WAM Capital (WAM) investor relations material

Executive summary

• FY2026 was the most challenging year since the global financial crisis, marked by war, inflation, government policy, and AI's impact on small cap industrials, resulting in a 10.5% portfolio decline and a $125.9 million after-tax loss.

• The board rebased the dividend due to depleted profit reserves, setting the final FY2026 dividend at 15.5 cps (60% franked) and targeting 8.0 cps (60% franked) for FY2027 to preserve capital and rebuild reserves.

• Share price fell sharply after the results, moving from a premium to NTA to trading around NTA, as the market reacted to the dividend cut and profit reserve disclosure.

• Management acknowledged responsibility for the delayed dividend adjustment and outlined plans to rebuild reserves and gradually restore dividend growth.

Financial highlights

• FY2026 investment portfolio performance was -10.5%, underperforming the All Ordinaries Index by around 3% but outperforming the small industrials index by 4%.

• Over 70% of portfolio companies beat earnings expectations during the August reporting season, despite share prices not reflecting this.

• Pre-tax NTA at 30 June 2026 was $1.22 per share, with share price at $1.22 per share.

• Cash holdings were approximately 11.5%-12%.

• Operating loss before tax was $186.7 million for FY2026.

Outlook and guidance

• FY2027 dividend target is 8.0 cps (60% franked), with interim and final dividends of 4.0 cps each, aiming for a grossed-up yield of 8.2%-8.3% if achieved.

• Achieving the FY2027 dividend target depends on generating additional profits through positive portfolio performance.

• Management expects the environment for small caps to remain tough for the next three to six months, with potential improvement if interest rates stabilize or decline in 2027.

• Board aims to grow the dividend over time, contingent on portfolio performance and profit reserve replenishment.