Incitec Pivot Ltd T.IPL

RE:RE:Divvy increase...

[lundu]

I have a question for the board regarding dividend payout ratios and financial reporting in general.  I have shares in BCE, IPL, and PPL, all of which pay excellent dividends. But BCE's actual dividend of $2.73 a share is somewhat less than their Net Earnings of $2.98 a share and adjusted earnings of $3.18 a share.  The dividend seems reasonably safe. But BCE bases their payout ratio on Free Cash Flow, somewhere between 65-75%. The Free Cash Flow is at present $3.46 a share.  IPL's Net Earnings are 427.4 million or $1.28 per share and the cash dividend is 497.1 million or $1.4850 a share.  At first glance it seems that IPL is paying out more dividends than it earns.  Going over the explanations about reporting standards and GAAP, BCE says, "We consider Free Cash Flow to be an important indicator of the financial strength and performance of our businesses because it shows how much cash is available to pay dividends, repay debt, and reinvest in our company."  I presume IPL has a similar statement in their year end financial report.  BCE also states that "Free Cash Flow  does not have and standardized meaning under IFRS .... and the most comparable IFRS financial measures are Net Earnings attributable to common shareholders and EPS."  Not having an accounting background, I find all this a bit puzzling.  Why are the reporting of financial results so "fluid"?  How come all companies don't just follow the same standards of reporting?  Any help with this would be much appreciated.  The reason I'm asking is that some financial web sites have been asking whether PPL can sustain their dividend because of their high payout ratio and I guess that question could be asked of IPL. It seems that if you use different standards of accounting you can come up with different results and then publish your findings and create worry, mistrust, or worse, panic selling. 

Lundu