updated may investor presentation brisbane final2014/05/23  · • 1 for 2 bonus option issue...

Investor PresentationBrisbane, May 2014

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Agenda

• Market Overview and Outlook

• About Wilson Asset Management

• Investment Portfolio

• WAM Capital Limited

• WAM Research Limited

• WAM Active Limited

• Investor Communications

• Wilson Asset Management in the Community

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Levelling the playing field

$170bthe sum of capital raised over the last 10 years from wholesale investors through

private placements

7.8% the average discount price of private placements to wholesale investors

$13bthe amount wholesale investors have been

advantaged over retail investors

“In our view, the regime for placements to wholesale investors is unequitable and defies logic… Wholesale investors have the ability to realise a profit on placements at the expense of retail investors.” Wilson Asset Management submission to the Financial System Inquiry

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Market Overview and Outlook

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Current Market Outlook

Very strong housing market

Tech bubble bursting?

China slowdown

Tough Budget to impact growth

US recovery underway

PE ratios above historical average

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US second best market recovery

Source: Bloomberg and Deltec International Group

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US market reaches new highs

Source: IRESS

Nasdaq Composite Index

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• New economic reforms for slower sustainable growth

• 2014 GDP target 7.5% versus 10 year average of 10.5%

• Property prices falling

• Liquidity issues emerging

• The ‘War on Pollution’ to impact short term growth

• Shadow banking risks

China: low growth outlook

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The ‘War on Pollution’

9Source: From Wilson Asset Management’s recent trip to China

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Wenzhou

10Source: From Wilson Asset Management’s recent trip to China

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About Wilson Asset Management

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Experienced Team

Geoff WilsonB Sc GMQ FAICD FFinsiaChairman / Portfolio Manager

Kate ThorleyB Com CPA Grad Dip ACGChief Executive Officer / Company Secretary

Chris StottB Bus Grad Dip App Fin Chief Investment Officer / Portfolio Manager

Martin HicksonB Bus B CompSenior Equity Analyst / Dealer

Matthew HauptCFA B Com Grad Dip App Fin Equity Analyst

Mark TobinBBS MEconSc ACCA Equity Analyst

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Investment approachResearch Driven

Investment StrategyMarket Driven

Investment Strategy

Identifying undervalued growth companies

• Bottom-up stock picking• Extensive research of companies

(1,000 + company meetings / year)

• Rigorous rating process applied

• Catalyst must be identified

• Investment portfolio turns over approx. 0.5x / year

Exploiting market mis-pricing opportunities

• Short term arbitrages and mis-pricings:

o IPOso Placements o Takeoverso Discount to NTA playso Block tradeso Market themes and trends

• Active trading investment portfolio turns over approx. 6x / year

Flexibility to hold cash if no investment opportunities are identified 13

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ASX: WAM ASX: WAX ASX: WAA

Gross assets* $609m $151m $37m

Share price* $1.95 $1.16 $1.31

Pre tax NTA* $1.78 $1.07 $1.05

Premium to NTA* 9% 8% 24%

Fully franked dividend yield** 6.7% 6.5% 7.4%

Investment approach Research Driven / Market Driven

Research Driven Market Driven

Our LICs

*As at 30 April 2014**Annualised interim dividend as at 30 April 2014

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-40%

-30%

-20%

-10%

0%

10%

20%

30%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

WAM Research Premium/Discount to NTA

Our LICs trading at premiums to NTA

“…for the past two years, the sector as a whole has been undergoing a significant re-rating with the overwhelming majority of LICs enjoying either a significant narrowing of their discounts or conversely, an increase in their existing premiums.” Zenith Investment Partners, May 2014

-30%

-20%

-10%

0%

10%

20%

30%

2008 2009 2010 2011 2012 2013 2014

WAM Active Premium/Discount to NTA

WAM Capital Premium/Discount to NTA

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-40%

-30%

-20%

-10%

0%

10%

20%

30%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

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Investment portfolio

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Top 10 Research Driven Holdings*

ASX Code Company

DNA Donaco International Limited

SGH Slater & Gordon Limited

AAD Ardent Leisure Group

DLX DuluxGroup Limited

AHE Automotive Holdings Group Limited

TNE Technology One Limited

FXJ Fairfax Media Limited

NEA Nearmap Limited

ENE Energy Developments Limited

CSV CSG Limited*As at 30 April 2014

Held in WAM Capital

and WAM Research

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Top 10 Market Driven Holdings*

ASX Code Company

CBAPA CBA Perpetual Exc Resale Listed Sec –PERLS IV

CYA Century Australia Investments Limited

ANZPB ANZ Convertible Preference Share –CPS2

WIC Westoz Investment Company Limited

HIL Hills Limited

IPE IPE Limited

CSR CSR Limited

MQA Macquarie Atlas Roads Group

DJS David Jones Limited

BHP BHP Billiton Limited*As at 30 April 2014

Held inWAM Capital

and WAM Active

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Top Contributors and Detractors*

Research Driven Investment Strategy

Contributors % Detractors %

IPP iProperty Group Limited 7.9 NXT NEXTDC Limited -2.3

VOC Vocus Communications Limited

6.0 UGL UGL Limited -1.2

SGH Slater & Gordon Limited 5.9 PGH Pact Group Holdings Limited

-0.9

*WAM Capital FY2014

Market Driven Investment Strategy

Contributors % Detractors %

AOG Aveo Group 7.7 GNC Graincorp Limited -10.2

HIL Hills Limited 6.0 TSE Transfield Services Limited -3.1

CSR CSR Limited 4.3 MMS McMillan Shakespeare Limited -3.1

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0.00

0.50

1.00

1.50

2.00

2.50

Research Driven Investee Company

Overview • Est 1987, provides construction services to transport, resources and utilities sectors across Australia. Majority of work is in QLD

Background • New CEO appointed in July 2012 (ex UGL Limited and Thiess)• Earnings stability and resolved some low margin and loss making

contracts

Catalysts • State and Federal governments increasing infrastructure spend • Integration of Rob Carr acquisition

Outlook • Push into NSW should drive growth in coming years• Great exposure to the increase in government infrastructure investment

Seymour Whyte Limited (SWL)

Commenced buying at $0.72

$

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Market Driven Investee Company

Overview • Toll road operator with assets in France and the USA

Background • A spin-off from the former Macquarie Infrastructure Fund in 2010

Catalysts • Improving credit rating and reduced cost of funding • Extension of management rights for toll road• Potential value in residual asset portfolio

Outlook • Well managed strategic long term assets with strong management team

Macquarie Atlas Roads Group (MQA)

Commenced buying at $1.71

$

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WAM Capital Limited(ASX: WAM)

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Recent Highlights

13.0c Fully franked annualised interim dividend, up 8.3%

6.7% Fully franked

dividend yield*

+14.4% Investment Portfolio

performance**

21%Increase in

Shareholders’ Equity**

+28%Total Shareholder

Return**

15 yearTrack record

*As at 30 April 2014**12 months to 30 April 2014

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Dividend Growth

WAM Capital Dividends since Inception

Cents per share

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

Ordinary fully franked dividend Special fully franked dividend Equal access share buy-back

*Annualised interim dividend

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Outperformance

Performance at 30 April 2014 (% pa) 1 Yr 3 Yrs 5 Yrs 10 Yrs

Since Inception

WAM InvestmentPortfolio* 14.4% 13.3% 20.0% 13.7% 18.1%

S&P/ASX All Ordinaries Accumulation Index

10.4% 8.4% 12.5% 9.4% 8.6%

Outperformance +4.0% +4.9% +7.5% +4.3% +9.5%

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

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OutperformanceIndex re-based

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200

400

600

800

1,000

1,200

WAM Investment Portfolio before expenses, fees & taxes S&P/ASX All Ordinaries Accumulation Index

WAM Portfolio+83.3% above pre-

GFC peak

Index +10.0% from pre-GFC peak

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Long term returns

$10,000 invested in 1999 WAM Capital $91,466 versus the market $33,886

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

Date 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

WAM Capital Ltd All Ordinaries Accum Index

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$91,466

$33,886

*Assumes reinvestment of dividends

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WAM Research Limited

(ASX: WAX)

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Recent Highlights

7.5c Fully franked annualised interim dividend, up 7.1%

6.5% Fully franked

dividend yield*

+17.1% Investment Portfolio

performance**

19%Increase in

Shareholders’ Equity**

+22.6%Total Shareholder

Return**

7.5% pa Outperformance of

market since investment strategy changed in 2010

*As at 30 April 2014 **12 months to 30 April 2014

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Dividend GrowthWAM Research Dividends since Inception

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

Ordinary fully franked dividend Special fully franked dividend

Cents per share

*Annualised interim dividend

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Outperformance

Performance at 30 April 2014 (% pa) 1 Yr 2 Yrs 3 Yrs

Since change in

investment strategy

(July 2010)

WAX InvestmentPortfolio* 17.1% 24.0% 16.2% 18.5%

S&P/ASX All Ordinaries Accumulation Index 10.4% 15.6% 8.4% 11.0%

Outperformance +6.7% +8.4% +7.8% +7.5%

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

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Outperformance

Investment performance since revised investment process July 2010

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WAX Investment Portfolio before all expenses, fees & taxes S&P/ASX All Ordinaries Accumulation Index

Index re-based

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Capital Management

• 1 for 2 Bonus Option Issue announced 28 October 2013

• Exercise price: $1.20 Exercise by: 17 June 2015

• Options trading at: $0.035* (ASX: WAXO)

• Share price: $1.14* (ASX: WAX)

*As at 19 May 201433

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WAM Active Limited(ASX: WAA)

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9.6c Fully franked annualised

interim dividend

7.4% Fully franked

dividend yield*

+12.8% Investment Portfolio

performance**

28%Increase in

Shareholders’ Equity**

+33%Total Shareholder

Return**

38.2% % cash currently held by

investment portfolio*

Recent Highlights

*As at 30 April 2014**12 months to 30 April 2014

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Dividend Growth

WAM Active Dividends since Inception

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2008/09 2009/10 2010/11 2011/12 2012/13 2013/14*

Fully franked dividends

Cents per share

*Annualised interim dividend

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Positive Performance

Performance at 30 April 2014 (% pa) 1 Yr 3 Yrs 5 Yrs

Since Inception

WAA InvestmentPortfolio* 12.8% 11.4% 17.0% 13.3%

S&P/ASX All Ordinaries Accumulation Index 10.4% 8.4% 12.5% 1.8%

Outperformance +2.4% +3.0% +4.5% +11.5%

UBS Bank Bill Index (cash) 2.7% 3.7% 3.9% 4.5%

Outperformance +10.1% +7.7% +13.1% +8.8%

*Investment performance and Index returns are before expenses, fees and taxes37

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Positive Performance

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WAA Investment Portfolio before all expenses, fees & taxes S&P/ASX All Ordinaries Accumulation Index UBS Bank Bill Index

Index re-based

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Investor Communications

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Investor Communication

Weekly emails including market

update

Half yearly national investor

presentations

Investor newsletters

Half & full year financial results

Industry conferences

and independent

research

Website wamfunds.com.au

Monthly NTA announcement & investment

update

Media

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Wilson Asset Management in the

Community

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Community Investment

All donations are made by Wilson Asset Management (the investment manager) and/or its staff, not the listed entities. 42

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DisclaimerThis presentation has been prepared for use in conjunction with a verbal presentation and should be read in that context. Information

for the graphs, charts and quoted indices contained in this presentation has been sourced from IRESS Market Technology, WAM

Capital Ltd, WAM Research Ltd and WAM Active Ltd unless otherwise stated. The information in this presentation is only intended for

Australian residents. The purpose of this presentation is to provide information only and the contents of the presentation does not

purport to provide investment advice. We strongly suggest that investors consult a financial adviser prior to making any investment

decision. The presentation does not take into account the investment objectives, financial situation or particular needs of any person

and should not be used as the basis for making investment, financial or other decisions. The information is selective and may not be

complete or accurate for your particular purposes and should not be construed as a recommendation to invest in any particular

investment or security, or Fund offered by Wilson Asset Management. The information provided in the presentation is given in good

faith and is believed to be accurate at the time of compilation. Neither Wilson Asset Management, WAM Capital Ltd, WAM Research

Ltd and WAM Active Ltd nor its directors or employees make any representation or warranty as to the accuracy, reliability, timeliness

or completeness of the information. To the extent permissible by law, Wilson Asset Management, WAM Capital Ltd, WAM Research

Ltd and WAM Active Ltd and its director and employees disclaim all liability (whether arising in contract, tort, negligence or otherwise)

for any error, omission, loss or damage (whether direct, indirect, consequential or otherwise). Performance figures quoted in the

report are past performance. Past performance is not an indicator of future performance. Neither Wilson Asset Management, WAM

Capital Ltd, WAM Research Ltd and WAM Active Ltd nor its directors or employees guarantee or make any representation as to the

performance of the Funds, the maintenance or repayment of capital, the price at which shares may trade or any particular rate of

return.

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Contact usinfo@wamfunds.com.au

phone (02) 9247 6755 | fax (02) 9247 6855www.wamfunds.com.au

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Investor PresentationBrisbane, May 2014

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