Ausdrill Limited (ASL):
Mining services outfit Ausdrill is set to acquire Barminco in a bid to create Australia’s second largest mining services company. The deal is worth $258 million at today’s prices, comprised of cash and scrip, with Ausdrill to raise $250m via an entitlement offer. Ausdrill told the market it expects the acquisition to be financially positive, lifting its earnings per share to 15.8 cents from 12.3c.
AVEO GROUP (AOG):
Retirement village operator Aveo said profit fell 30 per cent as sales of established units to new clients dropped, and the company said it was looking at strategic options to boost its share price, including bringing new investors on board. Aveo, which has lost 10 per cent in value over the past 12 months as it has responded to damaging allegations about its business practices and treatment of residents and it also defending a class action lawsuit, said funds from operations, or FFO, the industry's preferred revenue measure, fell to $115.4 million in the year to June from $163.9 million. The Sydney-based company also said it was conducting a strategic review to strengthen a share price that was trading at a 44 per cent discount to the net tangible assets of its retirement business and would make an announcement on the outcome of that review by the end of next week. The strategic review will focus on closing the value gap between the price of Aveo's listed securities and the underlying value of Aveo's retirement properties and include the possibility of the introduction of capital partners, either form Australia or overseas, into the retirement business. Earnings per share rose 43 per cent to 63.3¢ and the company declared an estimated unfranked dividend of 9¢.
BHP Billiton Limited (BHP):
Anglo-Australian giant BHP and labour unions said they have agreed to extend talks through today aimed at averting a strike at the world’s biggest copper mine in Chile. Management and union leaders at the Escondida mine agreed to extend the talks by one day in a bid to avoid a crippling shutdown — which could start as early as Friday (AEST) if no agreement is reached, as tomorrow is a national holiday in Chile. The main union, Sindicato No1, said in a statement it had managed to clear up some issues that had stalled the negotiations, “but there are still some important points to be resolved.” The union’s 2,500 members voted to strike on August 2. They are demanding a five per cent pay raise and profitshare bonuses. The giant Escondida complex — which produces nearly one million tonnes of copper annually — is located 170 kilometres southeast of Antofagasta, in northern Chile’s Atacama desert. Memories are still fresh of a 44-day strike at the mine last year which slashed copper production by 39 per cent, jolted markets and slowed Chile’s economic growth. The South American country is the world’s largest copper producer, responsible from almost one-third of global production.
Commonwealth Bank of Australia (CBA):
CBA's failure to properly plan for the introduction of a mandated low-cost default super fund meant that it breached superannuation laws 15,000 times, the Hayne royal commission has heard. By failing to move the members over to a MySuper product the bank breached section 29WA of the Superannuation Industry Supervision Act, which is punishable by a fine of 50 penalty units of $10,500 each or $157.5 million in total. The Australian Financial Review understands each payment would represent a breach but a spokesperson for Commonwealth Bank said the initial error, which concerned 13,000 super funds, would constitute only a single breach. The bank would, however, find a further 2000 breaches of section 29WA as it scrambled to fix the problem.
CSL Limited (CSL):
CSL shares have jumped 2.26 per cent in early trade after it reported a 28 per cent lift in annual profit to $US1.7 billion ($2.35bn), beating its previous guidance. The company’s boost in profit will benefit investors, who will enjoy a 26 per cent increase in the final dividend, to receive $US1.72-a-share. Australian shareholders will receive $A2.28-a-share, which is a 30 per cent increase. CSL (CSL) chief executive Paul Perreault said the strength of the results reflected its patient-focused workforce. He also outlined that the tightness in supply of CSL’s key raw material, plasma, had been a feature across the industry this year. “The CSL Plasma team have opened 27 new collection centres in the US — a growth rate matched in the industry. CSL now operates 206 plasma collection centres worldwide,” he said. The annual results also reported a 11 per cent increase in revenue to $US7.9bn and a 33 per cent jump in earnings before interest and tax to $US2.8bn.
DEXUS Property Group (DXS):
Dexus has reported a 37 per cent rise in annual profit, benefiting from a buoyant leasing market that has pushed up rents in its office blocks and boosted the valuation of its property portfolio. Dexus (DXS), Australia’s largest office landlord, reported a net profit of $1.73 billion in the 12 months through June, up from $1.26 billion a year earlier. That largely reflected a $1.13 billion on-year rise in the book value of its properties, especially in central Sydney where the supply of office space has been squeezed by the ongoing construction of a light-rail network. Valuation gains in Sydney included $39.7 million at Australia Square, $24.5 million at 1 Farrer Place and $59.0 million at Grosvenor Place, management said. Annual funds from operations rose by 5.8 per cent to $653.3 million. Gearing was at 24.1 per cent at the end of June, below a target range of 30- 40 per cent. Commercial real estate is typically valued based on its capitalisation rate, or the annual net income produced by a property divided by the purchase price. Like bond yields, falling cap rates indicate rising values, and vice versa.
Fairfax Media Limited (FXJ):
Fairfax Media has posted its last full year result under its own banner, falling to a full-year net loss after tax of $63.8 million, down from a profit of $83.9 million for the previous period. Revenue at the newspaper publisher, which has investments in radio, streaming and digital advertising, fell 3.1 per cent to $1,687.9 million for the year to June. Fairfax Media (FXJ) will lose its name later this year after it agreed to a $2.16 billion buyout from Nine Entertainment Company in July. The deal is subject to regulatory and shareholder approval and is due to complete in December.
Insurance Australia Group Ltd (IAG):
Insurance Australia Group has outlined a $592 million capital return to shareholders, as the general insurance giant posted a slight dip in annual net profit. The $19.5 billion company - which houses brands including NRMA and CGU - told the ASX profit dipped to $1.001 billion for the 12 months ended June 30 , down from $1.005 billion in the prior year. When adjusted for non-controlling interests net income fell to $923 million from $929 million, according to Wednesday's statement. The result compared to analysts estimates for adjusted net income of $1.03 billion and operating profit of $1.54 billion, according to Bloomberg. IAG's profit was weighed on by a higher effective tax rate and a more than $80 million decline in the contribution from investment income during the period.
National Australia Bank Ltd (NAB):
The scale of NAB's inability to report licence breaches on time has been revealed in a document published by the Hayne royal commission which shows the bank breaking conditions of its licence at the alarming rate of around once every week between 2014 and 2017. Of the 297 breaches the bank revealed, 110 were considered serious. Of the 110 serious breaches 84 were reported to ASIC outside the 10-day time frame required by Section 912D of the Corporations Act, with 83 of these taking place in the wealth division. The bank also offers something of an apology for sloppy record keeping where it has not been able to produce material that records the decision-making behind the breach report or has provided minutes of a meeting that were dated after ASIC has been told.
SEEK Limited (SEK):
Seek CEO Andrew Bassat is taking a ‘five out of six ain’t bad’ approach to his company’s results, with each Seek’s business units performing strongly with the exception of Latin America. Seek today reported revenue growth of 25 per cent year-on-year, up to $1.294bn at June 30 2018 from $1.039bn a year earlier, with earnings before interest, taxes, depreciation and amortization (EBITDA) up 15 per cent. Mr Bassat told The Australian that while the company’s result was strong overall, especially across Australia and New Zealand, Asia and China, its Latin American numbers were disappointing. Statutory profit was down 84 per cent to $53.2 million, dragged down by impairments largely due to what Mr Bassat said was a challenging market environment in Brazil. Seek posted a non-cash impairment charge of $119 million against the carrying value of Brasil Online, $59 million on OCC (Online Career Center Mexico), and a non-cash fair value gain of $36 million on the investment in Maimai.
Wesfarmers Ltd (WES):
Wesfarmers has once again relied on strong earnings from the jewel in its conglomerate crown, hardware chain Bunnings, to do the heavy lifting when it comes to earnings, as the soon to be demerged supermarket group Coles suffered a sharp slide in its full-year earnings with the costs of a new wages deal for its staff to continue to weigh heavily on its profitability. Meanwhile, Wesfarmers’ other key retail operations, Kmart and Target, will have to do without their highly successful chief executive Guy Russo, who has announced his retirement from the group. The Perthbased conglomerate (WES) today unveiled a 58.3 per cent drop in full-year net profit to $1.197 billion, driven by hundreds of millions of dollars in impairments flowing from its failed Bunnings UK and Ireland venture and $300 million in impairments from Target. Coles posted a 6.8 per cent drop in full-year earnings before interest and tax to $1.5 billion, which could send a shiver through the ranks of investors just as the supermarket chain is being prepared for a demerger and a listing on the ASX. Bunnings has once again shown its earnings strength, delivering a 12.7 per cent lift in earnings at a time when the retail sector is incredibly competitive and tough. Following the Coles demerger it will drive more than 50 per cent of group earnings. Also countering the slump in earnings at Coles was a 21.5 per cent jump in EBIT at the combined Target and Kmart department store businesses, an 8.3 per cent lift in earnings at Officeworks and a 13.1 per cent earnings leap for its industrials division.
Woodside Petroleum Limited (WPL):
Woodside Petroleum said first-half net profit rose 5.9 per cent to $US541 million on higher oil and gas sales and prices as it flagged a period of major growth in coming years. Woodside (WPL), Australia’s largest independent oil and gas producer, said its net profit increased from $US511m a year earlier, on the back of a 27 per cent lift in sales revenue from its operations to $US2.25 billion. Underlying profit was up 11 per cent to $US566m for the six months through June just beating market expectations of a $US556m net profit. Woodside chief executive Peter Coleman said the strong result, which included a 25 per cent boost in operating cashflow to $US1.54bn, set the company up for its potential growth projects at Scarborough and Browse, off Western Australia, and at the SNE project in Senegal. “Our balance sheet is in good shape for the upcoming growth phase,” Mr Coleman told investors. “We have a clear roadmap for growth and it is underpinned by an oustanding growth business.” Woodside shares hit a three-year closing high of $35.56 last week after gains in oil prices, which its LNG sales are also based on, and growing confidence in the Perth company’s ability to grow by developing the Browse and Scarborough gas fields through existing and new LNG plant at Karratha.
(Source: AIMS)
Mining services outfit Ausdrill is set to acquire Barminco in a bid to create Australia’s second largest mining services company. The deal is worth $258 million at today’s prices, comprised of cash and scrip, with Ausdrill to raise $250m via an entitlement offer. Ausdrill told the market it expects the acquisition to be financially positive, lifting its earnings per share to 15.8 cents from 12.3c.
AVEO GROUP (AOG):
Retirement village operator Aveo said profit fell 30 per cent as sales of established units to new clients dropped, and the company said it was looking at strategic options to boost its share price, including bringing new investors on board. Aveo, which has lost 10 per cent in value over the past 12 months as it has responded to damaging allegations about its business practices and treatment of residents and it also defending a class action lawsuit, said funds from operations, or FFO, the industry's preferred revenue measure, fell to $115.4 million in the year to June from $163.9 million. The Sydney-based company also said it was conducting a strategic review to strengthen a share price that was trading at a 44 per cent discount to the net tangible assets of its retirement business and would make an announcement on the outcome of that review by the end of next week. The strategic review will focus on closing the value gap between the price of Aveo's listed securities and the underlying value of Aveo's retirement properties and include the possibility of the introduction of capital partners, either form Australia or overseas, into the retirement business. Earnings per share rose 43 per cent to 63.3¢ and the company declared an estimated unfranked dividend of 9¢.
BHP Billiton Limited (BHP):
Anglo-Australian giant BHP and labour unions said they have agreed to extend talks through today aimed at averting a strike at the world’s biggest copper mine in Chile. Management and union leaders at the Escondida mine agreed to extend the talks by one day in a bid to avoid a crippling shutdown — which could start as early as Friday (AEST) if no agreement is reached, as tomorrow is a national holiday in Chile. The main union, Sindicato No1, said in a statement it had managed to clear up some issues that had stalled the negotiations, “but there are still some important points to be resolved.” The union’s 2,500 members voted to strike on August 2. They are demanding a five per cent pay raise and profitshare bonuses. The giant Escondida complex — which produces nearly one million tonnes of copper annually — is located 170 kilometres southeast of Antofagasta, in northern Chile’s Atacama desert. Memories are still fresh of a 44-day strike at the mine last year which slashed copper production by 39 per cent, jolted markets and slowed Chile’s economic growth. The South American country is the world’s largest copper producer, responsible from almost one-third of global production.
Commonwealth Bank of Australia (CBA):
CBA's failure to properly plan for the introduction of a mandated low-cost default super fund meant that it breached superannuation laws 15,000 times, the Hayne royal commission has heard. By failing to move the members over to a MySuper product the bank breached section 29WA of the Superannuation Industry Supervision Act, which is punishable by a fine of 50 penalty units of $10,500 each or $157.5 million in total. The Australian Financial Review understands each payment would represent a breach but a spokesperson for Commonwealth Bank said the initial error, which concerned 13,000 super funds, would constitute only a single breach. The bank would, however, find a further 2000 breaches of section 29WA as it scrambled to fix the problem.
CSL Limited (CSL):
CSL shares have jumped 2.26 per cent in early trade after it reported a 28 per cent lift in annual profit to $US1.7 billion ($2.35bn), beating its previous guidance. The company’s boost in profit will benefit investors, who will enjoy a 26 per cent increase in the final dividend, to receive $US1.72-a-share. Australian shareholders will receive $A2.28-a-share, which is a 30 per cent increase. CSL (CSL) chief executive Paul Perreault said the strength of the results reflected its patient-focused workforce. He also outlined that the tightness in supply of CSL’s key raw material, plasma, had been a feature across the industry this year. “The CSL Plasma team have opened 27 new collection centres in the US — a growth rate matched in the industry. CSL now operates 206 plasma collection centres worldwide,” he said. The annual results also reported a 11 per cent increase in revenue to $US7.9bn and a 33 per cent jump in earnings before interest and tax to $US2.8bn.
DEXUS Property Group (DXS):
Dexus has reported a 37 per cent rise in annual profit, benefiting from a buoyant leasing market that has pushed up rents in its office blocks and boosted the valuation of its property portfolio. Dexus (DXS), Australia’s largest office landlord, reported a net profit of $1.73 billion in the 12 months through June, up from $1.26 billion a year earlier. That largely reflected a $1.13 billion on-year rise in the book value of its properties, especially in central Sydney where the supply of office space has been squeezed by the ongoing construction of a light-rail network. Valuation gains in Sydney included $39.7 million at Australia Square, $24.5 million at 1 Farrer Place and $59.0 million at Grosvenor Place, management said. Annual funds from operations rose by 5.8 per cent to $653.3 million. Gearing was at 24.1 per cent at the end of June, below a target range of 30- 40 per cent. Commercial real estate is typically valued based on its capitalisation rate, or the annual net income produced by a property divided by the purchase price. Like bond yields, falling cap rates indicate rising values, and vice versa.
Fairfax Media Limited (FXJ):
Fairfax Media has posted its last full year result under its own banner, falling to a full-year net loss after tax of $63.8 million, down from a profit of $83.9 million for the previous period. Revenue at the newspaper publisher, which has investments in radio, streaming and digital advertising, fell 3.1 per cent to $1,687.9 million for the year to June. Fairfax Media (FXJ) will lose its name later this year after it agreed to a $2.16 billion buyout from Nine Entertainment Company in July. The deal is subject to regulatory and shareholder approval and is due to complete in December.
Insurance Australia Group Ltd (IAG):
Insurance Australia Group has outlined a $592 million capital return to shareholders, as the general insurance giant posted a slight dip in annual net profit. The $19.5 billion company - which houses brands including NRMA and CGU - told the ASX profit dipped to $1.001 billion for the 12 months ended June 30 , down from $1.005 billion in the prior year. When adjusted for non-controlling interests net income fell to $923 million from $929 million, according to Wednesday's statement. The result compared to analysts estimates for adjusted net income of $1.03 billion and operating profit of $1.54 billion, according to Bloomberg. IAG's profit was weighed on by a higher effective tax rate and a more than $80 million decline in the contribution from investment income during the period.
National Australia Bank Ltd (NAB):
The scale of NAB's inability to report licence breaches on time has been revealed in a document published by the Hayne royal commission which shows the bank breaking conditions of its licence at the alarming rate of around once every week between 2014 and 2017. Of the 297 breaches the bank revealed, 110 were considered serious. Of the 110 serious breaches 84 were reported to ASIC outside the 10-day time frame required by Section 912D of the Corporations Act, with 83 of these taking place in the wealth division. The bank also offers something of an apology for sloppy record keeping where it has not been able to produce material that records the decision-making behind the breach report or has provided minutes of a meeting that were dated after ASIC has been told.
SEEK Limited (SEK):
Seek CEO Andrew Bassat is taking a ‘five out of six ain’t bad’ approach to his company’s results, with each Seek’s business units performing strongly with the exception of Latin America. Seek today reported revenue growth of 25 per cent year-on-year, up to $1.294bn at June 30 2018 from $1.039bn a year earlier, with earnings before interest, taxes, depreciation and amortization (EBITDA) up 15 per cent. Mr Bassat told The Australian that while the company’s result was strong overall, especially across Australia and New Zealand, Asia and China, its Latin American numbers were disappointing. Statutory profit was down 84 per cent to $53.2 million, dragged down by impairments largely due to what Mr Bassat said was a challenging market environment in Brazil. Seek posted a non-cash impairment charge of $119 million against the carrying value of Brasil Online, $59 million on OCC (Online Career Center Mexico), and a non-cash fair value gain of $36 million on the investment in Maimai.
Wesfarmers Ltd (WES):
Wesfarmers has once again relied on strong earnings from the jewel in its conglomerate crown, hardware chain Bunnings, to do the heavy lifting when it comes to earnings, as the soon to be demerged supermarket group Coles suffered a sharp slide in its full-year earnings with the costs of a new wages deal for its staff to continue to weigh heavily on its profitability. Meanwhile, Wesfarmers’ other key retail operations, Kmart and Target, will have to do without their highly successful chief executive Guy Russo, who has announced his retirement from the group. The Perthbased conglomerate (WES) today unveiled a 58.3 per cent drop in full-year net profit to $1.197 billion, driven by hundreds of millions of dollars in impairments flowing from its failed Bunnings UK and Ireland venture and $300 million in impairments from Target. Coles posted a 6.8 per cent drop in full-year earnings before interest and tax to $1.5 billion, which could send a shiver through the ranks of investors just as the supermarket chain is being prepared for a demerger and a listing on the ASX. Bunnings has once again shown its earnings strength, delivering a 12.7 per cent lift in earnings at a time when the retail sector is incredibly competitive and tough. Following the Coles demerger it will drive more than 50 per cent of group earnings. Also countering the slump in earnings at Coles was a 21.5 per cent jump in EBIT at the combined Target and Kmart department store businesses, an 8.3 per cent lift in earnings at Officeworks and a 13.1 per cent earnings leap for its industrials division.
Woodside Petroleum Limited (WPL):
Woodside Petroleum said first-half net profit rose 5.9 per cent to $US541 million on higher oil and gas sales and prices as it flagged a period of major growth in coming years. Woodside (WPL), Australia’s largest independent oil and gas producer, said its net profit increased from $US511m a year earlier, on the back of a 27 per cent lift in sales revenue from its operations to $US2.25 billion. Underlying profit was up 11 per cent to $US566m for the six months through June just beating market expectations of a $US556m net profit. Woodside chief executive Peter Coleman said the strong result, which included a 25 per cent boost in operating cashflow to $US1.54bn, set the company up for its potential growth projects at Scarborough and Browse, off Western Australia, and at the SNE project in Senegal. “Our balance sheet is in good shape for the upcoming growth phase,” Mr Coleman told investors. “We have a clear roadmap for growth and it is underpinned by an oustanding growth business.” Woodside shares hit a three-year closing high of $35.56 last week after gains in oil prices, which its LNG sales are also based on, and growing confidence in the Perth company’s ability to grow by developing the Browse and Scarborough gas fields through existing and new LNG plant at Karratha.
(Source: AIMS)
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