Profit for 2013 was $37.7 million, down 14.7 per cent from $44.1 million in the 2012 financial year.
Meanwhile, the group’s net operating result after tax was $35.1 million, down by 7.5 per cent.
“One of the events during the year was the fact that the banking sector was up over 30 per cent, so we ended up having some of our call options exercised,” managing director Ross Barker at Djerriwarrh Investments told InvestorDaily.
This means Djerriwarrh “didn’t get as much dividend income as in the prior years.”
The other reason for the drop in profit was the performance and different accounting structure of one of their other investments.
“We have an investment called Hastings Diversified Utilities Fund, which has a special constitution and it has to be accounted for through the profit and loss ... and Hastings did not rise as much in the 2013 [financial] year as it had in the 2012 year,” Mr Barker said.
The fund did give a strong final year dividend at 16 per cent fully franked, bringing the total for the year to 26 cents per share.
“The whole purpose of the fund is to try and enhance the dividend yield, so we try to provide 1 to 1.5 per cent better yield than you would get on the underlying portfolio,” Mr Barker said.
“Part of that comes from the selling of the call options, which gives us some of the extra income. Another part of it part of it is when we sell things at a profit, we pay capital gains tax and we have some extra franking that we can add as well.”
Djerriwarrh enters the new financial year with a good level of option coverage and a strong cash position.
“Progressively as the year goes on, we will be looking to invest that [cash] ... we don’t have specific targets of areas; we tend to do it stock by stock and we will chose stocks that we think represented good medium- to long-term value,” Mr Barker stated.
