WAM RESEARCH LIMITED — Net Asset Value 2016

Feb 11, 2016

Investment Update & Net Tangible Assets Report AS AT 31 JANUARY 2016

Performance

							Since change in investment
Performance at			Fin		3 Yrs	5 Yrs	strategy (Jul-10)
31 January 2016	1 Mth	6 Mths	YTD	1 Yr	%pa	%pa	%pa
WAX Investment Portfolio*	-1.8%	11.8%	16.8%	27.6%	22.3%	19.0%	20.0%
S&P/ASX All
Ordinaries	-5.4%	-8.8%	-5.0%	-4.7%	5.5%	5.4%	7.4%
Accumulation Index
Outperformance	+3.6%	+20.6%	+21.8%	+32.3%	+16.8%	+13.6%	+12.6%

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

Net Tangible Assets (NTA) figures

NTA	before tax	121.18c
NTA	after tax and before tax on unrealised gains	118.90c
NTA	after tax	118.75c

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WAM Research Limited

ASX Code	WAX
Listed	Aug 2003
Gross assets	$216.0m
Market cap	$233.2m
Share price	$1.35
NTA before tax	$1.21
Shares on issue	172,768,120
Fully franked dividends (FY2015) Dividendyield	8.0c 5.9%

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

The Australian equity market experienced its worst start to the calendar year since January 2010, with the S&P/ASX All Ordinaries Accumulation Index falling 5.4%. Concerns around global economic growth and a continued slowdown in China drove the decline in equity markets. China’s equity market was particularly volatile during the month and fell 223% as investors reacted poorly to the unexpected devaluation of the Yuan, softer economic data and tighter capital controls.

The continued deterioration in commodity prices placed downward pressure on the Australian equity market during the month. Oil prices fell 4.7% in January following on from a 15.6% fall in December. The falling commodity prices hurt also the Australian dollar, which fell to a seven-year low during the month. Unsurprisingly, the defensive sectors – utilities, telecommunications and consumer staples – outperformed the index in January.

Corporate earnings season is now underway and so far the results have been mixed and outlooks statements guarded. We expect the difficult conditions will continue and have taken profits on a number of positions throughout January and February to increase our cash weighting. This provides us with the ability to act on opportunities as they emerge.

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

Matthew Haupt Portfolio Manager

Martin Hickson Senior Equity Analyst/Dealer

Tobias Yao Equity Analyst

James McNamara Head of Corporate Affairs

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AS AT 31 JANUARY 2016

Investment Update & Net Tangible Assets Report

Diversified portfolio

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|---|---|---|---|---|
|December 2015|January 2016|
|Investment Type|$m|%|$m|%|
|Listed Equities|$129.8|58.9|$108.2|50.1|
|Fixed Interest & Cash|$90.6|41.1|$107.9|49.9|
|Gross Assets|$220.4m|100.0|$216.1m|100.0|
|Total shares on issue|172,768,120|172,768,120|

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Sector allocation

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|||||||
|---|---|---|---|---|---|
|Top holdings|Sector allocation|
|Market Value|Market Value as|
|Code|Company|
|$|% Gross Assets|
|SIQ|Smartgroup Corporation Limited|10,008,902|4.6%|
|IPH|IPH Limited|6,752,908|3.1%|
|ECX|Eclipx Group Limited|6,511,086|3.0%|18.0%|
|MTR|Mantra Group Limited|6,061,892|2.8%|
|RCG|RCG Corp Limited|6,060,279|2.8%|
|11.5%|
|A2M|The A2 Milk Company Limited|4,790,092|2.2%|
|50.1%|
|SRX|Sirtex Medical Limited|4,739,669|2.2%|
|9.1%|
|CSV|CSG Limited|4,441,239|2.1%|
|BBN|Baby Bunting Group Limited|4,405,891|2.0%|4.2%|
|3.8%|
|FXL|FlexiGroup Limited|4,261,298|2.0%|0.4%|2.9%|
|TRS|The Reject Shop Limited|4,004,910|1.9%|
|PSI|PSC Insurance Group Limited|3,745,952|1.7%|
|Consumer Discretionary: 18.0%|
|SXL|Southern Cross Media Group Limited|3,651,850|1.7%|
|Industrials: 11.5%|
|BLX|Beacon Lighting Group Limited|3,259,368|1.5%|
|Financials: 9.1%|
|PME|Pro Medicus Limited|3,043,048|1.4%|
|CCP|Credit Corp Group Limited|3,038,917|1.4%|Health Care: 4.2%|
|CKF|Collins Foods Limited|2,769,163|1.3%|Information Technology: 3.8%|
|EVT|Event Hospitality and Entertainment Limited|2,370,850|1.1%|
|Consumer Staples: 2.9%|
|CIW|Clime Investment Management Limited|2,357,337|1.1%|
|Telecommunication Services: 0.4%|
|PMP|PMP Limited|1,702,960|0.8%|
|Cash and Fixed Interest: 50.1%|

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Investment Update & Net Tangible Assets Report AS AT 31 JANUARY 2016

Dividend growth

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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
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On 23 October 2015, the Company paid a fully franked final dividend of 4.0 cents per share. This brings the full year fully franked dividend to 8.0 cents per share, an increase of 6.7% on the previous corresponding period.

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