WAM Capital (WAM) H2 2024 earnings summary

Executive summary

• All four managed funds—WAM Capital, WAM Microcap, WAM Research, and WAM Active—delivered strong portfolio performances in FY2024, significantly outperforming relevant ASX indices, with WAM Research achieving +30.7% and WAM Capital +26.4%.

• Outperformance was especially notable against the Small Ordinaries Index, with WAM Research (+21.4%) and WAM Capital (+17.1%) marking the best results in over a decade.

• Fully franked or partially franked dividends were paid across all funds, with yields enhanced by franking credits and supported by robust profit reserves.

• WAM Microcap maintained a seven-year outperformance streak since IPO and successfully deployed AUD 90 million raised in April.

• WAM Active outperformed its benchmark by 26%, benefiting from increased capital markets activity in larger small caps.

Financial highlights

• WAM Capital delivered a 26.4% portfolio return, 17.1% above the S&P/ASX Small Ordinaries Accumulation Index, and paid a 15.5 cps full year dividend (60% franked).

• WAM Microcap achieved a 21.6% portfolio return, 12.3% outperformance, and a 10.5 cps fully franked dividend.

• WAM Research posted a 30.7% portfolio return, 21.4% outperformance, and a 10.0 cps full year dividend (60% franked).

• WAM Active delivered a 25.8% portfolio return, 18.2% outperformance, and a 6.0 cps fully franked dividend.

• Operating profit before tax rose 37.0% to $319.4 million, with after-tax profit at $229.2 million.

Outlook and guidance

• The investment process remains focused on diligent research, free cash flow, return on equity, and market catalysts to identify mispricing opportunities.

• Board expects FY2025 full year dividend to remain at 15.5 cps, 60% franked, subject to tax paid and franked dividends received.

• Sustaining current dividends requires portfolio returns above 16% per annum, grossed-up for fees and taxes.

• Small cap underperformance is viewed as cyclical, with expectations of a rebound once interest rate cuts materialize.

• Dividend increases are unlikely; focus remains on maintaining current high yields and building profit reserves.