The author and publisher would like to thank Alan Hull (author of Active Investing, Revised Edition, Trade My Way and Invest My Way; www.alanhull.com) for generating the five-year share-price charts.
This twenty-sixth edition first published in 2020 by Wrightbooks
an imprint of John Wiley & Sons Australia, Ltd
42 McDougall Street, Milton Qld 4064
Office also in Melbourne
Typeset in Adobe Garamond Pro Regular 10/12 pt
First edition published as Top Stocks by Wrightbooks in 1995
New edition published annually
© Martin Roth 2020
The moral rights of the author have been asserted
ISBN: 9780730372073 (pbk.)
9780730372080 (ebook)
All rights reserved. Except as permitted under the Australian Copyright Act 1968 (for example, a fair dealing for the purposes of study, research, criticism or review), no part of this book may be reproduced, stored in a retrieval system, communicated or transmitted in any form or by any means without prior written permission. All enquiries should be made to the publisher at the address above.
Cover design: Wiley
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Charts created using TradeStation © TradeStation Technologies, Inc. 2001–2019. All rights reserved. No investment or trading advice, recommendation or opinions are being given or intended.
Disclaimer
The material in this publication is of the nature of general comment only, and does not represent professional advice. It is not intended to provide specific guidance for particular circumstances and it should not be relied on as the basis for any decision to take action or not take action on any matter which it covers. Readers should obtain professional advice where appropriate, before making any such decision. To the maximum extent permitted by law, the author and publisher disclaim all responsibility and liability to any person, arising directly or indirectly from any person taking or not taking action based on the information in this publication.
Economic uncertainty, political instability, trade wars, currency volatility and more seem to be exerting a growing influence on global financial markets. Yet, in the midst of this environment, numerous fine companies continue to emerge in Australia, with great potential for investors.
In Top Stocks 2020 there are 25 new companies, including 18 that have never appeared in any previous edition of the book. This is the second-highest number of new companies in the 26-year history of the book.
They are often smaller to medium-sized corporations. Some will be unfamiliar to investors. But all meet the stringent Top Stocks criteria, including solid profits and moderate debt levels.
Guiding investors towards value stocks has been one of the paramount aims of the book from the very first edition. Indeed, one of the rationales for the book has always been to highlight the truth that Australia boasts many excellent companies that enjoy high profits — and growing profits — regardless of the direction of the markets. Despite the title, Top Stocks is actually a book about companies.
Right from the start it has been an attempt to help investors find the best public companies in Australia, using strict criteria. These criteria are explained fully later. But, in essence, all companies in the book must have been publicly listed for at least five years and must have been making a profit and paying a dividend for each of those five years. They must also meet tough benchmarks of profitability and debt levels. It is completely objective. My own personal views count for nothing. In addition, share prices have never been relevant.
Of course, such stocks could not withstand the tidal wave of a substantial market sell-off. They too would be affected. But they should be affected less. And if they are good companies they will continue to thrive and to pay dividends. And they will bounce back faster than many others.
Of the 105 companies in Top Stocks 2020 — 10 more than in last year's edition — fully 74 reported a higher after-tax profit in the latest financial year (June 2019 for most of them), including 44 with double-digit profit growth and a further three that achieved triple-digit growth. In addition, 73 recorded higher earnings per share and 68 paid a higher dividend.
And though, as I wrote above, share prices are not relevant for selection to Top Stocks, more than half the companies in the book have provided investor returns — share price appreciation plus dividends — of an average of at least 10 per cent per year over a five-year period.
Each year I try to identify trends among the companies of Top Stocks. The weakening dollar has for several years become a feature of local financial markets. It has benefited exporters and companies with extensive overseas business. Conversely, it can hurt importers.
For investors interested in this theme, here are companies in Top Stocks 2020 that generate a substantial amount of their revenues abroad. Do note, however, that this does not automatically mean that they are beneficiaries of a weaker dollar. Some have a hedging program — or some other arrangement — in place that limits the potential gains from a weak dollar.
The gold price has been rising during 2019, putting a spotlight on gold stocks. Here are some from this edition of Top Stocks.
It was back in Top Stocks 2011 that I first alerted readers to the phenomenon of a growing number of high-tech companies making it into the book. Ten years earlier only one technology company — Computershare — had been in Top Stocks. But since 2011 a dozen or so have regularly made it.
The Information Technology sector represents only around 4 per cent of market capitalisation in Australia (in the US it is more than 20 per cent), yet some of these companies have been outstanding performers.
They are generally small companies and it can sometimes be difficult for outsiders to understand just how they make their money. In addition, some are on high price/earnings ratios with low dividend yields. Thus, many investors avoid them.
But technology has infiltrated virtually every facet of our lives, and the best of these companies are set to grow. It is worth taking the time to learn more about them.
| Year-on-year after-tax profit growth (%) | Dividend yield (%) | |
| Altium | –48.9 | 0.9 |
| Citadel Group | –24.1 | 2.8 |
| Codan | –29.8 | 1.9 |
| Data#3 | –28.7 | 4.2 |
| DWS | –25.5 | 7.3 |
| Hansen Technologies | –18.7 | 1.8 |
| Infomedia | –25.0 | 1.7 |
| Integrated Research | –13.9 | 2.4 |
| IRESS | –27.3 | 3.8 |
| Objective | –22.6 | 1.3 |
| Technology One | –14.6 | 1.2 |
Another trend — first noted a year ago — is the rise of listed fund management companies. One of these, Perpetual, has been in the book for many years. But others, like APN Property Group and Australian Ethical Investment, are new.
The companies are beneficiaries of the huge — and steadily growing — pool of superannuation money in Australia. Nevertheless, it must be recognised that their fortunes are linked to the financial markets. Their profits will take a hit if the markets fall badly. But they should also recover quickly once investors become active again.
| Year-on-year after-tax profit growth (%) | Dividend yield (%) | |
| APN Property Group | –27.1 | 5.0 |
| Australian Ethical Investment | –30.9 | 2.3 |
| Fiducian Group | –12.5 | 4.6 |
| Magellan Financial Group | –35.5 | 3.0 |
| Pendal Group | –29.5 | 7.8 |
| Perpetual | –16.6 | 6.9 |
| Platinum Asset Management | –16.7 | 7.1 |
With interest rates remaining low, many investors have been seeking stocks offering high dividend yields. These are still a worthy target, as they can offer a degree of protection if the market is falling. Table N lists all companies in the book according to their dividend yields.
Six years ago, in Top Stocks 2014, with investors looking for smaller companies with high dividend yields, I published a list of smaller companies from the book — a market capitalisation of below $450 million — with a dividend yield of at least 5 per cent.
There were 22 such companies in Top Stocks 2014. Since then I have repeated the process each year. There were 10 companies in Top Stocks 2019. This year there are just seven.
| Dividend yield (%) | |
| Bell Financial Group | 7.6 |
| Vita Group | 7.5 |
| DWS | 7.3 |
| GR Engineering Services | 6.5 |
| Virtus Health | 5.9 |
| Mortgage Choice | 5.3 |
| APN Property Group | 5.0 |
It is a feature of the Top Stocks books that they contain many smaller companies. So almost every year one or more of them gets acquired by a larger corporation.
In this latest edition, Capilano Honey, which appeared in Top Stocks 2019, is omitted because it was acquired by a private equity firm in 2018.
But something new has occurred with Top Stocks 2020. No fewer than three of the companies that qualify for inclusion have announced that they are likely to be taken over. One or more of these friendly acquisitions may even have taken place by the time this book is printed and reaches the bookstores, leading to the delisting of the stock.
It was tempting not to include the companies in the book at all. But I have decided to leave them in. There is a remote possibility that the takeovers will not go ahead. It is unlikely — these are non-hostile takeover bids — but possible that they are voted down by shareholders.
I also remember one year, in the early days of Top Stocks, that I removed one company from the book when it appeared it would be acquired by a rival. But the takeover never went ahead.
Here are the three stocks. Please be aware that one or more of them may no longer exist as an independent company by the time you are reading this book.
Top Stocks is written for all those investors wishing to exercise a degree of control over their portfolios. It is for those just starting out, as well as for those with plenty of experience but who still feel the need for some guidance through the thickets of nearly 2300 listed stocks.
It is not a how-to book. It does not give step-by-step instructions to ‘winning' in the stock market. Rather, it is an independent and objective evaluation of leading companies, based on rigid criteria, with the intention of yielding a large selection of stocks that can become the starting point for investors wishing to do their own research.
A large amount of information is presented on each company, and another key feature of the book is that the data is presented in a common format, to allow readers to make easy comparisons between companies.
It is necessarily a conservative book. All stocks must have been listed for five years even to be considered for inclusion. It is especially suited for those seeking out value stocks for longer-term investment.
Yet, perhaps ironically, the book is also being used by short-term traders seeking a goodly selection of financially sound and reliable companies whose shares they can trade.
In addition, there are many regular readers who buy the book each year, and to them in particular I express my thanks.
The criteria for inclusion in Top Stocks are strict:
It is surely a tribute to the strength and resilience of Australian corporations that, once again, despite the volatility of recent years, so many companies have qualified for the book.
A total of 15 companies from Top Stocks 2019 have been omitted from this new edition.
One company, Capilano Honey, was acquired during the year.
With interest rates remaining low some corporations expanded their borrowings, and three companies from Top Stocks 2019 saw their debt-to-equity ratio rise above the 70 per cent limit for this book:
The remaining 11 excluded companies had return-on-equity ratios that fell below the required 10 per cent:
There are 25 new companies in this book (although seven of them have appeared in earlier editions of the book but were not in Top Stocks 2019).
The new companies in this book are:
* Companies that have not appeared in any previous edition of Top Stocks.
This is the 26th edition of Top Stocks. Just three companies have appeared in each one of those editions:
Once again it is my hope that Top Stocks will serve you well.
Martin Roth
Melbourne
September 2019
The 105 companies in this book have been placed as much as possible into a common format, for ease of comparison. Please study the following explanations in order to get as much as possible from the large amount of data.
The tables have been made as concise as possible, though they repay careful study, as they contain large amounts of information.
Note that the tables for the banks have been arranged a little differently from the others. Details of these are provided later in this Introduction.
At the head of each entry is the company name, with its three-letter ASX code and the website address.
Under the company name is a share-price chart, to September 2019, provided by Alan Hull (www.alanhull.com), author of Invest My Way, Trade My Way and Active Investing.
Under the share-price chart is a small table with the following data.
This is the closing price on 2 September 2019. Also included are the 12-month high and low prices, as of the same date.
This is the size of the company, as determined by the stock market. It is the share price (again, as of 2 September 2019) multiplied by the number of shares in issue. All companies in this book must be in the All Ordinaries Index, which comprises Australia's 500 largest stocks, as measured by market capitalisation.
The NTA-per-share figure expresses the worth of a company's net tangible assets — that is, its assets minus its liabilities and intangible assets — for each share of the company. The price-to-NTA-per-share ratio relates this figure to the share price.
A ratio of one means that the company is valued exactly according to the value of its assets. A ratio below one suggests that the shares are a bargain, though usually there is a good reason for this. Profits are more important than assets.
Some companies in this book have a negative NTA-per-share figure — as a result of having intangible assets valued at more than their remaining net assets — and a price-to-NTA-per-share ratio cannot be calculated.
See Table M, in the second part of this book, for a little more detail on this ratio.
This is the total return you could have received from the stock in the five years to September 2019. It is based on the share price appreciation (or depreciation) plus dividends, and is expressed as a compounded annual rate of return.
A dividend reinvestment plan (DRP) allows shareholders to receive additional shares in their company in place of the dividend. Usually — though not always — these shares are provided at a small discount to the prevailing price, which can make them quite attractive. And of course no broking fees apply.
Many large companies offer such plans. However, they come and go. When a company needs finance it may introduce a DRP. When its financing requirements become less pressing it may withdraw it. Some companies that have a DRP in place may decide to deactivate it for a time.
The information in this book is based on up-to-date information from the companies. But if you are investing in a particular company in expectations of a DRP, be sure to check that it is still on offer. The company's own website will often provide this information.
The price/earnings ratio (PER) is one of the most popular measures of whether a share is cheap or expensive. It is calculated by dividing the share price — in this case the closing price for 2 September 2019 — by the earnings per share figure. Obviously the share price is continually changing, so the PER figures in this book are for guidance only. Many newspapers publish each morning the latest PER for every stock.
This is the latest full-year dividend expressed as a percentage of the share price. Like the price/earnings ratio, it changes as the share price moves. It is a useful figure, especially for investors who are buying shares for income, as it allows you to compare this income with alternative investments, such as a bank term deposit or a rental property.
It is sometimes useful to compare a company's price/earnings ratio and its dividend yield with those of its sector.
Figures used in this book are those of the S&P/ASX sectors from September 2019.
Each commentary begins with a brief introduction to the company and its activities. Then follow the highlights of its latest business results. For the majority of the companies these are their June 2019 results, which were issued during July and August 2019. Finally, there is a section on the outlook for the company.
Here is what you can find in the main table.
These are the company's revenues from its business activities, generally the sale of products or services. However, it does not usually include additional income from such sources as investments, bank interest or the sale of assets. If the information is available, the revenues figure has been broken down into the major product areas.
As much as possible, the figures are for continuing businesses. When a company sells a part of its operations the financial results for the sold activities are now separated from the core results. This can mean that the previous year's results are restated — also excluding the sold business — to make year-on-year comparisons more valid.
Earnings before interest and taxation (EBIT) is the firm's profit from its operations before the payment of interest and tax. This figure is often used by analysts examining a company. The reason is that some companies have borrowed extensively to finance their activities, while others have opted for alternative means. By expressing profits before interest payments it is possible to compare the performance of these companies more precisely. The net interest figure — interest payments minus interest receipts — has been used for this calculation.
You will also find many companies using a measure called EBITDA, which is earnings before interest, taxation, depreciation and amortisation.
This is the company's EBIT expressed as a percentage of its revenues. It is a gauge of a company's efficiency. A high EBIT margin suggests that a company is achieving success in keeping its costs low.
The gross margin is the company's gross profit as a percentage of its sales. The gross profit is the amount left over after deducting from a company's sales figure its cost of sales: that is, its manufacturing costs or, for a retailer, the cost of purchasing the goods it sells. The cost of goods sold figure does not usually include marketing or administration costs.
As there are different ways of calculating the cost of goods sold figure, this ratio is better used for year-to-year comparisons of a single company's efficiency, rather than in comparing one company with another.
Many companies do not present a cost of goods sold figure, so a gross margin ratio is not given for every stock in this book.
The revenues for some companies include a mix of sales and services. Where a breakdown is possible, the gross profit figure will relate to sales only.
The profit before tax figure is simply the EBIT figure minus net interest payments. The profit after tax figure is, of course, the company's profit after the payment of tax, and also after the deduction of minority interests. Minority interests are that part of a company's profit that is claimed by outside interests, usually the other shareholders in a subsidiary that is not fully owned by the company. Many companies do not have any minority interests, and for those that do it is generally a tiny figure.
As much as possible, I have adjusted the profit figures to exclude non-recurring profits and losses, which are often referred to as significant items. It is for this reason that the profit figures in Top Stocks sometimes differ from those in the financial media or on financial websites, where profit figures normally include significant items.
Significant items are those that have an abnormal impact on profits, even though they happen in the normal course of the company's operations. Examples are the profit from the sale of a business, or expenses of a business restructuring, the write-down of property, an inventory write-down, a bad-debt loss or a write-off for research and development expenditure.
Significant items are controversial. It is often a matter of subjective judgement as to what is included and what excluded. After analysing the accounts of hundreds of companies, while writing the various editions of this book, it is clear that different companies use varying interpretations of what is significant.
Further, when they do report a significant item there is no consistency as to whether they use pre-tax figures or after-tax figures. Some report both, making it easy to adjust the profit figures in the tables in this book. But difficulties arise when only one figure is given for significant items.
In normal circumstances most companies do not report significant items. But investors should be aware of this issue. It sometimes causes consternation for readers of Top Stocks to find that a particular profit figure in this book is substantially different from that given by some other source. My publisher occasionally receives emails from readers enquiring why a profit figure in this book is so different from that reported elsewhere. In virtually all cases the reason is that I have stripped out a significant item.
It is also worth noting my observation that a growing number of companies present what they call an underlying profit (called a cash profit for the banks), in addition to their reported (statutory) profit. This underlying profit will exclude not only significant items but also discontinued businesses and sometimes other related items. Where all the relevant figures are available, I have used these underlying figures for the tables in this book.
It should also be noted that when a company sells or terminates a significant business it will now usually report the profit or loss of that business as a separate item. It will also usually backdate its previous year's accounts to exclude that business, so that worthwhile comparisons can be made of continuing businesses.
The tables in this book usually refer to continuing businesses only.
Earnings per share is the after-tax profit divided by the number of shares. Because the profit figure is for a 12-month period the number of shares used is a weighted average of those on issue during the year. This number is provided by the company in its annual report and its results announcements.
The cashflow per share ratio tells — in theory — how much actual cash the company has generated from its operations.
In fact, the ratio in this book is not exactly a true measure of cashflow. It is simply the company's depreciation and amortisation figures for the year added to the after-tax profit, and then divided by a weighted average of the number of shares. Depreciation and amortisation are expenses that do not actually utilise cash, so can be added back to after-tax profit to give a kind of indication of the company's cashflow.
By contrast, a true cashflow — including such items as newly raised capital and money received from the sale of assets — would require quite complex calculations based on the company's statement of cashflows.
However, many investors use the ratio as I present it, because it is easy to calculate, and it is certainly a useful guide to how much funding the company has available from its operations.
The dividend figure is the total for the year, interim and final. It does not include special dividends. The level of franking is also provided.
The NTA per share figure tells the theoretical value of the company — per share — if all assets were sold and then all liabilities paid. It is very much a theoretical figure, as there is no guarantee that corporate assets are really worth the price put on them in the balance sheet. Intangible assets such as goodwill, newspaper mastheads and patent rights are excluded because of the difficulty in putting a sales price on them, and also because they may in fact not have much value if separated from the company.
As already noted, some companies in this book have a negative NTA, due to the fact that their intangible assets are so great, and no figure can be listed for them.
Where a company's most recent financial results are the half-year figures, these are used to calculate this ratio.
The interest cover ratio indicates how many times a company could make its interest payments from its pre-tax profit. A rough rule of thumb says a ratio of at least three times is desirable. Below that and fast-rising interest rates could imperil profits. The ratio is derived by dividing the EBIT figure by net interest payments. Some companies have interest receipts that are higher than their interest payments, which turns the interest cover into a negative figure, and so it is not listed.
Return on equity is the after-tax profit expressed as a percentage of the shareholders' equity. In theory, it is the amount that the company's managers have made for you — the shareholder — on your money. The shareholders' equity figure used is an average for the year.
This ratio is one of the best-known measures of a company's debt levels. It is total borrowings minus the company's cash holdings, expressed as a percentage of the shareholders' equity. Some companies have no debt at all, or their cash position is greater than their level of debt, which results in a negative ratio, so no figure is listed for them.
Where a company's most recent financial results are the half-year figures, these are used to calculate this ratio.
The current ratio is simply the company's current assets divided by its current liabilities. Current assets are cash or assets that can, in theory, be converted quickly into cash. Current liabilities are normally those payable within a year. Thus, the current ratio measures the ability of a company to repay in a hurry its short-term debt, should the need arise. The surplus of current assets over current liabilities is referred to as the company's working capital.
Where a company's most recent financial results are the half-year figures, these are used to calculate this ratio.
The tables for the banks are somewhat different from those for most other companies. EBIT and debt-to-equity ratios have little relevance for them, as they have such high interest payments (to their customers). Other differences are examined below.
Operating income is used instead of sales revenues. Operating income is the bank's net interest income — that is, its total interest income minus its interest expense — plus other income, such as bank fees, fund management fees and income from businesses such as corporate finance and insurance.
Banks borrow money — that is, they accept deposits from savers — and they lend it to businesses, homebuyers and other borrowers. They charge the borrowers more than they pay those who deposit money with them, and the difference is known as net interest income.
These are all the costs of running the bank. Banks have high operating expenses, and one of the keys to profit growth is cutting these expenses. Add the provision for doubtful debts to operating expenses, then deduct the total from operating income, and you get the pre-tax profit.
Banks have traditionally made most of their income from savers and from lending out money. But they are also working to diversify into new fields, and this ratio is an indication of their success.
As noted, the banks have high costs — numerous branches, expensive computer systems, many staff, and so on — and they are all striving to reduce these. The cost-to-income ratio expresses their expenses as a percentage of their operating income, and is one of the ratios most often used as a gauge of efficiency. The lower the ratio drops the better.
Banks have enormous assets, in sharp contrast to, say, a high-tech start-up whose main physical assets may be little more than a set of computers and other technological equipment. So the return on assets — the after-tax profit expressed as a percentage of the year's average total assets — is another measure of efficiency.
| ASX code: ONT | www.1300smiles.com.au | |
|
||
| Share price ($) | 6.10 | |
| 12-month high ($) | 6.60 | |
| 12-month low ($) | 5.98 | |
| Market capitalisation ($mn) | 144.4 | |
| Price-to-NTA-per-share ratio | 21.9 | |
| 5-year share price return (% p.a.) | 3.6 | |
| Dividend reinvestment plan | No | |
| Sector: Health care | Company | Sector |
| Price/earnings ratio (times) | 18.6 | 37.1 |
| Dividend yield (%) | 4.1 | 1.4 |
Townsville-based 1300SMILES, founded in 2000, runs a chain of more than 35 dental practices in 10 major population centres of Queensland, and has also expanded to South Australia and New South Wales. Its main role is the provision of dental surgeries and practice management services to self-employed dentists, allowing them to focus on dental services. It also manages its own small dental business. The founder and managing director, Dr Daryl Holmes, owns around 60 per cent of the company equity.
Revenues and profits rose modestly as the company continued to expand. The company also reports what it calls over-the-counter revenues, which represent the amount actually received by its dentistry businesses before the deduction of patient fees by self-employed dentists. On this basis — which the company believes gives a fairer measure of the scale of its operations than its reported statutory sales figure — total company revenues rose to $58.9 million in June 2019, from $55.8 million in the previous year. During the year the company acquired new practices in Noosa, Springfield Lakes, Maroochydore and Strathpine, all in Queensland.
The dental business in Australia is fragmented, with around 70 per cent of dentists working in their own private practices or in small partnerships. However, as stricter regulatory and compliance requirements drive up costs, a gradual consolidation is taking place, which has led to the rise of what has become known as the Dental Service Organisations sector, and 1300SMILES is one of the leaders in this trend. The company buys dental practices, then retains the dentists, who pay a fee to 1300SMILES for services received, including marketing, administration, billing and collection, facilities certification and licensing. The company also provides support staff, equipment and facilities and sources all consumable goods. It continues to seek out new practices to buy, though it has strict benchmarks concerning the price it will pay. Company management have suggested that a big new wave of consolidation is due to take place, and they believe that 1300SMILES, with its relatively low levels of debt and its strong reputation, will be able to take advantage of this. In particular, the company believes that it may even be able to buy out some of its rival consolidators. In addition, it expects to continue establishing new practices in existing and new regions. It will also build up existing practices through benchmarking, training and mentoring, as well as by expanding those facilities that are at full capacity.
| Year to 30 June | 2018 | 2019 |
| Revenues ($mn) | 39.1 | 40.3 |
| EBIT ($mn) | 10.4 | 10.7 |
| EBIT margin (%) | 26.6 | 26.4 |
| Profit before tax ($mn) | 10.7 | 10.8 |
| Profit after tax ($mn) | 7.6 | 7.8 |
| Earnings per share (c) | 32.24 | 32.82 |
| Cash flow per share (c) | 41.98 | 42.40 |
| Dividend (c) | 24 | 25 |
| Percentage franked | 100 | 100 |
| Net tangible assets per share ($) | 0.42 | 0.28 |
| Interest cover (times) | ~ | ~ |
| Return on equity (%) | 20.6 | 19.9 |
| Debt-to-equity ratio (%) | ~ | 21.4 |
| Current ratio | 0.9 | 1.0 |
| ASX code: AX1 | www.accentgr.com.au | |
| ||
| Share price ($) | 1.63 | |
| 12-month high ($) | 1.71 | |
| 12-month low ($) | 1.05 | |
| Market capitalisation ($mn) | 877.7 | |
| Price-to-NTA-per-share ratio | 17.4 | |
| 5-year share price return (% p.a.) | 49.0 | |
| Dividend reinvestment plan | No | |
| Sector: Consumer discretionary | Company | Sector |
| Price/earnings ratio (times) | 16.3 | 13.7 |
| Dividend yield (%) | 5.1 | 3.9 |
Sydney company Accent Group is a nationwide footwear wholesaler and retailer that has grown rapidly through a series of mergers and acquisitions. Its brands now include The Athlete's Foot — established in 1976 — Hype DC, Platypus, Podium Sports, Skechers, Merrell, CAT, Vans, Dr. Martens, Saucony, Timberland, Sperry Top-Sider, Palladium and Stance. The company's wholesale division distributes footwear and apparel. Accent also operates in New Zealand.
Accent overcame a weak retail environment to post a strong result, with double-digit gains in sales and profit. With profit growing at a faster pace than sales, the company was successful in boosting margins. The good result came despite the weakening dollar, which forced up costs for its imported products. Retail sales at company-owned stores rose 16 per cent to $656 million. This included a 2.3 per cent increase in like-for-like sales and a 93 per cent surge in digital sales. Skechers, Platypus, Vans, Dr. Martens, Timberland and Merrell all traded especially well. Wholesale revenues of $116 million were 7 per cent higher than in the previous year, with strong performances from Vans, Dr. Martens, Merrell, CAT and Stance more than offsetting continued weakness from Skechers. Total company sales for the year, including for franchise stores, rose 9 per cent to $935 million. During the year Accent opened 54 new stores and closed 21, resulting in a total of 479 stores and online sites.
| Year to 30 June* | 2018 | 2019 |
| Revenues ($mn) | 702.4 | 796.3 |
| EBIT ($mn) | 64.7 | 80.6 |
| EBIT margin (%) | 9.2 | 10.1 |
| Profit before tax ($mn) | 60.9 | 77.0 |
| Profit after tax ($mn) | 44.0 | 53.9 |
| Earnings per share (c) | 8.23 | 10.02 |
| Cash flow per share (c) | 12.75 | 15.28 |
| Dividend (c) | 6.75 | 8.25 |
| Percentage franked | 100 | 100 |
| Net tangible assets per share ($) | 0.08 | 0.09 |
| Interest cover (times) | 17.1 | 22.6 |
| Return on equity (%) | 11.6 | 13.6 |
| Debt-to-equity ratio (%) | 8.9 | 12.3 |
| Current ratio | 1.3 | 1.2 |
* 1 July 2018