What you need to know from August reporting season

August is the month of reckoning for listed companies whose financial reports go public.

It's reporting season - the time of year when ASX-listed companies with a June 30 balance sheet publish their annual reports.

For investors it's a chance to look under the hood of listed companies and see how they have performed, get a feel for where the business may be heading, and importantly, learn what sort of dividend will be paid.

Even if you don't own shares directly, reporting season holds plenty of relevance.

The majority of Australians have exposure to listed companies through their super. It makes the line-up of annual reports coming hot-off-the-press worth a look.

What does an annual report contain?

You can find a company's annual report in the 'Investor' section of its website.

Most companies offer a separate, and much shorter, overview of results. It's a good thing too as annual reports can be a lengthy read. The Commonwealth Bank's 2023 annual report ran to a hefty 308 pages.

Only the most dedicated investors will pore over every page, but certain sections of annual reports are essential reading:

• The Directors' report - this is where the directors provide an overview of the company's performance, any major strategies deployed, and the company's prospects for the future. You'll also find details of directors' pay, which can be quite an eye opener.
• The profit and loss statement - this is the main game for plenty of investors. It shows if the company turned a profit, and whether it improved on last year's bottom line.
• Statement of Financial Position - this is all about the company's balance sheet, and in a slowing economy, check out cash reserves and corporate debt to see how they've changed over the year.
• The auditor's report - auditors are required to state whether an annual report presents a 'true and fair' view of the financial position and performance of the business. Keep an eye out for any disclaimers by the auditor. They can be a red flag for investors.

What to watch for this reporting season

As Australians battle a cost of living crunch, all eyes will be on dividend announcements.

Discount retailer JB HiFi has won over investors on this score. Despite the company reporting a fall in net profit, its share price jumped from $67 to a record $74 this week - and not just because JB HiFi is buying E&S Trading - an appliance retailer that will help support future growth.

The real excitement came with the announcement of a spicy 'special dividend' of $0.80 per share on top of a final dividend of $1.03 per share.

Beyond dividends, cast an eye over reported corporate debt. Today's high interest rate environment is seeing an increase in so-called zombie companies that rely heavily on debt just to keep going.

What are some of the big names to watch for?

With more than 2000 companies listed on the ASX, it's virtually impossible to keep tabs on every company.
Several big names will be especially interesting to watch for, including:

Commonwealth Bank

Australia's homegrown banking giant reported a $9.5 billion, down from last year's record 10 billion, when it tabled its annual report on August 15,

CBA attributed the 6% drop in profit to higher operating costs as a result of inflation.

The bank's final dividend of $2.50 per share is up from $2.40 a year ago.

Australia's other leading banks - Westpac, ANZ and NAB, all have a September 30 year-end. Their full reports won't be available until November, but keep an eye out for third-quarter updates.

Telstra

It's been a rough ride for Telstra investors, with the telco's share price falling from $4.34 in mid-2023 to $3.86 in August 2024.

Telstra's annual report, published on August 15 will show if the company still lives up to its reputation as a great dividend payer.

Telstra has already noted that traffic on its mobile network has increased more than threefold over the five years to mid-2024 and continues to grow by 20% annually.

Qantas

Pencil in August 29 as the date Qantas reveals its final results after a year of considerable turbulence including the departure of long-term CEO Alan Joyce.

Since Joyce's exit last September, the airline has been on a new flight path, with its shares rebounding $4.74 to around $6 today.

The big miners

A conga line of our leading resource companies will publish annual results this month including Whitehaven Coal (August 22), BHP and Woodside Energy (both August 27).

There's a lot on the go for the miners as many juggle the transition to cleaner energy plus challenging commodity prices.

Falling nickel prices, for example, saw BHP announce the suspension of its nickel operations in Western Australia earlier in 2024.

The trap to avoid

Annual reports may need to get the tick of approval from auditors but companies can still draw on strategies to influence investors' views.

One such trick is to stack an annual report with compelling images.

Research in the US found that poorly performing companies can still attract investors when reports are packed with powerful images.

Long story short, focus on the figures and formal commentary rather than the Insta-worthy photos.

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