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WAM CAPITAL LIMITED — Net Asset Value 2012
Oct 9, 2012
66036_rns_2012-10-09_b39183b8-9daa-40ce-952a-105c5d97e18e.pdf
Net Asset Value
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WAM CAPITAL LTD (WAM) ABN 34 086 587 395 INVESTMENT UPDATE & NET TANGIBLE ASSETS REPORT SEPTEMBER 2012
Company overview
WAM Capital Limited (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 September 2012 |
Since Inception %pa (Aug-99) |
|||||||
|---|---|---|---|---|---|---|---|---|
Fin YTD % |
||||||||
| 1 Mth % |
6 Mths % |
1 Year % |
3 Yrs %pa |
5 Yrs %pa |
10 Yrs %pa |
|||
| WAM Investment Portfolio S&P/ASX All Ordinaries Accumulation Index Outperformance |
+1.7% +2.1% -0.4% |
+4.3% +2.1% +2.2% |
+6.2% +8.2% -2.0% |
+13.4% +13.4% +0.0% |
+10.8% +1.8% +9.0% |
+5.3% -3.6% +8.9% |
+14.3% +8.6% +5.7% |
+17.7% +7.4% +10.3% |
NTA figures
The following Net Tangible Asset (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 121,781,287 remaining options on issue with an exercise price of $1.60 per share.
| NTA before tax NTA after tax and before tax on unrealised gains NTA after tax |
161.31c |
|---|---|
| 160.73c | |
| 157.35c |
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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
Dividends – 5.5 cents per share fully franked final
On 28 September 2012, the Company paid a fully franked final dividend of 5.5 cents per share. This is a 10% increase on the previous year’s final dividend.
The Board is committed to paying 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, cash holdings and available franking credits.
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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 between WAM Capital and Premium Investors Limited (Premium) through a scheme of arrangement. The offer involves WAM Capital 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.
The WAM Capital Board believes the merger will be beneficial to WAM Capital shareholders as it will provide a greater market presence, increased liquidity of WAM Capital 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.
WAM Capital 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 21.5% discount to the August NTA. With the announcement of the merger the Premium share price is now trading close to NTA.
For further details please refer to the WAM Capital merger page on our website www.wamfunds.com.au.
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 28 September 2012, 7,923,876 options have been exercised for a total consideration of $12,678,202. The remaining balance of outstanding options is 121,781,287.
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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
Market outlook
Index up for the month
The ASX S&P All Ordinaries Accumulation Index finished the month up 2.1% and up 8.2% for the first quarter of the new financial year. The September quarter was the best for the Australian market in three years. The market was boosted by the US and European central banks announcing further monetary stimulus. Expectations of interest rate cuts domestically also improved market sentiment. A cut of 0.25% was delivered in early October with further rate cuts expected over the next 12 months.
Iron ore still rusting
While iron ore prices recovered somewhat during September there was no respite for companies in the mining services sector. Macmahon Holdings downgraded its FY13 profit forecast by 40% - 70%. This was one month after their full year result when a 20% rise in FY13 profits was forecast. Fortescue Metals Group cut staff numbers, announced asset sales, cut capital expenditure and refinanced debt to relieve pressure on its balance sheet. The reduction in capital expenditure by the major mining companies is slowly filtering through the mining services sector. We expect further downgrades in the coming months.
Waiting for guidance
We still believe analysts’ expectations for FY13 earnings are too high and that further earnings downgrades will be announced. Annual General Meeting (AGM) season is only a few weeks away and the profit guidance provided will be watched closely. Many companies provided little or no guidance with their results in August, where they would have normally done so. Thus there will be added emphasis on the updates provided at this year’s AGMs.
Portfolio structure
As at 30 September 2012, listed securities made up 58.6% of the portfolio with fixed interest and cash making up the remaining 41.4%. 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 31 August 2012 | As at 31 August 2012 | As at 30 September 2012 | As at 30 September 2012 | ||
|---|---|---|---|---|---|
| Investment Type | $m % |
$m % |
|||
| Listed Equities | 111.7 | 50.6% | 133.0 | 58.6% | |
| Fixed Interest and Cash | 108.9 | 49.4% | 93.9 | 41.4% | |
| Long Portfolio | 220.6 | 100.0% | 226.9 | 100.0% | |
| Short Portfolio | (3.0) | (1.4%) | (2.1) | (0.9%) | |
| Total Fund Size | $217.6 | $224.8* | |||
| No. | No. | ||||
| Total ordinary shares on issue |
131,388,535 | 138,690,429 | |||
| Total options on issue | 128,021,791 | 121,781,287 |
- This is after the receipt of option monies totalling $9,984,807 and the payment of the $5,934,322 fully franked final dividend 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
Portfolio structure (continued)
As at 30 September 2012 the major securities held in the portfolio were as follows.
| Market Value as % Gross Assets |
|||
|---|---|---|---|
| Market Value $ |
|||
| Code | Company | ||
| ALS | Alesco Corporation Limited | 7,093,542 | 3.2% |
| CBAPB | CBA Perpetual Exc Resale Listed Sec - PERLS IV | 6,450,043 | 2.9% |
| CYA | CenturyAustralia Investments Limited | 4,815,756 | 2.1% |
| IBC | Ironbark Capital Limited | 4,659,432 | 2.1% |
| ELI | EmergingLeaders Investments Limited | 4,498,254 | 2.0% |
| BRG | Breville GroupLimited | 3,970,526 | 1.8% |
| INA | Ingenia Communities Group | 3,762,070 | 1.7% |
| RHG | RHG Limited | 3,343,260 | 1.5% |
| AHE | Automotive Holdings GroupLimited | 3,286,032 | 1.5% |
| NXT | NEXTDC Limited | 3,239,040 | 1.4% |
| CYG | CoventryGroupLimited | 3,064,832 | 1.4% |
| CCQ | Contango Capital Partners Limited | 2,971,898 | 1.3% |
| SDG | Sunland GroupLimited | 2,956,455 | 1.3% |
| FAN | Fantastic Holdings Limited | 2,526,538 | 1.1% |
| RIC | RidleyCorporation Limited | 2,435,316 | 1.1% |
| AMM | Amcom Telecommunications Limited | 2,382,891 | 1.1% |
| GLG | Gerard LightingGroupLimited | 2,354,333 | 1.0% |
| SKE | Skilled GroupLimited | 2,300,818 | 1.0% |
| DJS | David Jones Limited | 2,219,844 | 1.0% |
| WEB | Webjet Limited | 2,193,013 | 1.0% |
Portfolio structure – sector allocation
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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 – 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 September 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.
| S&P/ASX All Ordinaries Accumulation Index |
|||
WAM Investment Portfolio |
|||
| Financial Year | 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% +6.2% |
+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% +8.2% |
+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% -2.0% |
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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
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 All Ord Accum | -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 All Ord Accum | -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 All Ord Accum | +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 All Ord Accum | +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 All Ord Accum | +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 All Ord Accum | +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 All Ord Accum | +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 All Ord Accum | -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 All Ord Accum | +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 All Ord Accum | +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 All Ord Accum | +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 All Ord Accum | +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 All Ord Accum | -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 | Since inception | ||||
| Investment Portfolio* | -2.2% | +0.5% | +1.7% | +2.7% | +1.7% | +755.4% | |||
| S&P/ASX All Ord Accum | -6.9% | +0.3% | +3.7% | +2.1% | +2.1% | +155.9% |
*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