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Half Yearly Report and Accounts as at 31 December 2020

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Half Yearly Report and Accounts as at 31 December 2020

Djerriwarrh seeks to provide an enhanced level of fully franked income that is higher than is available from the S&P/ASX 200 and which is delivered at a low cost to shareholders. The enhanced yield is achieved through a bias to investing in companies with higher dividend income, produced over the short and long term, as well as using option strategies to generate additional income and realised capital gains.

The Portfolio return for the six months to 31 December 2020, including franking, was 14.7%, ahead of the S&P/ASX 200 Accumulation Index return, including franking, of 13.7%.

At 31 December 2020, the yield on the portfolio (net asset backing) was 5.0%, including franking, whereas the yield on the S&P/ASX 200, including franking, was 3.8%.

Economic conditions have been extremely challenging for many businesses as the
COVID-19 pandemic negatively impacted many companies. The Half Year Profit was
$8.1 million, down from $24.1 million in the corresponding period last year. Key
components of the result are:
- a significant decline in income from investments to $9.6 million from $17.9 million as
companies suspended or reduced dividends through the period. The biggest
reductions came from the major banks and BHP, whilst Sydney Airport was amongst
a number of companies in the portfolio that did not pay a dividend during the half.
- income from option activity was $6.1 million, up from $3.3 million.
- recognition of losses in open option positions was $3.6 million, down from the gain of
$7.0 million in the corresponding period last year. The significant increase in the
market over the six months to 31 December 2020 has negatively impacted the value of
these positions with losses arising when prices on the underlying stocks go up. The
value of these losses will reduce over time as positions are either exercised or expire.

Net Operating Result (which excludes the valuation impact of open option positions
and is therefore a better measure of the Company’s income from its investment
activities) was $11.8 million, down from $17.1 million in the prior corresponding
period.

Interim dividend of 5.25 cents per share fully franked, down from 8.75 cents per share
fully franked in the corresponding period last year.
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