WAM ACTIVE LIMITED — Interim / Quarterly Report 2017

Jul 12, 2017

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Investment update As at 30 June 2017

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wilsonassetmanagement.com.au ABN 49 126 420 719

Snapshot

Pre-tax net tangible assets

$1.06

Fully franked dividend yield

5.0%

Gross assets

$42.0m

Performance (p.a. since January 2008)

12.6%

WAM Active Limited

Market overview

WAM Active Limited
ASX code	WAA
Listed	Jan 2008
Gross assets	$42.0m
Market cap	$42.7m
Share price (WAA)	$1.10
Option price (WAAO)	$0.015
NTA before tax	$1.06
Shares on issue	38,802,828
Options on issue	31,680,247
Annualised fully franked	5.5c
interim dividend (FY2017)
Fully franked dividend yield	5.0%

Investment objectives

• Deliver shareholders a regular income stream via fully franked dividends

• Provide a positive return with low volatility, after fees, over most periods of time

• Preserve capital

Wilson Asset Management investment & management team

investment &	management team
Geoff Wilson	Chairman & Portfolio
	Manager
Kate Thorley Chris Stott	Chief Executive Officer Chief Investment Officer & Portfolio Manager
Matthew Haupt	Portfolio Manager
Martin Hickson	Portfolio Manager
Oscar Oberg	Portfolio Manager
Tobias Yao	Senior Equity Analyst
John Ayoub	Senior Equity Analyst
Cooper Rogers	Assistant Dealer

The S&P/ASX All Ordinaries Accumulation Index closed up 0.3% for the month, to finish the financial year up 13.1%, the best year for the market since 2014. The sectors that drove the advance during FY2017 were materials (+20.6%), utilities (+14.7%), banks (+11.9%) and healthcare (+11.8%).

Global equity markets ended the month down as central banks foreshadowed the end of easy monetary policy. The US Federal Reserve raised interest rates for the third consecutive time to between 1% to 1.25% in response to improving confidence in the US economy.

In Australia, the unemployment rate fell to a lower than expected 5.5% from 5.7% the previous month, the lowest level since February 2013. The political attack on banks continued with the South Australian Government announcing it would introduce a bank tax in addition to the Federal Government’s levy. The policy was met by widespread criticism across the industry. In July, the SA opposition announced it would block the tax in parliament.

Stock news

Afterpay Holdings Limited (ASX: AFY) and Touchcorp Limited’s (ASX: TCH) scheme of arrangement was approved by shareholders in June to create the new merged entity, Afterpay Touch Group Limited (ASX: APT). We believe the strong management team is capitalising on its first mover advantage into the ‘buy now, pay later’ space. We have received positive feedback from retailers as part of our on-the-ground research and believe Afterpay Touch’s transaction momentum will continue as it increases its market share.

Net tangible asset (NTA) figures

NTA before tax	106.04c
NTA after tax and before tax on unrealised gains	105.07c
NTA after tax	105.02c

The above figures are not adjusted for the 31,680,247 options on issue with an exercise price of $1.14.

Company overview

WAM Active Limited (ASX: WAA) is a listed investment company managed by Wilson Asset Management. Listed in January 2008, WAM Active provides investors with exposure to an active trading style with the aim of achieving a sound return with a low correlation to traditional markets.

Performance

	Performance
	Performance at 30 June 2017	1 Mth	6 Mth	1 Yr	3 Yrs %pa	5 Yrs %pa	Since Inception %pa (Jan-08)
	WAA Investment Portfolio*	1.1%	3.9%	11.6%	11.6%	13.9%	12.6%
	S&P/ASX All Ordinaries	0.3%	2.9%	13.1%	6.8%	11.6%	3.3%
	Accumulation Index
	Outperformance	**+0.8% **	+1.0%	-1.5%	+4.8%	+2.3%	+9.3%
	UBS Bank Bill Index (Cash)	0.1%	0.9%	1.8%	2.2%	2.5%	3.7%
	Outperformance	+1.0%	+3.0%	+9.8%+9.4%+11.4%			+8.9%

*Investment performance and Index returns are before expenses, fees and taxes.

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wilsonassetmanagement.com.au Page 2 of 4 T +61 2 9247 6755

Investment update As at 30 June 2017

Growth of $10,000 investment since inception

WAM Active versus the Index

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$25,000
$19,830
$20,000
$14,155
$15,000
$12,890
$10,000
$5,000
$0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
WAM Active (ASX: WAA) S&P/ASX All Ordinaries Accumulation Index UBS Bank Bill Index
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Notes:

1. The above graph reflects the period from inception in January 2008 to 30 June 2017.

2. WAM Active’s performance is calculated using the closing daily share price in Australian dollars and assumes all dividends are reinvested.

3. The S&P/ASX All Ordinaries Accumulation Index and the UBS Bank Bill Index has been chosen for comparison purposes only. The graph is not intended to be an indication of future performance of any asset class, index or the WAM Active portfolio.

Diversified portfolio

Diversified portfolio
		May 2017			June	2017
Investment type	$m		%	$m			%
Listed equities	24.9		59.8	32.3			76.8
Short portfolio	(1.2)		(2.9)	(2.7)			(6.3)
Fixed interest & cash	18.0		43.1	12.4			29.5
Gross assets	$41.7		100.0	$42.0			100.0
Total shares on issue		38,799,425			38,802,828*

*During the month, 3,403 options were exercised and allotted.

One-for-one option issue

In August 2016, the Company announced a one-for-one bonus option issue to all shareholders at no cost. Options entitle holders to purchase additional ordinary shares in WAM Active at the exercise price of $1.14 at any time on or before 17 September 2018. The options trade on the ASX under the code WAAO. The bonus option issue is an effective way to grow the Company and will deliver benefits to shareholders. As the Company’s size increases, onmarket liquidity for the shares is expected to increase. It will also increase the Company’s relevance in the market, improve the prospect of broker and research coverage, and gain interest from financial planners.

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Page 3 of 4

Investment update As at 30 June 2017

wilsonassetmanagement.com.au T +61 2 9247 6755

Top 20 holdings

Code Company HHV Hunter Hall Global Value Limited FLT Flight Centre Travel Group Limited TGG Templeton Global Growth Fund Limited APT Afterpay Touch Group Limited JHG Janus Henderson Group PLC CPU Computershare Limited EHE Estia Health Limited WOW Woolworths Limited SGM Sims Metal Management Limited SVW Seven Group Holdings Limited	Code Company
	NEC Nine Entertainment Co Holdings Limited
	QAN Qantas Airways Limited
	CSL CSL Limited
	JBH JB Hi-Fi Limited
	CAJ Capital Health Limited
	DOW Downer EDI Limited
	FXJ Fairfax Media Limited
	RMD ResMed Inc
	MND Monadelphous Group Limited
	AAD Ardent Leisure Group

Fully franked dividends

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

Fully franked dividends since inception

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Cents per share
10.0
8.0
6.0
4.0
2.0
0.0
2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17
Fully franked dividends Return of Capital
Annualised interim dividend
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Page 4 of 4

Investment update As at 30 June 2017

wilsonassetmanagement.com.au T +61 2 9247 6755