WAM CAPITAL LIMITED — Earnings Release 2016

Jul 24, 2016

WAM Capital Limited (WAM) ASX Announcement/Media Release 25 July 2016

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WAM Capital profit increases 85.7% to a record $132.3m, increased fully franked full year dividend to 14.5 cents

• Operating profit before tax increased 85.7% to $132.3m

• 12-month portfolio performance of 21.6%, outperforming by 19.6%

• Total shareholder return of 24.5%

• Fully franked full year dividend of 14.5 cents per share

WAM Capital Limited (ASX: WAM) today announced an 85.7% increase in operating profit before tax to $132.3 million (2015: $71.2 million). The record profit was driven by a 21.6% increase in the investment portfolio in the 12 months to 30 June 2016. The Company reported an 81.5% rise in operating profit after tax to $98.0 million (2015: $54.0 million).

Chairman Geoff Wilson said the Company had outperformed the S&P/ASX All Ordinaries Accumulation Index by 19.6% during a volatile year for the Australian equity market.

“The investment portfolio’s outperformance in the 2016 financial year demonstrates the strength of our investment process, which has provided shareholders with sound risk-adjusted returns since inception in 1999.”

“The investment performance of 21.6% was achieved while holding an average cash weighting of 35%.” he said.

Wilson Asset Management Chief Investment Officer, Chris Stott, said the investment team had found value in the subdued market conditions through exposure to undervalued growth companies in the vehicle leasing, retail and health product sectors.

“We were pleased with our stock selection during the year. For the financial year our top performing stocks were Smartgroup Corporation Limited (ASX: SIQ), The A2 Milk Company Limited (ASX: A2M), IPH Limited (ASX: IPH), Mayne Pharma Group Limited (ASX: MYX) and Blackmores Limited (ASX: BKL),” Mr Stott said.

The Company will pay a fully franked final dividend of 7.25 cents per share, bringing the full year fully franked dividend to 14.5 cents per share. The full year dividend represents an annualised fully franked dividend yield of 6.3% (based on closing price as at Friday, 22 July 2016).

Chief Executive Officer of Wilson Asset Management, Kate Thorley, said the Company continued to perform strongly due to the solid performance of the investment portfolio.

“WAM Capital has delivered a total shareholder return of 24.5% for the year to the Company’s 20,000 retail shareholders, the majority of which have self managed superannuation funds. We are pleased that we can deliver on the Company’s goal of paying an increased dividend to shareholders.” Ms Thorley said.

Performance at 30 June 2016 1 Yr	3 Yrs %pa 5 Yrs %pa 10 Yrs %pa 15 Yrs %pa	Since inception %pa(Aug-99)
WAM Investment Portfolio* 21.6%	18.5% 16.3% 13.3% 16.3%	18.0%
S&P/ASX All Ordinaries Accumulation Index 2.0%	8.2% 7.3% 4.9% 7.4%	7.9%
Outperformance +19.6%	+10.3% +9.0% +8.4% +8.9%	+10.1%

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

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WAM Capital Limited (WAM) ASX Announcement/Media Release 25 July 2016

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Fully franked final dividend increased to 7.25 cents

The Board has declared an increased fully franked final dividend of 7.25 cents per share, bringing the full year fully franked dividend to 14.5 cents per share. The full year dividend represents an annualised fully franked dividend yield of 6.3% (based on closing price as at Friday, 22 July 2016). The dividend reinvestment plan (DRP) is available to shareholders for the final dividend. The dividend reinvestment plan will operate at a 2.5% discount.

Ex dividend date 17 October 2016 Record date 18 October 2016 Last election date for the DRP 20 October 2016 Final dividend payment date 28 October 2016

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.

Growing fully franked dividends

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Cents per share
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Ordinary fully franked dividend Special fully franked dividend Equal access share buy-back
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Share Purchase Plan and Placement

The Board of WAM Capital today announced a Share Purchase Plan (SPP) and Placement. The SPP offers existing shareholders the opportunity to acquire up to $15,000 worth of ordinary shares in WAM Capital without incurring any brokerage. The SPP will be offered at the fixed price of $2.14 per share. Shareholders who participate will be entitled to the fully franked final dividend of 7.25 cents per share. Shareholders on the WAM Capital register as at 7:00 pm (AEST) on Friday, 22 July 2016, with a registered address in Australia or New Zealand will be entitled to participate in the SPP. The SPP will open 1 August 2016 and will close 19 August 2016. Further information will be provided in the SPP Offer Booklet being sent to shareholders on 1 August 2016.

The Board currently intends to offer existing WAM Capital professional and sophisticated investors[*] the ability to participate in a Placement at $2.14 per share, the same fixed price as the SPP. The Placement is currently expected to occur in August. The Board can issue additional shares provided it complies with the relevant ASX Listing Rules. The shares issued under the Placement will rank pari passu with existing shares.

• These terms are defined in the Corporations Act and refer to individuals with net assets greater than $2.5 million, or those who earn gross income of $250,000, or a Superannuation Fund with net assets of at least $10 million.

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WAM Capital Limited (WAM) ASX Announcement/Media Release 25 July 2016

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Equity market performance and outlook

Chief Investment Officer Chris Stott said the equity market outlook for the next 12 months remains mixed.

“Initial political uncertainty following the recent federal election eased after the Coalition claimed the requisite majority in the lower house to form government. While the uncertainty impacted consumer and business confidence in the short term, the impact has been modest and consumer sentiment is forecast to improve in the coming months.”

“In FY2017 we expect further cuts to interest rates in Australia, which is positive for the economy, in particular the housing market and retail sectors. This low interest rate environment will be conducive to higher levels of economic activity, which is supportive of earnings growth.”

“Ongoing planned global stimulus, particularly in Japan and the United Kingdom, will be supportive of equity markets in the near term” Mr Stott said.

The Company continues to find investment opportunities regardless of market conditions, and our current cash weighting positions us well to capitalise on these opportunities.

Portfolio outperformance since inception

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Index re-based
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WAM Investment Portfolio before expenses, fees & taxes S&P/ASX All Ordinaries Accumulation Index
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Advocating for retail investors

Wilson Asset Management continues to engage in public policy discussions and advocate on behalf of all shareholders regarding issues of importance. We recently made a submission to the Australian Securities Exchange (ASX) in response to proposed changes to its admission requirements for listed entities. Proposed changes set out in the ASX’s public consultation paper, included amendments to the listing rules that whereby only shareholders with at least $5,000 of shares (up from $2,000) would be counted towards the ‘spread test’ admission requirement. We recommended the ASX retain the current $2,000 minimum threshold as, in our view, initial public offerings (IPOs) with a minimum subscription amount of $5,000 would deter retail investors and act as a barrier to entering the share market. Our submission also made recommendations relating to proposed changes to the market capitalisation assets test and the planned introduction of a formal free float test. Over coming months we will monitor the ASX’s public consultation process regarding the proposed changes and engage in the public debate.

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WAM Capital Limited (WAM) ASX Announcement/Media Release 25 July 2016

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Top holdings (as at 30 June 2016)

Code	Company	Market Value $	Market Value as % Gross Assets
HHV	Hunter Hall Global Value Limited	35,923,281	3.8%
MYX	Mayne Pharma Group Limited	24,585,845	2.6%
SIQ	Smartgroup Corporation Limited	20,187,934	2.1%
CYA	Century Australia Investments Limited	18,270,122	1.9%
NCK	Nick Scali Limited	16,337,288	1.7%
RWC	Reliance Worldwide Corporation Limited	15,582,138	1.7%
APN	APN News & Media Limited	15,539,374	1.7%
SXL	Southern Cross Media Group Limited	15,063,940	1.6%
CL1	Class Limited	14,898,127	1.6%
ECX	Eclipx Group Limited	14,815,727	1.6%
CCP	Credit Corp Group Limited	14,366,890	1.5%
RCG	RCG Corporation Limited	14,007,171	1.5%
SDF	Steadfast Group Limited	13,440,669	1.4%
VOC	Vocus Communications Limited	13,099,704	1.4%
SGF	SG Fleet Group Limited	13,095,839	1.4%
VTG	Vita Group Limited	13,026,571	1.4%
AGF	AMP Capital China Growth Fund	12,905,278	1.4%
AAD	Ardent Leisure Group	12,574,732	1.3%
MVP	Medical Developments International Limited	11,507,540	1.2%
TRS	The Reject Shop Limited	10,539,580	1.1%

About WAM Capital

WAM Capital Limited (ASX: WAM), one of Australia’s leading listed investment companies, has an investment management agreement with Wilson Asset Management. Listed in August 1999, WAM Capital provides investors with exposure to an actively managed diversified portfolio of undervalued growth companies listed on the Australian Securities Exchange. WAM Capital also provides exposure to relative value arbitrage and market mispricing opportunities. WAM Capital’s investment objectives are to deliver investors a stream of fully franked dividends, provide capital growth and preserve capital.

For more information visit www.wamfunds.com.au

For further information, please contact Wilson Asset Management:

Geoff Wilson	Kate Thorley	Chris Stott	Alexandra Hopper
Chairman and	Chief Executive Officer	Chief Investment Officer and	Senior Communications
Portfolio Manager	(02) 9247 6755	Portfolio Manager	Advisor
(02) 9247 6755		(02) 9258 4906	(02) 9258 4904
			0431 381 295

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