WAM ACTIVE LIMITED — Annual Report 2013

Sep 3, 2013

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WAM Active Limited ABN 49 126 420 719

Annual Report for the year ending 30 June 2013

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Company Particulars

WAM Ac tive Limited is a Listed In vestmentC ompany and is a reportin g entity. It is primarily an investor in	WAM Ac tive Limited is a Listed In vestmentC ompany and is a reportin g entity. It is primarily an investor in
equities listed on the AustralianS ecurities Ex change.
Director s:	Ge offrey Wilso n (Chairman )
	Ma tthew Kidma n
	Jo hn Aberneth y
Secretar y:	Ka te Thorley
Investm ent Manage r:	MA M Pty Limit ed
	Le vel 11, 139M acquarieS treet
	Sy dney NSW 2000
Auditors :	Mo ore Stephen s Sydney
Country of Incorpor ation:	Au stralia
Register ed Office:	Le vel 11, 139M acquarieS treet
	Sy dney NSW 2000
Contact Details:	Po stal Address : GPO Box 4658, Sydne y NSW 2001
	Te lephone: ( 02) 9247 67 55
	Fa x: ( 02) 9247 68 55
	Em ail: in fo@wamfun ds.com.au
	We bsite:w ww.wamfun ds.com.au
Share R egistrar:	Bo ardroom Pty Limited
	Le vel 7, 207 Ke nt Street
	Sy dney NSW 2000
	Te lephone: ( 02) 9290 96 00
	Fa x: ( 02) 9279 06 64
	Fo r enquiriesr elating to sh areholdings, dividends (i ncluding par ticipation in	the
	Div idend Reinv estment Pla n) and relate d matters,p lease conta ct the share
	reg istrar.
Australi an Securitie s	WA M ActiveO rdinary Shar es (WAA)
Exchang e:	WA M ActiveO ptions (WAA O) $1.08 ex piry 12 Dece mber 2013
Share holder P resenta tions 20 13
Perth Thursda Presenta Rydges Cnr King Perth WA 10.00am y 14 Novem tion only Perth & Hay Sts 6000 – 11.30am ber	Annual Wedn S 9 General M Presenta Sydne esday 20 Lyceum Th Wesley Ce 220 Pitt St ydney NSW .45am – 11 eeting a tion y Novembe eatre ntre reet 2000 .00am nd r
Adelaide Thursda Presenta National Cnr Bota Adelaide 10.00am y 21 Novem tion only Wine Centre nic & Hackn SA 5000 – 12.00pm ber ey Rd	Me Fr Pre Mo 40 Me 10 lbourne iday 22 Nov sentation on rgans at 40 1 Collins Str lbourne VIC .00am – 12. ember ly 1 eet 3000 00pm Canberra Monday 25 Presentation Belconnen 110 Benjam BelconnenA 10.00am – November only Premier Inn in Way CT 2617 11.00am Brisban Tuesday Presenta Urban H 345 Wick Brisbane 10.00am e 26 Novemb tion only otel ham Terrac QLD 4000 – 12.00pm er e

Key Highlights FY2013

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15.4%

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5.6%

Investment Portfolio Performance

Full Year Fully Franked Dividend

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7.0%

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59.0%

After Tax Net Tangible Assets (NTA) (adjusted for dividends)

Shareholders’ Equity

Summary of Results FY2013

WAM Active reported an operating profit before tax of $1,769,584 (2012: $322,300) and operating profit after tax of $1,499,202 (2012: $394,535) for the year to 30 June 2013. The increase in profit compared to the previous year is a reflection of the investment portfolio returning 15.4% compared to 5.5% in FY2012.

In June 2012, WAM Active issued 16,309,945 options to acquire ordinary shares in the Company with an exercise price of $1.08. As at 30 June 2013, 9,671,147 options (59%) had been exercised for a total consideration of $10,444,837. The remaining balance of options are due to expire on 12 December 2013.

The Board declared a fully franked final dividend of 4.75 cents per share which brings the full year dividend to 9.5 cents per share, fully franked. This is a 5.6% increase on the previous year.

At a glance as at 30 June 2013	At a glance as at 30 June 2013
Listing date	January2008
Market cap ($m)	$29.3m
Share price	$1.11
Shares on issue (WAA)	26,400,472
Options on issue (WAAO)	6,638,798
NetTangibleAssets (pre-tax)	$1.05
Net Tangible Assets (post-tax)	$1.05
GrossAssets ($m)	$28.4m
Fullyfranked dividendsFY2013	9.5 cents
Fully franked dividends FY2012	9.0 cents
Fullyfranked annualised dividend yield	8.6%

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WAM Active’s investment portfolio
return 12% p.a. over 5½ years
Index re-based
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Index re-based
100
80
60
40
20
0
-20
-40
-60
2007 2008 2009 2010 2011 2012 2013
WAA Investment Portfolio
S&P/ASX All Ordinaries Accumulation Index
UBS Bank Bill Index
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CONTENTS

Objectives and Investment Approach…………………………………………………….	1
Chairman’s Letter……………………………………………………………………………	3
Corporate Governance Statement………………………………………………………...	7
Directors’ Report to Shareholders…………………………………………………………	13
Auditor’s Independence Declaration………………………………………………………	22
Statement of Comprehensive Income..…………………………………………………...	23
Statement of Financial Position……………………………………………………………	24
Statement of Changes in Equity…………………………...………………………………	25
Statement of Cash Flows………………………………………………………………….	26
Notes to the Financial Statements………………………………………………………...	27
Directors’ Declaration……………………………………………………………………….	48
Independent Auditor’s Report……………………………………………………………...	49
Investments at Market Value………………………………………………………………	51
ASX Additional Information..……………………………………………………………….	53

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

OBJECTIVES AND INVESTMENT APPROACH

WAM Active Objectives

The investment objectives of WAM Active Limited (‘WAM Active’ or ‘the Company’) are to:

• deliver investors a regular income stream in the form of fully franked dividends;

• provide investors with a positive return, after fees, over most periods of time; and

• • preserve capital in both the short term and long term.

Our Approach and Business Model

Our approach is to invest with a focus on absolute returns. An absolute return approach aims to deliver positive returns in a rising market as well as preserving capital in a falling market over the long term. Returns of absolute return funds typically tend to have a low correlation to market indices and benchmarks that represent other asset classes such as shares, property or fixed interest. This low correlation means that movements in those variables are relatively independent of each other. Investment in absolute return-focused investment entities may therefore assist investors to diversify and reduce the overall volatility of their portfolios over the long term.

Our disciplined approach is to provide the maximum return possible while taking the minimum amount of risk. WAM Active has a relatively low risk profile for a number of reasons. If we do not identify an opportunity under the Market Driven approach, we revert to cash. The average net cash position held since inception is 49.9% of assets.

Business Model

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Our investment team has over 50 years of collective experience in the Australian sharemarket with a high degree of ‘street smarts’. The team comprises of Geoff Wilson and Chris Stott as Portfolio Managers, Martin Hickson, Equity Analyst/Dealer, and Matthew Haupt and Mark Tobin, Equity Analysts. The team spends as much time as possible meeting with the management of investee companies - during the past year we have had over 1,000 company meetings.

Our Style

Our investment style can be summarised as:

• absolute return focus, benchmark unaware

• fundamental bottom-up approach

• quick decision making resulting from a flat organisational structure

• increased flexibility due to the relatively small funds under management and flexible mandates

• a focus on risk adjusted returns with above average cash positions

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WAM ACTIVE LIMITED A.B.N. 49 126 420 719

OBJECTIVES AND INVESTMENT APPROACH

Investment Process

To achieve the Company’s objectives, we employ the following investment process:

Market Driven Investing

We take advantage of relative short-term arbitrages and mis-pricings in the Australian equities market, rather than investing in any individual companies or portfolio of companies for a prolonged period of time. We utilise our extensive information network in the investment community to help generate investment ideas.

We scour the market for opportunities including:

• initial public offerings (IPOs)

• capital raisings

• block trades

• oversold positions

• takeovers

• Listed Investment Companies (LIC) arbitrage

• stocks trading at a discount to their NTA backing

• earnings momentum / surprises

• short selling

• market themes and trends

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WAM ACTIVE LIMITED A.B.N. 49 126 420 719

CHAIRMAN’S LETTER

Dear Fellow Shareholders,

Firstly, I would like to thank you very much for your support of WAM Active in financial year 2013. I would also like to welcome all new shareholders to the Company.

WAM Active is now in its sixth financial year of operation and I am pleased with the Company’s solid performance. Since listing in January 2008, the investment philosophy has been consistently applied and the Company has delivered shareholders a growing stream of fully franked dividends and preserved shareholders’ capital. It is pleasing that over this period, the investment portfolio has returned 12.0% p.a. while being on average 50.1% invested. The S&P/ASX All Ordinaries Accumulation Index has fallen 1.0% p.a. over the same period. The Board and the Manager continue to be confident that with the flexible investment approach and ability to take advantage of many varying trading situations, shareholders will continue to see positive returns in most market environments.

Performance

In evaluating the performance of the Company, we look at three key measures set out below. These performance numbers were achieved while holding an average of 33.9% in cash during the year. The return on our cash was 3.8% and the return on our equity portion of the portfolio was 21.4%.

1. How the investment manager performed

This measure is before tax and all costs and is compared to the S&P/ASX All Ordinaries Accumulation Index which is also before tax and costs. WAM Active’s investment portfolio increased 15.4% for the 12 months to 30 June 2013. The S&P/ASX All Ordinaries Accumulation Index increased by 20.7% over the same period.

2. The movement in net tangible assets (NTA) after taxes, management fees and other costs

This performance measure shows the change in the value of the assets that belong to the shareholders over the 12 month period. Corporate tax (being 30%) is a significant item of difference between the investment portfolio and the net asset performance. The franking credits attached to corporate tax payments are available for distribution to shareholders through fully franked dividends. WAM Active’s after tax NTA, adjusted for dividends, increased 7.0% for the 12 months to 30 June 2013. Shareholders exercising their options over the 12 months had an impact on the after tax NTA of minus 1.8%.

3. The Total Shareholder Return

This measure shows the return to shareholders (assuming a proportionate exercise of options during the year) being the change in share price together with dividends reinvested expressed as a percentage. The total shareholder return for WAM Active for the year to 30 June 2013 was 24.5%.

Investment portfolio

Over the course of the 2013 financial year, the equity component of the portfolio turned over 4.9 times and we traded in 296 individual stocks.

The best performing strategies employed were trades based on relative value arbitrage, oversold positions, earnings momentum/surprise, market themes/trends and takeover arbitrage. The top contributing stocks for FY2013 were: Ingenia Communities Limited (INA), Clough Limited (CLO), RHG Limited (RHG) and Sunland Group Limited (SDG).

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WAM ACTIVE LIMITED A.B.N. 49 126 420 719

CHAIRMAN’S LETTER

Annualised Investment Portfolio Performance vs S&P/ASX All Ordinaries Accumulation Index

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25%
20%
15%
10%
5%
0%
-5% 2007/2008 2008/2009 2009/2010 2010/2011 2011/2012 2012/2013
-10%
-15%
-20%
-25%
WAA Investment Portfolio - before all expenses, fees and taxes
S&P/ASX All Ordinaries Accumulation Index
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Dividends

The Board has resolved to pay a fully franked final dividend of 4.75 cents per share. This brought the FY2013 full year dividend to 9.5 cents per share fully franked, an increase of 5.6% on the previous year.

The Board is committed to paying an increasing stream of fully franked dividends to shareholders, provided the Company has sufficient profit reserves, franking credits and it is within prudent business practices. Dividends are paid on a six-monthly basis and the dividend reinvestment plan is available to shareholders for both the interim and final dividend.

The dividend reinvestment plan will be operating at a 2.5% discount.

WAM Active Dividends since inception

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Cents per share
10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
2008/09 2009/10 2010/11 2011/12 2012/13
Fully franked dividends
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WAM ACTIVE LIMITED A.B.N. 49 126 420 719

CHAIRMAN’S LETTER

Capital Management

One of the objectives of the Board is to continue to grow the Company's net tangible assets and capital base. The Board aims to achieve this objective while maintaining the Company's strong performance track record.

In June 2012, the Company issued 16,309,945 options on a one-for-one basis to acquire fully paid ordinary shares in the capital of the Company. The options have an exercise price of $1.08 and can be exercised at any time on or before 12 December 2013. The options are currently trading on the Australian Securities Exchange (‘ASX’) under the code WAAO.

The option issue aims to achieve:

• a reduction in the fixed administrative expense ratio by spreading the Company’s administrative expenses across a larger pool of assets;

• an increase in the liquidity of WAM Active’s shares which will make it easier for shareholders to buy and sell them; and

• an increase in the size of WAM Active, thereby making it more relevant in the market and potentially improving the coverage by research firms, dealer groups and financial advisers.

As at 30 June 2013, 9,671,147 options (59%) had been exercised for a total consideration of $10,444,837, with the remaining balance of outstanding options being 6,638,798.

Equity Market Outlook

The S&P/ASX All Ordinaries Accumulation Index closed the FY2013 year up 20.7%, its strongest annual performance since the onset of the Global Financial Crisis. The new financial year has started strongly with the market up 8.2% in the first two months. Still much of Europe remains troubled by high unemployment and ongoing sovereign debt crises and we expect below-average growth from the region for many years. Positive signs continue to emerge from the United States that an economic recovery is underway following a deep and prolonged recession. While still expanding, data out of China indicates a slower pace of economic growth with the new regime indicating they will tighten monetary conditions over the medium term.

Australia’s economy has been flagging in calendar year 2013 with political uncertainty dampening business and consumer confidence and delaying expenditure decisions. Reflecting the poorer trading conditions, numerous companies have announced profit downgrades in recent months with softer economic conditions making it difficult for businesses to grow earnings.

We remain optimistic about the longer term outlook for the Australian economy which is supported by strong underlying fundamentals. With improving macro-economic conditions overseas, an increased availability of funding and stronger company balance sheets, corporate activity in Australia is showing signs of life after several years. In FY2014, we expect this trend to gather momentum and provide a number of investment opportunities, including IPOs and takeovers. We continue to see opportunities to invest in Listed Investment Companies (LICs), although their discount to NTA has narrowed in recent months. Over the year ahead, we also anticipate there will be select investment opportunities to short sell companies given the Australian economy remains subdued. The softer Australian dollar will continue to have a positive impact on many businesses and generates investment opportunities in a number of sectors including tourism, manufacturing and those with an export focus. In the mining services sector, we believe there are deep value opportunities. However, we expect the full benefits of the softer dollar and near record-low interest rates will not be felt until early 2014.

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WAM ACTIVE LIMITED A.B.N. 49 126 420 719

CHAIRMAN’S LETTER

Company Outlook W ith a conservative cash weighti n g, no debt a nd a flexi b le and pro v en invest m ent appro a ch, WAM A ctive is w e ll positione d to capital i se on opp o rtunities in the market as they ari s e. We believe that W AM Activ e can conti n ue to find trading opp o rtunities ir r espective o f market c o nditions with the C ompany o u tperformi n g in both u p and dow n markets.

Shareholder Communication

W e take an active app r oach to ke e ping shar e holders informed abo u t WAM Ac t ive’s activi t ies and p erformanc e including, monthly in v estment updates and NTA announcements , yearly an d half y early profit announce m ents, semi-annual shareholder b riefings an d access t o all relevant i n formation, such as in d ependent research r e ports, on o ur website: www.wam f unds.com.au.

W e encour a ge shareh o lders and interested i n vestors to use the “S u bscribe H e re” feature on our w ebsite to r e ceive weekly market updates and notificati o n when announceme n ts and oth e r i m portant information b ecomes a v ailable.

D uring the y ear we co n tinued the successful and well-attended shareholder b r iefings, wit h p resentatio n s held in S ydney, Melbourne, Adelaide, Bri s bane, Pert h and Can b erra. The t eam at W ilson Ass e t Manage m ent enjoy s the opportunity to meet with you and are committed to m aintaining sharehold e r briefings as a semi- a nnual eve n t. We invit e you to att e nd the up c oming b riefings in N ovember 2 013 – ple a se see details at the front of this document.

W e aim to p rovide val u able com m unications and we we l come all feedback on how we can improve o ur commu n ication wit h our shareholders by calling our office on (02) 9247 67 5 5 or sending us an e mail to inf o @wamfun d s.com.au.

T hank you f or your co n tinuing su p port.

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Geoff Wilson Chairman

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WAM ACTIVE LIMITED A.B.N. 49 126 420 719

CORPORATE GOVERNANCE STATEMENT

The Board is committed to the Company operating effectively and in the best interests of shareholders. The Board has followed the principles and best practice recommendations established by the ASX Corporate Governance Council having regard to the nature of the Company’s activities and its size. The Company has adopted the ASX Corporate Governance Principles and Recommendations with 2010 Amendments (2[nd] Edition) for the 2013 financial year, subject to the exceptions noted below.

Role of the Board (Recommendations: 1.1 to 1.3)

The Company has a Board but no full time employees. Subject at all times to any written guidelines issued by the Board of Directors of WAM Active Limited, the day-to-day management and investment of funds is carried out by MAM Pty Limited (‘the Manager’) pursuant to a management agreement. Consequently, there is no need to delegate functions to senior management or for a process to evaluate the performance of senior executives under Recommendations 1.1, 1.2 and 1.3.

The role of the Board is to set strategic direction, approve capital management initiatives and to be responsible for the overall corporate governance of the Company which includes:

• To oversee and monitor the performance of the Manager’s compliance with the management agreement and to ensure that the Manager is monitoring the performance of other external service providers;

• Ensuring adequate internal controls exist and are appropriately monitored for compliance;

• Ensuring significant business risks are identified and appropriately managed;

• Approving the interim and final financial statements and related reports and generally various other communications to the ASX and shareholders that the Board deems material; and

• Setting appropriate business standards and codes for ethical behaviour.

The Board aims to ensure that all Directors and the Manager act with the utmost integrity and objectivity and endeavour to enhance the reputation of the Company. The Board aims to act in a manner designed to create and build sustainable value for shareholders.

Composition & Operation of the Board (Recommendations: 2.1 to 2.6)

The skills, experience and expertise relevant to the position of each Director who is in office at the date of the Annual Report and their term in office are detailed in the Directors’ Report on pages 14 to 16.

The Board had one independent Director and two non-independent Directors. The name of the Director considered to be independent is:

• John Abernethy

This Director is considered independent as per the criteria outlined in the Board of Directors Charter which includes the Company’s criteria for independence of Directors, and can be found in the Corporate Governance section of the Company’s website at www.wamfunds.com.au. The criteria is in accordance with ASX Corporate Governance Council’s Principles.

Whilst the Company agrees with the benefits of a majority of independent Directors, under Recommendation 2.1, it believes that it can better achieve the results of the Company with the current Board’s level of expertise and without burdening shareholders with the additional costs associated with adding further independent Directors.

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WAM ACTIVE LIMITED A.B.N. 49 126 420 719

CORPORATE GOVERNANCE STATEMENT

The Chairman is not an independent Director. The Company believes that an independent Chairman, under Recommendation 2.2, does not necessarily improve the function of the Board. The Company believes that when the Chairman is a significant driver behind the business and is a sizeable shareholder, as is the case with this Company, it adds value to the Company and all shareholders’ benefit. The Company does not employ a Chief Executive Officer, consequently Recommendation 2.3 is not applicable.

Given the size of the Board, a nomination committee has not been formed under Recommendation 2.4. The Board as a whole considers the composition of the Board and appointment of new Directors. The Board identifies suitable candidates to fill vacancies as they arise with the aim of achieving the optimal mix of skills and diversity.

Under the Board of Directors Charter, the performance of each Director was reviewed by the Chairman during the year and the Board undertook the annual review of the performance of the Chairman to ensure the Board’s activities continue to be efficiently organised and conducted. At every annual general meeting one third of the Directors must retire from office and be eligible for re-election. Shareholder approval is required on the composition of the Board.

Each Director has the right to access all relevant information and, subject to prior consultation with the Chairman, may seek independent professional advice at the entity’s expense. A copy of advice received by the Director is made available to all other members of the Board.

Code of Conduct (Recommendations: 3.1 and 3.5)

The Company has established a Directors Code of Conduct which sets out the Company’s key values and how they should be applied within the workplace and in dealings with those outside of the Company. The Directors Code of Conduct can be found in the Corporate Governance section of the Company’s website at www.wamfunds.com.au.

Diversity Policy (Recommendations: 3.2 to 3.5)

As the Company has no full time employees and given the size of the Board, a diversity policy has not been established under Recommendations 3.2 to 3.5. The Board’s composition is reviewed on an annual basis. In the event a vacancy arises, the Board will include diversity in its nomination process. Currently, there are no women on the Board.

Audit & Risk Committee (Recommendations: 4.1 to 4.4)

The Company has formed an Audit & Risk Committee consisting of two non-executive Directors of whom one is independent as defined by the ASX Corporate Governance Council’s Principles. This is considered adequate given the size of the Board (three members) and the nature of the Company. The members of the Audit & Risk Committee are:

• John Abernethy Chairman, independent director

• Matthew Kidman Non-Executive Director, non-independent director

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WAM ACTIVE LIMITED A.B.N. 49 126 420 719

CORPORATE GOVERNANCE STATEMENT

The Committee’s responsibilities are to:

• Oversee the existence and maintenance of internal controls and procedures to ensure compliance with all applicable regulatory obligations;

• Oversee the financial reporting process;

• Review the annual and half-year financial reports and recommend them for approval by the Board of Directors;

• Nominate external auditors; and

• Review the existing external audit arrangements.

The qualifications of those appointed to the Committee are detailed in the Directors’ Report on pages 14 to 16.

The Audit & Risk Committee Charter can be found in the Corporate Governance section of the Company’s website at www.wamfunds.com.au.

The Committee formally reports to the Board after each of its meetings. Details of the number of meetings of the Audit & Risk Committee during the 2013 year are set out in the Directors’ Report on page 19.

The external audit firm partner responsible for the Company audit attends meetings of the Board and Audit & Risk Committee by invitation.

The Company’s external audit is undertaken by Moore Stephens Sydney and the audit engagement partner is required to be changed at regular intervals. Scott Whiddett, a partner of Moore Stephens Sydney, is the partner responsible for the external audit of the Company for the 2013 financial year.

ASX Listing Rule Compliance (Recommendations 5.1 and 5.2)

The Company has established a continuous disclosure policy to ensure compliance with the continuous disclosure obligations under the ASX Listing Rules and the Corporations Act 2001. The policy aims to ensure all investors have equal and timely access to material information concerning the Company and that Company announcements are factual and presented in a clear and balanced way. The Continuous Disclosure Policy can be found in the Corporate Governance section of the Company’s website at www.wamfunds.com.au.

Under the Securities Dealing Policy, which can be found in the Corporate Governance section of the Company’s website at www.wamfunds.com.au, Directors are not required to hold a minimum number of shares pursuant to the Company’s Constitution. However, their current relevant interests in the Company’s shares are shown in the Directors’ Report. Directors must not deal in shares of the Company if they are in possession of price sensitive or inside information. The Board has also nominated they may not deal in shares of the Company the five business days before the announcement of a dividend or any other capital management initiative that might have a material impact on the share price.

In addition, the Company has established a Conflict of Interest Policy, in accordance with the Corporations Act 2001 . Under this policy, the Directors must keep the Board advised, on an ongoing basis, of any interests that could potentially conflict with those of the Company. Where the Board believes that a significant conflict exists, the Director concerned does not receive the relevant board papers and is not present at the meeting whilst the item is considered.

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WAM ACTIVE LIMITED A.B.N. 49 126 420 719

CORPORATE GOVERNANCE STATEMENT

Shareholder Rights & Communication (Recommendations 6.1 and 6.2)

The Board aims to ensure that the shareholders are informed of all major developments affecting the Company’s state of affairs.

The Company Secretary is primarily responsible for coordinating the disclosure of information to shareholders and regulators under the direction of the Board.

Information is communicated to shareholders through the:

• Website;

• ASX Company Announcements platform;

• Annual Report;

• Investor newsletters;

• Investor presentations;

• Monthly Investment Updates and NTA releases; and

• Other correspondence regarding matters impacting on shareholders as required.

Monthly NTA releases and half yearly investor newsletters contain additional information concerning the underlying investment portfolio of the Company in an effort to give investors a better understanding of the Company.

The Board encourages full participation of shareholders at the Annual General Meeting (‘AGM’) to ensure a high level of accountability and identification with the Company’s strategy and goals. Shareholder information sessions are also held twice a year in May and November following the AGM. These provide an informal forum where shareholders are given the opportunity to raise questions and participate in general discussion about the Company.

The Communications Policy can be found in the Corporate Governance section of the Company’s website at www.wamfunds.com.au.

Risk Management (Recommendations: 7.1 to 7.4)

The Company has an established enterprise risk management program in accordance with the International Risk Standard AS/NZS ISO 31000:2009. It also has an established internal control program based upon the principles set out in the Australian Compliance Standard AS 3806:2006.

The Company’s enterprise risk management program addresses its material business risks. Each identified risk is individually assessed in terms of the likelihood of the risk event occurring and the potential consequences in the event that the risk event was to occur. The CompliSpace Assurance software has been implemented through which material business risks and the mitigating controls can be monitored in real time. It also ensures transparency of data and ease of reporting to the Board on the performance of its enterprise risk and compliance programs.

The Manager has provided to the board a report as to the overall effectiveness of the Company’s management of its material business risks.

The Board has received assurance from the Director and Chief Executive Officer of the Manager that in their view:

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WAM ACTIVE LIMITED A.B.N. 49 126 420 719

CORPORATE GOVERNANCE STATEMENT

• the declaration provided in accordance with section 295A of the Corporations Act 2001 is founded on a sound system of risk management and internal control; and

• the system of risk management and internal control is operating effectively in all material respects in relation to financial reporting risks.

The Board requires the Manager to report annually on the operation of internal controls to manage the Company’s material business risk, reviews any external audit commentary in respect to internal controls and conducts any other investigations it requires in order to report on the effectiveness of the internal control system. In respect of the current financial year all necessary declarations have been submitted to the Board.

There are two main areas of risk that have been identified:

• Market risk; and

• Operational risk

Market Risk

The Manager is primarily responsible for recognising and managing market related risk as per the management agreement. The Manager provides periodic reports to the Board regarding this area of risk. By its nature, as a listed investment company, 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. However, the Company seeks to reduce and manage market risk by not being overly exposed to one investee company or one particular sector of the market. The Manager reviews the relative weightings of individual securities and the relevant market sectors regularly. 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.

MAM Pty Limited, the Manager, is required to act in accordance with the investment management agreement and reports to the Board regularly on the Company’s performance and any material actions that have occurred in the period.

Operational Risk

The Manager is primarily responsible for recognising and managing operational risk issues such as legal and regulatory risk, systems and process risk and outsourcing risk. The Company outsources its administrative functions to service providers: MAM Pty Limited (investment management), Wilson Asset Management (International) Pty Limited (accounting and compliance), RBC Investor Services (custody) and Boardroom Pty Limited (share registry) and risk issues associated with these activities are handled in accordance with the service provider’s policies and procedures.

MAM Pty Limited, the Manager, provides a declaration to the Board twice a year to certify that the Company’s financial statements and notes present a true and fair view, in all material respects, of the Company’s financial condition and operational results and that they have been prepared and maintained in accordance with relevant Accounting Standards and the Corporations Act 2001 .

Remuneration of Directors (Recommendations: 8.1 to 8.4)

Given the size of the Board, a remuneration committee has not been formed under Recommendation 8.1. The Board believes that such a committee would not serve to protect or enhance the interests of the shareholders. The Board as a whole considers the issue of remuneration.

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WAM ACTIVE LIMITED A.B.N. 49 126 420 719

CORPORATE GOVERNANCE STATEMENT

The maximum total remuneration of the Directors of the Company has been set at $110,000 per annum to be divided in such proportions as they agree. The scope of the Company's operations, and the frequency of Board meetings are principal determinants of the fee level. Further detail is provided in the Directors’ Report on page 17.

All directors of WAM Active are non-executive directors. Accordingly, the requirement under Recommendation 8.3 to distinguish the structure of the remuneration paid to executive and nonexecutive directors is not applicable to the Company.

No equity based remuneration is paid to Directors. Directors do not receive bonuses nor are they issued options on securities as part of their remuneration.

The Chairman of WAM Active Limited is the sole Director of MAM Pty Limited. Further detail is provided in the Directors’ Report.

12

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

DIRECTORS’ REPORT TO SHAREHOLDERS FOR THE YEAR ENDED 30 JUNE 2013

The Directors present their report together with the financial report of WAM Active Limited (‘the Company’) for the financial year ended 30 June 2013.

Principal Activity

The principal activity of the Company is making investments in listed companies. The Company’s investment objectives are to deliver a rising stream of fully franked dividends and to preserve capital in both the short term and long term. No change in this activity took place during the year or is likely in the future.

Operating and Financial Review

Investment operations over the year resulted in an operating profit before tax of $1,769,584 (2012: $322,300) and an operating profit after tax of $1,499,202 (2012: $394,535). The increase in profit in comparison to the previous year is a reflection of the investment portfolio returning 15.4% compared to 5.5% in FY2012.

Under Accounting Standards, realised gains and losses and dividend income are added to or reduced by changes in the market value of the Company’s investments. This can lead to large variations in reported profits. We believe a more appropriate measure of the results is the change in Net Tangible Assets (NTA) per share. The after tax NTA, adjusted for dividends, increased 7.0% for the 12 months to 30 June 2013. Shareholders exercising their options over the 12 months had an impact on the after tax NTA of minus 1.8%.

Net asset backing for each ordinary share as at 30 June 2013 (calculated on market value less realisation costs and all applicable taxes and before dividends declared) amounted to 104.65 cents per share (2012: 106.47 cents). NTA after tax on realised gains but before tax on unrealised gains was 105.72 cents per share (2012: 108.02 cents). These figures are after the payment of 9.25 cents in fully franked dividends to shareholders during the year (2012: 8.5 cents).

Further information on the operating and financial review of the Company is contained in the Chairman’s Letter on pages 3 to 6 of the Annual Report.

Financial Position

The net asset value of the Company for the current financial year was $27,673,996 (2012: $17,402,006).

Significant changes in State of Affairs

There was no significant change in the state of affairs of the Company during the year ended 30 June 2013.

Dividends Paid or Recommended

Dividends paid or declared are as follows:

Fully franked 2012 final dividend of 4.5 cents per share was paid on 19 October 2012 $880,270 Fully franked 2013 interim dividend of 4.75 cents per share was paid on 19 April 2013 $1,242,393

Since year end the Board has declared a final dividend of 4.75 cents per share fully franked to be paid on 4 October 2013.

13

WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

DIRECTORS’ REPORT TO SHAREHOLDERS FOR THE YEAR ENDED 30 JUNE 2013

Options

In May 2012, the Board announced a one-for-one bonus issue of options to acquire ordinary shares in the capital of the Company. The options have an exercise price of $1.08 and can be exercised at any time on or before 12 December 2013. The options are currently trading on the Australian Securities Exchange (‘ASX’) under the code WAAO. As at 30 June 2013, 9,671,147 options had been exercised for a total consideration of $10,444,837, with the remaining balance of outstanding options being 6,638,798.

Directors

The following persons were Directors of the Company during the whole of the financial year and up to the date of this report, except as otherwise noted:

G.J. Wilson M.J. Kidman J.B. Abernethy R.J. Walker (resigned 17 September 2012)

Information on Directors

Geoffrey Wilson (Chairman – Non-independent)

Experience and expertise

Geoffrey Wilson has had 33 years experience in the Australian and international securities industry. He holds a Bachelor of Science Degree and a Graduate Management Qualification. He is also a Fellow of the Institute of Company Directors and a Fellow of the Securities Institute of Australia.

Geoffrey has been Chairman of the Company since July 2007.

Geoffrey Wilson is currently Chairman of WAM Research Limited (appointed June 2003), WAM Capital Limited (March 1999) and Australian Stockbrokers Foundation. He is a Director of the Australian Leaders Fund Limited (appointed October 2003), Clime Capital Limited (appointed November 2003), Incubator Capital Limited (appointed February 2000), the Sporting Chance Cancer Foundation, the Australian Fund Managers Foundation, the Odyssey House McGrath Foundation, the Australian Children’s Music Foundation, Premium Investors Pty Limited and he is a Member of the Second Bite NSW Advisory Committee. He is also a Director of investment management companies Wilson Asset Management (International) Pty Limited, MAM Pty Limited, Boutique Investment Management Pty Limited and Boutique Asset Management Pty Limited.

Former directorships in the last 3 years

Geoffrey Wilson is a former Director of Cadence Capital Limited (November 2003 to February 2013).

Special responsibilities

Chairman of the Board.

Interests in shares of the Company

Details of Geoffrey Wilson’s interests in the Company are included later in this report.

Interests in contracts

Details of Geoffrey Wilson’s interests in contracts of the Company are included later in this report.

14

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

DIRECTORS’ REPORT TO SHAREHOLDERS FOR THE YEAR ENDED 30 JUNE 2013

Matthew Kidman (Non-Executive Director – Non-independent)

Experience and expertise

Matthew Kidman worked as a portfolio manager at Wilson Asset Management (International) Pty Limited for 13 years between 1998 and 2011. Prior to joining Wilson Asset Management, Matthew worked as a finance journalist at the Sydney Morning Herald between the years 1994 and 1998. In 1997 he was made business editor of the paper and was charged with the responsibility of company coverage. He has degrees in Law and Economics and a Graduate Diploma in Applied Finance.

Matthew Kidman has been a Director of the Company since July 2007.

Other current directorships

Matthew Kidman is currently Chairman of Watermark Market Neutral Fund Limited (appointed May 2013). He is a Director of WAM Capital Limited (appointed March 1999), WAM Research Limited (appointed May 2002), Centrepoint Alliance Limited (appointed February 2012) and he is also a Director of the investment management company Boutique Asset Management Pty Limited.

Former directorships in the last 3 years

Matthew Kidman is a former Director of Australian Leaders Fund Limited (October 2003 to January 2010).

Special responsibilities

Member of the Audit & Risk Committee.

Interests in shares of the Company

Details of Matthew Kidman’s interests in the Company are included later in this report.

Interests in contracts

Matthew Kidman has no interests in contracts of the Company.

John Abernethy (Non-Executive Director – Independent)

Experience and expertise

John Abernethy has over 30 years experience in funds management and corporate advisory. He spent ten years at NRMA Investments as Head of Equities managing portfolios. In 1994 he joined Poynton Corporate Limited as an Executive Director before forming Clime Investment Management Limited (formerly known as Loftus Capital Partners) in 1996. John was also appointed Chairman of Clime Capital Limited in July 2009. He has a Bachelor of Law and Commerce from University of NSW.

John Abernethy has been a Director of the Company since November 2007.

Other current directorships

John Abernethy is Chairman of Clime Capital Limited (appointed July 2009). He is Director of Clime Investment Management Limited (formerly known as Loftus Capital Partners Limited) (appointed July 2005), WAM Research Limited (appointed May 2002), Australian Leaders Fund Limited (appointed November 2003), Jasco Holdings Limited and Watermark Market Neutral Fund Limited (appointed June 2013).

15

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

DIRECTORS’ REPORT TO SHAREHOLDERS FOR THE YEAR ENDED 30 JUNE 2013

John Abernethy (Non-Executive Director – Independent) (cont’d)

Former directorships in the last 3 years

John Abernethy has not resigned as a Director from any listed companies within the last three years.

Special responsibilities

Chairman of the Audit & Risk Committee.

Interests in shares of the Company

Details of John Abernethy’s interests in shares of the Company are included later in the report.

Interests in contracts

John Abernethy has no interests in contracts of the Company.

Company Secretary

The following person held the position of Company Secretary at the end of the financial year:

Kate Thorley – CPA, B.Comm, Grad Dip App Fin and Inv, Grad Dip App Corp Gov Kate Thorley has eight years experience in the funds management industry and more than 14 years of financial accounting and corporate governance experience. Kate is the Chief Executive Officer and Company Secretary of Wilson Asset Management (International) Pty Limited and is also the Company Secretary of WAM Capital Limited and WAM Research Limited. She previously held the positions of Chief Financial Officer and Financial Accountant for Wilson Asset Management (International) Pty Limited. Kate was appointed non-executive Director of Mothercare Australia Limited in August 2013. Kate was appointed Company Secretary of WAM Active in November 2007.

Remuneration Report

This report details the nature and amount of remuneration for each Director of WAM Active Limited.

a) Remuneration of Directors

All Directors of WAM Capital are non-executive Directors. The Board from time to time determines remuneration of Directors within the maximum amount approved by the shareholders at the Annual Shareholders Meeting. Directors are not entitled to any other remuneration.

Fees and payments to Directors reflect the demands that are made on and the responsibilities of, the directors and are reviewed annually by the Board. The Company determines the remuneration levels and ensures they are competitively set to attract and retain appropriately qualified and experienced Directors.

The maximum total remuneration of the Directors of the Company has been set at $110,000 per annum. Directors do not receive bonuses nor are they issued options on securities as part of their remuneration. Directors’ fees cover all main Board activities and membership of committees.

16

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

DIRECTORS’ REPORT TO SHAREHOLDERS FOR THE YEAR ENDED 30 JUNE 2013

Remuneration Report (cont’d)

Directors’ remuneration received for the year ended 30 June 2013:

Director Position G.J. Wilson Chairman M.J. Kidman Non-Executive Director J. B. Abernethy Non-Executive Director R.J. Walker (resigned 17 Sep 2012) Non-Executive Director	Short-term employee benefits Directors’ Fees $ Post- employment benefits Superannuation $ Total $ - 1,000 1,000 9,174 826 10,000 27,523 2,477 30,000 5,821 576 6,397
	42,518 4,879 47,397

Directors receive a superannuation guarantee contribution required by the government, which is currently 9% of individuals benefits and do not receive any retirement benefits.

The following table reflects the Company’s performance and Directors’ remuneration over five years:

	2013	2012	2011	2010	2009
Operating profit after tax ($)	1,499,202	394,535	1,205,441	2,121,460	641,196
Dividends (cents per share)	9.5	9.0	8.0	6.0	2.0
After tax net tangible asset (cents per share)	104.65	106.47	112.67	112.14	103.37
Total Directors’ remuneration ($)	47,397	71,000	92,000	92,000	110,000
Shareholders’ equity ($)	27,673,996	17,402,006	18,131,297	17,519,848	15,967,655

As outlined above, the Directors’ fees are not directly linked to the Company’s performance.

b) Director Related Entities Remuneration

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

Geoffrey Wilson is the Director of MAM Pty Limited, the entity appointed to manage the investment portfolio of WAM Active Limited. Entities associated with Geoffrey Wilson also hold 100% of the issued shares of MAM Pty Limited. The core duties of the Manager in addition to managing the investment portfolio include the provision of financial and administrative support to ensure the maintenance of the corporate and statutory records of the Company; liaison with the ASX with

17

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

DIRECTORS’ REPORT TO SHAREHOLDERS FOR THE YEAR ENDED 30 JUNE 2013

Remuneration Report (cont’d)

respect to compliance with the ASX Listing Rules; liaison with ASIC with respect to compliance with the Corporations Act; liaison with the share registrar of the Company; investor relations; and the provision of information necessary for the maintenance of financial accounts of the Company to be completed. In its capacity as Manager, MAM Pty Limited was paid a management fee of 1% p.a (plus GST) of gross assets amounting to $260,330 inclusive of GST (2012: $195,772). As at 30 June 2013, the balance payable to the Manager was $79,787 (2012: $48,497).

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 2013, a performance fee of $488,099 inclusive of GST is payable to MAM Pty Limited (2012: $125,542).

c) Contracts

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.

d) Remuneration of Executives

There are no executives that are paid by the Company. MAM Pty Limited, the investment manager of the Company is remunerated as outlined above.

e) Equity Instruments Disclosures of Directors and Related Parties

As at the date of this report, the Company’s Directors and their related parties held the following interests in the Company:

Directors	Ordinary Shares	Options
G.J. Wilson	2,344,793	2,124,793
M.J. Kidman	384,962	-
J.B. Abernethy	60,000	-

Directors and director related entities disposed of and acquired ordinary shares and options in the Company on the same terms and conditions available to other shareholders. The Directors have not, during or since the end financial year, been granted options over unissued shares or interests in shares of the Company as part of their remuneration.

The Directors have not, during or since the end financial year, been granted options over unissued shares or interests in shares of the Company as part of their remuneration.

18

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

DIRECTORS’ REPORT TO SHAREHOLDERS FOR THE YEAR ENDED 30 JUNE 2013

Directors’ Meetings

Director	No. eligible to attend	Attended
G.J. Wilson	3	3
M.J. Kidman	3	3
J.B. Abernethy	3	3
R.J. Walker (resigned	1	-
17 Sep 2012)

Audit & Risk Committee Meetings

The main responsibilities of the Audit & Risk Committee are set out in the Corporate Governance Statement on page 9 of the Annual Report.

Director	No. eligible to attend	Attended
M.J. Kidman	3	3
J.B. Abernethy	3	3

After Balance Date Events

Since year end the Company declared a final dividend of 4.75 cents per share fully franked to be paid on 4 October 2013.

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.

Future Developments

The Company will continue to pursue investment activities – primarily investing in equities listed on the Australian Securities Exchange – to achieve the Company’s stated objectives.

The Company’s future performance is dependent on the performance of the Company’s investments. In turn, the performance of these investments is impacted by company-specific factors and prevailing industry conditions. In addition, a range of external factors including economic growth rates, interest rates, exchange rates and macro-economic conditions impact the overall equity market and these investments.

As such, we do not believe it is possible or appropriate to accurately predict the future performance of the Company’s investments and, therefore, the Company’s performance.

Environmental Issues

The Company’s operations are not regulated by any environmental regulation under a law of the Commonwealth or of a State or Territory.

19

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

DIRECTORS’ REPORT TO SHAREHOLDERS FOR THE YEAR ENDED 30 JUNE 2013

Indemnification and Insurance of Officers or Auditors

During the financial year the Company paid a premium in respect of a contract insuring the Directors of the Company, the Company Secretary and any related body corporate against liability incurred as such by a Director or Secretary to the extent permitted by the Corporations Act 2001 . The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

No indemnities have been given or insurance premiums paid during or since the end of the financial year, for any person who is or has been an auditor of the Company.

Proceedings on behalf of the Company

No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.

The Company was not a party to any such proceedings during the year.

Non-Audit Services

During the year Moore Stephens Sydney, the Company’s auditor, did not perform any other services in addition to their statutory duties for the Company. Moore Stephens Sydney Pty Limited, a related party of the Company’s auditor, performed taxation services for the Company. Details of the amounts paid to the auditors and their related parties are disclosed in Note 5 to the financial statements.

The Board of Directors, in accordance with advice from the Audit & Risk Committee, is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 . The Directors are satisfied that the services disclosed in Note 5 did not compromise the external auditor’s independence for the following reasons:

• all non-audit services are reviewed and approved by the Audit & Risk Committee prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and

• the nature of the services provided do not compromise the general principles relating to auditory independence in accordance with the APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board.

Auditor’s Independence Declaration

A copy of the Auditor’s Independence Declaration as required under Section 307C of the Corporations Act 2001 is set out on page 22 of this Annual Report.

20

WAM ACTIVE LIMITED A.B.N. 49 126 420 719 DIRECTORS’ REPORT TO SHAREHOLDERS FOR THE YEAR ENDED 30 JUNE 2013

S igned in a c cordance w ith a resolution of th e Board of D irectors.

==> picture [4 x 59] intentionally omitted <==

==> picture [55 x 59] intentionally omitted <==

==> picture [49 x 59] intentionally omitted <==

G .J. Wilson C hairman

D ated in Sydney this 4 t h day of S e ptember 2013

21

==> picture [176 x 56] intentionally omitted <==

Level 15, 135 King Street Sydney NSW 2000

T +61 (0)2 8236 7700 F +61 (0)2 9233 4636

www.moorestephens.com.au

AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF WAM ACTIVE LIMITED

In accordance with the requirements of section 307C of the Corporations Act 2001 , as lead auditor for the audit of WAM Active Limited for the year ended 30 June 2013, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

• a) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

• b) any applicable code of professional conduct in relation to the audit.

==> picture [107 x 38] intentionally omitted <==

Moore Stephens Sydney Chartered Accountants

==> picture [93 x 22] intentionally omitted <==

Scott Whiddett Partner

Dated in Sydney, this 4[th] day of September 2013

22

Moore Stephens Sydney ABN 90 773 984 843. Liability limited by a scheme approved under Professional Standards Legislation Other than for the acts or omissions of financial services licensees. An independent member of Moore Stephens International Limited - members in principal cities throughout the world The Sydney Moore Stephens firm is not a partner or agent of any other Moore Stephens firm.

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2013

Note Proceeds from sale of investments Cost of investments sold Realised gains/(losses) on financial assets Unrealised (losses)/gains on financial assets Other revenue from operating activities 2 Performance fees Management fees Directors fees Custody fees ASX listing and chess fees Share registry fees Brokerage expense on share purchases Option issue expenses Other expenses from ordinary activities Profit before income tax Income tax (expense)/benefit 3(a) Profit attributable to members of the Company 12 Other comprehensive income Other comprehensive income for the year, net of tax Total comprehensive income for the year Basic earnings per share 15 Diluted earnings per share 15	2013 $ 73,949,931 (73,587,240) 362,691 (337,104) 2,955,946 (454,820) (242,580) (47,397) (51,945) (34,954) (40,757) (223,438) (2,191) (113,867) 1,769,584 (270,382) 1,499,202 - 1,499,202 7.3 cents 7.2 cents	2012 $ 57,904,913 (58,655,083)
		(750,170) 578,854 1,319,547 (116,982) (182,424) (71,000) (50,320) (30,568) (24,933) (178,650) (36,836) (134,218)
		322,300 72,235
		394,535
		- 394,535
		2.4 cents
		2.4 cents

The accompanying notes form part of these financial statements.

23

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2013

Note Assets Cash and cash equivalents 13 Trade and other receivables 6 Financial assets 7 Deferred tax assets 3(b) Total Assets Liabilities Financial liabilities 8 Trade and other payables 9 Deferred tax liabilities 3(d) Total Liabilities Net assets Equity Issued capital 10(a) Reserves 11 Accumulated losses 12 Total equity	2013 $ 12,349,971 1,418,887 14,873,300 49,885 28,692,043 - 737,059 280,988 1,018,047 27,673,996 27,091,075 1,599,380 (1,016,459) 27,673,996	2012 $ 9,569,918 836,698 8,826,054 293,181
		19,525,851
		502,082 1,367,861 253,902
		2,123,845
		17,402,006
		16,195,624 1,331,155 (124,773)
		17,402,006

The accompanying notes form part of these financial statements.

24

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2013

Note Total equity as at 1 July Profit for the year attributable to members of the Company 12 Total other comprehensive income for the year Shares issued via dividend reinvestment plan 10(b) Shares issued via exercise of options 10(d) Dividends paid 4(a) Total equity as at 30 June attributable to members of the Company	2013 $ 17,402,006 1,499,202 - 450,614 10,444,837 (2,122,663) 27,673,996	2012 $ 18,131,297 394,535 - 246,770 - (1,370,596)
		17,402,006

The accompanying notes form part of these financial statements.

25

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2013

Note Cash flows from operating activities Dividends and trust distributions received Interest received Other investment income received Management fees (inclusive of GST) Performance fees (inclusive of GST) Brokerage expense on share purchases (inclusive of GST) Payments for administration expenses (inclusive of GST) GST on brokerage expense on share sales Net GST received from the ATO Income tax (paid)/refund Net cash provided by operating activities 14 Cash flows from investing activities Proceeds from sale of investments Payments for purchase of investments Net cash (used in) investing activities Cash flows from financing activities Dividends paid – net of reinvestment Proceeds from option exercise Net cash provided by/(used in) financing activities Net increase/(decrease) in cash and cash equivalents held Cash and cash equivalents at beginning of financial year Cash and cash equivalents at end of financial year 13	2013 $ 2,288,282 319,214 382,446 (229,041) (125,542) (239,521) (333,238) (14,537) 61,518 (104,110) 2,005,471 73,466,272 (81,464,478) (7,998,206) (1,672,049) 10,444,837 8,772,788 2,780,053 9,569,918 12,349,971	2012 $ 661,218 480,473 157,659 (164,236) (320,726) (192,558) (286,954) (10,798) 71,954 17,697
		413,729
		58,140,447 (58,593,143)
		(452,696)
		(1,123,826) -
		(1,123,826)
		(1,162,793) 10,732,711
		9,569,918

The accompanying notes form part of these financial statements.

26

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

1. Summary of significant accounting policies

Basis of preparation

The financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001 .

The Company is a for-profit entity for financial reporting purposes under Australian Accounting Standards.

The financial report was authorised for issue on 4th September 2013 by the Board of Directors.

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

Australian Accounting Standards set out accounting policies that the Australian Accounting Standards Board has concluded would result in financial statements containing relevant and reliable information about transactions, events and conditions to which they apply. Compliance with Australian Accounting Standards ensures the financial statements and notes also comply with International Financial Reporting Standards (IFRS) as issued by the IASB. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless otherwise stated.

Except for cash flow information, the financial statements have been prepared on an accruals basis and are based on historical costs with the exception of financial assets and certain other financial assets and liabilities which have been measured at fair value.

a) Financial instruments

• i. Initial recognition and measurement

• Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. For financial assets, trade date accounting is adopted, which is equivalent to the date that the Company commits to purchase or sell the assets.

Financial instruments are initially measured at fair value. Transaction costs related to financial instruments are expensed to the Statement of Comprehensive Income immediately.

• ii. Classification and subsequent measurement

• Investments such as shares in publicly listed and unlisted companies, exchange traded call and put options and investments in fixed interest securities are subsequently measured at fair value and are presented in the Statement of Financial Position 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 Statement of Comprehensive Income.

27

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

1. Statement of significant accounting policies (cont’d)

a) Financial instruments (cont’d)

• iii. Financial assets at fair value through profit or loss

Financial assets are classified “at fair value through the 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 the Statement of Comprehensive Income in the period in which they arise.

iv. Financial liabilities

Borrowed stock is classified “at fair value through profit or loss”. Realised and unrealised gains and losses arising from changes in fair value are included in the Statement of Comprehensive Income in which they arise.

v. 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.

vi. 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 Company 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 Statement of Comprehensive Income.

b) Income tax

The charge of current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the end of the current financial year. 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 method in respect of temporary differences 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 period when the asset is realised or liability is settled. Deferred tax is credited in the Statement of Comprehensive Income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

28

WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

1. Statement of significant accounting policies (cont’d)

b) Income tax (cont’d)

Deferred tax assets relating to temporary differences and unused tax losses are recognised, to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.

Current tax assets and liabilities are offset only 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 only 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 periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.

c) Cash and cash equivalents

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

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 initially recognised at fair value. They are subsequently stated at their amortised cost less the provision for 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.

g) Impairment of assets

At each reporting date, the Company reviews the carrying values of its non-financial assets to determine whether there is any indication that those assets may be 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 Statement of Comprehensive Income.

h) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of GST, except where the amount of 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 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 Statement of Financial Position.

29

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

1. Statement of significant accounting policies (cont’d)

h) Goods and Services Tax (GST) (cont’d)

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

i) Comparative figures

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

j) Critical accounting estimates and judgements

The Directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and the 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 2013. All material financial assets are valued by reference to quoted prices and therefore no significant estimates or judgements are required in respect to their valuation.

k) Profits reserve

The profits reserve is made up of amounts allocated from retained earnings that are preserved for future dividend payments.

l) New standards and interpretations not yet adopted

The Australian Accounting Standards Board has issued a number of new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods, some of which are relevant to the Company. The Company has decided not to early adopt any of the new and amended pronouncements. The new and amended

pronouncements that are relevant to the Company, but applicable in future reporting periods are set out below:

• i) AASB 9: Financial Instruments and AASB 2010-7: Amendments to Australian Accounting Standards arising from AASB 9 (effective 1 January 2015). AASB 9 permits the recognition of fair value gains and losses in other comprehensive income if they relate to investments that are not traded. The Company has not early adopted AASB 9. This is not expected to have a significant impact on the Company’s financial statements as the Company does not expect to elect any investments as not held for trading.

• ii) AASB 13: Fair Value Measurement and AASB 2011-8: Amendments to Australian Accounting Standards arising from AASB 13 (effective January 2013). AASB 13 addresses how to measure fair value and aims to enhance fair value disclosures. The new standard will impact the type of information disclosed in the notes to the Company’s financial statements. The Company is of the view that the current basis of their fair value recognition is consistent with the new standard’s recognition basis, and is not expected to have a significant impact on the amounts recognised. Accordingly the Company will adopt the new standard from its operative date.

30

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

1. Statement of significant accounting policies (cont’d)

• l) New standards and interpretations not yet adopted (cont’d)

• iii) AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirement (effective 1 July 2013). Amendments to AASB 124 ‘Related Party’ Disclosures’ will remove the duplication of information relating to individual Key Management Personnel in the notes to the financial statements and the Directors’ report. This standard is not expected to have a material impact on the Company’s Financial Statements.

• iv) AASB 2012–2: Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial Liabilities (effective 1 January 2013). AASB 2012–2 principally amends AASB 7: Financial Instruments: Disclosures to require entities to include information that will enable users of their financial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off associated with the entity’s recognised financial assets and recognised financial liabilities, on the entity’s financial position. This Standard is not expected to significantly impact the Company as no financial assets and liabilities are offset in the financial statements.

• v) AASB 2012–3: Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities (effective 1 January 2014). This Standard adds application guidance to AASB 132: Financial Instruments: Presentation to address potential inconsistencies identified in applying some of the offsetting criteria of AASB 132, including clarifying the meaning of “currently has a legally enforceable right of set-off” and that some gross settlement systems may be considered equivalent to net settlement. This Standard is not expected to significantly impact the Company as no financial assets and liabilities are offset in the financial statements.

2. Other revenue

2. Other revenue Australian sourced dividends Interest Trust distributions Underwriting fees Foreign sourced dividends	2013 $ 2,250,479 321,826 380,825 1,621 1,195 2,955,946	2012 $ 666,887 498,280 152,332 2,048 -
		1,319,547

31

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

3. Taxation

a) Income tax expense/(benefit)

The prima facie tax on profit before income tax is reconciled to the income tax expense/(benefit) as follows:

Prima facie tax payable on profit from ordinary activities before income tax at 30% (2012: 30%) Imputation credit gross up Franking credit offset Other non-assessable items Total income tax expense/(benefit) results in a: Current tax expense/(asset) Deferred tax liability Deferred tax asset Over provision in prior period b) Deferred tax assets Tax losses Provisions Option issue costs Capitalised legal fees Movement in deferred tax assets Balance at the beginning of the year Transfer tax losses from current tax liability Recoup losses Credited to the Statement of Comprehensive Income Under provision in prior period At reporting date	2013 $ 530,875 105,868 (352,892) (13,469) 270,382 240,213 27,086 3,416 (333) 270,382 2013 $ 36,077 6,056 7,156 596 49,885 293,181 - (239,880) (3,416) - 49,885	2012 $ 96,690 74,309 (243,234) - (72,235) (215,973) 137,244 6,494 -
		(72,235)
		2012 $ 275,957 7,342 8,841 1,041
		293,181
		83,701 215,973 - (6,494) 1
		293,181

32

WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

3. Taxation (cont’d) c) Current tax liabilities Balance at the beginning of the year Current year income tax expense/(benefit) on operating profit Net income tax paid Income tax refund due Transfer tax losses (from)/to deferred tax asset At reporting date d) Deferred tax liabilities Fair value adjustments Income provisions Movement in deferred tax liabilities Balance at the beginning of the year Credited to the Statement of Comprehensive Income At reporting date 4. Dividends a) Ordinary dividends paid during the year Final Dividend FY2012: 4.5 cents per share fully franked at 30% tax rate paid 19 October 2012 (Final dividend FY2011: 4.0 cents per share fully franked) Interim Dividend FY2013: 4.75 cents per share fully franked at 30% tax rate paid 19 April 2013 (Interim dividend FY2012: 4.5 cents per share fully franked) Dividends paid by the Company 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 has not been recognised as a liability at the end of the financial year: Final dividend for the year ended 30 June 2013 of 4.75 cents per share fully franked at 30% tax rate payable 4 October 2013 (FY2012: 4.5 cents fully franked)	2013 $ - 240,213 (104,443) 104,110 (239,880) - 2013 $ 256,974 24,014 280,988 253,902 27,086 280,988 2013 $ 880,270 1,242,393 2,122,663 1,254,022	2012 $ - (215,973) - - 215,973
		-
		2012 $ 229,267 24,635
		253,902
		116,658 137,244
		253,902
		2012 $ 642,666 727,930
		1,370,596
		733,948

33

WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

4. Dividends (cont’d)

c) Dividend franking account Balance of franking account at year end d) Adjustments to franking account after year end Balance of franking account at year end Estimated income tax refund due Franking credits on dividends receivable Subsequent to the reporting period, the franking account would be reduced by the proposed dividend disclosed in b) above as follows:	2013 $ 26,055 26,055 (104,110) 3,936 (537,438) (611,557)	2012 $ 478,290
		478,290 - - (314,549)
		163,741

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 $280,988 (2012: $253,902).

5. Auditor’s remuneration

Remuneration of the auditor of the Company for: Auditing or reviewing the financial report Other services provided by a related practice of the auditor: Taxation Services	2013 $ 31,735 6,050 37,785	2012 $ 32,012 3,300
		35,312

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.

34

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

6. Trade and other receivables

Outstanding settlements Income receivable GST receivable Tax refund	2013 $ 1,174,249 92,936 47,592 104,110 1,418,887	2012 $ 690,590 126,932 19,176 -
		836,698

Outstanding settlements are on the terms of operating in the securities industry. These are noninterest bearing and require the settlement within three days of the date of a transaction. Income receivable relates to interest, sub-underwriting fees, dividend, and trust distributions receivable at the end of the reporting period.

7. Financial assets

7. Financial assets
Listed investments at fair value Unlisted investments at fair value	2013 $ 14,850,251 23,049 14,873,300	2012 $ 7,976,700 849,354
		8,826,054

The market values of individual investments as at 30 June 2013 are disclosed on pages 51 to 52 of the Annual Report.

8. Financial liabilities

Borrowed stock

2013		2012
$		$
	-	502,082

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 cannot exceed 50% of the gross value of the Portfolio of the Company as outlined in the Company’s Management Agreement.

9. Trade and other payables

Outstanding settlements Management fee payable Performance fee payable Sundry payables	2013 $ 79,631 79,787 488,099 89,542 737,059	2012 $ 1,070,438 48,497 125,542 123,384
		1,367,861

Outstanding settlements are on the terms operating in the securities industry. These do not incur interest and require settlement within three days of the date of the transaction. Sundry creditors are settled within the terms of payment offered. No interest is applicable on these accounts.

35

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

10. Issued capital

a) Paid-up capital 26,400,472 ordinary shares fully paid (2012: 16,309,945) b) Ordinary shares Balance at the beginning of the year 175,537 ordinary shares issued on 19 October 2012 under a dividend reinvestment plan 243,843 ordinary shares issued on 19 April 2013 under a dividend reinvestment plan 9,671,147 ordinary shares issued from the exercise of options allotted July 2012 to June 2013 exercise price $1.08 109,560 ordinary shares issued on 30 September 2011 under a dividend reinvestment plan 133,732 ordinary shares issued on 24 April 2012 under a dividend reinvestment plan At reporting date	2013 $ 27,091,075 16,195,624 183,398 267,216 10,444,837 - - 27,091,075	2012 $ 16,195,624
		15,948,854 - - - 107,057 139,713
		16,195,624

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) Capital management

The Board manages the Company’s capital by regularly reviewing the most efficient manner by which the Company employs its capital including share capital and unexercised options. At the core of this management is the belief that shareholder value should be preserved. Shareholder value will be preserved through the management of the level of distributions to shareholders, share and options issues as well as the use of share buy-backs. These capital management initiatives will be used when deemed appropriate by the Board. There have been no changes in the strategy adopted by the Board to control the capital of the Company since the prior year. The Company is not subject to any externally imposed capital requirements.

d) Options

In June 2012, the Company issued 16,309,945 options on a one-for-one basis to acquire fully paid ordinary shares, exercisable at $1.08 per option. During the year to 30 June 2013, 9,671,147 options were exercised for a total consideration of $10,444,837. At 30 June 2013, 6,638,798 options remain unexercised and can be exercised at any time before 12 December 2013.

36

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

11. Reserves

11. Reserves
	2013	2012
	$	$
Profits reserve	1,599,380	1,331,155
The profits reserve details an amount preserved for future	dividend payments as outlined in
accounting policy Note 1(k).
Movement in profits reserve	2013	2012
	$	$
Balance at the beginning of the year	1,331,155	2,009,070
Transfer from retained earnings	2,390,888	692,681
Final dividend FY2012 paid (refer to note 4a)	(880,270)	(642,666)
Interim dividend FY2013 paid (refer to note 4a)	(1,242,393)	(727,930)
At reporting date	1,599,380	1,331,155

12. Retained earnings

Balance at the beginning of the year Transfer to profits reserve Profit for the year attributable to members of the Company At reporting date	2013 $ (124,773) (2,390,888) 1,499,202 (1,016,459)	2012 $ 173,373 (692,681) 394,535
		(124,773)

13. Cash and cash equivalents

Cash at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items in the Statement of Financial Position as follows:

Cash at bank and on hand Fixed interest securities	2013 $ 1,299,971 11,050,000 12,349,971	2012 $ 1,858,378 7,711,540
		9,569,918

The weighted average interest rate for cash and fixed interest securities as at 30 June 2013 is 3.75% (2012: 5.05%). The fixed interest securities have an average maturity of 70 days (2012: 59 days). The majority of fixed interest securities are invested in term deposits with Australian major banks and their banking subsidiaries that have Standard & Poor’s A-1+ rating. The fixed interest securities also includes the cash collateral for the borrowed stock (refer Note 8).

37

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

14. Cash flow information

Reconciliation of operating profit after income tax: Cash Flow from operations after income tax (Less)/add items classified as investing/financing activities: Realised (gains)/losses on sale of investments Add non-cash items: Unrealised losses/(gains) on investments Changes in assets and liabilities: Decrease/(Increase) in receivables Decrease/(increase) in deferred tax assets Increase/(decrease) in payables (Decrease)/increase in current tax liabilities Increase in deferred tax liabilities Cash flow from operating activities 15. Earnings per share Profit after income tax used in the calculation of basic and diluted earnings per share Weighted average number of ordinary shares outstanding during the year used in calculating basic earnings per share Weighted average number of dilutive options outstanding Weighted average number of ordinary shares outstanding during the year used in calculating dilutive earnings per share	2013 $ 1,499,202 (362,691) 337,103 5,580 243,296 360,005 (104,110) 27,086 2,005,471 2013 $ 1,499,202 No. 20,665,647 250,044 20,915,691	2012 $ 394,535 750,170 (578,854) (2,758) (209,479) (94,826) 17,697 137,244
		413,729
		2012 $ 394,535
		No. 16,185,458 - -

16. Financial risk management

The Company’s financial instruments consist of listed and unlisted investments, trade receivables, trade payables and borrowed stock. The risks exposed to through these financial instruments are discussed below and include credit risk, liquidity risk and market risk consisting of interest rate risk and other price risk. There have been no substantive changes in the types of risks the Company is exposed to, how these risks arise, or the Board’s objective, policies and processes for managing or measuring the risks from the previous period.

Under delegation from the Board, the Manager has the responsibility for assessing and monitoring the financial market risk of the Company. The Manager monitors these risks daily. On a formal basis the investment team meet on a weekly basis to monitor and manage the below risks as appropriate.

38

WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

16. Financial risk management (cont’d)

a) Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge a contracted obligation. The Manager monitors the credit worthiness of counterparties on an ongoing basis and evaluates the credit quality of all new counterparties before engaging them.

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

The Manager is responsible for ensuring there is appropriate diversification across counterparties and that they are of a sufficient quality rating. The Manager is satisfied that the counterparties are of sufficient quality and diversity to minimise any individual counterparty credit risk. The majority of the Company’s receivables arise from unsettled trades at year end which are settled three days after trade date. Engaging with counterparties via the Australian Securities Exchange facilitates the Company in both mitigating and managing its credit risk.

Credit risk is not considered to be a major risk to the Company as any cash and fixed interest securities held by the Company or in its portfolios are invested with financial institutions that have a Standard and Poor’s short rating A-1+ and long term rating of AA-. Also the majority of maturities are within three months.

None of the assets exposed to credit risk are overdue or considered to be impaired.

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 payments are the purchase of securities and dividends paid to shareholders, the levels of which are managed by the Board and the Manager.

The Company’s cash receipts depend upon the level of sales of securities, dividends and interest received and the 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. Should these decrease by a material amount the Company can alter its cash outflows as appropriate. The Company also holds a portion of its portfolio in cash and fixed interest securities sufficient to ensure that it has cash readily available to meet all payments. Furthermore, the assets of the Company are largely in the form of tradeable securities which, if liquidity is available, can be sold on market if necessary.

The table below reflects an undiscounted contractual maturity analysis for the Company’s liabilities. The timing of cash flows presented in the table to settle liabilities reflects the earliest possible contractual settlement date to the reporting date.

39

WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

16. Financial risk management (cont’d)

b) Liquidity risk (cont’d)

30 June 2013 Liabilities Financial liabilities Trade and other payables Total 30 June 2012 Liabilities Financial liabilities Trade and other payables Total	>1 month $ <1 months $ Total $ - - - - 737,059 737,059
	- 737,059 737,059
	>1 month $ <1 months $ Total $ - 502,082 502,082 - 1,367,861 1,367,861
	- 1,869,943 1,869,943

c) Market risk

Market risk is the risk that changes in market prices, such as interest rates and other market prices will affect the fair value or future cash flows of the Company’s financial instruments.

By its nature, as a listed investment company that invests in tradable 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.

(i) Interest rate risk

The Company’s interest bearing financial assets expose it to risks associated with the effects of fluctuations in the prevailing level of market interest rates on its financial position and cash flows. The Company however is not materially exposed to interest rate risk as the majority of its fixed interest securities mature within three months. As the Company’s exposure to interest rate risk is not significant, interest rate sensitivities have not been performed.

40

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

16. Financial risk management (cont’d)

c) Market risk (cont’d)

(i) Interest rate risk (cont’d)

At the end of the reporting period, the Company’s exposure to interest rate risk and the effective weighted average interest rate was as follows:

30 June 2013 Weighted average interest rate (% pa) Assets Cash and cash equivalents 3.75% Trade and other receivables Financial assets Total Liabilities Financial liabilities Trade and other payables Total 30 June 2012 Weighted average interest rate (% pa) Assets Cash and cash equivalents 5.05% Trade and other receivables Financial assets Total Liabilities Financial liabilities Trade and other payables Total	Interest bearing $ 12,349,971 - -	Non- interest bearing $ Total $ - 12,349,971 1,418,887 1,418,887 14,873,300 14,873,300
	12,349,971	16,292,187 28,642,158
	- -	- - 737,059 737,059
	-	737,059 737,059
	Interest bearing $ 9,569,918 - -	Non- interest bearing $ Total $ - 9,569,918 836,698 836,698 8,826,054 8,826,054
	9,569,918	9,662,752 19,232,670
	- -	502,082 502,082 1,367,861 1,367,861
	-	1,869,943 1,869,943

41

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

16. Financial risk management (cont’d)

c) Market risk (cont’d)

(ii) Other price risk

Other market price risk is the risk that the value of an instrument will fluctuate as a result of changes in market prices, whether caused by factors specific to an individual investment, its issuer or all factors affecting all instruments traded in the market.

As the majority of the Company’s investments are carried at fair value with fair value changes recognised in the Statement of Comprehensive Income, all changes in market conditions will directly affect net investment income.

The Manager seeks to manage and reduce the market risk of the Company by diversification of the investment portfolio across numerous stocks and multiple industry sectors. The relative weightings of the individual securities and market sectors are reviewed daily and the risk managed on a daily basis. 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’s industry sector weighting of the gross assets as at 30 June is as below:

Industry sector Financials Industrials Consumer Staples Consumer Discretionary Materials Energy Information Technology Health Care Utilities Telecommunication Services	2013 2012 27.0% 20.4% 8.8% 11.7% 7.1% 2.9% 5.2% 2.8% 3.1% 3.6% 0.6% 0.0% 0.3% 0.3% 0.2% 1.6% - 4.8% - 1.8%
	52.3% 49.9%

Securities representing over 5 per cent of the gross assets at 30 June were:

Company name	2013 (%)
Graincorp Limited	6.1%
Company name	2012 (%)
N/A	N/A

42

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

16. Financial risk management (cont’d)

c) Market risk (cont’d)

(ii) Other price risk Sensitivity Analysis

For investments held by the Company at the end of the reporting period, a sensitivity analysis was performed relating to its exposure to market risk. This analysis demonstrates the effect on current year net assets after tax as a result of a reasonably possible change in the risk variable. The sensitivity assumes all other variables to remain constant.

Investments represent 52.3% (2012: 49.9%) of gross assets at year end. A 5% movement in the market value of each of the investments within the portfolio would result in a 2.6% (2012: 2.5%) movement in the net assets after tax. This would result in the 30 June 2013 net asset backing after tax moving by 2.7 cents per share (2012: 2.6 cents per share).

d) Financial instruments measured at fair value

The financial assets and liabilities recognised at fair value in the Statement of Financial Position have been analysed and classified using a fair value hierarchy reflecting the significance of the inputs in making the measurements. The fair value hierarchy consists of the following levels:

• Level 1: Quoted prices in active markets for identical assets or liabilities

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly (as prices) or indirectly (derived from prices).

• Level 3: Inputs for the asset or liability are not based on observable market data (unobservable inputs).

Included within Level 1 of the hierarchy are listed investments. The fair value of these financial assets and liabilities have been based on the closing quoted last prices at the end of the reporting period, excluding transaction costs.

In valuing unlisted investments, included in Level 2 of the hierarchy, valuation techniques such as those using comparisons to similar investments for which market observable prices are available or the last sale price have been adopted to determine the fair value of these investments.

30 June 2013 Financial assets Financial liabilities Total 30 June 2012 Financial assets Financial liabilities Total	Level 1 $ Level 2 $ Level 3 $ Total $ 14,834,536 38,764 - 14,873,300 - - - -
	14,834,536 38,764 - 14,873,300
	Level 1 $ Level 2 $ Level 3 $ Total $ 7,976,700 849,354 - 8,826,054 (502,082) - - (502,082)
	7,474,618 849,354 - 8,323,972

43

WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

17. Investment transactions

The total number of contract notes that were issued for transactions in securities during the financial year was 3,748 (2012: 2,565). Each contract note could involve multiple transactions. The total brokerage paid on these contract notes was $423,816 (2012: $326,250).

18. Segment reporting

The Company currently operates only in the investment industry within Australia. It has no reportable business or geographic segments.

19. Capital commitments

There are no capital commitments as at 30 June 2013 (2012: nil).

20. Contingent liabilities

At 30 June 2013, the Company had a contingent liability of $9,020 in relation to a placement for Netcomm Wireless Limited (2012: nil).

21. Key management personnel compensation

The names and positions held by 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 R.J. Walker Non-Executive Director (resigned 17 September 2012)

a) Remuneration

There are no executives that are paid by the Company.

Individual Directors’ remuneration disclosures are provided in the Remuneration Report of the Directors’ Report on page 17, as permitted by Corporations Regulations 2M.3.03 and 2M.6.04.

Total Directors remuneration paid by the Company for the year ended 30 June 2013 Total Directors remuneration paid by the Company for the year ended 30 June 2012	Short-term employee benefits Directors’ Fees $ Post- employment benefits Superannuation $ Total $ 42,518 4,879 47,397
	60,459 10,541 71,000

44

WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

21. Key management personnel compensation (cont’d)

b) Share and option holdings

At 30 June 2013, the Company’s key management personnel and their related parties held the following interests in the Company:

Ordinary Shares held

Directors G.J. Wilson M.J. Kidman J.B. Abernethy R.J. Walker (resigned 17/09/12)	Balance at 30 June 2012 Acquisitions Disposals Balance at 30 June 2013 2,144,793 200,000 - 2,344,793 301,702 354,962 271,702 384,962 60,000 - - 60,000 1,642,300 - 1,642,300 -
	4,148,795 554,962 1,914,002 2,789,755

Options held

Directors G.J. Wilson M.J. Kidman J.B. Abernethy R.J. Walker (resigned 17/09/12)	Balance at 30 June 2012 Acquisitions Exercised/ Disposals Balance at 30 June 2013 2,144,793 - 20,000 2,124,793 301,702 - 301,702 - 60,000 - 60,000 - 1,642,300 - 1,642,300 -
	4,148,795 - 2,024,002 2,124,793

At 30 June 2012, the Company’s key management personnel and their related parties held the following interests in the Company:

Ordinary Shares held

Directors G.J. Wilson M.J. Kidman J.B. Abernethy R.J. Walker	Balance at 30 June 2011 Acquisitions Disposals Balance at 30 June 2012 2,144,793 - - 2,144,793 277,872 23,830 - 301,702 60,000 - - 60,000 1,642,300 - - 1,642,300
	4,124,965 23,830 - 4,148,795

Options held

Directors G.J. Wilson M.J. Kidman J.B. Abernethy R.J. Walker	Balance at 30 June 2011 Options Granted Disposals Balance at 30 June 2012 - 2,144,793 - 2,144,793 - 301,702 - 301,702 - 60,000 - 60,000 - 1,642,300 - 1,642,300 - 4,148,795 - 4,148,795

45

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

22. Related party transactions

All transactions with related parties were made on normal commercial terms and conditions and at market rates.

Geoffrey Wilson is the Director of MAM Pty Limited, the entity appointed to manage the investment portfolio of WAM Active Limited. Entities associated with Geoffrey Wilson hold 100% of the issued shares of MAM Pty Limited. The core duties of the Manager in addition to managing the investment portfolio include the provision of financial and administrative support to ensure the maintenance of the corporate and statutory records of the Company; liaison with the ASX with respect to compliance with the ASX Listing Rules; liaison with ASIC with respect to compliance with the Corporations Act; liaison with the share registrar of the Company; investor relations; and the provision of information necessary for the maintenance of financial accounts of the Company to be completed.

In its capacity as Manager, MAM Pty Limited was paid a management fee of 1% p.a (plus GST) of gross assets amounting to $260,330 inclusive of GST (2012: $195,772). At 30 June 2013, the balance payable to the Manager was $79,787 (2012: $48,497).

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. At 30 June 2013, a performance fee of $488,099 inclusive of GST is payable to MAM Pty Limited (2012: $125,542).

Wilson Asset Management (International) Pty Limited employs accounting personnel to provide accounting services to WAM Active Limited. These services are provided on commercial terms and include a standard charge of $2,750 inclusive of GST per month and an additional charge of $5,500 inclusive of GST is charged for preparing the half year and full year financial statements. These accounting services total $38,500 inclusive of GST for the financial year 2013 (2012: $38,500). Wilson Asset Management (International) Pty Limited is owned by an entity associated with Geoffrey Wilson.

These amounts are in addition to the Directors’ remuneration detailed in note 21(a).

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.

46

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

23. Events subsequent to reporting date

Since year end the Board has declared a final dividend of 4.75 cents per share fully franked to be paid on 4 October 2013.

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 Company, the results of those operations, or the state of affairs of the Company in subsequent financial years.

47

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

DIRECTORS’ DECLARATION

T he Directors of WAM Active Limited declar e that:

• 1 ) The fin a ncial repor t as set out in pages 2 3 to 47 and the additional disclos u res includ e d in the Director s ’ Report d e signated a s “Remun e ration Rep o rt”, as set out on pag e s 16 and 18, are in accor d ance with the Corpo r ations Act 2 001 , inclu d ing: a) complying with Accounting Standard s in Australi a and the C orporation s Regulatio n s 200 1 ; and

• b) givi n g a true and fair view o f the financial positio n of the Co m pany as a t 30 June 2 013 and of its perfo r mance, as represent e d by the re s ults of the operations and the cashflows, for t h e year en d ed on that date; and

• 2 ) The Dir e ctor of the Manager, M AM Pty Limited has d eclared th a t:

• a) the f inancial re c ords of the Company f or the fina n cial year have been p roperly maintained in a c cordance w ith the Se c tion 286 o f the Corpo r ations Act 2001 ;

• b) the f inancial st a tements a n d notes fo r the financial year co m ply with th e Accounti n g Sta n dards; and

• c) the f inancial st a tements a n d notes fo r the financial year giv e a true an d fair view.

• 3 ) At the d a te of this d eclaration, in the Dire c tors’ opini o n there ar e reasonable grounds t o believe t hat the Co m pany will be able to p ay its debts as and w h en they b e come due and payable.

S igned in a c cordance w ith a resolution of th e Board of D irectors.

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G .J. Wilson, Chairman D ated in Sydney this 4 t h day of S e ptember 2013

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Level 15, 135 King Street Sydney NSW 2000 T +61 (0)2 8236 7700 F +61 (0)2 9233 4636

www.moorestephens.com.au

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF WAM ACTIVE LIMITED ABN 49 126 420 719

Report on the Financial Report

We have audited the accompanying financial report of WAM Active Limited (‘the company”), which comprises the statement of financial position as at 30 June 2013, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration.

Director’s Responsibility for the Financial Report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards (IFRS).

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001 .

Moore Stephens Sydney ABN 90 773 984 843. Liability limited by a scheme approved under Professional Standards Legislation Other than for the acts or omissions of financial services licensees. An independent member of Moore Stephens International Limited - members in principal cities throughout the world The Sydney Moore Stephens firm is not a partner or agent of any other Moore Stephens firm.

49

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Opinion

In our opinion:

• a. the financial report of WAM Active Limited is in accordance with the Corporations Act 2001, including:

• i. giving a true and fair view of the company’s financial position as at 30 June 2013 and of its performance for the year ended on that date; and

• ii. complying with Australian Accounting Standards and the Corporations Regulations 2001 ; and

• b. the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

Report on the Remuneration Report

We have audited the remuneration report included in pages 16 to 18 of the directors’ report for the year ended 30 June 2013. The directors of the company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s Opinion

In our opinion the remuneration report of WAM Active Limited for the year ended 30 June 2013 complies with section 300A of the Corporations Act 2001 .

Matters Relating to the Electronic Publication of the Audited Financial Report

This auditor’s report relates to the financial report for the year ended 30 June 2013 included on WAM Active Limited’s website. The Company’s directors are responsible for the integrity of WAM Active Limited’s website. We have not been engaged to report on the integrity of the WAM Active Limited’s website. The auditor’s report refers only to the subject matter described above. It does not provide an opinion on any other information, which may have been hyperlinked to/from these statements. If users of the financial report are concerned with the inherent risks arising from publication on a website, they are advised to refer to the hard copy of the audited financial report to confirm the information contained in this website version of the financial report.

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Moore Stephens Sydney Chartered Accountants

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Scott Whiddett Partner

Dated in Sydney this 4[th] day of September 2013

50

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

INVESTMENTS AT MARKET VALUE AS AT 30 JUNE 2013

Company Name	Code	Market Value	% of Gross
		$	Assets
Financials
Ask Funding Limited	AKF	26,512	0.1%
Australasian Wealth Investments Limited	AWK	46,761	0.2%
Bell Financial Group Limited	BFG	172,822	0.6%
Centuria Capital Limited	CNI	43,877	0.2%
Century Australia Investments Limited	CYA	1,284,625	4.5%
CIC Australia Limited	CNB1	185,105	0.6%
Contango Microcap Limited	CTN	172,435	0.6%
Contango Microcap Ltd Option $1.20 28/02/2014	CTNO9	1,369	0.0%
Devine Limited	DVN	307,872	1.1%
Emerging Leaders Investments Limited	ELI	766,636	2.7%
IMF (Australia) Limited 10.25% Conv Note Dec 2014	IMFG	157,772	0.5%
ING Private Equity Access Limited	IPE	588,163	2.0%
Ingenia Communities Group	INA	420,194	1.5%
Ironbark Capital Limited	IBC	196,024	0.7%
Keybridge Capital Limited	KBC	90,720	0.3%
Magellan Financial Group Limited	MFG	595,762	2.1%
Peters Macgregor Investments Limited	PET	23,049	0.1%
RHG Limited	RHG	114,431	0.4%
Signature Capital Investments Limited	SGI	15,715	0.1%
Sunland Group Limited	SDG	645,042	2.3%
Templeton Global Growth Fund Limited	TGG	157,984	0.5%
The Trust Company Limited	TRU	176,427	0.6%
Trafalgar Corporate Group	TGP	186,199	0.7%
Trinity Group	TCQ	45,320	0.2%
Villa World Limited	VLW	426,703	1.5%
Wentworth Holdings Limited	WWM	69,890	0.2%
Westoz Investment Company Limited	WIC	601,133	2.1%
Westpac Banking Corporation stapled security	WBCPA	114,077	0.4%
Wide Bay Australia Ltd	WBB	53,492	0.2%
		7,686,111	27.0%
Industrials
Australian Infrastructure Fund	AIX	58,507	0.2%
Clarius Group Limited	CND	85,246	0.3%
Coventry Group Limited	CYG	700,461	2.5%
Dolomatrix International Limited	DMX	25,087	0.1%
Hills Holdings Limited	HIL	694,199	2.4%
K & S Corporation Limited	KSC	102,547	0.4%
Norfolk Group Limited	NFK	305,560	1.1%
Rungepincockminarco Limited	RUL	234,786	0.8%
Saunders International Limited	SND	3,019	0.0%
Sedgman Limited	SDM	32,342	0.1%
Seymour Whyte Limited	SWL	265,403	0.9%
		2,507,157	8.8%
Consumer Staples
Graincorp Limited	GNC	1,724,177	6.1%
Primeag Australia Limited	PAG	135,688	0.4%
Warrnambool Cheese and Butter Factory Company	WCB	164,814	0.6%
		2,024,679	7.1%

51

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

INVESTMENTS AT MARKET VALUE AS AT 30 JUNE 2013

Company Name Code Consumer Discretionary Automotive Holdings Group Limited AHE Enero Gorup Limited EGG Harvey Norman Holdings Limited HVN iSelect Limited ISU Noni B Limited NBL Prime Media Group Limited PRT Materials Brickworks Limited BKW Capral Limited CAA Murchison Metals Ltd MMX Energy Miclyn Express Offshore Limited MIO Information Technology ISS Group Limited ISS Longreach Group Limited LRG Health Care Australian Pharmaceutical Industries Limited API Total Long Portfolio Total Cash and cash equivalents, income receivable and net outstanding settlements Total Short Portfolio Gross Assets

Market Value $ % of Gross Assets 47,456 0.2% 30,688 0.1% 738,495 2.6% 79,412 0.3% 86,804 0.3% 470,368 1.7% 1,453,223 5.2% 555,447 2.0% 261,737 0.9% 58,512 0.2% 875,696 3.1% 183,002 0.6% 183,002 0.6% 23,072 0.1% 52,643 0.2% 75,715 0.3% 67,717 0.2% 67,717 0.2% 14,873,300 52.3% 13,585,117 47.7% - 28,458,417

52

WAM ACTIVE LIMITED A.B.N. 49 126 420 719

ASX ADDITIONAL INFORMATION

Additional information required by the Australian Stock Exchange Limited Listing Rules and not disclosed elsewhere in this report.

Shareholdings

Substantial shareholders (at 31 July 2013)

Mr Geoffrey James Wilson and Associated Entities 8.8% of the issued share capital

On-market buy back (at 31 July 2013)

There is no current on-market buy back.

Distribution of shareholders (at 31 July 2013)

Category 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over	No. of shareholders Ordinary Shares Options 63 23 198 99 192 49 440 69 42 11
	935 251

The number of shareholdings held in less than marketable parcels is 16.

Twenty largest shareholders – Ordinary shares (at 31 July 2013)

Name Entities associated with Mr Geoffrey Wilson Clodene Pty Limited Ruapehu Holdings Pty Ltd (Ruapehu A/C) Sanolu Pty Limited Harlow Trading Pty Limited (Arragon Pension Fund A/C) Entities associated with Mr Matthew Kidman Mrs M Tooher Mr & Mrs M A O’Brien Mr R Tooher Edington Pty Limited (Herring Super Fund A/C) Mr & Mrs D B Brown Trophy Components Distributors Pty Limited Uplands Holdings Pty Ltd (Media Five Partners Super Fund A/C) Vohra Holdings Pty Ltd (Vohra Super Fund A/C) W L Houghton Pty Ltd (The Chiatta Super Fund A/C) Distad Pty Limited (Barker Superfund A/C) Mr & Mrs K A Tunks (The Metalong S/F A/C) The Miller Foundation Ltd Mr & Mrs A Stuer Dr & Mrs W B Blakemore (Dr WB Blakemore P/L S/F A/C)

Number of ordinary shares held Percentage of issued capital held 2,234,793 8.8% 576,488 2.2% 417,339 1.6% 409,067 1.5% 380,000 1.4% 346,067 1.3% 300,000 1.1% 280,240 1.1% 272,775 1.0% 226,500 0.9% 222,991 0.8% 200,000 0.8% 200,000 0.8% 200,000 0.8% 194,603 0.7% 185,000 0.7% 152,500 0.6% 150,000 0.6% 142,933 0.5% 142,601 0.5%

7,233,897 27.7%

Stock Exchange Listing

Quotation has been granted for all of the ordinary shares and options of the Company on all Member Exchanges of the ASX Limited.

53

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