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WAM CAPITAL LIMITED — Net Asset Value 2012
Dec 9, 2012
66036_rns_2012-12-09_1a3946ed-6c1f-4dd9-b72a-5de1d4e5bfa2.pdf
Net Asset Value
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WAM CAPITAL LTD (WAM) ABN 34 086 587 395 INVESTMENT UPDATE & NET TANGIBLE ASSETS REPORT NOVEMBER 2012
Company overview
WAM Capital (WAM) is a listed investment company that provides investors exposure to an actively managed diversified portfolio that concentrates on identifying undervalued growth companies. These are generally found in the small to medium industrial sector. WAM also provides exposure to relative value arbitrage and market mispricing opportunities.
Investment objective
The investment objectives are to deliver a rising stream of fully franked dividends, to provide capital growth and to preserve capital.
Outperformance against sharemarket
Since inception, the WAM investment portfolio has outperformed the overall sharemarket. WAM’s performance against the S&P/ASX All Ordinaries Accumulation Index is shown in the table below. The investment performance is before expenses, fees and taxes.
| Performance as at 30 November 2012 |
1 Mth % |
6 Mths % |
Fin YTD % |
1 Year % |
3 Yrs %pa |
5 Yrs %pa |
10 Yrs %pa |
Since Inception %pa (Aug-99) |
|---|---|---|---|---|---|---|---|---|
| WAM Investment Portfolio S&P/ASX All Ordinaries Accumulation Index Outperformance |
+0.9% +0.3% +0.6% |
+10.4% +12.0% -1.6% |
+9.9% +11.7% -1.8% |
+15.8% +13.1% +2.7% |
+11.0% +2.9% +8.1% |
+6.4% -3.1% +9.5% |
+14.3% +8.6% +5.7% |
+17.8% +7.6% +10.2% |
Net Tangible Asset (NTA) figures
The following NTA figures are after the payment of a fully franked final dividend of 5.5 cents per share paid on the 28 September 2012. The figures below have not been adjusted for the 121,643,566 remaining options on issue with an exercise price of $1.60 per share.
| NTA before tax | 165.81c |
|---|---|
| NTA after tax and before tax on unrealised gains | 165.17c |
| NTA after tax | 161.10c |
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WAM Capital Limited| ABN 34 086 587 395 Phone 02 9247 6755 | Fax 02 9247 6855 | [email protected] | www.wamfunds.com.au
2013 Interim Dividend Guidance - 6.0 cents per share fully franked
On 5 November 2012, the Board announced the intention to pay a fully franked interim dividend of 6.0 cents per share for the half year ending 31 December 2012. This will be a 9.1% increase on the previous years’ interim dividend and represents an annualised fully franked dividend yield of 7.2% based on the last sale price. The dividend payment will be reliant on profitability and the availability of franking credits.
It is anticipated that the record date for the proposed interim dividend will be no earlier than February 2013, which is consistent with previous years. If the Premium Investors Limited (Premium) Scheme of Arrangement is approved and implemented in accordance with the current timetable, Premium shareholders who elect to receive WAM shares as consideration will receive the interim dividend. This is assuming these shares are held on the dividend record date.
The Board’s dividend policy is to pay an increasing stream of fully franked dividends to shareholders provided the Company has sufficient franking credits and it is within prudent business practices. It must also comply with Government legislation and the ATO’s interpretation of a company’s ability to pay franked dividends. Dividends are paid on a sixmonthly basis. Dividend payments will also be made with consideration to cash flow and cash holdings.
WAM Capital Dividends
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Cents per share
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Merger to acquire 100% of Premium Investors
On 14 September 2012, WAM announced a proposed merger with Premium through a scheme of arrangement. The offer involves WAM acquiring 100% of Premium shares on a net tangible assets (NTA) for NTA basis. Subsequent to our offer, the Independent Directors of Premium have recommended the offer to their shareholders.
WAM will offer Premium shareholders the option to exchange up to 100% of their Premium shares for new WAM shares, receive 100% cash out or a combination of both. Each Premium shareholder who elects to receive scrip consideration will also be issued one WAM option (WAMO) for each new share issued.
The WAM Board believes the merger will be beneficial to WAM shareholders as it will provide a greater market presence, increased liquidity of WAM shares and a reduction in the fixed
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WAM Capital Limited| ABN 34 086 587 395 Phone 02 9247 6755 | Fax 02 9247 6855 | [email protected] | www.wamfunds.com.au
Merger to acquire 100% of Premium Investors (continued)
administration expense ratio. There are also potential benefits from the deferred tax assets and franking credit balances in the Premium accounts.
WAM owns 2,710,746 Premium shares, or 2.7% of the issued capital. The shares have a cost price of $0.64 per share, representing a 24.3% discount to the October 2012 NTA. With the announcement of the merger the Premium share price is now trading close to NTA.
Today, 10 December 2012, Premium Investors (PRV) shareholders will vote on whether to approve the merger with WAM Capital. The meeting will take place 10.30am in the Computershare Investor Services offices at Level 4, 60 Carrington Street, Sydney. Assuming shareholders approve the merger, the second Court hearing is due to be held on 12 December 2012. The implementation date is 31 December 2012.
For further details please refer to the WAM Capital merger page on our website www.wamfunds.com.au or the ASX announcement platform.
Option issue – 1 for 1 bonus issue
On 2 April 2012, the Board announced a 1 for 1 bonus issue of options to acquire ordinary shares in the capital of the Company. The options have an exercise price of $1.60 per share and can be exercised at any time on or before 31 July 2013. The options are currently trading on the ASX under the code WAMO.
As at 30 November 2012, 8,061,597 options have been exercised for a total consideration of $12,898,555. The remaining balance of outstanding options is 121,643,566.
Market outlook
November keeps positive momentum going - just!
The ASX S&P All Ordinaries Accumulation Index finished up 0.27% for November. The market rallied strongly in the second half of the month to recover its early losses and eke out a small gain. This continued its positive momentum in 2012. We have now registered 10 positive months in the last 11. There was also another 0.25% cash rate cut from the RBA just after the month’s end, returning the cash rate to the same level as during the GFC. These low interest rates should help stimulate merger and takeover activity as their cost of capital for funding corporate activity has now fallen significantly. At some point also this low interest rate environment will stimulate the broader economy.
AGM season reflections
The number and breadth of earnings downgrades announced during the AGM season in November was the most notable in memory. This suggests that, even after the recent interest rate cuts, there could be more reductions by the RBA in 2013. Company feedback suggests economic conditions remain tough.
Miners digging for savings
Rio Tinto announced a major cutback in their capital expenditure and exploration budget during the month. This follows similar moves by BHP Billiton and Fortescue Metal Group a few months ago. The brunt of these cuts will be felt by many mining services companies who work with the major miners. Although companies in the sector have experienced big declines in their share prices over the last 6 months, they may have further falls based on these cost reduction programs. As new contracts are negotiated and current contracts come up for renewal, profit margins may be squeezed and revenue could fall as less work is undertaken. As these mining services companies are smaller in size they may provide us with trading opportunities as this new phase of the resources story plays out.
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WAM Capital Limited| ABN 34 086 587 395 Phone 02 9247 6755 | Fax 02 9247 6855 | [email protected] | www.wamfunds.com.au
Portfolio structure
As at 30 November 2012, listed securities made up 66.8% of the portfolio with fixed interest and cash making up the remaining 33.2%. Our focus is on companies with strong earnings per share growth that trade on attractive earnings multiples, are well positioned in growth industries and have proven management. We continue to research thoroughly to identify undervalued growth companies that meet this profile, and carry out over 1,000 company visits a year.
| As at 31 October 2012 | As at 31 October 2012 | As at 30 November 2012 | As at 30 November 2012 | ||
|---|---|---|---|---|---|
| Investment Type | $m % |
$m % |
|||
| Listed Equities | 158.2 | 68.7% | 154.5 | 66.8% | |
| Fixed Interest and Cash | 72.1 | 31.3% | 76.7 | 33.2% | |
| Long Portfolio | 230.3 | 100.0% | 231.2 | 100.0% | |
| Short Portfolio | (1.1) | (0.5%) | (0.0) | (0.0%) | |
| Total Fund Size | $229.2 | $231.2 | |||
| No. | No. | ||||
| Total ordinary shares on issue |
138,697,794 | 138,828,150 | |||
| Total options on issue | 121,773,922 | 121,643,566 |
As at 30 November 2012 the major securities held in the portfolio were as follows.
| Code | Company | Market Value $ |
Market Value as % Gross Assets |
|---|---|---|---|
| IBC | Ironbark Capital Limited | 6,084,279 | 2.6% |
| ALS | Alesco Corporation Limited | 5,784,862 | 2.5% |
| CYA | CenturyAustralia Investments Limited | 5,332,084 | 2.3% |
| MFG | Magellan Financial GroupLimited | 4,760,775 | 2.1% |
| INA | Ingenia Communities Group | 4,740,566 | 2.1% |
| ELI | EmergingLeaders Investments Limited | 4,436,634 | 1.9% |
| RHG | RHG Limited | 4,040,458 | 1.7% |
| NXT | NEXTDC Limited | 3,960,478 | 1.7% |
| BKW | Brickworks Limited | 3,928,823 | 1.7% |
| BRG | Breville GroupLimited | 3,484,941 | 1.5% |
| CYG | CoventryGroupLimited | 3,481,493 | 1.5% |
| CRZ | Carsales.Com Limited | 3,318,067 | 1.4% |
| AHE | Automotive Holdings GroupLimited | 3,275,187 | 1.4% |
| FAN | Fantastic Holdings Limited | 3,026,622 | 1.3% |
| CCQ | Contango Capital Partners Limited | 2,971,898 | 1.3% |
| AMM | Amcom Telecommunications Limited | 2,937,058 | 1.3% |
| CTD | Corporate Travel Management Limited | 2,873,480 | 1.2% |
| CLO | Clough Limited | 2,647,123 | 1.1% |
| FXJ | Fairfax Media Limited | 2,461,472 | 1.1% |
| SDG | Sunland GroupLimited | 2,334,731 | 1.0% |
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WAM Capital Limited| ABN 34 086 587 395 Phone 02 9247 6755 | Fax 02 9247 6855 | [email protected] | www.wamfunds.com.au
Portfolio structure – sector allocation
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Performance – yearly comparison to S&P/ASX All Ordinaries Accumulation Index Set out below is the performance of WAM’s investment portfolio since listing to 30 November 2012 on a financial year basis. The performance data is before all expenses, fees and taxes and is used as a guide to the performance of the investment portfolio against the S&P/ASX All Ordinaries Accumulation Index which is also a before tax and expenses measure.
| Financial Year | WAM Investment Portfolio |
S&P/ASX All Ordinaries Accumulation Index |
Outperformance |
|---|---|---|---|
| 1999/2000 2000/2001 2001/2002 2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011 2011/2012 YTD 2012/2013 |
+33.3% +30.2% +32.7% +12.3% +27.3% +13.9% +27.4% +44.1% -23.0% -3.2% +29.8% +17.9% +4.2% +9.9% |
+11.3% +8.9% -4.5% -1.1% +22.4% +24.8% +24.2% +30.3% -12.1% -22.2% +13.8% +12.2% -7.0% +11.7% |
+22.0% +21.3% +37.2% +13.4% +4.9% -10.9% +3.2% +13.8% -10.9% +19.0% +16.0% +5.7% +11.2% -1.8% |
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WAM Capital Limited| ABN 34 086 587 395 Phone 02 9247 6755 | Fax 02 9247 6855 | [email protected] | www.wamfunds.com.au
Performance - monthly comparison
The table below shows the month by month performance of WAM against the S&P/ASX All Ordinaries Accumulation index.
| Aug 99 | Sep 99 | Oct 99 | Nov 99 | Dec 99 | Jan 00 | Feb 00 | Mar 00 | Apr 00 | |
|---|---|---|---|---|---|---|---|---|---|
| Investment Portfolio* | +1.4% | +5.1% | +4.1% | +11.0% | +4.9% | -2.0% | +5.4% | +5.3% | -5.7% |
| S&P/ASX AllOrdAccum | -2.5% | -1.2% | +0.5% | +5.4% | +5.6% | -0.7% | +1.9% | +0.5% | -1.5% |
| May 00 | Jun 00 | Jul 00 | Aug 00 | Sep 00 | Oct 00 | Nov 00 | Dec 00 | Jan 01 | |
| Investment Portfolio* | -2.9% | +3.6% | +2.9% | +5.2% | -0.7% | +2.5% | +1.9% | +0.1% | +1.7% |
| S&P/ASX AllOrdAccum | -1.3% | +7.7% | -1.3% | +1.7% | +0.2% | -1.1% | +1.1% | -2.0% | +4.4% |
| **Feb 01 ** | **Mar 01 ** | Apr 01 | May 01 | Jun 01 | July 01 | **Aug 01 ** | **Sep 01 ** | Oct 01 | |
| Investment Portfolio* | -0.2% | -3.7% | +3.9% | +6.7% | +6.9% | -1.0% | +4.6% | -2.9% | +8.6% |
| S&P/ASX All Ord Accum | -0.2% | -4.8% | +5.7% | +1.6% | +3.8% | -4.5% | -1.3% | -6.7% | +6.8% |
| Nov 01 | Dec 01 | Jan 02 | Feb 02 | Mar 02 | Apr 02 | May 02 | Jun 02 | Jul 02 | |
| Investment Portfolio* | +3.8% | +3.3% | +7.0% | +3.1% | +4.9% | -0.4% | +0.7% | -2.2% | -3.0% |
| S&P/ASX AllOrdAccum | +3.4% | +2.7% | +1.3% | -1.1% | +0.8% | -1.8% | +0.9% | -4.4% | -4.1% |
| Aug 02 | Sep 02 | Oct 02 | Nov 02 | Dec 02 | Jan 03 | Feb 03 | Mar 03 | Apr 03 | |
| Investment Portfolio* | +3.9% | -1.1% | +1.1% | +1.6% | +1.5% | +1.3% | -1.7% | -0.4% | +3.8% |
| S&P/ASX AllOrdAccum | +1.8% | -4.1% | +2.6% | +1.5% | -1.5% | -1.3% | -5.1% | +3.4% | +4.4% |
| May 03 | Jun 03 | Jul 03 | Aug 03 | Sept 03 | Oct 03 | Nov 03 | Dec 03 | Jan 04 | |
| Investment Portfolio* | +1.5% | +3.5% | +3.6% | +5.2% | +3.7% | +5.4% | -0.7% | +3.6% | +2.5% |
| S&P/ASX AllOrdAccum | +0.5% | +1.3% | +3.6% | +3.5% | -0.1% | +3.5% | -2.1% | +3.7% | -0.7% |
| **Feb 04 ** | **Mar 04 ** | Apr 04 | May 04 | Jun 04 | Jul 04 | **Aug 04 ** | **Sep 04 ** | Oct 04 | |
| Investment Portfolio* | +2.7% | +0.1% | -1.3% | -0.8% | +1.0% | +2.4% | +1.2% | +2.5% | +2.9% |
| S&P/ASX AllOrdAccum | +3.1% | +2.0% | -0.1% | +1.6% | +2.7% | +0.6% | +1.1% | +3.8% | +3.1% |
| Nov 04 | **Dec 04 ** | Jan 05 | Feb 05 | Mar 05 | Apr 05 | May 05 | Jun 05 | Jul 05 | |
| Investment Portfolio* | +3.3% | +0.7% | +2.7% | -0.2% | -0.8% | -4.2% | +0.0% | +2.8% | +2.2% |
| S&P/ASX All Ord Accum | +4.6% | +3.0% | +1.3% | +1.8% | -0.7% | -3.8% | +3.4% | +4.5% | +2.8% |
| Aug 05 | Sep 05 | Oct 05 | Nov 05 | Dec 05 | Jan 06 | Feb 06 | Mar 06 | Apr 06 | |
| Investment Portfolio* | +4.0% | +2.7% | +0.1% | +3.1% | +0.8% | +1.6% | +4.9% | +5.3% | +2.1% |
| S&P/ASX AllOrdAccum | +2.2% | +4.8% | -3.8% | +4.4% | +3.0% | +3.7% | +0.7% | +4.8% | +2.4% |
| May 06 | Jun 06 | Jul 06 | Aug 06 | Sep 06 | Oct 06 | Nov 06 | Dec 06 | Jan 07 | |
| Investment Portfolio* | -2.3% | +0.5% | +0.4% | +3.4% | +2.4% | +4.7% | +3.6% | +6.1% | +3.8% |
| S&P/ASX AllOrdAccum | -4.3% | +1.9% | -1.5% | +3.2% | +1.3% | +4.8% | +2.5% | +3.6% | +2.0% |
| **Feb 07 ** | **Mar 07 ** | Apr 07 | May 07 | Jun 07 | Jul 07 | **Aug 07 ** | **Sep 07 ** | Oct 07 | |
| Investment Portfolio* | +0.4% | +1.9% | +2.6% | +4.7% | +3.3% | +0.3% | -4.2% | +1.7% | +3.1% |
| S&P/ASX AllOrdAccum | +1.6% | +3.3% | +3.0% | +3.2% | -0.1% | -1.9% | +1.7% | +5.8% | +3.1% |
| **Nov 07 ** | **Dec 07 ** | Jan 08 | Feb 08 | Mar 08 | Apr 08 | May 08 | Jun 08 | Jul 08 | |
| Investment Portfolio* | -4.8% | -1.1% | -9.5% | -1.3% | -5.3% | +1.7% | +2.3% | -7.9% | -1.6% |
| S&P/ASX All Ord Accum | -2.4% | -2.4% | -11.2% | +0.3% | -4.1% | +4.6% | +2.4% | -7.3% | -5.2% |
| Aug 08 | Sep 08 | Oct 08 | Nov 08 | Dec 08 | Jan 09 | Feb 09 | Mar 09 | Apr 09 | |
| Investment Portfolio* | +1.7% | -5.3% | -9.2% | -5.6% | +3.1% | -1.5% | +1.1% | +2.6% | +5.2% |
| S&P/ASX AllOrdAccum | +4.0% | -10.6% | -13.9% | -7.2% | -0.1% | -4.9% | -4.3% | +8.1% | +6.1% |
| May 09 | Jun 09 | Jul 09 | Aug 09 | Sep 09 | Oct 09 | Nov 09 | Dec 09 | Jan 10 | |
| Investment Portfolio* | +3.6% | +3.9% | +8.2% | +7.6% | +6.9% | +2.3% | +0.6% | +1.6% | -2.4% |
| S&P/ASX AllOrdAccum | +2.2% | +3.9% | +7.7% | +6.5% | +6.1% | -1.9% | +1.9% | +3.7% | -5.9% |
| Feb 10 | Mar 10 | Apr 10 | May 10 | Jun 10 | Jul 10 | Aug 10 | Sept 10 | Oct 10 | |
| Investment Portfolio* | -0.5% | +3.7% | +0.8% | -2.4% | +0.7% | +2.5% | +1.5% | +4.4% | +1.4% |
| S&P/ASX AllOrdAccum | +1.8% | +5.8% | -1.2% | -7.6% | -2.6% | +4.2% | -0.7% | +5.0% | +2.2% |
| Nov 10 | Dec 10 | Jan 11 | Feb 11 | Mar 11 | Apr 11 | May 11 | Jun 11 | Jul 11 | |
| Investment Portfolio* | +2.3% | +3.7% | +1.4% | +2.1% | +0.1% | +1.2% | -1.4% | -2.4% | +0.2% |
| S&P/ASX All Ord Accum | -0.7% | +3.8% | +0.1% | +2.2% | +0.6% | -0.6% | -1.9% | -2.4% | -3.4% |
| Aug 11 | Sept 11 | Oct 11 | Nov 11 | Dec 11 | Jan 12 | Feb 12 | Mar 12 | Apr 12 | |
| Investment Portfolio* | -1.8% | -0.8% | +2.6% | -1.3% | -1.2% | +1.6% | +4.4% | +2.3% | +0.0% |
| S&P/ASX AllOrdAccum | -2.0% | -6.3% | +7.2% | -3.4% | -1.6% | +5.2% | +2.4% | +1.2% | +1.1% |
| May 12 | Jun 12 | Jul 12 | Aug 12 | Sep 12 | Oct 12 | Nov 12 | Since inception | ||
| Investment Portfolio* | -2.2% | +0.5% | +1.7% | +2.7% | +1.7% | +2.6% | +0.9% | +785.2% | |
| S&P/ASX AllOrdAccum | -6.9% | +0.3% | +3.7% | +2.1% | +2.1% | +3.0% | +0.3% | +164.1% |
*The change in the investment portfolio before all expenses, fees and taxes.
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WAM Capital Limited| ABN 34 086 587 395 Phone 02 9247 6755 | Fax 02 9247 6855 | [email protected] | www.wamfunds.com.au
For more information
Please contact Geoff Wilson, Chris Stott or Kate Thorley.
Wilson Asset Management Level 11, 139 Macquarie Street, Sydney NSW 2000 GPO Box 4658 Sydney NSW 2001
Phone 02 9247 6755 Fax 02 9247 6855 [email protected]
www.wamfunds.com.au
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WAM Capital Limited| ABN 34 086 587 395 Phone 02 9247 6755 | Fax 02 9247 6855 | [email protected] | www.wamfunds.com.au