By Eli Greenblat
Listed investment company Djerriwarrh has seen its equities portfolio sink as the global financial crisis smashed share prices, causing the fund to sink into a loss.
The full-year loss to the end of June of $14.1 million for the full-year, compared with a profit in the year earlier of $66.7 million, as the company booked impairment charges of $49.7 million related to unrealised losses on its investment portfolio.
Djerriwarrh's shares were up 13 cents at $3.99 in morning trading.
Djerriwarrh's final dividend has been held at 16 cents per share fully franked.
Excluding the impairment charges, the fund would have posted a profit of $35.6 million.
However Djerriwarrh's preferred measure of profitability - operating profit after tax (excluding capital gains) - showed a profit of $55.2 million, up 21.2 per cent from the previous corresponding period.
Net operating profit per share before capital gains was 26.9 cents per share, up from 22.4 cents.
Djerriwarrh is part of the listed investment company stable that includes the nation's biggest listed fund, Australian Foundation Investment Co., Amcil and Mirrabooka.
Last week Mirrabooka, which specialises in small- and mid-cap stocks, posted a loss of $6.755 million after booking impairment charges. Its operating profit was up marginally to $8.4 million from $8.3 million in 2007-08.
Djerriwarrh owns a large portfolio of blue-chip stocks, worth around $800 million, and bolsters its returns by writing and trading options.
The company said its option writing activity had benefited greatly from the volatile market conditions which prevailed throughout the year.
''In a year where dividends received from companies have begun to decline Djerriwarrh has been able to harvest significantly more income from its option writing activity given a higher level of call option coverage over the portfolio and the very large moves in shares prices evident through the year.''
The company's portfolio declined in value by 15.9 per cent over the financial year, compared to the 20.1 per cent fall in the general market, Djerriwarrh said.
The number of stocks in Djerriwarrh's portfolio was reduced to fund some of these opportunities and build overall cash position, it said.
As at June 30 the company's largest holdings included BHP Billiton Ltd ($85.2 million), Westpac Banking Corp ($78.3 million) and National Australia Bank ($55.9 million). It also had sizeable holdings in CBA, Telstra and Woodside. Some of its share purchases during the year included Westpac, Santos, Rio Tinto and ANZ.
with