Reporting Season

Over the past month, the majority of Australian companies have reported their interim results.

Despite volatile market conditions and general nervousness in regards to global economic growth prospects, company results overall, have been relatively sound. Profit guidance was mostly in-line with consensus expectations and outlook statements were broadly conservative. Nevertheless, downward revisions to consensus earnings estimates for the current year (2015/16) have continued, but fortunately not accelerated.

In broad terms, some companies have created value following the completion or near-completion of their cost reduction programs, while others have continued to benefit from the weaker Australian dollar. As widely anticipated, however, the ongoing weakness in commodity prices (including Oil) has adversely impacted companies directly and indirectly linked to the Resources sector.

In regards to a selection of equity investments which have been analysed and recommended by our in-house Investment Committee, the majority of these have delivered pleasing results.

The following table, which lists a snapshot of our equity investments, illustrates that these companies excluding those in the Resources sector, on average, have increased their dividends for the six months ending 31 December 2015.

Dividends (cents per share)
Investment Code Dec-14 Dec-15 % Change
Amcor Ltd AMC 24.4 26.7 9.4%
AMP Ltd AMP 13.5 14 3.7%
Ansell Ltd ANN 25.7 28 8.9%
Australia and New Zealand Banking Group Ltd ANZ 95 95 0.0%
BHP Billiton Ltd BHP 80.8 22.3 -72.4%
Caltex Australia Ltd CTX 50 70 40.0%
Cedar Woods Properties Ltd CWP 12 12 0.0%
Commonwealth Bank of Australia CBA 198 198 0.0%
Computershare Ltd CPU 15 16 6.7%
CSL Limited CSL 74.4 81.5 9.5%
National Australia Bank Ltd NAB 99 99 0.0%
Oil Search OSH 10.5 5.6 -46.7%
Qube Holdings Limited QUB 2.7 2.7 0.0%
ResMed Inc RMD 3.08 2.95 -4.2%
Telstra Corporation Limited TLS 15 15.5 3.3%
Tox Free Solutions Limited TOX 4 4.5 12.5%
Transurban Group TCL 19.5 22.5 15.4%
Wesfarmers Limited WES 89 91 2.2%
Westpac Banking Corporation WBC 92 94 2.2%
Woodside Petroleum Ltd WPL 184 60 -67.4%
Average (not weighted)       -3.8%
Average ex resources (BHP, WPL, OSH)        6.5%

Whilst market volatility is likely to persist in the short term, we will continue to take advantage of the longer-term opportunities to purchase shares in companies at prices that are attractive to what we perceive to be a fair value for the returns and riskiness of underlying earnings and dividend streams.