HMC Capital Limited (ACN 138 990 593)
P. 1300 466 326
E. info@hmccapital.com.au
Level 7, 1 Macquarie Place, Sydney NSW
2000 www.hmccapital.com.au
ASX RELEASE
28 October 2024
ANNUAL REPORT 2024
HMC Capital Limited (ASX: HMC) provides the attached Annual Report for the year ended 30 June 2024. It
is being dispatched to those shareholders who have elected to receive it.
This announcement is authorised for release by the Board.
For further information, please contact:
INVESTORS
Misha Mohl
Group Head of Strategy & IR
+61 422 371 575
misha.mohl@hmccapital.com.au
Will McMicking
Group Chief Financial Officer
+61 451 634 991
william.mcmicking@hmccapital.com.au
MEDIA
John Frey
Corporate Communications
+61 411 361 361
john@brightoncomms.com.au
About HMC Capital
HMC Capital is a leading ASX-listed diversified alternative asset manager focused on real estate, private
equity, energy transition, digital infrastructure and private credit. We manage approximately $15.4bn on
behalf of institutional, high net worth and retail investors. We have a highly experienced and aligned team
with deep investment and operational expertise. Our point of difference is our ability to execute large,
complex transactions. This has underpinned our rapid FUM growth and track record of generating outsized
returns for our investors. We are well positioned to grow our FUM to over $20bn in the medium term.
HMC Capital Limited
ACN 138 990 593
Annual
Report
2024
For the year ended 30 June 2024
The alternative
asset manager
of the future.
Contents
FY24 Highlights
2
HMC Capital Track Record
4
Chair and Chief Executive Officer’s Letter
6
Track Record and Economic Flywheel
8
Directors’ Report and Financial Statements
12
Directors’ Report
13
Auditor’s Independence Declaration
47
Financial Report
48
Consolidated statement of profit or loss
49
and other comprehensive income
Consolidated statement of financial position
50
Consolidated statement of changes in equity
51
Consolidated statement of cash flows
52
Notes to the Consolidated Financial Statements
53
Consolidated Entity Disclosure Statement
97
Directors’ Declaration
104
Independent Auditor’s Report
105
Shareholder Information
111
Corporate Directory
115
1
HMC Capital | Annual Report 2024
FY24 Highlights
Operating EPS (pre tax)
37.0cps
+40% on FY23
Financial
Funds Management
Operating Margin
68%
vs. 62% in FY23
Dry Powder
$2.5bn²
Across Platform
Assets Under Management
$12.7bn¹
+30% on FY23
Net Tangible Assets +
Undrawn Debt
$1.4bn
Net cash position
Final Dividend
6.0cps
“Successfully diversifying platform with
establishment of new growth platforms
and strategic hires.”
Notes. All figures as at 30 June 2024 unless stated otherwise. Past performance should not be taken as an indicator of future performance
1.
AUM includes undrawn equity commitments plus debt for LML Fund, $1.6bn real estate development pipeline. Includes AUM of $1.6bn for Payton and $0.7bn for StratCap which
were not owned by HMC as at 30 June 2024.
2.
Includes cash, undrawn debt and equity commitments across funds platform.
3.
ROIC calculated as pre-tax earnings (including directly attributable division costs) divided by balance sheet invested capital
4.
Payton Capital business was acquired by HMC in July 2024.
5.
As at 19-Aug-24. HMC IPO price of $3.35 adjusted by $0.67/security to exclude HDN in-specie distribution. Assumes dividends reinvested on ex-dividend date.
2
Key Highlights
29% p.a
Total Shareholder Return since IPO5
New Growth
Platforms
y Energy Transition platform with specialist team onboarded
and first seed investment secured
y Private Credit platform with acquisition of $1.6b1,4 AUM CRE
credit manager Payton Capital
y Digital Infrastructure capability via acquisition of strategic
platform in North America (StratCap)1
Building Investment
& Fundraising
Capability
y Over 20 dedicated fundraising and distribution resources
across HMC platform including Payton
y Recently appointed Head of Wholesale Distribution
y 2 new senior hires have been appointed including an
offshore based individual to support institutional fundraising
Building high margin
& ROE platforms
y Private Equity platform generated $78m of EBITDA
(48% ROIC3) including $16m performance fee in FY24
y Real Estate platform generated $85m of EBITDA (11% ROIC3)
y Private Credit platform generated over 45% EBITDA
margin in FY244 and expected to significantly contribute to
FY25 result
3
HMC Capital | Annual Report 2024
HMC Capital Track Record
Execution capability has accelerated evolution to a capital light alternative
asset manager
2016
JUL 20
2017-2019
NOV 20
OCT 19
OCT 21
SEP 21
APR 21
DEC 20
HealthCo (ASX: HCW)
listed on the ASX
following $650m IPO
HDN acquires $222m
of assets partially
funded by $88m
institutional placement
HMC announces
$140m institutional
placement and $128m
of acquisitions to seed
the establishment of
the HomeCo Daily
Needs REIT
Home Consortium
(ASX: HMC) listed
on the ASX at
$3.35 with $925m
investment portfolio
Home
Consortium
Acquisition of
former Masters
Home Improvement
property portfolio
Commenced process
of redeveloping
500,000sqm of GLA
HMC and HDN
announce
proposed
acquisition of
Aventus Group for
$2.3bn to create
Australia’s leading
Daily Needs REIT
HMC added to S&P/
ASX 300 index
HDN acquires
$322m of
acquisitions and
announces $265m
entitlement offer
HMC announces
$125m institutional
placement and
$131m of strategic
acquisitions to seed
establishment of new
Healthcare REIT
HMC establishes
in-house asset
management
and development
capability organically
HomeCo Daily Needs
REIT (ASX: HDN)
listed on the ASX via
in‑specie distribution
and $300m IPO
HDN listed with
$844m of assets
4
HMC Capital makes
first Energy Transition
Fund investment
through acquisition
of controlling interest
in StorEnergy, a
specialist developer,
owner & operator of
utility-scale Battery
Energy Storage
Systems (BESS) with a
1.4GW development
portfolio (~$2bn)
HMC Capital
acquires
StratCap, a
specialist North
American
based Digital
Infrastructure
asset manager
with $0.7bn
of AUM
APR 22
DEC 22
JUN 23
MAR 22
AUG 22
MAR 23
SEP 23
JUL 23
MAY 24
SEP 24
HMC added to S&P/
ASX 200 index
HMC announces
rebranding and
change of name to
HMC Capital
HMC Capital Partners
Fund 1 launched and
seeded with strategic
stake in Sigma
Healthcare (ASX: SIG)
HMC Capital
Partners Fund 1
Successful first
close for new $1.3bn
healthcare and life
sciences unlisted
fund with institutional
capital
$1.2bn acquisition of
11 private hospitals
leased to Healthscope
in the largest
healthcare transaction
since 2019
HMC Capital
announces new $1.3bn
healthcare and life
sciences unlisted
fund with seed assets
from Healthscope
transaction
HMC Capital
announces
establishment of
its private credit
platform through
the acquisition of
Payton Capital,
a specialist CRE
private debt fund
manager with
$1.6bn AUM
Successful first
close for new
$800m last mile
logistics fund
with institutional
capital
HDN added to
ASX200
HMC Capital
announces
proposed
establishment
of new ~$1bn
unlisted last mile
logistics fund and
acquisition of
seed asset
5
HMC Capital | Annual Report 2024
HMC Capital delivered a record financial result in
FY24 underpinned by new revenue streams and
significant growth in recurring funds management
earnings. Pre-tax operating EPS growth of 40%
on FY23 is consistent with the 44% per annum
growth rate achieved since HMC became an ASX-
listed company in October 2019 (FY20). Similarly,
assets under management increased by 30% to
$12.7bn and have grown by 80% per annum since
HMC listed. Importantly, this growth has been
achieved whilst maintaining a strong balance
sheet. HMC finished FY24 with a net cash position
and approximately $1.4 billion of liquidity including
tangible assets and undrawn debt capacity.
FY24 was a landmark year from a strategic
standpoint with HMC establishing three exciting
growth platforms in private credit, energy transition
and digital infrastructure. HMC has been preparing
for these strategies for some time and they build on
the key philosophy of the group to organically grow
assets under management via strategies which are
exposed to megatrends. For each strategy, HMC
has secured high quality people to build institutional
scale platforms and replicate the success of our
existing real estate and private equity platforms.
Financial Highlights
y FY24 pre-tax operating earnings of $129 million,
up 57% on FY23
y FY24 pre-tax operating EPS 37 cents, up 40%
on FY23
y Net cash balance sheet with $1.4 billion of
available liquidity including liquid assets
y Investment dry powder of $2.5 billion across
funds management platform
y Assets under management (AUM) of $12.7 billion
(+30% on FY23)
Existing Growth Platforms
y Real Estate platform AUM increased to
$9.6 billion
— Successfully established new $1.2 billion
unlisted healthcare fund in FY24 with four
major domestic and global institutional
investors
y Private Equity platform generated over
$78 million of EBITDA and 48% divisional ROIC
— Strong financial contribution underpinned
by strong investment performance of
HMC Capital Partners Fund I which paid
a $16 million performance fee in FY24
Chair and
Chief Executive
Officer’s Letter
6
New Growth Platforms
y Established $1.6 billion AUM Private Credit
platform with the acquisition of Payton Capital
— Highly profitable and scalable business
focused on commercial real estate
(CRE) lending
— Onboarding new specialist investment team to
broaden capability into corporate and asset-
based private credit under the leadership of
Matt Lancaster
y Energy Transition platform established with
specialist investment team onboarded
— Secured first seed investment and on-track
to launch new $2 billion+ platform in FY25
y Established Digital Infrastructure platform
with the acquisition of North American
business StratCap
— Highly strategic acquisition which provides
HMC with specialist capability in rapidly
growing and globally scalable sector
Outlook
HMC is well placed to maintain a strong operating
EPS growth trajectory supported by five highly
scalable and growing platforms based on the
following:
y Commencing FY25 with a materially higher
recurring earnings base underpinned by funds
management and co-investment income
y Private credit platform is expected to double in
AUM and deliver strong EBITDA growth in FY25
including a contribution from corporate and
asset-based lending activities
y Transactional activity in HMC’s real estate
business is picking up and we expect this will
continue as the next interest rate easing cycle
gets underway
y HMC has a deep transaction pipeline across
digital infrastructure, energy transition and
private credit and is evaluating major growth
opportunities which have the potential to create
outsized profit events for the group
y Well capitalised with $1.4 billion of liquidity and
tangible assets to drive growth via our balance
sheet in addition to significant dry powder across
our funds management platform
FY25 dividend guidance of 12 cents per share
is consistent with our strategy to maintain the
dividend at this level and re-invest retained
earnings into value accretive growth opportunities.
Chris Saxon
David Di Pilla
Chair
Managing Director
and Chief Executive Officer
7
HMC Capital | Annual Report 2024
HMC Capital Economic Flywheel
HMC’s strong growth since listing is a testament to the scalability of our business model and competitive
advantages. Our flywheel continues to gain momentum as we focus on sectors underpinned by
favourable megatrends.
Note: Private Equity positions are strategic, non-controlling positions.
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High ROE Alternative
Asset Manager
Warehousing
Underwriting
Strategic stakes
Track Record and
Economic Flywheel
8
Pre-tax EPS track record (cents per share)
Our transition to a high ROE alternative asset manager has driven significant growth in earnings supported by
high quality recurring revenue streams.
Asset Under Management ($bn)
HMC is well positioned to achieve its $20bn+ medium-term AUM target as a significantly more diversified
business with multiple growth drivers.
Notes: All figures as at 30 June 2024 unless otherwise stated. Where returns are mentioned, past performance is not a reliable indicator of future performance.
1.2
3.1
6.8
9.7
12.7
20+
FUM
Development Pipeline
80% CAGR
Medium-term
target
FY24
FY23
FY22
FY21
FY20
8.7
13.7
37.0
FUM
Development Pipeline
44% CAGR
FY24
FY23
FY22
FY21
FY20
21.5
9.5
1.5
24.9
9
HMC Capital | Annual Report 2024
Track Record and Economic Flywheel (CONTINUED)
Established Funds
Targeted and long-term investment approach focused on high conviction megatrends
Real Estate
Private Equity1
Strategic
Investments
Description
HMC manages over $9.6bn2 of real estate across
multiple vehicles supported by a diversified
investor base spanning listed and unlisted
investors
HMC’s Private Equity platform was established
in Aug 22 with the launch of HMC Capital
Partners Fund I (HMCCP). HMCCP invests
in ASX-listed companies where we help
management teams and boards unlock value
via improved capital allocation and portfolio
management
Investment
track record
Last Mile Logistics
28% FFO/ps
CAGR since IPO
19% IRR
Since inception
Healthcare &
Life Sciences
25% FFO/ps
CAGR since IPO
31% IRR
Since inception
~26%
pa
Jul 24
Jun 24
Mar 24
Dec 23
Sep 23
Jun 23
Mar 23
Dec 22
Sep 22
Aug 22
Ą1.00 Ą1.04 Ą1.03
Ą1.06
Ą1.17
Ą1.07
Ą1.27
Ą1.55
Ą1.45
Ą1.55
HMCCP Returns since inception (NAV/unit)
1.
Private Equity positions are strategic, non-controlling positions.
2.
As at 30 June 24 and includes undrawn equity plus debt for Last Mile Logistics Fund and property development pipelines across HDN, HCW, LML and UHF.
10
New Growth Platforms Established
Strategic investments in institutionally scalable platforms and high conviction sectors
Private Credit
Energy Transition
Digital Infrastructure
Strategic
Investments
Description
Commercial Real Estate (CRE)
private debt asset manager
with $1.6bn AUM predominantly
in residential development loans
Developer, owner and operator
of large-scale Battery Energy
Storage Systems (BESS)
across Australia’s National
Electricity Market
Specialist North American
based Digital Infrastructure
asset manager with $0.7bn
of AUM
Institutionally
Scalable
Platforms
Highly profitable business with
strong investment track record
AUM tracking above budget
since acquisition and achieving
record monthly investor inflows
Organic expansion into
Corporate and Asset-Based
Private Credit well progressed
with team being onboarded
under Matt Lancaster
Strategic 1.4GW development
portfolio offering ~$2bn
investment opportunity
Scalable platform with several
potential bolt-on opportunities
currently under evaluation
Second seed asset in due
diligence ahead of $2bn+ fund
launch in FY25
Acquisition provides entry into
new highly scalable sector and
end markets
Platform comprises ~$0.7bn of
fee-paying AUM
Deep actionable pipeline with
opportunities under contract or
exclusivity totalling ~$1bn
Favourable
Sector
Megatrends
Australian private credit market
expected to almost double by
2028 ($bn)1
2028F
2027F
2026F
2025F
2024F
2023
188
212
240
271
307
346
Australian private credit market
+84%
5x increase in investment
required to achieve global
net-zero emissions by 2050
(USD bn)2,3
Required annual
investment
2023
9,200
1,769
+5x
Growing global data centre
demand – in-place capacity
(in MW)4
2028
2024
2019
17,500
34,500
83,600
+4.8x
EMEA
Americas
APAC
1.
EY estimates.
2.
McKinsey.
3.
Clean Energy Council, Climate Council, Energy Transition Initiative.
4.
DC Byte (June 2024).
HMC expects each investment to generate a return on equity
above its 20% target return over the medium-term
11
HMC Capital | Annual Report 2024
Directors’ Report and
Financial Statements
– 30 June 2024
12
Directors’ Report
The directors of HMC Capital Limited (ACN 138 990 593) (referred to hereafter as the Company or
HMC Capital) present their report, together with the financial statements, on the consolidated entity
(referred to hereafter as the group) consisting of HMC Capital and the entities it controlled at the end of,
or during, the year ended 30 June 2024.
Directors
The following persons were directors of HMC Capital during the whole of the financial year and up to the date
of this report, unless otherwise stated:
Chris Saxon
Independent Non-Executive Chair
David Di Pilla
Managing Director and Chief Executive Officer
Zac Fried
Non-Executive Director
Brendon Gale
Independent Non-Executive Director
Greg Hayes
Non-Executive Director
Kelly O’Dwyer
Independent Non-Executive Director
Susan Roberts
Independent Non-Executive Director
Principal activity
The principal activities of the group during the year was funds management via the ownership and
management of real asset focused funds.
Significant changes in the state of affairs
HealthCo Healthcare and Wellness REIT (HCW)
In July 2023, an extraordinary general meeting of unitholders of HCW was held to obtain unitholder approval
to HMC Capital’s participation in, and support of the capital raising undertaken by HCW to fund the acquisition
of a property portfolio leased to a private hospital operator. A resolution was passed to amend the Investment
Management Agreement to permit the payment of acquisition or disposal fees by way of issues of units to
HMC Capital as investment manager, in lieu of cash. In September 2023, 5,368,042 units were issued by
HCW in lieu of cash to HMC Capital to satisfy an acquisition fee that arose as a result of the acquisition.
Further, a resolution to enter a selective buy back agreement pursuant to which the responsible entity of
HCW agreed to buy back, and HMC Capital agreed to sell, up to 8,456,608 units held by HMC Capital for
nominal consideration was also passed to facilitate a bonus unit provided to eligible HCW unitholders, that
was funded by HMC Capital. During the year, HCW executed the selective buyback of 3,486,061 units from
HMC Capital pursuant to the selective buy back agreement.
In February 2024, HMC opted to unwind its position in a cash backed – equity total return swap and acquire
ordinary units for HCW at $1.335 per unit. This resulted in an additional 31,912,867 units being acquired, which
increased HMC’s direct investment in HCW at the time from 16.4% to 22.1%.
HMC Wholesale Healthcare Fund (previously referred as Healthcare and Life Sciences
Unlisted Fund)
During the year, HMC Capital reached the financial close on the $1.3 billion HMC Wholesale Healthcare Fund
with $650.0 million of equity commitments including $328.0 million from four global institutional investors and
$322.0 million from HCW.
13
HMC Capital | Annual Report 2024
Directors’ Report continued
HMC Capital Foundation
In November 2023, HMC Capital seeded HMC Capital Foundation with $0.4 million cash, 714,286 units of
HCW and 913,044 units of HomeCo Daily Needs REIT (HDN). HMC Capital Foundation was established as
a standalone public ancillary fund to support the development and scale of initiatives of beneficiaries and
charities that are aligned to HMC Capital’s social impact areas. HMC Capital Foundation is not considered
a related party to HMC Capital as the Foundation is managed by an independent corporate professional
trustee board with no representatives from HMC Capital.
Sigma Healthcare Limited
HMC Capital entered into an agreement to partially sub-underwrite the retail entitlement offer of Sigma
Healthcare Limited announced in December 2023 up to $27.1 million (being 38,733,737 shares) as part of its
announced proposal to merge with Chemist Warehouse Group. Sigma Healthcare Limited is a key portfolio
investment for the HMC Capital Partners Fund I. In January 2024, HMC Capital acquired $12.8 million (being
18,222,292 shares) of Sigma Healthcare Limited under the partial sub-underwriting agreement and HMC
Capital Partners Fund I acquired $76.4 million (being 109,207,767 shares) by way of subscribing in full for its
retail entitlements under the entitlement offer. As announced on 24 January 2024, HMC Capital had assigned
the HMC Capital priority sub-underwriting (as defined in Sigma Healthcare Limited announcement dated
24 January 2024) to HMC Capital Partners Fund I.
Other significant changes
In January 2024, HMC Capital Partners Fund I completed a capital raising in which HMC Capital increased
its investment in HMC Capital Partners Fund I by $21.0 million (being 15,831,134 shares) and non-controlling
investors increased their investment in HMC Capital Partners Fund I by $54.6 million (being 42,838,621 shares).
Post capital raise, HMC Capital had 46.25% ownership of HMC Capital Partners Fund I.
In March 2024, HMC Capital announced it had entered into final documentation to acquire 100% of StratCap
LLC, a digital infrastructure funds management business in North America. Completion of the acquisition
is subject to obtaining regulatory approvals and fulfilling customary acquisition conditions which remained
pending as at 30 June 2024.
In May 2024, HMC Capital announced the acquisition of private credit fund manager, Payton Capital Limited
(Payton). The acquisition of Payton, which provides commercial real estate loans, forms the foundation
of a broader diversified Private Credit asset management platform to be established by HMC over the
medium‑term spanning real estate, corporate, mezzanine and infrastructure loans. Under the acquisition
of Payton, HMC will pay the vendors upfront consideration of $127.5 million comprising $99.0 million cash
and $28.5 million in HMC shares. HMC has also agreed to pay an additional $16.5 million of contingent
consideration in cash (payable in FY26), subject to business performance thresholds and other conditions.
To support the acquisition and broader private credit strategy, HMC successfully completed a $100.0 million
institutional placement (being 15,384,616 fully paid ordinary shares) and a Share Purchase Plan of
approximately $58.3 million (being 8,969,665 fully paid ordinary shares). HMC has also realised $50.0 million
from an on‑market sell-down of its co-investment in HDN from 14.0% to 12.1%. In July 2024, the group reached
financial close for the Payton acquisition.
There were no other significant changes in the state of affairs of the group during the financial year.
14
Review of operations and financial performance
A summary of the financial performance of the group for the financial year ended 30 June 2024 is outlined below.
Consolidated
30 June 2024
$m
30 June 2023
$m
Total revenue and other income including share of profit/loss of associates
108.8
95.4
Net profit for the year
114.4
83.3
Operating earnings before tax
129.3
82.1
Operating earnings after tax*
115.0
79.5
Weighted average shares on issue (million)
349.7
310.9
Operating earnings before tax per share (cents)
37.0
26.4
Operating earnings after tax per share (cents)
32.9
26.4
*
HMC has historically reported income tax expenses in its operating earnings on a cash payable basis due to the availability of income tax losses. As a result of HMC utilising all
its available income tax losses in FY24, HMC in FY24 is now reporting income tax expense on an accounting basis including deferred taxes. As a result, HMC has adjusted the
comparative period operating earnings after tax from $82.1 million to $79.5 million to include the $2.6 million expense.
The group recorded total revenue and other income (including share of profit/loss of associates) of
$108.8 million (30 June 2023: $95.4 million) and a statutory profit after tax for the current financial year of
$114.4 million compared to $83.3 million for the financial year ended 30 June 2023. The statutory profit is
primarily attributable to revenue from management fees, dividend income, share of associate profit from
investments in HomeCo Daily Needs REIT and HealthCo Healthcare and Wellness REIT of $12.4 million and
net fair value gains of $121.4 million.
Operating earnings after tax was $115.0 million for the current financial year compared to Operating earnings of
$79.5 million for the financial year ended 30 June 2023. Operating earnings is a non-IFRS financial measure which
is not prescribed by Australian Accounting Standards and represents the group’s underlying earnings from its
operations and is determined by adjusting the statutory net profit after tax for items. A reconciliation is provided
below and the guidance provided in Australian Securities and Investments Commission (ASIC) Regulatory Guide
230 ‘Disclosing non-IFRS financial information’ has been followed when presenting the Operating earnings.
Non‑IFRS financial information has not been audited by the external auditor but has been sourced from the
financial statements. The directors consider Operating earnings to represent the core earnings of the group.
Operating earnings
The table below provides a reconciliation between the net profit after tax for the year and Operating Earnings:
Consolidated
30 June 2024
$m
30 June 2023
$m
Statutory profit after tax
114.4
83.3
Non-controlling interest adjustments
(48.4)
(26.2)
Income tax expense
14.3
2.6
Amortisation of borrowing costs
1.0
0.4
Acquisition and transaction costs
23.2
5.3
Net fair value movements
–
3.6
Depreciation expenses
1.1
1.2
Donation expense
3.1
–
Share of associate profit to Funds From Operations (FFO)
20.6
11.9
Operating earnings before tax
129.3
82.1
Income tax expenses
(14.3)
(2.6)
Operating earnings after tax*
115.0
79.5
*
HMC has historically reported income tax expenses in its operating earnings on a cash payable basis due to the availability of income tax losses. As a result of HMC utilising all
its available income tax losses in FY24, HMC in FY24 is now reporting income tax expense on an accounting basis including deferred taxes. As a result, HMC has adjusted the
comparative period operating earnings after tax from $82.1 million to $79.5 million to include the $2.6 million expense.
15
HMC Capital | Annual Report 2024
Directors’ Report continued
Summary of financial position
A summary of the group’s financial position as at 30 June 2024 is outlined below:
Consolidated
30 June 2024
$m
30 June 2023
$m
Assets
Total assets
1,787.8
1,344.7
Net assets
1,506.8
1,200.4
Net tangible assets1
1,320.0
1,013.6
Adjusted net tangible assets2
1,072.6
881.7
Number of shares on issue (million)
373.1
347.6
Net tangible assets ($ per share)1
3.54
2.92
Adjusted net tangible assets ($ per share)2
2.87
2.54
Capital management3
Debt facility limit
355.0
275.0
Drawn debt
–
36.5
Cash and undrawn debt
506.3
258.9
Gearing ratio (%)4
–
1.8%
Hedged debt (%)
–
–
Weighted average cost of debt (% per annum)5
–
5.3%
1.
Net tangible assets include deferred tax assets and liabilities, right-of-use assets and lease liabilities.
2.
Adjusted net tangible assets exclude the following: right-of-use assets, lease liabilities, provisions, deferred tax assets and liabilities and non-controlling interests. Prior year net
tangible asset was revised to exclude non-controlling interest.
3.
30 June 2024 balance excludes a $200.0 million non-recourse debt facility in HMC Capital Partners Fund I utilised for acquiring investments in Australian listed equities (30 June
2023: $50.0 million) and cash balance of $35.3 million (30 June 2023: $28.3 million). Prior year cash and undrawn debt was revised to exclude the non-recourse debt facility.
4.
Gearing is defined as borrowings (excluding unamortised establishment costs) less cash and cash equivalents divided by total assets excluding cash and cash equivalents and
deferred tax assets and excludes HMC Capital Partners Fund I.
5.
Excludes commitment fee on undrawn debt. Prior year weighted average cost of debt was revised to exclude commitment fee on undrawn debt.
Financing
The group’s bank debt comprises a $355.0 million secured syndicated debt facility. During the year, the facility
limit was increased from $275.0 million to $355.0 million and the maturity date of the facility was extended to
30 September 2025. This was undrawn as at 30 June 2024.
Dividends
Dividends declared during the financial year were as follows:
Consolidated
30 June 2024
$m
30 June 2023
$m
Final dividend to shareholders registered on 30 August 2023 of 6.0 cents
(2023: 6.0 cents) per ordinary share
20.9
18.0
Interim dividend for the year ended 30 June 2024 of 6.0 cents (2023: 6.0 cents)
per ordinary share
20.9
18.0
41.8
36.0
On 20 August 2024, the directors determined to pay a dividend of 6.0 cents per ordinary share. The dividends
will be paid on 2 October 2024 to eligible shareholders on the register on 28 August 2024.
16
Matters subsequent to the end of the financial year
In May 2024, the group announced the acquisition of Payton Capital. In July 2024, the group reached financial
close for the acquisition. At the date of this report, acquisition accounting is incomplete and will be disclosed in
the next reporting period.
In July 2024, the group made an investment in StorEnergy Pty Limited (‘StorEnergy’), a specialist developer,
owner and operator of utility-scale battery energy storage systems. This represents the first investment by
HMC’s Energy Transition platform which is seeking to assemble an asset portfolio across the energy value
chain. The group will continue to make further investments over a three year period resulting in a total
expected investment of up to ~$50 million to secure a majority interest.
No other matter or circumstance has arisen since 30 June 2024 that has significantly affected, or may
significantly affect the group’s operations, the results of those operations, or the group’s state of affairs in
future financial years.
Likely developments and expected results of operations
HMC Capital objectives
The group’s objective is to provide shareholders with above average risk-adjusted returns via its funds
management strategy. The group intends to achieve this objective by investing in high conviction and
scalable real asset strategies on behalf of shareholders and HMC Capital managed funds (third party capital).
The group will undertake these activities whilst maintaining an appropriate capital structure and approach
to sustainability.
Risk considerations
Financial risks
HMC Capital’s performance is linked to the performance of its balance sheet investments and the
performance of its managed funds, which are invested in real estate and private equity strategies (including
Australian listed equities). The group has sought to protect itself from financial risks by maintaining a
diversified portfolio of investments.
A key economic risk for HMC Capital’s real asset investments (direct and in-direct via funds) relates to interest
rate movements and the impact of this on valuations and the cost of debt funding. The group seeks to mitigate
this risk by investing in quality assets, maintaining an appropriate capital structure and having adequate
interest rate hedging in place.
Market risk is a key risk for HMC Capital’s Australian listed equities investments (direct and in-direct via
funds). Market risk is risk that the market price will fluctuate. This may be a result of factors such as economic
conditions, government regulations, market sentiment, local and international political events, pandemic
outbreaks, environmental and technological issues.
Sustainability and climate-related and environmental risks
Sustainability is a key element of the group’s business approach, driven by the belief that sustainable
investments are aligned to long-term value creation and should not be dilutive to returns. HMC Capital
Limited has established a sustainability subcommittee of the HMC Capital Board that governs HMC Capital’s
sustainability strategy and initiatives across its managed funds, including the group. HMC Capital are signatory
to the United Nations Principal for Responsible Investing (UNPRI) and a Global Real Estate Sustainability
Benchmark (GRESB) participating member. These two organisations provide an investment and reporting
framework to help shape the group’s future strategies and risk framework.
The geographic diversity of the group’s portfolio limits the exposure to physical climate events to localised
occurrences. The group also undertakes detailed due diligence on property acquisitions to assess
environmental risks including contamination as well as any potential exposure to climate related events.
17
HMC Capital | Annual Report 2024
Directors’ Report continued
The group has considered the impact of environmental, social and governance (‘ESG’) risk as well as the
volatile economic environment in preparing its consolidated financial statements and in the exercise of critical
accounting assumptions and estimates, including impacts occurring during the reporting period and the
uncertainty of future effects. The group will continue to monitor these risks and the impact they have on the
consolidated financial statements.
Environmental regulation
The directors are satisfied that adequate systems are in place to manage the group’s environmental
responsibility and compliance with regulations. The directors are not aware of any material breaches of
environmental regulations and, to the best of their knowledge and belief, all activities have been undertaken
in compliance with environmental requirements.
Information on Directors
Name:
Chris Saxon
Title:
Independent Non-Executive Chair
Experience and
expertise:
Chris is a leading Australian lawyer and was, until 2019, a partner with global law firm Baker
McKenzie. Chris’ practice included large-scale mergers and acquisition (‘M&A’) transactions
across a range of sectors, notably energy (gas, electricity, renewable), industrials, infrastructure
and mining. He has consistently been ranked as one of Australia’s foremost project and M&A
lawyers and has been lead adviser on government restructuring transactions and privatisations,
major trade sales and infrastructure projects. Chris served as Chair of Baker McKenzie Australia
for five years (2012-2017) and held numerous leadership roles within the firm.
Other current
directorships:
None
Former directorships
(last 3 years):
None
Special responsibilities:
Chair of the Remuneration and Nomination Committee
Interests in shares:
295,497 ordinary shares
Interests in rights:
11,706 share rights over ordinary shares
Interests in options:
4,000 options over ordinary shares
Name:
David Di Pilla
Title:
Managing Director and Chief Executive Officer
Experience and
expertise:
David led the team that founded the consortium which led to the ultimate establishment HMC
Capital in 2016. Since this time, the HMC Group has grown from its initial Masters portfolio to
today being a diversified alternative asset manager. David has over 30 years of experience
in investment banking, strategic advisory & consulting and corporate leadership as a Director
and CEO. During his 20-year investment banking career David was Managing Director of
UBS Investment Bank for over 15 years and during this time led some of Australia’s landmark
transactions across corporate M&A, Equity & Debt Capital Markets. Prior to his time at UBS,
David reached the position of Vice President, Investment Banking at JP Morgan.
Other current
directorships:
Non-Executive Director of HomeCo Daily Needs REIT (ASX: HDN) – appointed on 18 September
2020 and Non-Executive Director of HealthCo Healthcare and Wellness REIT (ASX: HCW) –
appointed on 28 July 2021.
Former directorships
(last 3 years):
None
Interests in shares:
40,812,935 ordinary shares
Interests in rights:
946,229 share rights over ordinary shares
Interests in options:
40,000 options over ordinary shares
18
Name:
Zac Fried
Title:
Non-Executive Director
Experience and
expertise:
Zac worked closely with David Di Pilla and the team who founded and established the
consortium to acquire the group in 2016. Zac is the Executive Deputy Chairman of the Spotlight
Group (‘SGH’). Established in 1973, SGH owns a number of major and iconic Australian retail
brands: Spotlight, Anaconda, Mountain Designs and Harris Scarfe. SGH also controls one
of Australia’s largest privately-owned property portfolios, Spotlight Property Group, and
operates a significant family office engaged in extensive investment and philanthropic activities.
With over 13,000 employees and 300 big box retail outlets across four countries with large
greenfield redevelopment opportunities, SGH is one of Australia’s leading retail and property
industry participants. Zac’s focus at SGH includes the oversight of SGH’s property development
and leasing portfolio. He has over 30 years of retail and property industry experience and a
demonstrable track record of successful site identification, property value creation, and the
fostering of many longstanding and close lessee relationships. Zac has played the central role
at SGH in the development of many of Australia and New Zealand’s premier retail, office, and
homemaker centres. In addition to his role at SGH, Zac is the President of the Large Format Retail
Association (‘LFRA’). The LFRA is the preeminent industry association responsible for representing
the Australian retail industry interests of operators, investors, property owners, developers and
service providers that collectively generate more than $80 billion or 25% of all retail sales in
Australia. Zac is also a Director and Investment Committee member of Valara Partners Fund,
a leading Australian private credit real estate fund, a position he has held since 2017.
Other current
directorships:
None
Former directorships
(last 3 years):
None
Interests in shares:
19,270,857 ordinary shares
Interests in rights:
9,864 share rights over ordinary shares
Interests in options:
300,000 options over ordinary shares
Name:
Brendon Gale
Title:
Independent Non-Executive Director
Experience and
expertise:
Brendon is a leading Australian sporting administrator and is the current Chief Executive Officer
and Executive Director of the Richmond Football Club, one of the largest and most diversified
sports businesses in Australia. He is also an experienced company director, having previously
served on the board of the Victorian Equal Opportunity and Human Rights Commission and is
a current director of the Richmond Football Club Ltd and Aligned Leisure Pty Ltd. Brendon is
experienced in leading high performing and profitable consumer businesses, operating in multi
stakeholder environments, involving significant public investment. He has a proven track record
in shaping positive corporate culture and setting the tone from the top through the alignment
of purpose, values and strategy. Brendon holds a Master’s Degree in Arts and Bachelor of
Laws from Monash University, has completed the Advanced Management Program at Harvard
Business School and is a Graduate of the Australian Institute of Company Directors.
Other current
directorships:
None
Former directorships
(last 3 years):
None
Special responsibilities:
Chair of the Sustainability Committee and member of the Remuneration and Nomination
Committee
Interests in shares:
304,076 ordinary shares
Interests in rights:
6,555 share rights over ordinary shares
Interests in options:
None
19
HMC Capital | Annual Report 2024
Directors’ Report continued
Name:
Greg Hayes
Title:
Non-Executive Director
Experience and
expertise:
Greg is currently a Non-Executive Director of HomeCo Daily Needs REIT (ASX: HDN) and
Non-Executive Director of Aurrum Holdings Pty Ltd. Having worked across a range of industries
including property, infrastructure, energy and logistics, Greg’s skills and experience include
strategy, finance, mergers and acquisitions and strategic risk management, in particular in
listed companies with global operations. Greg was previously a Non-Executive Director of
Ingenia Communities (ASX: INA), Chief Financial Officer and executive director of Brambles
Limited, Chief Executive Officer and Group Managing Director of Tenix Pty Ltd, Chief Financial
Officer and later interim Chief Executive Officer of the Australian Gaslight Company, Chief
Financial Officer Australia and New Zealand of Westfield Holdings, Executive General Manager,
Finance of Southcorp Limited. Greg has a Master of Applied Finance, a Graduate Diploma in
Accounting, a Bachelor of Arts, completed an Advanced Management Programme (Harvard
Business School, Massachusetts) and is a Member of Chartered Accountants Australia and
New Zealand.
Other current
directorships:
Non-Executive Director of HomeCo Daily Needs REIT (ASX: HDN) - appointed on
16 October 2020.
Former directorships
(last 3 years):
Non-Executive Director of Ingenia Communities (ASX: INA) - retired on 1 July 2024
Special responsibilities:
Member of the Audit and Risk Committee
Interests in shares:
11,020,810 ordinary shares
Interests in rights:
10,851 share rights over ordinary shares
Interests in options:
None
Name:
The Hon. Kelly O’Dwyer
Title:
Independent Non-Executive Director
Experience and
expertise:
Kelly is a Non-Executive Director of EQT Holdings Limited, HealthCo Healthcare and Wellness
REIT, Barrenjoey Capital Partners Group Holdings Pty Ltd and the National Reconstruction
Fund Corporation. Kelly previously served in the Australian Parliament as a Senior Cabinet
Minister holding a number of key economic portfolios including Minister for Jobs and Industrial
Relations; Minister for Revenue and Financial Services; Minister for Small Business; and
Assistant Treasurer. She also served on the Cabinet’s Budget Committee (the Expenditure
Review Committee) and held the portfolios of Minister for Women; as well as Minister Assisting
the Prime Minister with the Public Service. Prior to entering Parliament, Kelly worked in
law, government and finance and brings insights across a range of sectors including funds
management, superannuation, workplace relations, foreign investment, law and banking.
Kelly holds a Bachelor of Laws (Hons) and Bachelor of Arts from The University of Melbourne.
Other current
directorships:
Non-Executive Director of EQT Holdings Limited (ASX:EQT) - appointed on 29 March 2021 and
Non-Executive Director of HealthCo Healthcare and Wellness REIT (ASX: HCW) - appointed on
1 August 2021.
Former directorships
(last 3 years):
None
Special responsibilities:
Member of the Audit and Risk Committee, member of the Sustainability Committee and
member of the Remuneration and Nomination Committee.
Interests in shares:
74,477 ordinary shares
Interests in rights:
5,619 share rights over ordinary shares
Interests in options:
1,000 options over ordinary shares
20
Name:
Susan Roberts
Title:
Independent Non-Executive Director
Experience and
expertise:
Susan is an experienced director and CEO with over 30 years in the financial services,
investment and insurance industries. Susan’s current roles include Chair of Audit for AIG
Australia and Teachers Health, and she is a director of Metlife Australia. Susan has a technical
actuarial and investment background coupled with risk management, business strategy,
governance and stakeholder management skills. Susan has significant commercial and financial
executive experience, including CEO and Managing Director of Lazard Asset Management
Pacific, and Director, Strategy at Lend Lease Investment Services. Susan has previously served
as a Non-Executive Director of Maple Brown Abbott and as Chair of the Audit and Risk, and
Claims Committee for Zurich Australia Superannuation. Susan was also Chair of the Investor
Working Group for the 30% Club in Australia. Susan holds a Bachelor of Economics from
Macquarie University and is a Fellow of the Actuaries Institute of Australia.
Other current
directorships:
None
Former directorships
(last 3 years):
None
Special responsibilities:
Chair of the Audit and Risk Committee and member of the Sustainability Committee
Interests in shares:
58,157 ordinary shares
Interests in rights:
6,555 share rights over ordinary shares
Interests in options:
None
‘Other current directorships’ quoted above are current directorships for listed entities only and excludes
directorships of all other types of entities, unless otherwise stated.
‘Former directorships (last 3 years)’ quoted above are directorships held in the last 3 years for listed entities
only and excludes directorships of all other types of entities, unless otherwise stated.
Company Secretary
Andrew Selim joined HMC Capital as a senior executive in 2017 and is Group General Counsel and Company
Secretary. He is responsible for all legal, compliance and governance activities of HMC Capital and its
managed funds. Andrew has over 20 years of local and international experience in real estate, funds
management and corporate law. Before joining the group, Andrew was Senior Legal Counsel and Company
Secretary at GPT Group. Prior to that, he was a Senior Associate at Allens Linklaters. Andrew holds a
Master of Laws, Bachelor of Laws (Honours) and Bachelor of Science (Advanced), all from the University
of Sydney and is admitted to practise as a solicitor in Australia, England and Wales. He is also a Graduate
of the Australian Institute of Company Directors and is a Member of the Governance Institute of Australia
and Association of Corporate Counsel Australia. He previously sat on the Law Society of New South Wales
In-House Corporate Lawyers Committee and was previously Chair of the Property Council of Australia’s
Future Leaders Mentoring Program Subcommittee. Andrew has also been recognised by The Legal 500 GC
Powerlist, Australasian Lawyer and Doyles Guide as a leading in-house lawyer.
21
HMC Capital | Annual Report 2024
Directors’ Report continued
Meetings of Directors
The number of meetings of the Company’s Board of Directors (‘the Board’) held during the year ended
30 June 2024, and the number of meetings attended by each director were:
Full Board
Attended
Full Board
Held
Remuner-
ation and
Nomination
Committee
Attended
Remuner-
ation and
Nomination
Committee
Held
Audit
and Risk
Committee
Attended
Audit
and Risk
Committee
Held
Sustaina-
bility
Committee
Attended
Sustaina-
bility
Committee
Held
Chris Saxon
10
10
3
3
–
–
–
–
David Di Pilla*
9
10
–
–
–
–
–
–
Zac Fried
10
10
–
–
–
–
–
–
Brendon Gale
10
10
3
3
–
–
3
3
Greg Hayes
10
10
–
–
4
4
–
–
Kelly O’Dwyer
10
10
3
3
4
4
3
3
Susan Roberts
10
10
–
–
4
4
3
3
Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee.
*
David Di Pilla attended remuneration and nomination, audit and risk and sustainability committee meetings by invitation.
Shares under option
There are 2,795,102 unissued ordinary shares of HMC Capital under options outstanding at the date of this
report. The exercise price per option is $7.00 and the options expire on 30 November 2025.
Shares under share rights
There were 3,389,824 unissued ordinary shares of HMC Capital under performance rights at the date of this
report. The rights are exercisable at $Nil exercise price.
No person entitled to exercise the share rights had or has any right by virtue of the share right to participate in
any share issue of HMC Capital or of any other body corporate.
Shares issued on the exercise of options
6,000 ordinary shares of HMC Capital were issued on the exercise of options during the year ended 30 June
2024 and up to the date of this report. The options were exercised at an exercise price of $7.00 per share.
Shares issued on the exercise of performance rights
835,325 ordinary shares of HMC Capital were issued on the exercise of performance rights during the year
ended 30 June 2024 and up to the date of this report. The performance rights were exercised at an exercise
price of $Nil per share.
Indemnity and insurance of officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their
capacity as a director or executive, for which they may be held personally liable, except where there is a lack
of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the directors
and executives of the Company against a liability to the extent permitted by the Corporations Act 2001.
The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.
22
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, agreed to indemnify the auditor of
the Company or any related entity against a liability incurred by the auditor. During the financial year, the
Company has not paid a premium in respect of a contract to insure the auditor of the Company or any
related entity.
Proceedings on behalf of HMC Capital
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of HMC Capital, or to intervene in any proceedings to which HMC Capital is a party for
the purpose of taking responsibility on behalf of HMC Capital Limited for all or part of those proceedings.
Non-audit services
There were no non-audit services provided during the financial year by the auditor.
Officers of the Company who are former partners of KPMG
There are no officers of the Company who are former partners of KPMG.
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian
Securities and Investments Commission, relating to ‘rounding-off’. Amounts in this report have been
rounded off in accordance with that Corporations Instrument to the nearest hundred thousand dollars,
unless otherwise stated.
Related party confirmation
The directors confirm that since listing the Company has complied with, and continues to comply with, its
related party transaction policy which is publicly available.
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act
2001 is set out immediately after this directors’ report.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the
Corporations Act 2001.
On behalf of the directors
Chris Saxon
David Di Pilla
Chair
Director
20 August 2024
23
HMC Capital | Annual Report 2024
Directors’ Report continued
Remuneration report (audited)
On behalf of the Board of Directors (the ‘Board’) and as Chair of the Remuneration and Nomination Committee,
I am pleased to present HMC Capital’s remuneration report for the year ended 30 June 2024 (‘FY24’).
FY24 was a year of transition and growth for HMC Capital. Our platform of assets has continued to grow and
diversify, as the group invests in areas and products in growing and scalable sectors. HMC is now an increasingly
diversified alternative asset manager with scalable platforms in real estate, private equity, private credit, energy
transition and digital infrastructure. This year, we have established three major new growth vehicles:
y Energy transition: we have hired a highly credentialled executive team and secured our first seed
investment. Our first fund will launch in H1 FY25.
y Private Credit: we now have a diversified private credit platform for the group in a high growth sector
through the acquisition of $1.5 billion AUM credit manager Payton Capital.
y Digital infrastructure: we are building capability via the acquisition of a North American digital infrastructure
fund manager (StratCap LLC).
This growth has been achieved in FY24 while the group also delivered on its value accretive objectives with
respect to financial performance and total shareholder returns, with key highlights including:
y Record operating earnings (OE) (pre-tax) in FY24 of $129.3 million or 37 cents per share (a 40% increase on
FY23 OE and a 516% increase since our inaugural results from IPO in 2019).
y 45% total shareholder return (TSR) in FY24 and 161% total shareholder return from listing (October 2019)
to 30 June 2024. This represents 138% outperformance versus the S&P/ASX 200 A-REIT index and 121%
outperformance versus the S&P/ASX 200 index since listing.
y Our Private Equity fund has delivered 24.4% p.a. since inception in September 2022, resulting in a
$15.6 million cash performance fee being earned in FY24.
y Real Estate AUM of $9.6 billion supported by new fund establishment and stable valuations across daily
needs and healthcare portfolios which continue to outperform.
y Net cash balance sheet with $1.4 billion of available liquidity including liquid assets.
y Significant progress on our decarbonisation strategy and Net Zero Energy Roadmap, including a 30% net
reduction in Scope 1 and Scope 2 carbon emissions in FY24 (compared to FY22 baseline).
FY24 Remuneration outcomes
Whilst HMC has delivered strong returns for shareholders and positioned the Company for further growth, we
have continued to be disciplined in respect of remuneration outcomes and most importantly, to ensure a high
degree of alignment between business performance and remuneration outcomes. For Executive KMP in FY24
this meant the following results:
y All Executive KMP received a 5% increase in fixed remuneration. This increase was in line with increases for
the broader employee population at HMC Capital.
y The Head of Real Estate (Head of RE) and Group CFO had an increase in their target short-term incentive
(STI) and long-term incentive (LTI) from 60% to 70% (with the MD & CEO continuing to not participate in
STI in FY24).
y STIP outcomes for FY24 of 85% of target (57% of maximum opportunity) and 100% of target (67% of
maximum opportunity) for the Head of Real Estate and Group CFO respectively. These results highlight the
challenging nature of the STI KPIs which apply to HMC executives, as STI stretch hurdles were not achieved
despite the extremely strong year noted above. Further detail on these awards is set out in section 4.
y The Group’s LTIP award plan issued in FY20 vested in August 2023, being assessed on performance in
the three-year period from 1 July 2020 to 30 June 2023. This award was split into two equal tranches,
with 50% being subject to a relative TSR hurdle and 50% subject to an OE hurdle measuring aggregate OE
performance over the performance period. During this period HMC Capital’s TSR was 84.5%, ranking it 1st
out of the 28 companies in the S&P/ASX 300 A-REITs comparator group with a 100th percentile ranking
resulting in 100% vesting for this tranche of the award. The Company delivered OE of 70.5c per share over
the three-year period, against forecast OE of 52.3c per share. This actual aggregate OE result delivered
was 135% above the target OE pool for the three-year period, resulted in 100% of this tranche vesting.
y No changes were made to any Non-Executive Director Board or Committee fees for FY24.
24
Variable Remuneration Review
As we move into FY25, HMC continues to implement its strategy of becoming a fully diversified alternative
asset manager. As a result, HMC’s business has become significantly larger and more complex, with a much
greater emphasis on asset and funds management, both domestically and now in North America. To drive
this growth, HMC has recruited and continues to recruit high calibre talent to lead and execute on our strategy
of creating high growth, scalable investment opportunities for our stakeholders. To support these changes, it
is essential that our remuneration structures continue to ensure a clear alignment between rewards and the
strength and quality of our earnings, whilst at the same time always maintaining prudent risk management.
We are therefore undertaking a full review of our variable remuneration arrangements to ensure they
continue to be fit for purpose for HMC.
Our STI and LTI structures are being reviewed to allow us to retain existing talent and continue to attract
the calibre of executive needed to drive our business forward. It is intended that any new structures will
reward those individuals who increase the profitability of the group and deliver a high return on equity, whilst
complying with our strict risk management policies and achieving our sustainability objectives. Our various
investment platforms are at different stages of growth and also require us to compete for talent in different
employment markets. It is therefore critical that the new arrangements allow flexibility in remuneration
outcomes. These changes will begin to be implemented in FY25, with full implementation in FY26.
In addition to this Remuneration Review, we continue to review our organisation structure in light of the growth
in the business. A new divisional structure has now been implemented, based around our specialist investment
platforms. This will impact on the way we report our results and may also impact the executive structure and
reduce the number of our Executive KMP as this business model is finalised. These impacts will be set out in our
FY25 Remuneration Report.
Looking Forward to FY25
The Board regularly benchmarks the Executive KMP roles against an Industry comparator group based on
financial services and A-REIT companies of broadly similar size and a market capitalisation comparator group.
The annual review of the remuneration for all HMC Capital employees considers broader factors such as
inflation, market wage forecast increases and cost of living adjustments. These factors, together with the
Variable Remuneration Review noted above, and the continuing growth and complexity of the business means
the Board will make the following changes to the remuneration of Executive KMP for FY25 (see section 7 for
further detail):
y The MD & CEO will receive a 5% increase in fixed remuneration, in line with that provided to other HMC
executives. Despite this increase, his fixed remuneration remains significantly below the median of
both comparator groups used for our executive benchmarking. As in prior years the MD & CEO will not
participate in the STI Plan in FY25.
y In FY25 the MD & CEO will be granted an LTI award of 500,000 performance rights which is greater
than the FY24 LTI award (approximately 250% of fixed remuneration at target and 375% at maximum LTI
opportunity). The Board has concluded that the award is justified because of the exceptional performance
of the MD & CEO in FY24 and the growth outlook for the group in FY25 and beyond. Key rationale used by
the Board in determining this grant include:
— the growth in operating earnings in FY24 to 37 cps, representing a 40% increase from FY23;
— share price performance in FY24 which saw a 45% increase in TSR, which included new equity raised and
grew the Company’s market capitalisation by approximately $1 billion to $2.7 billion as at 30 June 2024.
This performance represents both sector and market leading performance;
— the establishment of three very exciting new growth platforms for the future; private credit, energy
transition and digital infrastructure, together with recruitment of market-leading executives to manage
and grow these platforms;
— significant capital inflows into our managed platforms, including the commitment of institutional capital;
and
— consideration of benchmarking data confirming the MD & CEO’s total remuneration package is not
positioned appropriately.
25
HMC Capital | Annual Report 2024
Directors’ Report continued
y These performance rights will only vest if the Company achieves strong earnings growth and TSR over
three years commencing FY25.
y The Head of RE and Group CFO will each receive an increase in fixed remuneration of 7% and 24%
respectively. These increases reflect the increasing size and complexity of HMC’s business and have been
made after extensive benchmarking with peer group companies. Any changes to the variable remuneration
of these two Executive KMP in FY25 will be determined once the Remuneration Review is completed.
y The only change to the structure of the FY25 LTI awards is the way in which the OE hurdle targets are
determined. In FY25, the OE LTI threshold, target and stretch metrics will be calculated using our FY24
OE performance and applying compounded annual growth rate (CAGR) targets over the three-year
performance period (on a cents per share basis). This change increases the transparency in the way HMC
sets its LTI earnings targets.
y There will be a five percent increase in Director base and Committee fees in FY25. This is the first increase
in Director base fees since ASX listing in 2019.
y The Board will continue to review its structure and notes its commitment for 50% representation by women
across the organisation by the end of FY25, including Executive and Board Director positions.
Overall, the Board aims to ensure that the group’s remuneration platform is market competitive, aligns
performance measures with the achievement of the group’s strategic objectives, reflects the growing
complexity of the group’s operations and is fair to all stakeholders.
We will continue to review and assess the effectiveness of our remuneration framework in order to motivate
and retain our Executive KMP and other senior executives.
Chris Saxon
Chair of the Board
Chair of the Remuneration and Nomination Committee
20 August 2024
26
1. Key Management Personnel
The remuneration report details the key management personnel (‘KMP’) remuneration arrangements for the
group, in accordance with the requirements of the Corporations Act 2001 and its Regulations.
KMP are those persons having authority and responsibility for planning, directing and controlling the activities
of the HMC Capital Group, directly or indirectly, including all directors.
The MD & CEO and other senior executives considered KMP are collectively referred to as the Executive KMP
of HMC Capital. All KMP were KMP for the full year unless noted otherwise.
Non-Executive Directors
Role
Chris Saxon
Chair and Independent Non-Executive Director
Zac Fried
Non-Executive Director
Brendon Gale
Independent Non-Executive Director
Greg Hayes
Non-Executive Director
Kelly O’Dwyer
Independent Non-Executive Director
Susan Roberts
Independent Non-Executive Director
Executive KMP
Role
David Di Pilla
Managing Director and Chief Executive Officer
Sid Sharma
Head of Real Estate (Head of RE)
Will McMicking
Group Chief Financial Officer (Group CFO)
27
HMC Capital | Annual Report 2024
Directors’ Report continued
2. Executive Remuneration Governance and Structure
The following diagram illustrates HMC Capital’s remuneration governance:
SHAREHOLDERS
BOARD
The Board reviews, challenges and approves the recommendations of the Remuneration and Nomination
Committee around policy, performance, and remuneration arrangements for Non-Executive Directors and
Executive KMP of the Group.
REMUNERATION AND NOMINATION COMMITTEE
EXTERNAL ADVISORS
Members
Three independent Non-Executive Directors who are all
independent of management:
y Chris Saxon (Committee Chair)
y Brendan Gale
y Kelly O’Dwyer
Role
To support and advise the Board in fulfilling its responsibilities
to shareholders and employees of the group by ensuring that:
y Non-Executive Directors and Executive KMP of the group
are remunerated fairly, appropriately and transparently;
y Remuneration policies and outcomes of the group strike
an appropriate balance between the interests of the
group’s shareholders and rewarding and motivating
executives and employees in order to secure the long-
term benefits from their energy, drive and loyalty; and
y Short- and long-term incentives are linked to the
achievement of key financial metrics, creation of
sustainable shareholder returns and achievement of the
Company’s sustainability objectives.
The Board and Committee may
seek advice from independent
experts and advisors if required.
In FY23 no remuneration
recommendation, as defined in
the Corporations Act, relating to
Executive KMP remuneration was
received from external advisors.
28
3. Executive Remuneration Principles and Structure
The diagram below shows the principles used to determine the nature and amount of executive remuneration
paid as well as how remuneration is structured to reward executives with a mix of both fixed (FR) and variable
(STIP and LTIP) components.
REMUNERATION PRINCIPLES
Be strategically aligned
Be market competitive
Enhance shareholders’ interests:
y Focus on sustained growth in shareholder wealth,
consisting of dividends and growth in share price,
and delivering constant or increasing return on assets
as well as focusing the executive on key non-financial
drivers of value including sustainability goals; and
y Attract, reward and retain high calibre executives.
Enhance executives’ interests:
y Reward capability and experience;
y Reflect competitive reward for contribution to
growth in shareholder wealth; and
y Provide a clear structure for earning rewards.
FIXED
VARIABLE
Fixed remuneration
Short-term incentive
Long-term incentive
DELIVERY METHOD
Base salary plus
superannuation
Annual cash payment
opportunity + STI deferral
into rights
Rights to shares
REWARDS FOR
Performance, skills, and
capabilities
Performance over a
12-month period against
agreed key business
objectives
Growth in total shareholder
return relative to key
comparators and achieving
forecast OE over three-year
performance period
IS
Fixed
At risk
At risk
LINKED TO
PERFORMANCE
Market aligned (both by
market capitalisation and
industry comparator groups)
base salary commensurate
with role size and complexity
Key performance metric
combination of critical
business measures and
individual achievement of
key performance indicators
(‘KPIs’). OE and behavioural
gateways must be met
before any STI is payable
Key performance conditions
aligned with long-term
business goals and
shareholder value creation
HOW MEASURED
Performance against key
attributes of position
Performance against critical
key business metric OE per
share targets and individual
KPIs
50% – Relative TSR
vs ASX 200 A-REIT
comparator group
50% – aggregate OE per
share vs 3-year target pool
29
HMC Capital | Annual Report 2024
Directors’ Report continued
Executive KMP have their remuneration benchmarked regularly by the Remuneration and Nomination
Committee with assistance from external advisors where necessary. In benchmarking these roles, the
Committee typically uses benchmarks comprising several groups of comparable companies. The most recent
benchmarking peer groups included:
y An Industry comparator group - companies from the A-REIT and Financial Services sector with a market
capitalisation broadly within that of HMC Capital’s market capitalisation. These are companies with whom
HMC Capital competes for capital and people; and
y A Market Capitalisation comparator group – companies in the S&P/ASX 200 with comparable average
market cap being 25 companies above and 25 companies below HMC Capital’s market capitalisation.
Each of the relevant Executive KMP’s total remuneration is made up of a mix of Fixed Remuneration and
Variable Remuneration, as set out below.
The remuneration structures for executives and Non-Executive Directors are structured and disclosed
separately, in alignment with the fourth edition of the ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations.
Remuneration Mix - FY24
Executive KMP total target remuneration is broken down into the following four remuneration elements.
Table 1: Executive K MP remuneration mix for FY24.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Will
McMicking
Sid
Sharma
David
Di Pilla
33.0% 0%
66.7%
24.2%
27.3%
45.5%
25.0%
3.0%
2.3%
27.3%
45.5%
FR – Cash STI – Cash STI - Equity LTI - Equity
As in prior years, the MD & CEO did not to participate in the short-term incentive plan in FY24.
Minimum shareholding requirements
HMC Capital has a minimum shareholding policy which applies to all Non-Executive Directors, all Executive
KMP and selected other senior executives. This policy has the following key features:
y The minimum shareholding requirements under the Policy are as follows:
— Non-Executive Directors: 200% of base annual Board fees (Chair and member respectively);
— MD&CEO: 200% of annual fixed remuneration; and
— Executive KMP: 100% of annual fixed remuneration.
y Minimum shareholding requirement should be met within 5 years of commencement of directorship/
employment or commencement of the policy – whichever is later.
y Shares counted towards the minimum shareholding requirement under the policy include all shares in which
the Non-Executive Director or senior executive has a relevant or economic interest.
30
y Shares are valued at the higher of price paid to acquire them (or if acquired via the vesting of awards under
the HMC Capital Non-Executive Director Equity Plan (NEDEP) or HMC Capital Employee Equity Plan (EEP)
the volume weighted average price on the vesting date) or the average of the closing HMC share price over
the relevant financial year.
y Non-Executive Directors, the MD & CEO and Senior Executives will be required to retain all shares derived
from participation in the NEDEP or EEP (as applicable), except where required to sell shares for related
tax obligations (or in cases of severe financial hardship), until such time as they meet the minimum holding
requirement.
4. Executive Short-term Incentive Plan (‘STIP’)
Term
Details
Rationale
The HMC Capital STIP is designed to attract, motivate and retain the Executive KMP and key
employees who participate by providing an opportunity to be rewarded for outperformance
based on performance against key critical business metrics over the FY24 financial year
Eligibility
All Executive KMPs are eligible to participate in the STIP. The Board may also invite other
selected employees to participate from time to time.
Opportunity
The MD & CEO has elected not to participate in the FY24 STIP (as in prior years).
Other Executive KMP have a target opportunity of 70% and a maximum opportunity of 105% of
their annual fixed remuneration (base salary + superannuation).
Performance Period
The performance period for the Plan is the 12 months ending 30 June 2024.
Gateways
Unless the below Gateways are met, no STI is payable for Executive KMP:
1. HMC Group Operating
Earnings (OE) Gateway
FY24 OE per share of 29 cents (pre-tax).
2. Behavioural gateway
Every STIP eligible employee must demonstrate they have met
and continue to comply with HMC Group values as set out in
the Code of Conduct.
Performance
conditions
The FY24 STIP is subject to the following performance conditions tested over the
performance period:
y the group’s OE per share guidance;
y HMC Funds under Management (FUM); and
y individual KPIs agreed with each member of the KMP. KPIs vary according to the areas of
responsibility for each STIP participant. Where participants have responsibility for specific
managed funds, such as HDN or HCW, these employees may have OE and Assets under
Management (AUM) targets for these respective funds.
In determining STIP performance the Board will consider performance against the HMC Capital
Sustainability Commitments. Failure to achieve appropriate progress will result in the dial-down
of STI outcomes for some or all employees.
Vehicle and Deferral
STIP awards are typically delivered in a mix of cash and deferred equity. For Executive KMP
participating in the STIP, the Board has determined that 25% of any STI payment above a
set limit of $200,000 will be deferred into share rights. These rights have a one-year service
condition, vesting after the FY24 results are released to the ASX, and are forfeitable if the
Executive resigns or is terminated for cause.
In determining the portion of STI to be deferred, the Board took into account that the majority
of Executive KMP are significant HMC Capital shareholders, and all Executive KMP have
already exceeded the required minimum shareholding requirements in the new Minimum
Shareholding Policy.
Discretion
The Board retains the right to apply discretion when determining annual STI outcomes. No such
overriding discretion was applied in FY24.
31
HMC Capital | Annual Report 2024
Directors’ Report continued
FY24 Executive KMP STIP performance and outcomes
For the FY24 all performance gateway metrics for Executive KMP participating the in the STIP were met
as follows:
Performance category
Metric
FY24 Performance Outcome
Met/Not met
1. HMC Group OE Gateway FY24 OE per share of 29 cents (pre-tax)
OE per share of 37 cents
Met
2. Behavioural gateway
Every STIP eligible employee must demonstrate they have met and continue
to comply with HMC Group values as set out in the Code of Conduct.
Met
In determining the STIP outcomes for each of the Executive KMP who participated in the FY24 program, the
MD & CEO and Board of HMC Capital take into account a variety of factors. Group financial outcomes are key
factors which drive the STIP results. In addition to this, the contribution of each executive KMP, including the
performance of the division for which they are responsible is considered.
The key Group financial metrics considered for the FY24 STIP are as follows:
FY24 Group metrics
y HMC Capital OE (pre-tax) performance of 37 cps materially exceeding the threshold of 29 cps and exceeded our
challenging OE target of 35 cps.
y HMC Capital Group FUM of $12.7bn which is above target. This FUM figure includes FUM for Payton Capital and
StratCap (as the agreements for the acquisition of these businesses were signed in FY24) as well as real estate
development pipelines.
The individual metrics taken into account by the MD & CEO and Board of HMC Capital in assessing STIP
outcomes are as follows.
FY24 Individual metrics
Sid Sharma
Head of Real Estate
Financial
y HDN’s FFO (pre-tax) performance of 8.6 cps met HDN market guidance.
y HCW’s FFO (pre-tax) performance of 8 cps met HCW market guidance.
y Managed HDN, HCW, LML and UHF through a volatile macro-economic period with all entities growing underlying
earnings by controlling costs and maximising returns.
y Unlisted institutional real estate strategies significantly outperformed return targets.
y Real estate strategy achieved greater than 99% occupancy and rent collection.
People/Leadership
y Led Group’s sustainability commitments which met stretch FY24 sustainability targets, including goal of 30% net
reduction in emissions (compared to the FY22 baseline).
y Continued to develop and lead the real estate team to optimise the skills and structure of the team to align and drive
business strategy.
Final FY24 STI performance for Head of RE was assessed at 85% of target.
32
FY24 Individual metrics continued
William McMicking
Group CFO
Financial
y Leading role in securing new fund strategies in the Private Credit and Digital infrastructure areas. This has included
the successful acquisition of Payton Capital Limited and StratCap LLC, leading the financial and IT integration of both
businesses.
y Responsible for key Capital Partners investment which has significantly overachieved prescribed investment return
in FY24.
y Strengthened and grown risk management framework across group to take into account growth of new funds and
asset management businesses. This included development and execution of expanded new internal audit capability
across the group.
y Responsible for successful delivery of HMC’s capital, financial reporting, taxation and IT needs across Group in time of
transition and growth.
People/Leadership
y Substantial progress made against FY24 sustainability targets (with the actual achievements set out below), including
achievement of stretch goal of 30% net reduction in emissions.
y Demonstrated leadership across all financial aspects of Group to build and strengthen team delivering the strong
business results with appropriate risk management controls.
Final FY24 STI performance for Group CFO was assessed at 100% of target.
The Board views the FY24 STIP outcomes for both the Head of Real Estate and Group CFO as appropriate.
They reflect the powerful financial performance of the group, as demonstrated by the strong OE outcome
and significant increase in FUM. These outcomes were achieved at a time the group was able to establish
three major new growth platforms through a combination of both organic and acquisition growth strategies
to secure new investment capability, capital sources and investment products.
The following table shows the actual STI outcomes for Executive KMP as a percentage of their maximum
STIP opportunity.
Table 2: Actual STI outcomes for Executive K MP
STIP awarded/Forfeited %
Executive KMP
FY24
FY23
Sid Sharma
57%/43%
67%/33%
Will McMicking
67%/33%
68%/32%
In addition to the above KPIs, the Board has also taken into account performance against the HMC Capital
Sustainability Commitments. The Board has reviewed the progress noted below against the Commitments,
which supports the FY24 STIP outcomes (with no dial-down of FY24 outcomes required).
Category
Commitment
Environment
Climate Action – To actively minimise carbon emissions.
Continued progress on our decarbonisation strategy and Net Zero Emissions Roadmap, including1,2:
y 30% net reduction in Scope 1 and Scope 2 carbon emissions in FY24 (compared to FY22 baseline)
y Solar installed across 30% of feasible sites3, with further installations ongoing throughout FY25
y Energy Management System has been installed across all feasible sites3 within HDN and HCW
y LED lighting conversion achieved across all feasible assets3
33
HMC Capital | Annual Report 2024
Directors’ Report continued
Category
Commitment continued
Environment
continued
Green future - To champion the preservation and restoration of the natural environment.
y National partnership with Veolia to roll our waste compactors to feasible sites as part of our waste
management strategy. During FY24, we installed six compactors across the HDN portfolio. This roll out
will continue to progress in FY25
y Instituted Green Building ratings across new developments as appropriate including, Green Star and
NABERS. WELL building rating system under review for new HCW assets
y Completed NABERS certifications across eligible sites, with a portfolio average of 4.2 Star NABERS
Energy rating and 5 Star NABERS Water rating4
y Finalised minimum sustainability design standards across applicable developments, in line with 4 Star
Green Star pathway
y Awaiting final endorsement for our 4 Star Green Star ratings for HDN’s South Nowra, with Mackay and
Glenmore Park submissions due to be filed in Q2 FY25
y Completed Green Star performance ratings across HDN and HCW assets
Social
Connection – To respond to local and regional essential community needs as they relate to health,
wellness and daily services.
y The “HMC Capital Foundation” has made grants to three organisations during FY24. The next round of
submission for grants will be opening in early FY25
y Progressed our CommunityCo. national charity partnership with Eat Up, with the roll out of onsite
initiatives including sandwich making sessions to support providing lunches to children in need at local
schools and community centres
y Continued incorporation of our Social Impact Framework “Needs Assessment” into acquisition due
diligence process
Respect – To respect the inherent dignity, safety, diversity and human rights of all people we touch.
y Received final endorsement from Reconciliation Australia and publicly released Reflect RAP document
y FY25 target of 50% female across the organisation continues to be achieved in FY24 with current staff
50% female and 50% male as at 30 June 2024
y There were nil employee Lost-Time Injuries in FY24
Governance
Alignment – To have the skills, environment and culture that support and propel HMC Capital’s ambition
and Sustainability Commitments.
y “AA” ESG Rating from MSCI maintained
y Across the HMC board there are 29% female and 71% male. We are progressing towards our FY25
target of 50% female. It is noted that across the independent board positions for both listed and
unlisted funds, female representation is currently 53%
y During FY24 the group became a signatory of Hesta 40:40 Vision
y HDN awarded was 2024 ESG Regional Top-Rated company with Morningstar Sustainanalytics, for the
second year in a row
y Continued upskilling on ESG across the workforce through lunch & learns. ESG strategy is embedded in
our new hire and onboarding process
Accountability – To earn and keep the trust of our key stakeholders through transparent communication,
processes and by doing what we say we will do.
y Continued implementation of Board evaluation recommendations arising out of independent external
review
y Sustainability Committee quarterly meetings continued during FY24 to assess progress against our
ESG commitments
y Continued to be a signatory to UN PRI & UN Global Compact
y Published HDN’s second Modern Slavery Statement
y FY23 Sustainability Report published
y Continued HDN’s annual GRESB submission
Notes.
1.
Statistics reported from Group level unless otherwise stated and as at 30 June 2024. Dataset; a) Excludes assets where the tenant is responsible for electricity consumption and
has complete operational control; b) Excludes assets held for sale, acquisitions and divestments during FY24 and since FY22 baseline formed; c) Sites that are classified as feasible
include assets where we have operational control, and the building infrastructure and architecture is suitable for the proposed sustainability initiative.
2.
Includes surrendered carbon certificates generated through our environmental initiatives.
3.
Excludes assets with pending development impacting the installation of LED.
4.
As at August 2024.
34
5. Executive Long-term Incentive Plan (‘LTIP’)
Term
Details
Plan
FY24 LTIP awards are made under the HMC Capital Employee Equity Plan (EEP).
Rationale
The EEP is designed to align executive rewards with shareholder expectations and to
incentivise and retain the Executive KMP and key employees by providing an opportunity to
be rewarded based on performance.
Eligibility
All Executive KMPs are eligible to participate in the EEP. The Board may also invite other
selected employees to participate from time to time.
Instrument
Performance rights are granted by the Company for nil consideration. Each performance
right is a right to receive one fully paid share in the Company.
Opportunity
The LTIP opportunity is set as a percentage of Fixed Remuneration (FR).
The MD & CEO received a grant of performance rights based on a maximum stretch value
of 200% of his FR. Other Executive KMP grants are based on 70% of FR.
Allocation Methodology
The number of performance rights awarded is determined by dividing the maximum
opportunity by the five-trading day volume weighted average price of a share following
announcement of the Company’s FY23 full-year results.
Performance Period
The performance period for the FY24 awards is the three-year period commencing
1 July 2023 to 30 June 2026.
Performance conditions
For the FY24 awards the performance measures are 50% relative TSR and 50% aggregate
OE per share.
Relative TSR
Relative TSR is measured against a comparator group of S&P/ASX 200 A-REITs. The vesting
schedule is as follows.
Performance scale
Percentage of rights to vest
Below 50th percentile
Nil
At the 50th percentile (threshold)
50 %
At or above the 75th percentile (maximum)
100 %
Rights will vest on a straight-line basis if the Company’s TSR performance is between the 50th
and 75th percentile of the comparator group.
Company’s OE
The OE condition is measured by the aggregate of the annual OE pool tested against the
aggregated disclosed annual OE target pool. The vesting schedule is as follows.
Performance scale
Percentage of rights to vest
Below 95% of target OE
Nil
At the 95% of target OE (threshold)
50 %
At the 100% of target OE (target)
75 %
At or above 105% of target OE (maximum)
100 %
Rights will vest on a straight-line basis if the Company’s OE performance is between 95%
and 105% of target.
Disclosure of performance outcomes
In the FY26 Remuneration Report the Board will set out how HMC Capital has performed
against these targets. The FY24 OE (pre-tax) target component for the LTI awards is
35c per share.
35
HMC Capital | Annual Report 2024
Directors’ Report continued
Term
Details continued
Vesting Date
Performance rights will vest when the Board determines the performance relative to the
performance conditions (around the release of the FY26 results to the ASX). Rights are
exercisable the day after vesting and each participant will have until one month after the
full‑year results are announced for FY28 to exercise their rights.
Service condition
Unless the Board determines a different treatment:
i. If a participant ceases to be an employee due to resignation (or termination for cause) all
unvested rights will automatically lapse.
ii. If a participant ceases employment for any other reason, all unvested rights (which may
be pro-rated by the Board for time elapsed since the start of the Performance Period) will
remain “on-foot” and will be performance tested at the end of the relevant Performance
Period. To the extent that the relevant performance conditions are satisfied, the Rights will
vest at the original Vesting Date.
Dividends
Rights do not carry a right to vote or to dividends.
Change of control
In the event of change of control, unless the Board determines otherwise, a pro-rata
number of the participant’s unvested awards will vest to the extent that the conditions have
been satisfied.
Clawback
The EEP provides the Board with broad clawback powers if the Board considers the
participant’s conduct, capability or performance justifies the variation. No clawback power
has been exercised to date.
Securities Trading Policy
The HMC Capital Group’s Securities Trading Policy prevents participants from entering
into transactions or arrangements, including by way of derivatives or similar financial
products which operate to limit the economic risk relating to awards made under the EEP
which either have not vested or have vested but remain subject to a holding lock or other
restriction on dealing.
FY21 LTIP performance
The Group’s FY21 LTIP awards vested in August 2023 based on performance in the three-year period from
1 July 2020 to 30 June 2023. The performance of this award is summarised in the table below.
Performance hurdle
Relative TSR vs a comparator
group of S&P/ASX 300
A-REITS as at 1 July 2020.
Aggregate FFO/OE performance vs OE target pool.
Percent of total award
50%
50%
How assessed
HMC’s relative TSR ranked on
a percentile basis against all
companies in the comparator
group.
Actual HMC Capital FFO/OE performance for each year
in the performance period against Company’s annual OE
targets, as disclosed in its ASX FFO guidance for relevant
financial year.
Actual performance
HMC Capital was ranked
1st in percentile ranking in
companies in the ASX 300
A-REIT comparator group
with 84.5% TSR.
Company delivered FFO/OE of 13.1c (post-tax) 31.0c and
26.4c (pre-tax) per share, in aggregate 70.5c per share
over the FY21-FY23 period. This was measured against
aggregate forecast OE pool of 52.8 cents per share
for the same period, based on OE forecasts of 12.8c
(post‑tax), 18.5c and 21.5 cents (pre-tax) respectively.
Actual aggregate OE result delivered was 134% above
the target OE pool.
Percentage of applicable
tranche vesting
100%
100%
36
6. Non-Executive Directors’ Remuneration
Fees and payments to Non-Executive Directors reflect the demands and responsibilities of their role.
Non-Executive Director’s fees and payments are reviewed annually by the Remuneration and Nomination
Committee. The Remuneration and Nomination Committee may, from time to time, receive advice from
independent remuneration consultants to ensure Non-Executive Director’s fees and payments are appropriate
and in line with the market.
Subject to ASX listing rules, HMC Capital may from time to time determine the maximum aggregate
remuneration to be provided to the directors in a general meeting. In the 2020 Annual General Meeting
shareholders approved an increase in the maximum director fee pool to $1,200,000 per annum. The FY24
Non-Executive Director fees are set out below.
Table 3: Non-Executive Director fees.
Board
Committee*
Chair
Member
Committee Chair
Member
FY24 Fee**
$250,000
$100,000
$30,000
$10,000
*
Comprising the Audit and Risk Committee, Remuneration and Nomination Committee and Sustainability Committee. As the Board Chair is also the Chair of the Remuneration and
Nomination Committee Mr Saxon did not receive any additional fee for chairing this Committee.
** Non-Executive Director fees are paid inclusive of 11% superannuation.
In addition, HMC Capital Non-Executive Directors serving on the Boards of HMC Capital managed funds will
be paid Board and Committee fees commensurate with other Board members (which are to be reimbursed by
the respective HMC Capital managed fund). Any fees paid in respect of the HMC Capital managed funds are
not shown in Table 6, as this table refers only to remuneration paid in respect of HMC Capital.
HMC Capital has established a Non-Executive Director Equity Plan (NEDEP) which was approved by
shareholders at the 2020 Annual General Meeting. The key terms of the NEDEP are as follows:
Term
Details
Plan
Awards are made under the NEDEP.
Rationale
The purpose of the NEDEP is to provide the opportunity for Non-Executive Directors to
acquire Rights to receive Shares through sacrificing a portion of their annual remuneration
(Fee Sacrifice Rights) thereby:
y allowing Non-Executive Directors to become shareholders and share in the success of the
Company;
y aligning the interests of Non-Executive Directors with those of shareholders; and
y allowing Non-Executive Directors the opportunity to acquire Shares in a tax-effective
manner.
Eligibility
All Non-Executive Directors are eligible to participate in the NEDEP.
Instrument
Fee sacrifice rights are granted by the Company for nil consideration. Each right is a right to
receive one fully paid share in the Company.
Opportunity
Under the NEDEP Non-Executive Directors can voluntarily elect to acquire rights, in lieu of up
to 50% of their annual Board fees in any 12-month period.
Allocation methodology
The following formulae is used to calculate the number of Fee Sacrifice Rights issued.
No. of Rights = A/B
Where:
A = the amount of remuneration that a Non-Executive Director wishes to sacrifice for the
relevant period.
B = the volume weighted average price (VWAP) of a share over the 5 trading days following
the Company’s half or full-year results announcement for the relevant period.
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HMC Capital | Annual Report 2024
Directors’ Report continued
Term
Details continued
Vesting period
Fee Sacrifice Rights will automatically vest and Restricted Shares will then be allocated to
the Non-Executive Director in two tranches (50% each) on or around the first trading day
of the next available trading window after the release of the FY24 half year and full year
results respectively.
Disposal restrictions
The Restricted Shares issued to the Non-Executive Directors are subject to disposal
restrictions until the Non-Executive Director retires from the Board.
Mandatory share-holding
requirement
It is a requirement of appointment that Non-Executive Directors acquire a shareholding
of HMC Capital shares equivalent to 200% of their annual Board fees within five years
of appointment.
Dividends
Fee Sacrifice Rights do not carry any dividend or voting rights prior to vesting into
Restricted Shares.
7. FY25 Remuneration
Executive KMP remuneration
The fixed remuneration of the MD & CEO will increase by 5% in FY25. He will also receive an award of 500,000
performance rights for his FY25 LTI award (representing an LTI award of approximately 250% and 375%
of fixed remuneration at target and stretch performance respectively). As noted in the Chair’s address, the
Board has determined that a larger award is required in FY25 to reflect the exceptional contribution made by
the MD & CEO to the results of the group in FY24, the total shareholder returns delivered over the last several
years and to retain and incentivise the MD & CEO given his importance to the group.
The Head of RE, Mr Sharma will receive a 7% increase in his fixed remuneration in FY25. The Group CFO,
Mr McMicking will receive a 24% increase in fixed remuneration. The increase to the group CFO fixed
remuneration is required to align his remuneration with the market and to reflect the much larger scope of
his role given the increase in the size and complexity of the group, the new operating divisions added and
the expanded number of investment platforms now managed by HMC.
Any changes to the variable remuneration packages for the Head of RE and the group CFO will be determined
after the Variable Remuneration Review and updated in the FY25 Remuneration Report.
Incentive Plan review
Our STI and LTI structures are being reviewed to allow us to retain existing talent and continue to attract
the calibre of executive needed to drive our business forward. It is intended that any new structures will
reward those individuals who increase the profitability of the group and deliver a high return on equity,
whilst complying with our strict risk management policies and achieving our sustainability objectives.
The impact of the Review on the variable remuneration of the Executive KMP will be set out in the
FY25 Remuneration Report.
Executive Long-term incentive Plan
The FY22 LTIP awards will vest in August 2024 (after the FY24 results are released to the ASX), based on
performance from 1 July 2021 to 30 June 2024. This award is split into two equal tranches, each with a
separate performance hurdle. Fifty percent (50%) of the award has a relative TSR hurdle and 50% an OE
hurdle measuring aggregate OE performance over the performance period.
The relative TSR hurdle measures the performance of HMC Capital against a comparator group of S&P/ASX
300 A-REITs as at the commencement of the performance period. During this three-year period the HMC
Capital TSR was 48%, ranking it 2nd out of the 29 companies in the S&P/ASX 300 A-REITs comparator group
with 96th percentile ranking. This will result in 100% of this tranche vesting.
38
The FFO/OE performance hurdle measures the actual Company OE performance for each of the three years
in the performance period against its annual FFO/OE targets, as disclosed in its FFO/OE guidance to the ASX
for each relevant financial year. Over the FY22 – 24 performance period the Company delivered FFO/OE
of 31.0c (pre-tax), 26.4c and 37c per share (pre-tax), in aggregate 94.4c per share, against forecast FFO
of 75 cents per share (with the FY22 LTIP FFO/OE forecasts being 18.5c (pre-tax), 21.5c and 35c (pre-tax)
respectively). It is noted that the FFO/OE target pool for the FY22 award is 45% higher than the FFO target
pool used for the FY21 FFO/OE LTI awards (of 52.8c).
The FY22 LTI aggregate FFO/OE result delivered is 26% above the target FFO/OE pool for the period and
will result in 100% of this tranche vesting. Each participant has until one month after the FY26 awards are
announced to exercise their rights.
FY25 LTIP awards
The Board has determined that it will change the way its OE targets are set for the FY25 LTI awards
(50% of proposed awards). Rather than retrospectively announcing the OE targets set for each financial
year, the Board will set the OE target pool for the three-year performance period at grant by determining
threshold and stretch OE growth required based on specific CAGRs, calculated from the FY24 base year
OE performance. Threshold OE growth will be set at 10% CAGR with stretch OE growth set at 15% CAGR.
Actual OE for each of the three years in the period is then aggregated and measured against the aggregate
target OE for the performance period. This change is designed to give greater transparency to our OE
targets and responds to feedback received in FY24 regarding the way the group set its OE targets. The new
arrangements also ensure that the LTI OE targets are challenging and only reward participants if the group
achieves significant growth in earnings per share. As HMC remains in the ASX 200 A-REIT sector, HMC’s
relative TSR vs ASX200 A-REIT comparator group will continue to be used for the remaining 50% of the
FY25 LTI award (although the Board will continue to review the appropriate comparator group to be used
in future years).
NED remuneration
There will be a five percent increase to all Director base and Committee fees in FY25. This is the first increase
in Non-executive Director base fees since ASX listing in 2019.
8. Employment agreements
Remuneration and other terms of employment for Executive KMP are formalised in employment agreements
which outline their duties and remuneration. All agreements are open ended (i.e., ongoing until notice is
provided by either party).
Key terms of the agreements are set out below.
Table 4: Executive K MP key employment terms
Executive KMP
Notice Period – Company
Notice Period – Executive KMP
MD&CEO
6 months
6 months
Other Executive K MP
6 months
6 months
The MD&CEO’s employment agreement contains post-employment restraints including non-compete
clauses and restrictions against soliciting and enticing customers. The restrictions operate for up to 12 months
post‑employment and the enforceability of these restraints is subject to all usual legal restrictions. The Group
may summarily terminate the employment agreement in certain circumstances, including acts of serious
misconduct, gross negligence, a serious breach of the employment agreement or bankruptcy.
Other than prescribed notice periods, there are no special termination benefits payable under the
employment agreements. All payments on termination will be subject to the termination benefits cap under
the Corporations Act 2001.
39
HMC Capital | Annual Report 2024
Directors’ Report continued
9. Details of remuneration for the financial year
Amounts of remuneration
Details of the remuneration expense of KMP of the group for the current and previous financial year are set
out in the following tables.
Remuneration for Executive KMP for FY24 and FY23
Table 5: Executive K MP total remuneration (statutory disclosures)
Short-term benefits
Post-
employment
Long-term
benefits
Share-based
payments
Total
Base Salary
$
Cash Bonus
$
Annual
leave
$
Super-
annuation
$
Long service
leave
$
Rights
benefits2
$
$
Current Executive KMP
David Di Pilla, MD&CEO
FY24
941,844
–
6,744
27,399
–
1,413,961
2,389,948
FY23
869,5431
–
104,676
19,374
–
1,213,358
2,206,951
Sid Sharma, Head of Real Estate
FY24
598,672
331,138
27,502
27,399
–
310,000
1,294,711
FY23
569,309
320,000
4,626
20,686
–
328,545
1,243,166
Will McMicking, Group CFO
FY24
493,786
325,625
1,031
27,399
–
249,024
1,096,864
FY23
468,769
278,750
(10,946)
21,561
–
201,502
959,636
Total Remuneration
FY24
2,034,302
656,763
35,277
82,196
–
1,972,985
4,781,523
FY23
1,907,621
598,750
98,356
61,621
–
1,743,405
4,409,753
Explanatory notes to the Remuneration for Executive K MP for FY24 and FY23 table are below.
1.
Mr Di Pilla’s base salary also includes the FBT car parking expense of $5,350.
2.
Rights benefits for Mr Sharma and Mr McMicking include the amortised value of their deferred FY23 STI rights which will vest after the FY24 results are released to the ASX.
40
Remuneration for Non-Executive Directors for FY24 and FY23
Table 6: Non-Executive Director total remuneration (statutory disclosures)
Short-term
benefits
Post-employment
Long-term
benefits
Share-based
payments
Total
Cash Fees1
$
Super-
annuation3
$
Long service
leave
$
Rights
benefits2
$
$
Chris Saxon, Chair
FY24
112,570
12,429
–
103,431
228,431
FY23
113,080
23,841
–
114,114
251,035
Zac Fried
FY24
45,028
4,972
–
41,374
91,374
FY23
90,464
9,536
–
1,293
101,293
Brendon Gale
FY24
63,040
6,961
–
57,923
127,923
FY23
63,325
13,351
–
64,101
140,777
Greg Hayes
FY24
49,531
5,469
–
45,509
100,509
FY23
49,755
10,490
–
51,177
111,422
Kelly O’Dwyer
FY24
58,537
6,463
–
49,648
114,648
FY23
57,021
12,023
–
57,020
126,064
Susan Roberts
FY24
63,040
6,961
–
57,923
127,923
FY23
76,783
8,115
–
–
84,898
Total Remuneration
FY24
391,745
43,255
–
355,809
790,809
FY23
450,426
77,355
–
287,705
815,488
Explanatory notes to the Remuneration for Non-Executive K MP for FY24 and FY23 table are below.
1.
A number of Non-Executive Directors participate in the Non-Executive Director Equity Plan and receive a portion of their fees in Fee Sacrifice Rights, which are expensed and
shown under the Rights Benefits column.
2.
The FY24 rights benefit has been valued as at the date the Rights were granted and amortised over the vesting period. The FY23 Rights benefits amounts reflect the value
each Director sacrificed during FY23 to acquire Rights under the NEDEP. In FY23 Mr Fried did not participate in the Non-Executive Director Equity Plan and received all of his
remuneration in cash fees and superannuation.
3.
The lower superannuation contributions reflect that in FY24, superannuation was paid on the 50% of the Director’s fees which were paid in cash (and not the portion that was
sacrificed in Fee Sacrifice Rights).
4.
The FY23 Total Remuneration sets out the FY23 remuneration for all current Non-Executive Director in the table. These amounts do not include the remuneration for Ms Jane
McAloon who ceased being a Director of HMC Capital in FY23.
Non-Executive Director’s salaries are 100% fixed. The fixed and variable remuneration proportions for
Executive KMPs for FY24 is as follows:
Table 7: Executive K MP mix of fixed and variable remuneration (based on statutory remuneration table)
Executive KMP
Fixed Remuneration
%
Variable remuneration %
(including STIP and LTIP payments)
David Di Pilla
41%
59%
Sid Sharma
50%
50%
Will McMicking
48%
52%
41
HMC Capital | Annual Report 2024
Directors’ Report continued
10. Share-based compensation
Share rights
The terms and conditions of each award of rights over ordinary Shares affecting remuneration of directors
and other KMP in this financial year are set out below. Rights granted have a $nil exercise price and carry no
dividend or voting rights.
Table 8: FY24 K MP rights awards
Award details and
recipient
Grant Date
Fair value
at grant
date
Number
of Rights
awarded
Estimated
Vesting
Percentage
of award
vesting/
(forfeited)
in year (%)
Performance
hurdles
Maximum
value to be
recognised in
future years
FY24 LTIP
(Executive K MP)
– David Di Pilla
– Sid Sharma
– Will McMicking
23/11/2023
12/10/2023
12/10/2023
$3.401
363,808
82,594
68,828
Aug 2026
– / –
– / –
– / –
50% Relative
TSR vs
ASX/S&P 200
50% OE
822,667
187,317
156,097
FY24 NEDEP
Fee Sacrifice rights
– Chris Saxon
– Zac Fried
– Brendon Gale
– Greg Hayes
– Kelly O’Dwyer
– Susan Roberts
16/11/2023
$4.932
23,412
9,365
13,111
10,301
11,238
13,111
Feb 2024
Aug 2024
– / –
– / –
– / –
– / –
– / –
– / –
None
12,107
4,842
6,780
5,326
5,811
6,780
FY23 Deferred
STIP Rights
(Executive K MP)
– Sid Sharma
– Will McMicking
23/11/2023
$4.58
7,492
4,917
Aug 2024
– / –
– / –
Service only
7,422
4,871
FY23 LTIP
(Executive K MP)
– David Di Pilla
– Sid Sharma
– Will McMicking
1/12/2022
18/10/2022
18/10/2022
$3.383
359,232
69,904
58,254
Aug 2025
– / –
– / –
– / –
50% Relative
TSR vs
ASX/S&P 200
50% OE
532,830
95,641
79,702
FY23 NEDEP
Fee Sacrifice rights
– Chris Saxon
– Brendon Gale
– Greg Hayes
– Kelly O’Dwyer
24/10/2022
$4.18
24,273
13,593
10,680
11,651
Aug 2023
– / –
– / –
– / –
– / –
None
–
–
–
–
FY22 LTIP
(Executive K MP)
– David Di Pilla
– Sid Sharma
– Will McMicking
14/3/2022
$5.134
223,189
43,840
35,870
Aug 2024
– / –
– / –
– / –
50% Relative
TSR vs
ASX/S&P 300
50% OE
72,686
14,277
11,682
FY21 LTIP4,5
(Executive K MP)
– David Di Pilla
– Sid Sharma
– Will McMicking
25/11/2020
18/1/2021
18/1/2021
$3.17
$3.24
$3.24
376,083
71,456
44,245
Aug 2023
– / –
– / –
– / –
50% Relative
TSR vs
ASX/S&P 300
–
50% OE
–
–
–
1.
This is the weighted average fair value for the award to the Executive K MP. The fair value of the relative TSR hurdle in the performance rights to Mr Di Pilla was calculated
at $2.43 and the fair value of FFO hurdled performance rights was calculated at $4.36. The fair value of the relative TSR hurdled performance rights to Messrs Sharma and
McMicking was calculated at $2.45 and the fair value of FFO hurdled performance rights was calculated at $4.36.
2.
This is the weighted average fair value. The fair values of Tranche 1 vesting in February 2024 and Tranche 2 vesting in August 2024 were $4.97 and $4.90 respectively.
3.
This is the weighted average fair value. The fair value of the relative TSR hurdled performance rights was calculated at $2.46 and the fair value of FFO hurdled performance
rights was calculated at $4.30.
4.
This is the weighted average fair value. The fair value of the relative TSR hurdled performance rights was calculated at $4.03 and the fair value of FFO hurdled performance
rights was calculated at $6.22.
5.
This is the weighted average fair value. The fair value of the relative TSR hurdled performance rights was calculated at $2.88 and the fair value of FFO hurdled performance
rights was calculated at $3.59.
6.
These awards include Top-up awards made to compensate Executive K MP and Non-Executive Directors for the capital reduction in the Company’s share capital approved by
shareholders at the FY20 AGM associated with the establishment of the HomeCo Daily Needs REIT. These additional rights were issued to preserve the value of any unvested
rights, were awarded on the same terms and conditions as the original rights held by the participants and resulted in a ‘top-up’ of an additional 16.5% rights per impacted award
(but for the FY21 LTIP award only the MD & CEO as other Executive K MP received their FY21 LTIP after the capital reduction). All top-up awards were all made on 13 January 2021
with the following fair values (IPO Grant – $3.96, FY20 COVID Grant – $3.01, FY20 LTIP – $3.60, FY21 LTIP – MD & CEO – $3.54). The fair value at grant date for each of these
awards shown in the table is the fair value of the original awards at the date of grant.
42
Share rights holding
The number of share rights (including rights granted and vested as part of the compensation during the
financial year) and options over ordinary shares in HMC Capital held during the financial year by each
Non‑Executive Director and Executive KMP of the group, including their personally related parties, are set
out below. Details of options awarded to KMP who choose to take up these awards as part of fundraising in
HMC Capital Partners Fund 1 are also included.
Table 9: FY24 Rights and option holdings by K MP
Rights held at 30 June 2024
Instrument1
Rights held
at 30 June
20232
Granted in
FY24
Vested and
exercised in
FY24
Lapsed or
expired in
FY24
Vested and
exercisable
Unvested
Non-Executive Directors
Chris Saxon
Rights
Options
28,420
4,000
23,412
–
40,126
–
–
–
–
–
11,706
4,000
Zac Fried
Rights
Options
5,182
300,000
9,365
–
4,683
–
–
–
–
–
9,864
300,000
Brendon Gale
Rights
16,703
13,111
23,259
–
–
6,555
Greg Hayes
Rights
16,381
10,301
15,831
–
–
10,851
Kelly O’Dwyer
Rights
Options
11,651
1,000
11,238
–
17,270
–
–
–
–
–
5,619
1,000
Susan Roberts
Rights
–
13,111
6,556
–
–
6,555
Executive KMP
David Di Pilla
Rights
Options
958,504
40,000
363,808
–
376,083
–
–
–
–
–
946,229
40,000
Sid Sharma
Rights
256,102
90,086
142,358
–
–
203,830
Will McMicking
Rights
138,369
73,745
–
–
44,245
167,869
1.
Options were granted to K MP due to investments made by the applicable K MP in HMC Capital Partners Fund 1 (Fund). To assist in driving initial investment and overall success of
the Fund, early investors were provided with the opportunity to apply for one Option in the HMC Capital for every 50 units allocated in the Fund. Options were allocated on same
terms as other investors in the Fund and are not considered as compensation or remuneration (and no expense is recognised in the remuneration disclosures). All Options awarded
to Directors were disclosed in the 2022 Notice of Annual General Meeting (AGM) and approved by shareholders at the 2022 AGM.
2.
This includes both vested and unvested rights held as at 30 June 2023.
Additional information
The factors that are considered to affect total shareholder return (‘TSR’) are summarised below:
Table 10: Group financial performance since listing
IPO listing
11 October
2019
30 June
2020
30 June
2021
30 June
2022
30 June
2023
30 June
2024
Income
OE post-tax (cents per security)
n/a
6.0
13.1
30.3
26.4
37
Net Profit/(Loss) after tax ($m)
n/a
(2.8)
(85.9)
107.3
83.3
114.4
Shareholder returns
Dividends (cents per security)
n/a
12.0
12.0
12.0
12.0
12.0
Share price at reporting date ($)
$3.35
$3.00
$5.441
$4.511
$5.06
$7.21
TSR of HMC Capital (%)2
n/a
(9.4%)
113.2%
(14.3%)
12.8%
45.4%
1.
Excludes the 0.5 HDN in-specie units received for every 1 HMC security (HDN IPO price of $1.33 = $0.67 value per HMC security).
2.
TSR for year to 30 June 2020 is from 11 October 2019 (ASX listing date).
43
HMC Capital | Annual Report 2024
Directors’ Report continued
This graph demonstrates HMC Capital’s total shareholder return versus key indices since listing.
HMC Total Shareholder Return versus the ASX 200 and ASX 200 AREIT (to 30 Jun 2024)
Since IPO (19 Oct 2019)
$17.2m
+161%
+40%
+23%
-
$20m
$40m
$60m
$80m
$100m
$120m
$140m
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
$10.00
Oct
19
Feb
20
Jun
20
Oct
20
Feb
21
Jun
21
Oct
21
Feb
22
Jun
22
Oct
22
Feb
23
Jun
23
Oct
23
Feb
24
Jun
24
Oct
24
Operating Earnings (pre-tax)
Total Shareholder Return
HMC Operating Earnings
HMC TSR
S&P ASX 200 Accumulation (re-based)
S&P ASX 200 AREIT Accumulation (re-based)
$91.0m
FY22
$82.1m
FY23
$[x]m
FY24
$37.5m
FY21
FY20
Source: IRESS.
Notes: As at 1 July 2024. HMC IPO price of $3.35 adjusted by $0.67/security to exclude HDN in-specie distribution. Assumes dividends reinvested on ex-dividend date.
11. Additional disclosures relating to KMP
KMP Shareholdings
The number of shares in HMC Capital held during the financial year by each Non-Executive Director and
Executive KMP, including their personally related parties, are set out below:
Table 11: Shareholdings of key management personnel
Balance held at
30 June 2023
Acquired1
Received on
vesting of a
share right
Sold
Balance held at
30 June 2024
Non-Executive Directors
Chris Saxon
255,371
–
40,126
–
295,497
Zac Fried
26,153,892
5,724
4,683
(6,893,442)
19,270,857
Brendon Gale
280,817
–
23,259
–
304,076
Greg Hayes
10,998,637
6,342
15,831
–
11,020,810
Kelly O’Dwyer
57,207
–
17,270
–
74,477
Susan Roberts
51,601
–
6,556
–
58,157
Executive KMP
David Di Pilla
40,412,070
24,782
376,083
–
40,812,935
Sid Sharma
228,035
4,616
142,358
–
375,009
Will McMicking
2,815,851
457
–
(10,397)
2,805,911
1.
Shares acquired by K MP are acquired for market value.
44
Balance held at
30 June 2022
Acquired
Received on
vesting of a
share right
Sold
Balance held at
30 June 2023
Non-Executive Directors1
Chris Saxon
226,863
8,572
19,936
–
255,371
Zac Fried
26,126,717
19,201
7,974
–
26,153,892
Brendon Gale
250,307
19,346
11,164
–
280,817
Greg Hayes
10,978,088
11,777
8,772
–
10,998,637
Kelly O’Dwyer
39,066
8,572
9,569
–
57,207
Susan Roberts
–
51,601
–
–
51,601
Executive KMP
David Di Pilla
40,053,372
46,021
312,677
–
40,412,070
Sid Sharma
–
–
228,035
–
228,035
Will McMicking
2,802,781
13,070
82,885
(82,885)
2,815,851
1.
This table sets out the FY23 shareholdings for all current Non-Executive Directors. It does not include any shareholding for Ms Jane McAloon who ceased being a director of HMC
Capital in FY23.
Other transactions
There are a number of related party transactions between KMP and the group as disclosed in the notes
to the Financial Statements. The terms and conditions of these transactions are considered to be no more
favourable than those which it is reasonable to expect would have been adopted if dealing with an unrelated
individual at arm’s length in the same circumstances.
This concludes the remuneration report, which has been audited in accordance with section 308(3c) of the
Corporations Act 2001.
45
HMC Capital | Annual Report 2024
Directors’ Report continued
Officers of the Company who are former partners of KPMG
There are no officers of the Company who are former partners of KPMG.
Rounding of amounts
The Company is of a kind referred to in ASIC Legislative Instrument 2016/191 relating to ‘rounding-off’.
Amounts in this report have been rounded off in accordance with that Instrument to the nearest thousand
dollars, or in certain cases, the nearest dollar.
Related party confirmation
The directors confirm that since listing the Company has complied with, and continues to comply with, its
related party transaction policy which is publicly available.
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act
2001 is set out immediately after this directors’ report.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the
Corporations Act 2001.
On behalf of the directors
Chris Saxon
David Di Pilla
Chair
Director
20 August 2024
46
Auditor’s Independence Declaration
38
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and
logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by
a scheme approved under Professional Standards Legislation.
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of HMC Capital Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of HMC Capital Limited
for the financial year ended 30 June 2024 there have been:
i.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
ii.
no contraventions of any applicable code of professional conduct in relation to the audit.
KPM_INI_01
KPMG
Brendan Twining
Partner
Sydney
20 August 2024
PAR_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
47
HMC Capital | Annual Report 2024
Financial Report
– 30 June 2024
Contents
Consolidated statement of profit or loss
48
and other comprehensive income
Consolidated statement of financial position
49
Consolidated statement of changes in equity
50
Consolidated statement of cash flows
51
Notes to the consolidated financial statements
52
Consolidated entity disclosure statement
96
Directors’ declaration
103
Independent auditor’s report
104
Shareholder information
110
Corporate directory
113
48
Consolidated statement of profit or loss and
other comprehensive income
for the year ended 30 June 2024
Consolidated
Note
30 June 2024
$m
30 June 2023
$m
Revenue
5
81.1
68.7
Other income
Share of profits of associates and joint ventures accounted for using the equity
method
13
12.4
17.9
Other income
0.3
0.8
Interest income
3.1
3.1
Dividend income
11.9
4.9
Change in assets/liabilities at fair value through profit or loss
6
121.4
58.3
Expenses
Employee benefits expenses
7
(35.7)
(30.2)
Corporate expenses
(25.6)
(18.9)
Acquisition and transaction costs
7
(23.2)
(6.6)
Finance costs
7
(17.0)
(8.6)
Other expenses
–
(3.5)
Profit before income tax expense
128.7
85.9
Income tax expense
8
(14.3)
(2.6)
Profit after income tax expense for the year
114.4
83.3
Other comprehensive income for the year, net of tax
–
–
Total comprehensive income for the year
114.4
83.3
Profit for the year is attributable to:
Non-controlling interest
48.4
26.2
Owners of HMC Capital Limited
66.0
57.1
114.4
83.3
Total comprehensive income for the year is attributable to:
Non-controlling interest
48.4
26.2
Owners of HMC Capital Limited
66.0
57.1
114.4
83.3
Non-controlling interest (NCI) for the year ended 30 June 2024 and 30 June 2023 relates to HMC Capital
Partners Fund I.
Cents
Cents
Basic earnings per share
35
18.88
18.37
Diluted earnings per share
35
18.73
18.27
The above consolidated statement of profit or loss and other comprehensive income should be read in
conjunction with the accompanying notes.
49
HMC Capital | Annual Report 2024
Consolidated
Note
30 June 2024
$m
30 June 2023
$m
Assets
Current assets
Cash and cash equivalents
9
186.6
48.8
Trade and other receivables
10
29.2
33.0
Financial assets at fair value through profit or loss
12
60.7
66.9
Other assets
11
9.2
41.7
Total current assets
285.7
190.4
Non-current assets
Financial assets at fair value through profit or loss
12
733.1
346.3
Investments accounted for using the equity method
13
575.5
612.5
Property, plant and equipment
14
1.0
2.1
Intangible assets
15
186.7
186.7
Right-of-use assets
16
2.9
3.8
Convertible notes
17
2.9
2.9
Total non-current assets
1,502.1
1,154.3
Total assets
1,787.8
1,344.7
Liabilities
Current liabilities
Trade and other payables
18
28.3
17.5
Borrowings
19
199.1
86.3
Employee benefit obligations
20
1.3
1.9
Lease liabilities
21
0.9
0.8
Income tax
8
12.1
–
Total current liabilities
241.7
106.5
Non-current liabilities
Lease liabilities
21
2.0
2.8
Employee benefit obligations
20
0.5
–
Provisions
0.5
0.5
Deferred tax liability
8
36.3
34.5
Total non-current liabilities
39.3
37.8
Total liabilities
281.0
144.3
Net assets
1,506.8
1,200.4
Equity
Contributed equity
22
5,366.1
5,204.4
Reserves
23
(1,225.2)
(1,228.5)
Accumulated losses
(2,918.0)
(2,942.2)
Equity attributable to the owners of HMC Capital Limited
1,222.9
1,033.7
Non-controlling interest
283.9
166.7
Total equity
1,506.8
1,200.4
The above consolidated statement of financial position should be read in conjunction with the
accompanying notes.
Consolidated statement of financial position
as at 30 June 2024
50
Consolidated statement of changes in equity
for the year ended 30 June 2024
Consolidated
Contributed
equity
$m
Share-based
payments
reserve
$m
NCI
reserve
$m
Accumulated
losses
$m
Non-
controlling
interest*
$m
Total equity
$m
Balance at 1 July 2022
5,036.7
5.1
(1,232.5)
(2,963.3)
–
846.0
Profit after income tax expense
for the year
–
–
–
57.1
26.2
83.3
Other comprehensive income for
the year, net of tax
–
–
–
–
–
–
Total comprehensive income
for the year
–
–
–
57.1
26.2
83.3
Transactions with owners in their capacity as owners:
Contributions of equity, net of
transaction costs (note 22)
168.0
–
–
–
–
168.0
Share-based payments
–
4.5
–
–
–
4.5
Acquisition of treasury shares
(5.9)
–
–
–
–
(5.9)
Vesting of employee awards
5.6
(5.6)
–
–
–
–
Contributions by NCI
–
–
–
–
140.5
140.5
Dividends declared (note 24)
–
–
–
(36.0)
–
(36.0)
Balance at 30 June 2023
5,204.4
4.0
(1,232.5)
(2,942.2)
166.7
1,200.4
Consolidated
Contributed
equity
$m
Share-based
payments
reserve
$m
NCI
reserve
$m
Accumulated
losses
$m
Non-
controlling
interest*
$m
Total equity
$m
Balance at 1 July 2023
5,204.4
4.0
(1,232.5)
(2,942.2)
166.7
1,200.4
Profit after income tax expense
for the year
–
–
–
66.0
48.4
114.4
Other comprehensive income for
the year, net of tax
–
–
–
–
–
–
Total comprehensive income
for the year
–
–
–
66.0
48.4
114.4
Transactions with owners in their capacity as owners:
Contributions of equity, net of
transaction costs (note 22)
162.9
–
–
–
–
162.9
Share-based payments
–
7.9
–
–
–
7.9
Acquisition of treasury shares
(5.8)
–
–
–
–
(5.8)
Vesting of employee awards
4.6
(4.6)
–
–
–
–
Contributions by NCI
–
–
–
–
68.8
68.8
Dividends declared (note 24)
–
–
–
(41.8)
–
(41.8)
Balance at 30 June 2024
5,366.1
7.3
(1,232.5)
(2,918.0)
283.9
1,506.8
*
Non-controlling interest (NCI) for the year ended 30 June 2024 and 30 June 2023 relates to HMC Capital Partners Fund I.
The above consolidated statement of changes in equity should be read in conjunction with the
accompanying notes.
51
HMC Capital | Annual Report 2024
Consolidated statement of cash flows
for the year ended 30 June 2024
Consolidated
Note
30 June 2024
$m
30 June 2023
$m
Cash flows from operating activities
Receipts from customers and tenants (inclusive of GST)
96.1
79.9
Payments to suppliers and employees (inclusive of GST)
(58.0)
(69.8)
Interest paid
(12.6)
(7.8)
Income taxes paid
–
(2.0)
Net cash from operating activities
37
25.5
0.3
Cash flows from investing activities
Payment for deposits
(47.1)
(37.6)
Payment for financial instruments
(496.9)
(565.0)
Payment for equity accounted investments
(51.5)
(48.5)
Proceeds on disposal of financial instruments
238.4
219.8
Proceeds on disposal of investments in joint ventures
49.9
32.7
Proceeds from disposal of investments
76.7
4.8
Distributions received
44.1
33.7
Other investing activities
–
(0.7)
Net cash used in investing activities
(186.4)
(360.8)
Cash flows from financing activities
Proceeds from issue of shares
161.6
163.6
Proceeds from borrowings
376.8
365.0
Repayment of borrowings
(263.3)
(278.5)
Dividends paid
24
(41.8)
(36.0)
Other financing activities
(3.4)
(2.9)
Cash contributed by non-controlling entity
68.8
140.5
Net cash from financing activities
298.7
351.7
Net increase/(decrease) in cash and cash equivalents
137.8
(8.8)
Cash and cash equivalents at the beginning of the financial year
48.8
57.6
Cash and cash equivalents at the end of the financial year
9
186.6
48.8
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
52
Notes to the Consolidated Financial Statements
Note 1.
General information
The consolidated financial statements cover HMC Capital Limited (ACN 138 990 593) (the Company or
HMC Capital) and the entities it controlled at the end of, or during, the financial year (collectively referred
as the group). The consolidated financial statements are presented in Australian dollars, which is the group’s
functional and presentation currency.
HMC Capital is a listed public company limited by shares, incorporated and domiciled in Australia. Its
registered office and principal place of business is:
Level 7, Gateway
1 Macquarie Place
Sydney NSW 2000
A description of the nature of the group’s operations and its principal activities are included in the directors’
report, which is not part of the consolidated financial statements.
The consolidated financial statements were authorised for issue, in accordance with a resolution of directors,
on 20 August 2024. The directors have the power to amend and reissue the consolidated financial statements.
Note 2. Material accounting policy information
The accounting policies that are material to the group are set out below. The accounting policies adopted are
consistent with those of the previous financial year, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The group has adopted all of the new or amended Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been
early adopted.
The following Accounting Standards and Interpretations adopted during the year are most relevant to
the group:
Amendments to AASB 101 and AASB Practice Statement 2
The group adopted disclosure of accounting policies (Amendments to AASB 101 and AASB Practice Statement
2) from 1 July 2023. The amendments did not result in any changes to the accounting policies themselves or
the accounting policy information disclosed in the consolidated financial statements.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) and the
Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also
comply with International Financial Reporting Standards as issued by the International Accounting Standards
Board (‘IASB’).
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where
applicable, the revaluation of certain financial assets and liabilities, including derivative financial instruments.
53
HMC Capital | Annual Report 2024
Notes to the Consolidated Financial Statements continued
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the group’s accounting policies. The
areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the financial statements, are disclosed in note 3.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the group only.
Supplementary information about the parent entity is disclosed in note 32.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of HMC Capital
as at 30 June 2024 and the results of all subsidiaries for the year then ended.
Subsidiaries are all those entities over which the group has control. The group controls an entity when the
group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated
from the date on which control is transferred to the group. They are de-consolidated from the date that
control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the group are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment
of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in
ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference
between the consideration transferred and the book value of the share of the non-controlling interest
acquired is recognised directly in equity attributable to the parent.
Where the group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and
non-controlling interest in the subsidiary together with any cumulative translation differences recognised in
equity. The group recognises the fair value of the consideration received and the fair value of any investment
retained together with any gain or loss in profit or loss.
Operating segments
Operating segments are presented using the ‘management approach’, where the information presented is
on the same basis as the internal reports provided to the Chief Operating Decision Makers (‘CODM’), which is
the Board of Directors. The CODM is responsible for the allocation of resources to operating segments and
assessing their performance.
Revenue recognition
The group recognises revenue as follows:
Management fee income
Management fees comprise investment management and asset management fees for assets managed on
behalf of third parties.
Investment management fees are recognised over time based on a percentage of Gross Asset Value (GAV)
of the investment being managed. Acquisition fees and disposal fees are recognised at a point in time as a
percentage of purchase or disposal values on completion of the service.
Asset management fees are recognised over time based on the percentage of gross income. New tenant and
lease renewal fees are recognised at a point in time as a percentage of annual rental on the receipt of the
successful executed tenancy agreements. Development management fees are recognised over time based on
a percentage of the development costs.
54
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of
calculating the amortised cost of a financial asset and allocating the interest income over the relevant period
using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through
the expected life of the financial asset to the net carrying amount of the financial asset.
Distribution income
Revenue is recognised when the group’s right to receive the payment is established, which is generally when
the directors of the investee approve the dividends.
Income tax
The income tax expense or benefit for the period is the tax payable on that period’s taxable income based
on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and
liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior
periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be
applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or
substantively enacted, except for:
y when the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or
liability in a transaction that is not a business combination and that, at the time of the transaction, affects
neither the accounting nor taxable profits; or
y when the taxable temporary difference is associated with interests in subsidiaries, associates or joint
ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference
will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting
date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future
taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax
assets are recognised to the extent that it is probable that there are future taxable profits available to recover
the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax
assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to
the same taxable authority on either the same taxable entity or different taxable entities which intend to settle
simultaneously.
HMC Capital (the ‘head entity’) and its wholly-owned Australian subsidiaries have formed an income tax
consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax
consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated
group has applied the ‘separate taxpayer within group’ approach in determining the appropriate amount of
taxes to allocate to members of the tax consolidated group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax
liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed
from each subsidiary in the tax consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised
as amounts receivable from or payable to other entities in the tax consolidated group. The tax funding
arrangement ensures that the intercompany charge equals the current tax liability or benefit of each tax
consolidated group member, resulting in neither a contribution by the head entity to the subsidiaries nor a
distribution by the subsidiaries to the head entity.
55
HMC Capital | Annual Report 2024
Notes to the Consolidated Financial Statements continued
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current
classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in
the group’s normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised
within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are
classified as non-current.
A liability is classified as current when: it is either expected to be settled in the group’s normal operating
cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting
period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the
reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-
term, highly liquid investments with original maturities of three months or less that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method, less any allowance for expected credit losses. Trade receivables are generally due
for settlement within 30 days.
The group has applied the simplified approach to measuring expected credit losses, which uses a lifetime
expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based
on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses. Debts that
are known to be uncollectable are written off when identified.
Investment in associates
Associates are entities over which the group has significant influence but not control or joint control.
Investments in associates are accounted for using the equity method. Under the equity method, the share of
the profits or losses of the associate is recognised in profit or loss and the share of the movements in equity is
recognised in other comprehensive income. Investments in associates are carried in the statement of financial
position at cost plus post-acquisition changes in the group’s share of net assets of the associate. Goodwill
relating to the associate is included in the carrying amount of the investment and is neither amortised nor
individually tested for impairment. Dividends received or receivable from associates reduce the carrying
amount of the investment.
When the group’s share of losses in an associate equals or exceeds its interest in the associate, including
any unsecured long-term receivables, the group does not recognise further losses, unless it has incurred
obligations or made payments on behalf of the associate.
The net investment in the associate is impaired when one or more events that have a detrimental impact
on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is
impaired includes observable data such as significant financial difficulty of the associate or it is probable that
the associate will enter bankruptcy.
The group discontinues the use of the equity method upon the loss of significant influence over the associate
and recognises any retained investment at its fair value. Any difference between the associate’s carrying
amount, fair value of the retained investment and proceeds from disposal is recognised in profit or loss.
56
Investment in joint ventures
A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement
have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control
of an arrangement, which exists only when decisions about the relevant activities require the consent of the
parties sharing control.
The group’s investments in its joint ventures are accounted for using the equity method. Under the equity
method, the investment in the joint venture is initially recognised at cost. The carrying amount of the
investment is adjusted to recognise changes in the group’s share of net assets of the joint venture since the
acquisition date. Goodwill relating to the joint venture is included in the carrying amount of the investment
and is not tested for impairment separately. The statement of profit or loss reflects the group’s share of the
results of operations of the joint venture. Any change in other comprehensive income (‘OCI’) of those investees
is presented as part of the group’s OCI. In addition, when there has been a change recognised directly in the
equity of the joint venture, the group recognises its share of any changes, when applicable, in the statement
of changes in equity. Unrealised gains and losses resulting from transactions between the group and the joint
venture are eliminated to the extent of the interest in the joint venture. The financial statements of the joint
venture are prepared using the same accounting policies and for the same reporting period as the group.
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as
part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are
subsequently measured at either amortised cost or fair value depending on their classification. Classification is
determined based on both the business model within which such assets are held and the contractual cash flow
characteristics of the financial asset unless an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred
and the group has transferred substantially all the risks and rewards of ownership. When there is no
reasonable expectation of recovering part or all of a financial asset, its carrying value is written off.
Financial assets at fair value through profit or loss
Investments in listed equity securities are classified as financial assets at fair value through profit or loss.
Typically, such financial assets will be either: (i) held for trading, where they are acquired for the purpose of
selling in the short-term with an intention of making a profit, or a derivative; or (ii) designated as such upon
initial recognition where permitted. Fair value movements are recognised in profit or loss.
Convertible notes
Convertible notes are accounted for on an amortised cost basis.
Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to the
group and the cost of the item can be measured reliably. The carrying amount of any component accounted
for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to
profit or loss during the reporting period in which they are incurred.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and
equipment over their expected useful lives as follows:
Fixtures, fittings and equipment
3 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each
reporting date.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic
benefit to the group. Gains and losses between the carrying amount and the disposal proceeds are taken to
profit or loss.
57
HMC Capital | Annual Report 2024
Notes to the Consolidated Financial Statements continued
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured
at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments
made at or before the commencement date net of any lease incentives received, any initial direct costs
incurred, and, an estimate of costs expected to be incurred for dismantling and removing the underlying asset,
and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the
estimated useful life of the asset, whichever is the shorter. Where the group expects to obtain ownership of the
leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets
are subject to impairment or adjusted for any remeasurement of lease liabilities.
The group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term
leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are
expensed to profit or loss as incurred.
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at
their fair value at the date of the acquisition. Intangible assets acquired separately are initially recognised
at cost. Indefinite life intangible assets are not amortised and are subsequently measured at cost less any
impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets
are measured as the difference between net disposal proceeds and the carrying amount of the intangible
asset.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually
for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired,
and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or
loss and are not subsequently reversed.
Management rights
Management rights acquired in a business combination are not amortised, on the basis of indefinite life,
which is reassessed every year. Instead, they are tested annually for impairment, or more frequently if events
or changes in circumstances indicate that they might be impaired, and are carried at cost less accumulated
impairment losses. Management considers that the useful life of management rights is indefinite because
there is no foreseeable limit to the cash flows this asset can generate.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are
tested annually for impairment, or more frequently if events or changes in circumstances indicate that they
might be impaired. Other non-financial assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for
the amount by which the asset’s carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use. The value-in-
use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate
specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent
cash flows are grouped together to form a cash-generating unit.
Trade and other payables
Trade and other payables represent liabilities for goods and services provided to the group prior to the end of
the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost
and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
58
Borrowings
Borrowings are initially recognised at the fair value of the consideration received, net of transaction costs.
They are subsequently measured at amortised cost using the effective interest method.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at
the present value of the lease payments to be made over the term of the lease, discounted using the interest
rate implicit in the lease or, if that rate cannot be readily determined, the group’s incremental borrowing rate.
Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments
that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise
price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated
termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in
the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are
remeasured if there is a change in the following: future lease payments arising from a change in an index or a
rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a
lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss
if the carrying amount of the right-of-use asset is fully written down.
Finance costs
Finance costs is predominately interest and finance charges on borrowings which are expensed in the period
in which they are incurred.
Provisions
Provisions are recognised when the group has a present (legal or constructive) obligation as a result of a past
event, it is probable the group will be required to settle the obligation, and a reliable estimate can be made of
the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration
required to settle the present obligation at the reporting date, taking into account the risks and uncertainties
surrounding the obligation. If the time value of money is material, provisions are discounted using a current
pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is
recognised as a finance cost.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave
expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to
be paid when the liabilities are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the
reporting date are measured at the present value of expected future payments to be made in respect of
services provided by employees up to the reporting date. Consideration is given to expected future wage
and salary levels, experience of employee departures and periods of service. Expected future payments are
discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity
and currency that match, as closely as possible, the estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they
are incurred.
59
HMC Capital | Annual Report 2024
Notes to the Consolidated Financial Statements continued
Share-based payments
Equity-settled share-based compensation benefits are provided to directors and employees.
Equity-settled transactions are awards of shares, rights over shares or options over shares, that are provided
to directors and employees in exchange for the rendering of services.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently
determined using either the Binomial or Black-Scholes option pricing model that takes into account the
exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price
volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the
option, together with non-vesting conditions that do not determine whether the group receives the services
that entitle the employees to receive payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity
over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value
of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the
vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at
each reporting date less amounts already recognised in previous periods.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to
market conditions are considered to vest irrespective of whether or not that market condition has been met,
provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not
been made. An additional expense is recognised, over the remaining vesting period, for any modification that
increases the total fair value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the group or employee, the failure to satisfy the condition is
treated as a cancellation. If the condition is not within the control of the group or employee and is not satisfied
during the vesting period, any remaining expense for the award is recognised over the remaining vesting
period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any
remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled
award, the cancelled and new award is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure
purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date; and assumes that the
transaction will take place either: in the principal market; or in the absence of a principal market, in the most
advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset
or liability, assuming they act in their economic best interests. For non-financial assets, the fair value
measurement is based on its highest and best use. Valuation techniques used to measure fair value are those
that are appropriate in the circumstances and which maximise the use of relevant observable inputs and
minimise the use of unobservable inputs.
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that
reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each
reporting date and transfers between levels are determined based on a reassessment of the lowest level of
input that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal
expertise is either not available or when the valuation is deemed to be significant. External valuers are selected
based on market knowledge and reputation. Where there is a significant change in fair value of an asset or
liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs
applied in the latest valuation and a comparison, where applicable, with external sources of data.
60
Contributed capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction,
net of tax, from the proceeds.
Dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the
Company.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether
equity instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity
instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of
any non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the
acquiree is measured at either fair value or at the proportionate share of the acquiree’s identifiable net assets.
All acquisition costs are expensed as incurred to profit or loss.
On the acquisition of a business, the group assesses the financial assets acquired and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic conditions, the
group’s operating or accounting policies and other pertinent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the group remeasures its previously held equity interest
in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous
carrying amount is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value.
Subsequent changes in the fair value of the contingent consideration are classified as an asset or liability is
recognised in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent
settlement is accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any
non‑controlling interest in the acquiree and the fair value of the consideration transferred and the fair value
of any pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and
the pre-existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain
purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on
the acquisition-date, but only after a reassessment of the identification and measurement of the net assets
acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer’s
previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts
the provisional amounts recognised and also recognises additional assets or liabilities during the measurement
period, based on new information obtained about the facts and circumstances that existed at the acquisition-
date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii)
when the acquirer receives all the information possible to determine fair value.
61
HMC Capital | Annual Report 2024
Notes to the Consolidated Financial Statements continued
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of HMC Capital,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of
ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued
during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take
into account the after income tax effect of interest and other financing costs associated with dilutive potential
ordinary shares and the weighted average number of additional ordinary shares that would have been
outstanding assuming conversion of all dilutive potential ordinary shares.
Goods and Services Tax (‘GST’) and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred
is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of
the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of
GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the
statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or
financing activities which are recoverable from, or payable to the tax authority, are presented as operating
cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the
tax authority.
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities
and Investments Commission, relating to ‘rounding-off’. Amounts in this report have been rounded off in
accordance with that Corporations Instrument to the nearest hundred thousand dollars, unless otherwise
stated.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are
not yet mandatory, have not been early adopted by the group for the annual reporting period ended
30 June 2024. The group’s assessment of the impact of these new or amended Accounting Standards
and Interpretations, most relevant to the group, are set out below.
Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current
(AASB 2020-1)
AASB 2020-1 amendments provide clarification on the requirements for classifying liabilities as current or
non‑current. The effective date is for annual reporting periods commencing from 1 January 2024. The group
has not finalised their assessment of the impact but does not expect the impact of the adoption of AASB
2020-1 will be material.
62
AASB 18 Presentation and Disclosure in Financial Statements
This standard is applicable to annual reporting periods beginning on or after 1 January 2027, with early
adoption permitted. The standard replaces AASB 101 ‘Presentation of Financial Statements’, although many
of the requirements have been carried forward unchanged and is accompanied by limited amendments
to the requirements in AASB 107 ‘Statement of Cash Flows’. The standard will affect presentation and
disclosure in the financial statements, including introducing five categories in the statement of profit or
loss and other comprehensive income: operating, investing, financing, income taxes and discontinued
operations. The standard introduces two mandatory sub-totals in the statement: ‘Operating profit’ and ‘Profit
before financing and income taxes’. There are also new disclosure requirements for ‘management defined
performance measures’, such as earnings before interest, taxes, depreciation and amortisation (‘EBITDA’)
or ‘adjusted profit’. The standard provides enhanced guidance on grouping of information (aggregation
and disaggregation), including whether to present this information in the primary financial statements or in
the notes. The group will adopt this standard from 1 July 2027 and it is expected that there will be a material
change to the layout of the statement of profit or loss and other comprehensive income.
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts in the financial statements. Management continually evaluates
its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses.
Management bases its judgements, estimates and assumptions on historical experience and on other
various factors, including expectations of future events, management believes to be reasonable under the
circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results.
The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are
discussed below.
Fair value measurement hierarchy
The group is required to classify all assets and liabilities, measured at fair value, using a three level hierarchy,
based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1:
Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date; Level 2: Inputs other than quoted prices included within Level 1 that are observable for
the asset or liability, either directly or indirectly; and Level 3: Unobservable inputs for the asset or liability.
Considerable judgement is required to determine what is significant to fair value and therefore which category
the asset or liability is placed in can be subjective.
The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models. These
include discounted cash flow analysis or the use of observable inputs that require significant adjustments
based on unobservable inputs.
Goodwill and other indefinite life intangible assets
The group tests annually, or more frequently if events or changes in circumstances indicate impairment,
whether goodwill and other indefinite life intangible assets have suffered any impairment, in accordance
with the accounting policy stated in note 2. The recoverable amounts of cash-generating units have been
determined based on value in use calculations. These calculations require the use of assumptions, including
estimated discount rates based on the current cost of capital and growth rates of the estimated future
cash flows.
Investments in associates accounted for using the equity method
The investment in associates is tested whether the group has significant influence over an investee. The
group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether
the net investment in the associate has suffered any impairment, in accordance with the accounting policy
stated in note 2.
63
HMC Capital | Annual Report 2024
Notes to the Consolidated Financial Statements continued
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences and taxable losses only if the group
considers it is probable that future taxable amounts will be available to utilise those temporary differences and
taxable losses.
The group assesses the recoverability of deferred tax assets at each reporting date. In making this
assessment, the group considers, in particular, the future business plans, reasons for past losses, whether
the unused tax losses resulted from identifiable causes which are unlikely to recur and if any tax planning
opportunities exist in the period in which the taxable losses can be utilised. The recognised net deferred tax
liability of $36.3 million (2023: $34.5 million) comprises nil (2023: $0.6 million) of carry forward tax losses
and $5.0 million (2023: $6.0 million) of deductible temporary differences. The group has made a judgement
that they will be able to generate sufficient taxable profits over the foreseeable future, based upon its future
business plans.
Note 4. Operating segments
Identification of reportable operating segments
From 1 July 2023, the group amended its operating segments to align to its current funds management
strategies of Real Estate and Private Equity. Historically, operating segments had separated Investments
and Funds Management activities. As the group provides capital to support existing and new HMC Capital
managed funds, the new reporting format will provide more transparency on total shareholder returns
(comprising both investment income and funds management income) on invested capital across the various
funds management strategies.
The following summary describes the operations in each of the group’s reportable segments:
y Real Estate – the group’s Real Estate strategies include HMC Capital managed HomeCo Daily Needs REIT,
HealthCo Healthcare and Wellness REIT, HMC Wholesale Healthcare Fund and the Last Mile Logistics Fund.
y Private Equity – currently comprises the HMC Capital Partners Fund I, a high conviction strategic stakes fund.
y Corporate – the corporate segment comprises unallocated costs and Capital Solutions activities which
includes short term investments undertaken relating to non-HMC managed funds.
The operating segments are based on the internal reports that are reviewed by the Chief Operating Decision
Maker (‘CODM’) in assessing performance and in determining the allocation of resources. The CODM monitor
the performance of the business on the basis of Operating Earnings for each segment. Operating Earnings
represents the group’s underlying and recurring earnings from its operations and is determined by adjusting
the statutory net profit after tax for items.
As required by Australian Accounting Standards, comparative information has been restated to align to the
new reportable segments.
The information reported to the CODM is on a monthly basis. The group only operates in Australia.
Major customers
During the year ended 30 June 2024, there were three (30 June 2023: two) major customers from the Real
Estate segment of the group generating more than 10% of the group’s external revenue.
64
Operating segment information
Consolidated – 30 June 2024
Real Estate
$m
Private Equity
$m
Corporate
$m
Total
$m
Revenue
Management fee income
77.6
3.5
–
81.1
Other property income
–
–
–
–
Total revenue
77.6
3.5
–
81.1
Operating earnings (before income tax)
84.6
78.0
(33.3)
129.3
Depreciation expenses
–
–
(1.1)
(1.1)
Donation expenses
–
–
(3.1)
(3.1)
Acquisition and transaction costs
(18.8)
(1.0)
(3.4)
(23.2)
Amortisation of borrowing costs
–
–
(1.0)
(1.0)
Share of associate profit (adjusted)
(20.6)
–
–
(20.6)
Non-controlling interest
–
48.4
–
48.4
Profit/(loss) before income tax expense
45.2
125.4
(41.9)
128.7
Income tax expense
(14.3)
Profit after income tax expense
114.4
Assets
Segment assets
800.3
768.6
218.9
1,787.8
Total assets
1,787.8
Total assets includes:
Investments in associates
575.5
–
–
575.5
Liabilities
Segment liabilities
–
209.4
71.6
281.0
Total liabilities
281.0
65
HMC Capital | Annual Report 2024
Notes to the Consolidated Financial Statements continued
Consolidated – 30 June 2023 (restated)
Real Estate
$m
Private Equity
$m
Corporate
$m
Total
$m
Revenue
Management fee income
68.4
–
–
68.4
Other property income
0.3
–
–
0.3
Total revenue
68.7
–
–
68.7
Operating earnings (before income tax)
79.0
28.3
(25.2)
82.1
Depreciation expenses
–
–
(1.2)
(1.2)
Fair value movements
(0.2)
–
(3.4)
(3.6)
Acquisition and transaction costs
(1.3)
(1.0)
(3.0)
(5.3)
Amortisation of borrowing costs
–
–
(0.4)
(0.4)
Share of associate profit (adjusted)
(11.9)
–
–
(11.9)
Non-controlling interest
–
26.2
–
26.2
Profit/(loss) before income tax expense
65.6
53.5
(33.2)
85.9
Income tax expense
(2.6)
Profit after income tax expense
83.3
Assets
Segment assets
913.5
399.7
31.5
1,344.7
Total assets
1,344.7
Total assets includes:
Investments in associates
612.5
–
–
612.5
Liabilities
Segment liabilities
2.0
55.0
87.3
144.3
Total liabilities
144.3
Note 5. Revenue
Consolidated
30 June 2024
$m
30 June 2023
$m
Management fee income
81.1
68.4
Other property income
–
0.3
81.1
68.7
66
Note 6. Change in assets/liabilities at fair value through profit or loss
Consolidated
30 June 2024
$m
30 June 2023
$m
Net fair value gain on remeasurement of financial instruments
63.4
48.9
Realised gain on disposal of derivative instruments
0.9
14.7
Realised gain/(loss) on disposal of financial instruments
57.1
(10.1)
Realised gain on disposal of investments
–
4.8
121.4
58.3
Note 7. Expenses
Consolidated
30 June 2024
$m
30 June 2023
$m
Employee benefits expenses
Salaries and wages
26.4
22.9
Defined contribution superannuation expense
1.7
1.5
Share-based payments
4.9
4.2
Other employee benefits
2.7
1.6
Total employee benefits expenses
35.7
30.2
Acquisition and transaction costs
Transaction and group reorganisation costs
7.5
6.6
Loss on sale of investments in associates due to selective buyback
6.2
–
Loss on disposal of investment in associates
9.5
–
Total acquisition and transaction costs
23.2
6.6
Finance costs
Interest and finance charges on borrowings
15.9
8.0
Interest and finance charges on lease liabilities
0.1
0.2
Amortisation of borrowing costs
1.0
0.4
Finance costs expensed
17.0
8.6
Change in expense classification:
During the year, the group amended its expense allocation on the consolidated statement of profit and loss
and other comprehensive income and related notes to align to its current funds management strategies.
The new reporting format provides transparency of costs incurred by the group and enhance the information
available to the users of the report.
67
HMC Capital | Annual Report 2024
Notes to the Consolidated Financial Statements continued
The comparatives have been realigned to current year presentation. The total of corporate expenses of
$27.6 million and property and fund management expenses of $25.0 million as at 30 June 2023 have been
disaggregated further into the following categories.
Previously
reported
$m
Adjustment
$m
30 June 2023
Reclassified
$m
Property and funds management expense
25.0
(25.0)
–
Employee benefits expenses
–
30.2
30.2
Corporate expenses
27.6
(8.7)
18.9
Other expenses
–
3.5
3.5
Total expense
52.6
–
52.6
There is no net impact on the comparative year profit or loss due to the realignment.
Note 8. Income tax
Consolidated
30 June 2024
$m
30 June 2023
$m
Income tax expense
Current tax
12.1
–
Deferred tax movements
2.2
2.6
Aggregate income tax expense
14.3
2.6
Deferred tax included in income tax expense comprises:
Increase in deferred tax liabilities
2.2
2.6
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense
128.7
85.9
Tax at the statutory tax rate of 30%
38.6
25.8
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Permanent differences and others
(24.7)
(30.0)
Utilisation of tax losses
0.4
6.8
Income tax expense
14.3
2.6
Effective tax rate
11.1%
3.0%
68
Consolidated
30 June 2024
$m
30 June 2023
$m
Deferred tax liability/(assets)
Deferred tax liability comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Management rights
41.2
41.2
Right of use assets
0.9
1.1
Tax losses
–
(0.6)
Lease liabilities
(1.0)
(1.2)
Others
(3.7)
(2.4)
37.4
38.1
Amounts recognised in equity:
Transaction costs on share issue
(1.1)
(3.6)
Deferred tax liability
36.3
34.5
Movements:
Opening balance
34.5
32.5
Charged to profit or loss
2.2
2.6
Credited to equity
(0.4)
(0.6)
Closing balance
36.3
34.5
Consolidated
30 June 2024
$m
30 June 2023
$m
Provision for income tax
Provision for income tax
12.1
–
Tax losses not recognised
Consolidated
30 June 2024
$m
30 June 2023
$m
Unused tax losses for which no deferred tax asset has been recognised
2,494.3
2,496.6
Potential tax benefit at statutory tax rates
748.3
749.0
The group has not brought to account $2,494.3 million (2023: $2,496.6 million) of tax losses, which includes the
benefit arising from tax losses incurred prior to the Company’s IPO. The benefits of unused tax losses will only
be brought to account (with the recognition of a deferred tax asset) when there is convincing evidence that it is
probable that they will be realised.
This benefit of tax losses will only be obtained if:
y the group derives future assessable income of a nature and an amount sufficient to enable the benefit
from the deductions for the losses to be realised;
y the group continues to comply with the conditions for deductibility imposed by tax legislation, in particular
the group continues to meet the Business Continuity Test; and
y no changes in tax legislation adversely affect the group in realising the benefit from the deductions for
the losses.
69
HMC Capital | Annual Report 2024
Notes to the Consolidated Financial Statements continued
Note 9. Cash and cash equivalents
Consolidated
30 June 2024
$m
30 June 2023
$m
Current assets
Cash at bank
186.6
48.8
Note 10. Trade and other receivables
Consolidated
30 June 2024
$m
30 June 2023
$m
Current assets
Trade receivables
9.4
14.3
Allowance for expected credit losses
–
(0.2)
9.4
14.1
Distributions receivables
7.8
7.5
Accrued income
8.9
10.9
Other receivables
3.1
0.5
19.8
18.9
29.2
33.0
Note 11. Other assets
Consolidated
30 June 2024
$m
30 June 2023
$m
Current assets
Prepayments
0.2
39.9
Deposits
9.0
1.8
9.2
41.7
HMC Wholesale Healthcare Fund (‘HWHF’)
In March 2023, HMC Wholesale Healthcare Fund – a fund managed by HMC Capital acquired a portfolio of
private hospitals leased to private hospital operator Healthscope. As at 30 June 2023, HMC Capital provided
short term underwriting support for a third party institutional investor undertaking advanced due diligence,
which was settled in December 2023.
Acquisition deposits
In May 2024, HMC Capital announced it had agreed terms to acquire 100% of Payton Capital (‘Payton’) and
made a $3.5 million deposit into an escrow account. In February 2024, HMC Capital announced it had agreed
terms to acquire 100% of Stratcap LLC (‘Stratcap’) and made a $4.4 million deposit into an escrow account.
70
Note 12. Financial assets at fair value through profit or loss
Consolidated
30 June 2024
$m
30 June 2023
$m
Current assets
Cash backed – equity total return swap
–
66.9
Australian listed equity securities
60.7
–
60.7
66.9
Non-current assets
Australian listed equity securities
733.1
346.3
793.8
413.2
Reconciliation
Reconciliation of the fair values at the beginning and end of the current and
previous financial year are set out below:
Opening fair value
413.2
–
Additions
496.9
565.0
Disposals
(237.7)
(190.6)
Revaluation increments
121.4
38.8
Closing fair value
793.8
413.2
Refer to note 26 for further information on fair value measurement.
Note 13. Investments accounted for using the equity method
Consolidated
30 June 2024
$m
30 June 2023
$m
Non-current assets
Associate – HomeCo Daily Needs REIT
360.7
434.0
Associate – HealthCo Healthcare and W
ellness REIT
201.4
166.6
Joint venture – General Medical Precinct Trust
2.5
2.5
Joint venture – Life Sciences Medical Precinct Trust
10.9
9.4
575.5
612.5
Interests in associates and joint ventures
Interests in associates and joint ventures are accounted for using the equity method of accounting. Information
relating to associates that are material to the group are set out below:
Ownership interest
Name
Principal place of business/
Country of incorporation
30 June 2024
%
30 June 2023
%
HomeCo Daily Needs REIT
Australia
12.1%
14.1%
HealthCo Healthcare and W
ellness REIT
Australia
22.3%
16.3%
General Medical Precinct Trust
Australia
27.4%
25.0%
Life Sciences Medical Precinct Trust
Australia
31.9%
30.7%
71
HMC Capital | Annual Report 2024
Notes to the Consolidated Financial Statements continued
Summarised financial information
HDN
HCW
Joint ventures
30 June
2024
$m
30 June
2023
$m
30 June
2024
$m
30 June
2023
$m
30 June
2024
$m
30 June
2023
$m
Summarised statement of
financial position
Current assets
109.5
52.2
52.7
65.3
0.3
–
Non-current assets
4.676.8
4,773.2
1,388.7
1,659.2
43.8
40.5
Total assets
4,786.3
4,825.4
1,441.4
1,724.5
44.1
40.5
Current liabilities
409.7
106.0
40.6
62.5
0.4
–
Non-current liabilities
1,384.1
1,643.3
480.9
703.7
–
–
Total liabilities
1,793.8
1,749.3
521.5
766.2
0.4
–
Net assets
2,992.5
3,076.1
919.9
958.3
43.7
40.5
Summarised statement of
profit or loss and other
comprehensive income
Revenue and fair value changes
272.2
273.7
82.5
67.1
–
6.8
Expenses
(190.2)
(171.5)
(75.2)
(45.9)
–
–
Profit before income tax
82.0
102.2
7.3
21.2
–
6.8
Other comprehensive income
–
–
–
–
–
–
Total comprehensive income
82.0
102.2
7.3
21.2
–
6.8
Reconciliation of the group’s
carrying amount
Opening carrying amount
434.0
443.2
166.6
136.9
11.9
28.6
Additional investments acquired
during the year
–
0.6
49.9
32.0
1.5
15.4
Share of profit after income tax
10.9
14.5
1.5
3.4
–
–
Share of distributions paid/payable
(23.3)
(24.2)
(9.2)
(5.7)
–
–
Loss recognised on disposal
(9.5)
–
–
–
–
–
Disposal/others
(51.4)
(0.1)
(7.4)
–
–
(32.1)
Closing carrying amount
360.7
434.0
201.4
166.6
13.4
11.9
Commitments
Consolidated
30 June 2024
$m
30 June 2023
$m
Committed at the reporting date but not recognised as liabilities:
Capital expenditure
82.7
120.0
Property acquisitions
141.1
75.3
72
Note 14. Property, plant and equipment
Consolidated
30 June 2024
$m
30 June 2023
$m
Non-current assets
Fixtures, fittings and equipment – at cost
3.4
3.4
Less: Accumulated depreciation
(2.4)
(1.3)
1.0
2.1
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year
are set out below:
Consolidated
Furniture,
fittings and
equipment
$m
Balance at 1 July 2022
3.1
Additions
0.1
Depreciation expense
(1.1)
Balance at 30 June 2023
2.1
Depreciation expense
(1.1)
Balance at 30 June 2024
1.0
Note 15. Intangible assets
Consolidated
30 June 2024
$m
30 June 2023
$m
Non-current assets
Goodwill
49.3
49.3
Management rights
137.4
137.4
186.7
186.7
Impairment testing
Goodwill and management rights are allocated to the Funds Management group of cash generating
units (‘Funds Management CGU’) and are tested annually for impairment or when there are indicators of
impairment. Goodwill and management rights are considered to be impaired if their recoverable amount is
less than their carrying amount. As part of annual impairment testing, goodwill generated as a result of the
recognition of deferred tax on management rights acquired in a business combination is offset against a
corresponding and equal deferred tax liability when calculating the carrying value of the cash generating unit.
No impairment expense was recognised for the year ended 30 June 2024 and 30 June 2023 as the estimated
recoverable amount is greater than the carrying value for the Funds Management CGU.
73
HMC Capital | Annual Report 2024
Notes to the Consolidated Financial Statements continued
The recoverable amount of goodwill and management rights was determined using the value in use approach
and valued using discounted cash flow projections. Key assumptions adopted in the discounted cash flow
valuation are as follows:
Cash flows
5 years (2023: 5 years)
Discount rate (pre-tax)
13.6% (2023: 13.2%)
Management fee revenue
11.6% (2023: 17.3%) (5 year compound annual growth rate, ‘CAGR’)
Terminal growth rate
3.0% (2023: 3.0%)
Cash flow projections were based on financial budgets for the year ending 30 June 2024. Cash flows beyond
the projected period are extrapolated using estimated growth rates.
Terminal growth rates are estimated based on the expected long-term earnings growth and macro-economic
factors. Discount rates applied to cash flow projections are calculated by reference to the group’s weighted
average cost of capital. Discount rates are adjusted for risks specific to the cash generating unit which include
funds under management growth assumptions.
Sensitivity analysis
A 50 basis point increase/decrease in the discount rate would result in a $17.6 million decrease/$19.2 million
increase in the recoverable value of the cash generating unit.
A 50 basis point increase/decrease in the terminal growth rate would result in a $13.8 million increase/
$12.7 million decrease in the recoverable value of the cash generating unit.
Note 16. Right-of-use assets
Consolidated
30 June 2024
$m
30 June 2023
$m
Non-current assets
Right-of-use assets
4.9
4.9
Less: Accumulated depreciation
(2.0)
(1.1)
2.9
3.8
The group leases office premises under an agreement expiring in three years, with an option to extend. The
lease has various escalation clauses.
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year
are set out below:
Consolidated
Office
premises
$m
Balance at 1 July 2022
4.8
Depreciation expense
(1.0)
Balance at 30 June 2023
3.8
Depreciation expense
(0.9)
Balance at 30 June 2024
2.9
For other AASB 16 lease-related disclosures refer to the following:
y note 7 for details of interest on lease liabilities and other lease expenses;
y note 21 for details of lease liabilities at the beginning and end of the financial year;
y note 25 for the maturity analysis of lease liabilities; and
y consolidated statement of cash flows for repayment of lease liabilities.
74
Note 17. Convertible notes
Consolidated
30 June 2024
$m
30 June 2023
$m
Non-current assets
Convertible notes
2.9
2.9
Convertible notes represent an investment in a related party and derive interest at a variable rate plus a
margin. The convertible notes have a 7-year term and may be converted between a date that is five years
after the commencement date and the maturity date.
Note 18. Trade and other payables
Consolidated
30 June 2024
$m
30 June 2023
$m
Current liabilities
Trade payables
2.3
0.3
Rent received in advance
0.2
0.1
Accrued expenses
24.3
14.4
Other payables
1.5
2.7
28.3
17.5
Refer to note 25 for further information on financial instruments.
Note 19. Borrowings
Consolidated
30 June 2024
$m
30 June 2023
$m
Current liabilities
Secured margin loan (HMC Capital Partners Fund I, non-recourse borrowings)
200.0
50.0
Secured bank debt (HMC Capital)
–
36.5
Capitalised borrowing costs
(0.9)
(0.2)
199.1
86.3
Refer to note 25 for further information on financial instruments.
HMC Capital Partners Fund I margin loan comprises a $70.0 million non-recourse debt facility and a
$130.0 million non-recourse debt facility which has been utilised for acquiring investments in Australian listed
equities. These facilities are secured by HMC Capital Partners Fund I investments in Australian listed equities.
The $70.0 million facility’s maturity date is 5 September 2024. The $130.0 million facility’s maturity date is
2024 October 2024.
HMC Capital’s bank debt comprises a $355.0 million secured syndicated debt facility. During the year, the
maturity date of the facility was extended to 30 September 2025. The bank debt is secured by group assets.
This was undrawn as at 30 June 2024.
75
HMC Capital | Annual Report 2024
Notes to the Consolidated Financial Statements continued
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Consolidated
30 June 2024
$m
30 June 2023
$m
Total facilities
Secured margin loan
200.0
50.0
Secured bank debt
355.0
275.0
555.0
325.0
Used at the reporting date
Secured margin loan
200.0
50.0
Secured bank debt
–
36.5
200.0
86.5
Unused at the reporting date
Secured margin loan
–
–
Secured bank debt
355.0
238.5
355.0
238.5
Compliance with loan covenants
The group has complied with the financial covenants of its debt facilities during the financial year ended
30 June 2024 and 30 June 2023.
Note 20. Employee benefit obligations
Consolidated
30 June 2024
$m
30 June 2023
$m
Current liabilities
Annual leave
1.2
0.9
Other employee benefits
0.1
1.0
1.3
1.9
Non-current liabilities
Employee benefits
0.5
–
1.8
1.9
76
Note 21. Lease liabilities
Consolidated
30 June 2024
$m
30 June 2023
$m
Current liabilities
Lease liability
0.9
0.8
Non-current liabilities
Lease liability
2.0
2.8
2.9
3.6
Refer to note 25 for maturity analysis of lease liabilities.
Note 22. Contributed equity
Consolidated
30 June 2024
Shares
30 June 2023
Shares
30 June 2024
$m
30 June 2023
$m
Ordinary shares – fully paid
373,051,656
347,613,058
5,367.6
5,204.7
Less: Treasury shares
(213,729)
(72,462)
(1.5)
(0.3)
372,837,927
347,540,596
5,366.1
5,204.4
Movements in ordinary share capital
Details
Date
Shares
$m
Balance
1 July 2022
299,617,806
5,036.7
Issue of shares to the Trust (at $4.92 per ordinary share)
25 August 2022
635,264
3.1
Issue of shares to the Trust (at $4.72 per ordinary share)
28 September 2022
524,075
2.5
Issue of shares under Institutional Placement (at $3.50 per ordinary share)
5 April 2023
35,714,286
125.0
Issue of shares under Share Purchase Plan (SPP) (at $3.50 per ordinary share)
28 April 2023
11,053,908
38.7
Issue of shares under SPP (at $3.50 per ordinary share)
5 May 2023
67,719
0.2
Share issue transaction costs, net of tax
–
(1.5)
Balance
30 June 2023
347,613,058
5,204.7
Issue of shares to the Trust (at $5.26 per ordinary share)
23 August 2023
957,646
5.0
Issue of shares to the Trust (at $6.50 per ordinary share)
21 February 2024
126,671
0.8
Issue of shares under institutional placement (at $6.50 per ordinary share)
30 May 2024
15,384,616
100.0
Issue of shares under SPP (at $6.50 per ordinary share)
25 June 2024
8,969,665
58.3
Share issue transaction costs, net of tax
–
(1.2)
Balance
30 June 2024
373,051,656
5,367.6
77
HMC Capital | Annual Report 2024
Notes to the Consolidated Financial Statements continued
Movements in treasury shares
Details
Date
Shares
$m
Balance
1 July 2022
–
–
Acquisition of shares by the Trust (at $4.92 per ordinary share)
25 August 2022
(635,264)
(3.1)
Acquisition of shares by the Trust (at $4.72 per ordinary share)
28 September 2022
(524,075)
(2.5)
Acquisition of shares through on-market purchase
30 September 2022
(74,116)
(0.3)
Vesting of employee awards
1,160,993
5.6
Balance
30 June 2023
(72,462)
(0.3)
Acquisition of shares by the Trust (at $5.26 per ordinary share)
23 August 2023
(957,646)
(5.0)
Acquisition of shares by the Trust (at $6.50 per ordinary share)
21 February 2024
(126,671)
(0.8)
Vesting of employee awards
943,050
4.6
Balance
30 June 2024
(213,729)
(1.5)
Ordinary shares
Ordinary shares entitle the holder to participate in any dividends declared and any proceeds attributable to
shareholders should the company be wound up in proportions that consider both the number of shares held
and the extent to which those shares are paid up. The fully paid ordinary shares have no par value and HMC
Capital does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a
poll each share shall have one vote.
Treasury shares
Treasury shares are shares in HMC Capital Limited held by the HMC Capital Limited Employee Share Plan
Trust (Trust) for the purposes of issuing shares under the group’s employee share scheme and executive
incentive plans. Shares issued to employees, upon satisfaction of relevant vesting conditions, are recognised
on a first in first out basis.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The group’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that
it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital
structure to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt
is calculated as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The group is subject to certain financing arrangements covenants and meeting these is given priority in all
capital risk management decisions. There have been no events of default on the financing arrangements
during the financial year.
The capital risk management policy remains unchanged from the prior year.
78
Note 23. Reserves
Consolidated
30 June 2024
$m
30 June 2023
$m
Share-based payments reserve
7.3
4.0
Non-controlling interest (‘NCI’) reserve
(1,232.5)
(1,232.5)
(1,225.2)
(1,228.5)
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of
their remuneration.
Non-controlling interest reserve
The reserve is used to recognise the difference between the amount of the adjustment to non-controlling
interests in Home Consortium Development Limited (HCDL) and any consideration paid or received
attributable to HMC Capital on de-stapling from the group. The securities in HCDL and HMC Capital were
destapled effective from 24 December 2021.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Share-based
payments
reserve
$m
NCI
reserve
$m
Total
$m
Balance at 1 July 2022
5.1
(1,232.5)
(1,227.4)
Share-based payments
4.5
–
4.5
Vesting of employee awards (note 22)
(5.6)
–
(5.6)
Balance at 30 June 2023
4.0
(1,232.5)
(1,228.5)
Share-based payments
7.9
–
7.9
Vesting of employee awards (note 22)
(4.6)
–
(4.6)
Balance at 30 June 2024
7.3
(1,232.5)
(1,225.2)
Note 24. Dividends
Dividends
Dividends declared during the financial year were as follows:
Consolidated
30 June 2024
$m
30 June 2023
$m
Final dividend to shareholders registered on 30 August 2023 of 6.0 cents
(2023: 6.0 cents) per ordinary share
20.9
18.0
Interim dividend for the year ended 30 June 2024 of 6.0 cents
(2023: 6.0 cents) per ordinary share
20.9
18.0
41.8
36.0
On 20 August 2024, the directors determined to pay a dividend of 6.0 cents per ordinary share. The dividends
will be paid on 2 October 2024 to eligible shareholders on the register on 28 August 2024.
79
HMC Capital | Annual Report 2024
Notes to the Consolidated Financial Statements continued
Franking credits
Consolidated
30 June 2024
$m
30 June 2023
$m
Franking credits available for subsequent financial years based on a tax rate of 30%
0.7
1.1
The above amounts represent the balance of the franking account as at the end of the financial year.
Note 25. Financial instruments
Financial risk management objectives
The group’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk.
The group’s overall risk management program focuses on the unpredictability of financial markets and seeks
to minimise potential adverse effects on the financial performance of the group. The group uses different
methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in
the case of interest rate risk and ageing analysis for credit risk.
Risk management is carried out by senior finance executives (‘finance’) under policies approved by the Board
of Directors (‘the Board’). These policies include identification and analysis of the risk exposure of the group
and appropriate procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks
within the group’s operating units. Finance reports to the Board on a quarterly basis.
Market risk
Foreign currency risk
The group is not exposed to any significant foreign currency risk.
Price risk
The group’s main exposure to price risk arises from the equity total return swap (equity swap) and investment
in financial assets at fair value through profit or loss disclosed in note 12 to the financial statements.
Australian listed equity securities and cash backed equity swaps
All securities present a risk of loss of capital. The maximum risk resulting from financial instruments is
determined by the fair value of the financial instrument as recorded in the statement of financial position.
The table below demonstrates the impact of a 10% movement in price of investments with direct equity
exposure in active markets with quoted prices or prices that are observable either directly or indirectly.
This sensitivity analysis has been performed to assess the direct risk of holding equity securities with all other
variables held constant. It assumes that the relevant changes occur at the reporting date.
Average price increase
Average price decrease
Consolidated – 30 June 2024
% change
Effect on
profit before
tax
$m
Effect on
equity
$m
% change
Effect on
profit before
tax
$m
Effect on
equity
$m
Australian listed equity securities
10.0%
79
55
10.0%
(79)
(55)
80
Interest rate risk
The group’s main interest rate risk arises from long-term borrowings. Borrowings obtained at variable rates
expose the group to interest rate risk. Borrowings obtained at fixed rates expose the group to fair value risk.
The group uses derivative financial instruments such as interest rate swap contracts to hedge certain risk
exposures when necessary.
As at the reporting date, the group had the following variable rate borrowings outstanding:
30 June 2024
30 June 2023
Consolidated
Weighted
average interest
rate
%
Balance
$m
Weighted
average interest
rate
%
Balance
$m
Bank loans*
6.68%
–
9.67%
36.5
Margin loan
6.54%
200.0
6.44%
50.0
Net exposure to cash flow interest rate risk
200.0
86.5
*
Weighted average interest rate includes commitment fee on undrawn debt (5.3% per annum on drawn debt only for 30 June 2023).
An analysis by remaining contractual maturities is shown in ‘liquidity and interest rate risk management’ below.
An official increase/decrease in interest rates of 50 (2023: 50) basis points per annum would have an adverse/
favourable effect on profit before tax of $1.0 million (2023: $0.4 million). The percentage change is based on
the expected volatility of interest rates using market data and analysts forecasts.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial
loss to the group. The group has a strict code of credit, including obtaining agency credit information,
confirming references and setting appropriate credit limits. The group obtains guarantees where appropriate
to mitigate credit risk. The maximum exposure to credit risk at the reporting date to recognised financial
assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the
statement of financial position and notes to the financial statements. The group does not hold any collateral.
The group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade
receivables through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions
are considered representative across all receivables of the group based on recent experience, historical
collection rates and forward-looking information that is available.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators
of this include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a
failure to make contractual payments for a period greater than one year.
Liquidity risk
Vigilant liquidity risk management requires the group to maintain sufficient liquid assets (mainly cash and
cash equivalents) and available borrowing facilities to be able to pay debts as and when they become due
and payable.
The group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities
by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial
assets and liabilities.
Refer to note 19 for details of unused borrowing facilities at the reporting date.
81
HMC Capital | Annual Report 2024
Notes to the Consolidated Financial Statements continued
Remaining contractual maturities
The following tables detail the group’s remaining contractual maturity for its financial instrument liabilities.
The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the
earliest date on which the financial liabilities are required to be paid. The tables include both interest and
principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from
their carrying amount in the statement of financial position.
Consolidated – 30 June 2024
1 year or less
$m
Between
1 and 2 years
$m
Between
2 and 5 years
$m
Over 5 years
$m
Remaining
contractual
maturities
$m
Non-derivatives
Non-interest bearing
Trade payables
2.3
–
–
–
2.3
Other payables
1.5
–
–
–
1.5
Interest-bearing – variable
Bank loans
–
–
–
–
–
Margin loan
200.0
–
–
–
200.0
Interest-bearing – fixed rate
Lease liability
0.9
1.0
1.0
–
2.9
Total non-derivatives
204.7
1.0
1.0
–
206.7
Consolidated – 30 June 2023
1 year or less
$m
Between
1 and 2 years
$m
Between
2 and 5 years
$m
Over 5 years
$m
Remaining
contractual
maturities
$m
Non-derivatives
Non-interest bearing
Trade payables
0.3
–
–
–
0.3
Borrowings
2.7
–
–
–
2.7
Interest-bearing – variable
Bank loans
38.6
–
–
–
38.6
Margin loan
50.5
–
–
–
50.5
Interest-bearing – fixed rate
Lease liability
0.9
2.0
1.0
–
3.9
Total non-derivatives
93.0
2.0
1.0
–
96.0
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually
disclosed above.
82
Note 26. Fair value measurement
Fair value hierarchy
The following tables detail the group’s assets and liabilities, measured or disclosed at fair value, using a three
level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1:
Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can
access at the measurement date
Level 2:
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly
Level 3:
Unobservable inputs for the asset or liability
Consolidated – 30 June 2024
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
Assets
Australian listed equity securities
793.8
–
–
793.8
Total assets
793.8
–
–
793.8
Consolidated – 30 June 2023
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
Assets
Cash backed – equity total return swap
66.9
–
–
66.9
Australian listed equity securities
346.3
–
–
346.3
Total assets
413.2
–
–
413.2
There were no transfers between levels during the financial year.
The carrying amounts of trade and other receivables and trade and other payables approximate their fair
values due to their short-term nature. The fair value of financial liabilities is estimated by discounting the
remaining contractual maturities at the current market interest rate that is available for similar financial liabilities.
Note 27. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the
group is set out below:
Consolidated
30 June 2024
$’000
30 June 2023
$’000
Short-term employee benefits
3,118
3,113
Post-employment benefits
125
141
Share-based payments
2,329
2,032
5,572
5,286
83
HMC Capital | Annual Report 2024
Notes to the Consolidated Financial Statements continued
Note 28. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by KPMG, the auditor
of the Company:
Consolidated
30 June 2024
$’000
30 June 2023
$’000
Audit services – K PMG
Audit or review of the financial statements
490
446
Other services – K PMG
Other assurance services – sustainability data assurance
58
–
Total remuneration to K PMG
548
446
Note 29. Contingent liabilities
The group had no contingent liabilities as at 30 June 2024 and 30 June 2023.
Note 30. Commitments
Consolidated
30 June 2024
$m
30 June 2023
$m
Capital commitments
Committed at the reporting date but not recognised as liabilities:
Acquisitions
146.9
432.4
Note 31. Related party transactions
Parent entity
HMC Capital Limited is the parent entity of the group.
Subsidiaries
Interests in subsidiaries are set out in note 33.
Associates
Interests in associates are set out in note 13.
Key management personnel
Disclosures relating to key management personnel are set out in note 27 and the remuneration report included
in the directors’ report.
84
Related party transactions with HealthCo Healthcare and Wellness REIT (‘HCW’)
HCW Funds Management Limited was appointed as the responsible entity of HCW in the 2022 financial year.
The Responsible Entity has appointed HMC Property Management Pty Limited (the ‘Property Manager’) and
HMC Investment Management Pty Ltd (the ‘Investment Manager’) to provide certain asset management,
investment management and development management services to HCW in accordance with an Investment
Management and Property and Development Management Agreement (‘Management Agreements’). The
Responsible Entity, Property Manager and Investment Manager are wholly owned subsidiaries of the group.
In May 2023, the base management fee threshold under the HCW Investment Management Agreement was
amended from 0.65% to 0.55% on incremental GAV above $800 million (previously $1.5 billion).
Related party transactions with HomeCo Daily Needs REIT (‘HDN’)
HMC Funds Management Limited was appointed as the responsible entity of HDN in the 2021 financial year.
The Responsible Entity has appointed HMC Property Management Limited (the ‘Property Manager’) and
HMC Investment Management Pty Ltd (the ‘Investment Manager’) to provide certain asset management,
investment management and development management services to HDN in accordance with an Investment
Management and Property and Development Management Agreement (‘Management Agreements’). The
Responsible Entity, Property Manager and Investment Manager are wholly owned subsidiaries of the group.
Transactions with related parties entered during the current financial year:
HealthCo Healthcare and Wellness REIT (HCW)
In July 2023, an extraordinary general meeting of unitholders of HCW was held to obtain unitholder approval
to HMC Capital’s participation in, and support of the capital raising undertaken by HCW to fund the acquisition
of a property portfolio leased to a private hospital operator. A resolution was passed to amend the Investment
Management Agreement to permit the payment of acquisition or disposal fees by way of issues of units to
HMC Capital as investment manager, in lieu of cash. In September 2023, 5,368,042 units were issued by
HCW in lieu of cash to HMC Capital to satisfy an acquisition fee that arose as a result of the acquisition.
Further, a resolution to enter a selective buy back agreement pursuant to which the responsible entity of
HCW agreed to buy back, and HMC Capital agreed to sell, up to 8,456,608 units held by HMC Capital for
nominal consideration was also passed to facilitate a bonus unit provided to eligible HCW unitholders, that was
funded by HMC Capital. During the year, HCW executed the selective buyback of 3,486,061 units from HMC
Capital pursuant to the selective buy back agreement.
In February 2024, HMC opted to unwind its position in a cash backed – equity total return swap and acquire
ordinary units for HCW at $1.335 per unit. This resulted in an additional 31,912,867 units being acquired, which
increased HMC’s direct investment in HCW at the time from 16.4% to 22.1%.
HMC Wholesale Healthcare Fund (previously referred as Healthcare and Life Sciences Unlisted Fund)
During the year, HMC Capital reached the financial close on the $1.3 billion HMC Wholesale Healthcare Fund
with $650.0 million of equity commitments including $328.0 million from four global institutional investors and
$322.0 million from HCW.
85
HMC Capital | Annual Report 2024
Notes to the Consolidated Financial Statements continued
Related party transactions entered during the financial year are disclosed below:
Consolidated
30 June 2024
$’000
30 June 2023
$’000
Sale of goods and services:
Investment management and property management fees derived from:
HDN
51,034
46,944
HCW
13,129
18,665
Other funds
11,033
1,815
Responsible Entity expenses reimbursed from:
HDN
755
835
HCW
856
812
Management fees derived from director and K MP related entity (Home Consortium
Leasehold Pty Ltd)
475
600
Payment for goods and services:
Payment for settlement adjustments relating to tenant rent and property expenses
–
464
Other transactions:
(i)
Rental guarantee expenses payable to HDN and HCW
–
1,156
(ii) Receipts from HDN (predominately reimbursement of insurance and travel costs)
5,350
6,219
(iii) Receipts from HCW (predominately reimbursement of insurance and travel costs)
976
1,324
(iv) Receipts from unlisted funds (predominately reimbursement of insurance and
travel costs)
550
644
(v) Acquisition of HCW units
–
32,000
(vi) Sale of The George Trust to HCW
–
32,700
(vii) Disposal of HCW units
6,217
–
(viii) Investment in Life Science
1,586
419
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Consolidated
30 June 2024
$’000
30 June 2023
$’000
Current receivables:
HDN
11,273
9,545
HCW
5,746
13,067
Other funds
391
2,855
Current payables:
Payables to HDN and HCW
21
372
86
Loans to/from related parties
The following balances are outstanding at the reporting date in relation to loans with related parties:
Consolidated
30 June 2024
$’000
30 June 2023
$’000
Non-current receivables:
Convertible notes in a director and K MP related entity (Aurrum Childcare Pty Limited)
2,869
2,869
All related party receivables are considered to be recoverable.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Note 32. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Parent
30 June 2024
$m
30 June 2023
$m
Profit/(loss) after income tax
59.6
(1,000.4)
Total comprehensive income
59.6
(1,000.4)
Statement of financial position
Parent
30 June 2024
$m
30 June 2023
$m
Total current assets
253.5
60.9
Total assets
1,466.4
1,299.2
Total current liabilities
29.7
48.1
Total liabilities
32.4
48.1
Equity
Contributed equity
5,366.1
5,204.4
Profits reserve
57.5
39.7
Share-based payments reserve
7.3
4.0
Accumulated losses
(3,997.0)
(3,997.0)
Total equity
1,434.0
1,251.1
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity and its wholly owned subsidiaries are party to a deed of cross guarantee under which each
company guarantees the debts of the others. Refer to note 34 for further details.
87
HMC Capital | Annual Report 2024
Notes to the Consolidated Financial Statements continued
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2024 and 30 June 2023.
Capital commitments
Refer to note 30 for commitments of the group which is the same for the parent entity.
Material accounting policy information
The accounting policies of the parent entity are consistent with those of the group, as disclosed in note 2,
except for the following:
y Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
y Investments in associates are accounted for at cost, less any impairment, in the parent entity.
y Dividends received from subsidiaries and distributions received from associates are recognised as other
income by the parent entity.
Note 33. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following principal
material subsidiaries in accordance with the accounting policies described in note 2:
Ownership interest
Name
Principal place of business/
Country of incorporation
30 June 2024
%
30 June 2023
%
Home Consortium Property Pty Ltd
Australia
100.0%
100.0%
Home Consortium Property Trust
Australia
100.0%
100.0%
Aventus Holdings Pty Limited
Australia
100.0%
100.0%
HMC Capital Partners Trust B
Australia
100.0%
100.0%
Home Consortium Developments Pty Ltd
Australia
100.0%
100.0%
HomeCo Childcare Pty Ltd
Australia
100.0%
100.0%
HMC Funds Management Limited
Australia
100.0%
100.0%
HMC Investment Management Pty Ltd
Australia
100.0%
100.0%
HMC Property Management Pty Ltd
Australia
100.0%
100.0%
HCW Funds Management Limited
Australia
100.0%
100.0%
HMC Capital Funds Management Pty Ltd
Australia
100.0%
100.0%
HMC Capital Investments Limited
Australia
100.0%
100.0%
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiary
with non-controlling interests in accordance with the accounting policy described in note 2:
Parent
Non-controlling interest
Name
Principal place
of business/
Country of
incorporation
Principal
activities
Ownership
interest
30 June
2024
%
Ownership
interest
30 June
2023
%
Ownership
interest
30 June
2024
%
Ownership
interest
30 June
2023
%
HMC Capital Partners Fund I Australia
Equity Investments
45.9%
51.6%
54.1%
48.4%
88
Summarised financial information
Summarised financial information of the subsidiary with non-controlling interests that are material to the group
are set out below. The summarised financial information represents amounts before intragroup eliminations.
HMC Capital
30 June 2024
$m
Partners Fund 1
30 June 2023
$m
Summarised statement of financial position
Current assets
35.4
53.4
Non-current assets
733.1
346.3
Total assets
768.5
399.7
Current liabilities
225.0
55.0
Non-current liabilities
–
–
Total liabilities
225.0
55.0
Net assets
543.5
344.7
Summarised statement of profit or loss and other comprehensive income
Revenue and other income
134.4
63.6
Expenses
(25.3)
(9.4)
Profit before income tax expense
109.1
54.2
Income tax expense
–
–
Profit after income tax expense
109.1
54.2
Other comprehensive income
–
–
Total comprehensive income
109.1
54.2
Statement of cash flows
Net cash used in operating activities
(3.6)
(1.5)
Net cash used in investing activities
(229.3)
(310.7)
Net cash from financing activities
239.8
340.5
Net increase in cash and cash equivalents
6.9
28.3
Other financial information
Profit/(loss) attributable to non-controlling interests
48.4
(26.2)
Accumulated non-controlling interests at the end of reporting period
283.9
166.8
HMC Capital Partners Fund I margin loan comprises a $70.0 million non-recourse debt facility and a
$130.0 million non-recourse debt facility which has been utilised for acquiring investments in Australian listed
equities. These facilities are secured by HMC Capital Partners Fund I investments in Australian listed equities.
The $70.0 million facility’s maturity date is 5 September 2024. The $130.0 million facility’s maturity date is
24 October 2024.
89
HMC Capital | Annual Report 2024
Notes to the Consolidated Financial Statements continued
Note 34. Deed of cross guarantee
HMC Capital and its wholly owned subsidiaries are parties to a deed of cross guarantee under which each
company guarantees the debts of the others. By entering into the deed, the wholly-owned entities have been
relieved from the requirement to prepare financial statements and Directors’ report under ASIC Corporation
(Wholly-owned Companies) Instrument 2016/785.
HMC Capital and its wholly owned subsidiaries represent a ‘Closed Group’ for the purposes of the Instrument,
and as there were no other parties to the deed of cross guarantee that are controlled by HMC Capital, they
also represented the ‘Extended Closed Group’. HMC Capital Partners Fund I is not a wholly-owned entity and
is therefore not part of the Closed Group.
Set out below is a consolidated statement of profit or loss and other comprehensive income and statement of
financial position of the ‘Closed Group’.
Statement of profit or loss and other comprehensive income
30 June 2024
$m
30 June 2023
$m
Revenue
81.1
68.7
Share of profits of associates and joint ventures accounted for using the equity method
12.4
17.9
Other income
0.3
0.7
Interest income
1.7
1.3
Dividend income
3.0
1.3
Change in assets/liabilities at fair value through profit or loss
(2.6)
0.1
Employee benefits expenses
(35.7)
(30.2)
Acquisition and transaction costs
(22.9)
(5.3)
Finance costs
(7.6)
(5.9)
Corporate expenses
(24.5)
(18.2)
Other expenses
14.4
1.3
Profit before income tax expense
19.6
31.7
Income tax expense
(14.3)
(2.6)
Profit after income tax expense
5.3
29.1
Other comprehensive income for the year, net of tax
–
–
Total comprehensive income for the year
5.3
29.1
Equity – accumulated losses
30 June 2024
$m
30 June 2023
$m
Accumulated losses at the beginning of the financial year
(2,970.2)
(2,963.3)
Profit after income tax expense
5.3
29.1
Dividends paid
(41.8)
(36.0)
Accumulated losses at the end of the financial year
(3,006.7)
(2,970.2)
90
Statement of financial position
30 June 2024
$m
30 June 2023
$m
Current assets
Cash and cash equivalents
151.3
20.5
Trade and other receivables
29.0
32.8
Financial assets at fair value through profit or loss
60.7
42.0
Other assets
9.2
41.7
250.2
137.0
Non-current assets
Investments accounted for using the equity method
575.5
612.5
Other financial assets
171.0
150.0
Property, plant and equipment
1.0
2.1
Intangible assets
186.7
186.8
Right-of-use assets
2.9
3.8
Convertible notes
2.9
2.9
940.1
958.1
Total assets
1,190.2
1,095.1
Current liabilities
Trade and other payables
3.4
12.6
Borrowings
(0.9)
36.3
Employee benefit obligations
1.2
1.9
Lease liabilities
0.9
0.8
Income tax
12.1
–
16.7
51.6
Non-current liabilities
Lease liabilities
2.0
2.8
Employee benefit obligations
0.5
–
Provisions
0.5
0.5
Deferred tax liability
36.3
34.5
39.3
37.8
Total liabilities
56.0
89.4
Net assets
1,134.2
1,005.7
Equity
Contributed equity
5,366.1
5,204.5
Reserves
(1,225.2)
(1,228.6)
Accumulated losses
(3,006.7)
(2,970.2)
Total equity
1,134.2
1,005.7
91
HMC Capital | Annual Report 2024
Notes to the Consolidated Financial Statements continued
Note 35. Earnings per share
Consolidated
30 June 2024
$m
30 June 2023
$m
Profit after income tax
114.4
83.3
Non-controlling interest
(48.4)
(26.2)
Profit after income tax
66.0
57.1
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per share
349,657,127
310,893,576
Adjustments for calculation of diluted earnings per share:
Options/rights over ordinary shares
2,801,102
1,588,570
Weighted average number of ordinary shares used in calculating diluted earnings per share
352,458,229
312,482,146
Cents
Cents
Basic earnings per share
18.88
18.37
Diluted earnings per share
18.73
18.27
Note 36. Share-based payments
The share-based payment expense for the year was $7.9 million (2023: $4.5 million).
Share rights
The following share rights are issued to employees and key management personnel of the group.
Share rights issued in the 2024 financial year
During the financial year, the group made a number of equity awards. These included the following:
y FY24 awards (performance rights with predetermined relative TSR and aggregated Operating Earnings
performance hurdles and service conditions);
y FY24 NED fee sacrifice rights (which upon vesting are only subject to disposal restrictions);
y Retention awards (Rights only subject to service conditions); and
y A number of sign-on awards to newly appointed executives in compensation for equity awards forgone
from prior employers (rights with service conditions only).
92
Set out below are summaries of share rights granted under the plans:
30 June 2024
Plan details
Grant date
Estimated
vesting
date
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
FY20 COVID-19 grant
25/08/2020
30/09/2022
89,042
(78,159)
10,883
FY21 LTIP (MD & CEO)
25/11/2020
27/08/2023
376,083
(376,083)
–
FY21 LTIP (Executive K MP,
excluding MD & CEO)
18/01/2021
27/08/2023
338,344
(294,099)
44,245
Sign-on award
14/03/2022
27/08/2023
14,399
(14,399)
–
FY22 LTIP
14/03/2022
28/08/2024
478,427
(19,130)
459,297
Recognition rights
14/03/2022
30/06/2022
3,592
(3,592)
–
Sign-on award
14/03/2022
1/04/2024
37,500
(37,500)
–
Sign-on award
19/05/2022
26/04/2024
20,172
20,172
Sign-on award
19/05/2022
26/04/2025
20,172
20,172
Retention awards
18/10/2022
24/08/2023
22,750
(22,750)
–
Retention awards
18/10/2022
24/08/2024
22,750
22,750
FY23 LTIP
18/10/2022
25/08/2025
989,224
(68,610)
920,614
FY23 NEDEP
fee sacrifice rights
24/10/2022
24/08/2023
60,197
(60,197)
–
Sign-on award
5/12/2022
1/07/2023
125,701
125,701
Sign-on award
5/12/2022
1/07/2024
125,701
125,701
Sign-on award
5/12/2022
1/07/2025
125,701
125,701
Sign-on award
26/06/2023
27/02/2024
28,728
(16,000)
12,728
Sign-on award
26/06/2023
27/02/2025
28,728
28,728
FY24 LTIP
12/10/2023
24/08/2026
904,728
(84,590)
820,138
Retention awards
12/10/2023
24/08/2024
23,411
23,411
Retention awards
12/10/2023
24/08/2025
23,411
23,411
Sign-on award
6/11/2023
1/10/2024
52,075
52,075
Sign-on award
6/11/2023
1/10/2025
52,075
52,075
FY24 NED
Fee Sacrifice Rights – T1
16/11/2023
21/02/2024
40,271
(40,271)
–
FY24 NED
Fee Sacrifice Rights – T2
16/11/2023
24/08/2024
40,267
40,267
FY24 LTIP
23/11/2023
24/08/2026
363,808
363,808
FY23 STI Deferral Rights
23/11/2023
24/08/2024
12,409
12,409
Sign-on award
28/03/2024
1/03/2025
7,204
7,204
Sign-on award
11/04/2024
1/04/2025
35,145
35,145
Sign-on award
11/04/2024
1/04/2026
35,146
35,146
Sign-on award
17/05/2024
8/05/2025
7,468
7,468
Sign-on award
18/06/2024
1/06/2025
6,945
6,945
2,907,211
1,604,363
(943,050)
(172,330)
3,396,194
93
HMC Capital | Annual Report 2024
Notes to the Consolidated Financial Statements continued
30 June 2023
Plan details
Grant date
Estimated
vesting
date
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
IPO employee grant
14/10/2019
14/10/2022
335,624
-
(335,624)
-
-
FY20 LTIP
14/10/2019
27/08/2022
436,485
-
(436,485)
-
-
FY20 COVID-19 grant
25/08/2020
30/09/2022
262,567
-
(173,525)
-
89,042
FY21 LTIP (MD & CEO)
25/11/2020
27/08/2023
376,083
-
-
-
376,083
FY21 LTIP (Executive K MP,
excluding MD & CEO)
18/01/2021
27/08/2023
338,344
-
-
-
338,344
Sign-on award
14/03/2022
25/08/2022
25,235
-
(25,235)
-
-
Sign-on award
14/03/2022
27/08/2023
14,399
-
-
-
14,399
Sign-on award
14/03/2022
31/01/2024
9,885
-
-
(9,885)
-
FY22 LTIP
14/03/2022
28/08/2024
488,985
-
-
(10,558)
478,427
FY22 NEDEP
fee sacrifice rights
14/03/2022
25/08/2022
69,377
-
(69,377)
-
-
Recognition rights
14/03/2022
30/06/2022
104,167
-
(85,489)
-
18,678
Sign-on award
14/03/2022
01/04/2024
37,500
-
-
-
37,500
Sign-on award
19/05/2022
26/04/2024
20,172
-
-
-
20,172
Sign-on award
19/05/2022
26/04/2025
20,172
-
-
-
20,172
Sign-on award
19/05/2022
26/04/2023
20,172
-
(20,172)
-
-
Retention awards
18/10/2022
24/08/2023
-
25,250
-
(2,500)
22,750
FY23 LTIP
18/10/2022
25/08/2025
-
1,054,394
-
(65,170)
989,224
FY23 NEDEP
fee sacrifice rights
24/10/2022
24/08/2023
-
60,197
-
-
60,197
Sign-on award
05/12/2022
01/07/2023
-
125,701
-
-
125,701
Sign-on award
05/12/2022
01/07/2024
-
125,701
-
-
125,701
Sign-on award
05/12/2022
01/07/2025
-
125,701
-
-
125,701
Sign-on award
26/06/2023
27/02/2024
-
28,728
-
-
28,728
Sign-on award
26/06/2023
27/02/2025
-
28,728
-
-
28,728
2,559,167
1,599,650
(1,145,907)
(90,613)
2,922,297
There are 213,729 share rights that are vested and exercisable as at 30 June 2024 (2023: 107,720).
The weighted average remaining contractual life of share rights outstanding at the end of the financial year
was 1.2 years (2023: 1.1 years).
94
For the share rights granted during the current financial year, the valuation model inputs used to determine
the fair value at the grant date, are as follows:
Plan details
Grant date
Estimated
Vesting
date
Share price
at grant
date
$
Expected
Volatility
%
Dividend
yield
%
Risk-free
interest
rate
%
Fair value
at grant
date
$
FY24 LTI awards (excl. MD&CEO) 12/10/2023
24/08/2026
4.68
39
2.53
3.92
3.40
24/08/2024
FY24 Retention awards
12/10/2023
24/08/2025
4.68
39
2.60
4.1
4.53
Sign-on award
1/10/2024
6/11/2023
1/10/2025
4.63
39
2.62
4.42
4.47
FY24 NED Fee Sacrifice Rights
16/11/2023
21/02/2024
5.00
33
2.52
4.35
4.93
22/08/2024
FY24 LTI awards (MD&CEO)
23/11/2023
24/08/2026
4.67
39
2.51
4.16
3.40
FY23 STI Deferral Rights
23/11/2023
24/08/2024
4.67
33
2.6
4.29
4.58
Sign-on award
28/03/2024 1/03/2025
7.19
31
2.03
3.75
7.06
1/04/2025
Sign-on award
11/04/2024
1/04/2026
6.71
31
2.06
3.95
6.51
Sign-on award
18/06/2024
1/06/2025
6.99
32
1.88
4.00
7.29
Sign-on award
17/05/2024
8/05/2025
6.99
32
1.97
3.96
6.86
Note 37. Cash flow information
Reconciliation of profit after income tax to net cash from operating activities
Consolidated
30 June 2024
$m
30 June 2023
$m
Profit after income tax expense for the year
114.4
83.3
Adjustments for:
Depreciation expenses
2.1
2.1
Share-based payments expenses
4.6
4.5
Share of profit from associates and joint ventures
(12.4)
(17.9)
Net gain on disposal of investments
(58.0)
(4.8)
Net fair value adjustment on remeasurement of financial instruments
(63.4)
(53.5)
Transaction costs
15.7
–
Amortisation of capitalised borrowing costs
1.0
0.4
Donation paid in lieu of cash
2.7
–
Dividend income recognised as investing activities
(11.9)
(4.9)
Change in operating assets and liabilities, net of effects from purchase of controlled entities:
Decrease in trade and other receivables
4.1
0.3
(Increase)/decrease in other operating assets
2.1
(1.7)
Increase/(decrease) in trade and other payables
23.0
(5.3)
Increase in deferred tax liability
2.2
2.6
Decrease in other operating liabilities
(0.8)
(4.8)
Net cash from operating activities
25.5
0.3
95
HMC Capital | Annual Report 2024
Notes to the Consolidated Financial Statements continued
Changes in liabilities arising from financing activities
Consolidated
Secured margin
loan
$m
Secured bank
debt
$m
Lease
liabilities
$m
Total
$m
Balance at 1 July 2022
–
–
4.3
4.3
Net cash (used in)/from financing activities
50.0
36.5
(0.7)
85.8
Balance at 30 June 2023
50.0
36.5
3.6
90.1
Net cash (used in)/from financing activities
150.0
(36.5)
(0.7)
112.8
Balance at 30 June 2024
200.0
–
2.9
202.9
Note 38. Events subsequent to the end of the financial year
In May 2024, the group announced the acquisition of Payton Capital. In July 2024, the group reached financial
close for the acquisition. At the date of this report, acquisition accounting is incomplete and will be disclosed in
the next reporting period.
In July 2024, the group made an investment in StorEnergy Pty Limited (‘StorEnergy’), a specialist developer,
owner and operator of utility-scale battery energy storage systems. This represents the first investment by
HMC’s Energy Transition platform which is seeking to assemble an asset portfolio across the energy value
chain. The group will continue to make further investments over a three year period resulting in a total
expected investment of up to ~$50 million to secure a majority interest.
No other matter or circumstance has arisen since 30 June 2024 that has significantly affected, or may
significantly affect the group’s operations, the results of those operations, or the group’s state of affairs in
future financial years.
96
Consolidated Entity Disclosure Statement
As at 30 June 2024
Entity name
Entity type
Place formed/
Country of
incorporation
Ownership
interest
%
Tax
residency
HMC Capital Limited
Company
Australia
100.0%
Australia
Home Consortium Developments Pty Ltd
Company
Australia
100.0%
Australia
HMC Investment Management Pty Ltd
Company
Australia
100.0%
Australia
HMC Property Management Pty Ltd
Company
Australia
100.0%
Australia
HMC Capital Funds Management Pty Ltd
Company
Australia
100.0%
Australia
Home Consortium Developments Property Pty Ltd
Company
Australia
100.0%
Australia
Home Consortium Property Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo Childcare Pty Ltd
Company
Australia
100.0%
Australia
Aventus Holdings Pty Ltd
Company
Australia
100.0%
Australia
Aventus Property Group Pty Ltd
Company
Australia
100.0%
Australia
Aventus Custodian Pty Ltd
Company
Australia
100.0%
Australia
Aventus Funds Management Pty Ltd
Company
Australia
100.0%
Australia
Aventus Property Management Pty Ltd
Company
Australia
100.0%
Australia
Aventus Services Pty Ltd
Company
Australia
100.0%
Australia
Aventus National Operations Pty Ltd
Company
Australia
100.0%
Australia
Aventus Investment Management Holdings Pty Ltd
Company
Australia
100.0%
Australia
Aventus Investment Management Pty Ltd
Company
Australia
100.0%
Australia
HomeCo (Upper Coomera) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Coffs Harbour) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Box Hill) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Braybrook) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Hawthorn East) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Keysborough) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Knoxfield) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Mornington) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Roxburgh Park) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (South Morang) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Wagga W
agga) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Lismore) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Rutherford) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Marsden Park) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Bathurst) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Ellenbrook) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Joondalup) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Butler) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Parafield) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
97
HMC Capital | Annual Report 2024
Consolidated Entity Disclosure Statement continued
Entity name
Entity type
Place formed/
Country of
incorporation
Ownership
interest
%
Tax
residency
HomeCo (Rosenthal) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Gregory Hills TC) LeaseCo Pty Ltd
Company
Australia
100.0%
Australia
HomeCo (Gregory Hills HC) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Hawthorn East) Development Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HMC (Park Ridge) Pty Ltd
Company
Australia
100.0%
Australia
HomeCo (Glen Huntly) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Greystanes) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Temporary W
arehouse) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HMC Investor (LML) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HMC HWHF Investor Pty Ltd
Company – Trustee
Australia
100.0%
Australia
Home Consortium Property Trust
Trust
Australia
100.0%
Australia
HomeCo (Upper Coomera) Property Trust
Trust
Australia
100.0%
Australia
HomeCo (Coffs Harbour) Property Trust
Trust
Australia
100.0%
Australia
HomeCo (Box Hill) Property Trust
Trust
Australia
100.0%
Australia
HomeCo (Braybrook) Property Trust
Trust
Australia
100.0%
Australia
HomeCo (Hawthorn East) Property Trust
Trust
Australia
100.0%
Australia
HomeCo (Keysborough) Property Trust
Trust
Australia
100.0%
Australia
HomeCo (Knoxfield) Property Trust
Trust
Australia
100.0%
Australia
HomeCo (Mornington) Property Trust
Trust
Australia
100.0%
Australia
HomeCo (Roxburgh Park) Property Trust
Trust
Australia
100.0%
Australia
HomeCo (South Morang) Property Trust
Trust
Australia
100.0%
Australia
HomeCo (Wagga W
agga) Property Trust
Trust
Australia
100.0%
Australia
HomeCo (Lismore) Property Trust
Trust
Australia
100.0%
Australia
HomeCo (Rutherford) Property Trust
Trust
Australia
100.0%
Australia
HomeCo (Marsden Park) Property Trust
Trust
Australia
100.0%
Australia
HomeCo (Bathurst) Property Trust
Trust
Australia
100.0%
Australia
HomeCo (Ellenbrook) Property Trust
Trust
Australia
100.0%
Australia
HomeCo (Joondalup) Property Trust
Trust
Australia
100.0%
Australia
HomeCo (Butler) Property Trust
Trust
Australia
100.0%
Australia
HomeCo (Parafield) Property Trust
Trust
Australia
100.0%
Australia
HomeCo (Rosenthal) Property Trust
Trust
Australia
100.0%
Australia
HomeCo (Gregory Hills HC) Property Trust
Trust
Australia
100.0%
Australia
HomeCo (Hawthorn East)
Development Property Trust
Trust
Australia
100.0%
Australia
HomeCo (Glen Huntly) Property Trust
Trust
Australia
100.0%
Australia
HomeCo (Greystanes) Property Trust
Trust
Australia
100.0%
Australia
HomeCo (Temporary W
arehouse) Property Trust
Trust
Australia
100.0%
Australia
HMC Investor (LML) Trust
Trust
Australia
100.0%
Australia
HMC HWHF Investor Property Trust
Trust
Australia
100.0%
Australia
HMC Funds Management Limited
Company – Responsible Entity Australia
100.0%
Australia
98
Entity name
Entity type
Place formed/
Country of
incorporation
Ownership
interest
%
Tax
residency
HomeCo DNR (Penrith) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Prestons) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Vincentia) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Butler) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Braybrook) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Richlands) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Upper Coomera CC) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Keysborough) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Tingalpa) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Rosenthal) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Mornington) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Joondalup) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Hawthorn East) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Ellenbrook) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Glenmore Park) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Gregory Hills TC) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Parafield) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Seven Hills) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Marsden Park NSW) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Box Hill) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Armstrong Creek) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Marsden Park) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Bundall) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Coffs Harbour) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Mackay) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (South Morang) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Toowoomba) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Upper Coomera) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Pakenham) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Victoria Point) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Leppington) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (North Lakes) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Gregory Hills Home) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Richlands Land) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Cranbourne W
est) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (Kellyville W
est) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HDN (Southlands Boulevarde) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HDN (LML Fund) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (HDN No.1) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (HDN No.2) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
99
HMC Capital | Annual Report 2024
Consolidated Entity Disclosure Statement continued
Entity name
Entity type
Place formed/
Country of
incorporation
Ownership
interest
%
Tax
residency
HomeCo DNR (No. 1) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (No. 2) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (No. 3) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (No. 5) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (No. 6) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (No. 7) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (No. 8) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (No. 9) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (No. 10) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo DNR (No. 12) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
Aventus Properties Pty Ltd
Company – Trustee
Australia
100.0%
Australia
Aventus Landowner Holdings Pty Ltd
Company – Trustee
Australia
100.0%
Australia
Aventus McGraths Hill Pty Ltd
Company – Trustee
Australia
100.0%
Australia
Aventus Belrose Pty Ltd
Company – Trustee
Australia
100.0%
Australia
Aventus Caringbah Pty Ltd
Company – Trustee
Australia
100.0%
Australia
Aventus Cranbourne Pty Ltd
Company – Trustee
Australia
100.0%
Australia
Aventus Cranbourne Thompsons Road Pty Ltd
Company – Trustee
Australia
100.0%
Australia
Aventus Diversified Pty Ltd
Company – Trustee
Australia
100.0%
Australia
Aventus Epping Pty Ltd
Company – Trustee
Australia
100.0%
Australia
Aventus H1 Pty Ltd
Company – Trustee
Australia
100.0%
Australia
Aventus Jindalee Pty Ltd
Company – Trustee
Australia
100.0%
Australia
Aventus K otara South Pty Ltd
Company – Trustee
Australia
100.0%
Australia
Aventus Mile End Pty Ltd
Company – Trustee
Australia
100.0%
Australia
Aventus Mile End Stage 3 Pty Ltd
Company – Trustee
Australia
100.0%
Australia
Aventus Midland Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HDN (Midland Home) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
Aventus Peninsula Pty Ltd
Company – Trustee
Australia
100.0%
Australia
Aventus Sunshine Coast Pty Ltd
Company – Trustee
Australia
100.0%
Australia
Aventus T1 Pty Ltd
Company – Trustee
Australia
100.0%
Australia
Aventus Tuggerah Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HDN No. 3 Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HDN No. 4 Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HDN No. 5 Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HDN No. 6 Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HCW Funds Management Limited
Company – Responsible Entity Australia
100.0%
Australia
HomeCo (Erina) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Morayfield HH) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Tarneit) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Essendon) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Southport) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
100
Entity name
Entity type
Place formed/
Country of
incorporation
Ownership
interest
%
Tax
residency
HomeCo (Woolloongabba) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Five Dock) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Concord) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (St Marys) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Rouse Hill) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Armadale) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Nunawading) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Ballarat) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Cairns) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Springfield) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Everton Park) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HCW (Vitality Village) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HCW (Pine Rivers) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HCW (Victorian Rehab Centre) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HCW (Northpark) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HCW (Geelong) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HCW (WHF) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (GC Bundaberg) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (GC Chermside) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (GC Nambour) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (GC Ringwood) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (GC Shepparton) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (GC Southport) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (GC Urraween SSR) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (GC Urraween UC) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (GC W
embley) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (GC W
embley Salvado) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Avondale Heights) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Beaconsfield) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Boronia) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Bulleen) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Chadstone) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Chirnside Park) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Croydon) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Frankston) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Melton) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Ormond) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Seaford) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Yallambie) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (Maylands) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
101
HMC Capital | Annual Report 2024
Consolidated Entity Disclosure Statement continued
Entity name
Entity type
Place formed/
Country of
incorporation
Ownership
interest
%
Tax
residency
HCW (Bundoora) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HCW (Clyde North) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HCW (Donnybrook) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HCW (Forest Hill) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HCW (Junction Village) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HCW (Mitcham) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HCW (Reservoir) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HCW (Sunshine) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HCW (View B) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (New Temporary W
arehouse) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (HCW First) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HomeCo (HCW Third) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HCW Co-Ownership Holding Company Pty Ltd
Company
Australia
100.0%
Australia
HCW No. 1 Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HCW No. 2 Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HCW No. 3 Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HMC Capital Partners Holdings Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HMC Capital Partners No. 1 Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HMC Capital Partners No. 2 Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HMC Capital Partners No. 3 Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HMC Capital Partners No. 4 Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HMC Capital Investments Limited
Company – Responsible Entity Australia
100.0%
Australia
HMC Capital Partners Fund 1 Pty Ltd
Company
Australia
100.0%
Australia
HMC Capital No. 2 Pty Ltd
Company
Australia
100.0%
Australia
HMC Capital No. 3 Pty Ltd
Company
Australia
100.0%
Australia
HMC Capital Partners Holdings Trust
Trust
Australia
46.0%
Australia
HMC Capital Partners Trust A
Trust
Australia
-
Australia
HMC Capital Partners Trust B
Trust
Australia
100.0%
Australia
HMC Capital Partners Trust C
Trust
Australia
-
Australia
HMC Capital Partners Trust D
Trust
Australia
100.0%
Australia
HMC LML No.1 Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HMC (Menai Marketplace) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HMC (Settlement City) Pty Ltd
Company
Australia
100.0%
Australia
HMC (Southlands Boulevarde) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HMC LML (No. 2) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HMC LML (No. 3) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HMC W
HF No. 1 Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HWHF (Knox) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HWHF (Ringwood) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HWHF (Campbelltown) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
102
Entity name
Entity type
Place formed/
Country of
incorporation
Ownership
interest
%
Tax
residency
HWHF (Nepean) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HWHF (The Mount) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HWHF (Sydney Southwest) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HWHF (SB) Pty Ltd
Company – Trustee
Australia
100.0%
Australia
The George AH Pty Ltd
Company – Trustee
Australia
91.0%
Australia
Life Sciences Medical Precinct AH Pty Ltd
Company – Trustee
Australia
60.0%
Australia
General Medical Precinct AH Pty Ltd
Company – Trustee
Australia
50.0%
Australia
HMC Energy Transition Holdings Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HMC Energy Transition No. 1 Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HMC Energy Transition No. 2 Pty Ltd
Company – Trustee
Australia
100.0%
Australia
HMC Energy Transition Holdings Trust
Trust
Australia
100.0%
Australia
HMC Energy Transition No. 1 Trust
Trust
Australia
100.0%
Australia
HMC Energy Transition No. 2 Trust
Trust
Australia
100.0%
Australia
HMC USA Holdings LLC
Company
USA
100.0%
USA
Determination of Tax Residency
Section 295 (3A) of the Corporations Act 2001 requires that the tax residency of each entity which is included
in the Consolidated Entity Disclosure Statement (CEDS) be disclosed. In the context of an entity which was an
Australian resident, ‘Australian resident’ has the meaning provided in the Income Tax Assessment Act 1997. The
determination of tax residency may involve judgement as determination of tax residency is fact dependent.
In determining tax residency, the consolidated entity has applied the following interpretations:
y Australian tax residency – The consolidated entity has applied current legislation and judicial precedent,
including having regard to the Commissioner of Taxation’s public guidance in Tax Ruling TR 2018/5 and
Practical Compliance Guideline PCG 2018/19.
y Foreign tax residency – the consolidated entity has applied current legislation and where available judicial
precedent in determination of foreign tax residency.
Partnership and Trusts:
Australian tax law does not contain specific residency tests for partnerships and trusts. Generally, these
entities are taxed on a flowthrough basis, meaning the partners and unitholders have the obligation to pay
tax in relation to their involvement in the partnership or trust, so there is no need for a general residence
test. For this reason, the tax residence of trusts has been disclosed as the same tax residence of the relevant
trust’s trustee.
103
HMC Capital | Annual Report 2024
Directors’ Declaration
In the directors’ opinion:
y the attached consolidated financial statements and notes of HMC Capital Limited comply with the
Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other
mandatory professional reporting requirements;
y the attached consolidated financial statements and notes comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board as described in note 2 to the financial
statements;
y the attached consolidated financial statements and notes give a true and fair view of the group’s financial
position as at 30 June 2024 and of its performance for the financial year ended on that date;
y there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable;
y at the date of this declaration, there are reasonable grounds to believe that the members of the Extended
Closed Group will be able to meet any obligations or liabilities to which they are, or may become, subject by
virtue of the deed of cross guarantee described in note 34 to the financial statements; and
y the information disclosed in the attached consolidated entity disclosure statement is true and correct.
The directors have been given the declarations required by section 295A of the Corporations Act 2001, from
the Chief Executive Officer and Chief Financial Officer for the year ended 30 June 2024.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations
Act 2001.
On behalf of the directors
Chris Saxon
David Di Pilla
Chair
Director
20 August 2024
104
Independent Auditor’s Report
94
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and
logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by
a scheme approved under Professional Standards Legislation.
Independent Auditor’s Report
To the shareholders of HMC Capital Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
HMC Capital Limited (the Company).
In our opinion, the accompanying Financial
Report of the Company gives a true and
fair view, including of the Group’s
financial position as at 30 June 2024 and
of its financial performance for the year
then ended, in accordance with the
Corporations Act 2001, in compliance with
Australian Accounting Standards and the
Corporations Regulations 2001.
The Financial Report comprises:
• Consolidated statement of financial position as at 30
June 2024
• Consolidated statement of profit or loss and other
comprehensive income, Consolidated statement of
changes in equity, and Consolidated statement of
cash flows for the year then ended
• Consolidated entity disclosure statement and
accompanying basis of preparation as at 30 June
2024
• Notes, including material accounting policy
information
• Directors’ Declaration.
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during
the financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for
the audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics
for Professional Accountants (including Independence Standards) (the Code) that are relevant to our
audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in
accordance with these requirements.
105
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Independent Auditor’s Report continued
95
Key Audit Matters
The Key Audit Matters we identified are:
• Valuation of intangibles;
• Revenue recognition; and
• Investments accounted for using the equity
method.
Key Audit Matters are those matters that, in our
professional judgement, were of most
significance in our audit of the Financial Report of
the current period.
These matters were addressed in the context of
our audit of the Financial Report as a whole, and
in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Valuation of intangibles ($186.7 million)
Refer to Note 2 Material accounting policy information and Note 15 Intangible assets to the Financial
Report
The key audit matter
How the matter was addressed in our audit
Valuation of intangibles is a Key Audit Matter
due to:
• the size of the balance (being 10% of total
assets); and
• the high level of judgement exercised in
assessing the inputs to the Group’s
annual assessment of impairment model.
We focused on significant forward-looking
assumptions the Group applied in its value in
use model, including:
•
forecast cash flows, growth rates and
terminal growth rates which are
influenced by subjective drivers and
market conditions.
•
discount rates, which are subjective in
nature and vary according to the specific
conditions and environment of the Group
of Cash Generating Units (CGU).
We involved valuation specialists to
supplement our senior audit team members
in assessing this key audit matter.
Our procedures included:
•
considering the applicability of the value in use
method applied by the Group to perform the
annual test of intangibles for impairment against
the requirements of the accounting standards.
•
assessing the integrity of the value in use model
used, and the accuracy of the underlying
calculations.
•
assessing the historical accuracy of the Group’s
forecasts by comparing to actual results, to use
in our evaluation of forecasts incorporated in the
value in use model.
•
challenging the Group’s significant forecast cash
flow and growth rate assumptions. We
compared key forecast assumptions to the
Board approved plan and strategy. We compared
forecast growth rates and terminal growth rates
to publicly available data of a group of
comparable entities and the industry trends, and
considered differences for the Group’s
operations.
•
together with our valuation specialists, using our
knowledge of the Group and its industry to
independently develop a discount rate range
using publicly available reports for comparable
entities, and compared it to the Group’s discount
rate.
•
considering the sensitivity of the model by
varying key assumptions, such as forecast
106
96
growth rates, terminal growth rates and discount
rates, within a reasonably possible range. We did
this to identify those assumptions at higher risk
of bias or inconsistency in application and to
focus our further procedures.
•
assessing the disclosures in the financial report
using our understanding obtained from our
testing and against the requirements of the
accounting standards.
Revenue recognition ($81.1 million)
Refer to Note 2 Material accounting policy information and Note 5 Revenue to the Financial Report
The key audit matter
How the matter was addressed in our audit
Revenue recognition is a Key Audit Matter
due to:
•
its significance to the financial
performance of the Group; and
•
the significant audit effort required as a
result of the various streams of revenue
generated from a diverse range of
services, each with varying rates and
contractual terms.
Significant revenue streams include fees from
the provision of investment management
services and property management services
for properties managed on behalf of third
parties.
Our procedures included:
•
inquiring of the Group to obtain an
understanding of processes for significant
revenue streams, and testing the controls at the
Group relating to review and approval of
investment management fee invoices for these
revenue streams.
•
assessing the Group's accounting policies
related to revenue recognition against the
requirements of the accounting standard and
our understanding of the business.
•
testing samples, which included statistical
samples, of revenue across each key revenue
stream. We:
-
evaluated the terms and conditions of the
respective contracts with investment funds
against the requirements of AASB 15
Revenue from Contracts with Customers,
checking for contractual features which
distinguish the accounting treatment
between over time or point in time
recording of revenue. We checked our
evaluation against the Group’s accounting
policies.
-
recalculated the investment management
and property management services
revenue recognised based on the fee rates
in the underlying contracts, and the
underlying Funds under Management
(“FuM”). We compared this to the revenue
recognised by the Group.
107
HMC Capital | Annual Report 2024
Independent Auditor’s Report continued
97
-
using the terms and conditions of the
respective contracts for acquisitions and
disposals services we tested revenue
amounts and the timing thereof to
underlying settlement contracts and the
Group’s revenue recognition policy.
-
using the tenancy schedule as per the lease
agreements we tested revenue amounts
and the timing of the receipt of the lease
agreements against the Group’s revenue
recognition policy.
•
assessing the disclosures in the financial report
using our understanding obtained from our
testing and against the requirements of the
accounting standard.
Investments accounted for using the equity method ($575.5 million)
Refer to Note 2 Material accounting policy information and Note 13 Investments accounted for using
the equity method to the Financial Report
The key audit matter
How the matter was addressed in our audit
Investments accounted for using the equity
method is a Key Audit Matter due to the:
•
the size of the balance (being 32% of total
assets);
•
the high level of judgement exercised in
assessing if the Group has control or
significant influence over the equity
accounted investees, as this drives
differing accounting outcomes; and
•
the high level of judgement exercised in
assessing the Group’s assessment of
impairment indicators for the equity
accounted investments.
Our procedures included:
•
instructing appointed auditors of the equity
accounted investments to perform procedures
we have determined relevant to our role in
gathering evidence on the share of profit that is
attributable to the Group and forms a significant
part of the Group’s financial results.
•
discussing with those audit teams to identify
and address any issues that may impact results
of the Group.
•
reading the reporting provided to us by those
auditors in conjunction with inspecting their files
for consistency between the reporting provided
to us, our instructions, and the underlying audit
work.
•
evaluating the Group's assessment of whether
there are impairment indicators with respect to
the recoverability of the equity accounted
investments.
•
assessing the disclosures in the financial report
using our understanding obtained from our
testing and against the requirements of the
accounting standard.
108
98
Other Information
Other Information is financial and non-financial information in the Group’s annual report which is
provided in addition to the Financial Report and the Auditor's Report. The Directors are responsible
for the Other Information.
The Other Information we obtained prior to the date of this Auditor’s Report was the Directors’
Report, Operating and Financial Review and Remuneration Report. The Chair and Chief Executive
Officer’s Letter and Additional Shareholder Information are expected to be made available to us after
the date of the Auditor's Report.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
and will not express an audit opinion or any form of assurance conclusion thereon, with the exception
of the Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other
Information. In doing so, we consider whether the Other Information is materially inconsistent with
the Financial Report, or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
We are required to report if we conclude that there is a material misstatement of this Other
Information, and based on the work we have performed on the Other Information that we obtained
prior to the date of this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• preparing the Financial Report in accordance with the Corporations Act 2001, including giving
a true and fair view of the financial position and performance of the Group, and in compliance
with Australian Accounting Standards and the Corporations Regulations 2001;
• implementing necessary internal control to enable the preparation of a Financial Report in
accordance with the Corporations Act 2001, including giving a true and fair view of the
financial position and performance of the Group, and that is free from material misstatement,
whether due to fraud or error; and
• assessing the Group and Company’s ability to continue as a going concern and whether the
use of the going concern basis of accounting is appropriate. This includes disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting
unless they either intend to liquidate the Group and Company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
• to obtain reasonable assurance about whether the Financial Report as a whole is free from
material misstatement, whether due to fraud or error; and
• to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it
exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
109
HMC Capital | Annual Report 2024
Independent Auditor’s Report continued
99
the basis of the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
Auditor’s Report.
Report on the Remuneration Report
Opinion
In our opinion, the Remuneration Report
of the Group for the year ended 30 June
2024, complies with Section 300A of the
Corporations Act 2001.
Directors’ responsibilities
The Directors of the Company are responsible for the
preparation and presentation of the Remuneration
Report in accordance with Section 300A of the
Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report included in
pages 10 to 36 of the Directors’ report for the year
ended 30 June 2024.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
Brendan Twining
Partner
Sydney
20 August 2024
110
Shareholder Information
The Shareholder information set out below was applicable as at 15 July 2024.
Distribution of equitable shares
Analysis of number of equitable shareholders by size of holding:
Ordinary shares
Number
of holders of
shares
% of total
shares issued
1 to 1,000
822
0.08
1,001 to 5,000
874
0.74
5,001 to 10,000
720
1.46
10,001 to 100,000
1,101
6.75
100,001 and over
62
90.97
3,579
100.00
Holding less than a marketable parcel
160
–
111
HMC Capital | Annual Report 2024
Shareholder Information continued
Equity shareholders
Twenty largest quoted equity shareholders
The names of the twenty largest shareholders of quoted equity shares are listed below:
Ordinary shares
Number held
% of total
shares
issued
HSBC Custody Nominees (Australia) Limited
97,094,485
26.03
Home Investment Consortium Trust*
90,380,913
24.23
J P Morgan Nominees Australia Pty Limited
53,813,753
14.43
Citicorp Nominees Pty Limited
37,655,420
10.09
National Nominees Limited
7,625,137
2.04
Aurrum Holdings Pty Ltd
7,023,606
1.88
Goat Properties Pty Ltd
6,729,606
1.80
BNP Paribas Nominees Pty Ltd
5,206,652
1.40
Netwealth Investments Limited
4,296,704
1.15
UBS Nominees Pty Ltd
3,885,885
1.04
BNP Paribas Noms Pty Ltd
2,702,519
0.72
Citicorp Nominees Pty Limited
2,450,238
0.66
CW Property Nominees Pty Ltd
2,238,806
0.60
HSBC Custody Nominees (Australia) Limited
1,868,733
0.50
Goat Properties Pty Ltd
1,138,195
0.31
Balmoral Financial Investments Pty Ltd
1,117,280
0.30
SG Foundation Investments Pty Ltd
1,071,014
0.29
Pacific Custodians Pty Limited
1,046,693
0.28
BNP Paribas Nominees Pty Ltd
1,045,488
0.28
BNP Paribas Noms (NZ) Ltd
1,020,305
0.27
329,411,432
88.30
*
Home Investment Consortium Trust holding includes all subsidiaries.
Unquoted equity shares
Number
on issue
Number
of holders
Share rights
3,087,944
40
112
Substantial shareholders
Substantial holders in the Company are set out below:
Ordinary shares
Number held
% of total
shares
issued
Home Investment Consortium Trust*
90,380,913
24.23
*
Home Investment Consortium Trust holding includes all subsidiaries.
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a
poll each share shall have one vote.
There are no other classes of equity securities.
Restricted shares
Class
Expiry date
Number
of securities
Ordinary shares
Upon retirement from the Board
284,519
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HMC Capital | Annual Report 2024
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114
Directors
Chris Saxon
David Di Pilla
Zac Fried
Brendon Gale
Greg Hayes
Kelly O’Dwyer
Susan Roberts
Company secretary
Andrew Selim
Registered office and
Principal place of business
Level 7
Gateway
1 Macquarie Place
Sydney NSW 2000
Share register
Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000
Telephone: 1300 554 474
Auditor
KPMG
Level 38, Tower 3
International Towers Sydney
300 Barangaroo Avenue
Sydney NSW 2000
Stock exchange listing
HMC Capital Limited shares are listed on the Australian Securities Exchange
(ASX code: HMC)
Website
www.hmccapital.com.au
Corporate Governance
Statement
hmccapital.com.au/investor-centre
Corporate Directory
115
HMC Capital | Annual Report 2024
HMC Capital Limited
ACN 138 990 593