WAM RESEARCH LIMITED — Net Asset Value 2015

Aug 13, 2015

Investment Update & Net Tangible Assets Report AS AT 31 JULY 2015

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Performance

Performance
						Since change in
Performance at 31 July 2015	1 Mth	6 Mths	1 Yr	3 Yrs %pa	5 Yrs %pa	investment strategy (Jul-10) %pa
WAX Investment Portfolio*	4.5%	14.1%	25.4%	25.3%	19.0%	19.5%
S&P/ASX All Ordinaries Accumulation Index	4.2%	4.5%	5.4%	14.7%	9.4%	10.1%
Outperformance	+0.3%	+9.6%	+20.0%	+10.6%	+9.6%	9.4%

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

Net Tangible Assets (NTA) figures

Net Tangible Assets (NTA) figures
NTA before tax	117.57c*
NTA after tax and before tax on unrealised gains	116.16c*
NTA after tax	115.96c*

~~*~~ This is after the payment of $238k (0.1 cents a share) and the provision of $3.0m (1.8 cents a share) in tax relating to FY2015.

WAM Research Limited

ASX Code	WAX
Listed	Aug 2003
Gross assets	$203.3m
Market cap	$195.1m
Share price	$1.18
NTA before tax	$1.18
Shares on issue	165,303,976
Fully franked annualised interim dividend (FY2015)	8.0c
Dividendyield	6.8%

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

Market overview

July was a positive month for the Australian equity market with the S&P/ASX All Ordinaries Accumulation Index up 4.2%. The Index was lifted higher by the healthcare and consumer staples sectors, despite significant drag from the resources sector. The Australian dollar reached its lowest level against the US dollar since May 2009, driven by falling commodity prices and further realisation that interest rates in the United States are moving higher short term. Unsurprisingly, many of the best performing stocks for the month were foreign earners.

Corporate earnings season gets underway in August where we expect the earnings outlook for companies to remain mixed. The retail and housing sectors are well positioned on the back of low interest rates and stable levels of consumer sentiment, while companies exposed to the resources sector are likely to remain weak with poor results and outlook statements.

Inflation data released during the month remained well within the Reserve Bank of Australia’s (RBA) target 2-3% range and as a result in early August the RBA left interest rates on hold. According to their statement, there seems to be a low level of urgency short term to make further adjustments to monetary policy.

We are now almost six and a half years into this current bull market which is in its mature phase. We believe the Australian equity market will continue to benefit from low interest rates and improving domestic economic conditions over the medium term. In the short term, we believe opportunities will continue to present themselves, irrespective of macroeconomic conditions.

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

James McNamara Communications Manager

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Investment Update & Net Tangible Assets Report AS AT 31 JULY 2015

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Diversified portfolio

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||||||
|---|---|---|---|---|
|June 2015|July 2015|
|Investment Type|$m|%|$m|%|
|Listed Equities|106.4|54.4|114.5|56.2|
|Fixed Interest & Cash|89.0|45.6|89.1|43.8|
|Gross Assets|$195.4m|100.0%|$203.6m|100.0%|
|Total shares on issue|165,303,976|165,303,976|

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Top holdings

Sector allocation

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|||||||
|---|---|---|---|---|---|
|Market Value|Market Value as|
|Code|Company|
|$|% Gross Assets|
|ECX|Eclipx Group Limited|8,024,462|3.9%|
|18.0%|
|ASB|Austal Limited|7,995,543|3.9%|
|IPH|IPH Limited|6,251,019|3.1%|
|ENE|Energy Developments Limited|6,029,098|3.0%|
|43.8%|
|MTR|Mantra Group Limited|5,802,922|2.9%|
|15.5%|
|SIQ|Smartgroup Corporation Limited|5,678,623|2.8%|
|ISU|iSelect Limited|5,500,535|2.7%|
|CCP|Credit Corp Group Limited|5,379,332|2.6%|
|CSV|CSG Limited|5,368,334|2.6%|0.7%|7.4%|
|1.1%|6.7%|
|RFG|Retail Food Group Limited|5,117,156|2.5%|3.0%|3.8%|
|AHD|Amalgamated Holdings Limited|5,015,896|2.5%|
|VOC|Vocus Communications Limited|4,389,282|2.2%|
|Consumer Discretionary: 18.0%|
|RCG|RCG Corp Limited|3,970,600|2.0%|Industrials: 15.5%|
|CKF|Collins Foods Limited|3,448,847|1.7%|Financials: 7.4%|
|APE|AP Eagers Limited|3,041,544|1.5%|Information Technology: 6.7%|
|Telecommunication Services: 3.8%|
|SDA|SpeedCast International Limited|2,895,959|1.4%|
|Utilities: 3.0%|
|CIW|Clime Investment Management Limited|2,612,185|1.3%|
|Consumer Staples: 1.1%|
|HSN|Hansen Technologies Limited|2,380,694|1.2%|
|Health Care: 0.7%|
|TRS|The Reject Shop Limited|2,213,015|1.1%|Cash and Fixed Interest: 43.8%|
|RHP|Rhype Limited|2,155,221|1.1%|

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Investment Update & Net Tangible Assets Report AS AT 31 JULY 2015

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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 usually 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
9.0
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
Annualised interim dividend
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On 28 May 2015, the Company paid a fully franked interim dividend of 4.0 cents per share, an increase of 6.7% on the previous corresponding period. The dividend reinvestment price was $1.1362 after the 2.5% discount.

Priority offer to WAM Research shareholders in Future Generation Global Investment Company Limited

WAM Research shareholders are entitled to share in the $110 million priority allocation to the Future Generation Global Investment Company Limited (FGG) initial public offering (IPO). FGG will be Australia’s first internationally focused listed investment company with the dual objectives of providing shareholders with diversified exposure to selected global equities and changing the lives of young Australians affected by mental illness. FGG will charge shareholders 0.0% management fees and 0.0% performance fees as the participating fund managers will manage the capital on a pro bono basis. This arrangement allows the company to donate 1.0% of its net tangible assets each year to selected Australian non-profits working to improve the mental health of young Australians.

Further information, including the prospectus and online application form, is available at www.futuregeninvest.com.au/global.

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