WAM ACTIVE LIMITED — Call Transcript 2017

Sep 5, 2017

==> picture [285 x 27] intentionally omitted <==

Investor conference call 6 September 2017

==> picture [187 x 152] intentionally omitted <==

==> picture [133 x 13] intentionally omitted <==

Disclaimer

This presentation has been prepared by MAM Pty Ltd and Wilson Asset Management (International) Pty Ltd (Wilson Asset Management) for use in conjunction with a verbal presentation and should be read in that context. This presentation Information for the graphs, charts and quoted indices contained in this presentation has been sourced from WAM Capital Ltd, WAM Leaders Ltd, WAM Research Ltd, WAM Active Ltd, WAM Microcap Ltd and Century Australia Investments Ltd unless otherwise stated. This presentation is proprietary to Wilson Asset Management. It may not be reproduced, disseminated, quoted or referred to, in whole or in part, without the express consent of Wilson Asset Management. The information in this presentation is only intended for Australian residents. The purpose of this presentation is to provide information only and the contents of the presentation do not purport to provide investment or financial advice. We strongly suggest that investors consult a financial advisor prior to making any investment decision. The presentation does not take into account the investment objectives, financial situation or particular needs of any person and should not be used as the basis for making investment, financial or other decisions. The information is selective and may not be complete or accurate for your particular purposes and should not be construed as a recommendation to invest in any particular investment or security, or listed investment company offered by Wilson Asset Management. The information provided in this presentation is given in good faith and is believed to be accurate at the time of compilation. Neither Wilson Asset Management, WAM Capital Ltd, WAM Leaders Ltd, WAM Research Ltd, WAM Active Ltd, WAM Microcap Ltd and Century Australia Investments Ltd nor their respective directors or employees (Wilson Asset Management parties) make any representation or warranty as to the accuracy, reliability, timeliness or completeness of the information. To the extent permissible by law, Wilson Asset Management parties disclaim all liability (whether arising in contract, tort, negligence or otherwise) for any error, omission, loss or damage (whether direct, indirect, consequential or otherwise). Performance figures quoted in the report are past performance. Past performance is not an indicator of future performance. None of the Wilson Asset Management parties guarantee or make any representation as to the performance of the listed investment companies, the maintenance or repayment of capital, the price at which shares may trade or any particular rate of return. This presentation includes “forward looking statements” within the meaning of securities laws of applicable jurisdictions. Forward looking statements can generally be identified by the use of the words “anticipate”, “believe”, “expect”, “project”, “forecast”, “estimate”, “likely”, “intend”, “should”, “could”, “may”, “target”, “plan” “guidance” and other similar expressions. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of any Wilson Asset Management party, that may cause actual results to differ materially from those expressed or implied in such statement. Actual results, performance or achievements may vary materially from any projections and forward looking statements and the assumptions on which those statements are based. Readers are cautioned not to place undue reliance on forward looking statements and Wilson Asset Management assumes no obligation to update such information. This presentation is not, and does not constitute, an offer to sell or the solicitation, invitation or recommendation to purchase, any securities and neither this presentation nor anything contained in it forms the basis of any contract or commitment. Without limiting this, this presentation does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States.

Page 3

==> picture [380 x 405] intentionally omitted <==

----- Start of picture text -----

Agenda
1. About Wilson Asset Management
2. Our listed investment companies
3. Reporting season and market outlook
4. What did and didn’t work
5. Questions
----- End of picture text -----

==> picture [130 x 13] intentionally omitted <==

Making a difference

• Six LICs and more than $2 billion in shareholder capital for 55,000 retail shareholders

• Eight investment professionals with combined investment experience of more than 100 years

• Proven investment approach that has delivered superior returns for almost 20 years

• Committed to philanthropic and advocacy initiatives

• Creator and supporter of:

==> picture [194 x 47] intentionally omitted <==

==> picture [135 x 88] intentionally omitted <==

==> picture [98 x 56] intentionally omitted <==

Winner of the Listed Investment Companies category at the Professional Planner | Zenith Fund Awards 2014, 2015 and 2016

Page 4

==> picture [130 x 13] intentionally omitted <==

Investment and management team

==> picture [80 x 51] intentionally omitted <==

Geoff Wilson

Chairman

& Portfolio Manager

==> picture [80 x 51] intentionally omitted <==

John Ayoub Senior Equity Analyst

==> picture [81 x 51] intentionally omitted <==

==> picture [80 x 51] intentionally omitted <==

==> picture [80 x 51] intentionally omitted <==

==> picture [80 x 51] intentionally omitted <==

Chris Stott Matthew Haupt Chief Investment Officer Portfolio Manager & Portfolio Manager

Kate Thorley Chief Executive Officer

Martin Hickson Portfolio Manager

==> picture [81 x 52] intentionally omitted <==

==> picture [82 x 51] intentionally omitted <==

==> picture [80 x 52] intentionally omitted <==

Jesse Hamilton Chief Financial Officer

Tobias Yao Senior Equity Analyst

James McNamara Head of Corporate Affairs

==> picture [80 x 51] intentionally omitted <==

Oscar Oberg Portfolio Manager

==> picture [82 x 53] intentionally omitted <==

Martyn McCathie General Manager

Page 5

==> picture [130 x 13] intentionally omitted <==

Investing in undervalued growth companies

==> picture [155 x 24] intentionally omitted <==

==> picture [154 x 23] intentionally omitted <==

Focus on ASX listed small-to-mid-cap industrial companies

Focus on ASX listed small-to-mid-cap industrial companies Research-driven process

Research and market-driven processes

==> picture [146 x 23] intentionally omitted <==

==> picture [143 x 26] intentionally omitted <==

Focus on ASX top 200 listed companies Research and market-driven processes

Focus on ASX listed small-to-mid-cap industrial companies Market-driven process

==> picture [188 x 63] intentionally omitted <==

Focus on ASX listed micro-cap industrial companies Research and market-driven processes

==> picture [72 x 36] intentionally omitted <==

Focus on ASX top 300 listed companies Research, market and investment-driven processes

Page 6

==> picture [130 x 13] intentionally omitted <==

==> picture [155 x 24] intentionally omitted <==

==> picture [40 x 32] intentionally omitted <==

Gross assets

$1,251.6m

Share price[*] $2.48

Pre-tax net tangible assets

Fully franked final dividend

$1.95 7.5 cents

Dividend yield[*] Performance (p.a. since August 1999)

6.0%

17.6%

As at 31 July 2017

*As at 5 September 2017

Page 7

==> picture [130 x 13] intentionally omitted <==

==> picture [146 x 23] intentionally omitted <==

Gross assets

$486.9m

Pre-tax net tangible assets

$1.15

Options exercised[*]

17.8% As at 31 July 2017 *As at 5 September 2017

Share price[*]

$1.11

Fully franked final dividend

2.0 cents

Portfolio performance (p.a. since May 2016)

9.5%

==> picture [38 x 31] intentionally omitted <==

Page 8

==> picture [130 x 13] intentionally omitted <==

==> picture [187 x 29] intentionally omitted <==

Options

ASX: WLEO Options exercise price: $1.10

Last date to exercise options to be eligible for fully franked 2.0 cents per share final dividend: 17 November 2017 Option expiry date: 17 November 2017

Page 9

==> picture [130 x 13] intentionally omitted <==

==> picture [154 x 22] intentionally omitted <==

Gross assets

$229.1m

Share price[*] $1.595

==> picture [38 x 31] intentionally omitted <==

Pre-tax net tangible assets Fully franked final dividend $1.22 4.5 cents

Dividend yield[*]

5.6%

Performance (p.a. since July 2010)

18.5%

As at 31 July 2017 *As at 5 September 2017

Page 10

==> picture [130 x 13] intentionally omitted <==

==> picture [143 x 26] intentionally omitted <==

==> picture [38 x 31] intentionally omitted <==

Gross assets

$42.7m

Share price[*] $1.12

Pre-tax net tangible assets

Fully franked final dividend

$1.06 2.75 cents

Dividend yield[*] Performance (p.a. since January 2008)

4.9% As at 31 July 2017 *As at 5 September 2017

12.7%

Page 11

==> picture [130 x 13] intentionally omitted <==

FY2017 fully franked final dividends – key dates

WAM Capital – 7.5 cents per share

WAM Leaders – 2.0 cents per share

Dividend ex date 17 October 2017 Record date 18 October 2017 Last election date for the DRP 20 October 2017 Payment date 27 October 2017

Last option exercise date to be entitled to div 17 November 2017 Dividend ex date 23 November 2017 Record date 24 November 2017 Last election date for the DRP 28 November 2017 Payment date 5 December 2017

WAM Research – 4.5 cents per share

WAM Active – 2.75 cents per share

Dividend ex date 17 October 207 Record date 18 October 2017 Last election date for the DRP 20 October 2017 Payment date 27 October 2017

Dividend ex date 17 October 2017 Record date 18 October 2017 Last election date for the DRP 20 October 2017 Payment date 27 October 2017

Page 12

==> picture [137 x 84] intentionally omitted <==

==> picture [130 x 13] intentionally omitted <==

Gross assets Share price[*] Pre-tax net tangible assets $89.2m $0.925 $0.94

• Diversified exposure to a portfolio of listed companies focused on the S&P/ASX 300 Index

• Wilson Asset Management was appointed investment manager on 18 April 2017

• Portfolio re-weighted over the last quarter to align with research, market and investment-driven processes

• Investment portfolio increase of 14.8% in FY2017, outperforming the S&P/ASX 300 Accumulation Index by 1.0%

• Outperformance of 1.8% since being appointed as investment manager

Page 13

As at 31 July 2017[*] As at 5 September 2017

==> picture [194 x 69] intentionally omitted <==

==> picture [130 x 13] intentionally omitted <==

==> picture [45 x 39] intentionally omitted <==

Gross assets

$160.3m

Share price[*] Pre-tax net tangible assets $1.245 $1.13

• Listed on 28 June 2017 with investor demand exceeding $154 million limit

• 5.9% investment portfolio increase since inception, outperforming the

S&P/ASX Small Ordinaries Accumulation Index by 5.6%

• 79.6% exposure to equities with 86 companies held in the portfolio[^]

As at 31 July 2017[*] As at 5 September 2017[^] As at 31 August 2017

Page 14

==> picture [194 x 61] intentionally omitted <==

Holding summary[*]

==> picture [130 x 13] intentionally omitted <==

Code Company % IDX Integral Diagnostics Limited 3.1% RKN Reckon Limited* 2.9% PAC Pacific Current GroupLimited 2.5% RHL Ruralco Holdings Limited 2.4% PNI Pinnacle Investment Management GroupLimited 2.3% APX Appen Limited 2.1% DTL Data#3 Limited 2.0% PSI PSC Insurance GroupLimited 2.0% TOT 360 Capital Total Return Fund 2.0% JIN Jumbo Interactive Limited 1.9% SW1 Swift Networks GroupLimited 1.8% RXP RXP Services Limited 1.8% CDD Cardno Limited 1.7% NUH Nuheara Limited 1.6% PPS Praemium Limited 1.6% VTG Vita GroupLimited 1.4% FDV Frontier Digital Ventures Limited 1.3%	Code Company %
	EPD Empired Limited 1.3%
	3PL 3P LearningLimited 1.2%
	AVJ AVJennings Limited 1.2%
	CGR CML GroupLimited 1.1%
	AQZ Alliance Aviation Services Limited 1.1%
	MXI MaxiTRANS Industries Limited 1.1%
	SFI Spookfish Limited 1.1%
	EHL Emeco Holdings Limited 1.0%
	CAJ Capitol Health Limited 1.0%
	NBL Noni B Limited 1.0%
	MAH Macmahon Holdings Limited 1.0%
	FIG Freedom Insurance GroupLimited 1.0%
	BIG BigUn Limited 1.0%
	SMX SMS Management & TechnologyLimited 1.0%
	SSG Shaver ShopGroupLimited 1.0%
	NZM NZME Limited 1.0%
	OVH Onevue Holdings Limited 1.0%

*As at 31 July 2017. To provide an understanding to our shareholders of our initial holdings and their corresponding weightings in the portfolio, we have listed all holdings that represent more than 1.0% of gross assets. On a monthly basis, we will revert to providing the top 20 holdings without the percentage weightings.

Page 15

==> picture [130 x 13] intentionally omitted <==

Equity market outlook

==> picture [25 x 26] intentionally omitted <==

==> picture [25 x 25] intentionally omitted <==

==> picture [26 x 27] intentionally omitted <==

==> picture [25 x 26] intentionally omitted <==

==> picture [26 x 26] intentionally omitted <==

==> picture [26 x 26] intentionally omitted <==

The equity market is fairly valued All 45 OECD nations are exhibiting positive GDP growth for the first time since the GFC Domestic interest rates are on hold for the short-to-medium term Geopolitical risks are currently elevated Consumer sentiment remains unsteady Australian companies are reinvesting to drive growth

Page 16

==> picture [130 x 13] intentionally omitted <==

Reporting season

==> picture [26 x 25] intentionally omitted <==

==> picture [26 x 25] intentionally omitted <==

==> picture [26 x 26] intentionally omitted <==

==> picture [25 x 25] intentionally omitted <==

==> picture [25 x 25] intentionally omitted <==

Earnings growth was the best in many years Results were slightly below market expectations Outlook statements were benign Resources and mining services sectors were standout performers Small caps have been strong in recent months

Page 17

==> picture [130 x 13] intentionally omitted <==

==> picture [111 x 55] intentionally omitted <==

What worked: Research-driven

Noni B Limited (ASX: NBL)

Women’s fashion retailer

Why we invested

• Strong management team

• Cost savings

• Potential for additional store roll out opportunities and acquisitions

Why it worked

– Execution in a tough retail environment – Cost saving initiatives driving margin expansion

– Strong balance sheet – Valuation remains attractive

Page 18

==> picture [130 x 13] intentionally omitted <==

==> picture [130 x 57] intentionally omitted <==

What worked: Market-driven

BHP Billiton Limited (ASX: BHP)

Multinational mining, metals and petroleum company

Why we invested

• Visited management across Australia

• Positive commodity outlook

• Elliot Management proposal acting as a potential catalyst for change

Why it worked

• Strong earnings release

• Reduction in debt, focus on costs, cash

• generation

• Willingness of board and management to realise full value of assets within the portfolio

Page 19

==> picture [130 x 13] intentionally omitted <==

==> picture [127 x 72] intentionally omitted <==

What worked: Market-driven

Seven Group Holdings Limited (ASX: SVW)

Diversified operating and investment group in the media, mining and construction industries

Why we invested

• Exposure to mining recovery

• Increased replacement capital expenditure in the mining sector

Why it worked

• SVW result above market expectations

• – Strong balance sheet with opportunities to deploy capital

– Owner of WesTrac, the authorised dealer of Caterpillar equipment in NSW and WA

Page 20

==> picture [130 x 13] intentionally omitted <==

==> picture [130 x 57] intentionally omitted <==

What didn’t work: Research-driven

iSelect Limited (ASX: ISU)

Online insurance comparison website

Why we invested

• Non-health insurance verticals driving earnings

• Capital management

Why it didn’t work

• Earnings below market expectations

• Sluggish growth in health, life and general insurance verticals

• Operating leverage benefits

Page 21

==> picture [130 x 13] intentionally omitted <==

November 2017 shareholder resentations p

Adelaide	Perth	Toowoomba	Brisbane
Monday 20 November	Tuesday 21 November	Thursday 23 November	Friday 24 November
The Playford	Novotel Perth Langley	Empire Theatre	Brisbane Exhibition &
120 North Terrace	221 Adelaide Terrace	54-56 Neil Street	Convention Centre
Adelaide SA 5000	Perth WA 6000	Toowoomba City QLD 4350	Cnr Merivale & Glenelg Streets
			Southbank QLD 4101
Presentation:	Presentation:	Presentation:	Presentation:
10.00am – 12.00pm	10.00am – 12.00pm	10.00am – 12.00pm	10.00am – 12.00pm
Hobart	Canberra	Sydney	Melbourne
Monday 27 November	Tuesday 28 November	Wednesday 29 November	Thursday 30 November
Best Western	The Mercure	The Wesley Centre	Melbourne Convention Centre
156 Bathurst St	Cnr Ainslie & Limestone	220 Pitt Street	1 Convention Centre Place
Hobart TAS 7000	Avenues	Sydney NSW 2000	South Wharf VIC 3006
	Braddon ACT 2612
Presentation:	Presentation:	Presentation:	Presentation:
10.00am – 12.00pm	10.00am – 12.00pm	11.30am – 1.30pm	10.00am – 12.00pm

The Future Generation presentations will follow all Wilson Asset Management presentations in each city

Page 22

==> picture [130 x 13] intentionally omitted <==

Join more than 35,000 weekly readers

Get in touch

Page 23