updated may investor presentation brisbane final2014/05/23 · • 1 for 2 bonus option issue...
TRANSCRIPT
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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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
-60
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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 [email protected]
phone (02) 9247 6755 | fax (02) 9247 6855www.wamfunds.com.au
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Investor PresentationBrisbane, May 2014
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