Eco Investor October 2016

Core Securities

August Increases Dividend

Unlisted investment company August Investments increased its final dividend for 2015-16 to $6 per share fully franked, bringing the full year dividend to $12 per share. The equivalent 2014-15 full year dividend was $9 per share. August has changed its accounting so that the final dividend is no longer provided for in the accounts of the year to which it relates.

Managing Director, Damien Lynch, said three features were noteworthy for the year: continuing high returns, increased interest from investors, and the company's return to community based investments.

The annual yield to investors was 12.9 per cent, of which 8.9 per cent was capital growth and 4.2 per cent was the dividend yield. He said this was the lowest return for three years, but still pleasing.

The relatively slow growth in funds from investors over a number of years reversed during 2015-16, and investments received from new and existing investors increased the number of shares on issue by 8.5 per cent. During the year August issued 597 new shares at an average price of $316.27 each to raise $188,815. Together with growth in the value of the portfolio, this pushed the company's net asset value to over one million dollars for the first time. At 30 June, net asset value was $1,187,662.

The investor interest was in part due to a new share transfer and buyback policy that facilitates the redemption of shares. "The Trustees of the Estate of one of our largest shareholders were able to transfer their shares to new investors in a remarkably quick time, with only half the investors interested in purchasing these shares being successful," said Mr Lynch. "Directors will consider a rights issue later in the year to provide another opportunity to those investors who missed out."

Mr Lynch said August Investments began in 1981 with the aim of investing in a balanced portfolio that included a small proportion in community projects. The initial community investments were based around permaculture projects and were highly successful.

"However, over time, the community links dissipated and we made fewer such investments. Recent attempts to support community projects have been far from successful as investments. Hepburn Community Wind Park has been a success for the community, but investors have received no return and the Net Asset Value as slowly declined. Even our long term investment in Maleny Credit Union has been written down as the return has been cut to way below the level that could be expected for the risks involved."

"Undaunted, a new wave of Community Solar projects have emerged and August Investments has taken small holdings (we would prefer larger holdings, but investment is limited) in Repower Shoalhaven #3 based around Nowra, NSW and Lismore Community Solar Farm (East) in Northern NSW. The latter investment was finalized in early July this year. We are of the opinion that these projects are aware of past mistakes and should provide a reasonable return. Other such investments are on the radar," said Mr Lynch.

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