Djerriwarrh Investments, another of the investment companies associated with Goldman Sachs JBWere, has lifted net operating profit (excluding capital gains) 42.5 per cent to $54.9 million in the year to June.
The company said yesterday that net profit (including realised capital gains) was $90.7 million, a 43.3 per cent increase from the 2006 figure of $63.3 million, as the company rode the market boom, and a bit more.
The All Ordinaries was up 25 per cent in the 2007 year and including re-invested dividends, the market was up by just over 28 per cent, so DJW has outperformed.
Revenue from operating activities (excluding capital gains) was $48.0 million, 26 per cent up from 2007, and shareholders will receive a final dividend of 16c, up from 13c previously.
That was after the interim of 10c a share was declared earlier this year. The final dividend which is fully franked will be paid on August 9 to ordinary shareholders on the register on July 26.
The company said the final dividend includes an attributable 3 cents of Listed Investment Company (LIC) gain. This gain enables some shareholders to claim a tax deduction in their tax return.
Operating profit was made up primarily of dividends received from the investment portfolio, option income and revenue from the trading portfolio, which was up significantly. It does not include realised gains.
Earnings per share based on Net Operating Profit were 28.8 cents compared with 24.0 cents last year (the company had a rights issue during the year, expanding its capital base).
The company's shares rose 15c to $5.19, a new record high for the stock.
Total assets (at market value) at 30 June 2007 were $1.2 billion, up from $881 million last year.
Total portfolio return over the twelve months to 30 June 2007 (change in net asset backing per share plus dividends reinvested) was 27.0 per cent after tax and management expenses.
The company said total shareholder return measured by change in share price plus dividends over the twelve month period was 15.0 per cent as the share price moved to a discount of over 5 per cent to net asset backing by financial year end.
Management expense ratio was 0.22 per cent, compared to 0.24 per cent for the previous year. Net asset backing at 30 June 2007 was $5.24 (before providing for the 16 cent final dividend).
Net tangible assets per share before any provision for deferred tax on the unrealised gains on the long-term investment portfolio as at 30 June 2007 were $5.24 (before allowing for the final dividend), up from $4.45 (before allowing for the final dividend) at the end of the previous corresponding period.
The associated company, Mirrabooka, last week produced a similar result.
Mirrabooka reported a 20.1 per cent rise in annual profit for 2007 to $24.51 million on the back of a 43.6 per cent return from its portfolio of small and mid-sized stocks.
Operating profit after tax was $9.9 million, 36.4 per cent up from the previous corresponding period, net operating profit per share was 8.52 cents, up 35.9 per cent from 6.27 cents the previous corresponding period.
DJW Chairman, Bruce Teele yesterday said the key factors driving this "out-performance" were:
•The major net acquisitions in the Investment Portfolio during the twelve month period that enjoyed very good share price returns over the year. In particular, BHP Billiton, Santos, Rio Tinto and the Telstra Instalment Receipts (under the institutional entitlement).
•The strong returns (including income from option activities) in the Investment Portfolio generated by Djerriwarrh's holdings in Commonwealth Bank, National Australia Bank, West Australian Newspapers, St George Bank, Westpac and Wesfarmers.
•Net gains in the Trading Portfolio. The major contributors to this return were positions in Premier Investments, Telstra (including the instalment receipts), AMCIL Limited and National Australia Bank.
•The level of gearing in the portfolio which partially offsets some of the dampening impact of the written call options in the rising market.
He said the outlook for the company and the markets was "positive":
"Notwithstanding the recent speculation about increasing interest rates, the market looks set for another positive period at least in the short term with company profits remaining strong and the level of domestic activity robust," Mr Teele said.
"This is reinforced by the continued demand for resources, ongoing terms of trade stimulus and low levels of unemployment.
"Another feature of current financial markets which is particularly relevant for Djerriwarrh is that they still appear comfortable in embracing risk despite recent aberrations.
"Along with a relatively benign outlook for equity markets this has meant that volatility remains at relatively low levels thereby reducing premiums the Company can earn for writing call options over part of the Portfolio."
Here's the portfolio:
