WAM Microcap (WMI) H1 2025 earnings summary

Executive summary

• Outperformance across all four small-cap funds, with WAM Capital up 33% vs. market up 15% year-over-year, and WAM Research outperforming by 16% in the half.

• Operating profit before tax rose to $45.1M for H1 FY2025, up from $12.6M year-over-year, with after-tax profit at $32.5M versus $9.5M.

• Investment portfolio increased 14.4% in six months, outperforming the S&P/ASX Small Ordinaries Accumulation Index by 8.9%.

• Profit reserves have been rebuilt, providing strong dividend visibility for the next several periods.

• All four funds now trade at a premium to NTA, reversing prior discounts.

Financial highlights

• WAM Capital profit reserve now covers over three dividends, with improved franking potential.

• Net realised and unrealised gains on investments and FX totaled $49.9M, up from $11.3M year-over-year.

• Basic and diluted EPS was 11.72c, up from 4.51c year-over-year.

• Cash and cash equivalents at period end were $27.2M, down from $46.0M at June 2024.

• Dividends paid during the period totaled $14.5M.

Outlook and guidance

• Positive outlook for select high-quality, undervalued growth companies, especially in consumer and discretionary sectors.

• Expectation of continued M&A activity, especially from private equity, as market volatility persists.

• Anticipation of further interest rate cuts, which would benefit many portfolio holdings.

• Board remains committed to paying a stream of fully franked dividends, subject to profits reserves and franking credits.

• No changes to principal activity or investment objectives anticipated.