WAM RESEARCH LIMITED — Net Asset Value 2014

Jan 13, 2014

AS AT 31 DECEMBER 2013

Investment Update & Net Tangible Assets Report

Performance

Performance
Performance at 31 December 2013	1 Mth	Fin YTD	1 Yr	3 Yrs %pa	Since change in investment strategy (Jul-10) %pa
WAX Investment Portfolio*	0.1%	17.0%	29.1%	18.0%	19.6%
S&P/ASX All Ordinaries Accumulation Index	0.9%	14.6%	19.7%	8.0%	11.0%
Outperformance	-0.8%	+2.4%	+9.4%	+10.0%	+8.6%

• 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	$153.3m
Market cap	$155.2m
Share price	$1.125
NTA before tax	$1.11
Shares on issue	137,940,729
Options on issue	68,904,997
Fully franked dividends (FY2013)	7.0c
Dividend yield	6.2%

Net Tangible Assets (NTA) figures

Investment objectives

NTA before tax 110.51c
NTA after tax and before tax on unrealised gains 108.00c
NTA after tax 107.76c

• The above figures are after 43,894 options exercised during the month and have not been adjusted for the remaining options on issue.

• 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

Market overview

After the market’s poor start to December, the forecast ‘Christmas Rally’ bore out with the S&P/ASX All Ordinaries Accumulation Index (‘Index’) closing up 0.9% for the month. The market’s December gains added to its overall strong performance in calendar year 2013 with the Index up 19.7% for the year. The 2013 calendar year marked the Index’s biggest one year rise since calendar year 2009.

In December, local and international markets maintained their strong appetite for Initial Public Offerings (‘IPOs’) with 33 companies listing on the Australian Securities Exchange (‘ASX’) raising $18.5 billion. A total of 61 companies floated on the ASX in calendar year 2013 to raise a total of $56.9 billion - an increase of 17.8% on the previous year. We expect that the surge in IPOs will be followed by an increase in corporate Merger and Acquisition activity in Australia in 2014. Our forecast is contingent on clear signals that economic activity is picking up and so providing company boards with greater confidence in the underlying strength of their businesses.

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

We remain quite cautious in our outlook for the year ahead and anticipate a more subdued performance for Australian and global equity markets. The main reason for this view is that over the last 12 to 18 months company price to earnings (P/E) multiples have expanded significantly while earnings growth has remained anaemic. We will be more positive in our outlook for the market once we start to see a growth in earnings – a thematic we will be watching carefully during next month’s reporting season.

Chief Investment Officer/ Portfolio Manager

Martin Hickson Senior Equity Analyst/Dealer

Matthew Haupt Equity Analyst

Mark Tobin Equity Analyst

Meredith Hemsley Corporate Affairs

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AS AT 31 DECEMBER 2013

Investment Update & Net Tangible Assets Report

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Diversified portfolio

Diversified portfolio
November 2013 Investment Type $m %	December 2013
	$m %
Listed Equities 93.6 61.0	77.8 50.8
Fixed Interest & Cash 59.7 39.0	75.5 49.2
Gross Assets $153.3m 100.0%
	$153.3m 100.0%
Total shares on issue 137,896,835
	137,940,729
Total options on issue -
	68,904,997

Top holdings

Top holdings
Code Company	Market Value as % Gross Assets
SGH Slater & Gordon Limited	3.8%
AHE Automotive Holdings Group Limited	3.1%
NEA Nearmap Limited	2.8%
NXT NEXTDC Limited	2.4%
SGN STW Communications Group Limited	2.3%
GWA GWA Group Limited	2.2%
VOC Vocus Communications Limited	2.1%
AAD Ardent Leisure Group	2.1%
TNE Technology One Limited	2.0%
CSV CSG Limited	2.0%
WEB Webjet Limited	2.0%
RCR RCR Tomlinson Limited	2.0%
DNA Donaco International Limited	1.9%
CIW Clime Investment Management Limited	1.8%
IPP iProperty Group Limited	1.8%
SFW SFG Australia Limited	1.7%
RWH Royal Wolf Holdings Limited	1.7%
PGH Pact Group Holdings Limited	1.3%
OFX Ozforex Group Limited	1.1%
TEN Ten Network Holdings Limited	1.0%

Sector allocation

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17.8%
49.2%
10.4%
8.0%
6.2%
5.2%
0.3%
1.4%
0.6%
0.9%
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Consumer Discretionary: 17.8% Information Technology: 10.4% Industrials: 8.0% Financials: 6.2% Telecommunication Services: 5.2% Materials: 1.4% Consumer Staples: 0.9% Energy: 0.6% Health Care: 0.3% Cash and Fixed Interest: 49.2%

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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. 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
Special fully franked dividend Ordinary fully franked dividend
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On 31 October 2013, the Company paid a fully franked final dividend of 3.5 cents per share, an increase of 7.7% on the previous corresponding period. The final dividend included 1.84 cents of Listed Investment Company (‘LIC’) capital gain which will enable some shareholders to claim a further tax deduction. The final dividend brings the total dividend for FY2013 to 7.0 cents per share and represents a fully franked annual dividend yield of 6.3%, based on the last closing price.

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. The options give shareholders the right, but not the obligation, to subscribe for shares in WAM Research at $1.20 per share. The options can be exercised in full or in part. The options are currently trading on the Australian Securities Exchange (‘ASX’) under the code WAXO.

As at 31 December 2013, 43,894 options had been exercised for a total consideration of $52,673, with the remaining balance of outstanding options being 68,904,997.

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