Ironbark Capital Limited ABN 89 008 108 227 Appendix 4D … · 2013. 2. 27. · Ironbark Capital...

Ironbark Capital Limited89 008 108 227ABN

Appendix 4DPreliminary Report

31 December 2012endedhalf-yearfor the

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Appendix 4D31 December 2012the half-year endedFor

Half-year Report

This half-year report is for the reporting period from 1 July 2012 to 31 December 2012. The previouscorresponding half-year period was 1 July 2011 to 31 December 2011.

Results for announcement to the market

$'000

Investment revenue from ordinary activities Up 19,931% to 7,211Profit/ (loss) before tax attributable to members Up 1,708% to 6,690Profit/ (loss) from ordinary activities after tax attributable to members Up 2,880% to 5,096

Dividends

The following dividends were paid or provided for in the half-year ended 31 December 2012.

DividendRate

TotalAmount

$'000Record

DateDate of

PaymentPercentage

Franked

2013 Interim 2.0 cps $3,114 17/12/2012 28/12/2012 100%

2013 Final 1.0 cps $1,557 20/06/2013 28/06/2013 100%

Subsequent to 31 December 2012, fully franked dividends of 0.5 cents per share totalling $0.8 million have beendeclared by the Directors, with payment date of 28 June 2013. The record date for determining entitlement to thetotal dividends will be 20 June 2013. Total dividends declared and payable on 28 June 2013 is 1.5 cents pershare.

The Company's Dividend Reinvestment Plan will not apply to the dividends above.

Net tangible assets31 December 31 December

2012 2011$ $

Net tangible asset per share (post deferred income tax) 0.563 0.557Net tangible asset per share (pre deferred income tax) 0.566 0.568

Explanation of resultsDuring the latest half-year the ASX 300 Accumulation Index recorded a sustained recovery to advance 16.10%.The IBC portfolio increased by 8.90%. The volatility of the IBC portfolio was approximately half the ASX 300. TheIBC investment performance well below the ASX Index is consistent with Directors' expectations during a periodof a strong equity market rally. The risk adjusted return was satisfactory with the portfolio delivering better thanhalf the market upside but with less than half the market risk measured through volatility.

The strong long term IBC investment performance record remains intact. Over the decade since inception, IBCinvestment returns are broadly in line with the ASX 300 Index while the volatility is approximately half the marketlevel.

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Appendix 4D31 December 2012the half-year endedFor

(continued)

The Investment Manager’s Report provides a more detailed comment on the recent performance of the IBCinvestment portfolio.

The strong absolute level of investment performance has facilitated Directors implementing their policy to declarea fully franked dividend when net profits are adequate and sufficient franking has been accumulated. On thisbasis two dividends totalling 1.5 cents have been declared on 19 December 2012 and 24 January 2013 and willbe paid on 28 June 2013.

Finally the Directors had previously stated their intention to be an earlier adopter of Accounting Standard AASB9. This matter remains under review and the current Half Year Accounts have been prepared on the same basisas the previous Annual Accounts.

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Investment Manager's Report31 December 2012For the half-year ended

Performance

Over the quarter the portfolio recorded a return of 4.5% compared to the sharemarket accumulation index returnof 6.8%. For the 6-month period the portfolio’s return of 8.9% is ahead of the manager’s absolute return target of6% for the period or 12% pa.

A 50 bps RBA rate cut and a general shift out of sovereign bonds into equities globally set the conditions for astrong broad rally in the local sharemarket in the December 2012 quarter. Corporate credit also rallied asinvestors chased an alternative to declining cash rates.

The market’s search for yield and duration continues to be the underlying theme for equities and is the basis forthe portfolio structure. Around 85% of the physical portfolio is held in high yielding securities (Telstra, banks,property trusts, utilities, hybrids) and 16% in resources mainly in BHP which rallied 12% on a recovery in iron oreprices. The overall quarterly return reflected the balanced nature of the portfolio with hybrid returns of 4% dilutingthe strong performance of the other sectors and option writing capping some upside.

Over the 12 month period the Ironbark portfolio achieved a return of 11.4% compared to the sharemarketaccumulation index return of 19.7%. Ironbark’s return was achieved with less than half of the sharemarket indexvolatility/risk.

Cash exposure was up from 24% to 26% from increased option delta in a rising sharemarket.

The income orientated management style has delivered consistent medium to long term outperformance againstthe sharemarket Index with significantly less volatility/risk.

Relative Performance to 31 December 2012

Inception 5 Yr 3 Yr 2 Yr 1 Yr 6 months 3 months(10 yrs)% p.a. % p.a. % p.a. % p.a. % % %

Ironbark Capital Ltd 8.96 3.75 8.49 7.65 11.39 8.90 4.54ASX 300 Accum Index 9.04 (1.81) 2.80 3.25 19.74 16.10 6.77Relative Performance (0.08) 5.56 5.69 4.40 (8.36) (7.21) (2.23)

Volatility IBC 7.10 8.80 5.80 5.30 4.60Volatility ASX 13.50 16.40 12.60 11.70 10.30

Absolute Performance

FYTDFY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 2013

% % % % % % % %Ironbark Capital Ltd 12.26 17.52 (9.71) (6.84) 12.38 15.36 2.51 8.90

Absolute-Target 12.00 12.00 12.00 12.00 12.00 12.00 12.00 6.00ASX 300 Accum Index 24.02 29.21 (13.67) (20.34) 13.05 11.90 (7.01) 16.10

Portfolio commentary for the 3 months to 31 December 2012

The portfolio is structured with an emphasis on income through yield orientated securities (hybrids, utilities,property trusts) and buy & write positions in BHP, Telstra and other leading companies. The buy & write strategyinvolves buying selective shares and selling, subject to appropriate timing, call options over those shares. Thisstrategy gives away some of the upside potential from a shareholding but generates option premium incomeconsistent with the income emphasis of the portfolio.

The portfolio’s running yield was 6.9% (inclusive of franking credits). The running yield excludes option premiumincome which would further increase the yield.

The portfolio is well diversified with investments in 34 different entities. Higher risk exposures in: banks,industrials and resources are largely held through buy & write option positions for income enhancement or addedprotection. The portfolio’s hybrid holdings are largely floating rate securities.

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Investment Manager's Report31 December 2012For the half-year ended

(continued)

During the quarter the major change was an increase in Telstra and property trusts through a new holding inShopping Centres Australasia Property Group (SCP). Lower margin hybrid securities were reduced.

The portfolio underperformed the strong sharemaket rally over the quarter which is typical of the balancedportfolio structure. Hybrids recorded a strong fixed interest type return of 4% but diluted the overall portfolioreturn. Option writing compressed returns in the strong sectors (banks and Telstra) but increased the downsideprotection. Utilities and Property Trust performed strongly with their high fixed yields benefiting from lower interestrates.

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89 008 108 227ABNIronbark Capital Limited31 December 2012- for the half-year endedInterim Report

ContentsPage

Corporate directory 1Portfolio Shareholdings 2Directors' Report 4Auditor's Independence Declaration 5Interim Financial Statements

Statement of Comprehensive Income 6Statement of Financial Position 7Statement of Changes in Equity 8Statement of Cash Flows 9Notes to the Financial Statements 10

Directors' Declaration 14Independent Auditor's Review Report to the Shareholders 15

This interim financial report does not include all the notes of the type normally included in an annual financial30 June 2012year endedreport. Accordingly, this report is to be read in conjunction with the annual report for the

during the interim reporting period inIronbark Capital Limitedand any public announcements made by2001.Corporations Actaccordance with the continuous disclosure requirements of the

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Corporate directory

Directors M J ColeChairman

R J Finley

I J Hunter

Company secretary P A Roberts

Principal registered office in Australia Level 720 Hunter Street

2000NSWSydney(02) 8236 7701

Share registrar Boardroom Pty LimitedGPO Box 3993

2001NSWSydney(02) 9290 9600

Investment manager Kaplan Funds Management Pty LimitedLevel 2244 Market Street

2000NSWSydney

Accounting and administration White Outsourcing Pty LtdLevel 720 Hunter Street

2000NSWSydney

Auditor MNSA Pty LtdLevel 2333 George Street

2000NSWSydney

Website www.ironbarkcapital.com

Company secretarial and all other enquiries Telephone: (02) 8236 7701Email: [email protected]

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Ironbark Capital Limited

ABN 89 008 108 227

Portfolio shareholdings

As at 31 December 2012

ASX code Security * Market Value

$'000

Banks

ANZ ANZ Banking Group Limited 2,617 3.0CBA Commonwealth Bank of Australia Limited 3,648 4.2

NAB National Australia Bank Limited 3,503 4.0

WBC Westpac Banking Corporation Limited 3,935 4.5

13,703 15.7

Hybrids

AGKHA AGL Energy Limited - Subordinated Notes 1,038 1.2

LEPHC ALE Property Group - Unsecured Notes 2,054 2.3

ANZPA/PB/PC ANZ Banking Group Ltd - Convertible Preference Shares 4,664 5.3

AQHHA APA Group - Subordinated Notes 1,067 1.2

BOQPD Bank of Queensland - Convertible Preference Shares 201 0.2

BENPB/PC/PD Bendigo Bank - Convertible Preference Securities 1,254 1.4

CTXHA Caltex Australia Limited - Subordinated Notes 2,101 2.4

PCAPA/CBAPA/PC Commonwealth Bank Perls III & Perls V & Perls VI 8,359 9.5

CWNHA Crown Limited - Subordinated Notes 1,039 1.2

IAGPC Insurance Australia Group - Convertible Preference Securities 1,821 2.1

IANG Insurance Australia Group - Perpetual Reset Exchangeable Notes 1,503 1.7

NABHA National Australia Bank Limited Income Securities 3,131 3.6

ORGHA Origin Energy Limited- Subordinated Notes 4,130 4.7

RHCPA Ramsay Health Care Ltd - Convertible Equity Securities 2,036 2.3

SVWPA 1,758 2.0

SBKPB/SUNPC Suncorp-Metway Limited - Convertible Preference Securities 4,538 5.2

WCTPA/WBCPA Westpac- Convertible Preference Shares 4,846 5.5

45,540 51.8

Large Industrial (Top 50)

IAG Insurance Australia Group Ltd 162 0.2

TLS Telstra Corporation Limited 6,078 6.9

6,240 7.1

* Includes market value of options written against holdings.

% of portfolio

Seven Group Holdings Limited - Convertible Preference Securities

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Ironbark Capital Limited

ABN 89 008 108 227

Portfolio shareholdings

As at 31 December 2012(continued)

ASX code Security * Market Value

$'000

Materials & Energy

BHP BHP Billiton Limited 10,660 12.2

BTU Bathurst Resources Limited 131 0.1

NCM Newcrest Mining Limited 266 0.3

RIO Rio Tinto Limited 106 0.1

STO Santos Limited 132 0.2

WPL Woodside Petroleum Limited 1,542 1.8

12,837 14.7

Property Trusts

LEP ALE Property Group 528 0.6

CPA Commonwealth Property Office Fund 734 0.8

CMW Cromwell Property Group 191 0.2

DXS Dexus Property Group 367 0.4

IOF Investa Office Fund 260 0.3

MGR Mirvac Group 585 0.7

SCP Shopping Centres Australasia Property Group 2,142 2.4

4,807 5.4

Utilities & Infrastructure

AIO Asciano Limited 147 0.2

CIF Challenger Infrastructure Fund - 0.0

DUE DUET Group 1,996 2.3

SPN SP AusNet 160 0.2

SKI Spark Infrastructure Group 853 1.0

3,156 3.7

Small Industrial (ex Top 50)

EGP Echo Entertainment Group Limited 49 0.1FSF Fonterra Shareholders' Fund 385 0.4

TPI Transpacific Industries Group Ltd 195 0.3

629 0.8

Cash 812 0.8

Total 87,724 100.0

* Includes market value of options written against holdings.

% of portfolio

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Directors' Report31 December 2012For the half-year ended

Directors' Report

("the Company")Ironbark Capital Limitedpresent their report together with the financial report ofDirectorsYour2012.31 Decemberendedhalf-yearfor the

Directorsand up to the dateperiodor since the end of theperiodduring theDirectorsThe following persons held office as

of this report:

2002)31 October(appointed(Chairman)M J Cole1987)30 January(appointed(Director)R J Finley2002)31 October(appointed(Director)I J Hunter

Review of operations31 December

2012$'000

31 December2011$'000

Profit/(loss) before income tax 6,690 (416)Income tax (expense)/benefit (1,594) 587

Profit after income tax (expense)/benefit 5,096 171

Rounding of amountsis of a kind referred to in Class Order 98/100, issued by the Australian Securities and InvestmentsCompanyThe

and financial report. Amounts in theDirectors' ReportCommission, relating to the 'rounding off' of amounts in theand financial report have been rounded off in accordance with that Class Order to the nearestDirectors' Report

thousand dollars, or in certain cases, to the nearest dollar.

Auditor's independence declarationisCorporations Act 2001A copy of the auditor's independence declaration as required under section 307C of the

5.set out on page

Directors.This report is made in accordance with a resolution of

M J ColeDirector

Sydney27 February 2013

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Statement of Comprehensive IncomeFor the half-year ended 31 December 2012

Notes



Income from trading portfolioRevenue 4 2,266 2,325Net unrealised gains/(losses) on trading portfolio 4,458 (3,575)Net realised gains on trading portfolio 415 1,283

Total income from trading portfolio 7,139 33

Other incomeOther income 72 3

Total other income 72 3

Total income 7,211 36

ExpensesManagement fees (284) (262)Audit fees (27) (23)Share registry fees (20) (24)Directors' fees (30) (30)ASX fees (16) (16)Accounting fees (53) (38)Custody fees (15) (14)Tax fees (5) (5)Legal fees (4) (2)Brokerage expense (30) (8)Options expense (15) (12)Other expenses (22) (18)

521 452

Profit/(Loss) before income tax 6,690 (416)

Income tax (expense)/benefit (1,594) 587

net of taxperiod,Profit for the 5,096 171

net of taxperiod,Other comprehensive income for the - -

periodTotal comprehensive income for the 5,096 171

Cents Cents

Basic and diluted earnings per share 7 3.46 0.12

should be read in conjunction with the accompanying notes.Statement of Comprehensive IncomeThe above

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Statement of Financial PositionAs at 31 December 2012

Notes


30 June2012$'000

ASSETSCurrent assetsCash and cash equivalents 812 2,147Trade and other receivables 216 697Trading portfolio 86,912 75,070Deferred tax assets 10 7Other assets 56 21

Total current assets 88,006 77,942

Non-current assetsDeferred tax assets 513 1,816

Total non-current assets 513 1,816

Total assets 88,519 79,758

LIABILITIESCurrent liabilitiesTrade and other payables 113 102Current tax liabilities 80 57Provisions 1,557 -

Total current liabilities 1,750 159

Non-current liabilitiesDeferred tax liabilities 12 14

Total non-current liabilities 12 14

Total liabilities 1,762 173

Net assets 86,757 79,585

EQUITYIssued capital 5(a) 86,903 80,156Accumulated losses (146) (571)

Total equity 86,757 79,585

should be read in conjunction with the accompanying notes.Statement of Financial PositionThe above

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Statement of Changes in EquityFor the half-year ended 31 December 2012

Notes

IssuedCapital$'000

Retainedearnings

$'000Total$'000

1 July 2011Balance at 80,156 186 80,342

Profit for the period - 171 171

periodTotal comprehensive income for the - 171 171

31 December 2011Balance at 80,156 357 80,513

1 July 2012Balance at 80,156 (571) 79,585

Profit for the period - 5,096 5,096

periodTotal comprehensive income for the - 5,096 5,096

Transactions with owners in their capacity as owners:Dividends provided for or paid 6 - (4,671) (4,671)Contributions of equity from rights issue, net of transaction costs and tax 6,747 - 6,747

6,747 (4,671) 2,076

31 December 2012Balance at 86,903 (146) 86,757

should be read in conjunction with the accompanying notes.Statement of Changes in EquityThe above

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Statement of Cash FlowsFor the half-year ended 31 December 2012

Notes



Cash flows from operating activitiesProceeds from sale of trading portfolio 29,986 20,123Payments for purchase of trading portfolio (36,888) (22,368)Dividends and trust distributions received 2,178 2,264Interest received 474 319Other income received 72 3Management fees paid (276) (261)Other expenses paid (241) (243)Income tax paid (253) -

from operating activities(outflow)Net cash (4,948) (163)

Cash flows from financing activitiesDividends paid to company shareholders 6 (3,114) -Proceeds from rights issue 6,795 -Transaction costs paid for rights issue (68) -

from financing activitiesinflowNet cash 3,613 -

in cash held(decrease)Net (1,335) (163)Cash and cash equivalents at the beginning of the period 2,147 6,249

periodCash and cash equivalents at end of 812 6,086

should be read in conjunction with the accompanying notes.Statement of Cash FlowsThe above

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Notes to the Financial Statements31 December 2012For the half-year ended

1 Basis of preparation of half-year report

31 December 2012for the half-year reporting period endedInterim Financial Statementsgeneral purposeTheseand theInterim Financial Reportingbeen prepared in accordance with Accounting Standard AASB 134have

2001.Corporations Act

not include all the notes of the type normally included in an annualdoInterim Financial StatementsThese30financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended

during the interim reporting period inIronbark Capital Limitedand any public announcements made byJune 20122001.Corporations Actaccordance with the continuous disclosure requirements of the

have been prepared on an accrual basis, and are based on historical costsInterim Financial StatementsThemodified by the revaluation of selected non-current assets, financial assets and financial liabilities for which thefair value basis of accounting has been applied.

The accounting policies adopted are consistent with those of the previous financial year and correspondinginterim reporting period unless otherwise stated in this report.

(a) Adoption of new and revised accounting standards

has adopted all of the new and revised Standards and Interpretations issued by the AustralianCompanyTheAccounting Standards Board that are relevant to its operations and effective for the current reporting period.

The adoption of all the new and revised Standards and Interpretations has not resulted in any changes to theaccounting policies and has no effect on the amounts reported for the current or prior periods. TheCompany's

new and revised Standards and Interpretations has not had a material impact and not resulted in changes to theStatements.Interim Financialpresentation of, or disclosure in, itsCompany's

(b) New accounting standards and interpretations issued but not yet applied by the entity

31Certain new accounting standards and interpretations have been published that are not mandatory forassessment of the impact of these new standards andCompany'sreporting periods. TheDecember 2012

interpretations is set out below.

(i) Amendments to Australian Accounting Standards arising fromAASB 2009-11Instruments,FinancialAASB 9Amendments to Australian Accounting Standards arising from AASB 9and AASB 2010-7AASB 9

(effective from 1 January 2015)(December 2010)

addresses the classification, measurement and derecognition of financial assetsFinancial InstrumentsAASB 9and financial liabilities. The standard is not applicable until 1 January 2015 but is available for early adoption.AASB 9 permits the recognition of fair value gains and losses in other comprehensive income if they relate toequity investments that are not traded. The Directors do not expect this will have a significant impact on theCompany's financial statements.

(ii) Amendments to Australian Accounting Standardsand AASB 2011-8Fair Value MeasurementAASB 13(effective 1 January 2013)arising from AASB 13

AASB 13 was released in September 2011. It explains how to measure fair value and aims to enhance fair valuehas yet to determine which, if any, of its current measurement techniques will have toCompanydisclosures. The

change as a result of the new guidance. It is therefore not possible to state the impact, if any, of the new rules onHowever, application of the new standard willStatements.Interim Financialany of the amounts recognised in the

does not intend toCompanyThestatements.notes to the financialimpact the type of information disclosed in theadopt the new standard before its operative date, which means that it would be first applied in the annualreporting period ending 30 June 2014.

There are no other standards that are not yet effective and that are expected to have a material impact on thein the current or future reporting periods and on foreseeable future transactions.Company

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(continued)

2 Summary of significant accounting policies

The accounting policies applied by the Company are the same as those applied by the Company for the yearended 30 June 2012.

3 Segment information

is engaged solely in investment activitiesCompanyhas only one reportable segment. TheCompanyTheconducted in Australia, deriving revenue from dividend income, interest income and from the sale of its tradingportfolio.

4 Revenue



Dividends 1,645 1,798Interest 449 322Distributions 172 205

2,266 2,325

5 Issued capital

(a) Issued capital

31 December2012

Shares

30 June2012

Shares


30 June2012$'000

Issued capital 155,715,478 141,559,525 86,903 80,156

(b) Movements in ordinary share capital

Date Details NotesNumber of

sharesIssueprice $'000

1 July 2011 Opening balance 141,559,525 80,15631 December 2011 Closing Balance 141,559,525 80,156

1 July 2012 Opening balance 141,559,525 80,15624 October 2012 Rights issue 5(c) 14,155,953 $0.48 6,79524 October 2012 Less: Transaction costs arising

from rights issue - (48)31 December 2012 Closing Balance 155,715,478 86,903

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(continued)

5 (continued)Issued capital

(c) Rights issue

On 14 September 2012, the Company invited its shareholders to subscribe to a non-renounceable rights issue of14,155,953 ordinary shares at an issue price of $0.48 per share on the basis of 1 share for every 10 fully paidordinary shares held, with such shares issued on 24 October 2012 and participated in the dividends paid on 28December 2012. The issue was fully subscribed.

6 Dividends

(a) Ordinary shares



Dividends provided for or paid during the half-year 4,671 -

(b) Dividend rate

Dividends provided for or paid and fully franked at 30% tax rate

DividendRate

TotalAmount

$'000Record

DateDate of

PaymentPercentage

Franked

2013 Interim 2.0 cps $3,114 17/12/2012 28/12/2012 100%

2013 Final 1.0 cps $1,557 20/06/2013 28/06/2013 100%

(c) Dividends not recognised at the end of the reporting period



haveDirectorsIn addition to the above dividends, since period end therecommended the payment of a final fully franked dividend of 0.5 cents per fully

The aggregate amount of the proposed dividendnil).-(2011paid ordinary shareexpected to be paid on 28 June 2013 out of retained earnings, but not recognised

end, isperiodas a liability at 779 -

7 Earnings per share

(a) Basic and diluted earnings per share

31 December2012

Cents

31 December2011Cents

From continuing operations attributable to the ordinary equity holders of thecompany 3.46 0.12

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(continued)

7 (continued)Earnings per share

(b) Weighted average number of shares used as denominator

2012Number

2011Number

Weighted average number of ordinary shares used as the denominator in calculatingbasic earnings per share 147,454,685 141,559,525

8 Contingencies

nil).(2011:31 December 2012had no contingent liabilities atCompanyThe

9 Events occurring after the reporting period

end that has significantly affected, or mayperiodNo matter or circumstance has occurred subsequent tothe results of those operations or the state of affairs of theCompany,significantly affect, the operations of the

periods.financialor economic entity in subsequentCompany

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Directors' Declaration31 December 2012For the half-year ended

opinion:Directors'In the

(a) are in accordance with the13to6and notes set out on pagesInterim Financial Statementstheincluding:2001,Corporations Act

(i) and other mandatoryCorporations Regulations 2001complying with Accounting Standards, theprofessional reporting requirements; and

(ii) and of its31 December 2012Company's financial position as atgiving a true and fair view of theended on that date, andhalf-yearperformance for the

(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when theybecome due and payable.

Directors.This declaration is made in accordance with a resolution of

M J ColeDirector

Sydney27 February 2013

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Ironbark Capital Limited ABN 89 008 108 227 Appendix 4D … · 2013. 2. 27. · Ironbark Capital...

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Transcript of Ironbark Capital Limited ABN 89 008 108 227 Appendix 4D … · 2013. 2. 27. · Ironbark Capital...