WAM ACTIVE LIMITED — Annual Report 2009

Jul 27, 2009

WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

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APPENDIX 4E PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2009

RESULTS FOR ANNOUNCEMENT TO THE MARKET All comparisons to the year ended 30 June 2008^

	$	Up/Down^	% mvmt
Revenue from ordinary activities	1,649,926	Up	305%
Profit from ordinary activities before income tax
expense attributable to members	825,647	Up	596%
Net profit after income tax expense for the year
attributable to members	641,196	Up	592%
		Franked
		amount per	Tax rate for
Dividend Information	Amtper share	share	franking
Final dividend per share	2.0c	2.0c	30%
Total dividends per share for the year	2.0c	2.0c	30%
The final dividend was declared on 1 July 2009 for shareholders on record date of 10 July 2009 and paid
on 20 July 2009.
The Dividend Reinvestment Plan is in operation	and the final dividend of 2.0 cents per share qualified.
Participating shareholders will be entitled to be	allotted the number of	shares (rounded	to the nearest
whole number) which the cash dividend would purchase at the relevant		issue price. The relevant issue
price will be at no discount to the price (calculated as the weighted average market price of			shares sold on
the ASX on the books closing date for the relevant dividend and the 3 trading days preceding that date).
To participate in the dividend re-investment plan, shareholders must return DRP election forms to our
share registrar no later than record date.

30 June 09 30 June 08
Net tangible asset backing 103.37c 99.42c
This report is based on the Financial Report which is in the process of being audited. All the documents
comprise the information required by Listing Rule 4.3A.

^ The Company was incorporated on 6 July 2007 and commenced trading upon its official quotation on the Australian Stock Exchange on 11 January 2008. Therefore comparative figures for June 2008 are for six months and not for a full year.

WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2009

Notes Proceeds from sale of investments Cost of investments sold Unrealised gain/(loss) on held for trading financial assets Other revenue from ordinary activities 2 Performance fees Management fees Directors fees Brokerage expense on share purchases Other expenses from ordinary activities Profit before income tax Income tax expense 3(a) Profit attributable to members of the Company 12 Basic earnings per share 15 Diluted earnings per share 15	2009 $ 40,736,899 (41,660,564) 1,785,732 787,860 (218,315) (147,200) (108,977) (147,931) (201,857) 825,647 (184,451) 641,196 4.16 cents 4.16 cents	2008 $ 16,094,263 (16,039,311) (244,512) 596,767 - (79,884) (48,489) (59,251) (100,957)
		118,626 (25,953)
		92,673
		0.60 cents
		0.60 cents

The accompanying notes form part of these financial statements.

1

WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

BALANCE SHEET AS AT 30 JUNE 2009

Notes ASSETS Cash and cash equivalents 13 Trade and other receivables 6 Held for trading financial assets 7 Deferred tax assets 3(b) TOTAL ASSETS LIABILITIES Financial liabilities 8 Trade and other payables 9 Deferred tax liabilities 3(c) TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 10 Reserves 11 (Accumulated losses)/Retained earnings 12 TOTAL EQUITY	2009 $ 4,399,628 710,844 11,766,412 466,592 17,343,476 98,442 671,660 605,719 1,375,821 15,967,655 15,233,786 1,043,109 (309,240) 15,967,655	2008 $ 9,993,027 2,529,541 3,436,096 105,677
		16,064,341
		357,042 320,488 60,352
		737,882
		15,326,459
		15,233,786 - 92,673
		15,326,459

The accompanying notes form part of these financial statements.

2

WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2009

Notes Total equity as at 1 July 2008 Profit for the year attributable to members of the Company 12 Shares issued in the year 10(b) Capitalised float costs 10(b) Total equity as at 30 June 2009 attributable to members of the Company	2009 $ 15,326,459 641,196 - - 15,967,655	2008 $ 1 92,673 15,400,100 (166,315)
		15,326,459

The accompanying notes form part of these financial statements.

3

WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2009

Notes CASH FLOWS FROM OPERATING ACTIVITIES Dividends received Interest received Other investment income received Underwriting fees Investment management fees Brokerage expense on share purchases Payments for administration expenses NET CASH PROVIDED BY OPERATING ACTIVITIES 14 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of investments Payments for purchase of investments Revenue from options written NET CASH USED IN INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Payments for float costs NET CASH PROVIDED BY FINANCING ACTIVITIES NET (DECREASE)/INCREASE IN CASH HELD Cash at beginning of financial year CASH AT END OF FINANCIAL YEAR 13	2009 $ 295,466 506,309 2,216 6,008 (122,207) (147,931) (276,853) 263,008 42,543,648 (48,407,665) 7,610 (5,856,407) - - - (5,593,399) 9,993,027 4,399,628	2008 $ 47,901 452,700 - - (56,962) (59,251) (100,148)
		284,240
		13,680,346 (19,134,067)
		(5,453,721)
		15,400,101 (237,593)
		15,162,508
		9,993,027 -
		9,993,027

The accompanying notes form part of these financial statements.

4

WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation

The financial report is a general purpose financial report that has been prepared in accordance with Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001 .

Australian Accounting Standards set out accounting policies that the Australian Accounting Standards Board has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions to which they apply. Material accounting policies adopted in the preparation of this financial report are presented below. They have been consistently applied unless otherwise stated.

WAM Active Limited is a listed public company, incorporated and domiciled in Australia.

The financial report has been prepared on an accruals basis and is based on historical costs with the exception of “held-for-trading” financial assets and certain other financial assets and liabilities which have been measured at fair value.

Accounting Policies

(a) Financial Instruments

i) Recognition and Initial Measurement

Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are delivered within timeframes established by marketplace convention.

Financial instruments are initially measured at fair value. Transaction costs related to instruments classified as at fair value through profit or loss are expensed to the Income Statement immediately. Financial instruments are classified and measured as set out below.

ii) Derecognition

Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expire. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in the Income Statement.

iii) Classification and Subsequent Measurement

Investments consist of shares in publicly listed and unlisted companies, exchange traded call and put options and investments in fixed interest securities.

It is considered that the information needs of shareholders in a company of this type are better met by stating investments at fair value rather than historical cost and by presenting the Balance Sheet on a liquidity basis.

The Company may short sell securities in anticipation of a decline in the market value of that security, or it may short sell securities for various arbitrage transactions. Short sales or borrowed stock are classified as a financial liability and are revalued to fair value through the Income Statement.

iv) Financial Assets at Fair Value Through Profit or Loss

Financial assets are classified at fair value through profit or loss when they are held for trading for the purpose of short term profit taking. Realised and unrealised gains and losses arising from changes in fair value are included in Income Statement in the year in which they arise. Unrealised gains and losses are then transferred to an asset revaluation reserve, net of the potential tax charges that may arise from the future sale of the investments, where they are above cost.

5

WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(a) Financial Instruments (continued)

v) Financial Liabilities

Borrowed stock and exchange traded call and put options are classified as financial liabilities at fair value through the Income Statement. Realised and unrealised gains and losses arising from changes in fair value are included in the Income Statement in the year in which they arise.

vi) Fair Value

Fair value is determined based on current market prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions and reference to similar instruments.

(b) Income Tax

The charge for current income tax expense is based on the profit for the year adjusted for any nonassessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the Balance Sheet. Current tax liabilities (assets) are measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary difference arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.

No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the year when the asset is realised or liability is settled. Deferred tax is credited in the Income Statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future years in which significant amounts of deferred tax assets or liabilities are expected to be removed or settled.

(c) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, at call deposits with banks or financial institutions and fixed interest securities maturing within three months.

(d) Revenue and Other Income

Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the rate inherent in the instrument. Dividend revenue is recognised when the right to receive a dividend has been established. All revenue is stated net of the amount of goods and services tax (GST).

(e) Trade and Other Receivables

Trade and other receivables are non-derivative financial assets and are stated at their amortised cost less impairment losses (refer Note 1(g)).

(f) Trade and Other Payables

Trade and other payables are non-derivative financial liabilities and are stated at their amortised cost.

6

WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(g) Impairment of Assets

At each reporting date, the Company reviews the carrying values of its tangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the Income Statement.

(h) Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of the GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense.

Receivables and payables are stated inclusive of GST. The net amount of GST recoverable from, or payable to, the ATO is included as an asset or liability in the Balance Sheet.

Cash flows are presented in the Cash Flow Statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

(i) Segment Reporting

The Company is engaged in investment activities conducted in Australia and derives revenue and investment income from listed, unlisted and fixed interest securities.

(j) Comparative Figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

(k) Critical Accounting Estimates and Judgements

The Directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data.

There are no estimates or judgements that have a material impact on the financial results of the Company for the year ended 30 June 2009.

(l) New Standards and Interpretations Not Yet Adopted

There are no impending new accounting standards that will result in any material change in relation to amounts recognised in the financial statements.

2. OTHER REVENUE FROM ORDINARY ACTIVITIES Interest Australian sourced dividends Foreign sourced dividends Trust distributions Underwriting fees Revenue from options written Other income	2009 $ 472,072 251,253 21,109 27,593 6,008 7,610 2,215 787,860	2008 $ 494,009 88,856 13,242 660 - - -
		596,767

7

WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

3. TAXATION (a) Income Tax Expense The prima facie tax on profit from ordinary activities before income tax is reconciled to the income tax (benefit)/expense as follows: Prima facie tax payable on profit from ordinary activities before income tax at 30% (2008: 30%) Imputation credit gross up Franking credit offset Other non-assessable items Under provision in prior year Total income tax expense results in a: Deferred tax liability Deferred tax asset Under provision in prior year (b) Deferred Tax Assets Tax losses Provisions Capitalised float costs Under provision in prior year Movement in deferred tax assets: Balance at the beginning of the year Capitalised float costs Credited to the Income Statement Under provision in prior year At reporting date (c) Deferred Tax Liabilities Fair value adjustments Income provisions Movement in deferred tax liabilities: Balance at the beginning of the year Charged to the Income Statement Over provision in prior year At reporting date	2009 $ 247,694 33,214 (110,712) 14,255 - 184,451 547,734 (363,283) - 184,451 417,444 6,210 42,938 466,592 105,677 - 363,282 (2,367) 466,592 592,030 13,689 605,719 60,352 547,734 (2,367) 605,719	2008 $ 35,588 4,129 (13,764) - -
		25,953
		60,352 (34,399) -
		25,953
		43,705 4,950 57,022 -
		105,677
		- 71,278 34,399 -
		105,677
		29,332 31,020
		60,352
		- 60,352 -
		60,352

8

WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

	2009		2008
	$		$
4. DIVIDENDS
(a) Ordinary Dividends Paid During the Year		-	-
(b) Dividends Not Recognised at Year End
In addition to the above dividends, since the end of the year, the
Directors have declared the following dividend which have not
been recognised as a liability at the end of the financial year:-
Final dividend for the year ended 30 June 2009 of 2.0 cents per
share fully franked at 30% tax rate paid 20 July 2009	308,002		-
(c) Dividend Franking Account
Balance of franking account at year end adjusted for franking
credits, arising from payment of provision for income tax and
dividends recognised as receivables and franking credits that may
be prevented from distribution in subsequent financial years.	109,252		13,764
Subsequent to year end, the franking account would be reduced
by the proposed dividend disclosed in (b) above as follows:	(132,001)		-
	(22,749)		13,764
The Company’s ability to continue to pay franked dividends is dependent upon the receipt			of franked
dividends from investments and the Company paying tax.
The balance of the franking account does not include the tax to be paid on unrealised investment gains and
accrued income currently recognised as a deferred tax liability of $605,719 (2008:		$60,352).
5. AUDITORS REMUNERATION
Remuneration of the auditor of the Company for:
Auditing or reviewing the financial report	29,028		9,900
Non-audit services
Other services provided by a related practice of the auditor:
Taxation Services	7,179		6,600
Investigating Accountant’s Report		-	7,700
	**36,207 **		24,200

The Company’s Audit & Risk Committee oversees the relationship with the Company’s External Auditors. The Audit & Risk Committee reviews the scope of the audit and review and the proposed fee. It also reviews the cost and scope of other audit-related tax compliance services provided by a related entity of the audit firm, to ensure that they do not compromise independence.

6. TRADE AND OTHER RECEIVABLES Trade debtors Prepayments Income receivable GST receivable	607,168 8,762 66,416 28,498 710,844	2,413,916 7,893 96,166 11,566
		2,529,541

Trade debtors relate to outstanding settlements, and are on the terms operating in the securities industry. These are non-interest bearing and require the settlement within three (3) days of the date of a transaction. Income receivable relates to accrued income and is non-interest bearing and unsecured.

9

WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

7. HELD FOR TRADING FINANCIAL ASSETS Listed investments Unlisted investments Exchange traded options 8. FINANCIAL LIABILITIES Borrowed stock		2009 $ 11,232,482 518,860 15,070 11,766,412 98,442	2008 $ 3,254,796 181,300 - 3,436,096 357,042

7. HELD FOR TRADING FINANCIAL ASSETS

Borrowed stock is carried at fair value. The Company provides cash collateral backing of 105% of the fair value of the borrowed stock to the stock lender. The level of borrowed stock plus other borrowings can not exceed 50% of the net asset value of the Company as outlined in the Company’s Management Agreement.

9. TRADE AND OTHER PAYABLES

Trade creditors Sundry creditors	284,893 386,767 671,660	228,810 91,678
		320,488

Trade creditors relate to outstanding settlements, and are on the terms operating in the securities industry. These do not incur interest and require settlement within three (3) days of the date of the transaction. Sundry creditors are settled within the terms of payment offered. No interest is applicable on these accounts.

10. ISSUED CAPITAL

(a) Paid-up Capital

15,400,101 ordinary shares fully paid (2008: 15,400,101) (b) Movement in Ordinary Share Capital Balance at the beginning of the year 1 ordinary share issued on incorporation 6 July 2007 15,400,100 ordinary shares issued on 3 January 2008 under prospectus Transaction costs arising from the Initial Public Offer (net of tax) At reporting date	15,233,786 15,233,786 - - - 15,233,786	15,233,786 - 1 15,400,100 (166,315) 15,233,786

Holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at shareholder meetings, otherwise each member present at a meeting or by proxy has one vote on a show of hands. In the event of the winding up of the Company, ordinary shareholders rank after creditors and share in any proceeds on winding up in proportion to the number of shares held.

(c) Options

The Company issued a prospectus dated 6 November 2007 and shareholders who subscribed for shares were issued with one option for each share they acquired. The Company issued 15,400,100 options to acquire fully paid ordinary shares exercisable at $1.00 per option. The options began trading on the Australian Securities Exchange on 11 January 2008 (ASX Code: WAAO) and on the 17 June 2009 all of these options expired. No options were exercised.

10

WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

10. ISSUED CAPITAL (CONTINUED)

(d) Capital Management

The Board effectively manages the Company’s capital by assessing the Company’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. At the core of this management is the belief that shareholder value should be preserved at all costs. Shareholder value will be preserved through the management of the level of distributions to shareholders, share and options to buy shares issues as well as the use of share buy-backs when shares are trading at a significant discount to NTA.

11. RESERVES Balance at the beginning of the year Transfer to asset revaluation reserve At reporting date	2009 $ - 1,043,109 1,043,109	2008 $ - -

This reserve is used to record increments and decrements on the revaluation of investments, net of potential tax as described in accounting policy note 1(a)(iv).

12. (ACCUMULATED LOSSES)/RETAINED EARNINGS
Balance at the beginning of the year	92,673	-
Transfer to asset revaluation reserve	(1,043,109)	-
Profit for the year attributable to members of the Company	641,196	92,673
At reporting date	(309,240)	92,673
13. CASH AND CASH EQUIVALENTS
Cash as at the end of the financial year as shown in the Cash	Flow Statement is reconciled to the related
items in the Balance Sheet as follows:
Cash at bank and on hand	2,244,128	3,062,178
Fixed interest securities	2,155,500	6,930,849
	4,399,628	9,993,027

The weighted average interest rate for cash and fixed interest securities as at 30 June 2009 is 3.08% (2008: 7.50%). The fixed interest securities have an average maturity of 19 days (2008: 10 days). The fixed interest securities are all rated A1+ by Standard & Poor’s. The fixed interest securities include the cash collateral for the borrowed stock (refer Note 8).

14. CASH FLOW INFORMATION Reconciliation of Operating Profit after Income Tax Operating profit after income tax Add/(less) items classified as Investing/Financing Activities: Realised loss/(gain) on sale of investments Revenue from options written (Less)/add non cash items: Unrealised profit/(loss) on investments Net cash provided by Operating Activities before changes in assets and liabilities: Decrease/(Increase) in receivables Increase in deferred tax assets Increase in payables Decrease in current tax assets/liabilities Increase in deferred tax liabilities Net cash provided by Operating Activities	641,196 923,665 (7,610) (1,785,732) 11,948 12,824 295,090 (373,740) 545,367 263,008	92,673 (54,951) - 244,512 (115,625) 9,306 91,678 (43,705) 60,352
		284,240

11

WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

15. EARNINGS PER SHARE Profit after income tax used in the calculation of basic earnings per share Weighted average number of ordinary shares outstanding during the year used in the calculation of basic earnings per share: Add: Weighted average number of options outstanding Weighted average number of ordinary shares outstanding during the year used in the calculation of diluted earnings per share:

2009 $ 2008 $ 641,196 92,673 No. No. 15,400,101 15,400,101 n/a - 15,400,101 15,400,101

16. FINANCIAL RISK MANAGEMENT

The Company’s financial instruments consist mainly of local money market instruments, short term investments, accounts receivable and accounts payable.

The terms and conditions including interest rate risk of each class of financial asset, financial liability and equity instrument, both recognised and unrecognised at balance date, are included under the appropriate note for that instrument.

Under delegation from the Board, the Manager has the responsibility for assessing and monitoring the financial and market risk of the Company.

(a) Credit Risk

Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted.

The maximum exposure to credit risk on financial assets, excluding investments, of the Company which have been recognised on the Balance Sheet, is the carrying amount net of any provision for impairment of those assets.

The Manager is responsible for ensuring there is appropriate diversification across counter parties and that they are of a sufficient quality rating. The Manager is satisfied that the Company is currently sufficiently diversified so as to reduce exposure to any individual credit risk.

(b) Liquidity Risk

Liquidity risk represents the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.

The Company’s major cash outflows are the purchase of securities and dividends paid to shareholders, the levels of which are managed by the Board and the management company.

The Company’s inward cash flows depend upon the level of sales of securities, dividends and interest received and any exercise of Company options that may be on issue from time to time.

The Manager monitors the Company’s cash-flow requirements daily by reference to known sales and purchases of securities, dividends and interest to be paid or received. The Company holds a portion of its portfolio in cash and fixed interest securities sufficient to ensure that it has cash available to meet all payments. Alternatively, the Company can increase its level of sales of the readily tradeable securities it holds to increase cash inflows.

(c) Market Risk

Market risk represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices.

12

WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

(c) Market Risk (continued)

By its nature, as a listed investment company that invests in tradeable securities, the Company will always be subject to market risk as it invests its capital in securities which are not risk free as the market price of these securities can fluctuate.

The Manager seeks to reduce market risk of the Company by not being overly exposed to one investee company or one particular sector of the market. The Company does not have set parameters as to a minimum or maximum amount of the portfolio that can be invested in a single company or sector.

The company enters into option contracts for the purpose of enhancing returns via the premiums that is earns from the writing of these contracts. Where the Company sells a call option it is obligated to deliver securities at an agreed price if the taker exercises the option. As at balance date there were call options outstanding which potentially required the Company if they were exercised to deliver securities to the value of $528,000 (2008: nil), however these call options were written against the underlying securities already owned by the Company. This exchange traded option was entered into within the constraints and controls imposed by the Australian Securities Exchange Limited. Dealing and administrative (including settlement) functions are separated. The total exposure position is determined daily and the Manager regularly reviews the investment and trading transactions of the Company. Shares to the value of $44,880 (2008: nil) are held by the Australian Clearing House (ACH) as collateral for sold option positions written by the Company. These shares are held by ACH under the terms of ACH Pty Ltd which require participants in the Exchange Traded Option market to lodge collateral, and are recorded as part of the Company’s investment portfolio.

(d) Net Fair Values

The carrying amounts of financial instruments on the Balance Sheet approximate their net fair values.

17. EVENTS AFTER THE BALANCE SHEET DATE

On 20 July 2009 the Directors paid a fully franked final dividend of 2.0 cents per share.

No other matters or circumstances have arisen since the end of the financial year which significantly affect or may significantly affect the operations of the economic entity, the results of those operations, or the state of affairs of the economic entity in subsequent financial years.

18. INVESTMENT TRANSACTIONS

The total number of contract notes that were issued for transactions in securities during the financial year was 1,573 (2008: 615). Each contract note could involve multiple transactions. The total brokerage paid on these contract notes was $330,685 (2008: $122,552).

these contract notes was $330,685 (2008: $122,552).
	2009	2008
19. CONTINGENT LIABILITIES	$	$
Estimates of material amounts of contingent liabilities, not provided
for in the accounts, arising from:
Sub-underwriting agreements entered into during the year of which
the offer closes after balance date.	-	140,000
20. CAPITAL COMMITMENTS
Capital commitments exist for placements entered into before year
end, which settled after period end in July and August 2009.	425,314	-

21. KEY MANAGEMENT PERSONNEL COMPENSATION

The names and position held of the Company’s key management personnel (including Directors) in office at any time during the financial year are:

G.J. Wilson Chairman M.J. Kidman Non-Executive Director J.B. Abernethy Non-Executive Director C.E. Cuffe Non-Executive Director R.J. Walker Non-Executive Director

13

WAM ACTIVE LIMITED A.B.N. 49 126 420 719 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

a) Remuneration

There are no executives that are paid by the Company. MAM Pty Limited, the Manager of the Company, remunerates Geoff Wilson and Matthew Kidman as employees and/or directors of MAM Pty Limited. The Manager is also contracted to provide day-to-day management of the Company.

Total Directors remuneration paid by the Company for the year ended 30 June 2009	Directors’ Fees Post-employment Superannuation Total
	$104,632 $5,368 $110,000

b) Share and Option holdings

As at 30 June 2009 the Company’s key management personnel held the following interests in the Company:

Ordinary Shares held:

Directors G.J. Wilson M.J. Kidman J.B. Abernethy C.E. Cuffe R.J. Walker Options held: Directors G.J. Wilson M.J. Kidman J.B. Abernethy C.E. Cuffe R.J. Walker	Balance at 30 June 2008 Acquisitions Disposals Balance at 30 June 2009 1,933,501 - - 1,933,501 205,000 - - 205,000 60,000 - - 60,000 - 100,000 - 100,000 1,542,000 - - 1,542,000
	3,740,501 100,000 - 3,840,501
	Balance at 30 June 2008 Issued/ Acquisitions Disposals/ Exercised/ Lapsed Balance at 30 June 2009 1,690,500 - (1,690,500) - 205,000 - (205,000) - - - - - - - - - 1,300,000 - (1,300,000) -
	3,195,500 - (3,195,500) -

22. RELATED PARTY TRANSACTIONS

All transactions with related entities were made on normal commercial terms and conditions.

Geoff Wilson and Matthew Kidman are Directors of MAM Pty Limited, the entity appointed to manage the investment portfolio of WAM Active Limited and manage the day-to-day operations of the Company. Entities associated with Geoff Wilson and Matthew Kidman hold 80% and 20% respectively of the issued shares of MAM Pty Limited. In its capacity as Manager, MAM Pty Limited was paid a management fee of 1%p.a (plus GST) of gross assets amounting to $157,970 inclusive of GST (2008: $85,729). As at 30 June 2009, the balance payable to the Manager was $55,587 (2008: $28,766).

In addition, MAM Pty Limited is to be paid, annually in arrears, a performance fee being 20% of the increase in the gross value of the Portfolio above the high water mark:

The high water mark is the greater of the:

• The highest gross value of the portfolio as at the last day of the last performance period for which a performance fee was last paid or payable; and

• the gross proceeds raised from the issue of shares pursuant to the original prospectus.

If the gross value of the portfolio falls below a previous high water mark then no further Performance Fees can be accrued or paid until the loss has been fully recovered. As at 30 June 2009, a performance fee of $234,289 inclusive of GST is payable to MAM Pty Limited (2008: nil).

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WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

These amounts are in addition to the above Directors’ remuneration.

Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than those detailed above) by reason of a contract made by the Company or a related Company with the Director or with a firm of which he is a member or with a Company in which he has substantial financial interest.

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