WAM ACTIVE LIMITED — Annual Report 2016

Aug 10, 2016

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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 2016

RESULTS FOR ANNOUNCEMENT TO THE MARKET All comparisons to the year ended 30 June 2015

$ up/down	% mvmt
Revenue from ordinary activities 6,255,856 up Profit from ordinary activities before tax attributable to members 4,166,837 up Profit from ordinary activities after tax attributable to members 3,139,348 up Net profit for the period attributable to members 3,139,348 up Dividend Information Cents per share Franked amount per share	189.3% 365.0% 249.7% 249.7% Tax rate for franking
2016 Interim dividend cents per share 2.5c 2.5c 2016 Final dividend cents per share 2.5c 2.5c Final Dividend Dates	30% 30%
Ex dividend date 17 October 2016 Record date 18 October 2016 Last election date for the DRP 20 October 2016 Payment date 28 October 2016

Dividend Reinvestment Plan

The Dividend Reinvestment Plan (‘DRP’) is in operation and the recommended fully franked final dividend of 2.5 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 2.5% 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 16 30 June 15 Net tangible asset backing (after tax) per share $1.04 $1.00

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

ABN 49 126 420 719

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2016

Note Net realised and unrealised gains on financial assets Investment revenue 2 Performance fees Management fees Directors fees Expenses paid on borrowed stock Custody fees ASX listing and chess fees Share registry fees Brokerage expense on share purchases Payroll tax Other expenses from ordinary activities Profit before income tax Income tax (expense)/benefit 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	2016 $ 4,714,129 1,541,727 (1,062,012) (376,081) (90,000) (31,703) (23,272) (43,954) (34,480) (238,013) (27,295) (162,209) 4,166,837 (1,027,489) 3,139,348 - 3,139,348 9.0 cents 9.0 cents	2015 $ 252,687 1,909,930 (249,088) (371,420) (80,000) (59,949) (42,157) (43,711) (31,669) (240,210) - (148,336)
		896,077 1,604
		**897,681 **
		- **897,681 **
		2.6 cents
		2.6 cents

The accompanying notes form part of these financial statements.

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WAM ACTIVE LIMITED

ABN 49 126 420 719

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2016

Note Assets Cash and cash equivalents 13 Trade and other receivables 6 Financial assets 7 Current tax assets 3(c) Deferred tax assets 3(b) Total Assets Liabilities Financial liabilities 8 Trade and other payables 9 Current tax liabilities 3(c) Deferred tax liabilities 3(d) Total Liabilities Net Assets Equity Issued capital 10(a) Reserves 11 Accumulated losses 12 Total Equity	2016 $ 15,974,380 3,139,528 20,720,803 - 9,156 39,843,867 938,859 2,181,895 162,155 5,231 3,288,140 36,555,727 35,263,028 2,610,458 (1,317,759) 36,555,727	2015 $ 10,691,455 2,419,411 23,244,138 203,180 13,720
		**36,571,904 **
		248,935 1,569,520 - 10,830
		1,829,285
		34,742,619
		34,849,177 1,143,942 (1,250,500)
		34,742,619

The accompanying notes form part of these financial statements.

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WAM ACTIVE LIMITED ABN 49 126 420 719

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2016

Note Balance at 1 July 2014 Profit for the year Transfer to profits reserve 11 Other comprehensive income for the year Transaction with owners: Shares issued via dividend reinvestment plan 10(b) Return of capital Dividends paid 4(a) Balance at 30 June 2015 Profit for the year Transfer to profits reserve 11 Other comprehensive income for the year Transaction with owners: Shares issued via dividend reinvestment plan 10(b) Dividends paid 4(a) Balance at 30 June 2016	Issued capital $ Accumulated losses $ Profits reserve $ Total equity $ 35,788,177 (1,016,459) 1,659,413 36,431,131 - 897,681 - 897,681 - (1,131,722) 1,131,722 - - - - - 448,750 - - 448,750 (1,387,750) - - (1,387,750) - - (1,647,193) (1,647,193)
	34,849,177 (1,250,500) 1,143,942 34,742,619
	- 3,139,348 - 3,139,348 - (3,206,607) 3,206,607 - - - - - 413,851 - - 413,851 - - (1,740,091) (1,740,091)
	35,263,028 (1,317,759) 2,610,458 36,555,727

The accompanying notes form part of these financial statements.

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WAM ACTIVE LIMITED

ABN 49 126 420 719

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2016

Note Cash flows from operating activities Proceeds from sale of investments Payments for purchase of investments Dividends received Interest received Trust distributions received Underwriting fees 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 provided by/(used in) operating activities 14 Cash flows from financing activities Return of capital paid Dividends paid – net of reinvestment Net cash 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 Non-cash transactions: Shares issued via dividend reinvestment plan	2016 $ 127,497,375 (120,269,306) 805,774 231,199 331,647 18,287 (468,195) (267,313) (255,240) (424,041) (15,857) 88,025 (663,189) 6,609,166 - (1,326,241) (1,326,241) 5,282,925 10,691,455 15,974,380 **413,851 **	2015 $ 115,294,695 (119,163,416) 1,170,491 490,624 240,792 24,014 (402,403) (1,144,533) (257,704) (429,017) (15,803) 146,467 (222,983)
		(4,268,776)
		(1,387,750) (1,198,443)
		(2,586,193)
		(6,854,969) 17,546,424
		10,691,455
		448,750

The accompanying notes form part of these financial statements.

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WAM ACTIVE LIMITED

ABN 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016

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 .

WAM Active Limited (‘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.

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.

The accounting policies adopted in the preparation of these financial statements are consistent with those applied in the 30 June 2015 Annual Report.

2. Investment revenue Australian sourced dividends Interest Trust distributions Foreign sourced dividends Underwriting fees	2016 $ 943,813 237,438 339,203 4,063 17,210 1,541,727	2015 $ 1,171,480 447,680 260,166 4,137 26,467
		1,909,930

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WAM ACTIVE LIMITED ABN 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016

3. Taxation

a) Income tax expense/(benefit)

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

	2016	2015
	$	$
Prima facie tax on profit before income tax at 30% (2015: 30%)	1,250,051	268,823
Imputation credit gross up	74,866	115,476
Foreign income tax offset gross up	215	422
Imputation credit offset	(249,553)	(384,920)
Foreign income tax offset	(717)	(1,405)
Other non-assessable items*	(47,373)	-
	1,027,489	(1,604)
*Other non-assessable items relate to timing differences on dividends received.
Effective tax rate	24.7%	(0.2%)
The effective tax rate for FY2016 is 24.7%, reflecting the benefit to the Company of franking		credits received
on dividend income during the year.
Total income tax expense/(benefit) results in a:
Current tax expense	1,022,505	27,697
Deferred tax liability	420	(28,205)
Deferred tax asset	4,564	(1,096)
	1,027,489	(1,604)
b) Deferred tax assets	2016	2015
	$	$
Provisions	7,194	8,729
Option issue costs	131	2,473
Capitalised legal fees	1,831	2,518
	9,156	13,720
Movement in deferred tax assets
Balance at the beginning of the year	13,720	12,624
Credited to the Statement of Comprehensive Income	(4,564)	1,096
At reporting date	9,156	13,720

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WAM ACTIVE LIMITED

ABN 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016

3. Taxation (cont’d) c) Current tax liabilities/(assets) Balance at the beginning of the year Current year income tax expense on operating profit Net income tax paid Underprovision in prior period At reporting date d) Deferred tax liabilities Fair value adjustments Income provisions Movement in deferred tax liabilities Balance at the beginning of the year Overprovision in prior period Credited to the Statement of Comprehensive Income At reporting date 4. Dividends a) Ordinary dividends paid during the year Final Dividend FY2015: 2.5 cents per share fully franked at 30% tax rate paid 30 October 2015 (Final dividend FY2014: 4.8 cents per share fully franked) Interim Dividend FY2016: 2.5 cents per share fully franked at 30% tax rate paid 29 April 2016 (Interim dividend FY2015: no dividend declared) 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 2016 of 2.5 cents per share fully franked at 30% tax rate payable 28 October 2016 (FY2015: 2.5 cents fully franked)	2016 $ (203,180) 1,022,505 (663,190) 6,020 162,155 2016 $ 5,163 68 5,231 10,830 (6,019) 420 5,231 2016 $ 867,346 872,745 1,740,091 2016 $ 877,743	2015 $ (7,895) 27,697 (222,979) (3)
		(203,180)
		2015 $ - 10,830
		10,830
		39,035 - (28,205)
		10,830
		2015 $ 1,647,193 -
		1,647,193
		2015 $ 867,344

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WAM ACTIVE LIMITED

ABN 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016

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 payable/(refund due) Subsequent to the reporting period, the franking account would be reduced by the proposed dividend disclosed in b) above as follows:	2016 $ 231,314 231,314 162,155 (376,176) 17,293	2015 $ 64,324
		64,324 (203,180) (371,719)
		(510,575)

The Company’s ability to continue to pay franked dividends is dependent upon the receipt from investments and the Company paying tax. 5. Auditor’s remuneration Remuneration of the auditor of the Company for: 2016 $ Auditing or reviewing the financial report 36,831 Other assurance services - Other services provided by a related practice of the auditor: Taxation Services 7,480 Other non-assurance services 3,300 47,611

of franked dividends 2015 $ 36,512 1,017 7,260 - 44,789

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

ABN 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016

6. Trade and other receivables

Outstanding settlements Income receivable GST receivable	2016 $ 2,815,657 229,805 94,066 3,139,528	2015 $ 2,307,865 74,985 36,561
		2,419,411

Outstanding settlements are on the terms of operating in the securities industry. These are non-interest bearing and require the settlement within two 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	2016 $ 20,253,481 467,322 20,720,803	2015 $ 23,010,511 233,627
		23,244,138

The majority of unlisted investments held at 30 June 2016 relate to Initial Public Offerings that have listed on the Australian Securities Exchange since year end.

8. Financial liabilities

Borrowed stock

2016	2015
$	$
938,859	248,935

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	2016 $ 901,438 34,742 1,139,721 105,994 2,181,895	2015 $ 1,092,965 99,338 267,314 109,903
		1,569,520

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

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WAM ACTIVE LIMITED

ABN 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016

10. Issued capital

a) Paid-up capital 35,109,715 ordinary shares fully paid (2015: 34,693,760) b) Ordinary shares Balance at the beginning of the year 215,968 ordinary shares issued on 30 October 2015 under a dividend reinvestment plan 199,987 ordinary shares issued on 29 April 2016 under a dividend reinvestment plan 377,228 ordinary shares issued on 24 October 2014 under a dividend reinvestment plan 4.0 cents per share return of capital paid 1 June 2015 At reporting date	2016 $ 35,263,028 34,849,177 208,389 205,462 - - 35,263,028	2015 $ 34,849,177
		35,788,177 448,750 (1,387,750)
		34,849,177

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 deploys its capital. At the core of this, the Board is of the belief that shareholder value should be preserved through the management of the level of distributions to shareholders, share and option issues and 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) Return of capital

As at 31 December 2014, the Company’s net assets were less than issued capital. The Directors recognise investors have cash flow needs and therefore declared a 4.0 cents per share return of capital, which was approved by shareholders at an Extraordinary General Meeting held in Sydney on 19 May 2015. WAM Active traded ex-return of capital on 21 May 2015 and the payment was made on 1 June 2016.

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WAM ACTIVE LIMITED

ABN 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016

11. Reserves

11. Reserves
Profits reserve The profits reserve is made up of amounts transferred from current future dividend payments. Movement in profits reserve Balance at the beginning of the year Transfer of profits during the period Final dividend paid (refer to note 4a) Interim dividend 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	2016 $ 2015 $ 2,610,458 1,143,942 year profits and are preserved for 2016 $ 2015 $ 1,143,942 1,659,413 3,206,607 1,131,722 (867,346) (1,647,193) (872,745) - 2,610,458 1,143,942 2016 $ 2015 $ (1,250,500) (1,016,459) (3,206,607) (1,131,722) 3,139,348 897,681 (1,317,759) (1,250,500)
		1,143,942
		2015 $ (1,016,459) (1,131,722) 897,681
		(1,250,500)

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 Cash at call Term deposits	2016 $ 11,967,919 80 4,006,381 15,974,380	2015 $ 458,777 7,232,678 3,000,000
		10,691,455

The weighted average interest rate for cash and term deposits as at 30 June 2016 is 1.76% (2015: 2.53%). The term deposits have an average maturity of 59 days (2015: 100 days). All the term deposits are invested with major Australian banks and their 100% owned 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).

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WAM ACTIVE LIMITED

ABN 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016

14. Cash flow information

Reconciliation of operating profit after income tax: Profit after income tax Fair value gains/(losses) on financial assets Changes in assets and liabilities: Increase in receivables Decrease/(increase) in deferred tax assets Increase/(decrease) in payables Decrease/(increase) in current tax assets Decrease in deferred tax liabilities Cash flow from operating activities 15. Earnings per share Basic 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 and dilutive earnings per share	2016 $ 3,139,348 3,213,259 (720,117) 4,564 612,376 365,335 (5,599) 6,609,166 2016 9.0 cents 2016 $ 3,139,348 No. 34,883,043	2015 $ 897,681 (3,276,355) (569,488) (1,096) (1,096,027) (195,286) (28,205)
		(4,268,776)
		2015 2.6 cents
		2015 $ 897,681
		No. 34,590,997

There are no outstanding securities that are potentially dilutive in nature for the Company.

16. Segment reporting

The Company currently engages in investing activities, including cash, term deposits and equity investments. It has no reportable business or geographic segments.

17. Capital commitments

There are no capital commitments as at 30 June 2016 (2015: nil).

18. Contingent liabilities

There are no contingent liabilities as at 30 June 2016 (2015: $nil).

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WAM ACTIVE LIMITED

ABN 49 126 420 719

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016

19. Events subsequent to reporting date

Since year end the Board has declared a final dividend of 2.5 cents per share fully franked to be paid on 28 October 2016.

The Company has announced a one for one bonus option issue (‘Bonus Option Issue’) to all WAM Active shareholders to acquire ordinary shares in the capital of the Company. Shareholders will be issued one option for every one share held in the Company under the Bonus Option Issue. Options are being issued at no cost to shareholders. The options have an exercise price of $1.14 per share and can be exercised at any time on or before 17 September 2018.

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.

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