WAM ACTIVE LIMITED — Annual Report 2014

Aug 4, 2014

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WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

APPENDIX 4E PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2014

RESULTS FOR ANNOUNCEMENT TO THE MARKET All comparisons to the year ended 30 June 2013

	$	up/down	% mvmt
Revenue from ordinary activities	6,060,365	up	103.3%
Profit from ordinary activities before tax attributable to
members	4,058,622	up	129.4%
Profit from ordinary activities after tax attributable to
members	3,171,203	up	111.5%
Net profit for the period attributable to members	3,171,203	up	111.5%
		Franked
	Cents per	amount per	Tax rate for
Dividend Information	share	share	franking
Interim dividend cents per share	4.8	4.8	30%
Final dividend cents per share	4.8	4.8	30%
Final Dividend Dates
Ex dividend date			13 October 2014
Record date			15 October 2014
Last election date for the DRP			16 October 2014
Payment date			24 October 2014
The Dividend Reinvestment Plan is in operation and the recommended fully		franked final dividend of 4.8 cents
per share qualifies. Participating shareholders will be entitled to be allotted the number of shares (rounded to
the nearest whole number) which the cash dividend would purchase at the		relevant issue price. The relevant
issue price will be at a 5.0% discount to the price (calculated as the VWAP (volume weighted average market
price) of shares sold on the ASX on the ex date for the relevant dividend and the 3 trading days following that
date).
		30 June 14	30 June 13
Net tangible asset backing (after tax) per share		$1.06	$1.05
This report is based on the Annual Report which is in the process of being audited. All the documents
comprise the information required by Listing Rule 4.3A.

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

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2014

Note Net realised and unrealised gains on financial assets Investment revenue 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 3(a) Profit attributable to members of the Company 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	2014 $ 4,317,595 1,742,770 (1,066,497) (374,057) (70,000) (52,366) (45,176) (36,384) (209,371) - (147,892) 4,058,622 (887,419) 3,171,203 - 3,171,203 9.7cents 9.7cents	2013 $ 25,587 2,955,946 (454,820) (242,580) (47,397) (51,945) (34,724) (35,890) (223,438) (2,191) (118,964)
		1,769,584 (270,382)
		**1,499,202 **
		- **1,499,202 **
		7.3 cents
		7.2cents

The accompanying notes form part of these financial statements.

2

WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2014

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	2014 $ 17,546,424 1,857,817 20,801,747 12,624 40,218,612 1,082,900 2,665,546 39,035 3,787,481 36,431,131 35,788,177 1,659,413 (1,016,459) **36,431,131 **	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

The accompanying notes form part of these financial statements.

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

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2014

Note Balance at 1 July 2012 Profit for the year Transfer to profits reserve 11 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) Balance at 30 June 2013 Profit for the year Transfer to profits reserve 11 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) Balance at 30 June 2014	Issued capital $ Accumulated losses $ Profits reserve $ Total equity $ 16,195,624 (124,773) 1,331,155 17,402,006 - 1,499,202 - 1,499,202 (2,390,888) 2,390,888 - - - - - 450,614 - - 450,614 10,444,837 - - 10,444,837 - - (2,122,663) (2,122,663)
	27,091,075 (1,016,459) 1,599,380 27,673,996
	- 3,171,203 - 3,171,203 - (3,171,203) 3,171,203 - - - - - 1,855,979 - - 1,855,979 6,841,123 - - 6,841,123 - - (3,111,170) (3,111,170)
	35,788,177 (1,016,459) 1,659,413 **36,431,131 **

The accompanying notes form part of these financial statements.

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

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2014

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 Net cash (used in)/provided by operating activities 14 Cash flows from investing activities Proceeds from sale of investments Payments for purchase of investments Net cash provided by/(used in) investing activities Cash flows from financing activities Proceeds from options exercised Proceeds from DRP underwriting Dividends paid – net of reinvestment Net cash provided by/(used in) financing activities Net increase 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	2014 $ 1,132,784 423,740 188,283 (378,071) (488,099) (224,432) (325,799) (16,144) 97,336 (995,895) (586,297) 98,364,946 (98,168,128) 196,818 6,841,123 1,166,724 (2,421,915) 5,585,932 5,196,453 12,349,971 17,546,424	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)
		10,444,837 - (1,672,049)
		(1,123,826)
		2,780,053 9,569,918
		12,349,971

The accompanying notes form part of these financial statements.

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WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

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.

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

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.

Classification and subsequent measurement

Financial instruments are subsequently measured at fair value. Current market prices for all quoted investments are used to determine fair value. For all unlisted securities that are not traded in an active market, valuation techniques are applied to determine fair value, including recent arm’s length transactions and reference to similar instruments.

The Company classifies its financial instruments into the following categories:

(i) 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.

(ii) Financial liabilities

• Financial liabilities such as 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.

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.

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WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

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

b) Income tax

The charge of current income tax expense is based on the profit for the year adjusted for any nonassessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the 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.

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 term deposits 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.

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WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

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

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.

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 2014. 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 transferred from current and retained earnings that are preserved for future dividend payments.

l) New and amended accounting policies adopted

The Company has adopted AASB 13: Fair Value Measurement and associated Amending Standards. AASB 13 defines fair value, addresses how to measure fair value and requires disclosures about fair value measurement. The amounts reported in the Company’s financial statements were not affected as a consequence of applying AASB 13. However the Company has included new disclosures regarding assets and liabilities that are measured at fair value in the Company’s financial statements.

Fair value is the price the Company would receive to sell an asset or would have to pay to transfer a liability in an orderly transaction between independent, knowledgeable and willing market participants at the measurement date or, in the absence of such a market, the most advantageous market to which the Company has access to at that date.

As fair value is a market-based measure, the Company uses closing quoted last prices as a basis of measuring the fair value of assets and liabilities that are listed. The fair values of assets and liabilities that are not traded in an active market are determined using valuation techniques that maximise the use of observable market data.

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

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

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

m) 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 (December 2010) and associated Amending Standards (effective 1 January 2017). AASB9 will include simplifications to the classification of financial assets and 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 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. This Standard is not expected to significantly impact the Company as no financial assets and liabilities are offset in the financial statements.

2. Investment revenue

Australian sourced dividends Interest Trust distributions Foreign sourced dividends Underwriting fees	2014 $ 1,124,109 406,702 190,735 10,397 10,827 1,742,770	2013 $ 2,250,479 321,826 380,825 1,195 1,621
		2,955,946

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

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

3. Taxation

a) Income tax expense

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

Prima facie tax on profit before income tax at 30% (2013: 30%) Imputation credit gross up Foreign income tax offset gross up Franking credit offset Foreign income tax offset Other non-assessable items Total income tax expense results in a: Current tax expense 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 At reporting date	2014 $ 1,217,587 142,131 550 (473,769) (1,835) 2,755 887,419 1,128,188 (241,953) 1,184 - 887,419 2014 $ - 6,732 4,815 1,077 12,624 49,885 - (36,077) (1,184) 12,624	2013 $ 530,875 105,868 63 (352,892) (211) (13,321) 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

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

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

3. Taxation (cont’d) c) Current tax liabilities Balance at the beginning of the year Current year income tax expense on operating profit Net income tax paid Income tax refund due Transfer tax losses from 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 FY2013: 4.75 cents per share fully franked at 30% tax rate paid 4 October 2013 (Final dividend FY2012: 4.5 cents per share fully franked) Interim Dividend FY2014: 4.8 cents per share fully franked at 30% tax rate paid 30 April 2014 (Interim dividend FY2013: 4.75 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 2014 of 4.8 cents per share fully franked at 30% tax rate payable 24 October 2014 (FY2013: 4.75 cents fully franked)	2014 $ - 1,128,188 (1,100,006) 7,895 (36,077) - 2014 $ 20,132 18,903 39,035 280,988 (241,953) 39,035 2014 $ 1,478,136 1,633,034 3,111,170 **1,647,194 **	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

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WAM ACTIVE LIMITED

A.B.N. 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

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:	2014 $ 162,363 162,363 (7,894) - (705,940) (551,471)	2013 $ 26,055
		26,055 (104,110) 3,936 (537,438)
		(611,557)

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 $39,035 (2013: $280,988).

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	2014 $ 35,797 7,398 43,195	2013 $ 31,735 6,050
		37,785

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.

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

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

6. Trade and other receivables

6. Trade and other receivables
Outstanding settlements Income receivable GST receivable Tax refund	2014 $ 1,662,647 90,976 96,299 7,895 1,857,817	2013 $ 1,174,249 92,936 47,592 104,110
		**1,418,887 **

Outstanding settlements are on the terms of operating in the securities industry. These are non-interest 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

Listed investments at fair value Unlisted investments at fair value 8. Financial liabilities Borrowed stock	2014 $ 20,781,152 20,595 20,801,747 2014 $ 1,082,900	2013 $ 14,850,251 23,049
		14,873,300
		2013 $ -

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	2014 $ 1,292,799 103,144 1,144,533 125,070 2,665,546	2013 $ 79,631 79,787 488,099 89,542
		737,059

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.

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

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

10. Issued capital

a) Paid-up capital 34,316,532 ordinary shares fully paid (2013: 26,400,472) b) Ordinary shares Balance at the beginning of the year 271,076 ordinary shares issued on 4 October 2013 under a dividend reinvestment plan 1,015,602 ordinary shares issued on 4 October 2013 under a dividend reinvestment plan underwriting agreement 295,009 ordinary shares issued on 30 April 2014 under a dividend reinvestment plan 6,334,373 ordinary shares issued from the exercise of options allotted July 2013 to December 2013 exercise price $1.08 175,537 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 At reporting date	2014 $ 35,788,177 27,091,075 311,412 1,166,724 377,843 6,841,123 - - - 35,788,177	2013 $ 27,091,075
		16,195,624 - - - - 183,398 267,216 10,444,837
		27,091,075

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

The Company raised a total of $17,285,960 through the one-for-one Bonus Option Issue announced on 4 May 2012. These options expired on 12 December 2013 with 16,005,520 options exercised.

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

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

11. Reserves

Profits reserve	2014 $ 2013 $ 1,659,413 1,599,380

The profits reserve details an amount preserved for future dividend payments as outlined in accounting policy Note 1(k).

Movement in profits reserve Balance at the beginning of the year Transfer from retained earnings Final dividend FY2013 paid (refer to note 4a) Interim dividend FY2014 paid (refer to note 4a) At reporting date 12. Accumulated losses Balance at the beginning of the year Transfer to profits reserve Profit for the year attributable to members of the Company At reporting date	2014 $ 1,599,380 3,171,203 (1,478,136) (1,633,034) 1,659,413 2014 $ (1,016,459) (3,171,203) 3,171,203 (1,016,459)	2013 $ 1,331,155 2,390,888 (880,270) (1,242,393)
		1,599,380
		2013 $ (124,773) (2,390,888) 1,499,202
		(1,016,459)

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 Term deposits	2014 $ 3,201,009 14,345,415 17,546,424	2013 $ 1,299,971 11,050,000
		12,349,971

The weighted average interest rate for cash and term deposits as at 30 June 2014 is 3.28% (2013: 3.75%). The term deposits have an average maturity of 88 days (2013: 70 days). The majority of term deposits are invested with major Australian banks and their banking subsidiaries that have Standard & Poor’s A-1+ rating. The term deposits also includes the cash collateral for the borrowed stock (refer Note 8).

15

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

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

14. Cash flow information Reconciliation of operating profit after income tax: Cash Flow from operations after income tax Less items classified as investing/financing activities: Realised gains on sale of investments (Less)/add non-cash items: Unrealised (gains)/losses on investments Changes in assets and liabilities: (Increase)/decrease in receivables Decrease in deferred tax assets Increase in payables Increase/(decrease) in current tax liabilities (Decrease)/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	2014 $ 3,171,203 (2,260,570) (2,057,025) (46,748) 37,261 715,319 96,216 (241,953) (586,297) 2014 $ 3,171,203 No. 32,673,032 - 32,673,032	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

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