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DJERRIWARRHINVESTMENTSLIMITED

ABN 38 006 862 693


APPENDIX 4D STATEMENT

FOR THE HALF-YEAR ENDING 31 DECEMBER 2015


CONTENTS


  • Results for announcement to the market


  • Media Release


  • Appendix 4D Accounts


  • Independent Auditors' Review Report


This half-year report is presented under listing rule 4.2A and should be read in conjunction with the Company's 2015 Annual Report.


RESULTS FOR ANNOUNCEMENT TO THE MARKET

The reporting period is the half-year ended 31 December 2015 with the previous corresponding period being the half-year ended 31 December 2014. The results have been reviewed by the Company's auditors.


Results for announcement to the market


  • Profit for the half-year (including unrealised gains or losses on open option positions) was

    $21.1 million, 6.7% up from $19.8 million in the previous corresponding period.


  • Net Operating Result for the half-year was $25.6 million, 17.8% up from $21.7 million in the previous corresponding period. In the opinion of Directors, this is a better measure of the Company's performance in deriving on-going investment, trading and options income from the Company's portfolios.


  • Revenue from operating activities was $20.7 million, 5.1% up from $19.7 million in the previous corresponding period. This excludes trading and option income and capital gains on investments.


  • The interim dividend of 10 cents per share fully franked, unchanged from the previous interim period, will be paid on 16 February 2016 to ordinary shareholders on the register on 1 February 2016. There is no conduit foreign income component of the dividend.


  • The final dividend for the 2015 financial year was 16 cents per share, fully franked, and it was paid to shareholders on 21 August 2015.


  • The Company's Dividend Reinvestment Plan remains suspended.


  • Net tangible assets per share before any provision for deferred tax on the unrealised gains or losses on the long-term investment portfolio as at 31 December 2015 were $3.21 (before allowing for the interim dividend), down from $3.56 (also before allowing for the interim dividend) at the end of the previous corresponding period.



Volatile market boosts profit from option activity


RESULT SUMMARY TO 31 DECEMBER 2015


  • Djerriwarrh seeks to provide an enhanced level of fully franked income in part by using option strategies


  • Half Year Profit increased 6.7% to $21.1 million


  • Income from option activity and the Trading Portfolio was $12.9 million, well ahead of the $8.5 million generated last half year.


  • Interim Dividend of 10 cents per share fully franked.


  • Six month portfolio return was negative 4.1%, including franking it was negative 2.1%.


Profit and Dividend

Profit for the half year to 31 December 2015 was $21.1 million, an increase of 6.7% from $19.8 million in the corresponding period last half year. Heightened volatility over the period combined with the strategy of maintaining call option coverage at the upper end of the Company's indicative range in a falling market, has benefited the option income activity of the Company which in turn has lifted profit. Income from option activity and the Trading Portfolio was $12.9 million, well ahead of the $8.5 million generated last half year.


Djerriwarrh's interim dividend has been maintained at 10 cents per share fully franked, the same as last year.


Portfolio

The Australian equity market has seen a marked divergence over the past six months as larger companies in the index have generally underperformed those outside of the top 50. The resource and energy sectors have also been particularly hard hit with rapidly falling commodity prices.


For Djerriwarrh, short term portfolio performance was reflective of the general bias the portfolio has to top 50 stocks; given this is where the options market is most active and the overweight position in energy stocks.


Djerriwarrh's portfolio return including franking for the six months to 31 December 2015 was negative 2.1% whereas the S&P/ASX 200 Accumulation Index return including franking was positive 0.3% (franking added 2.0% to Djerriwarrh's return and 0.8% to the Index). For the year to 31 December 2015, the portfolio return was 0.6% whereas the Index was 4.2% calculated on the same basis including franking.


As a long term investor, notwithstanding the recent under performance to the index, it remains encouraging to see the 10 year performance including franking of 7.7% per annum ahead of the index returns of 7.2% per annum. (see attached performance table).


One of the objectives over the period was to look for opportunities in companies outside of the top 50. In this context Challenger, Mainfreight and Navitas were some of the new companies added to the portfolio. The existing position in Healthscope was also increased. In the larger company space Djerriwarrh participated in the Commonwealth Bank capital raising through the period as well as adding further to the Macquarie Bank holding in the portfolio.

Given the general fall in the market over the half there were few call options exercised, although Asciano (under a takeover offer), Sydney Airport and Sonic Healthcare were the exceptions.

Other sales included a lightening in the exposure in the commodities sector (BHP and Santos being the largest of these), the sale of some of the holding in Woolworths early in the half and the complete disposal of 21stCentury Fox.

As we move into the second half of the financial year elevated volatility is likely to remain a key feature of the market. This along with a relatively higher level of option coverage as a starting position for the portfolio should assist with the generation of income which is one of the main objectives of the Company's investment activities.


Please direct any enquiries to:

Ross Barker Geoff Driver

Managing Director General Manager

(03) 9225 2101 (03) 9225 2102


14 January 2016

Djerriwarrh Investments Limited issued this content on 14 January 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 08 February 2016 14:16:18 UTC