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WAM CAPITAL LIMITED — Net Asset Value 2012
Nov 8, 2012
66036_rns_2012-11-08_94a10b92-6b6a-4dcd-b550-14048dcf7501.pdf
Net Asset Value
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WAM CAPITAL LTD (WAM) ABN 34 086 587 395 INVESTMENT UPDATE & NET TANGIBLE ASSETS REPORT OCTOBER 2012
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2013 interim dividend guidance, 6.0 cents per share fully franked, representing an annualised yield of 7.5%[*]
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Merger to acquire 100% of Premium Investors - Court approves scheme meeting and booklet
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Investor presentations 20 November - 4 December 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 31 October 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 |
+2.6% +3.0% -0.4% |
+7.0% +4.0% +3.0% |
+8.9% +11.4% -2.5% |
+13.3% +8.9% +4.4% |
+10.9% +3.5% +7.4% |
+5.1% -3.6% +8.7% |
+14.4% +8.7% +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 121,773,922 remaining options on issue with an exercise price of $1.60 per share.
| NTA before tax | 164.46c** |
|---|---|
| NTA after tax and before tax on unrealised gains | 164.12c |
| NTA after tax | 160.11c |
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Based on 8 November 2012 closing price.
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** After the payment of 0.74 cents per share of tax during the month.
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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 7.5% 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 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.
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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 Investors Limited (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 administration expense ratio. There are also potential benefits from the deferred tax assets and franking credit balances in the Premium accounts.
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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
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 23.2% discount to the September NTA. With the announcement of the merger the Premium share price is now trading close to NTA.
On 31 October 2012, the Court approved the scheme booklet which was despatched to Premium shareholders on 8 November 2012. The Independent Expert has concluded that both the cash consideration component and the scrip component of the scheme are fair and reasonable and are in the best interest of Premium’s shareholders in the absence of a superior proposal. The scheme meeting to approve the merger will be held on 10 December 2012. The indicative 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 31 October 2012, 7,931,241 options have been exercised for a total consideration of $12,689,986. The remaining balance of outstanding options is 121,773,922.
Market outlook
Market up again
The ASX S&P All Ordinaries Accumulation Index finished up 2.97% for October. This was its 5th consecutive positive month. It has also now registered 9 positive months in the last 10. Another 0.25% interest rate cut by the RBA and the expectation of further cuts helped drive the market higher.
Merger and acquisition activity heats up
A low interest rate environment is conducive to merger and acquisition activity, as we have mentioned previously. This month a plethora of deals were announced with takeover or merger talks involving Arrium, Discovery Metals, Graincorp, WHK Group and SFG Australia. We believe this trend will continue as more interest cuts are delivered by the RBA during FY13.
Downgrades leak out
Downgrades have been announced from companies such as Harvey Norman, SMS Management and Technology, Emeco Holdings and Treasury Wine Estates, representing varying sectors of the economy. November is a key time for AGMs and we expect further downgrades to be revealed at these meetings. The feedback we continue to receive from companies is that trading conditions remain challenging.
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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 31 October 2012, listed securities made up 68.7% of the portfolio with fixed interest and cash making up the remaining 31.3%. 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 companies that meet this profile, and carry out over 1,000 company visits a year.
| As at 30 September 2012 | As at 30 September 2012 | As at 31 October 2012 | As at 31 October 2012 | ||
|---|---|---|---|---|---|
| Investment Type | $m % |
$m % |
|||
| Listed Equities | 133.0 | 58.6% | 158.2 | 68.7% | |
| Fixed Interest and Cash | 93.9 | 41.4% | 72.1 | 31.3% | |
| Long Portfolio | 226.9 | 100.0% | 230.3 | 100.0% | |
| Short Portfolio | (2.1) | (0.9%) | (1.1) | (0.5%) | |
| Total Fund Size | $224.8 | $229.2 | |||
| No. | No. | ||||
| Total ordinary shares on issue |
138,690,429 | 138,697,794 | |||
| Total options on issue | 121,781,287 | 121,773,922 |
As at 31 October 2012 the major securities held in the portfolio were as follows.
| Code | Company | Market Value $ |
Market Value as % Gross Assets |
|---|---|---|---|
| ALS | Alesco Corporation Limited | 6,573,151 | 2.9% |
| IBC | Ironbark Capital Limited | 5,748,154 | 2.5% |
| CYA | CenturyAustralia Investments Limited | 5,388,178 | 2.4% |
| ELI | EmergingLeaders Investments Limited | 4,744,734 | 2.1% |
| BRG | Breville GroupLimited | 3,738,487 | 1.6% |
| INA | Ingenia Communities Group | 3,692,402 | 1.6% |
| RHG | RHG Limited | 3,645,196 | 1.6% |
| CSR | CSR Limited | 3,525,260 | 1.5% |
| AHE | Automotive Holdings GroupLimited | 3,459,552 | 1.5% |
| NXT | NEXTDC Limited | 3,441,480 | 1.5% |
| MFG | Magellan Financial GroupLimited | 3,407,061 | 1.5% |
| BKW | Brickworks Limited | 3,309,795 | 1.4% |
| CYG | CoventryGroupLimited | 3,261,857 | 1.4% |
| CRZ | Carsales.Com Limited | 3,178,855 | 1.4% |
| CCQ | Contango Capital Partners Limited | 2,971,898 | 1.3% |
| FAN | Fantastic Holdings Limited | 2,571,655 | 1.1% |
| SKE | Skilled GroupLimited | 2,514,373 | 1.1% |
| CTD | Corporate Travel Management Limited | 2,514,235 | 1.1% |
| AMM | Amcom Telecommunications Limited | 2,420,714 | 1.1% |
| SDG | Sunland GroupLimited | 2,416,447 | 1.1% |
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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 31 October 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% +8.9% |
+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% +11.4% |
+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% -2.5% |
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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 | Since inception | |||
| Investment Portfolio* | -2.2% | +0.5% | +1.7% | +2.7% | +1.7% | +2.6% | +777.4% | ||
| S&P/ASX AllOrdAccum | -6.9% | +0.3% | +3.7% | +2.1% | +2.1% | +3.0% | +163.4% |
*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
Investor Presentations
The team at Wilson Asset Management enjoys the opportunity to meet with you at the semiannual investor presentations to be held on the following dates:
Perth – 20 November 2012 Sydney – 28 November 2012 Melbourne – 29 November 2012 Adelaide – 30 November 2012 Canberra – 3 December 2012 Brisbane – 4 December 2012
We look forward to seeing you and please feel free to invite any other interested parties.
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