Stellar outcome for Government-controlled firms a notable exception.

The results for the six months to December 2014 has been fairly lacklustre, with one notable exception.

That's been the relatively stellar performance of the government-controlled companies, Air New Zealand, Genesis Energy, Meridian Energy and Mighty River Power.

These four companies raised their ordinary dividend rate by 22.7 per cent, on average, while their total sharemarket value has appreciated by more than $900 million since the day before their profit announcement.

By comparison, Contact Energy, which is controlled by ASX listed Origin Energy, held its dividend and its sharemarket value has fallen nearly $600 million since the day before its profit announcement.

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It is not surprising that Crown- controlled entities perform well because the interests of the Government and other shareholders are fully aligned in the current environment.

The Government prefers higher dividends over growth strategies while individual investors are scouring the world in search of high dividend yield companies.

By comparison, Origin Energy seems to be more interested in identifying growth opportunities for its NZX-listed entity. This is not a popular strategy in an environment where investors are seeking dividend yield over growth.

The accompanying table shows the profit performance of the 12 largest companies to report for the six months ended December 31.

It is not surprising that Crown- controlled entities perform well because the interests of the Government and other shareholders are fully aligned in the current environment.

The companies are ranked according to sharemarket value and the net profit after tax figures are normalised or underlying. The columns headed "latest" contain the net profit figures and dividends for the six months ended December 31, 2014 and the columns headed "previous" are for the same period the previous year.

The first point to note is that the combined earnings of the 12 companies increased only 1.4 per cent, from $1113 million to $1129 million. This is a disappointing performance considering the share price of these companies, excluding dividends, increased by 29.5 per cent, on average, over the past 12 months.

The best performing companies over the last 12 months have been Meridian Energy, with a 102.8 per cent capital return, Mighty River Power 66.3 per cent and Air New Zealand 60 per cent.

The worst performing were Fletcher Building, with a negative 9.2 per cent return, Sky Television minus 7.1 per cent and SkyCity plus 2.8 per cent.

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These figures clearly demonstrate that price/earnings multiples of this group expanded materially as the average share prices increased by 29.5 per cent while net earnings grew by just 1.4 per cent.

The positive feature of these 12 companies is that they raised their combined dividend rate by 7.3 per cent.

As most of these largest listed companies are almost totally domestically orientated, with the exception of Fletcher Building, Air New Zealand and SkyCity, they have been able to declare fully imputed dividends.

Thus, these top 12 companies have fairly attractive post-tax dividend yields.

Another point to note is that four of these top 12 companies are government controlled and another two, Vector and Port of Tauranga, are controlled by local public bodies.

In addition, Spark and Contact Energy were originally government owned and Auckland International Airport was controlled by the Crown and a number of local authorities.

Only Fletcher Building, SkyCity and Sky Television are truly private enterprise entities. Sky Television was the only one of this group to raise its dividend in the latest period and these three companies were the worst performers of the top 12 group over the past 12 months.

Meridian Energy is effectively the NZX's largest company on the basis that it has 2.56 billion shares on issue and these will form the basis of its total sharemarket value once the 50c instalment receipt payment is made in April.

Thus, three of the six largest NZX companies are electricity generators.

Meridian Energy reported a strong result as it beat analysts' consensus and prospectus forecasts. The company benefited from cost savings, higher wholesale prices and generation output growth.

The big surprise was the 1.4c special dividend, in addition to the 4.8c ordinary payout, and the announcement that it intends to return a further $625 million to shareholders over the next five years. This is contingent on the Tiwai Pt aluminium smelter remaining open.

Fletcher Building released a disappointing result, mainly because of a poor performance across the Tasman. The Australian issues are more company specific than market related.

The company held its dividend and stated that operating earning before significant items for the June 2015 year were expected to be at the lower end of the previous guidance of $650 million to $690 million ($592 million for the June 2014 year). This was an effective profit guidance downgrade.

Spark announced flat earnings for the six months to December 31 and repeated its comments about uncertainties over the regulatory regime.

The company said it remained on track for low single digit earnings before interest, tax, depreciation and amortisation (ebitda) growth and low single digit decline in revenue. However, it warned there was uncertainty as to when the new Chorus charges will take effect.

Auckland International Airport's result was ahead of analyst forecasts and the company upgraded its full-year guidance from a $160 million to $170 million range to a $167 million to $174 million range.

This represents a greater percentage lift in earnings per share following the share cancellation and capital return last year.

Mighty River Power and Genesis Energy both had small June 2015 profit downgrades. Mighty River said that earnings before interest, tax, depreciation, amortisation and fair value adjustments (ebitdaf) would be in the $480 million to $500 million range ($504 million last year) while Genesis said it was facing headwinds because of lower oil prices (at its Kupe field) and aggressive retail competition.

As noted previously, Contact Energy disappointed investors because it chose to hold its dividend even though its major capital expenditure programme has been completed and it recorded a substantial increase in operating cash flow.

Air New Zealand received a strong positive tick from investors after its comments that "we stated (in November) that should the then current level of jet fuel price persist, there would be a significant additional improvement in earnings in the second half of the year".

The company noted this week that fuel prices have eased further since the November statement.

Vector said it was comfortable with adjusted ebitda guidance of $588 million, compared with $580.7 million for the June 2014 year, while SkyCity was rather vague with chief executive Nigel Morrison saying little more than "the outlook for SkyCity remains positive".

Port of Tauranga stated that its full year underlying net profit after tax would be in line with last year ($77.2 million) while Sky Television's net profit guidance was at the lower end of a $170 million to $180 million range ($165.8 million for the June 2014 year).

The overall performance of these 12 companies, which represent 48.7 per cent of the benchmark NZX50 Gross Index, was disappointing and reflects the competitive nature of the domestic economy, regulatory pressure and the lack of growth in a number of industries, notably electricity.

The dividend yield of most of these companies is attractive, particularly on an after-tax basis, but investors will be looking for much improved earnings over the next few years to justify the relatively high price/earnings multiples of many of these companies.

Brian Gaynor is an executive director of Milford Asset Management which holds securities in all the companies mentioned in this column on behalf of clients.