DGM calculations

All figures needed to calculate Re using the DGM can be found in the annual report$$s income statement and balance sheet section.

Use the following formulas:

r$\_$e$=$D$\_1/$P$\_0+$g

g$=(1-$ D$\_1/$EPS $)$X $(($Net Income$)/($Shareholder$^\text{'}$ sEquity$))$

D$1$ is the sum of the dividends for the reporting period $($check payment date$).$

Don$$t include any special dividends as it is a one$-$off occurrence.

Don$$t include franking credits.

P$0$ is the beginning price of the share of the reporting period.

Use profit after tax for net income.

Include the page number of the annual report where you have obtained the figures.

Use statutory not underlying, and do not use adjusted figures.

If Santos Ltd has many divisions$/$operations$,$ you have to use the figures of the main group.

You may use the calculated basic EPS from the annual report $2023$ of Santos Ltd$,$ but check if they have used adjusted figures and note in your report what they have adjusted for.

As per the checklist, Your EPS cannot be negative.

If your g is negative, you will have to take averages for the variables used in the formula. The choice of which variable to apply an average will depend on the company$$s history. E$.$g$.$ check company$$s Dividend policy:

If Santos Ltd follows a constant dividend policy, take the average of $2-5$ years the EPS, as needed to make g positive.

If company DO NOT follow a constant dividend policy $($varies from year to year or once off extra dividend$),$ take the average of $2-5$ years of the dividend, as needed to make g positive.

Make a note in your report that as the dividend payments are a few months apart, the numbers may not fit the DGM formula well.