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Important InformationThis Prospectus contains important
information for you as a shareholder or prospective investor and
requires your immediate attention.
It should be read in its entirety. If you have any questions as
to its contents or the course you should follow, please consult
your stockbroker, accountant, solicitor or other professional
adviser immediately.
Prospectus1 for 1 bonus issue of up to 113,446,762 options to
acquire fully�paid ordinary shares exercisable at $1.37 per option
on or before30 September 2014
Australian Leaders Fund LimitedACN 106 845 970
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Important Information
This Prospectus is dated 4 April 2013 and was lodged with ASIC
on that date. None of ASIC, the ASX and their respective officers
take responsibility for the contents of this Prospectus.
The Company will apply for admission of the Options to quotation
on ASX within 7 days after the date of this Prospectus. The fact
that ASX may grant official quotation of the Options is not to be
taken in any way as an indication of the merits of the Company or
the Options.
Important document
As a Shareholder of the Company, this Prospectus is important
and requires your immediate attention.
This Prospectus contains a number of references to important
information, which forms part of this Prospectus, contained in the
prospectus issued by the Company and dated 12 February 2013, as
varied by the supplementary prospectus dated 21 February 2013
(together the Placement Prospectus). To obtain a copy of the
Placement Prospectus please call the Company on (02) 9252-0225 or
visit the Company’s website at http://wfunds.com.au/.
The content of this Prospectus has been determined on the basis
that Australian Leaders Fund Limited (Company) is a disclosing
entity for the purposes of the Act and that ASX maintains a
database of publicly disclosed information about the Company and
certain matters may reasonably be expected to be known to
Shareholders and their professional advisers.
No Exposure Period
No exposure period applies to the Issue.
Intermediary Authorisation
The Company does not hold an Australian Financial Services
Licence (AFSL) under the Act. Accordingly the Issue is being made
pursuant to an intermediary authorisation in accordance with
Section 911A(2)(b) of the Act.
Professional advice
The information in this Prospectus is not financial product
advice and does not take into account your investment objectives,
financial situation or particular needs. It is important that you
read this Prospectus in its entirety. In particular, you should
consider the risk factors that could affect the performance of the
Company, some of which are outlined in Section 5. Eligible
Shareholders who are issued Options should carefully consider these
factors in light of their personal circumstances (including
financial and taxation issues) and seek professional guidance
before deciding whether to exercise the Options. If you have any
questions you should seek professional advice from your legal,
investment or other professional adviser.
Foreign jurisdictions
No action has been taken to register this Prospectus or qualify
the Options or to otherwise permit an offering of the Options
outside Australia. The Options are offered to Shareholders with
registered addresses in New Zealand in reliance on the
Securities Act (Overseas Companies) Exemption Notice 2002 (New
Zealand).
The distribution of this Prospectus in jurisdictions outside
Australia or New Zealand may be restricted by law and persons who
come into possession of this Prospectus outside Australia or New
Zealand should seek advice on and observe any such restrictions.
Any failure to comply with such restrictions may constitute a
violation of applicable securities laws.
The Issue does not constitute an offer or invitation in any
place outside Australia or New Zealand where, or to any person to
whom, it would be unlawful to make such an offer or invitation.
United States
This document may not be released or distributed in the United
States of America. This document does not constitute an offer to
sell, or a solicitation of an offer to buy, securities in the
United States. Any securities described in this document have not
been, and will not be, registered under the US Securities Act of
1933 and may not be offered or sold in the United States except in
transactions exempt from, or not subject to, registration under the
US Securities Act and applicable US state securities laws.
No Guarantee
Neither the Company nor any other party makes any representation
or gives any guarantee or assurance:
(a) as to the performance or success of the Company;
(b) as to the rate of income or capital growth from the Company;
or
(c) that there will be no capital loss or particular taxation
consequence of investing in the Company.
An investment in the Company is not a deposit or any other type
of liability. An investment in the Company is subject to investment
risk. These risks are discussed in Section 5.
Investors should note that the past share price performance of
the Company provides no guidance as to its future share price
performance.
No representations other than in this Prospectus
No person is authorised to give any information or make any
representation in connection with the Issue which is not contained
in this Prospectus. Any information or representation not contained
in this Prospectus may not be relied on as having been authorised
by the Company.
Defined terms
Capitalised terms not defined in this Prospectus have the
meaning given to them in Placement Prospectus.
References to Australian dollars or $ are references to the
lawful currency of Australia. Any discrepancies between the totals
and the sum of all the individual components in the tables
contained in this Prospectus are due to rounding.
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Summary of important Dates
Option Prospectus 4 April 2013
Shares trade ex-bonus Option entitlements 9 April 2013
Options commence trading on a deferred settlement basis 9 April
2013
Record Date for Options 15 April 2013
Option issue date – Options are issued to Eligible Shareholders
and the Prospectus and Option holding statements are dispatched to
Eligible Shareholders
26 April 2013
End of Options trading on deferred settlement basis 26 April
2013
Normal trading of Options commences 29 April 2013
Option Expiry Date 5.00 pm (Sydney time), 30 September 2014
The above dates and times are indicative only. All times and
dates are a reference to Sydney time. The Company reserves the
right to vary any of the above dates and times, including closing
the Issue early or extending it subject to the Act, Listing Rules
and other applicable laws.
For any enquiries concerning the Issue, please contact Nerida
Dawson, Tom Richardson or Justin Braitling on (02) 92520225.
Key Issue Statistics
Maximum proceeds from the issue of the Options $0
Maximum number of Options to be issued 113,446,762^
Maximum proceeds from the exercise of the Options $155,422,064
(approximately)
Maximum number of Shares issued upon the exercise of the Options
113,446,762^
Option exercise price $1.37
^ See Section 7 for details of the total number of Shares and
Options on completion of the Issue.
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Corporate Directory
Directors Justin Braitling (Chairman) Geoffrey Wilson John
Abernethy Julian Gosse
Manager of the Company Watermark Funds Management Pty Limited
Level 5 139 Macquarie Street Sydney NSW 2000 Ph: (02) 9252 0225
Fax: (02) 9252 1220
Company Secretary Peter Roberts Registered Office Level 5 139
Macquarie Street Sydney NSW 2000 Ph: (02) 9252 0225 Fax: (02) 9252
1220
Solicitor to the Issue Watson Mangioni Lawyers Pty Limited Level
13 50 Carrington Street Sydney NSW 2000 Ph: (02) 9262 6666 Fax:
(02) 9262 2626
Auditors of the Company MNSA Pty Ltd Level 2 333 George St
Sydney NSW 2000 Ph: (02) 9299 0901 Fax: (02) 9299 8104
Share Registrar Boardroom Pty Limited Level 7, 207 Kent Street
Sydney NSW 2000 Ph: (02) 9290 9600 Fax: (02) 9279 0664
Table of Contents
1. Chairman’s Letter
.......................................................................................................................
1
2. Key Issue Terms
........................................................................................................................
2
3. Terms of the Issue
.....................................................................................................................
3
4. Risk Factors
...............................................................................................................................
6
5. Overview of the Company
..........................................................................................................
8
6. Financial Position of the Company
............................................................................................
9
7. Use of Proceeds and Effect of the
Issue..................................................................................
10
8. Option and Share terms
...........................................................................................................
12
9. Additional Information
..............................................................................................................
14
10. Definitions and Interpretation
...................................................................................................
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1. Chairman’s Letter
Dear Shareholder,
The Board of Australian Leaders Fund Limited (Company) are
pleased to announce a 1 for 1 bonus issue of Options to Eligible
Shareholders (Issue). The Options are being issued to Eligible
Shareholders at no cost.
The Board is focused on creating Shareholder value. We believe
the Issue will promote this endeavour and reward Shareholders for
their loyalty and support for the Company. Since listing in 2004,
the Company has successfully completed three bonus Option
issuances. The Board considers options an equitable way for
Shareholders to participate in the growth of the business.
Each Option issued gives Shareholders the opportunity, but not
the obligation, to subscribe for an additional Share at any time
before 5.00 pm (Sydney time) on 30 September at $1.37 per Share.
This exercise price was determined having regard to the Company’s
net tangible asset backing per Share (NTA) as reported by the
Company for the period ending 31 January 2013. The NTA for the
period ending 28 February 2013 was $1.39. See Section 6.1 for
further details. Once issued, Optionholders can exercise their
Options at any time until 5.00 pm (Sydney time) on 30 September
2014.
No funds will be raised by the grant of Options.
It is intended that money raised from the exercise of Options
(up to approximately $155,422,064) will be used for further
investment in accordance with the Company’s investment objectives
and process. The Board proposes to continue to focus its
investments in companies listed in the S&P ASX 200 Index. See
Section 5 for further details.
This Prospectus provides details of the Issue and an overview of
the business and activities of the Company.
The Board recommends that you read this Prospectus in its
entirety.
On behalf of the Board, I would like to thank all the
Shareholders for their ongoing support.
Yours faithfully
Justin Braitling Chairman
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2. Key Issue Terms
What is the Issue?
The Issue is a pro rata bonus issue of 1 Option (exercisable at
$1.37) for every Share held by Eligible Shareholders on the Record
Date.
The maximum number of Options which may be issued is 113,446,762
(this assumes 41,414,511 Shares are issued under the Placement
Prospectus).
Section 3.1
Who can participate in the Issue?
Options will be issued to all Eligible Shareholders registered
at 5.00pm on 15 April 2013 (Record Date).
Each Eligible Shareholder will be issued with 1 Option for every
Share they are the registered holder of at 5.00pm on the Record
Date.
Section 3.1
Who is an Eligible Shareholder?
Eligible Shareholders are registered Shareholders as at 5.00 pm
on the Record Date with a registered address in Australia, New
Zealand, or such other place determined by the Company in which it
would be lawful to make the Issue.
Section 3.6
How much will be raised under the Issue?
No funds will be raised by the grant of the Options.
If all Options issued under this Prospectus are subsequently
exercised, the Options issued would raise up to approximately
$155,422,064 (assuming 113,446,762 Options are issued). It is
currently expected that funds raised will be used for further
investments consistent with the investment objectives and
investment process of the Company.
Sections 3.3 and 7
What do I need to do?
If you are an Eligible Shareholder, you do not need to take any
action to receive the Options.
Section 3.5
What are the key investment risks associated with the
Company?
You will be issued 1 Share for every Option you exercise. A
summary of the key risks that Shareholders are exposed to are
highlighted below. Eligible Shareholders should read these risks
together with the other risks described in Section 5 before
exercising the Options and investing in additional Shares.
� The success and profitability of the Company depends upon the
ability of the Manager to invest in well-managed companies which
have the ability to increase in value over time (or to sell short
poorly-managed companies which have the potential to decrease in
value over time) and there is no guarantee that this can be
achieved.
� The value of the assets selected for the Portfolio may decline
in value which would be likely to have an adverse impact on the
value of the Shares. The value of shorts may also increase, having
a similar impact on the value of the Shares.
� The future earnings of the Company and the value of the
investments of the Company may be affected by the general economic
climate, commodity prices, currency movements, changing government
policy and other factors beyond the control of the Company. As a
result, no guarantee can be given in respect of the future earnings
of the Company or the earnings and capital appreciation of the
Company’s investments.
� While shorts can introduce a natural hedge into the Portfolio,
there are inherent risks associated with short selling. Short
selling involves leverage of the Company’s assets, can suffer from
low liquidity, and investment flexibility could be restrained by
the need to provide collateral to the lender. The Manager seeks to
control these risks.
Section 4
What is incorporated into the Prospectus?
The Placement Prospectus sets out important information in
relation to the Company and the Manager and relevant to your
decision whether to exercise your Options and invest in Shares.
Whenever this Prospectus references to information contained in the
Placement Prospectus, that information is taken to form part of
this document.
Section 9.10
How can I obtain a copy of the Placement Prospectus
A copy of the Placement Prospectus may be obtained from the
Company on request at no charge.
To obtain a copy please call (02) 92520225 or download a copy at
the following links
http://wfunds.com.au/pdfs/ALF%20Placement%20Prospectus.pdf and
http://wfunds.com.au/pdfs/ALF%20Supplementary%20Prospectus%20Lodgement.pdf
Section 9.10
How can further information be obtained?
For any enquiries concerning the Issue, please contact Nerida
Dawson, Tom Richardson or Justin Braitling on (02) 92520225.
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3. Terms of the Issue
3.1. Overview of the Issue
The Issue is a bonus 1 for 1 issue of Options exercisable at
$1.37 per Option.
The Issue will be made on a pro rata basis with respect to each
Share held by Eligible Shareholders registered at 5.00pm on the
record date 15 April 2013 (Record Date).
3.2. How many Options will be issued?
The number of Options that will be issued will equal to the
number of Shares held by Eligible Shareholders at 5.00pm on the
Record Date. The maximum number of Options which may be issued is
approximately 113,446,762. This maximum number assumes 41,414,511
Shares are issued under the Placement Prospectus and 100% of the
Company’s issued Share capital is held by Eligible
Shareholders.
It is expected that the Options will be issued on 26 April 2013.
The number of Options which you will be issued is shown on the
Option holding statement that will be dispatched to Eligible
Shareholders with a copy of this Prospectus.
3.3. How much will be raised?
No funds will be raised by the grant of the Options.
If 113,446,762 Options are issued under this Prospectus and are
all subsequently exercised, the Issue would raise up to
approximately $155,422,064. See Section 7 for further details.
3.4. Rights attaching to Options
On exercise each Option will be converted into 1 fully paid
ordinary share in the Company (Share). There will be no liability
on the part of Eligible Shareholders for any calls.
See Section 8.1 for a summary of the rights attaching to the
Options and Section 8.2 for the rights attaching to the Shares.
3.5. How to participate
If you are an Eligible Shareholder, you do not need to take any
action to receive the Options.
If you are an Eligible Shareholder, you will be issued with 1
Option for every Share you are the registered holder of at 5.00pm
on the Record Date.
3.6. Who is an Eligible Shareholder?
Eligible Shareholders are registered Shareholders as at 5.00 pm
on the Record Date with a registered address in Australia, New
Zealand, or such other place determined by the Company in which it
would be lawful to make the Issue. Directors and their associates
that are Eligible Shareholders will participate in the Issue.
3.7. ASX quotation of the Options
Within 7 days after the date of this Prospectus application will
be made to ASX for the Options to be quoted on ASX.
If ASX does not give permission for quotation of the Options
within 3 months after the date of this Prospectus (or a later date
permitted by ASIC), none of the Options will be issued and if any
have been issued, the issue will be void, unless ASIC grants an
exemption permitting the issue.
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3.8. Issue and allotment of Options
It is currently expected that the Options will be issued on 26
April 2013. Holding statements in relation to the Options will be
despatched to Eligible Shareholders together with a copy of this
Prospectus on the date the Options are issued.
Eligible Shareholders who sell any Options before they receive
their holding statements will do so at their own risk.
No Options or other securities will be issued on the basis of
this Prospectus later than the expiry date of this Prospectus being
the date 13 months after the date of this Prospectus.
3.9. Treatment of Overseas Shareholders
The Issue is made only to Eligible Shareholders with a
registered address in Australia, New Zealand, or such other place
determined by the Company in which it would be lawful to make the
Issue. The Company is of the view that it is unreasonable to make
the Issue to other overseas Shareholders (Excluded Shareholders)
having regard to:
(a) the number of Excluded Shareholders;
(b) the number and value of Shares held by the Excluded
Shareholders; and
(c) the cost of complying with overseas legal requirements.
This Prospectus does not constitute an offer of Securities in
any place in which, or to any person to whom, it would not be
lawful to make such an offer or to make the Issue. Where the
Prospectus has been despatched to persons domiciled in a country
other than Australia or New Zealand, and where that country's
securities code or legislation prohibits or restricts in any way
the making of the Issue, the Prospectus is provided for information
purposes only.
3.10. Participation in the May dividend
The Board announced on 30 January 2013 that the Company would
pay an interim fully franked dividend of 6 cents per Share.
Shareholders will be entitled to receive this interim fully franked
dividend with respect to each Share they are the registered holder
of on the dividend record date, currently expected to be 16 May
2013. The Board intends to pay the dividend on 23 May 2013. The
Directors reserve the right to change the dividend record date in
accordance with the Listing Rules.
Shares issued before the dividend record date will participate
in the dividend. Accordingly Eligible Shareholders are able to
increase their dividend entitlement by exercising some/all of their
Options before this date.
Options can be exercised by delivering to the Company a
completed notice of exercise together with payment of $1.37 per
Option being exercised. Further details of how to exercise your
Options are set out in Section 8.1. For the Shares issued to
participate in the dividend your exercise notice and payment by be
received by the Company:
(a) if payment is being made by BPay before 5:00 p.m. (Sydney
time) on 13 May 2013, being 3 business days before the dividend
record date,.
(b) if payment is being made by cheque, on 9 May 2013, being 5
business days before the dividend record date, for the Shares
issued to participate in the dividend.
Shares issued with respect to Options exercised after this time
will not participate in the May dividend.
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3.11. Taxation
The potential tax effects relating to the Issue will vary
between Shareholders. Shareholders are urged to consider the
possible tax consequences of exercising Options by consulting a
professional tax adviser.
The Directors do not consider that it is appropriate to give
Shareholders advice regarding the taxation consequences of being
granted Options under this Prospectus as it is not possible to
provide a comprehensive summary of the possible taxation positions
of all Shareholders.
The Company, its advisers and officers, do not accept any
responsibility or liability for any taxation consequences to
Shareholders in respect of the Issue. Shareholders should consult
their own professional tax adviser in connection with the taxation
implications of the Issue.
3.12. Investor Considerations
Before deciding to exercise your Options, you should consider
whether the Shares to be issued and allotted on exercise of the
Options are a suitable investment for you. There are general risks
associated with any investment in the stock market. The value of
Shares listed on ASX may rise or fall depending on a range of
factors beyond the control of the Company.
If you are in doubt as to the course you should follow, you
should seek advice on the matters contained in this Prospectus from
a stockbroker, solicitor, accountant or other professional adviser
immediately.
3.13. Private Information
We collect personal information from you in order to administer
your investment. If you think that our records are wrong or out of
date – particularly your address and email address – please contact
us and we will correct this information immediately. You can always
access the personal information that we hold about you.
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4. Risk Factors
4.1. Risk Factors
Intending investors should be aware that receiving and
exercising Options involves various risks. There are general risks
associated with owning Securities in publicly listed companies. The
price of Securities can go down as well as up due to factors
outside the control of the Company. These factors include
Australian and worldwide economic and political stability, natural
disasters, performance of the Australian stock market as a whole,
the Australian interest rate, foreign exchange, taxation and labour
relations environments.
The operating results and profitability of the Company are
sensitive to a number of factors. The following matters, as well as
others described elsewhere in this Prospectus, should be carefully
considered in evaluating the Company and its prospects:
(a) The success and profitability of the Company in part depends
upon the ability of the Manager to invest in well-managed companies
which have the ability to increase in value over time;
(b) The success and profitability of the Company in part depends
upon the retention of the Manager as manager of the Portfolio of
the Company and the retention of key personnel within the Manager
with responsibility for managing the Portfolio;
(c) While the Company and the Manager do not currently use debt
to increase the scale of the Portfolio of the Company, the use of
“short sales” may have an effect similar to leverage in that it can
enlarge the fluctuations in the value of the Portfolio of the
Company in a manner similar to a leveraged portfolio;
(d) The Manager may be obligated to cover its short position at
a higher price than the short price, resulting in a loss. Losses on
short sales are potentially unlimited as a loss occurs when the
value of a Security sold short increases;
(e) Until the Manager replaces a borrowed Security, the Company
will be required to maintain assets with the lending broker as
collateral. Thus, short sales involve credit exposure to the broker
that executes the short sales;
(f) The Company uses the service of a Prime Broker and Custodian
and must post Collateral with the Prime Broker under this
agreement. In the event of insolvency of the Custodian or the Prime
Broker, the Company may not be able to recover the entire value of
the relevant Securities;
(g) The performance fee may create an incentive for the Manager
to make investments that are riskier or more speculative than would
be the case in the absence of a fee based on the performance of the
Company;
(h) Investors are strongly advised to regard any investment in
the Company as a long term proposition and to be aware that, as
with any equity investment, substantial fluctuations in the value
of their investment may occur;
(i) The Company’s Portfolio may be less diversified than other
listed investment companies;
(j) The ability of the Manager to continue to manage the
Company’s Portfolio in accordance with this Prospectus and the Act
is dependent on the maintenance of the Manager’s AFSL and its
continued solvency. Maintenance of the AFSL depends, among other
things, on the Manager continuing to comply with the ASIC imposed
licence conditions and the Act;
(k) The future earnings of the Company and the value of the
investments of the Company may be affected by the general economic
climate, commodity prices, currency movements, changing government
policy and other factors beyond the control of the Company. As a
result, no
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guarantee can be given in respect of the future earnings of the
Company or the earnings and capital appreciation of the Company’s
investments;
(l) Variations in legislation and government policies could
materially affect operating results;
(m) Any variation in the taxation laws of Australia could
materially affect the operating results;
(n) Any variation in foreign exchange rates could materially
affect the operating results;
(o) Any variation in short and long term interest rates could
materially affect the operating results;
(p) Any variation in commodity prices could materially affect
the operating results;
(q) The price of investments that the Company has purchased can
rise as well as fall; and
(r) The past performance of funds managed by the Manager, and
persons associated with the Manager, are not necessarily a guide to
future performance of the Company.
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5. Overview of the Company
5.1. Overview of Australian Leaders Fund Limited
The Company is a listed investment company investing
predominately in listed Australian securities. The Portfolio is
managed by Watermark Funds Management Pty Limited (Manager), a
licensed securities dealer owned by an entity associated with
Justin Braitling. The Company provides investors with the
opportunity to invest in an actively managed portfolio and gain
access to the investment experience and expertise of the
Manager.
The Manager’s investment strategy is similar to other funds with
a primary goal of identifying shares which in its view are
undervalued by the share market and selling the shares of
businesses that in its view are fundamentally challenged when they
are overvalued by the share market.
The Manager is permitted by its investment management agreement
with the Company to acquire interests in a broad range of
investments including ASX listed securities, cash management trusts
and term deposits (refer to Sections 6.5 and 6.7 of the Placement
Prospectus for details).
An important distinction from many institutional funds is the
ability of the Manager to short sell listed Securities. This is
considered by the Manager to be an attractive means of funding
given the natural hedge introduced into the structure. Consistent
with the Manager’s investment guidelines, it is intended that
proceeds of short sales will fund approximately 40 – 60% of the
Company’s balance sheet.
5.2. Investment Objectives and Philosophy
The Company’s investment objective is to deliver superior
returns with reduced market risk while returning a consistent
stream of fully franked dividends to Shareholders. Information
regarding the Company’s investment objectives is set out in Section
6.1 of the Placement Prospectus.
Information regarding the Manager’s investment philosophy is set
out in Section 6.2 of the Placement Prospectus.
5.3. Investment Process and Permitted Investments
The Manager's investment process is a fundamentally driven,
security selection process based on sound investment ideas taken
from the investment universe of listed Australian securities. A
summary of the investment process is set out in Section 6.3 of the
Placement Prospectus.
Sections 6.5 and 6.7 of the Placement Prospectus summarise the
terms on which the Manager is permitted to undertake investments on
behalf of the Company.
5.4. Background of the Manager investment personnel
Information regarding key investment personnel engaged by the
Manager, namely Justin Braitling, Tom Richardson and Joshua Ross is
set out in Section 6.8 of the Placement Prospectus.
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6. Financial Position of the Company
6.1. Net Tangible Asset Backing per Share
The net tangible asset backing per Share (NTA) as reported by
the Company to ASX for the 2 months before the date of this
Prospectus is set out below:
31 January 2012 28 February 2013
NTA after all taxes 137 cents 139 cents
The Company reports its NTA to ASX on or around the 14
th of each month. The NTA for March will be
reported on the 14th April.
6.2. Overview of Operations and Results
A summary of the Company’s operations and results as at 31
December 2012 can be found in Section 4.2 of the Placement
Prospectus.
6.3. Dividend Policy and May dividend
The Board is committed to paying a consistent stream of fully
franked dividends to Shareholders provided the Company has
sufficient franking credits that can be distributed to Shareholders
and it is within prudent business practices. It is intended that
dividends will be paid on a six-monthly basis.
The Board’s policy of paying a consistent stream of fully
franked dividends when possible was continued with the Board
declaring an interim fully franked final dividend of 6 cents per
Share on 30 January 2013. This dividend will be paid to
Shareholders registered on the dividend record date, currently
expected to be 16 May 2013. The date on which the Board intends to
pay the dividend is 23 May 2013. See Section 3.10 regarding
participation in this dividend by Optionholders.
Further details regarding the Company’s performance with respect
to periods ending 31 December 2012, including dividends paid by the
Company’s in respect of each calendar year since listing on ASX
through to 31 December 2012 are set out in Section 4.2 of the
Placement Prospectus.
6.4. Market value of Portfolio as at 31 December 2012
As at 31 December 2012 the total value of the Company’s long
portfolio of investments in ASX listed securities was $187,345,367
and the total value of the Company’s short portfolio was
$135,819,973. These values were determined on the basis of the last
sale price on ASX at close of trading on 31 December 2012 for ASX
quoted securities.
On 14 March 2013, the Company announced its investment update
and NTA as at 28 February 2013. In February, the Company’s long
portfolio increased in value by 4.1% underperforming the All
Ordinaries Index which increased by 5.2%. The portfolio of
Securities borrowed and sold (short) by the Company increased by
4.6% underperforming the All Ordinaries Index and contributing to
performance. On balance, the Company’s total portfolio increased by
1.5% on a gross basis in February underperforming the market by
3.7%.
Section 4.3 of the Placement Prospectus sets out the portfolio
holdings of the Company on 31 December 2012 and the market value of
those Securities (based on the closing price on that date)
(Indicative Portfolio Table). The Indicative Portfolio Table does
not reflect the actual Portfolio as at the date of this Prospectus
as the Company has continued to actively trade in Securities since
31 December 2012. It is representative of the types of investments
the Company continues to make.
The Company refers Shareholders to the Indicative Portfolio
Table as an example only – it is not to be taken as an example of
the optimal portfolio allocation, now or in the future.
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7. Use of Proceeds and Effect of the Issue
7.1. Use of funds
If all of the Options were exercised, the effect on the Company
would be as follows (assuming 113,446,762 Options are issued and no
other capital raises are undertaken by the Company after the Record
Date):
� the number of Shares on issue should increase by 113,446,762
Shares to approximately 226,893,524 Shares; and
� the cash reserves of the Company would increase by
approximately $155,422,064.
The Board intends to use the funds raised on the on the exercise
of the Options for further investments consistent with the
investment objectives and investment process set out in Sections
6.5 and 6.7 of the Placement Prospectus.
The Directors and the Manager do not guarantee that any Options
will be exercised or that any funds will be raised.
7.2. Effect of the Issue
The capital structure of the Company at completion of the Issue
is set out below:
Shares 113,446,7621
Options 113,446,7622
Fully diluted capital 226,893,524
Notes: 1. Assumes 13,804,836 Shares are issued under the Second
Tranche of the Share Issue. 2. The exact number will be to equal to
the number of Shares on issue held by Eligible Shareholders at
5.00pm on the
Record Date.
7.3. Pro Forma Balance Sheet
The pro forma balance sheet set out below represents the balance
sheet of the Company as at 31 December 2012 adjusted for completion
of the Issue. It is intended to be illustrative only and it neither
reflects the actual position of the Company as at the date of this
Prospectus nor at the conclusion of the Issue. In particular, it
does not reflect actual expenditure of funds since 31 December
2012.
Actual 31 December 2012 Pro forma “A” Pro forma “B”
$ $ $
ASSETS
Cash and cash equivalents 33,492,114 89,425,112
244,732,294
Trade and other receivables 1,169,139 1,169,139 1,169,139
Financial assets 201,275,109 201,275,109 201,275,109
Deferred tax assets 4,105,369 4,105,369 1,169,139
TOTAL ASSETS 240,041,731 295,974,729 451,281,911
LIABILITIES
Trade and other payables 1,615,356 1,615,356 1,615,356
Financial liabilities 135,819,973 135,819,973 135,819,973
Current tax liabilities 2,127,179 2,127,179 2,127,179
Deferred tax liabilities 3,357,207 3,357,207 3,357,207
TOTAL LIABILITIES 142,919,715 142,919,715 142,919,715
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Actual 31 December 2012 Pro forma “A” Pro forma “B”
$ $ $
NET ASSETS 97,122,016 153,055,014
308,362,196
EQUITY
Issued capital 76,619,881 132,552,879 287,860,061
Reserves 20,502,135 20,502,135 20,502,135
TOTAL EQUITY 97,122,016 153,055,014
308,362,196
Notes:
1. The column headed “Actual 31 December 2012” is a summary
balance sheet of the Company based on the audited balance sheet of
the Company as at 31 December 2012.
2. The column headed “Pro forma A” is the audited balance sheet
of the Company as at 31 December 2012 adjusted to as if completion
of the Placement had taken place on 31 December 2012.
3. The column headed “Pro forma B” is the “Pro forma A” balance
sheet prepared as though the maximum number of Options were issued
and exercised and 113,446,762 Shares were issued on 31 December
2012.
4. All amounts assume that 113,446,762 Shares will be held by
Eligible Shareholders at the Record Date.
5. Pro forma A assumes payment of expenses related to the
Placement of $933,267 and Pro forma B assumes payment of expenses
related to the Issue of $114,881.
6. Pro forma A and Pro forma B assumes that the interim fully
franked dividend of 6 cents per Share has been declared but not
paid.
7. All amounts are $A unless otherwise stated.
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8. Option and Share terms
8.1. Rights Attaching to the Options
The terms and conditions of the Options are as follows:
Register
The Company will maintain a register of Optionholders in
accordance with Section 168(1)(b) of the Act.
Transfer/Transmission
An Option may be transferred or transmitted in any manner
approved by ASX.
Exercise
An Option may be exercised by delivery to the Company of a duly
completed notice of exercise of Options, signed by the registered
Optionholder, together with payment to the Company of $1.37 per
Option being exercised.
A blank notice of exercise will be sent to Optionholders at the
same time as the holdings statement.
An Option may be exercised on any business day from the date of
grant to 30 September 2014 (inclusive), but not after.
A notice of exercise of Options is only effective when the
Company has received the full amount of the exercise price in cash
or cleared funds.
Dividend Entitlement
If shareholders wish to exercise Options and participate in the
May dividend, the Company must receive duly completed notice of
exercise of Options together with payment no later than:
� 9 May 2013 (where payment is being made by cheque); and
� 13 May 2013 (where payment is being made by BPay).
Options do not carry any dividend entitlement. Shares issued on
exercise of Options rank equally with other issued Shares from the
date of issue and are entitled to dividends declared on and from
this date.
Participating rights
An Optionholder may only participate in new issues of Securities
to Shareholders if the Option has been exercised and Shares
allotted in respect of the Option before the record date for
determining entitlements to the issue. The Company must give at
least 7 business days’ notice to Optionholders of any new issue
before the record date for determining entitlements to the issue in
accordance with the Listing Rules.
If between the date of issue and the date of exercise of an
Option the Company makes one or more rights issues (being a pro
rata issue of Shares in the capital of the Company that is not a
bonus issue), the exercise price of options on issue will be
reduced in respect of each rights issue according to the following
formula:
NE = OE – E [P – (S + D)] (N + 1)
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where:
NE is the new exercise price of the Option;
OE is the old exercise price of the Option;
E is the number of underlying Shares into which one Option is
exercisable;
P is the average closing sale price per Share (weighted by
reference to volume) recorded on the stock market of ASX during the
5 trading days ending on the day before the ex rights date or ex
entitlements date (excluding special crossings and overnight
sales);
S is the subscription price for a Share under the rights
issue;
D is the dividend due but not yet paid on each Share at the
relevant time; and
N is the number of ordinary shares that must be held to entitle
holders to receive a new ordinary share in the rights issue.
If there is a bonus issue to the Shareholders, the number of
Shares over which the Option is exercisable will be increased by
the number of Shares which the Optionholder would have received if
the Option had been exercised before the record date for the bonus
issue.
Reconstructions and Alteration of Capital
Any adjustment to the number of Options and the exercise price
under a re-organisation of the Company’s share capital must be made
in accordance with the Listing Rules.
Stock Exchange Listing
The Company must make application for quotation of Shares issued
on exercise of the Options on ASX in accordance with the Listing
Rules. Shares so issued will rank equally with other issued
Shares.
8.2. Rights Attaching to the Shares
The following information is a summary of the Constitution.
Shareholders have the right to acquire a copy of the Constitution,
free of charge, from the Company.
Each Share confers on its holder:
(a) the right to vote at a general meeting of Shareholders
(whether present in person or by any representative, proxy or
attorney) on a show of hands (one vote per shareholder) and on a
poll (one vote per Share on which there is no money due and
payable) subject to the rights and restrictions on voting which may
attach to or be imposed on Shares (at present there are none);
(b) the right to receive dividends, according to the amount paid
up on the Share;
(c) the right to receive, in kind, the whole or any part of the
Company’s property in a winding up, subject to priority given to
holders of Shares that have not been classified by ASX as
“restricted securities” and the rights of a liquidator to
distribute surplus assets of the Company with the consent of
members by special resolution; and
(d) Subject to the Act and the Listing Rules, Shares are fully
transferable.
The rights attaching to Shares may be varied with the approval
of Shareholders in general meeting by special resolution.
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9. Additional Information
9.1. Capital Structure
As at the date of this Prospectus, the Company had 99,641,926
Shares on issue. On the Record Date, the Company expects it will
have 113,446,762 Shares on issue.
On completion of the Issue, assuming there are no Excluded
Shareholders, the number of Options on issue will be 113,446,762.
The number of Shares on issue may increase up to approximately
226,893,524 should all Options be exercised.
9.2. Legal Proceedings
The Company is not and has not been, during the 12 months
preceding the date of this Prospectus, involved in any legal or
arbitration proceedings which have had or may have a significant
effect on the financial position on the Company. As far as the
Directors are aware, no such proceedings are threatened against the
Company.
9.3. Material Contracts
The Company has appointed UBS AG, Australia Branch to be Prime
Broker and UBS Nominees Pty Limited as Custodian for the Company.
The services offered include the provision to the Company of margin
financing, clearing, settlement, stock borrowing and foreign
exchange facilities. For further details about these agreements
please refer to Section 8.4 of the Placement Prospectus.
As at the date of this Prospectus, the Company is a party to the
following transactions with related parties:
� the Company has appointed the Manager to manage the portfolio
of investments of the Company and to manage and supervise all
investments for the term. Justin Braitling is the sole Director and
beneficial owner of Watermark Funds Management Pty Ltd, the entity
appointed to manage the investment portfolio of the Company. A
summary of the key terms of the management agreement between the
Company and the Manager is set out in Section 6.7 of the Placement
Prospectus; and
� each Director has entered into a director protection deed with
the Company, pursuant to which the Company has agreed to indemnify,
to the extent permitted by the Act, each Director in respect of
certain liabilities incurred in the Director’s capacity as an
officer of the Company. Further information about the deeds of
indemnity is set out in Section 7.5 of the Placement
Prospectus.
Under an investment services agreement, the Manager pays 25% of
all management and performance fees received from the Company to
Boutique Asset Management Pty Limited, a company 80% owned by
entities associated with Geoffrey Wilson (a director of the
Company). Further information about this investment services
agreement is set out in Section 1, 6.7 and 7.1 of the Placement
Prospectus.
9.4. Information regarding the Directors in the Company
The Board is comprised of Justin Braitling, Geoffrey Wilson,
John Abernethy and Julian Gosse. The number of Shares in which
Directors, or entities associated with them, have a Relevant
Interest is as follows: F
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Director Ordinary Shares
Justin Braitling 1,230,894
Geoffrey Wilson 1,000,000
John Abernethy 60,000
Julian Gosse -
Information regarding:
� each Director’s professional experience is set out in Section
7.1 of the Placement Prospectus; and
� Director remuneration is set out in Section 7.4 of the
Placement Prospectus.
9.5. No Other Interests
Except as set out in this Prospectus, there are no interests
that exist at the date of this Prospectus and there were no
interests that existed within 2 years before the date of this
Prospectus that are, or were, interests of a Director or a promoter
of the Company in:
� the formation or promotion of the Company; or
� any property proposed to be acquired by the Company in
connection with its formation or promotion or the Issue.
Further, there have been no amounts paid or agreed to be paid to
a Director in cash or securities or otherwise by any persons either
to induce the person to become or to qualify him as a Director or
otherwise, for services rendered by the person in connection with
the Issue, the promotion or formation of the Company.
9.6. Interests of Experts
Other than as set out below, no expert nor any firm in which
such expert is a partner or employee has any interest in the
promotion of or any property proposed to be acquired by the
Company.
Watson Mangioni Lawyers Pty Limited have acted as solicitors to
the Offer and have performed work in relation to negotiating
certain of the material contracts, preparing the due diligence
program and performing due diligence enquiries on legal matters. In
respect of this Prospectus, the Company estimates that it will pay
amounts totalling approximately $15,000 (excluding disbursements)
to Watson Mangioni Lawyers Pty Limited.
9.7. Expenses of the Offer
Expenses of the Offer are estimated to be approximately $114,881
(excluding GST), consisting of the following:
Legal fees $15,000
ASX fees $82,710
ASIC lodgement fees $2,171
Other expenses $15,000
Total estimated expenses of the Offer $114,881
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9.8. Disclosing entity and documents Available for
Inspection
The Company is a disclosing entity for the purposes of Section
111AC(1) of the Act and as such, is subject to regular reporting
and disclosure obligations. Broadly, these obligations require the
Company to:
(a) prepare and lodge with ASIC both yearly and half-yearly
financial statements accompanied by a directors’ statement and
report and an audit or review report;
(b) within 14 days after the end of each month, inform ASX of
the net tangible asset backing of its quoted Securities as at the
end of that month; and
(c) immediately notify ASX of any information concerning the
Company of which it is, or becomes, aware and which a reasonable
person would expect to have a material effect on the price or value
of securities in the Company, subject to certain limited exceptions
related mainly to confidential information.
Copies of documents lodged at ASIC and/ASX in relation to the
Company may be obtained from or inspected at an office of ASIC or
downloaded at the ASX website.
9.9. Continuous Disclosure and Section 713
This Prospectus is issued pursuant to Section 713 of the Act.
This enables listed disclosing entities to issue a prospectus with
more limited disclosure than would be required of a full-form
prospectus where the Company has been a listed disclosing entity
for a period of at least 12 months.
The Company will provide a copy of any of the following
documents free of charge to any person who requests a copy in
relation to this Prospectus:
(a) the annual financial report of the Company for the year
ended 30 June 2012 being the most recently lodged with ASIC before
the lodgement of this Prospectus;
(b) the half-year financial report dated 31 December 2012;
and
(c) any other document or financial statement lodged by the
Company with ASIC or ASX under the continuous disclosure reporting
requirements in the period between the lodgement of the 30 June
2012 annual financial report referred to above and the lodgement of
the Prospectus being:
(i) for the period ending on 12 February 2013, the documents
listed in Section 8.8 of the Placement Prospectus
(ii) for the period between 12 February 2013 and ending on the
date of this Prospectus, the documents listed below:
Date Description of Announcement
3 April 2013 Results of Meeting
2 April 2013 Change in Portfolio Value
22 March 2013 Change of Director's Interest Notice
21 March 2013 Appendix 3B
14 March 2013 Change of Director’s interest notice
14 March 2013 Net tangible asset backing
12 March 2013 Option terms and timetable
7 March 2013 Change of Director’s interest notice
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Date Description of Announcement
6 March 2013 Change of Director’s interest notice
4 March 2013 Change in portfolio value
4 March 2013 Notice of general meeting/proxy form
25 February 2013 Placement update – letter to Shareholders
21 February 2013 Placement update
21 February 2013 Supplementary prospectus
19 February 2013 Trading halt
12 February 2013 Amended placement prospectus
7 February 2013 Placement presentation
6 February 2013 Placement prospectus
6 February 2013 Appendix 3B
5 February 2013 Net tangible asset backing
5 February 2013 Results of general meeting
4 February 2013 Quarterly report
4 February 2013 Change in portfolio value
1 February 2013 Reformatted appendix 4D
31 January 2013 Interim results – media release
31 January 2013 Appendix 4D half year to 31 December 2012
results
31 January 2013 Option terms and timetable
30 January 2013 Dividend announcement
18 January 2013 Amended timetable for share issue
14 January 2013 Net tangible asset backing
3 January 2013 Notice of general meeting/proxy form
2 January 2013 Change in portfolio value
9.10. Other Information
The Directors consider that, except as set out elsewhere in this
Prospectus, all information investors and their professional
advisers would reasonably expect to find in a disclosure document
that they reasonably require to make an informed assessment of the
effect of Issue on the Company, rights and liabilities attaching to
the Shares and Options is set out in the sections of the Placement
Prospectus referred to in this Prospectus.
The Company will give a copy of the Placement Prospectus to each
investor who requests such a copy. Please contact Nerida Dawson,
Tom Richardson or Justin Braitling on (02) 9252-0225 if you would
like a copy of the Placement Prospectus.
The Placement Prospectus can also be downloaded at
http://wfunds.com.au/pdfs/ALF%20Placement%20Prospectus.pdf and
http://wfunds.com.au/pdfs/ALF%20Supplementary%20Prospectus%20Lodgement.pdf.
9.11. ASIC Class Order
The Issue is made pursuant to ASIC Class Order 00/1092 which
exempts the Company from complying with Sections 717 and 723 of the
Act to the extent that those sections require:
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(a) this Prospectus to include or be accompanied by an
application form; and
(b) the Company to only issue Options pursuant to this
Prospectus to a person who has submitted an application form
distributed with this Prospectus.
The Issue is also made pursuant to ASIC Class Order 00/843 which
exempts the Company from complying with Section 727(3) of the Act
to the extent that section prohibits the Company from issuing
Options during the exposure period following lodgement of this
Prospectus.
9.12. Consents and Responsibility Statements
MNSA Pty Ltd has given, and before lodgement of this Prospectus
has not withdrawn, its consent to be named in this Prospectus as
auditor of the Company in the form and context in which it is
named.
Watermark Funds Management Pty Ltd has given, and before
lodgement of this Prospectus has not withdrawn, its consent to be
named in this Prospectus as Manager of the Company in the form and
context in which it is named.
Watson Mangioni Lawyers Pty Limited has given, and before
lodgement of this Prospectus has not withdrawn, its consent to be
named in this Prospectus as Solicitor to the Issue in the form and
context in which it is named.
Boardroom Pty Limited has given, and before lodgement of this
Prospectus has not withdrawn, its consent to be named in this
Prospectus as share registrar of the Company in the form and
context in which it is named.
UBS AG, Australia has given, and before lodgement of this
Prospectus has not withdrawn, its consent to be named in this
Prospectus as Prime Broker of the Company in the form and context
in which it is named.
UBS Nominees Pty Limited has given, and before lodgement of this
Prospectus has not withdrawn, its consent to be named in this
Prospectus as Custodian of the Company in the form and context in
which it is named. None of MNSA Pty Ltd, Boardroom Pty Limited,
Watson Mangioni Lawyers Pty Limited, Watermark Funds Management Pty
Ltd, UBS AG Australia and UBS Nominees Pty Limited:
(a) has authorised or caused the issue of the Prospectus;
(b) has made, or purported to have made, any statement in this
Prospectus, except this section; and
(c) assumes responsibility for any part of this Prospectus
except for statements in this section.
Each of these entities to the maximum extent permitted by the
law, disclaim any responsibility or liability for any part of this
Prospectus other than a statement included in this section.
9.13. Approval
This Prospectus has been approved by unanimous resolution of the
Directors.
Justin Braitling Chairman Dated: 4 April 2013
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10. Definitions and Interpretation
10.1. Defined Terms
Capitalised terms not defined below have the meaning given to
them in Placement Prospectus.
Act means the Corporations Act 2001.
ASX means the ASX Limited or the securities exchange operated by
ASX Limited.
Board means the board of directors of the Company.
Company means Australian Leaders Fund Limited (ACN 106 845
970).
Constitution means the constitution of the Company.
Eligible Shareholders means those Shareholders who are
registered as holders of existing shares as at 5:00pm (Sydney time)
on the Record Date have a registered address in Australia, New
Zealand, or other jurisdictions the Company will make the Issue in
accordance with Listing Rules.
Excluded Shareholders means those Shareholders who are not
Eligible Shareholders as at 5.00 pm on the Record Date.
Issue means the issue of up 113,446,762 Options to Eligible
Shareholders under this Prospectus.
Listing Rules means the listing rules of ASX.
Manager means Watermark Funds Management Pty Ltd (ACN 106 302
505).
May dividend means the dividend of 6 cents per Share which the
Board intends to pay the dividend on 23 May 2013.
NTA means the Company’s net tangible asset backing per
Share.
Option means an option to acquire a Share at an exercise price
of $1.37 issued in accordance with this Prospectus.
Optionholder means a holder of an Option.
Placement Prospectus means the prospectus issued by the Company
and dated 12 February 2013, as varied by the supplementary
prospectus dated 21 February 2013.
Prospectus means this prospectus as modified or varied by any
supplementary document issued by the Company and lodged with the
ASIC from time to time.
Record Date means 15 April 2013.
Registry means Boardroom Pty Limited.
Share means a fully paid ordinary share in the Company.
Shareholder means the holder of a Share.
Security has the meaning given in Section 92 of the Act.
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April 2013 Option Prospectus OLD
