Microequities Asset Management Group (ASX: MAM) Reports FY2026 Results

Microequities Asset Management Group reported a 20.1% decline in annual profit after weaker small-cap valuations reduced funds under management and recurring fees.

Profit attributable to owners fell to $5.71 million for the year ended June 30, 2026. Revenue from ordinary activities increased 1.5% to $12.73 million.

The result shows how market movements affect the earnings of a specialist fund manager. Lower portfolio values reduce management fees, while weaker fund returns can constrain performance fees. Microequities also invests its own capital in managed funds, adding direct exposure to valuation changes.

Valuations Weigh on Core Earnings

Funds under management fell 15% to $517.1 million from $607.9 million. Management attributed the decline mainly to lower market values across small and microcap industrial companies.

Technology-weighted portfolios were particularly affected during the final six months. The company linked that weakness to concerns about artificial intelligence disrupting software business models.

Recurring revenue declined 5% to $10.24 million. Consequently, operating profit from recurring revenue fell 9% to $6.14 million.

Performance-fee income dropped 37% to $2.30 million, based on the company’s operating summary. Those fees were generated during the first half, when several funds exceeded their high-water marks.

Meanwhile, ongoing operating expenses increased 3% to $4.10 million. The ratio of those expenses to recurring revenue rose to 40.02% from 37.17%.

Investment Loss Hits Reported Profit

Microequities recorded a $3.03 million unrealised loss on investments. Dividends and distributions reduced the net investment-related loss to $2.06 million.

The prior year produced $2.85 million of other income and investment gains. That reversal was a major contributor to the lower reported profit.

Basic earnings per share declined to 4.36 cents from 5.46 cents. However, operating cash flow remained positive at $7.47 million, compared with $9.79 million previously.

Net assets were $23.15 million at year-end. Cash stood at $3.81 million, while borrowings declined to $2.06 million from $2.65 million.

The audited accounts received an unmodified opinion.

Dividend Reduced as New Funds Approach

The board declared a fully franked final dividend of 1 cent per share. It is payable on September 4 to shareholders registered on August 21.

Together with the 2.3-cent interim payment, the FY2026 dividend totals 3.3 cents per share. The board cited weaker second-half performance and capital requirements for new products.

Microequities is preparing a domestic fund covering industrial and resources companies. It recruited a geologist to support that strategy.

Management also plans to develop its private-credit strategy following the launch of a private-credit special purpose vehicle.

Separately, the Global Value Microcap Fund rose 23.6% from April, driven largely by cybersecurity software holdings. Management presented that recovery as evidence against earlier concerns surrounding artificial intelligence and cybersecurity demand.