WAM RESEARCH LIMITED — Net Asset Value 2014

Sep 11, 2014

AS AT 31 AUGUST 2014

Investment Update & Net Tangible Assets Report

Performance

Performance at 31 August 2014	1 Mth	6 Mths	Fin YTD	1 Yr	3 Yrs %pa	Since change in investment strategy (Jul-10) %pa
WAX Investment Portfolio*	5.3%	8.9%	7.7%	18.5%	22.3%	19.2%
S&P/ASX All Ordinaries Accumulation Index	0.7%	6.0%	5.2%	14.4%	13.6%	11.2%
Outperformance	+4.6%	+2.9%	+2.5%	+4.1%	+8.7%	+8.0%

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

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WAM Research Limited

WAM Research Limited
ASX Code	WAX
Listed	Aug 2003
Gross assets	$162.1m
Market cap	$164.6m
Share price	$1.175
NTA before tax	$1.14
Shares on issue	140,047,618
Options on issue	67,969,283
Fully franked dividends (FY2014)	7.5c
Dividendyield	6.4%

Net Tangible Assets (NTA) figures

Net Tangible Assets (NTA) figures
NTA before tax 113.53c
NTA after tax and before tax on unrealised gains 111.30c
NTA after tax 111.09c

• The above figures are after 15,855 options exercised during the month and have not been adjusted for the remaining options on issue.

Market overview

The strong start to the new financial year continued throughout August with the S&P/ASX All Ordinaries Accumulation Index rising 0.7% for the month after the local sharemarket reached a six year high mid-month.

In the US, the S&P 500 Index reached another record high, inching above 2000 points for the first time in history. Since its most recent low of 666 points in March 2009, the US market is now up 200% in the last five and a half years. US Federal Reserve Chair Janet Yellen made an economic address at Jackson Hole during the month, giving little indication as to the direction of short term US interest rates. Investor sentiment suggests interest rate tightening will commence in early 2015.

Locally, August was dominated by annual company reporting season with results broadly in line with our low expectations. Many companies have concluded lengthy cost-cutting programs and while we typically expect to see a return to strong revenue growth at this point in the market cycle, this is yet to materialise. We remain cautious in our short term view of the Australian equity market. While consumer spending and business confidence remain subdued, we expect historically low interest rates to stimulate economic activity over the medium to longer term.

Investment objectives

• Provide a rising stream of fully franked dividends

• Achieve a high real rate of return, comprising both income and capital growth within risk parameters acceptable to the Directors

Company overview

WAM Research Limited (ASX: WAX) is a Listed Investment Company managed by Wilson Asset Management Group. Listed in August 2003, WAM Research provides investors with exposure to a diversified portfolio of undervalued growth companies, which are generally smallto-medium sized industrial companies listed on the Australian Securities Exchange.

Investment & Management Team

Geoff Wilson Chairman/Portfolio Manager

Kate Thorley Chief Executive Officer/ Company Secretary

Chris Stott Chief Investment Officer/ Portfolio Manager

Martin Hickson Senior Equity Analyst/Dealer

Matthew Haupt Senior Equity Analyst

Tobias Yao Equity Analyst

Judith Buchan Head of Corporate Affairs

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AS AT 31 AUGUST 2014

Investment Update & Net Tangible Assets Report

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Diversified portfolio

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|---|---|---|---|---|
|July 2014|August 2014|
|Investment Type|$m|%|$m|%|
|Listed Equities|122.6|79.0|127.8|78.8|
|Fixed Interest & Cash|32.5|21.0|34.3|21.2|
|Gross Assets|$155.1m|100.0%|$162.1m|100.0%|
|Total shares on issue|140,031,763|140,047,618|
|Total options on issue|67,985,138|67,969,283|

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~~*~~ This is after the payment of the 3.75 cents per share fully franked interim dividend and 0.1 cents in tax during the month.

Top holdings

Sector allocation

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|---|---|---|---|
|Market Value as %|
|Code|Company|
|Gross Assets|
|SGH|Slater & Gordon Limited|4.4%|
|VED|Veda Group Limited|4.3%|
|21.2%|
|GXL|Greencross Limited|3.1%|25.5%|
|CBAPA|CBA Perpetual Exc Resale Listed Sec - PERLS V|3.0%|0.1%|
|CSV|CSG Limited|3.0%|0.1%|
|1.0%|
|AHE|Automotive Holdings Group Limited|3.0%|
|1.9%|
|TNE|Technology One Limited|2.8%|4.3%|
|14.4%|
|MTR|Mantra Group Limited|2.7%|6.8%|
|IFM|Infomedia Limited|2.5%|
|11.8%|
|AAD|Ardent Leisure Group|2.2%|12.9%|
|VOC|Vocus Communications Limited|2.2%|
|SRX|Sirtex Medical Limited|2.2%|
|Consumer Discretionary: 25.5%|
|CTD|Corporate Travel Management Limited|2.2%|
|Financials: 14.4%|
|IIN|iiNet Limited|2.1%|
|Industrials: 12.9%|
|3PL|3P Learning Limited|2.1%|Information Technology: 11.8%|
|Health Care: 6.8%|
|FXJ|Fairfax Media Limited|2.1%|
|Telecommunication Services: 4.3%|
|ISD|Isentia Group Limited|2.1%|
|Utilities: 1.9%|
|AHD|Amalgamated Holdings Limited|2.0%|Consumer Staples: 1.0%|
|IFL|IOOF Holdings Limited|2.0%|Energy: 0.1%|
|Materials: 0.1%|
|ENE|Energy Developments Limited|1.9%|
|Cash and Fixed Interest: 21.2%|

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AS AT 31 AUGUST 2014

Investment Update & Net Tangible Assets Report

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Dividend growth

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. The Company’s ability to generate franking credits is dependent upon the receipt of franked dividends from investments and the payment of tax. Dividends are paid on a six-monthly basis and the dividend reinvestment plan is available to shareholders for both the interim and final dividend.

WAM Research dividends since inception

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Cents per share
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
Ordinary fully franked dividend Special fully franked dividend
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On 4 August 2014, the Company announced a fully franked final dividend of 3.75 cents per share. This brings the full year fully franked dividend to 7.5 cents per share, an increase of 7.1% on the previous corresponding period.

The dividend reinvestment plan (DRP) will operate at a 2.5% discount for the final dividend. To participate in the DRP, shareholders should send their DRP Election Form to the Company’s share registrar (Boardroom) no later than 16 October 2014.

Key dividend dates

Key dividend dates
Ex date:	13 October 2014
Record date:	15 October 2014
Last election date for DRP:	16 October 2014
Payment date:	24 October 2014

Bonus Option Issue

On 28 October 2013, the Company announced a one for two bonus option issue (‘Bonus Option Issue’) to all WAM Research shareholders to acquire ordinary shares in the Company. The options have an exercise price of $1.20 per share and can be exercised at any time on or before 17 June 2015.

As at 31 August 2014, 979,608 options had been exercised for a total consideration of $1,175,530, with the remaining balance of outstanding options being 67,969,283.

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