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Investor Presentation

November/December 2015

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Disclaimer

This presentation has been prepared for use in conjunction with a verbal presentation and should be read in that context. Information for the graphs, charts and quoted indices contained in this presentation has been sourced from Mintel, IRESS Market Technology, Wilson Asset Management (International) Pty Ltd, WAM Capital Ltd, WAM Research Ltd, WAM Active Ltd, Future Generation Investment Company Ltd, and Future Generation Global Investment Company Ltd unless otherwise stated. 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 does not purport to provide investment 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 Fund offered by Wilson Asset Management (International) Pty Ltd. The information provided in the presentation is given in good faith and is believed to be accurate at the time of compilation. Neither Wilson Asset Management (International) Pty Ltd, WAM Capital Ltd, WAM Research Ltd and WAM Active Ltd nor its directors or employees 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, WAM Capital Ltd, WAM Research Ltd and WAM Active Ltd and its director and employees 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. Neither Wilson Asset Management (International) Pty Ltd, WAM Capital Ltd, WAM Research Ltd and WAM Active Ltd nor its directors or employees guarantee or make any representation as to the performance of the Funds, the maintenance or repayment of capital, the price at which shares may trade or any particular rate of return.

Agenda

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1 About Wilson Asset Management
2 Market overview and outlook
3 Investment themes and trends
4 Investment portfolio
5 Performance:
WAM Capital Limited
WAM Research Limited
WAM Active Limited

6 Making a difference

7 Investor communication

About Wilson Asset Management

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Our team is passionate about making a difference
We are innovative, agile and entrepreneurial . Our investment approach and results are proven
We invest our time and expertise in causes that resonate with us

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We value shareholder engagement, work-life balance, efficiency, teamwork, fun and humour, and employee fulfilment

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

Experienced team

Geoff Wilson

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B Sc GMQ FAICD FFinsia Chairman / Portfolio Manager

Kate Thorley B Com CPA Grad Dip ACG Chief Executive Officer / Company Secretary

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Chris Stott

B Bus Grad Dip App Fin Chief Investment Officer / Portfolio Manager

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Matthew Haupt CFA B Com Grad Dip App Fin Portfolio Manager

Martin Hickson B Bus B Comp Senior Equity Analyst / Dealer

Tobias Yao CFA B Com Equity Analyst

Our listed investment companies

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WAM Capital (ASX: WAM) WAM Research (ASX: WAX) WAM Active (ASX: WAA)	WAM Capital (ASX: WAM) WAM Research (ASX: WAX) WAM Active (ASX: WAA)	WAM Capital (ASX: WAM) WAM Research (ASX: WAX) WAM Active (ASX: WAA)	WAM Capital (ASX: WAM) WAM Research (ASX: WAX) WAM Active (ASX: WAA)
*Gross assets **	$870m	$210m	$36m
*Share price **	$1.985	$1.255	$0.985
Pre tax NTA	$1.87	$1.17	$1.01
*Premium to NTA **	6.2%	7.3%	-2.5%
Fully franked FY2015 *dividend yield **	7.1%	6.4%	2.5%
Investment strategy	Research driven / market driven	Research driven	Market driven

As at 31 October 2015 *As at 18 November 2015

How we invest

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Research and market driven

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Research driven

Market driven

Extensive company research (meeting 1,000+ companies per year) focused on forecasting free cashflows and rating investment attributes
Buy when a catalyst is identified and sell when the company reaches our valuation
Provides exposure to undervalued growth companies
Scour the market for opportunities
Allows sound return with a low correlation to traditional markets
Provides the opportunity to perform in both bull and bear markets
High portfolio turnover
Flexibility to hold cash
Low portfolio turnover
Flexibility to hold cash

Research driven investment process

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Investment universe 2,000+

Investment ideas

Preparation and company meetings (1,000+ p.a.)

Analysis: qualitative and quantitative

Stock rankings

Catalyst identified

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PORTFOLIO
20-60 stocks selected
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Detailed rating process

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This process has delivered strong outperformance in both rising and falling markets for almost two decades

Qualitative analysis
Rate management
Rate industry/position
Quantitative analysis
Forecast two year earnings per share (EPS) growth
Valuation measure: EPS / price to earnings (PE) ratio
Investment decision making
We buy only when a catalyst is identified
We sell when our valuation is reached
Flat team structure with investment decision making informed by 65 years’ collective experience

WAM Leaders

Our disciplined investment rating process is applied to all listed equities

We are now looking to establish another listed investment company focused on companies within the ASX200

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We have traditionally invested c. 10% in Australian large cap companies

We look forward to sharing more with you soon

Market overview and outlook

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Have
resources
stocks
bottomed?
Below trend Housing has
economic peaked this
growth cycle
Further
interest rate
cuts?
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The state of the States

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Investment themes and trends

Taxi industry under threat

Smartphone app-based ride sharing company, Uber, started in 2009 and is one of the fastestgrowing businesses in the world
The company connects passengers and drivers who use their own private vehicles to provide cheap and clean taxi-like transportation
Uber has hit the taxi industry – governments may intervene to protect taxi operators and recover associated revenue streams
Uber is privately owned and we are unable to invest in it. We are not investing in the existing industry, avoiding companies like Cabcharge (ASX: CAB)

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Australia’s fitness obsession

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For many Australians ‘activewear’ has replaced casual wear given an increasing focus on health and fitness
Australian activewear pioneer Lorna Jane’s revenue is approaching $200m growing at more than 30%
This craze has led to the creation of wearable fitness tracking devices – Fitbit has sold more than 20m devices globally, priced between $US50 and $US350

Lorna Jane activewear growing at 30%

20m Fitbit products sold

The Australian retail sector is benefiting from this trend and we are invested in RCG Corporation (ASX: RCG)

Women having babies later in life

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Women are increasingly choosing to have children later in life and demand for assisted reproductive services has grown
Virtus Health (ASX: VRT) and Monash IVF (ASX: MVF) dominate the Australian market performing the majority of IVF cycles and a combined market share of more than 70%. We own shares in Virtus Health
The industry is maturing with low-cost operators, such as Primary Health Care (ASX: PRY) entering the market

Western Sydney’s surge

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Western Sydney is the largest longterm growth corridor in Australia , with enormous potential and minimal existing infrastructure
The median Western Sydney house price is at a 32% discount to the rest of Sydney even after rising in value, that discount is unlikely to continue with booming jobs and economic growth
Massive infrastructure spending is both planned and underway , including Badgerys Creek Airport with the government working towards mid-2020 commencement of operations
We believe property, logistics and infrastructure companies will provide the best exposure to this growth story. We own Qube Holdings (ASX: QUB)

Growing Chinese consumption

Australia’s exposure to China’s compelling growth story has continued through the end of the mining boom and into the free trade agreement
Market research firm Mintel found 80% of urban Chinese consumers believe organic food is worth the additional cost and 56% report increasing their spending to obtain organic products

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Chinese appetite for Australian health products is driving share prices of a2 Milk (ASX: A2M), Blackmores (ASX: BKL) and Bellamy’s (ASX: BAL). We own A2M and BKL shares

20 20

Investment portfolio

Top holdings

ASX Code	Company
HHV	Hunter Hall Global Value Limited*
ECX	Eclipx Group Limited^
CYA	Century Australia Investments Limited*
ASB	Austal Limited^
SIQ	Smartgroup Corporation Limited^
NUF	Nufarm Limited*
IPH	IPH Limited^
AOG	Aveo Group*
AAD	Ardent Leisure Group^
CSV	CSG Limited^

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^ Research driven * Market driven

As at 31 October 2015

What we like – research driven

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Eclipx Group (ASX: ECX)

Established player in vehicle fleet leasing, fleet management and diversified financial services

Profile

Market cap $770m

Background

Forward PE of 14x
EPS growth of 20%
$1.7b and 80,000 vehicles assets under management or financed under various brands, such as Fleet partners and Fleet plus
New business written

Catalysts

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Stronger than expected acquisition integration synergies
Adjacent financial services opportunities

Risks

Residual value and credit risk
Contract losses

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$ Started buying in IPO at $2.30
3.7
3.2
2.7
2.2
Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15
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Source: Wilson Asset Management Research

What we like – market driven

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Nufarm (ASX: NUF)

Global crop protection and seed technology company

Profile

Market cap $2.2b

Background

PE of 17.5x , EPS growth of 19%
New management team recently joined the business, undertaking a large cost-out program
New management team

Catalysts

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Large cost out program
Large improvement in working capital

Risks

Challenging economic industry conditions in Brazil
Weather related risks

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Commenced buying at $8.07
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$
9
8.5
8
7.5
7
6.5
Jun-15 Jul-15 Oct-15
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Sep-15

Aug-15

Source: Wilson Asset Management Research

What has worked – research driven

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The Reject Shop (ASX: TRS)

One of Australia’s largest discount variety retailers

Profile

Market cap $320m

Background

PE of 18x
EPS growth of 32%
• 333 stores around Australia servicing price conscious consumers
Success of the turnaround strategy demonstrated through:

Catalysts

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  - Comparable sales growth

  - Improvement in profitability

  - Performance of the new store formats

Risks • Consumer confidence
Expanded product range over the Christmas period

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Started buying at $5.87 Added to holding at $5.30
$
13
11
9
7
5
Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15
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Source: Wilson Asset Management Research

What has worked – market driven

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Qantas Airways (ASX: QAN)

Airline with multiple brands including Qantas, Jetstar, Qantas Link, Qantas Freight

Profile

Market cap $7.5b

Background

In FY14 the company reported a $2.8b loss, due to high operating costs, a poor operating environment and large asset write-downs
Began a transformation program to turn the business around

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Catalysts

Transformation plan ($2b in savings)
$1b + reduction in net debt
Falling oil price
Reduced capacity growth

Risks

Execution of turnaround strategy
Unsuccessful enterprise bargaining agreement negotiations
Reduction in domestic and international travel

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Start buying at $2.38 Sold at $3.40
$
4
3.5
3
2.5
2
1.5
Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15
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Source: Wilson Asset Management Research

What didn’t work – research driven

Retail Food Group Limited (ASX: RFG)

Owner of portfolio of franchise brands and coffee roasting business

Profile

Market Cap $740m

Background

FY16 PE of 11x
EPS growth 15%

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Catalysts

Acquisition led growth path
Diversification into coffee exposed businesses
Opportunity to revamp and roll out new format stores
Earnings upgrades

What went wrong

The initial store number target changed
Growth within the existing businesses were subdued
Pizza category had fierce competition
Focus changed to other opportunities than initial were flagged

Start buying at $4.70

Sold at average price of $4.31

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$
7.5
6.5
5.5
4.5
3.5
Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15
Source: Wilson Asset Management Research
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Performance

WAM Capital outperformance

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Performance at 31 October 2015 (% pa)	1 Yr	3 Yrs	5 Yrs	10 Yrs	Since Inception (Aug 1999)
WAM Investment Portfolio*	19.4%	19.0%	15.4%	13.9%	18.0%
S&P/ASX All Ordinaries Accumulation Index	0.4%	9.9%	6.8%	6.3%	8.0%
Outperformance	+19.0%	+9.1%	+8.6%	+7.6%	+10.0%

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

WAM Capital dividend growth

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WAM Capital dividends since inception

Cents per share

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18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
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Ordinary fully franked dividend Special fully franked dividend Equal access share buy-back

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

utperformance

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Performance at 31 October 2015 (% pa)	1 Yr	3 Yrs	5 Yrs	Since change in investment strategy (July 2010)
WAX Investment Portfolio*	24.4%	24.4%	19.4%	19.9%
S&P/ASX All Ordinaries Accumulation Index	0.4%	9.9%	6.8%	8.4%
Outperformance	+24.0%	+14.5%	+12.6%	+11.5%

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

WAM Research dividend growth

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WAM Research dividends since inception

Cents per share

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9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
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Ordinary fully franked dividend

Special fully franked dividend

WAM Active outperformance

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Performance at 31 October 2015 (% pa)	1 Yr	3 Yrs	5 Yrs	Since Inception (Jan 08)
WAA Investment Portfolio*	13.3%	13.6%	11.7%	12.6%
S&P/ASX All Ordinaries Accumulation Index	0.4%	9.9%	6.8%	1.9%
Outperformance	+12.9%	+3.7%	+4.9%	+10.7%
UBS Bank Bill Index (cash)	2.4%	2.7%	3.5%	4.1%
Outperformance	+10.9%	+10.9%	+8.2%	+8.5%

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

WAM Active dividend growth

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WAM Active dividends since inception

Cents per share

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12.0
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
Return of Capital Fully franked dividends
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Making a difference

Changes to franking put to rest?

During the 2015 financial year we submitted our response to the Federal Government’s Tax Discussion Paper
Our submission argued dividend imputation has significantly benefitted Australia’s financial system and should not be changed – we weren’t alone
We will continue to monitor and engage in this debate during the 2016 financial year

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“There is strong support for reducing personal income and company tax rates, for abolishing state stamp duties and for maintaining dividend imputation from the 850 submissions received on the March discussion paper.”

General manager Roger Brake, Tax White Paper Taskforce, August 2015

Future Generation Investment Company

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Future Generation Investment Company (ASX: FGX) announced for FY2015:

$1.644m

donation to charities focused on children at risk

$2.5m

management and performance fees saved

Fully franked 2.0c per share dividend to shareholders

Since inception the FGX investment portfolio has outperformed the market by

11.3%

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Future Generation Global Investment Company

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$302.1m raised

In September 2015, Future Generation Global Investment Company (ASX: FGG) listed on the Australian Securities Exchange after raising $302.1m

$3m to charity

FGG looks forward to making an annual donation of more than $3m to charities focused on youth mental health

To hear more about FGX and FGG please join us for the combined Future Generation presentation at 12.15pm

Wilson Asset Management gives

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This year we launched an initiative empowering each staff member to identify causes close to them.

The management company then gifts financial support for a charitable donation.

So far our team has supported:

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All donations are made by Wilson Asset Management (the investment manager) and/or its staff, not the listed entities

Volunteering

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Our team spent a day at volunteering at the Dandelion Support Network, which processes donated nursery equipment and children’s clothes local families

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Industry recognition

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This year, we won the Listed Investment Companies category at the Professional Planner / Zenith Fund Awards – the second year running

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Community investment

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All donations are made by Wilson Asset Management (the investment manager) and/or its staff, not the listed entities.

Investor communication

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Weekly emails Half yearly including market national investor update presentations

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Website Media wamfunds.com.au

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Monthly NTA announcement & investment update

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Industry conferences

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Half & full year financial results

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Independent research

Website : www.wamfunds.com.au

AI assistant

WAM ACTIVE LIMITED — Investor Presentation 2015

66032_rns_2015-11-18_518af68a-02f7-4cdd-8030-c119bf82be54.pdf

Disclaimer

Agenda

6 Making a difference

About Wilson Asset Management