Dear Investor,

DMXASF’s NAV increased 4.5% in September, a positive result in absolute terms, and mixed in the context of the broader market. The ASX 200 Accumulation Index declined 0.8% for the month, while smaller companies continue their strong run, with the ASX Emerging Companies Index up 12.9%.

Commentary

Once again, our largest holding, EDU Holdings, was a key contributor, rising another 21% and adding 2% to NAV. We’ve continued to let this position run, reaching 12% of the portfolio by month-end, and around 14% as we write following further gains into October. The continued momentum in its shares was supported in September by the company itself aggressively buying back stock, retiring just over 4% of shares outstanding during the month. That momentum continued into October with the company announcing exceedingly good enrollment numbers, surprising both the market and us. Despite having returned 300%+ over the past few months, EDU’s shares remain attractive at a <10 times multiple of current earnings, growth now baked into the year ahead, a strong cash-rich balance sheet, and prudent management who appear to be doing all the right things in terms of broadening its product offer, cautiously reviewing acquisition opportunities, and rationally buying back shares at value-accretive prices.

Another key holding, Energy One, also contributed meaningfully with its shares rising 25%. Energy One is attracting broader investor attention as it’s passed a key inflection point, delivering a strong FY25 result that aligned with its aspirational forecasts of 15-20% revenue growth with margin expansion. Since month-end, we’ve trimmed our Energy One position into continued price strength, but continue to be attracted to the company’s high quality revenue base, rational capital allocation framework, capable and proven management, and the significant global opportunity ahead of it. The market is starting to acknowledge this potential, so caution is warranted as we think about sizing and managing our exposure to this investment and others thematically similar within the portfolio.

Finally to note, the portfolio benefited from strength across the micro-cap sector, with names like Kinatico, PharmX, and Raiz rising 14-17% each. These are examples of high-quality businesses with significant recurring revenue bases, strong growth potential, and the expectation of leverage to the bottom line with earnings to outstrip revenue growth.

Offsetting some of these gains has been modest declines to our remaining payments-oriented positions. While in the same sector, each has a very different and somewhat unique business. EML Payments, Findi, and Tyro Payments each fell 10-12%. As discussed in recent monthly updates, EML has seemingly turned a corner with new leadership, the exit of non-core and troublesome operations, and a re-focus on organic growth. Its shares have been progressively discounting these improvements, and September saw some consolidation perhaps following full-year results which to our mind were fine, but yet to carry strong tangible evidence of organic growth. Sales cycles are long, and we believe EML has a good chance of surprising to the upside as revenue wins come through in the year or two ahead.

Findi is an ASX-listed holding company of a majority stake in an Indian ATM and payments company. Its growth and development over the past few years has been strong, and the company is working towards a local market IPO of its Indian subsidiary in the year ahead. Multiples achieved for similar businesses imply material upside potential for Findi’s shares, but in the wake of a capital raise back in March and now delaying their FY26 forecast, its shares have been languishing. As we write, Findi’s shares are under continued pressure as a very public war of words has erupted between a former executive and the company. We eagerly await newsflow on the company’s roll-out, its balance sheet position, and progress toward a potential 2026 local market IPO.

Tyro Payments is a relatively recent and small position for us which rose strongly in August on the back of takeover speculation, but has been drifting back in September as speculation hasn’t been met with follow-through. The company has announced multiple approaches, but pricing hasn’t been acceptable to the Board. In terms of corporate activity, we’re working with imperfect information as we’re not privy to what those offers are. But on a stand-alone and going concern basis, we’re attracted to the asset which we believe has strategic value and will either sooner or later be taken out, or will continue to exist and grow in its current independent form. Either way, we believe Tyro is an attractive asset for the portfolio.

Updates on Senetas and Verbrec, and our Unlisted Positions

The DMX Capital Partners update includes updates on Senetas and Verbrec, each of which is looking increasingly attractive following positive developments. These are both commonly owned across DMXASF and DMXCP. Additionally, we provide a detailed update on our unlisted holding in Yellow Brick Road and general commentary on the concept of these smaller companies seeking to delist and our variable response on a case-by-case basis. We encourage you to review the DMXCP report alongside this update.

In terms of DMXASF holdings, we’re pleased to see Austin Engineering announce an on-market buyback this month, highlighting the company’s strong balance sheet, positive cashflows, and undervalued shares. The company has had a difficult year, but with expectations re-set we’re enthused about the set-up for Austin for the year ahead. The company has multiple avenues for organic growth, a rational and considered approach to acquisitive growth, and a refreshed leadership team. Its new CEO is supported by its former CEO who remains a substantial shareholder and director of the business. We look forward to seeing what this management team can deliver with the platform and balance sheet they have behind them.

Summary

In a seasonally quiet period the portfolio continues its recent advance with generally positive fundamental developments across holdings. With a fully invested posture, we continue to carefully assess opportunities both within and outside of the portfolio. We’re selectively trimming where valuations and sizing are relatively high, and adding to laggards – such as Austin Engineering and EML Payments – which we perceive carry more upside from current depressed prices.

Thanks very much for your trust and support.