WAM ACTIVE LIMITED — AGM Information 2009

Nov 17, 2009

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CHAIRMAN’S ADDRESS

WAM ACTIVE LIMITED ABN 49 126 420 719 ANNUAL GENERAL MEETING

Wednesday 18[th] November 2009 – 11.15am

Lyceum Theatre, Wesley Centre 220 Pitt Street, Sydney NSW 2000

1. INTRODUCTION

Good morning, welcome to the second Annual General Meeting of WAM Active Ltd (WAA). Thank you for your attendance and support since we listed in January 2008.

My name is Geoff Wilson, I am Chairman of the Board of Directors and I will be chairing the meeting today. I would like to introduce the other members of the Board – Matthew Kidman, Chris Cuffe, Ron Walker and John Abernethy.

2. MISSION

WAA is an investment company which offers investors exposure to an active trading style with the aim of achieving a sound return with a low correlation to traditional markets. WAA is managed by MAM Pty Ltd a company owned by entities associated with Geoff Wilson and Matthew Kidman.

3. PERFORMANCE

We are pleased to report on the company’s performance in its first full year of operation. In the year to June 2009 the Gross Portfolio increased 9.6% while the All Ordinaries Accumulation Index fell 22.2% and the Small Ordinaries Accumulation Index fell 28.6%. For the 2009 year WAA made a profit before tax of $825,647, an operating profit after tax of $641,196 and paid a 2.0 cent fully franked dividend. In the 12 months from June 2008 we increased our exposure to the market from 21.9% to 73.4%.

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The result has been achieved through active investing. We actively traded the equity portion of the portfolio which turned over 11.8 times.

Now, I would like to take you through how we positioned the portfolio over the last 18 months and what we are planning on doing this year.

The bull market ended in November 2007, just as we were raising the money for the float of WAA. In January 2008 WAA started investing. We decided to hold significant cash levels, as a way of protecting shareholders capital, while we actively traded a third of the portfolio. We selectively short sold few companies as we didn’t want to get our “arms ripped off” when the inevitable rally occurred.

While the market was falling in late 2008, we decided on a two-pronged approach – buying very low risk plays – companies that were trading below their cash or assets (ie. EFG, RHG) and buying extremely high risk plays. Companies that had high levels of debt which, if they survived, would provide significant leverage (ie. Pacific Brands, McPhersons). As the market fell we continually looked at positioning the portfolios for a rally, we decided the best leverage plays were larger cyclical stocks in the financials, building materials, retail and transport sectors. We were looking for leverage to the recovery. When the market started to move we significantly increased our exposure, going from 17% invested in February 2009 to 80% invested in May 2009.

We have played this rally well while increasing our exposure to the market, holding cash and aggressively participating in over 138 capital raising since March 2009. Now, a few warning signs are starting to present themselves. Over the last 2 months the quality of companies looking to raise money have declined significantly. We think the significant arbitrage opportunities from the capital raisings are nearing an end.

Our view of the market over the next twelve months is it will be challenging. The easy money has been made. The next 44% increase required to get back to our previous high of 1 November 2007, could take 3 to 5 years.

An area of interest will be corporate activity as the recent capital raised will be put to work. We would expect 2010 will be a busy year for takeovers.

We are currently holding more than 30% of the portfolio in cash. We are prepared to increase this level as the market moves higher. We will stick to our trading strategies which have served shareholders well to date.

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4. NTA & SHARE PRICE

Our goal is to have the share price trading at a slight premium to NTA. We believe this will be achieved with performance and the payment of fully franked dividends delivering a high dividend yield.

5. GOAL

Our goal is to deliver a return of 10-15% per annum for our shareholders. This would ideally be achieved by turning the portfolio over 10 to 12 times a year and owing 40 to 50 companies.

6. DIVIDEND POLICY

A maiden final fully franked dividend of 2.0 cents per share was paid on 20 July 2009. Dividends are paid out of profit and/or retained earnings. As an active investor, any movement in our portfolio, either positive or negative, is recognised in our profit and loss account. It is worth noting dividends can be paid from each year’s profit without a requirement to recover past negative retained earnings.

The board is committed to paying dividends when profitability allows. Whenever possible, it is the board’s intention to increase the ordinary dividend paid each year. Obviously this will be dependent on adequate profitability and availability of franking credits.

7. PORTFOLIO

I have included a list of our major holdings as at 31[st] October 2009.

CODE	COMPANY	MARKET VALUE as % of Gross Assets
MCP	McPherson’s Limited	4.5%
TLS	Telstra Corporation Limited*	3.1%
SKE	Skilled Group Limited	2.2%
FXL	Flexigroup Limited	2.2%
HBSHA	Heritage Building Society Limited Notes	2.0%
RHG	RHG Limited	2.0%
VBA	Virgin Blue Holdings Limited	2.0%
NAB	National Australia Bank Limited	1.9%
QBE	QBE Insurance Group Limited	1.9%
FLT	Flight Centre Limited	1.8%

* Call option have been sold over this position

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8. VISION FOR THE FUTURE

I would now like to outline your board’s vision for the future of WAA.

WAA’s assets are currently $20.6 million, which is less than we planned. This was primarily as a result of the IPO occurring during the Global Financial Crisis. It has now been almost 2 years since WAA was launched and the results have been pleasing. Pre-tax NTA has grown to 125.5 cents a share while the market has fallen 21.3%.

We believe that our trading approach combined with the flexible structure of WAA allow us to significantly grow the size of the company in the years ahead. The board and manager believe WAA can grow to a market capitalisation of $100 million in the next 5 years, and continue to generate strong results. A larger company is helpful to shareholders in many ways, including:

• reducing costs per dollar of shareholder funds because of economies of scale;

• increased liquidity; and

• an improvement in the relativities between the share price and asset backing.

There are obviously a number of ways to increase the size of WAA...

The first, which we have achieved to date, is to perform strongly. The NTA per share has increased from $0.98 at the time of launch in January 2008 to $1.25 at the end of October 2009;

The second, is to have a consistent and growing income stream to shareholders in the form of fully franked dividends, and from time-to-time paying special dividends. To this end you will note that we paid our first dividend of 2.0 cents in July this year and, depending on profitability, we hope to continue this encouraging start.

The third, is to increase the capital base of the company. Our preferred means of increasing the capital base is through the issue of options to all shareholders, which would be tradeable on the ASX. This in turn means that all shareholders can decide individually whether to sell their options or exercise their options or let them lapse – to cater for their personal circumstances.

So what should your expectations be for capital raisings over the medium term – say the next 5 years?

Outside of achieving good performance and providing a consistent and growing dividend stream, we intend to achieve this by having a number of option issues. These issues over the next 5 years, will depend on market conditions.

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Our expectation is to announce an option issue in the near term, then another option issue in 2012 expiring in 2013 and a subsequent issue in 2014 expiring in 2015. As mentioned above, all options issued will be listed on the ASX, allowing all shareholders to participate in a way that best suits their circumstances.

Depending on the market conditions and the investment performance, we are confident these initiatives will help position WAA very favourably.

9. OPTION ISSUE

The Board proposes to undertake a bonus issue of options in the near term. Details of the offer including exercise price and record date for participation will be issued shortly.

10. CONCLUSION

In conclusion I would like to thank the staff, Directors and shareholders of WAA for their continuing support. We look forward to an exciting future ahead together. We believe there are always opportunities and we look forward to the current year.

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