Thanks to everyone for dialing into today's call. With me today is Portfolio Manager Tobias Yao, Senior Equity Analysts Shaun Weick and Sam Koch, and Equity Analyst Will Thompson. Unfortunately, Equity Analyst Cooper Rogers couldn't make it with us today. He's actually in China at the moment, which is probably our first offshore trip to China for a few years, which is good to see. So hopefully brings some valuable insights back, which I'm sure he will. So as a reminder, the six of us at WAM Capital, WAM Research, WAM Active, and WAM Microcap, serve over 4,000 companies a year and identify undervalued growth companies, predominantly in the small cap industrial sector. As it stands today, we do not own a company within the top ASX 50 companies within the market, across any of the portfolios. So turning to slide three and four of the presentation, you can see a summary of the small cap funds that we manage. Now, firstly, on WAM Capital, we were very happy with how we performed through the 2023 financial year, with the fund outperforming by 3.5%, and this was despite the fact we had a 5% headwind, with small cap companies underperforming the broader market for the second consecutive year. We've had a great start to the 2024 financial year. It's in fact our best reporting season we've had really since 2020, and the portfolio is outperforming the market by just over 3% as at the end of August. Because of the strong performance, we've been able to add to the profit reserve, and as it stands today, we have AUD 0.14 in the profit reserve, which means we can pay the next dividend in November. That's AUD 0.0775%, and around 80% of the May 2024 dividend. So we're in a much stronger position than what we were a few months ago, but I think it's worthwhile to remind shareholders that you need to be monitoring the market and obviously our performance versus the market in the net tangible asset announcements you see every month. Now turning to WAM Microcap, and, you know, there's been a number of years where we've outperformed strongly, namely 2020, where we outperformed by 17%, in 2021 by 20%. But I actually think last year was probably our best ever year, and we managed to outperform the Small Ordinaries Index by 8.5%. And the reason why I say this was it was an extremely hard market for microcap companies, given the lack of liquidity within the market. And, you know, the team performed extremely well, finding some great ideas. We had a number of companies that doubled and tripled over the year. Companies such as Close the Loop, Smartpay, also Tuas, and also Mermaid Marine come to mind. Now, we've added to the profit reserve again this year, and we've actually increased our dividend to AUD 0.0525 a share, and we have just over five years of dividend coverage within WAM Microcap. Now, moving on to slide four and WAM Research. Now, unfortunately, we just missed out on outperforming this year. We underperformed the All Ordinaries Index by 0.7%, and as I said before, on WAM Capital, we were actually quite happy with that performance, given small cap companies underperformed the market by 5%. Now, while we maintained our dividend of AUD 0.05 a share, the board made the decision to partially frank the dividend at 60% at year-end, and this was due to the low level of franking that we had within the portfolio. Now, while dividends can be paid by unrealized and realized profits, franking is a little bit different. It can only really be generated by realized profits, or in other words, when we sell companies at a profit and actually pay tax. Now, given we've seen two negative or bear markets in the last three and a half years, our ability to realize profits has been reduced, and we've also received less franking dividends from the companies that we receive over this period. So the board made the conservative decision, given the level of franking within the portfolio, to frank at 60%. And finally, on WAM Active, we had a great 2023 financial year. We outperformed the index by 14%, and WAM Active's actually been our best fund to start the year, with the portfolio outperforming strongly as at the end of August. We've been able to boost the profit reserve here. We're sitting at around AUD 0.10 a share at the end of August versus the AUD 0.03 interim dividend that we previously announced. So we're actually in a much better position in WAM Active than we were 12 months ago. So look, I'll leave it at that. I'll now pass it on to Tobias and the rest of the team, where we're gonna talk about themes in reporting season and some key stock ideas. Thanks, Oscar. Look, a theme we saw, continuing this, during this reporting season is the outperformance of artificial intelligence or AI companies. In fact, it's probably a topic, you know, I'm quite passionate about. It's a very polarizing subject. You know, the bulls on these AI companies would say that, you know, it's gonna be a few years of exponential growth, given the demand. On the other hand, the bears will be saying that the valuation of many of these companies have already priced in, you know, the best case scenario. So valuation is getting up there. You know, we are leaning more positively, and I guess we've taken a more pragmatic approach, in terms of looking at AI companies. You know, we are looking for real evidence on the ground from many of these companies that's reported. You can hear it in the conference calls on their presentations, talking about implementing AI initiatives that's driving, you know, real efficiency in the underlying businesses. In fact, if you listen to the CEO of Microsoft, you know, someone with probably the best insight into, I guess, this AI trend, you know, he's quoted as saying that AI could be as big as the internet itself. And as investors, it's very important for us to be able to benefit, you know, from the growth in AI over the next few years. So how do we play artificial intelligence in the stock market? You know, the key for us is the fact that we are not the thematic investors. We can't invest just in the theme. It has to marry up with our investment process, which is buying undervalued growth companies with catalysts that could rewrite the share price. So the catalyst is very important. The best way to describe how that's helping us in the AI thematic, and also the catalyst way of investing is coming together, is to go through a couple of examples. So one of the companies we're bullish on is a company called NEXTDC. Now, it's a data center operator, and in February this year, we started buying NEXTDC at around AUD ten. The catalyst we've identified, speaking to many industry experts on the matter, is that Microsoft is having issues with their self-built data centers. They're more likely to outsource some of their excess server capacity. And as a result, we started buying NEXTDC. Over the last 6-8 months, they've won two large contracts, which from Microsoft and a few other customers. The reason we still hold NEXTDC right now is we believe over the next two years, there will be more large contracts to come on the back of these AI capacity or the AI demand with data storage. Another company is called Megaport. Now, Megaport, the business is effectively enabling data connection between companies and data centers. We started buying stock in Megaport around April, May, around AUD 5. The catalyst that we identified there was a change in management. The chairman at the time came in to effectively stabilize the business and introduce financial discipline. He employed a CEO from the U.S. who used to run ThousandEyes, a high growth company, to come into Megaport and effectively reintroduce the sales culture to drive growth. And so the catalyst we've identified is effectively for the company to beat earnings and revenue expectations over the coming years on the back of effectively a renewed strategy and a renewed sales pipeline. So hopefully that gives you a bit of color on some things we've seen, particularly in the AI space. I would like to pass it now to our analyst, Sam Koch, for him to talk about his theme. Thank you. Thanks, Tobias. Another key theme that we saw during reporting season was the outperformance of the housing sector or companies exposed to the housing sector. We've been progressively increasing our exposure to the housing sector over the last, call it 6-9 months, taking a view that I guess the market was a little bit too worried about the impacts of high interest rates, high inflation, and a tougher economic environment on the household sector. Especially when you've got long-term drivers of the industry being sort of the underbuild and the increasing population here in Australia. There were two key companies that really delivered strong results that sort of fit this theme within the portfolio. One of those was Maas Group. The ticker is MGH, and the other one was Nick Scali, the ticker NCK. These are high conviction stock picks from us as a team. Maas Group delivered a solid set of FY 2023 results. It was towards the upper end of, I guess, their revised guidance that they provided towards the back end of the financial year. And I guess the key for us, the key highlight for us and for the rest of the market was that strong free cash flow generation in the business. And when you couple that with over AUD 70 million worth of capital recycling projects that earmarked their FY 2024, it really alleviated market concerns around the state of their balance sheet, sending the stock price 20% higher. Now, despite the 20% move, the stock's still on 10x price-to-earnings ratio with over 20% earnings growth forecast. We believe there's a number of catalysts to see the stock continue to re-rate from here. That's further balance sheet de-gearing and obviously improving sentiment towards the property sector. The second high conviction stock that fits this theme for us was Nick Scali. Nick Scali delivered a really strong set of financials in what could be said as a quite tough economic period. If you look at their FY 2023 result, obviously new sales actually came back as you'd expect. However, the large order bank that they already had and healthy margins really helped cushion that blow. Looking at the FY 2023 result and the trading update, you can really see why we like to back our management teams like Nick Scali. You know, they're managing to outperform peers through... Not just through trading and through their cost control, but also through the implementation and the integration of their acquisition Plush. So it's trading on about 12 x price-to-earnings ratio on depressed earnings growth, earnings growth forecast. From our perspective, we can see the stock continue to re-rate from here, and it's really about earnings upgrades and potential M&A that will drive that. I'm going to hand over to Shaun. Thanks, Sammy. Yes, so I guess along a similar theme, in the months leading into reporting season, we'd felt as though, I guess, the market had become increasingly negative on the consumer and retail sector, with the consensus narrative really pivoting towards it being too early to buy these stocks. With the trading updates expected to be very weak, and I suppose trigger earnings downgrades as a result of, yeah, some of those macro headwinds that Sam pointed to earlier. So, you know, we looked at valuations in many instances that reached, you know, 10-, 20-year lows, in the retail sector, and in particular, relative to, you know, the large cap retail and consumer companies. So given that, we focused the majority of our analysis on, you know, consensus expectations and looking where earnings were expected to be in that second half, FY 2024 and FY 2025 period, and comparing that to what companies had reported in FY 2019, which reflected a more normalized earnings base versus, you know, the COVID years, where the majority of retailers, you know, significantly overearned. So, yeah, we focus on building positions in those companies where consensus earnings expectations looked as though they'd been sufficiently rebased and, you know, valuations were pricing in, I guess, excessive, you know, pessimism. Then, I guess, to give ourselves a bit of a margin of safety, you know, we really did focus on those companies where you could see or potentially see additional catalysts playing out that could rewrite the share price, such as, you know, the announcement of cost out programs, which we saw with, you know, the likes of Baby Bunting or, you know, those with strong balance sheets that could surprise the market with, you know, capital management or acquisitions or divestments. So, you know, a couple of stocks, you know, that performed well for us throughout the period, which fit, I guess, this theme of Premier Investments. So, you know, the trading update was obviously strong. Earnings came in 11% ahead of expectations. The other element was really, you know, around balance sheet optionality that we identified. You know, Premier holds over AUD one billion in cash and liquid, you know, equity investments in Breville and Myer, which, you know, we think gives them significant optionality to undertake, you know, capital management, potentially with buybacks or special dividends or earnings accretive acquisitions at what we believe is at or, you know, approaching the bottom of the cycle. You've got, you know, founder and chairman, Solomon Lew, in there as a significant shareholder in the business, and, you know, clearly recognize that the shares are trading well below fundamentals. You know, and with, you know, a strategic review subsequently announced, which, you know, potentially could see some restructuring of the group and is ultimately aimed at, you know, unlocking value. So, you know, you could see the divergence of the high-growth businesses such as Smiggle and Peter Alexander. So, yeah, we think the stock's still cheap. On a sum-of-the-parts valuation, we can get north of AUD 33 a share, so there's 30% upside from here. And I guess another one that we like is GUD Holdings, which, you know, faced a lot of scrutiny by the market leading into the FY 2023 result. You know, there was a lot of concern around potential earnings downgrades on the APG 4x4 accessories business, given, I guess, delays in new vehicle supply, and, you know, that was really being compounded by high debt levels. But, you know, we'd identified some potential catalysts in there around, you know, the sale of the Davey water pumps business, which, you know, management had talked about for quite a while in terms of being a non-core asset. So, you know, they were able to sell that business for AUD 65 million, reduce the debt, and then, you know, you had earnings come in sort of 3% ahead of expectations. So from here, we think the APG business is significantly underearning versus the acquisition case. So as that new vehicle supply continues to recover, you're gonna see a strong tailwind for earnings and drive upgrades. And, you know, the balance sheet's now de-risked, and it trades at over a 25% discount to history. So yeah, we, we continue to like that one as well. I'll hand it over to Will now, who will, yeah, call out a theme and some key ideas. Yeah, the last theme is profitable tech. It's a talking point because over the last couple of years, we've really seen a lot of unprofitable tech companies, I guess, being topical during reporting seasons. However, this year, it was those previously loss-making companies that have become profitable. So, a great example of this was Tyro. We've seen them lose money the last couple of years, and they were able to really control their costs. I think what was the best part about Tyro's result this year was that they're showing that into 2024, they'll be able to keep those costs under control. They're going to continue growing the top line, and you'll really see the operational leverage and then they'll generate profits. 360, Life360, another one of those stocks where you saw them beat expectations for the first half result. And if you get the read-through for what they're gonna do for the second half of the year, again, you're gonna see them start to make money and I think the stock market's really gonna start to value those companies that are generating cash. Back to you, Oscar. Yeah. Thanks, Will, and, you know, probably worth also highlighting to shareholders, we don't not often get everything right. We did have a few misses through reporting season. I mean, one stock, which was quite disappointing for us, was a mining services company called Perenti. They actually provided guidance saying that they would grow earnings into the 2024 financial year, and we get to the result, and they slipped in the fact that they were gonna spend a certain amount on a tech investment, which meant they weren't gonna grow earnings next year. So that was certainly a stock that we were disappointed in, and we exited our positions at reporting season. So, but why don't I pass it on to Camilla, and we'll get stuck into the questions session? Great. Thanks, Oscar. As always, we've got a lot of questions coming through from our shareholders, and you actually just answered one from our shareholder, Will. To start, we've got another one from Mark. His concern is the significant drop in the share price. Can you please explain why the share price has suffered such a drop across WAM Capital, Microcap, Research, and Active? Yeah, look, thanks very much for the question, and, I'll spend a bit of time on this one, I think, because it's very important for our shareholders to sort of understand the dynamics at play. And certainly, this was something that Geoff and I had talked about in our teleconference a few weeks ago. I mean, the first thing I'd say is that there's no doubt, we're all shareholders too, and, you know, we're very disappointed with how the share price across all the funds really have performed over the last, call it, 12-18 months. And, you know, we're working incredibly hard within the team, and as I said, we've had it... We've... You know, first step's been a very good year in 2023. We're hoping that, you know, small caps can actually outperform through 2024. But if I put it all together, I think it's fair to say the broader listed investment company sector- ... as a whole, it's not just us, but just as a whole, yeah, has suffered over the last few years, and that's a product of the fact we've had two negative or bear markets over the last three and a half years. Call it COVID in 2020, and the sell-off in 2022 when the Russia-Ukraine war and inflation largely began. And what this means is that the portfolios or the net tangible assets, which is effectively the portfolio we run, has fallen in value over this period. And I think put it, you know, coupled with, you know, a higher interest rate environment and some economic uncertainty, it has also meant that the premiums that a lot of these listed investment companies are trading at have shrunk, and also the discounts have widened. I mean, I think using the best example, looking at WAM Microcap, we've outperformed every year by quite some way since 2020. We've increased the dividend, yet the premium has shrunk from, you know, over 25% at one point in 2020 or 2021 to today being 13%. So... And we've also seen the net tangible assets fall as well with given with the market. But I think, look, if we look at WAM Capital, which I assume, you know, a lot of our investors on the call today would be interested in, and probably be asking a similar question. I think it's worthwhile noting that we can only add to the profit reserve effectively if we're making a profit. Now, unfortunately, in the last two—in the last... Well, we've had two instances in the last three and a half years where the portfolio has fallen, which means we haven't been able to add to the profit reserve through that period, which means that we, at this point in time, we only have AUD 0.14 in the profit reserve versus the AUD 0.155 we've consistently paid for some time. But what's more is that the net tangible assets, which is the portfolio we run, has. When you pay a dividend, it falls by the value of that dividend. And at the same time, the portfolio hasn't risen enough to offset the fall in that dividend. So what that means is that if we go back to 2020, the net tangible assets of WAM Capital might have been around, I think, around AUD 1.95-AUD 2 a share. Today, they are AUD 1.45. So effectively, the net tangible assets has fallen by, call it 20%-25%. Now, also, at the same time, the premium has shrunk. So today we're at a 14% premium instead of, call it a 25% premium at that point in time. So if you look at that and put it all together, that's a drop of around 30%, which is effectively where you go from the AUD 2.20 or so share price that we were about 18 months ago or so, to about AUD 1.65 that we are today. Now, while it's important to look at the share price, it's definitely important to look at the share price and that drop there, you can't discount the fact that we've paid you dividends along that journey as well. You need to add back the dividends that we've given you to get a total shareholder return. And through that period, we've paid, I think, around AUD 0.455% of dividends, over that, call it, three-year period, and, you know, are set to, hopefully, give you AUD 0.155 in the next 12 months as well. So look, hopefully, that gives you a flavor and answers the question. The net tangible asset's fallen because we've kept paying you dividends through this turbulent time. But it is important to add back the dividends to assess your total shareholder return. Thanks, Oscar, for that explanation. Just to drill down a little bit further, our shareholder, Michael, he says his investments in WAM Active and WAM Capital have dropped 30% and 20%, respectively. Do you think you can provide a little more context around why that might be? Yeah, and look, as I said before, look, this is something that hurts us when we hear things like that. As we said, we're shareholders as well. We take our jobs incredibly serious in terms of our responsibility. But I think, you know, if with a drop that much, if we just focus on WAM Capital, I'm assuming, Michael, you probably bought shares at, say, AUD 2.20-AUD 2.30, something like that. As I explained, the net tangible assets has fallen by around 25% in that period, and the premium has also shrunk. We're at a very high premium to its net tangible assets there of around 25%. Today, it's around 15%. Put that together, you'd say that, you know, it's around a 30%-35% drop, as you said, from around AUD 2.20 to AUD 1.65. But don't discount the fact that you have received dividends over the period, so you need to add that back, to, to fully assess your total shareholder return. Thanks, Oscar. Next one from Tony. Same topic: What do the companies need to do to recover the share price? Well, we can't... Unfortunately, we can't control the premiums or discounts that our funds trade at. Now, as I said, the WAM Capital premium has fallen from around 25% to around 15% today. So if the market decides what that premium to our net tangible assets are, there's not much we can do about that. However, what we can control is outperforming. And, you know, we are very happy. I'm as the leader of, I guess, the lead portfolio manager of the wider team, we're actually very happy with how we've gone through this period. It's been a very volatile time. Small cap companies have materially underperformed the broader market. It's well over 20%. And we've come through this period outperforming every year against the Small Ordinaries Index. At some point, we are going to get a tailwind. We got a tailwinds in 2015 and 2016, and had incredible years. So you know, look, as we look forward, as we said last call, we're very positive on small caps going forward. We think there will be some mean reversion in the next 12 months. We've started to see it in at the start of the 2024 financial year. And so as a consequence, we're hopeful that, you know, we'll start to see the share price go up as the market also goes up as well. But, you know, we don't have a crystal ball and, you know, if there's a Russia, Ukraine war that turns up at any point, it's gonna be very difficult for us to keep paying those dividends. So as I said in my introduction, it is very, very important for all shareholders to be monitoring our net tangible asset announcements when they come out, and to monitor the performance, how the market is going. If the market falls 10% or 15% in the next few months, let's call it, it will be very difficult for us to add to the profit reserve and make sure that that final dividend in May can be fully fulfilled. Thanks, Oscar. Actually, just on profit reserve, from Elizabeth: Why do WAM Capital and WAM Active have low profit reserves at the moment? Because we pay you such a high dividend. That's the reason. And the boards of both WAM Capital and WAM Active made the decision, you know, back in June 2020, when COVID was really bad, to continue paying the dividend. Now, because we had another negative market two years later, right? That has... And we've kept paying the dividends through that period, the same amount, it has eaten away at our profit reserves, and that's why they're at low levels. Now, we had a choice. Other listed investment companies cut the dividend in mid 2020. We chose not to. So that's the reason why we have a low profit reserve, and it's been that way for four years. You know, I mean, I remember sitting here in a conference call mid-2020, thinking there was a high chance the dividend would get cut, but we ended up having an incredible year in 2021. So, look, as it stands today, we're in a good position. We're in a much better position than we have in previous calls. As I said, WAM Active is actually looking pretty good now. It's got 1.5 years of coverage. WAM Capital has 80% of the May dividend covered. So you know, if the portfolio goes up another couple of percent over the next six months, the May 2024 dividend should be covered. Thanks, Oscar. Tobias, let's go to you. We've got one from George and Kathy. Could you please comment on your holding in Capitol Health in light of its recent result? Its share price has been falling in recent weeks, and that's been compounded by the selling of a large amount of shares, 17.3 million, to be exact, by Tribeca. Can you provide some commentary on the holding there? Yeah, sure. Thank you for the, for the questions. Look, we're still very bullish on Capitol Health. You know, we do like many of these healthcare players. We think there's a lot of intrinsic value. You know, Capitol Health is a substantial position in our, in our fund. I mean, our, our view is that while the result wasn't good, we're beginning to see green shoots in terms of, in terms of the outlook statement. You know, when you look at some of our investments in these healthcare names, typically they are the sort of longer term investments and, you know, you might not get the payoff straight away, but we believe the share price will trend towards the intrinsic value over time. You know, some of the large positions we've had in the fund in the healthcare space have recently been acquired by either private equity or trade buyers. So we've had someone like Healthia getting acquired by Pacific Equity Partners at an 80% premium. We've had Silk Laser getting acquired by Wesfarmers. We've had Estia getting acquired by Bain. So we believe it might be sort of, you know, another couple of years, but, you know, industry consolidation makes a lot of sense in this industry as well. But we think that the share price is very cheap, and the valuation is very attractive at this current price. Great. Thanks, Tobias. Oscar, this one is from Carl, who's asked: Why was the WAM Microcap final dividend only increased by AUD 0.0025, and the special dividend's been discontinued for a second year in a row when the Profit Reserve has been sitting around AUD 0.50? What's the story behind that? Yeah, sure. And, obviously, this is a board decision. I'm not on the board, but so I'm sort of speaking on behalf of the board. But I think, you know, when we started the Micro-Cap Fund back in 2017, we always, we always wanted to restrict the size and generally, you know, what we feel running the fund is the appropriate size is probably up to around that AUD 300 million in size. Now, in 2017, 2018, and 2019, and I think it was actually 2020. I think the first four years, I think we paid a special dividend from memory, and that was really a reflection. Micro-Caps had a tremendous, they had a really tremendous period over that first four years. And, the size of the fund actually got over that AUD 300 million dollar threshold. So, you know, we made a decision last year, in the 2022 financial year. You know, we increased the dividend slightly, and we've done it again this year. You know, it's fair to say if we have big years when the, you know, maybe the portfolio is up 30% or 40% or 50%, potentially there could be a special dividend. But I think it's worth noting, like, we wanna be able to steadily increase that dividend over time. And we don't want the problems that we've currently got effectively in WAM Capital and WAM Active to be in WAM Microcap. So, yeah, we just... ideally, from the board's perspective, is slowly increase the dividend. If we have a really big year, and the size of the portfolio we feel is probably too big, then we would reward our shareholders with a special dividend. Thanks, Oscar. We've just had one that's come via email from Brad. He has said: "Would it ever be wise to pay more than the NTA for any WAM company? As over time, the price always seems to drop back close to NTA, as paying great dividend and the company can never really grow above NTA. Okay, a bit in that question, but. Look, if Geoff was here, he would always say he wants to buy a dollar of assets at eighty cents. You know, and we've consistently said ever since I've been at Wilson Asset Management, effectively, WAM Capital has traded at a premium. And certainly there's been periods in time where, you know, we've seen Geoff, for instance, sell shares in WAM Capital and WAM Research, given the premium has been very, very high. So look, if Geoff was here, he'd be saying the most value in terms of the Wilson Asset Management suite of funds that we manage would probably be within WAM Alternative in the Alternatives Fund, WMA and also in WAM Global, WGB. So yeah, we, when we sort of look to invest and in particular across our team, you know, we're always looking for companies at a discount to their net tangible assets, because inherently there's value. You can buy a company at effectively AUD 1 and get AUD 1.20 of assets, if it was to effectively all be liquidated. So, that's how we sort of look. We look at stocks, you know, and potentially, you know, there's a number of investors out there that also, you know, do that with listed investment companies as well. Thanks, Oscar. Let's go to some stocks now from our shareholders. Sam, can I get your thoughts on Smartpay? The ticker there is SMP. Yeah, definitely. We're substantial shareholders in Smartpay and really bullish on the outlook for that business. Marty, who's leading the team there, is doing an excellent job rolling out the terminals across Australia. And what we're actually really attracted to, or it's been a subtle change over the last sort of 3-6 months, is that there's a real opportunity to aggressively grow the profitability of their New Zealand business, and actually shift that business model more closely aligned with Australia. So, we're positive on the outlook of Smartpay. Obviously, in the current environment, it's to be expected. There's a level of sort of consumer weakness, so that might impact transaction volumes across their suite of merchants. We're willing to look through that and look at the opportunity that there is in Australia and New Zealand, so we're positive on it. Thanks, Sam. Will, what are your thoughts on Close the Loop Group, ticker CLG? Yeah, CLG, it's had a pretty amazing year, and I think it's still relatively undiscovered in the small cap space and offers great exposure to the ESG thematics. Both Shaun and I are lucky enough to head over to the U.S. next year and see their recent acquisition of ISP. And for a bit of background, ISP essentially recycles computers, and there's two elements to that: One, you want to make sure that their partner, HP, you want to make sure that all the data is wiped off it for security reasons. But two, about 30% of their computers get taken back to store after they're purchased, and they used to throw them out. But they want to make sure that they're really closing the loop within their system so that those computers can be recycled. They did about, I think it was about AUD 24 million of EBITDA, and they gave guidance for AUD 40 million of EBITDA. So we think it should be another strong year, and we, and we still think it's undiscovered within, within the small cap market. One thing I might add just to the comments there from the guys, is the first three stocks we've been questioned on, are stocks that we are over 5% in, in terms of a substantial shareholding. I think one thing to be mindful of as an investor is when you see us go substantial or over 5% in a company, it doesn't necessarily mean that is the biggest position in our portfolio. I think that's really important. When you have a look at the companies we're most positive on, you really got to look at, drill down to the top 20 holdings in each of the funds that you see at the net tangible asset announcements every month. Thanks, Will, and thanks, Oscar, for that. Oscar, you mentioned this company earlier in regards to results, so we'll stick with you. What are your thoughts on the proposed buyout of DDH Drilling by Perenti, and what is your outlook for Perenti in the mining services space? Well, I don't really like that acquisition. I think it's... Oh, got to be careful what I say, don't I? I don't know. Look, Perenti was going really, really well. It had a great year. It was one of our best companies last year. They were doing everything right, and then they bought what I would, we would consider a lower quality business. You know, drilling services businesses are highly volatile. They're highly cyclical. If there's changes in macroeconomic environments, miners can just stop spending. We've seen that in the past. So for us, we didn't really like the acquisition, to be blunt. And then, as I said earlier, I was quite lucky, I mentioned it actually, as one of our losses through reporting season. You know, the company decided to spend extra money on a technology investment, which you know took us as one of their largest shareholders by surprise. So we're a bit sort of puzzled with the strategy of the company at the moment, particularly given they were doing everything right. So we exited the company through August. Thanks, Oscar. Now, you mentioned this company earlier, but Tobias, maybe you can provide some more context. Thoughts on Tuas? Yeah, sure. So Tuas, it's the old TPG Singapore. It's a mobile telco in Singapore, and we love founder-led businesses, particularly when the founder's done it before. So the founder of Tuas is the same founder as TPG in Australia. Obviously, over the last 20 years, you know, significantly disrupted the market and gained market share. You know, we think this similar dynamic is playing out in Singapore. So we're really backing the management to grow market share, and they've done an incredible job in a very short period of time. I think management owns about 30-40% of the company. So it's pretty tightly held. It's not the most liquid of stocks. You know, we are substantial in the stock, and we're there for, you know, for the next two-five years as he continues, you know, his market share gains. You know, our view is they will at some point launch a fixed or broadband product. That's another product that could potentially disrupt the Singaporean market, given where the price point is. And so there's gonna have two drivers for the business, both mobile and broadband. That's gonna be driving the earnings growth for Tuas over the next few years. ... Thanks, Tobias. Shaun, would you be able to speak to Nick Scali and Premier in the context of the rising cost of living situation and perhaps the outlook of, for consumer spending here? Yeah, sure. Thanks. Good question. I mean, overarchingly, what I'd say is this is one of the most, I guess, telegraphed sort of slowdowns, you know, we've really seen in history. Everyone's talking about, you know, not if, but when is the recession coming? And, you know, what we're increasingly seeing is, you know, the market narrative shifting towards, you know, I guess, a soft landing. We're in the peak of some of the fixed to variable rate roles at the moment in terms of, you know, interest rates and how that's impacting on consumers. But, you know, what we'd say is, and what we saw through reporting season is, you know, we think that in general, the good retail is gonna really survive and thrive through this period. I mean, balance sheets are very healthy. The listed players, you know, in general, are holding very clean inventory. You know, we think there's opportunities given, you know, the slowdown's been expected for so long. You know, they've done a lot around their cost base to drive efficiency. So, yeah, net net, while there are some cyclical pressures, we think, you know, over the six... potentially six-12 months, you know, we think the listed space and the companies we're positioned in are very well positioned to, you know, gain market share and actually thrive and come out as much better businesses on the other side. Perfect. Thanks, Shaun. Oscar, can I get your thoughts on NextEd, ticker NXD? What's the outlook there, given legislation changes to visas? Well, it's been a ride, Camilla, over the last three weeks, to say the least. So what this business does, we are a substantial holder in it, and it's actually one of our best stocks in 2023. So basically what these guys do is they provide English language teaching schools for offshore students coming into Australia. And then from those English language teaching schools, these students then go on to vocational courses or undergraduate degrees, effectively. Now, what happened was there was a visa in place, basically to get as many offshore people into Australia pretty quickly, to get out there in the workforce and obviously to help some of the labor shortages out there. It's called a Section 408 visa. While this was doing really well for their English language business, what it meant was that all the people doing all these English language courses would just go out into the workforce, and they weren't actually going to the colleges or the vocational courses. So it was actually impacting the business. So, they came out at the start of August and dropped us a quite nasty earnings downgrade. However, what ended up happening is, so the shares fell a lot, fell about 40% or 50%, and I probably would have mentioned that as one of our worst. Well, I would have mentioned that as our worst stock over August. However, what happened was on the last day of August, on the 31st, the visa got changed, and we actually look at the stock very positively now. This could actually be massive for the business. It just effectively means that it goes back to normal, back to what they've always had. The government's also come out and said there's a number of other dodgy operators in the sector that might, you know, lose licenses to bring in English language students, so they could actually take market share through this period. So it's actually a very positive development for the company, and we've actually been buying the shares again. So, yeah, we quite like it and think it's a, you know, it'll take time for people to understand what's going on, but we think this could be a cracker going into the next 12 months. Thanks, Oscar. I'll just stay with you. Do you think the sentiment across the board towards listed investment companies lately is due to the rise of ETFs? Well, it's a good question. I think... Look, ETFs have been around for a long time, and I think generally, you know, what we've seen through COVID and the recovery, you know, and even through, you know, that 2022, like, if we even look at our WAM Leaders Fund, for instance, you know, they've performed incredibly well through that period of time, which shows you the value of active management. But I think that's been around for a long time. I don't necessarily think that's been the reason why it's been weak of late. The big reason, I think, is effectively that, a lot of our shareholders now have a choice. You know, over the last, really, since the GFC, interest rates have been close to zero. So putting your money in a term deposit versus, you know, a listed investment company offering a 5%-6% fully franked dividend yield, it probably, you know, people may have leaned towards listed investment companies because of that. Now, on a term deposit, you're getting a pretty decent interest rate. Yes, you might be getting a better yield on various listed investment companies, but you're taking risk on the market and on potentially the premiums contracting or the discounts widening, depending on which listed investment company you choose. So I think it's more that interest rates have risen, Camilla, not necessarily the rise of the ETF. Now, I think once the interest rates stabilize, though, and there's more certainty, and we're seeing this across a range of sectors, I think demand will return back to listed investment companies because they are a great structure, and provide franking and so forth. So yeah, I think that, that's for me, would be the reason. When we speak to a lot of shareholders, they're very confused as to what sort of happened really since COVID. And, you know, we probably are too, to be fair, it's been all over the place. But there is some normality returning into the market at the moment. Famous last words, but, you know, it, it's certainly that the last reporting season we saw was really a return to reporting seasons of old, which was very positive. So, as I said, we're... In the call with Geoff, we're very positive on the outlook this year in our cohort of stocks that we look at in small caps. Thanks, Oscar. Great insight. We've just heard that the RBA held, so timely response. I'll stay with you. WAM Capital, why were there negative results in 2022 and 2020? And then how has this not impacted dividends? Okay, so put really simply, we generate profit when the portfolio goes up. We generate a loss when the portfolio goes down in a financial year. Now, in COVID, in 2020 and in 2022, the portfolio went down, so we generated a loss. That was really over a period of about 1.5 years. You know, the last, effectively, it's been 3.5 years, let's call it, since COVID began. So around 40% of that period, in that 3.5-year period, we have not been generating profit, and we need to generate profit to be able to pay a dividend. So what that meant was that all the stored up profit we had before COVID, with all the good years that we had before COVID, you know, with the portfolio falls, we keep paying the dividend. And because we're not generating profit in that tough period, we're not adding to the profit reserve. In fact, it's declining. And that's where we're at now. Because we've eaten away at that profit reserve because of the tough markets that we've had, you know, there's only AUD 0.14 per share left there versus the AUD 0.155 in WAM that we pay on a, you know, for the full year. So look, this can change. Earnings take it from a very positive market, and we saw that in 2021, and that, you know, we won't have any questions on this anymore. And as I said, previously, you know, this has been pretty consistent over the last four years, and we're actually sitting today in a much better position than we were, say, 12 months ago, especially feeling more confident around, around the dividends. But yeah, I think try and think of it really simply. When the, when the portfolio goes up, market goes up, we generate a profit. We use that profit to pay a dividend. When the market falls and our portfolio falls, even if we outperform the market, which is what happened in COVID, the market fell, I think 7%, and we were down three, which is a great outcome for us. But because we generate a loss still, we can't put any profit away in the profit reserve, yet we've kept paying dividends, so the profit reserve goes down. So I think that's... Hopefully, I tried to do that as simply as possible. Hopefully, that makes sense, but happy to follow up with a call if it doesn't. Thanks, Oscar. Very helpful. Tobias, I believe you look after this one, Flight Centre, ticker FLT. What are your thoughts on that company? Yeah, so we're still bullish, Flight Centre. We have quite a few names in the travel space, Flight Centre, Webjet, SiteMinder, and Serko, just to name a few. You know, most of you would be familiar with the leisure part of Flight Centre, which is effectively, you know, obviously going to the Flight Centre stores and booking your overseas trips. You know, that business actually went through a pretty intense structure change during COVID. You know, management took effectively the chance during COVID to rightsize or optimize that business. And it's benefiting from, I guess, this wave of revenge travel or the normalization of travel. What we are more bullish about is the other 50% of the business, which is, it's the Flight Centre's corporate travel management business. It's a global business where they manage travel on behalf of small, medium, and very large enterprises. They've won a lot of market share over the last 2 years. A lot of domestic players offshore are struggling with bad balance sheets. So someone like Flight Centre, which is very well capitalized, have been able to pick up many of these large contracts, and many of these contracts will be contributing very material profits over the next few years. So we are bullish, Flight Centre, and particularly the corporate travel part of the business. And you know, we think capital management, which they've talked about, is another catalyst that could, you know, come up over the next six to 12 months. You know, that should also support the Flight Centre share price. Thanks, Tobias. Oscar, what is your view on Harvey Norman? Yeah, we talked this one up, and thankfully, it came through in reporting season. I must admit, it was a nervous sleep the night before, Camilla. But no, we really like this one. I mean, this is a, you know, classic Wilson Asset Management stock, really. And, you know, Harvey Norman's been around for a very, very long time, known very well by the market. I'd say generally, it's not liked in the market. And what people forget on Harvey Norman, it has a substantial property portfolio. And we first bought shares in June when the shares were trading at about AUD 3.30 a share. And at that point in time, the share price was trading lower than the property value. Now, we've only seen that happen on two other occasions in the last 15 years. That was in COVID in 2020, and then I think in 2012, when internet shopping or e-commerce started at pace. So effectively, yeah, May 2023, share price was trading lower than the property value. Now, straight away, that's a good investment for us because we are getting the retail business for free. Now, what was interesting in the reporting season, we did a bit of work, and this is not only for Harvey Norman, but for a number of other companies where we sort of took where analyst earnings were in 2025. Now, 2025 is a long way away, and the reason why we chose 2025 was because we're assuming a recession in 2024 and a really tough environment for retailers. So hopefully, 2025 is, call it, relatively normal. In the example of Harvey Norman, all the analysts are so negative on retail and so negative on the economy, that their earnings forecast for Harvey Norman in 2025 are actually lower than what they were back in 2019. Now, we don't think the current environment right now is worse than what it was in 2019. So it was interesting in reporting season, all the analysts hate Harvey Norman. They were all sells on Harvey Norman. They hate it, but they all upgraded their earnings numbers by about 10% or 15%. So again, that's a really good catalyst for us, and, you know, we, we really like Harvey Norman. We think analysts are really are way too negative. They'll work it out over the next six to 12 months and upgrade their earnings and potentially the analysts' recommendations. We think the stock's well worth well north of AUD 5.50. Thanks, Oscar. Shaun, we'll go to you. Can you share your view on The Reject Shop, please? ... Sure. Thanks, Camilla. Yeah, so the Reject Shop, another stock that we're bullish on. I mean, if you look at the FY 2023 result itself, it came in about 10% ahead of market expectations. You know, and the other key feature was really the company announcing a special dividend and then also reinitiating an additional AUD 10 million buyback. So the balance sheet is very strong. You know, they got AUD 77 million of cash and no debt. And we think the business model itself has reached an inflection point. You know, they've got the business back to strong, you know, positive same-store sales through the second half of FY 2023. And, you know, we think that continuing to this, into this year as the company benefits from both, you know, the trade down from consumers who are looking for more value, but also much improved merchandising with some of the changes they've made, you know, 12 months ago, really starting to come through the business and resonate with customers. So yeah, going forward, we think the top line can grow high single digit to potentially low double digit. The company is continuing to roll out more stores. And then if we look at the cost base, I mean, the freight headwind, this was one business that was smashed during COVID because, you know, consumers weren't going into shopping centers and then freight went from $3 million to $25 million. So yeah, as that freight headwind unwinds this year as well, you know, we think there's a gross margin benefit. And, you know, given the size of the sales base, is almost AUD 900 million, I mean, this company's got massive operating leverage if they get the sales right. So yeah, we think there's upside to analyst earnings expectations and, you know, the stock trades on 7.5x cash adjusted PE. So yeah, again, a classic Wilson Asset Management type stock. And yeah, we think this stock can double over the next couple of years. Great. Thanks, Shaun. Oscar, back to you. This is from Suzanne. As the investments in WAM Research are more or less the same as those in the research-driven part of WAM Capital, are there plans for WAM Capital to merge with WAM Research? Yeah. Thanks, Suzanne, for the question. So, clearly investors have a choice. If they like the research-driven process only, they can buy WAM Research. So there's value there in just owning WAM Research, is probably more longer term than WAM Capital, which is broadly speaking, 50% research, long-term ideas, and 50% market-driven, which is effectively the WAM Active side of Wilson Asset Management, which is shorter term ideas. There is no plans to merge WAM Research and WAM Capital. Look, never say never, but I'd say definitely not something we've talked about. And the reason is, you, as a WAM Research shareholder, if WAM Capital was to acquire you, you would be disadvantaged because your profit reserve is actually quite large relative to WAM Capital. So if we were to acquire WAM Research, your effectively, your profit reserve would shrink within WAM Capital. So look, there's definitely no plans at this stage at all. All right. Thanks, Oscar. We've got one from Jim, who says: With the typical shareholding size within the WAM Microcap Fund at 2% or less in weighting, what is the value proposition long term over and above an index fund equivalent? As the market capitalization of your funds increase, is there any intention to reduce the fees as a percentage? Okay. So with WAM Microcap, I think we've averaged since the June 2017 IPO, I think, just over, I think it's about 10% outperformance a year, to the end of 13th of June. So, look, it's going to be hard to maintain that going forward, but we're, we're obviously very happy with how, how, you know, the, the fund has performed. And, you know, clearly that has been better than just buying the Small Ordinaries Index over that period of time. In terms of the stocks we hold within their Microcap, effectively, none of those stocks are in the Small Ordinaries Index. These are very, very small companies, and a lot of them, they're high risk. You know, and often we see them before a lot of other funds see them. You know, these companies that I mentioned earlier, like Mermaid Marine, Smartpay, you know, NextEd, these are all undiscovered companies and that have, you know, have done very well. Don't get me wrong, we get a lot of things wrong, too. So it is a very risky part of the market. But broadly speaking, really, I don't. I think almost, what? five, maybe 5% of the portfolio is, you know, would have an index weight of some description in the Small Ordinaries Index, but it'd be incredibly, incredibly low. In terms of all the funds that we manage, the Micro-Cap portfolio would have the lowest correlation with the index. So yeah, you really, you really, you know. If you're buying WAM Micro-Cap, you're really backing our stock picking ability. And I think there was another question on fees. Look, speaking for Geoff, I heard him say this many times, the answer is no. We're constantly investing within Wilson Asset Management. You know, you got the call today, you got a lot of the road shows. How many people do we have in corporate affairs? We're always adding, Camilla. Like, I think, how many is in the team? There's eight of us now. Eight of us. So eight in the team, 55 within the whole organization. It's doubled in the past three to four years. So it's not something... And you know, as someone who's in the, I guess, the leadership team and, you know, talking about strategy, we want to attract the highest quality people to the organization. So certainly, you know, cutting fees, given the size is increasing, is certainly not something we're doing because we're consistently investing in the business. Great. Thank you, Oscar. This one is from Brian. Off the back of our recent results announcements, can you please clarify reasons for WAM Research's partial franking and whether this will apply for future payments? Yeah, thanks, thanks, Brian. Look, I guess this is a, again, a board decision. Franking is different from the dividend. They're pretty similar, but there's quirks, and I think, as I explained before, with dividends, around 70% of, of the dividends that we pay come from unrealized gains and realized gains within the portfolio. The other 30% comes from the dividends we receive from companies. Franking is very, very similar to that. The only difference is, is that with franking, it has to be off realized gains because you pay tax off those realized gains, right? So it's not unrealized gains, it's realized gains. Now, because we've had two very negative markets in the space of three and a half years, our portfolios drop. So at various points in time, a lot of the stocks that we owned were losing money, let's call it, when we first bought them. So we bought them at AUD 1. They might have gone to AUD 1.20, but they fell to AUD 0.80. So, you know, we're down 20% on our holding. Now, we didn't. In terms of how we add value for investors, we don't run our portfolio to get franking. And we weren't forced sellers at that point because we were looking at the franking balance and say, "Oh, you know, we need, we need some franking, so, you know, we'll just, we'll sell the companies," if that makes sense. Because of how that's played out, we've had less realized gains, we've paid less tax, which means we can't pass on as much franking to the shareholder. Now, as it stood, and I'm speaking for the board here, because I'm not on the board, but I'm speaking on behalf of the board here. We could have paid 100% franking for this dividend, but it could have been very tight for the next dividend at WAM Research. It could have been zero. So, the board took the conservative stance. For future dividends, what you need to really monitor is effectively the market. If the market goes up a lot and we crystallize some of our gains by selling shares like we did with Estia Health, which was effectively 6% of the portfolio, and we sold out of that company. It's highly successful, it was our largest position. We sold out from the takeover in August. You know, if we sell, turnover increases, we sell more shares, some of the companies that we're invested in pay more franking out, pay more dividends that we can pass on to the shareholders, then our franking balance will increase, and hopefully in time, you know, we can get that franking back to 100%. But that was the decision the board took at that point in time, for 60%. You know, certainly as it stands, you know, we'll have to keep monitoring it, like we'll have to keep monitoring, you know, the profit reserve with WAM Capital and our ability to keep paying dividends. Thanks, Oscar. This next one is from Joylan. WAM Capital has an investment in HHY Fund of AUD 1.5 million. Is this an unlisted investment fund? Certainly a stock I haven't been asked a question on for, I think, ever. Look, our understanding is. Look, this is certainly before my time with HHY. It used to be a listed investment company. It was very, very small, and it converted to an unlisted trust, I think. It is, oh, geez, I reckon it'd be 0.01% of the fund. It's tiny. That, yeah, as I said, it converted to a trust. Fair to say it's a very illiquid position, and we probably can't get out, and if we could, we probably would. But it's certainly not something I even think about on a day-to-day basis, to be fair. It's very, very small. Thanks, Oscar. Then someone's asked: What would be the upside for them investing AUD 10,000 now, given the share price being low? Maybe you can touch on the premium and discounts here. Okay, so I'm not giving you advice, but look, rather than talking about the premiums, discounts, I think it's just more your view on what small cap companies are going to do. We've had a huge headwind over the last four years. The headwind is just over 20%, and that is the fact the market has effectively outperformed small cap companies by over 20%. At some time, at some point in the future, that will reverse. We don't know when, but it will reverse. And we've seen it happen many times before over the years. So I guess when thinking about where to invest your AUD 10,000, I think, and looking at the four funds we manage specifically, I think you need to look at your own characteristics, the risk you're willing to take, and, you know, whether you think small cap companies look cheap at the moment and we're the best fund to effectively choose the right stocks and outperform the market when it comes back. And, you know, it's been... It has been a tough period over the last, you know, that 2022 financial year was incredibly challenging for the team. I mean, thinking about how we've gone through this period, we've actually outperformed every year our small-cap benchmarks, which, you know, given we don't really own resources, has been a tremendous effort and sets us up well when we start to see that mean reversion occur. So, yeah, I think you've got to ask yourself, are you bullish small-cap companies versus large-cap companies? Are you bullish the market? And are we the right fund manager to outperform? And then I think, you know, I should touch on the premiums and discounts, but, yeah, WAM's at a 14% premium. I think WAM Research is at, I'd say 16%-17%, Camilla. WAM Microcap at 14% and WAM Active is trading at about net tangible assets. So the cheapest fund at the moment is WAM Active, and the most expensive one would be WAM Research. Great. Thanks, Oscar, and thanks to Tobias, Will, Shaun and Sam. That's all we have for today. So Oscar, I'll just pass back to you for any closing remarks. Yeah, thanks, Camilla. Thanks to all those shareholders and for everyone being on the call today. Look, we're always available, so please feel free to call in and we'll get back to you with any questions that you have. But I really, really appreciate your support and for everyone dialing in today.