Earnings guidance is defined as the periodic comments management provide to the market about what it expects its company will do in the future. These comments are also known as “forward looking statements” because they focus on earnings expectations in light of industry and macroeconomic trends.

The ASX’s continuous disclosure guidance notes that “as a forward looking statement, earnings guidance must have a reasonable basis in fact or else it will be deemed to be misleading”. It also states that “when earnings guidance is provided, any material assumptions on which it is based, or material qualifications to which it is subject, should also be mentioned in the guidance. This will provide context and help the market to understand the basis for the guidance”.

Whilst the release of earnings guidance is discretionary, the ASX’s continuous disclosure guidance does require any company that “becomes aware that its earnings for a reporting period will materially differ from specific earnings guidance it has (previously) given to the market” to inform the market that its published guidance is no longer accurate.

The first earnings guidance provided by a company each year has been used for the purposes of our analysis in this report. The sample of companies in this report has also used a variety of earnings metrics, including EBIT, EBITDA, NPAT, underlying NPAT and EPS.

Basis of guidance Source data

Basis of preparation

This analysis contained in this report is based on publicly available information, including ASX announcements and financial accounts made or released during the 2013 and 2014 financial years.

Whilst we believe this information and its sources to be reliable, we do not guarantee its accuracy, and it should be understood to be general information only. The information is not intended to be taken as advice with respect to any specific organisation or situation and cannot be relied upon as such.

McGrathNicol accepts no responsibility for errors or omissions in financial information underpinning this report, nor the loss of any person arising from use of or reliance on information herein. All readers of this report must make their own enquiries or obtain professional advice in relation to any issue or matter referred to in this report.

Peer group sample GICS groups included

Construction & Engineering Construction and engineeringEnergy equipment and servicesCommercial services and supplies

Retail Textiles, apparel and luxury goodsSpecialty retailMultiline retailHousehold durablesDistributors

Media & Leisure MediaLeisure

Building Products Building productsConstruction materialsChemicalsTrading companies and distributors

Utilities Multi-utilitiesGas utilitiesElectric utilitiesElectrical equipmentOil, gas and consumable fuelsIndependent power producers and energy traders

Limitations

McGrathNicol acknowledges that at the level of detail applied, the analysis has limitations. For this reason, the analysis focuses on company earnings compared to the initial guidance, rather than in absolute terms and/or against the most recent or revised guidance released.

Peer group classification

The Construction & Engineering, Retail, Media & Leisure, Building Products and Utilities peer group samples underpinning this report have been selected according to the Global Industry Classification Standard (“GICS”) listed in the table below.

Findings

Note 1: Companies now delisted

Construction & Engineering guidance

Ticker CompanyFY13

EBITDAFY14

EBITDAFY13

RevenueFY14

Revenue

Market cap at

30/06/14 Released

FY13

Achieved Above

FY14 Not yetReleased Achieved Above released

WTP Watpac Ltd. 63 71 1,475 1,203 151 - - -

LEI Leighton Holdings Limited 1,730 1,886 20,830 22,565 6,679 - - -

FGE Forge Group Ltd 1 n/a n/a n/a n/a n/a - - -

AAX Ausenco Limited 66 (11) 619 454 83 - - -

MYE Mastermyne Group Limited 26 12 250 172 34 - - -

SSM Service Stream Limited (2) 12 527 389 71 - - -

SXESouthern Cross Electrical Engineering Limited 31 18 278 218 78 - -

- -

TSE Transfield Services Limited 204 209 3,694 3,748 556 - - -

WOR WorleyParsons Limited 560 503 8,811 9,561 4,297 - - -

SDM Sedgman Limited 34 9 467 318 114 - - - -

UGL UGL Limited 55 59 1,903 1,819 1,123 - - -

ASL Ausdrill Ltd. 253 165 1,133 829 267 - - -

CGH Calibre Group Limited 60 50 711 709 127 - - - -

COF Coffey International Limited 17 22 687 625 60 - - - -

GNG GR Engineering Services Limited 11 14 115 114 105 - - - -

MAH MacMahon Holdings Ltd. 166 165 1,166 1,016 125 - - - -

MCEMatrix Composites & Engineering Limited 11 20 145 159 112

- - - -

NWH NRW Holdings Limited 163 120 1,374 1,134 257 - - - -

CLO Clough Limited 1 n/a n/a n/a n/a n/a - - - -

BLY Boart Longyear Limited 319 110 2,012 1,223 85 - - - - -

DCG Decmil Group Limited. 73 79 529 618 301 - - - - -

MND Monadelphous Group Limited 251 218 2,617 2,333 1,456 - - - - -

RCR RCR Tomlinson Limited 59 81 875 1,300 383 - - - - -

Total 4,149 3,811 50,218 50,509 16,463

(8.1%) 0.6%

Media & Leisure guidance

Ticker CompanyFY13

EBITDAFY14

EBITDAFY13

RevenueFY14

Revenue

Market cap at

30/06/14 Released

FY13

Achieved Above

FY14 Not yetReleased Achieved Above released

SKT Sky Network Television Ltd. 344 365 885 909 3,280 - - -

SXL Southern Cross Media Group Limited 201 180 643 641 755 - - -

VRL Village Roadshow Limited 156 163 921 975 1,174 - - -

SGN STW Communications Group Ltd. 88 90 352 398 575 - - -

AHD Amalgamated Holdings Limited 163 175 1,038 1,096 1,474 - - - - -

APN APN News & Media Ltd. 141 145 823 819 798 - - - - -

AAD Ardent Leisure Group 89 102 449 500 1,098 - - - - -

FXJ Fairfax Media Limited 291 270 2,011 1,861 2,129 - - - - -

NWS News Corporation 566 615 8,891 8,574 10,104 - - - - -

PRT Prime Media Group Limited 64 62 255 258 385 - - - - -

REA REA Group Limited 149 209 336 437 5,626 - - - - -

SWM Seven West Media Limited 451 433 1,866 1,845 1,878 - - - - -

TEN Ten Network Holdings Limited 42 (81) 654 626 697 - - - - -

Total 2,745 2,727 19,124 18,921 29,971

(0.6%) (1.1% )

Retail guidance

Ticker CompanyFY13

EBITDAFY14

EBITDAFY13

RevenueFY14

Revenue

Market cap at

30/06/14 Released

FY13

Achieved Above

FY14 Not yetReleased Achieved Above released

NCK Nick Scali Limited 18 21 127 141 220 - - -

JBH JB Hi-Fi Limited 211 227 3,308 3,484 1,811 - - -

BRG Breville Group Ltd 74 72 487 542 1,055 - - -

ORL OrotonGroup Limited 19 19 100 125 179 - - -

BBG Billabong International Limited 76 55 1,107 1,125 493 - - - -

PBG Pacific Brands Limited 137 84 1,273 1,322 500 - - - -

RCG RCG Corporation Limited 16 18 56 81 166 - - - -

TRS The Reject Shop Limited 40 40 618 712 251 - - - -

SFH Specialty Fashion Group Limited 42 36 569 685 169 - - - - -

DJS David Jones Ltd n/a n/a n/a n/a n/a - - - - -

MYR Myer Holdings Limited 280 221 2,738 2,741 1,242 - - - - -

KMD Kathmandu Holdings Limited 71 71 384 393 644 - - - - -

FAN Fantastic Holdings Ltd. 23 13 445 448 153 - - - - -

GZL Gazal Corporation Limited 22 16 279 276 159 - - - - -

CCV Cash Converters International Limited 56 48 273 332 463 - - - - -

HVN Harvey Norman Holdings Ltd. 301 360 1,323 1,514 3,293 - - - - -

Total 1,388 1,302 13,088 13,920 10,799

(6.2%) 6.4%

Findings

Utilities guidance

Ticker CompanyFY13

EBITDAFY14

EBITDAFY13

RevenueFY14

Revenue

Market cap at

30/06/14 Released

FY13

Achieved Above

FY14 Not yetReleased Achieved Above released

AGK AGL Energy Limited 1,404 1,341 9,716 9,543 8,664 - - -

DUE DUET Group 762 753 1,264 1,241 3,189 - - -

SPN SP Ausnet 2 977 1,082 1,640 1,799 4,487 - - -

ENE Energy Developments Ltd. 166 174 392 413 881 - - -

APA APA Group 631 750 1,272 1,396 5,758 - - -

ENV Envestra Limited 360 402 508 554 2,444 - - -

MYT Mighty River Power Limited 378 495 1,837 1,705 1,287 - - -

PEA Pacific Energy Ltd. 31 36 44 49 178 - - -

EPW ERM Power Ltd 77 83 1,570 2,077 428 - - -

ORG Origin Energy Limited 1,738 1,886 14,791 14,568 16,135 - - - -

EWC Energy World Corp. Ltd. 56 72 133 159 555 - - - - -

IFN Infigen Energy 203 217 315 339 184 - - - - -

Total 6,783 7,291 33,481 33,843 44,189

7.5% 1.1%

Note 2: Name change to AusNet Services

Building Products guidance

Ticker CompanyFY13

EBITDAFY14

EBITDAFY13

RevenueFY14

Revenue

Market cap at

30/06/14 Released

FY13

Achieved Above

FY14 Not yetReleased Achieved Above released

HIL Hills Limited (37) 21 493 448 406 - - -

CYG Coventry Group Ltd. 8 3 236 211 107 - - -

FBU Fletcher Building Ltd. 764 818 8,517 8,401 6,037 - - -

ABC Adelaide Brighton Ltd. 252 265 1,183 1,228 2,210 - - -

DLX DuluxGroup Limited 138 173 1,068 1,486 2,126 - - -

JHX James Hardie Industries plc 222 310 1,321 1,494 6,157 - - -

GWA GWA Group Limited 82 89 565 578 806 - - -

GCS Global Construction Services Limited 46 26 200 160 78 - - -

BOL Boom Logistics Ltd. 54 41 338 273 57 - - -

BLD Boral Limited 339 396 4,163 4,455 4,109 - - - -

REH Reece Australia Limited 196 232 1,535 1,776 3,012 - - - -

BKW Brickworks Limited 69 78 607 670 2,012 - - - - -

IPL Incitec Pivot Limited 723 607 3,522 3,426 4,770 - - - - -

Total 2,856 3,058 23,750 24,607 31,888

7.1% 3.6%

Findings