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WAM CAPITAL LIMITED — Net Asset Value 2012
Jul 12, 2012
66036_rns_2012-07-12_e2d98477-f8ea-49dc-ac8c-1811fb359aa6.pdf
Net Asset Value
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WAM CAPITAL LTD (WAM) ABN 34 086 587 395 INVESTMENT UPDATE & NET TANGIBLE ASSETS REPORT JUNE 2012
WAM Capital Limited (WAM) is an investor in listed Australian equities. WAM concentrates on identifying undervalued growth companies, generally found in the small to medium industrial sector. 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 - its strong performance against the S&P/ASX All Ordinaries Accumulation Index is shown in the table below. The performance relates to investments and excludes expenses, fees and taxes.
| Performance as at 30 June 2012 |
1 Mth % |
6 Mths % |
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 |
+0.5% +0.3% +0.2% |
+6.6% +2.9% +3.7% |
+4.2% -7.0% +11.2% |
+16.8% +5.9% +10.9% |
+3.5% -4.1% +7.6% |
+13.5% +7.1% +6.4% |
+17.5% +6.9% +10.6% |
NTA figures
The following Net Tangible Asset (NTA) figures are after the payment of a fully franked interim dividend of 5.5 cents per share paid on the 23 March 2012. The figures below have not been adjusted for the 106,776,880 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 |
159.93c |
|---|---|
| 159.20c | |
| 156.04c |
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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
Placement
On 19 June 2012, the Board announced it's intention to undertake a placement of up to 15% of issued capital (16,026,915 ordinary shares) with attaching options on a one for one basis to retail investors and existing shareholders. The placement will be via a prospectus at an issue price equivalent to the pre-tax net tangible assets (NTA) per share as at 31 July 2012 with no dilution to the NTA backing per share for existing shareholders.
The placement has arisen as a response to demand from interested parties. The Board considers the placement to be a positive initiative for WAM and does not expect the placement to have an impact on the Board's dividend policy.
The placement will be subject to receipt of shareholder approval for the purposes of ASX Listing Rule 7.1. The general meeting of shareholders will be held at 11am (Sydney time) on 31 July 2012 at Royal Australian Historical Society, History House, 133 Macquarie Street, Sydney NSW 2000. The ASX listing rules state that existing shareholders who intend to participate in the placement are not entitled to vote on the resolution. Our preferred position is that shareholders can vote on everything, but in this case the ASX Listing Rules require us to include the voting exclusion statement in the notice of the meeting ie a person who participates in the placement can’t vote on the resolution. We understand the ASX policy behind the voting exclusion is to balance the interest of shareholders who do not elect to take up the offer against those who do.
The offer is expected to open on 2 August 2012 and to close on 24 August 2012.
It is intended that proceeds from the proposed capital raising will be invested in accordance with the Company's disciplined investment process using the Research Driven and Market Driven strategies. We will maintain our focus of investing in growth companies that have strong earnings, trade on low price to earnings multiples, have an experienced management team and are well positioned in their industry. If we cannot find acceptable risk/return investment opportunities using our two investment processes, we will hold cash until the right opportunities present themselves. The cash holding is a reflection of the Manager’s ability to find acceptable investment opportunities and not purely our view of the stock market. The money that is raised from the placement will be invested on a pro rata basis as we find new investment opportunities. We invest the funds money as a percentage of assets i.e. 1%,2%,3%.
The benefits of the placement include:
-
A reduction in the administrative expenses ratio as the Company's administrative expenses are spread across a larger pool of assets;
-
An increase in the liquidity of the Company's shares which will make it easier for shareholders to buy and sell the Company's shares; and
-
An increase in the size of the Company, thereby making it more relevant in the market and potentially improving the coverage by research firms, dealer groups and financial advisors.
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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 interim
On 23 March 2012, the Company paid a fully franked interim dividend of 5.5 cents per share. This was a 10% increase on the previous year’s interim 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 six-monthly 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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- Annualised interim dividend
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 were allotted to shareholders on 3 May 2012. 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 13 July 2012, 51,246 options have been exercised for a total consideration of $81,994 with a remaining balance of outstanding options being 106,768,708.
Market outlook
With a last minute sprint for the finish line, June scraped into positive territory with the S&P/ASX All Ordinaries Accumulation Index up 0.25%. However the index was down 7.0% for the financial year. This marks the third time in the last five financial years the market has finished down.
A raft of profit downgrades and discounted capital raisings were announced during June. The cast included some big names: Boral, Billabong, Ten Network Holdings, and Qantas. Given these downgrades and the weak economic environment, we believe that analysts’ earnings estimates for FY13 remain too optimistic and will need to be revised downwards. We expect this to occur over the coming months as full year results for most companies are released and analysts update their models and forecasts. The 0.25% interest rate cut in June should ultimately be a positive for
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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 (continued)
industrial companies as it will help stimulate economic activity. Unfortunately, feedback from the companies we meet is that they have not seen any flow-on effects or a change in consumer behaviour from the recent interest rate cuts. Since the current loosening cycle commenced in November 2011, we have seen a 1.25% reduction in the cash rate.
Moving offshore, concerns about the Greek election results and the continuing European sovereign debt crisis drove government bond yields lower during June - to multi-century lows in some cases. After the Greek election and the actions from the latest EU summit on the crisis, concerns dissipated somewhat and yields retreated from record low levels. These low Government bond yields imply a low growth environment, which is concerning for the future growth in company earnings.
Although we have become more conservative in our outlook for equity markets in 2013, volatile equity markets provide exceptional opportunities. Thus we continue to research thoroughly and meet with company management teams to identify such opportunities.
Portfolio structure
As at 30 June 2012, listed securities made up 54.0% of the portfolio with fixed interest and cash making up the remaining 46.0%. 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 800 company visits a year.
| As at 31 May 2012 | As at 31 May 2012 | As at 30 June 2012 | As at 30 June 2012 | ||
|---|---|---|---|---|---|
| Investment Type | $m % |
$m % |
|||
| Listed Equities | 98.8 | 56.6% | 94.8 | 54.0% | |
| Fixed Interest and Cash | 75.7 | 43.4% | 80.8 | 46.0% | |
| Long Portfolio | 174.5 | 100.0% | 175.6 | 100.0% | |
| Short Portfolio | (2.2) | (1.3%) | (2.5) | (1.4%) | |
| Total Fund Size | $172.3m | $173.1m | |||
| No. | No. | ||||
| Total ordinary shares on issue |
106,845,504 | 106,863,028 | |||
| Total options on issue | 106,794,404 | 106,776,880 |
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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 June 2012 the major securities held in the portfolio were as follows.
| Code | Company | Market Value $ |
Market Value as % Gross Assets |
|---|---|---|---|
| CBAPB | CBA Perpetual Exc Resale Listed Sec - PERLS IV | 5,103,200 | 2.9% |
| ELI | EmergingLeaders Investments Limited | 4,430,247 | 2.6% |
| IBC | Ironbark Capital Limited | 3,952,269 | 2.3% |
| CCQ | Contango Capital Partners Limited | 2,971,898 | 1.7% |
| BRG | Breville GroupLimited | 2,957,963 | 1.7% |
| MMS | McMillan Shakespeare Limited | 2,836,315 | 1.6% |
| TWO | Talent2 International Limited | 2,534,834 | 1.5% |
| SDG | Sunland GroupLimited | 2,530,679 | 1.5% |
| CYA | CenturyAustralia Investments Limited | 2,473,721 | 1.4% |
| CYG | CoventryGroupLimited | 2,266,670 | 1.3% |
| EPX | Ethane Pipeline Income Fund | 2,260,582 | 1.3% |
| RHG | RHG Limited | 2,201,987 | 1.3% |
| AIX | Australian Infrastructure Fund | 2,067,360 | 1.2% |
| SKE | Skilled GroupLimited | 2,005,236 | 1.2% |
| CIF | Challenger Infrastructure Fund | 1,999,203 | 1.2% |
| INA | Ingenia Communities Group | 1,979,371 | 1.1% |
| RKN | Reckon Limited | 1,960,904 | 1.1% |
| AMM | Amcom Telecommunications Limited | 1,923,678 | 1.1% |
| FXL | FlexiGroupLimited | 1,895,093 | 1.1% |
| WEB | Webjet Limited | 1,847,707 | 1.1% |
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 June 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 Company’s investment portfolio has performed against the S&P/ASX All Ordinaries Accumulation Index which is also a before tax and expenses measure.
| Financial Year | 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 |
+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% |
+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% |
+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% |
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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 AllOrdAccum | -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 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 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 AllOrdAccum | +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 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 AllOrdAccum | -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 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 AllOrdAccum | -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 | Since inception | |||||||
| Investment Portfolio* | -2.2% | +0.5% | +705.7% | ||||||
| S&P/ASX AllOrdAccum | -6.9% | +0.3% | +136.5% |
*The change in the 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 or Chris Stott.
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