even with the big slide in profit ORG said it will pay a final dividend to shareholders of $0.25 a share (in line with market expectations) on the 28th of September 2015.

20 August 2015





WESFARMERS LIMITED (WES)


Revenue ($m) 62,447.0 60,181.0 +3.8%


Underlying profit ($m) 2,440.0 2,253.0 +8.3%

Net Profit After Tax (NPAT) ($m) 2,440.0 2,689.0 -9.3%


Final Dividend ($) 1.11 1.05 +5.7%


Wesfarmers Limited (WES) posted a rise in profit driven by Coles

Wesfarmers (WES) has posted an in-line with consensus 9.3% drop in annual profit to $2,440m. The result was driven by Coles and hindered by the sale of its insurance business (which added more than $1bn to the FY14 result). All its business units (with the exception of coal mining interests) improved earnings over FY15.

Coles (46% of WES earnings & its largest business), recorded a 6.6% lift in profit to $1,783m for the year. Improvements in operational efficiencies helped deliver lower prices which lifted the number of customer transactions and basket size. Its Liquor business delivered flat earnings growth.

Bunnings continues to outperform the market, with 11.1% growth in earnings to $1,088m. Growth across resources states (QLD & WA) have been sluggish recently, although there was no mention of a state breakdown in this result. Over the year, 29 new trading locations were opened. Kmart was the best improver, with 18% growth in profit to $432m and 8.2% revenue growth. Officeworks contributed $118m to WES’ bottom line while Target (a drag on earnings in recent years) announced a 4.7% improvement in profit despite a slight fall in revenue. WES’ Chemicals, Energy and Fertilisers division posted a 5.4% rise in earnings despite the challenging environment (falling commodities, lower mining investment and cautious businesses). WES made $1.9bn in investments over FY15; therefore capital returns are unlikely over the short term.

A final dividend of $1.11 was declared, payable to investors on 30 September. Tuesday 25 August will be the ex-dividend date (cut-off for dividend eligibility). WES has a 4.7% dividend yield.

Looking ahead, no specific guidance was provided. WES shares have fallen by 9% over the past year.

20 August 2015





QANTAS AIRWAYS LIMITED (QAN)


Revenue ($m) 15,816.0 15,352.0 +3.0%


Underlying Profit Before Tax (PBT) ($m) 975.0 (646.0) -

PBT ($m) Consensus 982.0

Statutory Profit After Tax ($m) 560.0 (2,843) -

Shareholder Capital Return ($/share) 0.23 0.0 -

Final Dividend ($) 0.0 0.0 -

Qantas Airways Limited (QAN) returns to profit thanks to Transformation program

Qantas Airways (QAN) has posted a largely in-line with consensus underlying profit of $975m for the 12 months ended June 2015. The result was a $1.6bn improvement on FY14 and was driven by savings on fuel and the airline’s transformation program. This marks its first profit in two years.

Lower fuel prices boosted earnings by $597m. A more modest depreciation expense in FY15 added $326m while the repeal of the carbon tax was beneficial. Overall, $894m in Transformation benefits were realised in FY15: $712m in cost reduction and $182m in revenue benefits.

Qantas Domestic continues to be the biggest contributor to earnings (39% of profit) and was boosted most by the realisation of $302m of Transformation benefits. Its Qantas Loyalty program made up a quarter of earnings. Its budget airline, Jetstar returned to profit (lost $116m in FY14).

A $764m improvement in earnings for the underperforming Qantas International business provided a huge boost to its bottom line (first profit since GFC). More than half of the unit’s turnaround was due to its Transformation program. QAN will be adding four Dreamliners to its fleet in FY18 and another four in FY19.

Although no dividend was declared, QAN announced a $505m capital return. Shareholders will receive $0.23/share, subject to approval at its AGM in October. The payment will be made in November 2015, with no tax expected to be payable by shareholders. This will be combined with a share consolidation (expected to have a similar impact to a share buyback). QAN shares have almost tripled in value in 12 months.

Looking ahead, QAN has not provided profit guidance but expects $450m in Transformation benefits (cost, fuel and revenue) for FY16 and a slightly higher depreciation expense.

20 August 2015





ASX LIMITED (ASX)


Operating revenues ($m) 700.7 658.3 +6.4%

Operating revenues ($m) Consensus 701.0

Operating expenses 160.1 153.6 +4.2%

EBIT ($m) 502.0 470.9 +6.6%

Underlying NPAT ($m) 403.2 383.2 +5.2%

Underlying NPAT($m) Consensus 402.9

Final Dividend ($) 0.951 0.89.9 +5.8%

ASX Ltd (ASX) IPOs and capital raisings boosted FY15 results

FY15 was a very solid year for ASX Ltd. The company posted a 6.4% rise in revenue that can be attributed to; a 14% rise in listing and issuer service fees and a 10% lift in Austraclear (debt market services). The ASX listed 120 new companies via IPO helping to raise $39Billion and a further $50Billion being raised in the secondary capital market.

Revenue from the derivatives and Over the Counter (OTC) markets fell by 7% even with a 10.9% lift in basis single stocks and equity derivatives revenue. The ASX’s decision to cut the cost of its electricity derivatives transaction fees from 1 July 2014 and interest rate derivatives from 1 October 2014 impacted revenue. Cash trading and clearing increased over the year by 6.7% and the ASX saw an 8.3% rise in the revenue generated from is technical services unit.

ASX’s operating expenses increased by 4.2% largely driven by restructure charges of $7.7Million for technology transformations. CAPEX totalled $44.4Million in FY15 in line with expectations. The company’s plans to increase data services and replace CHESS will see a lift in CAPEX in FY16 $45-$50Million as the company looks to expand its offering and expand its Asian footprint.

The ASX will pay a final dividend to shareholders of $0.951 a share on the 23rd of September 2015.

20 August 2015





AMP LIMITED (AMP) RESULTS HY15 HY14 CHANGE Revenue ($m) 8,624.0 7,245.0 +19%

Net Profit After Tax ($m) 507.0 382.0 +32.7%

Net Profit Profit ($m) Consensus 493.8

Underlying Profit ($m) 570.0 510.0 +11.8%


Interim Dividend ($) 0.14 0.119 +17.6%

Interim Dividend ($) Consensus 0.14

AMP Limited (AMP) strong HY profit helped by solid contribution from most businesses

• AMP has reported a statutory profit of $507 million in the 6 months to June 30. This is a rise of almost 33% compared to the $382 million profit posted in the previous corresponding period (pcp) and ahead of the $494 million figure which was the average of market estimates.

• Underlying profit removes the impact of one off items or in the case of AMP, takes into consideration factors such as market volatility or the cost of implementing significant regulatory changes. By this measure AMP reported underlying profit of $570 million, a 12% increase on the $510 million in the pcp.

• There were good performances across AMP’s various businesses with the exception of ‘Australian Mature’, AMP’s life insurance business, which reported a 9% fall in NPAT. The bulk of AMP’s earnings are derived from the Wealth Management business which saw after tax profit rise by 13% to $207 million. At the same time Assets Under Management (AUM) grew by 13% compared to 1H14 while costs declined by 2.3% from 1H14.

• The Investment Management business, AMP Capital, saw the best improvement with NPAT rising by more than 26% to $72 million, the result benefitting from a 16% increase in fee income. Profit at the Wealth Protection business rose by 9% to $99 million aided by an improvement in lapse rates (customers not renewing policies), while New Zealand Financial Services business reported an 11% increase in the same measure to $61 million. AMP Bank reported an impressive jump in after tax profit of 19% to $50 million, helped by lowering costs and an improvement in the net interest margin.

• AMP declared an interim dividend of 14cents per share. The record date is Thursday September 3, 2015, with a payment date Friday October 9, 2015.

21 August 2015





COCA-COLA AMATIL LIMITED (CCL)


Revenue ($m) 2,449.7 2,336.2 +4.9%


EBIT ($m) 316.9 316.7 +0.1%





Coca-Cola Amatil (CCL) posted a flat result which was still above expectations

Coca-Cola Amatil (CCL) has posted a modest 0.9% lift in half-year profit to $183.9m. The result was above consensus and largely in-line with the company’s guidance. Earnings growth was non-existent due to difficult conditions in its core Australian division and a slowing Indonesian economy. Despite sluggish profit growth, sales volumes rose in all of its markets (Australia, NZ & Fiji, Indonesia & PNG). CCL is 29% owned by US based Coca-Cola Holdings.

CCL’s Australian beverage business posted a 6% slide in earnings, but still accounted for 70% of the group’s underlying profit. Volumes rose by 2.8% and the 110bps decline in margins to 16.5% was better than anticipated. CCL has been making an effort to release healthier options to the market, with the April launch of its naturally sweetened Coke Life an example.

Volumes from its New Zealand and Fiji unit rose by 8.5%, which was above the market’s forecasts while 7.7% growth in volumes in its Indonesia & PNG business fell well short of expectations. Indonesia’s economy is growing at the slowest pace since 2009, hurting retail spending.

A 75% franked 20c/s interim dividend was declared, payable to eligible shareholders on 6 October, with an ex-dividend date of 26 August. CCL shares rose following the result but have been heavily sold in the lead up to the report. CCL is down 5% over the year.

Looking ahead, CCL remains on track with its guidance and is targeting to return to mid- single-digit growth in earnings over the next few years.

21 August 2015





SANTOS LIMITED (STO)

RESULTS 1H15 1H14 CHANGE

Production volume (Mmboe) 28.3 25.0 +13%

Sales volume (Mmboe) 30.9 28.9 +7%

Product sales revenue ($m) 1,611.0 1,887.0 -15%


EBITDAX ($m) 900.0 950.0 -5%

Net profit ($m) 37.0 206.0 -82%

Final Dividend ($) 0.15 0.20 -25%

Santos Limited (STO) CEO steps down after a tough start to the year

Energy firm Santos has reported its first half results showing a 15% slide in revenue and 82% fall in net profit to $37Million, despite a 13% rise in production throughout 1H15 to 28.3Million barrels of oil equivalent (Mmboe). The ~50% slide in the oil price year on year (Y/Y) has significantly impacted the company. STO’s realised oil price was US$60/ barrel in 1H15 compared with US$115/ barrel in 1H14 down 38% Y/Y.

The company said it will undertake a thorough strategic review of its business in order to restore and maximise shareholder value. STO also announced that its current CEO David Knox will step down from his position, but will continue in the role until a successor is found.

STO said it is considering a spin-off of its assets going forward. The company has cut is CAPEX by 55% and is looking to rework major contracts to ensure better pricing for supplies and secure future work that they hope will deliver $180Million in supply-chain savings over the next year.

Santos said its QLD LNG project is on track to pump LNG by end of the 3Q15 and is on budget. STO have maintained FY15 production guidance of 57-64 Mmboe. Santos will pay a 1H15 dividend of $0.15 to shareholders on the 30th of September.

21 August 2015





INSURANCE AUSTRALIA GROUP LTD (IAG)


Gross Written Premium ($m) 11,440 9,779 +17%

Net Profit After Tax ($m) 728 1,233 -41%


Reported Insurance Margin (%) 10.7 18.3 -760 bps

Underlying Insurance Margin (%) 13.1 14.2 -110 bps

Final Dividend ($) 0.16 0.26 -38.5%


Insurance Australia Group Ltd (IAG) ballooning natural peril costs weigh on IAG’s result

Ballooning natural peril costs have weighed on IAG’s full year result. The total value of policies sold, also known as the Gross Written Premium (GWP) rose 17% to $11.4 billion compared with $9.8 billion a year ago. However, claim costs for the period rose beyond the $1 billion mark for the first time to $1.05 billion. This represents an increase of $495 million compared with 2014 and is substantially higher than the $700 million the insurer had allowed for. These factors conspired to see IAG’s full year Net Profit After Tax (NPAT) fall 41% to $728 million, which was well below expectations.

A key measure of profitability for insurers is the Insurance Margin. IAG’s full year Insurance Margin fell dramatically from a record high of 18.3% in 2014 to 10.7% in 2015. IAG’s preferred measure, Underlying Margin, which removes the impact of one-off events, saw a contraction of the measure to 13.1%.

IAG offered a positive outlook for FY16 with GWP growth expected to be flat in a competitive low growth environment. The group expects underlying profitability to remain strong thanks to the ongoing integration of the former Wesfarmers business. The reported Insurance Margin for FY16 remains unchanged at 14-16%. This will be helped by the quota share agreement with Berkeshire Hathaway, which came into effect on 1 July 2015. IAG expects the losses from natural perils for FY16 to be below $600 million.

IAG declared a final fully franked dividend of 16 cents per share, bringing the total dividend for the year to 29 cents, down from 39 cents a year ago. The payment will be made 7 October 2015, with a record date of 9 September.

21 August 2015





SUPER RETAIL GROUP LIMITED (SUL)


Revenue ($m) 2,238.7 2,090.1 +7.1%


Underlying Profit ($m) 106.3 112.2 -5.3%


Net Profit After Tax (NPAT) ($m) 81.1 108.4 -25.2%



Super Retail Group (SUL) annual profits held back by restructure

Super Retail (SUL) posted a slightly above consensus 5.3% drop in profit to $106.3m for the 12 months ended 30 June. The result was held back by the restructure of two of its brands and the closure of its NZ based outdoor business. SUL has interests in Auto, Leisure and Sports retailing.

Supercheap Auto posted a 1.6% rise in earnings despite a weaker Australian dollar (which increases costs of imported goods) and challenging conditions in Queensland (which SUL has substantial exposure to). Nine new stores were opened and 29 were refurbished (total of 300 stores) throughout the year to June 30, 2015.

Rebel and Amart Sports posted an 11.5% rise in profit, with strong sales growth from both businesses. Six new Amart Sports stores were opened over the year together with two Rebel stores and seven were refurbished (has a total of 90 Rebel stores and 56 Amart Sports).

Following a review of its underperforming units, SUL decided to restructure its Ray’s Outdoors business and integrate the Workout World unit with Rebel at a cost of $12.8m. The closure of Fishing Camping Outdoors (FCO) incurred a loss of $16.2m. A fully franked final dividend of 21.5c share has been declared, payable to eligible investors on 2 Oct, with an ex-dividend date of 28 Aug.

Looking ahead, no specific guidance was provided. SUL said it aims to deliver growth through increased like for like sales (i.e. from existing stores) and the opening of between 20-30 stores. SUL expects improved earnings thanks to better gross margins and cost cutting. SUL shares have improved by 4% over the past year.

21 August 2015





MEDIBANK PRIVATE LIMITED (MPL)


Health Insurance premium revenue ($m) 5,934.8 5,648.7 +5.1%

Total income ($m) 6,681.6 6,496.0 +2.9%

Total income ($m) Consensus 6.630.0

Gross profit 841.9 764.4 +10.1%

Net profit ($m) 285.3 130.8 +118.1%

Net profit ($m) Consensus 270.1


Medibank Private Limited (MPL) First FY result since listing beat expectations

Medibank Private reported better than expected profit for FY15 driven by a 5.1% pick-up in Health Insurance premium revenue. Medibank did not list any impairment and restructuring expenses over the year compared to the $134.7Million claimed last year, which supported its net profit result.

Operating profit in MPL’s Health Insurance business which contributes to 96% of its total profit was helped by two sets of premium increases over the last 18 months (premium rate rises of 6.50% from 1 April 2014 and another 6.59% increase from 1 April 2015). While total claim costs over the last year only increased by 4.3% to $5.1Billion.

The lift in revenue from health insurance more than offset the 11.3% slide in MPL’s complementary services division. This business provides health management services for government and corporate customers, as well as travel, life and pet insurance products. The decline was mainly due to the non-renewal of the government’s immigration contract which expired in July 2014.

Medibank surprised the market by announcing an inaugural fully franked dividend of $0.053 a share payable on 28 September 2015 to shareholders.

24 August 2015





FORTESCUE METALS (FMG)


Revenue (US$m) 8,574.0 11,753.0 -27%

Revenue (US$m) Consensus 8,612.0

Underlying Profit (US$m) 245.0 2,631.0 -90.7%

Net Profit After Tax (NPAT) (US$m) 316.0 2,740.0 -88.4%

NPAT (US$m) Consensus 418.9

Net Debt (US$m) 7,188.0 7,159.0 +0.4%

Final Dividend (A$) $0.02 $0.10 -80%

Fortescue Metals (FMG) missed annual profit estimates by 25%

Fortescue Metals (FMG) posted a huge slump in annual profit to US$316m for the 12 months ended 30 June 2015. The result was ~25% below consensus and held back by lower iron ore prices (-55% over FY15) and boosted by improvements in productivity, efficiency (including cost cutting measures) and record shipments.

Australia’s 3rd largest iron ore miner generates 94% of its revenue from selling ore to China and is extremely sensitive to economic developments in the world’s second biggest economy. FMG accounted for 18% of China’s total iron ore imports in 2015. FMG said it achieved a realised price of US$57/dmt for its ore over the year and has US$2.4bn of cash on hand.

Its debt position remains largely unchanged and uncomfortably high at US$7.2bn. Considering this is ~A$4bn above FMG’s market capitalisation (value on ASX), an external cash injection could be helpful. Media reports that a Chinese consortium is eyeing a stake in the ore miner surfaced in May.

FMG will surprisingly pay eligible investors a modest A$0.02/s fully franked final dividend on 5 October, with 3 September as the ex-dividend date. This decision was made despite its mountainous debt and weak earnings. FMG spent US$343m on payments over FY15.

FMG shares slumped following the consensus miss which takes its losses this calendar year to ~35%. Looking ahead, FMG has provided shipping guidance of 165mt for FY16; in-line with shipments made over FY15. No specific profit estimates were made for the year ahead.

24 August 2015





LEND LEASE GROUP (LLC)


Revenue ($m) 13,280.9 13,935.9 -4.7%


Funds managed ($m) 21,300.0 16,300.0 +31%

Australian Op business Profit after tax ($m) 625.1 446.0 +40.2%

NPAT ($m) 618.6 822.9 -24.8%


Final Dividend ($) 0.27 0.49 -44.89%

Lend Lease (LLC) FY15 result meets expectations boosted strong housing demand

Lend Lease Corporation (LLC) reported a solid result for the full year ended 30 June 2015, despite a 25% slide in its Net Profit After Tax (NPAT). LLC had advised the market that it could not replicate prior results as it came off a bumper FY14, adding that they expected to achieve a net profit of $604 - $628Million for FY15. LLC’s result was boosted by the sale of Bluewater shopping centre in the UK (Kent) for $485Million.

LLC’s Australian business unit performed well with the strength in property demand boosting profit after tax which rose by 40.2%. Its Australian Property Development business delivered record land-lot settlements of 3,822, up 26% over the year with strong sales from Barangaroo. While LLC’s Aussie engineering and services unit pushed its construction profit down 14% (Y/Y). Lend lease’s American division also increased by 14.2% underpinned by growth in military housing demand.

The areas of weakness for LLC were in Asia and Europe where its operating business profits fell. In Asia the profit slipped 76.5% as LLC purchased new properties, without boosting sales in the region. In Europe LLC’s unit profit fell by 74.9% (hit by the Bluewater sale) while the pipeline remains strong and presales of units are also tracking ahead of plan.

Lend Lease said the estimated value of its pipeline increased by 19% (Y/Y) to $44.9Billion, and funds under management lifted by 31% to $21.3Billion

LLC will pay a final dividend for shareholders of $0.27 on the 18th of September 2015

24 August 2015





UGL LIMITED (UGL)


Operating revenue ($m) 3,048.6 4,511.5 -32%


EBIT ($m) 75.3 185.8 -59%

EBIT Margin (%) 2.5% 4.1% -1.6%

Net Loss after Tax ($m) (236.4) 62.0

Net Loss after Tax ($m) Consensus (186.5)


UGL Limited (UGL) posts worse than expected annual loss due to hefty write-downs

Engineering services firm UGL Limited (UGL) reported an annual net loss after tax of $236.4Million for the FY15 (DTZ sales boosted its bottom line figure by $49Milion).

The $122.5million provision associated with the Ichthys Combined Cycle Power Plant (CCPP) project was already factored into this result, along with the $55.6Million related to the slowdown in the resources industry, the $63Million of goodwill impairments, and the $26.7Million in restructure charges. Today the company also reported other one-off changes and write-downs to the value of $41Million as the new management team work on recreating a stronger company for the future. The company said “Strong progress was made in reducing WIP in FY15 through the cash settlement of longstanding claims”.

UGL’s total operating revenue beat expectations. Rail & Defence revenue lifted by 2%, while Asset Services (UGL’s maintenance division) also increased by 2%. On the other hand UGL’s EBIT fell to $8.5Million mainly due to weak demand from the coal sector. UGL’s Engineering & Construction revenue lifted by 21% while revenue from its Technology Services unit fell by over 23% despite a 100% lift in its order book. Technology Systems revenue is expected to be flat in 2016 with Sydney Metro Northwest replacing completed projects in FY15.

UGLs’ order book now stands as $4.6Billion and is on track to achieve its FY16 guidance of $2.3Billion in revenue and a 4% increase in its earnings margin in FY17.

24 August 2015





NIB HOLDINGS LIMITED (NHF)


Revenue ($m) 1,672.9 1,528,5 +9%


Gross margin ($m) 267.8 236.2 +13.4%

Underwriting result ($m) 88.6 74.1 +19.6%

NPAT ($m) 75.3 69.8 +7.9%


Final Dividend ($) 0.06 0.05 +20%

NIB Holdings (NHF) posts strong growth in market share and gross margins

Aussie based health insurer NIB Holdings Limited (NHF) posted a solid 2015 full year result helped by growth in market share and a 13.4% lift in its overall gross margins.

NHF achieved a 4.7% growth in its Australian policyholder numbers with 23,100 new policyholders over the year. The revenue from these policies’ increased by 8.8% while net claims only increased by 5%, helping to push its gross margins up by 17.5%.

Since NHF acquired its New Zealand operations (Tower Health) in late 2012 the company has registered steady growth. New Zealand Policyholder growth hit 5.9% resulting in premium revenue growth of 8.1% to $150.4Million for the year. New Zealand gross margin figures fell as management expenses rose by 1.7% and underwriting costs increased.

NHF’s International (Inbound) Health Insurance business which includes international students and workers saw policyholder growth increase by 58.5% boosted by a new major contract with the Saudi Arabian Cultural Attaché Office in Canberra. A softening in Australia’s skilled migrant intake (457 visa class) has lead NIB Holdings to look at widening its offering in this space to cover the potential pull back in demand. Furthermore its acquisition of travel insurance provider World Nomads Group (WNG) was completed on 31 July 2015

NHF will post a final dividend for shareholders of $0.06 on the 9th of October 2015

24 August 2015





BLUESCOPE STEEL LIMITED (BSL)


Revenue ($m) 8,571.7 8,006.7 +7.1%


EBIT ($m) 296.6 102.3 +190%

Net Profit After Tax (NPAT) ($m) 136.3 (82.4)


Net Debt ($m) 275.2 261.6 +5%

Final Dividend ($) 0.03 Nil

BlueScope Steel Limited (BSL) beat consensus in its return to profit

BlueScope Steel (BSL) posted a better than expected return to profit making $136.3m for the 12 months ended 30 June. The return to profit was partly boosted by fewer one-off costs (which held back the prior result), while a drop in demand from China held back earnings.

While profit was above consensus, Australia’s biggest steelmaker faces challenges with its Port Kembla operations. BSL Chairman Mr Graham Kraehe said “…we have to address the major challenge of losses in commodity steelmaking in Australia and New Zealand.” China has substantially increased its exports this year (an increase equivalent to the output of 20 Port Kembla steelworks), which has pushed prices significantly lower. BSL said it has initiatives underway to achieve lower costs (target of ~$200m in savings by FY17 in Australia), otherwise “…[it] would be more competitive to externally source steel substrate.”

BSL declared a fully-franked $0.03/share dividend, payable to eligible investors on 19 Oct, with an ex-dividend date of 17 Sept. This marks the steelmaker’s first final dividend since Sept 2010.

Long serving Chairman Mr Kraehe announced his intention to retire from the Board at the conclusion of BSL’s AGM on 19 November 2015. Mr Kraehe was the inaugural Chairman of BSL in 2002 following its demerger from BHP. BSL is surging in a falling market today, although its shares have fallen by 40% over the past year. Looking ahead, BSL expects 1H16 underlying earnings, finance costs and tax charges to be similar to those delivered in the final half of 2015. A progress update on its local operations will be provided around its November AGM.

24 August 2015





SOUTH 32 LIMITED (S32) *Pro forma financial information has been prepared to reflect the business as it is now structured and as though it was in effect for the period 1 July 2013 to 30 June 2015

RESULTS (pro forma) FY15 FY14* CHANGE

*Operating revenue (US$m) 7,743.0 8,344.0 -7%

*Operating revenue (US$m) Consensus 7,941.0

*EBITDA (US$m) 1,849.0 1,483 +25%

*EBIT (US$m) 1,001.0 660.0 +52%

*Profit after Tax (US$m) 28.0 64.0 -56%

Statutory Profit (loss) after taxation (US$m) (919) 46.0

Final dividend (US$) 0.0 0.0

South32 (S32) releases an optimistic FY15 result despite the slowdown in the industry

South32 Limited (S32) reported its first financial result since its successful demerger from BHP Billiton on 25 May 2015. The company has released FY15 pro-forma results which reflect year-on-year (Y/Y) numbers for the business unit which now operates as S32.

South32’s profit from operations increased to US$519Million. The biggest gain was in its South African energy coal unit which reported earnings of US$94Million while its Columbian nickel mine, Cerro Matoso’s earnings were disappointing and its QLD silver mines in Carrington reported a 31% drop in revenue as expected.

S32 posted a FY15 Underlying EBITDA margin of 26.2% up 6% (Y/Y) which was better than expected. Its balance sheet is improving and its Net debt of US$402Million was better than expected. South32 is looking to yet again reduce its sustaining capital expenditure (CAPEX) by 9% to US$650Million in FY16.

S32 stated that the market pricing on metals (which continues to decline) will impact the higher cost producers and therefore believe that the focus on cost-cutting will need to continue. South32 does not intend to pay a dividend for the year ended 30 June 2015

26 August 2015





BHP LIMITED (BHP) *Information in this report has been presented on a continuing operations basis to exclude the contribution from assets that were demerged with South32, unless otherwise noted

RESULTS (*ex-S32) FY15 FY14* CHANGE

Statutory Profit from operations (US$m) 8,670 22,649 -61.7%

* Capital & exploration expenditure (US$m) 11,040 14,608 -24.4%

* Underlying EBITDA (US$m) 21,852 30,292 -27.9%

* Underlying EBIT (US$m) 11,866 22,098 -46.3%

*Underlying NPAT (US$m) 6,417 13,263 -51.6%

*Underlying NPAT (US$m) Consensus 6,500

Final dividend (US$) 0.62 0.62

BHP Billiton Ltd (BHP) posts a FY15 result in-line with expectations and a sound dividend

BHP Billiton’s (BHP) first full year result since the demerger of its South 32 (S32) business (which was finalised on 25 May 2015) was largely in-line with its recently revised expectations. As a result of the demerger, BHP has released three separate sets of numbers within their report (this report is based on its new underlying numbers which are derived from the company as it currently stands).

BHP posted a statutory profit from operations of US$8.67Bilion which fell by 62% from FY14 largely due to the fall in the prices of its key products (iron ore and energy), and also due to the spinoff of its S32 assets. BHP’s underlying earnings displayed the direct impact the fall in prices had on the company. The surprises in this result were the larger than expected write-downs, the negative revenue from its petroleum unit and the stronger than expected dividend.

BHP also advised the market it now predicts that Chinese long term steel demand will be lower than it previously expected, falling to 935 - 985 million metric tons.

CEO Andrew Mackenzie confirmed that BHP has no plans to cut its dividend in the near term and lifted the full year payout for shareholders. BHP will pay a final dividend to shareholders of $0.62 on 29 September 2015.

25 August 2015





OIL SEARCH LIMITED (OSH)


Total Production (mmboe) 14.32 5.37 +167%

Total Sales (mmboe) 14.45 4.74 +205%

Revenue (US$m) 863.8 510.0 +69%

Revenue (US$m) Consensus 864.5

Net Profit After Tax (NPAT) (US$m) 227.5 152.5 +49%

NPAT (US$m) Consensus 211.0

Interim Dividend (US$) 0.06 0.02 +200%

Oil Search (OSH) profits surge thanks to more than three-fold rise in sales

Oil Search (OSH) posted a better than expected half-year net profit of $227.5m for the six months ended 30 June. The result was driven by a more than three-fold increase in sales to 14.5mmboe and a 43% cut in unit production costs. This helped offset huge falls in oil and gas prices. The result was the company’s biggest HY earnings outcome in its history. However, oversupplied oil markets will continue to be a drag in the coming year.

OSH has been most focused on developing Liquefied Natural Gas (LNG) projects, which drive the PNG-based energy company’s sales most. It has a 29% stake in a major project operated by Exxon Mobil in PNG and will continue working towards its LNG venture (on the Elk and Antelope gas field).

A US$0.06/s unfranked interim dividend will be paid out to eligible investors on 29 September, with an ex-dividend date of 4 September.

OSH shares are falling following the result and take the losses for the past 12 months to 40%. Looking ahead, OSH has reiterated its 2015 full year production guidance of 27-29 mmboe, while it expects unit production costs to be in the range of US$9-US$11 per boe (US$1 lower the prior guidance). Capital costs are estimated to be between US$610-US$690m for the year – a substantial reduction to the average $1.7bn annual spend between 2011-2014. OSH expects to continue finding cost efficiencies.

26 August 2015





BC IRON LIMITED (BCI)


Revenue ($m) 281.2 471.4 -40%

Revenue ($m) Consensus 267.4

Underlying profit/(Loss) ($m) (43.1) 77.4

Net Profit/(Loss) After Tax ($m) (158.5) 71.8

Net Profit/(Loss) ($m) Consensus (101.8)

Net Debt ($m) 6.3 52.2 -87.9%


BC Iron (BCI) annual earnings under pressure as iron ore prices slump

BC Iron (BCI) posted a below consensus $158.5m annual loss for the 12 months ended 30 June. The result was held back most by clay-related operational challenges and a $170.8m impairment charge due to falling iron ore prices.

Lower demand from the world’s biggest consumer of ore (China buys ~60% of global exports) and a ramp up in supply from major producers pushed prices 55% lower over FY15. The junior Pilbara based miner is a higher cost producer of the metal than the larger BHP Billiton (BHP), Rio Tinto (RIO) and Fortescue Metals (FMG), which has made conditions especially challenging. BCI averaged US$72/dmt for the year, compared to US$123/dmt in the prior year.

BCI expanded its Pilbara asset portfolio by acquiring 100% of Iron Ore Holdings (IOH) in November 2014 off-market. The Perth based miner had a portfolio of projects in Central and Western Pilbara which BCI has integrated within its business.

BCI holds a 75% interest in the Nullagine Iron Ore Joint Venture (NJV), with the rest held by Fortescue. BCI utilises FMG’s infrastructure. Clay-related issues in 1H15 interrupted operations, although production ramped up over 2H15. No dividend was declared (as expected). September 2014 was the last time the ore miner paid a dividend to shareholders.

BCI shares are higher following the result, however have halved in value this calendar year and slumped by 89% in 2014. Looking ahead, BCI is targeting all-in cash costs of A$48-A$54 per wmt. The market price for ore is US$53.3/tonne in late August. BCI estimates EBITDA of A$5-A$14m for FY16.

26 August 2015





APA GROUP (APA)

RESULTS *Normalised FY15 FY14* CHANGE

Total Revenue ($m) 1,553.6 1,395.9 +11.3%

Revenue excluding pass-through ($m) 1,119.2 992.5 +12.8%

EBITDA ($m) 822.2 747.3 +10.0%

EBIT ($m) 614.1 591.1 +3.9%

Profit after Income Tax ($m) 203.9 199.6 +2.1%

Profit after Income Tax ($m) Consensus 221.0

Final Dividend ($) 0.205 0.1875 +9.3%

APA Group (APA) profit and future guidance both underwhelmed

APA Group (APA) Australia’s largest natural gas infrastructure business, reported net profit for the 2015 fiscal year of $559.9Million, up 62.9% year on year (Y/Y). APA operates roughly $19Billion worth of energy pipelines and assets within Australia. The company has been busy buying and selling assets this year and therefore this report is based on APA’s normalised results which compare current ‘like-for-like’ assets. Normalised profit increased by 2.1% which was slightly below the markets’ expectations.

Important costs to note include the US$4.6Billion acquisition of the Wallumbilla Gladstone Pipeline (WPG) which was finalised on June 3, 2015. APA’s earnings from continuing businesses increased to $822.2Million which was in-line with APA’s guidance for the year - this figure excluded the $784Million gross profit from the share sale of Australian Gas Networks Ltd (formerly known as Envestra) which occurred back in August 2014.

Today APA announced changes to the way in which it reports its depreciation and amortisation resulting in an expected FY16 EBITDA of between $1,275-1,310Million slightly below previous market expectations, despite the additional returns expected from its new WGP business. APA Group said it expects FY16 Growth CAPEX of between $300 -$400Million which will be used expand its growing stable of assets. APA said its FY16 distributions will be at least equal to the $0.38 it paid in FY15. APA group had already declared a final distribution of $0.205 per security to be paid on the 16th September 2015.

27 August 2015





RAMSAY HEALTH CARE (RHC)


Revenue ($m) 7,361.3 4,911.7 +49.9%


EBIT ($m) 803.9 584.9 +37.4%



Final Dividend ($) 0.605 0.51 +18.6%


Ramsay Health Care (RHC) earnings boosted by recent French acquisition

Ramsay Health Care (RHC) posted a below consensus $385.5m annual profit for the 12 months ended 30 June. The result was driven by an 8% lift in revenue across its Australia/Asia operations (group’s biggest earner) and RHC’s recent French acquisition.

RHC operates 212 hospitals across 5 countries and employs ~60,000 people. The group is now the leading hospital operator in France after finalising the acquisition of Générale de Santé on Oct 14. Revenue in France rose to €1,749.5m (~A$2,780) & accounted for close to 40% of the group’s EBIT. RHC is in the process of acquiring a further nine hospitals in Lille (France).

Its Australia/Asia operations generated $4.1bn in revenue and $521.4m in underlying earnings, making up more than half the group’s revenue. Locally, there continues to be rising demand for health care and more than 47% participation in health insurance. RHC operates ~70 private hospitals in Australia. Increasing consumer wealth, further potential acquisitions and the emergence of China offer the group growing opportunities across the region. RCH is pursuing an opportunity to operate five hospitals in Chengdu, China. Revenue rose by 8% across its UK operations to £413.2m.

Looking ahead, RHC is targeting core profit growth of 12%-14% for FY2016. RHC shares are higher on the result in a rising market and have improved by ~7% this calendar year. RHC shares have surged by 490% August 2008.

28 August 2015





WOOLWORTHS LIMITED (WOW)


Revenue ($m) 60,679.1 60,772.8 -0.2%


EBIT ($m) 3,322.5 3,775.2 -12%

Net Profit After Tax (NPAT) ($m) 2,146.0 2,451.7 -12.5%




Woolworths Limited (WOW) profits slide following a big loss for Masters

Woolworths Limited (WOW) posted a slightly above consensus 12.5% slide in annual profit to $2.1bn. Earnings growth from its core Australian Food, Liquor & Petrol division was modest at just 2.1%, accounting for 90% of the group’s profit. A loss from its Home Improvement unit was the biggest drag to WOW’s bottom line.

Food & Liquor sales were disappointing (particularly in Q4). Greater than expected deflation in average prices (incl. the effects of promotions) together with price investment (i.e. cutting margins to compete with Coles) has held back results. Liquor sales (Dan Murphy’s & BWS) rose 4.2% to $7.7bn. Sales at Big W slipped 5.7% to $4.1bn. The discount department store was impacted by its transformation plan but only accounts for ~6% of the group’s sales. Its Master home improvement unit lifted sales as new stores were opened, however its reported net loss widened.

WOW opened 30 new supermarkets, 10 Dan Murphy’s, 31 BWS, undertook a 117 store decline in petrol due to changes to the Woolworths/Caltex alliance, 2 new Big W stores & 9 Masters home improvement locations.

A $0.72/s dividend was declared, payable to eligible investors on 9 Oct. WOW shares rose following the result, although it continues to underperform Wesfarmers (WES) owned rival, Coles. WOW is down 11% Year-to-date, while WES is down 0.9%. Looking ahead, no profit guidance was provided for FY16.

The group’s chairman, Mr Waters will retire on 1 Sept and will be replaced by Origin Energy Chairman, Gordon Cairns. WOW announced the retirement of its CEO Grant O’Brien in June.

commsec august 2015 reporting season - full results

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