WAM Microcap (WMI) investor relations material

Executive summary

• FY 2026 was described as the toughest market since the GFC, with significant underperformance in key funds due to macro headwinds, rising interest rates, and sector rotation.

• WAM Active delivered exceptional returns (+76%) by shifting from industrials to resources, while WAM Capital, WAM Microcap, and WAM Research lagged due to their focus on small-cap industrials.

• Declared a fully franked final dividend of 5.35 cps, bringing the full year dividend to 10.7 cps, with a yield of 7.6% and grossed-up yield of 10.9%.

• Since listing in 2017, 80.7 cps in fully franked dividends paid, or 115.3 cps including franking credits.

• Portfolio positioning remains focused on undervalued growth companies with catalysts, despite short-term pain.

Financial highlights

• WAM Active returned approximately 76% in FY 2026, driven by a timely pivot to resources.

• WAM Microcap underperformed the market by 8%, its first underperformance since inception in 2017.

• Operating loss before tax of $2.4 million in FY2026, compared to a $59.7 million profit in FY2025.

• WAM Capital’s net tangible assets (NTA) dropped from AUD 1.70 to AUD 1.20, with the share price moving from a 15% premium to NTA to trading in line.

• Since inception, portfolio has returned 14.4% p.a., outperforming the benchmark by 7.4% p.a.

Outlook and guidance

• Management expects continued challenges in early FY 2027, with hopes for interest rate stabilization and eventual cuts.

• Portfolio is considered well positioned for FY2027, with confidence in opportunities across the micro-cap universe.

• Over 70% of portfolio companies beat earnings expectations during reporting season, indicating underlying business strength.

• Takeover activity and decade-low valuations in small caps are seen as potential catalysts for recovery.

• No specific guidance on timing of share price recovery; improvement expected when macro conditions normalize.