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2023 ReportPeers and competitors of Pacific Current Group Ltd:
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PACIFIC
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CONTENTS
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FY2023 Key Highlights
Chairman’s Report
Managing Director, Chief Executive Officer
and Chief Investment Officer’s Report
Board of Directors
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Index to the Notes to the Financial Statements
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
102 ASX Additional Information
104 Corporate Information
In accordance with ASX Listing Rule 4.10.3, Pacific Current Group
Limited’s Corporate Governance Statement can be found on its website
at http://paccurrent.com/shareholders/corporate-governance/
In this Annual Report, a reference to ‘Pacific Current Group’, ‘PAC’, ‘Group’,
‘the Group’, ‘ the Company’, ‘we’, ‘us’ and ‘our’ is to Pacific Current Group
Limited ABN 39 006 708 792 and its subsidiaries unless it clearly means just
Pacific Current Group Limited.
In this Annual Report, a reference to funds under management (FUM) means the
total market value of all the financial assets which one of our partner boutiques
manages on behalf of its clients and themselves.
LIMITED Annual Report 2023
11
ABOUT US
Pacific Current Group Limited (ASX: PAC) is a global multi-boutique
asset management firm dedicated to providing exceptional value to
shareholders, investors, and partners.
OUR PHILOSOPHY
Each investment is structured to create exceptional alignment with
our boutique managers. We apply flexible capital, strategic insight,
and global distribution to support the growth and development
of the boutiques in which we invest. Our goal is to help investment
managers focus on their core business and what matters most:
investing.
WHAT WE OFFER OUR BOUTIQUES
• Flexible capital solutions – we aim to create exceptional
alignment with our boutique managers, so every investment is
uniquely tailored to fit the boutique’s specific needs
• Global distribution and marketing services – we can accelerate
the growth of our boutiques by helping them secure new clients
and funds to manage
• Access to our global network and strategic insights – our global
network of industry contacts and decades of experience allow
us to assist boutiques in the management of their businesses
and the development and implementation of their growth
strategies
FY2023 KEY
HIGHLIGHTS
FUM across the Group
(up from $169b)
$204b
Comparable dividends
(from 38 cps)
38cps
“Fair Value” of Net Assets per Share
(up from $11.15)
$11.92
Underlying EBITDA steady
(from $35.6m)
$35.3m
Invested US$30m in private capital manager, Cordillera
Sale of interest in Proterra Asia for more than 40x the
run-rate annual distributions to PAC
Agreed to a US$50m debt facility to exploit future
growth opportunities
Unsolicited, non-binding, indicative proposal received
to acquire 100% of the shares in PAC
LIMITED 2
3
CHAIRMAN’S
REPORT
We have always been adamant that PAC is
fundamentally undervalued in the market;
fortunately, a combination of investments,
sales, and multiple acquisition offers has
provided support for that viewpoint.
Dear fellow shareholders,
The last financial year was one full of important highlights
and achievements. At the portfolio level, we evaluated a
large number of investment opportunities and made an
investment in Cordillera Investment Partners, LP. We
believe this investment will create significant value for
Pacific Current Group Limited’s (“PAC”) shareholders.
We have also supported the sale of Proterra Investment
Partners Asia PTE. Ltd (“Proterra Asia”), a subsidiary of
one of our boutiques, at a price we found compelling. The
most noteworthy development occurred after 30 June
2023, when we received unsolicited interest to acquire
PAC’s business – a development we believe provides
support for our view of our business being fundamentally
undervalued.
At the portfolio level, we have seen solid progress
across key boutiques. Of particular note have been the
achievements at GQG Partners Inc. (“GQG Inc”), Banner
Oak Capital Partners LP, and Proterra Investment Partners,
LP (“Proterra”). These firms have helped fuel management
fee revenue growth of 13% across the PAC portfolio. This
revenue is relatively stable and forms the basis for even
stronger revenue in FY2024.
Disposals of our holdings may provide the strongest
proof set on our view of the value of our holdings, as
the proceeds received upon selling assets have generally
been well above PAC’s estimates of fair value. We have
seen it with Aperio Group, LLC, Investors Mutual Limited,
Rare Infrastructure Ltd, and at the initial public offering
of GQG Inc. This experience gives us confidence in the
conservatism with which we value the portfolio.
Admittedly, we have struggled to convince enough people
of PAC’s inherent value as the trading share price has
not, to date, approximated the fair value of our portfolio.
That situation has now led to indications of interest in a
potential acquisition of PAC and the start of a competitive
process. As has always been the case, the goal in a
competitive process would be to realise for shareholders
the latent value we have always believed the company
possessed. An Independent Board Committee (“IBC”) has
been established to manage this process, given several
Directors have or may have potential conflicts.
PAC is a very enjoyable business of which to be a part.
The people involved in the business are capable and work
hard to find new and exciting investment opportunities.
The businesses we invest in are delivering great outcomes
for their clients and our shareholders. Most importantly,
PAC has also shown that it is a highly effective allocator
of capital.
In closing, the achievements made during the year
continue to confirm that the PAC team has considerable
skills in identifying and acquiring holdings in exceptionally
capable funds management teams and businesses. A team
ably led by Paul Greenwood. We are very appreciative of
the continued hard work of the PAC team.
We are hopeful for a great outcome for shareholders.
Either way, the outlook for FY2024 is positive and exciting.
Regards
Antony Robinson
Chairman
Annual Report 2023
MANAGING
DIRECTOR, CHIEF
EXECUTIVE
OFFICER AND
CHIEF INVESTMENT
OFFICER’S REPORT
Despite a challenging economic
environment in FY2023, PAC
continued to show the ability to
produce net positive results and
earned the attention of other larger
firms as a potential acquisition has
become a possibility.
I am pleased to offer a few observations and reflections on
FY2023 and what the future may hold for PAC.
Market Environment
The economic environment became more challenging in
FY2023, as surging interest rates and inflation notably
altered investor behavior. Institutional investors became
more reticent to buy and sell assets, as they struggled
to estimate how much further rates could rise and asset
prices erode. This was particularly evident in private real
estate and private equity, where transaction volume
declined precipitously.
such
as pensions, endowments,
Allocators
and
foundations behaved consistently with prior periods
of economic uncertainty. Their capital commitments
to new investments slowed as they sorted through the
implications of entering a macro economic environment
deprived of the low rates and tame inflation they had been
living with for many years.
The impact on PAC’s portfolio was modest, but in certain
situations, we did notice delayed asset sales at some
portfolio companies, extended fundraising cycles, and
reduced speed of capital deployment. Such periods are
always transitory, and we believe we are already seeing
early signs of more hospitable times ahead. All things
considered, PAC’s portfolio companies have weathered
this uncertain time well and seem positioned to prosper as
conditions stabilise and ultimately improve.
Financial Results
In FY2023, PAC’s boutique contributions (excluding mark-
to-market adjustments) grew 2.4% in USD terms (10%
in AUD). As expected, the primary driver was growth in
management fee revenues, which increased 13% (22%
in AUD). This growth was partially offset by a 22% (16%
AUD) decline in performance fees. Corporate revenues
fell from US$2.9 million to US$0.9 million, which, along
with higher interest expense, contributed to an 11% (4%
AUD) decrease in underlying net profit after tax. A final
dividend of A$0.23 per share was declared, which will be
67.3% franked. The full-year dividend of A$0.38 per share
was flat on a year-over-year basis.
Despite solid management fee growth, there were several
developments at PAC’s portfolio companies that restrained
the growth in PAC’s boutique contributions. These
included certain fundraising developments being pushed
from the second half of FY2023 into first half of FY2024,
and somewhat slower-than-expected deployment of new
committed capital. Collectively, these items amounted to
US$5 million to US$7 million of deferred revenue, most of
which PAC should receive in the first half of FY2024.
The reduction in corporate revenues primarily reflects
lower commissions earned by PAC through its efforts to
fundraise on behalf of our portfolio companies. These
revenues are inherently volatile because they result from
episodic allocations from institutional investors and thus
will always be difficult to forecast. The decline was due
to PAC having fewer products in active fundraising mode
and PAC’s salesforce devoting significant time to securing
external capital for PAC to manage.
Portfolio Highlights
PAC made a new US$30 million investment in Cordillera
Investment Partners, LP (“Cordillera”) in April 2023.
Cordillera epitomises many of the attributes we desire
in our investments. It has a talented and motivated
leadership team offering a distinctive private capital
FUM at 30 June 2023
FUM at 30 June 2022
Aether
Banner Oak
Carlisle
Cordillera
GQG
Proterra
Victory Park
Astarte
EAM
ROC
Pennybacker
4
5
Aether
Banner Oak
Carlisle
GQG
Proterra
Victory Park
Astarte
Blackcrane
EAM
ROC
Pennybacker
strategy (such as investing in boat marinas, whisky-barrel
aging and music royalties), with low correlations to other
markets and broad appeal to both institutional and high-
net-worth investors.
In June 2023, PAC announced the sale of its interest in
Proterra Asia, a subsidiary of Proterra, which is responsible
for managing Proterra’s private equity funds focused on
food companies in Asia. PAC received more than US$8
million (pre-transaction costs) for its interests, which
represents more than 40x the run-rate annual distributions
PAC received from this segment of Proterra’s business.
Finally, PAC and the Capital & Asset Management Group,
LLP (“CAMG”) management team have been working
diligently over the past four years to get the business
to profitability but recently agreed it was time to wind
the business down. After many near misses, CAMG was
unable to secure the funds under management (“FUM”) it
needed to sustain the business. While obviously this is not
the desired outcome, it is a risk we take when backing very
early-stage companies. Moreover, even with the benefit
of hindsight, we feel like we backed the right team; they
worked tirelessly and made great sacrifices in their efforts
to build the business.
Portfolio Value
At PAC’s last Annual General Meeting, we committed to
providing estimates of the fair value of our boutiques. We
believe it is important to do so because the International
Financial Reporting Standards (“IFRS”) that govern PAC’s
statutory accounts do not fully allow PAC to reflect
the true net asset value of the business. In short, there
are some portfolio companies (e.g., Aether Investment
Partners, LLC, Pennybacker Capital Management, LLC
(“Pennybacker”), Roc Group, and Victory Park Capital
Advisors, LLC (“VPC”)) that are recorded on PAC’s balance
sheet at initial acquisition cost, with investment balances
marked down if impairments are present, but cannot be
written up if they appreciate in value. The net impact is
that current statutory NAV does not accurately represent
the actual NAV that may be realised if PAC were to sell its
portfolio. Indeed, as at 30 June 2023 our reported NAV
was A$9.88 per share, but when we adjust for our internal
estimates of fair value, we arrive at a fair-value-adjusted
NAV of approximately A$11.92 per share, with the primary
sources of non-reportable value residing at Pennybacker,
Roc Group and VPC.
Potential Acquisition
After the conclusion of our fiscal year, we found ourselves
making some news. We received an unsolicited offer
from Regal Partners Limited (ASX: RPL) to acquire PAC
for A$10.77 per share (based on PAC’s portfolio company,
GQG Inc, stock price at close of trading on 24 July 2023).
The proposed consideration for PAC shareholders included
75% in cash and 25% in GQG Inc stock. On 27 July, GQG
Inc, announced its intention to make an acquisition offer
for PAC as well.
In light of these developments, PAC hired UBS to
help evaluate these offers and ensure we consider an
appropriate breadth of potential partners. Additionally,
given that some PAC board members are on GQG Inc’s
board and another is on the board of River Capital Pty Ltd
(a financing partner for the Regal bid), an IBC has been
established. The IBC consists of the non-conflicted board
members and will provide recommendations with regard
to all acquisition proposals.
In August 2023, PAC management has been busy holding
discussions with numerous interested parties. The IBC
anticipates using September 2023 to determine which, if
any, offers it should recommend. If a preferred party is
selected, it will have the opportunity to perform additional
diligence, negotiate a Scheme Implementation Deed and
other related documents, and enter into the several-
month-long Scheme of Arrangement process.
Annual Report 2023 MANAGING DIRECTOR,
CHIEF EXECUTIVE
OFFICER AND
CHIEF INVESTMENT
OFFICER’S REPORT
Looking Ahead
We expect FY2024 to be a watershed year for PAC.
Our optimism stems from the following:
– Some key boutiques, like Pennybacker and VPC, are
entering periods where their contributions to PAC
should grow meaningfully based on FUM already and/
or imminently secured. We expect this growth to be
supplemented by improved results at a handful of other
portfolio companies;
– We intend to announce at least one significant new
investment in the immediate future;
– We are making progress toward securing external funds
to manage, thus potentially providing PAC with a valuable
source of new revenues; and
– The market environment for high-quality asset
management remains strong. Just as with the sale of
Proterra Asia, PAC believes there is a strong possibility of
additional liquidity in its portfolio, and if this occurs it is
likely to be at valuations we find highly attractive.
Final Thoughts
Since the Treasury Group Limited merger with Northern
Lights Capital Partners, LLC in 2014, PAC has made great
strides in institutionalising our business, evolving the
investment strategy, and allocating capital effectively.
One area we have not succeeded in as much as we hoped
is maintaining a share price that more accurately reflects
what we believe to be the true value of PAC.
The fact that the acquisition prices being discussed are
notably higher than the pre-offer trading price suggests
our intuition about PAC’s value may be right. Ultimately,
our job is to deliver value to our shareholders. It now
appears possible that delivering this value will be best
achieved by selling PAC.
As PAC potentially moves into uncharted territory, I
want to say thank you for your insights, critiques, and
encouragement. It has all contributed to making us a
better company, for which we are deeply grateful. I am
also exceptionally appreciative of the PAC board and
employees, whose
invaluable contributions to PAC
have positioned PAC to deliver considerable value to
its shareholders, regardless of our future ownership
structure.
Paul Greenwood
Managing Director, Chief Executive Officer
and Chief Investment Officer
BOARD OF
DIRECTORS
6
7
Antony Robinson
Non-Executive
Chairman1
Paul Greenwood
Executive Managing
Director
Jeremiah Chafkin
Non-executive
Director
Melda Donnelly
Non-executive
Director
Gilles Guérin
Lead Independent
Director2
Peter Kennedy
Non-executive
Director
Notes:
1
Mr. Robinson is not presently considered by the Board to be independent. Refer to the Company’s Corporate Governance Statement available
on its website at Corporate Governance - Pacific Current Group (paccurrent.com).
2 Mr. Guerin was appointed by the Board as Lead Independent Director on 24 August 2023.
See pages 9 to 10 for further information
Annual Report 2023 CONTENTS
Your Directors submit their Report
for the year ended 30 June 2023.
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Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Index to the Notes to the Financial Statements
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
102 ASX Additional Information
104 Corporate Information
DIRECTORS’
REPORT
8
9
Your Directors submit their Report for the year ended 30 June 2023.
Directors and Officers
The Directors and officers of Pacific Current Group Limited (the “Company”) at the date of this report or at any time during the
financial year ended 30 June 2023 were:
Name
Mr. Antony Robinson
Mr. Paul Greenwood
Mr. Jeremiah Chafkin
Ms. Melda Donnelly
Mr. Gilles Guérin
Mr. Peter Kennedy
Ms. Clare Craven
Notes:
Role
Non-Executive Chairman¹
Executive Managing Director
Non-Executive Director
Non-Executive Director
Lead Independent Director²
Non-Executive Director
Company Secretary
1
Mr. Robinson is not presently considered by the Board to be independent. Refer to the Company’s Corporate Governance Statement available on its
website at Corporate Governance - Pacific Current Group (paccurrent.com).
2 Mr. Guerin was appointed by the Board as Lead Independent Director on 24 August 2023.
Names, Qualifications, Experience and Special Responsibilities
Mr. Antony Robinson, BCom, MBA, CPA (Non-Executive Chairman)
Mr. Robinson joined the Board on 28 August 2015, in the capacity of Non-Executive Director. He became an Executive Director
on 20 April 2016 before returning to a Non-Executive Director on 1 September 2018. On 1 October 2018, he was appointed
Chairman. He has significant expertise and experience across a number of industries, including banking, financial services,
telecommunications, and transport. He is an experienced company director and Chief Executive Officer. His previous executive
roles include Managing Director of IOOF Ltd and OAMPS Limited.
Mr. Robinson is the Managing Director of PSC Insurance Group Limited (since July 2015) and the Chairman of River Capital Pty Ltd.
He was formerly a Director of Tasfoods Limited (May 2014 - March 2018), a Director of Bendigo and Adelaide Bank Limited (April
2016 - November 2021) and Non-Executive Chairman of Longtable Group Ltd (now Maggie Beer Holdings Limited) (from October
2015 - November 2019).
Mr. Robinson is a member of the Audit and Risk Committee and the Remuneration, Nomination and Governance Committee.
Mr. Paul Greenwood, BA, CFA (Executive Managing Director)
Mr. Greenwood joined the Board on 10 December 2014 as an Executive Director. He co-founded Northern Lights Capital Group,
LLC (“Northern Lights”) in 2006 which merged with Treasury Group Ltd in November 2014 to form Pacific Current Group Limited.
Effective from 1 July 2018, Mr. Greenwood was appointed to the roles of Managing Director, Chief Executive Officer and Global
Chief Investment Officer (“MD, CEO and CIO”) in the Company.
Prior to Northern Lights, he created Greenwood Investment Consulting (“GIC”), a firm that worked directly with investment managers
on investment process and organisational issues. Before GIC, Mr. Greenwood served as Director of US Equity for Russell Investment
Group (“Russell”), where he managed all of Russell’s US equity-oriented portfolio management and research activities. He also served
as a Russell spokesperson and authored many articles and research commentaries related to investment manager evaluation.
Mr. Greenwood is a Non-Executive Director of GQG Partners Inc (since October 2021) and serves as the Company’s representative
on numerous committees and boards of portfolio companies that the Company has invested in. He is also a member of the Advisory
Board of Simcoe Capital (doing business as Signia Capital Management).
Mr. Jeremiah Chafkin, BScEcon, MBA Fin (Non-Executive Director)
Mr. Chafkin joined the Board on 10 April 2019. He has over 30 years’ experience in financial services leadership in the asset
management sector, primarily in North America. He is currently the Chief Investment Officer of Retirement Income Advisors, LLC
(dba Preservation Capital Management).
He was previously the Vice Chairman Investments of AssetMark Financial Holdings, Inc. (until April 2022). He was also previously
CEO at AlphaSimplex Group, IXIS Asset Management US and spent nearly a decade at Charles Schwab in a range of leadership
roles. He began his career at Bankers Trust Company where he spent almost 15 years in a variety of asset management roles
working with institutional clients in the USA and abroad.
Mr. Chafkin is a member of the Audit and Risk Committee and the Remuneration, Nomination and Governance Committee.
Annual Report 2023 DIRECTORS’
REPORT
continued
Ms. Melda Donnelly, CA, OAM B.C. (Non-Executive Director)
Ms. Donnelly joined the Board on 28 March 2012. She is the founder and former chairperson of the Centre for Investor Education,
a specialist education and consultancy firm for executives in Australian superannuation funds, institutional investment bodies and
the financial services markets. Her previous work experience includes CEO of the Queensland Investment Corporation, Deputy
Managing Director of ANZ Funds Management and Managing Director of ANZ Trustees.
Ms. Donnelly is a Non-Executive Director of GQG Partners Inc (since October 2021) and Chair of Coolabah Capital Investments
Pty Limited.
Ms. Donnelly has held a range of directorships of both Australian and international companies including Non-Executive Director
of Ashmore Group plc, trustee director of UniSuper, Deputy Chair of the Victorian Funds Management Corporation, Chair of Plum
Financial Services Nominees Pty Ltd and a member of the Investment Committee of HESTA Super Fund.
Ms. Donnelly is the Chair of the Audit and Risk Committee and a member of the Remuneration, Nomination and Governance
Committee.
Mr. Gilles Guérin, BA MSc, (Lead Independent Director)
Mr. Guérin joined the Board on 10 December 2014. He has over 20 years’ experience in capital markets and investment
management. This includes cross asset class experience spanning the equities, fixed income and commodities markets, with a
specific focus on alternative strategies and hedge funds. During his career, Mr. Guérin has managed relationships with investors and
distributors across the world, in particular Europe, the United States of America (the “USA”), Japan, the Middle East and Australia.
He has operated distribution capabilities worldwide and developed new products and investment capabilities. Throughout his
career, he liaised with regulators across various jurisdictions and worked with thought leaders of the investment industry including
Dr Andrew Lo and Dan Fuss.
He is a Director of U-Access (Ireland) UCITS plc.
Mr. Guerin was the CEO of BNP Paribas Capital Partners (retired September 2021), where he worked developing the alternative
investment capabilities of the BNP Paribas Group. He also served as CEO and President of Natixis Global Associates, Executive of
Natixis AM North America and held Executive and senior leadership roles at HDF Finance, AlphaSimplex, IXIS AM and Commerz
Financial Products. He was previously a Non-Executive Director of Ginjer AM and Chair of INNOCAP.
Mr. Guérin is a member of the Audit and Risk Committee and the Remuneration, Nomination and Governance Committee.
Mr. Peter Kennedy, B.Ec. L.L.M. (Tax) (Non-Executive Director)
Mr. Kennedy joined the Board on 4 June 2003. He is the founding partner of the commercial law firm, Madgwicks Lawyers, and
has more than 40 years’ experience in commercial law advising a broad range of clients across a variety of sectors. He is a member
of the Madgwicks’ Dispute Resolution practice and was formerly Madgwicks’ Managing Partner for over 16 years, where he played
an integral role in the governance and management of the firm.
Mr. Kennedy also sits on the boards of a number of companies in the manufacturing, property and retail industries and is Chair of
Treasury Group Investment Services Pty Ltd, a wholly owned subsidiary of the Company.
Mr. Kennedy is the Chair of the Remuneration, Nomination and Governance Committee and a member of the Audit and Risk
Committee.
Ms. Clare Craven, BLegS, FGIA, FCG, GAICD (Company Secretary)
Ms. Craven has over 20 years’ legal, company secretarial and governance experience gained in various listed and private companies.
She has a deep understanding of financial services, wealth management, corporate governance, risk management and compliance.
She currently acts as Company Secretary for several of Company Matters Pty Limited’s clients.
Ms. Craven previously held various senior leadership roles at Westpac Banking Corporation including Head of Westpac Secretariat,
Head of Westpac Subsidiaries and Head of BT Secretariat. Ms. Craven’s previous roles included Company Secretarial Consultant
to various public and private companies in the financial services, construction, insurance and health services sector, legal and
corporate advisory roles at NRMA Ltd and NRMA Insurance Limited (including Company Secretary), and as an Associate Solicitor
in private practice.
Ms. Craven is admitted as a Solicitor of the Supreme Court of NSW, holds a Bachelor of Legal Studies and a Graduate Diploma in
Applied Corporate Governance.
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NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES
The Company is a company limited by shares and is incorporated and domiciled in Australia. Its shares are listed for trading on the
Australian Securities Exchange (“ASX”) with the ticker code PAC. The Company and its controlled entities (the “Group”) invest in asset
managers, private advisory, placement and investment related firms on a global basis. The Group also provides, on an as agreed basis,
distribution and management services to specific investee companies.
The primary criteria the Company looks for in these potential investments are high quality people, a robust investment process,
competitive performance and strong growth potential. The strategy of the Company is to build shareholder value through identifying,
investing, and managing investments in investment management firms that exhibit moderate to high sustainable growth while
delivering exceptional results to their clients.
The Company is agnostic in respect to geography so long as an investment meets the Group’s investment criteria. The Group invests
across the life cycle continuum, from start-up opportunities to established but growing businesses. The portfolio is targeted to have a
mix of businesses from those with solid earnings to those with dramatic earnings acceleration, albeit from a smaller investment base.
OPERATING AND FINANCIAL REVIEW
REVIEW OF OPERATIONS
Investment activities during the year
Restructuring of investments
On 31 August 2022, the Group through Aurora Investment Management Pty Ltd (as the Trustee of The Aurora Trust), Hareon
Solar Singapore Private Limited (“Hareon”), Nereus Capital Investments (Singapore) Pte. Ltd (“NCI”) and Nereus Holdings Inc
executed a Settlement and Release Deed (the “Deed”) whereby the parties have agreed to the full satisfaction of the obligations of
the Group to Hareon in the amount of USD11,869,000 ($17,638,000). The Group paid Hareon USD7,000,000 ($10,403,000) on
16 September 2022 and the remaining balance of USD4,869,000 ($7,235,000) on 31 October 2022. With the full settlement of
the liability to Hareon, the Group’s obligations to Hareon were terminated in its entirety pursuant to the Deed.
The Group now classifies its investment in NCI as a joint venture and continues to look for opportunities to exit the investment in
an orderly fashion by actively offering the underlying investments for sale.
Acquisition of a new investment
On 6 April 2023, the Group acquired an interest in Cordillera Investment Partners, LP (“Cordillera”) and special limited partnership
interests in limited partnership vehicles managed by Cordillera for USD29,880,000 ($44,405,000). The Group is entitled to 16.38%
gross revenues, funds, carried interest and proceeds received by Cordillera less certain costs and expenses and 24.90% liquidation
proceeds in the event of sale. The investment has been accounted for as a financial asset at fair value through profit or loss.
Cordillera is based in San Francisco, California, USA and has three strategies that focus on investing in niche, non-correlated private
investments with the objective of diversifying and attractive risk-adjusted returns. It targets unique asset classes that are not yet
heavily trafficked by other institutional investors.
Sale of investments
On 31 December 2022, with the effect from 1 July 2022, Blackcrane Capital, LLC (“Blackcrane”) purchased and redeemed the 25% equity
ownership of the Group in Blackcrane with a potential value of up to USD250,000 ($372,000) to be paid as an earn-out. Blackcrane shall
pay the Group in one or more installments in an amount equal to, for each financial year, 50% of all Blackcrane’s revenues in excess of
USD1,500,000 ($2,229,000) until such time as the full amount of purchase price has been paid in full to the Group. At 30 June 2023,
Blackcrane is in the process of winding down its operations therefore the Group did not recognise any value on the potential earn-out.
On 14 June 2023, Proterra Investment Partners, LP (“Proterra”) and the Group agreed to sell Proterra’s line of business held by its
subsidiary Proterra Investment Partners Asia PTE. Ltd. (“Proterra Asia”), to Challenger Funds Management Holdings Pty Limited,
a subsidiary of Challenger Limited (ASX: CGF). On 17 June 2023, the Group received its share of the proceeds of USD8,320,000
($12,364,000) less USD508,000 ($755,000) of transaction costs. The sale of Proterra Asia did not change the Group’s equity
interest in Proterra.
Other investment activities
On 2 December 2022, the Group extended a Secured Credit Facility Promissory Note (“Credit Facility”) to Astarte Capital Partners,
LLP (“Astarte”) of up to USD600,000 ($892,000). The Credit Facility has a term of five years and bears a 10% interest per annum.
A full draw down was made by Astarte during the year. The transaction is classified as a financial asset at amortised cost.
On 14 December 2022, the Group extended a Credit Facility to Capital & Asset Management Group (“CAMG”) of up to GBP200,000
($358,000). The Credit Facility has a term of two years and bears a 10% interest per annum. A full draw down was made by CAMG
during the year. At the date of the transaction, this was classified as a financial asset at amortised cost.
On 21 December 2022, the Group partially settled its earn-out obligation to Pennybacker Capital Management, LLC (“Pennybacker”)
of USD1,591,000 ($2,364,000) as a result of reaching certain revenue thresholds for Pennybacker’s income platforms.
On 27 January 2023, the Group extended a short-term Credit Facility Promissory Note to IFP Group, LLC of USD250,000 ($372,000).
The Credit Facility bears a 10% to 15% interest per annum. The transaction is classified as a financial asset at amortised cost.
Annual Report 2023 DIRECTORS’
REPORT
continued
Financing activities during the year
The fully franked final dividend declared on 26 August 2022 in respect of the 2022 financial year was paid on 11 October
2022 totalling to $11,764,000 of which $10,500,000 was paid in cash and $1,264,000 was through the Dividend Reinvestment
Plan (“DRP”).
The fully franked interim dividend declared on 24 February 2023 in respect of the 2023 financial year was paid on 13 April 2023
totalling to $7,701,000 of which $6,080,000 was paid in cash and $1,621,000 was through the DRP.
Refer to Dividend section in this report for further details.
On 24 October 2022, the Company secured a USD50,000,000 ($74,306,000) Senior Secured Debt Facility (“Debt Facility”) from
Washington H. Soul Pattinson and Company Limited (“WHSP”). The Debt Facility has a term of five years from the first draw down
(subject to extension option) and bears an interest per annum of the aggregate of a term secured overnight financing rate (subject
to a floor of 1%) and 4.8% margin. In addition, the Group is required to maintain a loan to net assets ratio of less than 0.5 times.
The Debt Facility is secured by the assets of the Group.
On 26 October 2022, the initial amount of USD30,000,000 ($44,583,000), excluding the 2.5% discount on the proceeds of
USD750,000 ($1,115,000), was drawn down. The remaining USD20,000,000 ($29,723,000) will be drawn down in two equal
amounts as requested by the Company. The Debt Facility is classified as a financial liability at amortised cost.
Funds under management (“FUM”)
As at 30 June 2023, the FUM of the Group’s asset managers was $204,349,907,000 (2022: $169,288,461,000).
Open-end Boutiques
Closed-end Boutiques
FUM as at
30 June
2022
USD’000
FUM as at
30 June
2023
USD’000
FUM as at
30 June
2022
USD’000
FUM as at
30 June
2023
USD’000
Total
FUM as at
30 June
2022
USD’000
Total
FUM as at
30 June
2023
USD’000
Tier 1 - Boutiques reporting
in USD
Aether Investment
Partners, LLC
Banner Oak Capital
Partners, LP1
Carlisle Management
Company, S.C.A.
Cordillera Investment
Partners, LP2
Proterra Investment
Partners, LP1
Victory Park Capital
Advisors, LLC3
Tier 2 - Boutiques reporting
in USD
Astarte Capital
Partners, LLP4
Blackcrane Capital, LLC
–
–
–
–
1,588,770
1,545,245
1,588,770
1,545,245
6,237,400
7,388,800
6,237,400
7,388,800
1,124,708
987,619
1,032,198
1,002,931
2,156,906
1,990,550
GQG Partners Inc.
86,700,000
104,100,000
–
158,234
–
–
1,253,512
–
1,411,746
–
86,700,000
104,100,000
–
–
–
–
4,020,836
3,711,960
4,020,836
3,711,960
5,435,855
5,712,846
5,435,855
5,712,846
87,824,708
105,245,853
18,315,059
20,615,294
106,139,767
125,861,147
EAM Global Investors, LLC
1,415,067
1,477,911
–
14,552
–
–
529,050
642,226
529,050
642,226
–
–
–
–
14,552
–
1,415,067
1,477,911
Pennybacker Capital
Management, LLC5
Total Boutiques reporting
in USD
–
273,567
2,370,644
2,690,504
2,370,644
2,964,071
1,429,619
1,751,478
2,899,694
3,332,730
4,329,313
5,084,208
89,254,327
106,997,331
21,214,753
23,948,024
110,469,080
130,945,355
12
13
Open-end Boutiques
Closed-end Boutiques
FUM as at
30 June
2022
$’000
FUM as at
30 June
2023
$’000
FUM as at
30 June
2022
$’000
FUM as at
30 June
2023
$’000
Total
FUM as at
30 June
2022
$’000
Total
FUM as at
30 June
2023
$’000
129,275,409
160,621,682
30,727,316
35,950,167
160,002,725
196,571,849
Total Boutiques reporting
in USD (converted in
Australian dollar)
Tier 2 - Boutiques reporting
in Australian dollar
Roc Partners Capital Pty Ltd
–
–
9,285,736
7,778,058
9,285,736
7,778,058
Total
129,275,409
160,621,682
40,013,052
43,728,225
169,288,461
204,349,907
Boutique
Tier 1 (excluding GQG
Partners Inc.)9
Tier 2
Subtotal
Total FUM as at
30 June 2022
$’000
Inflows from
Boutique
Acquisitions
$’000
Net Flows6
$’000
Other7
$’000
Foreign
Exchange
Movement8
$’000
Total FUM as at
30 June 2023
$’000
28,156,437
2,004,743
15,556,287
–
813,439
(758,714)
636,711
370,735
1,055,952
32,667,282
242,034
15,410,342
43,712,724
2,004,743
54,725
1,007,446
1,297,986
48,077,624
GQG Partners Inc.9
125,575,737
–
11,647,688
14,655,559
4,393,299
156,272,283
Total Boutiques
169,288,461
2,004,743
11,702,413
15,663,005
5,691,285
204,349,907
Notes:
1
Banner Oak Capital Partners LP (“Banner Oak”) and Proterra represent regulatory FUM from one quarter in arrears. Although Pennybacker and
Carlisle Management Company, S.C.A. (“Carlisle”) previously reported FUM one quarter in arrears as well, those two boutiques are now reporting
current quarter FUM so the information above is through 30 June 2023.
2 The Group invested in Cordillera on 6 April 2023.
3
4
5
6
7
8
Victory Park Capital Advisors, LLC (“VPC”) has sponsored multiple Special Purpose Acquisition Companies (“SPACs”). SPACs do not represent funds
under management and are not reported in the numbers above. Rather, these amounts may economically benefit VPC through enhanced performance
fees generated from the vehicles/funds managed by VPC that provide risk capital to the SPACs. VPC FUM includes its regulatory capital for 30 June
2023, as well as other client FUM where VPC is paid a one-time, upfront fee.
Represents aggregate FUM of funds managed by investment managers in which Astarte has an interest as well as the unallocated committed capital
from funds managed by Astarte.
Pennybacker recently launched a hybrid strategy where investors commit funds for a period of two years, then it becomes an Open-end fund. Above
table is adjusted to classify it as Open-end despite the remaining committed period.
For Closed-end funds, Net Flows includes additional capital commitments. Distributions to limited partners of Closed-end funds will be reflected as
reduction in Net Asset Value, which is included in the ‘Other’ category.
Other includes investment performance, market movement and distributions.
The Australian dollar (“AUD”) has declined in value against the USA dollar (“USD”) during the year resulting to a favourable foreign exchange movement
of USD denominated FUM when converted to AUD. The AUD/USD was 0.6661 as at 30 June 2023 compared to 0.6904 as at 30 June 2022. The
Net Flows and Other items are calculated using the average rates.
9 GQG Partners Inc. (“GQG Inc)” being a listed entity is shown separately. GQG Inc continues to be a Tier-1 boutique in the Group portfolio.
The relationship between the boutiques’ FUM and the economic benefits received by the Group can vary dramatically based on
factors such as:
– the fee structures of each boutique including whether revenue is generated off committed or invested capital;
– the Group’s ownership interest in the boutique; and
– the specific economic features of each relationship between the Group and the boutique.
Annual Report 2023 DIRECTORS’
REPORT
continued
Accordingly, the Company cautions against simple extrapolation based on FUM trends.
Tier 1 Boutique is a term used to describe an asset manager that the Group expects to produce at least an average of $4,000,000
of annual earnings for the Group over the next three years, while a Tier 2 Boutique is one that the Group expects will contribute
less than this. Although there is no guarantee any Tier 1 Boutique will meet this threshold, this categorisation is intended to provide
insight into which boutiques are expected to be the most economically impactful to the Group.
Open-end is a term used by the Group to indicate FUM that are not committed for an agreed period and therefore can be
redeemed by an investor on relatively short notice. Closed-end is a term used by the Group to denote FUM where the investor
has committed capital for a fixed period and redemption of these funds can only eventuate after an agreed time and in some cases
at the end of the life of the fund.
Ownership Adjusted FUM by Pacific Current Group boutique manager in USD
Private Market /
Public Market
Strategy
Total FUM as at
30 June 2022
USD’000
Total FUM as at
30 June 2023
USD’000
Group Interest
Ownership
Adjusted
FUM as at
30 June 2022
USD’000
Ownership
Adjusted
FUM as at
30 June 2023
USD’000
Tier 1
Aether Investment
Partners, LLC
Banner Oak Capital
Partners, LP
Carlisle Management
Company, S.C.A.
Cordillera Investment
Partners, LP
GQG Partners Inc.
Proterra Investment
Partners, LP
Victory Park Capital
Advisors, LLC
Tier 2
Astarte Capital Partners,
LLP
Blackcrane Capital, LLC
Private
1,588,770
1,545,245
100.00%
1,588,770
1,545,245
Private
6,237,400
7,388,800
35.00%
2,183,090
2,586,080
Private
2,156,906
1,990,550
40.00%
862,762
796,220
Private
–
1,411,746
24.90%
–
351,525
Public
86,700,000
104,100,000
4.03%
3,494,010
4,195,230
Private
4,020,836
3,711,960
16.00%
643,334
593,914
Private
5,435,855
5,712,846
24.90%
1,353,528
1,422,499
Private
Private
529,050
642,226
44.46%
235,216
285,534
14,552
–
25.00%
3,638
–
EAM Global Investors, LLC
Public
1,415,067
1,477,911
18.75%
265,325
277,108
Pennybacker Capital
Management, LLC
Private
2,370,644
2,964,071
16.50%
391,156
489,072
Roc Partners Capital Pty Ltd
Private
6,411,057
5,181,313
30.01%
1,923,958
1,554,912
Total
116,880,137
136,126,668
12,944,787
14,097,339
The Group interest used in the calculation of Ownership Adjusted FUM (“OAF”) reflects the proportion of proceeds that the
Group, absent any distribution preferences, would receive in the event of the sale or liquidation of the business. The portfolio
above does not include boutiques that do not manage FUM.
People
The Company employed 20 full time equivalent employees at 30 June 2023 (2022: 20) working in its Australian office located in
Melbourne and USA offices located in Tacoma and Denver. This headcount excluded the employees of portfolio companies that
are consolidated into the Group.
14
15
Financial Review
Operating results for the year
The Group’s net loss after tax (“Statutory Results”) and loss per share are prepared in accordance with Australian Accounting Standards.
The Group also reports non-International Financial Reporting Standards (“non-IFRS”) financial measures such as “underlying net profit
before tax”, “underlying net profit after tax”, “underlying earnings per share”, and “normalised cash flows” which are shown in the
subsequent pages of this Report.
Underlying net profit after tax (“NPAT”) attributable to members of the Company
The Group generated a net loss before tax (“NLBT”) of $17,545,000 for the year ended 30 June 2023 (2022: $48,186,000 was NLBT);
a decrease in loss of 63.59%. This result, however, has been significantly impacted by non-cash, non-recurring and/or infrequent
items. Normalising this result for the impact of these non-cash and other normalising adjustments/items results in underlying NPAT to
members of the Company of $26,053,000 (2022: $27,134,000), a decrease of 3.98%.
Reported NLBT
Non-cash items
– Amortisation of identifiable intangible assets1
– Fair value adjustments of financial assets at fair value through profit or loss (“FVTPL”)
– Fair value adjustments of financial liabilities at FVTPL
– Impairment of investments and boutique receivables2
– Share-based payment expenses
– Other
Other normalising adjustments/items
– Deal, establishment and litigation costs3
– Net foreign exchange loss
– Hareon liability settlement expense
Unaudited underlying NPBT
Income tax expense4
Unaudited underlying NPAT
Less: non-controlling interests
Unaudited underlying NPAT attributable to the members of the Company
Notes:
2023
$’000
2022
$’000
(17,545)
(48,186)
8,977
17,904
(3,223)
14,022
2,055
130
39,865
3,788
657
4,927
9,372
31,692
(4,102)
27,590
(1,537)
26,053
7,218
66,327
414
4,182
1,206
–
79,347
2,117
1,124
983
4,224
35,385
(5,748)
29,637
(2,503)
27,134
1 The amortisation of identifiable intangible assets included the amortisation of intangible assets of the associates and joint venture amounting to
$5,953,000 (2022: $4,457,000). The amortisation is recorded as an offset to the share in net profit of the associates.
2
3
The impairment relates to the impairment of investment in Aether Investment Partners, LLC (“Aether”) and CAMG, and loan receivable from CAMG
(2022: Blackcrane and CAMG, and receivable from Blackcrane).
These were costs incurred in relation to the derivative action against several of the Group’s current and former directors, together with deal costs
on the acquisitions of investments.
4 The net income tax expense is the reported income tax expense adjusted for the tax effect of the normalisation adjustments.
Annual Report 2023 DIRECTORS’
REPORT
continued
Non-IFRS Financial Measures
Non-IFRS financial measures are measures that are not defined or specified under IFRS. The Directors believe that non-IFRS
measures assist in providing meaningful information about the Group’s performance and periodic comparability. The non-IFRS
measures should not be viewed as substitute for the Group’s Statutory Results.
The underlying NPAT, normalised cash flow from operations and unaudited underlying earnings per share are forms of non-IFRS
financial information per ASIC Regulatory Guide (RG) 230: Disclosing non-IFRS financial information. Non-IFRS financial measures
are not subject to review or audit.
The criteria for calculating the underlying NPAT attributable to members of the Company are based on the following:
– Non-cash items relate to income and expenses that are accounting entries rather than movements in cash; and
– Non-recurring items relate to income and expenses from events that are infrequent in nature including their related costs and
foreign exchange impact.
Loss per share
Set out below is a summary of the loss per share.
Reported net loss after tax (“NLAT”) attributable to the members of the Company ($’000)
(15,791)
(35,270)
Unaudited underlying NPAT attributable to the members of the Company ($’000)
26,053
27,134
Weighted average number of ordinary shares on issue (Number)
51,334,916
51,004,607
2023
2022
Basic loss per share (cents)
Diluted loss per share (cents)
Unaudited underlying earnings per share (cents)
(30.76)
(30.76)
50.75
(69.15)
(69.15)
53.20
The options outstanding at end of financial year is anti-dilutive and were not included in determining the weighted average number
of ordinary shares for diluted loss per share.
Dividends
Dividends paid or declared by the Company to members since the end of the previous financial year:
Declared and paid during the financial year:
– Final for 2022 on ordinary shares
– Interim for 2023 on ordinary shares
Declared after the end of the financial year:
– Final for 2023 on ordinary shares
Cents per
Share
Total Amount
$’000
Franked at
30%
Date of
Payment
23.00
15.00
11,764
7,701
19,465
100% 11 October 2022
100%
13 April 2023
23.00
11,862
67.3% 12 October 2023
Total dividends relating to financial year 2023 amounted to 38.00 cents per share which is comparable to 38.00 cents per share
in the financial year 2022.
On 26 August 2022, the Company declared a fully franked final dividend of 23.00 cents per share (30 August 2021: 26.00 cents
per share) in respect of the 2022 financial year. The total amount of the dividend was $11,764,000. The final dividend for the 2022
financial year was eligible for the DRP. Shares issued under the DRP were priced at average daily Volume Weighted Average Price
(“VWAP”) calculated over a 10-day period commencing on the third trading day following the record date, being 8 September 2022.
On 11 October 2022, the Company issued 176,562 new fully paid ordinary shares at an issue price of $7.16 each to shareholders
who reinvested their dividend entitlement in accordance with the DRP. Total dividends reinvested amounted to $1,264,000.
On 24 February 2023, the Company declared a fully franked interim dividend of 15.00 cents per share (25 February 2022:
15.00 cents per share) in respect of the 2023 financial year. The total amount of the dividend was $7,701,000. The interim dividend
for the 2023 financial year was eligible for the DRP. Shares issued under the DRP were priced at the average daily VWAP calculated
over a 10-day period commencing on the third trading day following the record date, being 9 March 2023.
16
17
On 13 April 2023, the Company issued 236,267 new fully paid ordinary shares at an issue price of $6.86 each to shareholders who
reinvested their dividend entitlement in accordance with the DRP. Total dividends reinvested amounted to $1,621,000.
On 25 August 2023, the Directors of the Company declared a final 67.3% franked dividend of 23.00 cents per share (26 August
2022: 23.00 cents per share). The dividend has not been provided for in the 30 June 2023 consolidated financial statements.
Cash flows
Set out below is a summary of the cash flows for the year ended 30 June 2023.
Cash provided by operating activities
Cash (used in)/provided by investing activities
Cash provided by/(used in) financing activities
Net (decrease)/increase in cash and cash equivalents
2023
$’000
21,822
(55,115)
22,099
(11,194)
2022
$’000
23,468
1,465
(19,881)
5,052
Operating activities
Cash flows from operations have decreased from a net inflow of $23,468,000 for the year ended 30 June 2022 to net inflow of
$21,822,000 for the year ended 30 June 2023. This was mainly attributable to the increase in income tax paid of $15,032,000
for this year from of $8,803,000 in the prior year due to tax paid in the UK and increase in tax payments in the USA. In addition,
payment of interest also increased from $47,000 in the prior period to $2,970,000 mainly from the interest on the Debt Facility.
Investing activities
Cash flows from investing activities have decreased from a net inflow of $1,465,000 for the year ended 30 June 2022 to net
outflow of $55,115,000 for the year ended 30 June 2023. This was primarily attributable to the acquisition of equity interest in
Cordillera ($44,405,000), repayment of Hareon liability ($17,638,000), and offset by the proceeds from sale of equity interest in
Proterra Asia ($12,364,000). In the prior year, this was primarily attributable proceeds from the disposal of 1% equity interest in
GQG Partners LLC ($58,089,000), offset by acquisition of equity interest in Banner Oak ($48,257,000) and additional contributions
to associates ($6,973,000).
Financing activities
Cash flows from financing activities increased from a net outflow of $19,881,000 for the year ended 30 June 2022 to net inflow of
$22,099,000 for the year ended 30 June 2023. This was mainly attributed to the proceeds from the Debt Facility of $44,583,000
and offset by the payment of dividends of $16,580,000 excluding dividends reinvested of $2,885,000 (30 June 2022: payment of
dividends of $18,599,000 excluding dividends reinvested of $2,272,000).
Annual Report 2023 DIRECTORS’
REPORT
continued
Normalised cash flow from operations
The normalised cash flow from operations is presented to reconcile the unaudited underlying NPBT with the cash provided by
operating activities.
Unaudited underlying NPBT
Cash items1
– Dividends and distributions received
– Net interest (paid)/received
Non-cash items2
– Dividends and distributions income
– Share of profits of associates and joint venture3
– Net interest expense/(income)
– Depreciation of plant and equipment and amortisation of right-of-use assets
Increase/decrease in assets and liabilities4
Unaudited underlying pre-tax cash from operations
Non-recurring/infrequent items5
– Deal, establishment and litigation costs
– Net foreign exchange loss/(gain)
Pre-tax cash from operations
Income tax paid
Cash provided by operating activities
2023
$’000
2022
$’000
31,692
35,385
46,014
(2,766)
43,248
(27,293)
(14,015)
3,110
693
33,762
102
33,864
(22,418)
(12,587)
(79)
508
(37,505)
(34,576)
1,470
38,905
(3,788)
1,737
(2,051)
36,854
(15,032)
21,822
73
34,746
(2,117)
(358)
(2,475)
32,271
(8,803)
23,468
The main drivers for the decrease in the cash provided by operating activities during the year is primarily the increase in income
tax paid due to the taxable gain on the disposal of 1% interest in GQG LLC.
Notes:
1 Cash items are added to reflect the actual receipts.
2
Share of profits of associates and joint venture exclude the related amortisation of associates and joint venture intangible assets of $5,953,000
(2022: $4,457,000).
3 Non-cash items are either deducted if income or added if expense to remove the non-cash components in the unaudited underlying NPBT.
4
Increase/decrease in assets and liabilities relate to the differences in the beginning and closing balances of operating assets and liabilities.
5 Non-recurring/infrequent items are included as deductions since these items were excluded in the determination of unaudited underlying NPBT.
Financial position
Set out below is a summary of the financial position at end of financial year.
Cash and cash equivalents
Other current assets
Current liabilities
Non-current assets
Non-current liabilities
Non-controlling interest
Net assets attributable to the members of the Company
Net assets per share at end of financial year
Annual Report 2023
18
19
2023
$’000
23,201
20,854
2022
$’000
34,886
12,116
(9,204)
(22,773)
34,851
24,229
562,255
557,715
(86,876)
(55,218)
510,230
526,726
(708)
(1,916)
509,522
524,810
$
9.88
$
10.26
Included in the cash balances are amounts held by operating subsidiaries. The remainder of the cash and cash equivalents at
30 June 2023 amounted to $16,096,000 (2022: $23,480,000) which was held by Central Administration that can be used to
provide the Group with liquidity and flexibility to fund future acquisition of new businesses.
The decrease in net assets is attributed mainly to the impairment of investments, reduction in the value of fair value investments,
increase in financial liabilities as a result of the Debt Facility obtained during the year and offset by acquisition of interest in
Cordillera.
Set out below is a summary of the contribution to the net assets of the Group from the Boutique Investments:
Aether and Aether General Partners
Astarte and ASOP Profit Share LP (“ASOP PSP”)
Banner Oak
Carlisle
Cordillera
EAM Global Investors, LLC (“EAM Global”)
GQG Inc
IFP
Pennybacker
Proterra
Roc Group
VPC and Victory Park Capital GP Holdco, L.P. (“VPC-Holdco”)
Other
Book value of Boutique Investments
2023
$’000
41,254
8,224
50,247
65,067
44,855
9,331
2022
$’000
55,001
7,638
51,308
75,179
–
14,381
164,983
173,917
7,537
28,724
39,612
10,011
80,423
1,934
9,568
24,642
40,404
9,547
81,605
7,052
552,202
550,242
DIRECTORS’
REPORT
continued
MATERIAL BUSINESS RISKS
Set out below are the material business risks faced by the Group that are likely to have an impact on the financial prospects of the
Group and how the Group manages these risks.
Global market risks
With a diversified global portfolio, the Group is exposed to a variety of risks related to global capital markets. Specifically, social,
political, geographical, and economic factors impact the performance of different capital markets in ways that are difficult to
predict. Equity market decline represents a significant risk to the Group because several of its affiliates’ revenues are directly tied
to the performance of public equities.
Fund manager performance
The aggregate FUM of many of the Group’s affiliates are highly sensitive to the relative performance (results compared to a market
benchmark) of each investment manager as well as the changing demand for specific types of investment strategies. In addition
to performance related risks, many boutique partners have high levels of key man risk, making them vulnerable to the sudden
departure of critically important investment professionals. Because many investments are made in new or young firms, there
is often the risk of firms failing to reach critical mass and become self-sustaining, which can lead them to seek additional capital
infusions from the Company or other parties.
Regulatory environment
The business of the Group operates in a highly regulated environment that is frequently subject to review and regular change of law,
regulations and policies. The Group is also exposed to changes in the regulatory conditions under which it and its boutique fund
managers operate in Australia, the USA, the United Kingdom (the “UK”), Continental Europe, and India. Each member boutique has
in-house risk and regulatory experts actively managing and monitoring each member boutique’s regulatory compliance activities.
Regulatory risk is also mitigated by the use of industry experts when the need arises.
Loss of key personnel
The Group operates in an industry that requires talent, wide range of skills and expertise of its people and asset managers. Loss of
these key people and asset managers would be detrimental to the continued success of the Group.
20
21
REMUNERATION REPORT (AUDITED)
Table of Contents
1. About this Remuneration Report
2. Defined terms used in the Remuneration Report
3. Remuneration philosophy and structure
4. Relationship between the remuneration philosophy and Company performance
5. Key management personnel
6. Remuneration of Non-Executive Directors
7. Remuneration of Executive KMP
8. Nature and amount of each element of KMP Remuneration in FY2023
9. Share based remuneration
10. KMP shareholdings
11. Shares under option
12. Performance rights
13. Loans to Directors and executives
1. About this Remuneration Report
The Remuneration Report has been prepared and audited against the disclosure requirements of the Corporations Act 2001
(the “Act”) and its regulations. The Remuneration Report forms part of the Directors’ Report and outlines the Company’s
remuneration framework and remuneration outcomes for the year ended 30 June 2023 for the Company’s Key Management
Personnel (“KMP”).
2. Defined terms used in the Remuneration Report
Term
EPS
Fixed
Remuneration
KMP
LTI
Option
Security
Share
STI
Meaning
Earnings per share, which is used for the purpose of determining performance against agreed at risk remuneration
performance targets. When measuring the growth in EPS to determine the vesting of the at-risk remuneration,
EPS is defined as using the statutory net profit after tax attributable to members of the Company or the unaudited
underlying net profit after tax attributable to members of the Company, divided by the weighted average number
of shares on issue during the year.
Generally, fixed remuneration comprises cash salary, superannuation contribution benefits (in Australia -
superannuation guarantee contribution and in the USA - partial matching of employee 401k defined contribution),
and the remainder as nominated benefits. Fixed remuneration is determined based on the role of the individual
employee, including responsibility and job complexity, performance and local market conditions. It is reviewed
annually based on individual performance and market data.
Key Management Personnel. Those people who have the authority and responsibility for planning, directing and
controlling the activities of the Group, directly or indirectly.
Long Term Incentive. It is awarded in the form of share performance rights or options to senior executives and
employees for the purpose of retention and to align the interests of employees with shareholders.
Option. Means an option to acquire a Share
Security. Means a Share or Option, an interest in a Share or Option, whether legal or equitable, or a right to
acquire or which may convert to a Share or Option.
Share. Means an ordinary share in the Company.
Short Term Incentive. The purpose of the STI is to provide financial rewards to senior executives in recognition of
performance aligned with business and personal objectives. The STI is a cash-based incentive paid on an annual
basis and at the discretion of the Board with reference to agreed outcomes and goals and company performance.
Refer to the respective key employment terms of each KMP set out in Section 7 of this Remuneration Report for
the eligibility of STI’s by assessing their performance against a set of pre-determined key performance indicators.
Annual Report 2023 DIRECTORS’
REPORT
continued
3. Remuneration philosophy and structure
Remuneration philosophy
The performance of the Group depends significantly upon the quality of its Directors and senior executives. The Group therefore
aims to provide market competitive remuneration and rewards to successfully attract, motivate and retain the highest quality
individuals. The Group’s remuneration and benefits are structured to reward people for their individual and collective contribution
to the Company and wider Group’s success, for demonstrating its values and for creating and enhancing value for the Group’s
stakeholders.
To this end, the Group embodies the following principles in its remuneration framework:
Competitive: Provide competitive rewards to attract high calibre executives.
Alignment:
Link executive remuneration to Group performance and enhancing shareholder value year on year.
At risk:
A significant portion of executive remuneration is ‘at risk’ and is dependent upon meeting pre-determined and
agreed performance benchmarks.
Remuneration committee
The Remuneration, Nomination and Governance Committee is a committee of the Board. The objective of this committee is to
assist the Board in the establishment of remuneration and incentive policies and practices for, and in discharging the Board’s
responsibilities relative to the remuneration setting and review of, the Company’s Non-Executive Directors, Executive Director and
other senior executives. The list of responsibilities of the Remuneration, Nomination and Governance Committee is set out in its
charter, which is available on the Group’s website at http://paccurrent.com/shareholders/corporate-governance.
Remuneration structure
The Group rewards its Executive KMP with a level and mix of remuneration that is relevant to their position, responsibilities and
performance during the year, which is aligned with the Company’s strategy, performance and returns to shareholders.
Executive KMP total remuneration comprises both fixed remuneration and variable remuneration, which includes short-term and
long-term incentive opportunities. On recommendation from the Remuneration, Nomination and Governance Committee, the
Board establishes the proportion of fixed remuneration and variable remuneration, reviews Executive KMP total remuneration
annually, and considers performance, relevant comparative remuneration in the market and advice on policies and practices.
Setting a target remuneration mix for Executive KMP is complicated due to the Company operating in different jurisdictions,
which have their own target remuneration mix models. Accordingly, the Group has adopted the target remuneration mix that is
appropriate for each jurisdiction, including giving consideration of the fact that in Australia, variable remuneration is considered
at risk until granted. This is because these amounts are only paid if the KMP is still in the employment of the Group at the date
of payment. In the USA; however, variable remuneration is a contractual right subject to performance conditions being met, i.e.
once the KMP met the performance conditions to qualify for the variable remuneration, the Group is obligated to pay the amounts
regardless of whether the KMP is still in the employment of the Group at the date of payment. As a result, the risks associated with
the different jurisdictions are different and the remuneration mix models differ to accommodate this situation.
Elements of Executive KMP remuneration
Fixed remuneration
Fixed remuneration consists of base salary, superannuation contribution benefits (in Australia - superannuation guarantee
contribution and in the USA – partial matching of employee 401k defined contribution), and the remainder as nominated benefits.
The level of fixed remuneration is set to provide a base level of remuneration that is both appropriate to the position and is
competitive in the market.
Variable remuneration
STI Plan
Under the Group’s STI Plan, Executive KMP have the opportunity to earn an annual incentive award, which is paid in cash. The STI
Plan links the achievement of the Company’s operational targets with the remuneration received by the Executive KMP charged
with meeting those targets. The awarding of an STI cash award is fully at the discretion of the Board on recommendation from the
Remuneration, Nomination and Governance Committee.
22
23
Feature
Terms of the Plan
How is the STI paid?
Any STI award is paid after the assessment of annual performance for the financial year
ended 30 June. For any bonus up to $200,000, 100% will be paid within three months
of year-end and for any bonus above $200,000, 50% will be paid within three months of
year-end and the remaining 50% deferred and paid at the start of the next financial year.
In Australia, the deferred component requires the KMP to complete the service period. In
the USA, the deferred component is a contractual obligation and the KMP is not required
to complete the service period. This arrangement can be varied at the discretion of
the Board.
How much can each Executive
KMP earn?
For FY2023, Executive KMP have a target STI opportunity generally of up to 100% of
base salary.
Outcomes and goals
How is performance measured?
Each year, on recommendation from the Remuneration, Nomination and Governance
Committee, the Board determines the total amount available for the payment of STIs
(bonus pool), based on the underlying profit performance of the Group for the year.
For FY2023, the total amount available for the payment of STIs to Executive KMP was
$751,112 (2022: $701,508).
The Board, on recommendation from the Remuneration, Nomination and Governance
Committee, establishes outcomes and goals which it expects the Executive KMP to achieve,
and against which performance is measured. The outcomes and goals are based on Group
and business unit financial targets (such as statutory and underlying profit performance),
growth and business development targets as well as operational management. The Board
creates these goals and outcome expectations in a manner that is designed to increase
returns to shareholders in the short and long-term. Refer to Section 7 of this Remuneration
Report for details of these goals.
The focus of the outcomes and goals is to drive decision making in a manner that increases
returns to shareholders in the short and long-term. The Board also considers the general
value add to the business and the Company’s stakeholders through areas such as investor
relations, deal origination and strategy.
The Board, on recommendation from the Remuneration, Nomination and Governance
Committee, assesses the individual performance of each Executive KMP. The Board base
their assessment of the Executive KMP’s performance against the outcomes and goals set
out above and other goals and Group and business unit underlying profit performance.
What happens if an Executive
KMP leaves?
If an Executive KMP resigns or is terminated for cause before the end of the financial year,
no STI is awarded for that financial year except for the Accrued Bonus Obligation.
What happens if there is a change
of control?
If the Executive KMP ceases employment during the financial year by reason of redundancy,
ill health, death or other circumstances approved by the Board, the Executive KMP will
be entitled to a pro-rata cash payment based on the Board’s assessment of the Executive
KMP’s performance during the financial year up to the date of ceasing employment.
In the event of a change of control, a pro-rata cash payment will be made, based on the
Remuneration, Nomination and Governance Committee’s recommended assessment of
performance during the financial year up to the date of the change of control and approval
by the Board.
Employee LTI Plan
At the 2021 Annual General Meeting (“AGM”) held on 19 November 2021, shareholders re-approved the Employee Share
Ownership Plan (the “Employee LTI Plan”) and the issue of securities under the Employee LTI Plan. The Company previously
received shareholder approval of the Employee LTI Plan at its AGM held on 30 November 2018.
Annual Report 2023 DIRECTORS’
REPORT
continued
A summary of the Employee LTI Plan is set out below:
Feature
Terms of the Employee LTI Plan
Employee Share
Ownership Plan
What is the objective
of the Employee
LTI Plan?
Under the terms of the Employee LTI Plan:
a. employees (including a director of the Company or its subsidiaries, who holds a salaried
employment or office in the Company or its subsidiaries, such as the Managing Director, Chief
Executive Officer and Chief Investment Officer, and any person who has been made an offer to
become such an employee) are eligible to participate;
b. eligible participants may acquire Shares in the Company, Options over Shares and rights to,
or interests in, such Shares (including directly or by a nominee, or as a beneficiary of a trust
established by the Company for participants); and
c. the Directors have broad discretion as to the terms on which eligible participants may acquire
securities under the Plan, including as to the number and type of Securities that may be offered,
the price payable for the Securities (which may be nil) and how payment for Securities may be
made (e.g. by loans from the Company, whether interest-free or limited recourse or otherwise, or
by salary sacrifice or sacrifice of cash bonuses).
The objectives of the Employee LTI Plan are:
a. to motivate and retain the Group’s personnel;
b. to attract quality personnel to the Group;
c. to create commonality of purpose between the Group’s personnel and the Group; and
d. to add wealth for all shareholders of the Company through the motivation of the Group’s
personnel;
by allowing the Group’s personnel to share the rewards of the success of the Group through the
acquisition of, or entitlements to, Securities (as defined in Section 2 of the Remuneration Report).
The awarding of an LTI grant is fully discretionary and grants are determined by the Board, based on a
recommendation from the Remuneration, Nomination and Governance Committee.
How are offers made?
The Company may from time to time invite any person to participate in this Employee LTI Plan who
is, or has been made an offer to become, an Eligible Person, by offering to the person any Securities
for acquisition on such terms as the Board may determine in accordance with this Employee LTI Plan.
How are Securities
acquired?
Securities may be acquired under the Employee LTI Plan by or for the benefit of a person by way of issue
of new Shares or Options, purchase of existing Shares or Options (whether on or off market), creation
of rights to or interests in Shares or Options, transfer of Securities or otherwise, and on such terms, as
the Board may determine.
What consideration is
paid for the Securities?
Terms of Options
Securities may be offered for acquisition and acquired by or for the benefit of a person under this
Employee LTI Plan for no consideration or at such price or for such other consideration to be paid or
otherwise provided at such times and on such terms as the Board may determine at or before the time
of acquisition of the Securities. For example, the Board may allow any consideration to be provided by
way of salary sacrifice or sacrifice of cash bonuses or other equivalent entitlements or in return for a
reduction in salary or wages or as part of the person’s remuneration package.
The Directors of the Company may also determine the terms of Options which may be acquired under
the Employee LTI Plan such as the exercise price, any restrictions as to exercise (e.g. vesting conditions),
any restrictions as to the disposal or encumbrance of any Options or underlying shares once acquired,
and the expiry date of options.
Other terms of Options are as follows:
a. An option holder will be entitled to have the number of Options, the exercise of the Options and/
or the number of shares underlying the options varied in the event of a bonus issue, rights offer or
reconstruction of the share capital of the Company, in accordance with the ASX Listing Rules.
b. The Company is not required to issue any shares following an exercise of Options unless the
Company can be satisfied that an offer of those shares for sale within 12 months after their
issue will not need disclosure to investors under part 6D.2 of the Corporations Act 2001.
c. Subject to the Corporations Act 2001 and the ASX Listing Rules, no options may be disposed of
(e.g. by sale or transfer) until any vesting conditions have been satisfied, and no Options may be
transferred except in circumstances (if any) permitted by the Company.
24
25
4. Relationship between the remuneration philosophy and Company performance
The table below sets out summary information about the Company’s earnings and movements in shareholder wealth for the
five years to 30 June 2023. The STI and/or LTI awards are paid based on individual and underlying Company performance. The
Board, based on a recommendation from the Remuneration, Nomination and Governance Committee, has ultimate discretion in
determining the amount of the bonus pool.
2023
2022
2021
2020
2019
Revenue and other income ($)
45,594,048
44,202,495
47,045,429
62,727,233
62,854,332
Statutory net profit/(loss) before tax ($)
(17,545,221)
(48,185,737)
23,464,856
(27,316,939)
53,968,253
Statutory net profit/(loss) after tax ($)
(14,254,525)
(32,766,534)
17,687,455
(16,289,332)
38,890,182
Underlying net profit after tax ($)
26,053,845
27,134,348
26,264,820
25,033,552
20,765,287
Share price at start of year ($)
Share price at end of year ($)
Interim dividend (cps)1
Final dividend (cps)1
Earnings/(loss) per share (cps)
Diluted earnings/(loss) per share (cps)
Underlying earnings per share (cps)
6.92
7.41
15.00
23.00
(30.76)
(30.76)
50.75
5.81
6.92
15.00
23.00
(69.15)
(69.15)
53.20
5.48
5.81
10.00
26.00
34.50
34.50
52.04
4.55
5.48
10.00
25.00
(35.88)
(35.88)
51.30
6.56
4.55
10.00
15.00
78.95
78.14
43.59
KMP bonuses ($)
401,780²
1,845,417²
333,067²
298,479³
391,556³
The Group’s FY2023 business performance is reflected in the outcome of the variable component of Executive KMP’s total
remuneration. Details of the remuneration of Executive KMP in FY2023 is set out in Section 8 of this Remuneration Report.
Notes:
1 Fully franked at 30% corporate income tax.
2
3
Awarded to Mr. Greenwood and Mr. Killick. This was determined by the Board on the recommendation of the Remuneration, Nomination and
Governance Committee based on the Company’s performance and the individual’s performance against a set of pre-determined key performance
indicators set out by the Board. Refer to Section 8 of this Remuneration Report for details of these amounts.
Awarded to Mr. Greenwood. This was determined by the Board on the recommendation of the Remuneration, Nomination and Governance
Committee based on the Company’s performance and Mr. Greenwood’s individual performance against a set of pre-determined key performance
indicators set out by the Board.
5. Key management personnel
The following were KMP of the Group at any time during the financial year and until the date of this Remuneration Report and
unless otherwise indicated they were KMP for the entire financial year.
Name
Position
Non-Executive Directors
Mr. A. Robinson
Mr. J. Chafkin
Ms. M. Donnelly
Mr. G. Guérin
Mr. P. Kennedy
Executive KMP
Mr. P. Greenwood
Mr. A. Killick
Notes:
Non-Executive Chairman¹
Non-Executive Director
Non-Executive Director
Lead Independent Director²
Non-Executive Director
MD, CEO and CIO
Chief Financial Officer (“CFO”)
1
2
Mr. Robinson is not presently considered by the Board to be independent. Refer to the Company’s Corporate Governance Statement available on its
website at Corporate Governance - Pacific Current Group (paccurrent.com).
Mr. Guerin was appointed by the Board as Lead Independent Director on 24 August 2023.
Annual Report 2023 DIRECTORS’
REPORT
continued
6. Remuneration of Non-Executive Directors
Objective
The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract and retain
Non-Executive Directors of the highest calibre at a cost acceptable to shareholders.
Structure
In accordance with the ASX Listing Rules, the aggregate remuneration of Non-Executive Directors is determined from time to time
by a general meeting of shareholders. An amount not exceeding the amount approved by shareholders is apportioned amongst
Directors, as agreed by the Directors, and the manner in which it is apportioned amongst Directors is reviewed annually.
The last determination by shareholders of the aggregate remuneration of Non-Executive Directors as Directors of the Company
and its subsidiaries was at the AGM held on 20 November 2020, when shareholders approved an increase in the aggregate
remuneration pool of $100,000 from $650,000 to $750,000, with effect from 1 July 2021. The Directors may seek an increase in
the Non-Executive Director fee pool at the 2023 AGM.
Non-Executive Directors do not receive performance-based bonuses from the Company, nor do they receive fees that are
contingent on performance, shares in return for their services, retirement benefits, other than statutory superannuation or
termination benefits.
The following is a schedule of Non-Executive Directors’ fees:
Chairman
Non-Executive Director (per Director)
Audit and Risk Committee chairman
Audit and Risk Committee member
Remuneration Committee chairman
Remuneration Committee member
Governance Committee chairman
Governance Committee member
2023
$
2022
$
200,000
130,000
200,000
130,000
2021
$
175,000
110,000
2020
$
175,000
110,000
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
2019
$
140,000
70,000
30,000
20,000
20,000
15,000
15,000
10,000
The fees above are inclusive of superannuation contributions, except for the Directors’ fees paid to Mr. Chafkin, Mr. Guérin
and Mr. Kennedy. In addition, Mr. Kennedy receives a fee of $30,000 for acting as Chairman of a related entity, Treasury Group
Investment Services Pty Ltd. Total fees paid to Non-Executive Directors in FY2023 were $750,000 (FY2022: $750,000). Refer to
Section 8 of this Remuneration Report for details of remuneration paid to Non-Executive Directors.
7. Remuneration of Executive KMP
Key terms of employment contract of Paul Greenwood
Title
MD, CEO and CIO
Term of Contract
A term of three years from 24 November 2014 and automatic renewal for successive one-year periods
thereafter until notice is given by either party. A First Addendum was signed and effective from 1 July 2016
on his appointment as President, North America, and Global CIO. A Second Addendum was signed and
effective from 1 July 2018 on his appointment as MD, CEO and CIO.
Base Salary
USD750,000
STI
LTI
Mr. Greenwood is eligible for Annual cash bonuses of up to USD400,000 each year subject to satisfying the
key performance indicators for the relevant year.
The following are the CEO’s KPIs for 2023:
– Achievement of EPS growth targets;
– Completion of targeted deal opportunities; and
– Achievement of strategic plan milestones.
As detailed in Section 3 of this Remuneration Report, Mr. Greenwood’s long-term incentive is provided through
the grant of the Company share entitlements conditional on certain performance criteria being met.
26
27
Title
MD, CEO and CIO
Other employee
benefit plans
Termination upon
death or permanent
disability
Termination by the
Company for cause
Termination by the
Company without
cause
Mr. Greenwood is also entitled to participate in any and all other employee benefit plans which are made
available to the senior executives of the Group from time to time. At present, Mr. Greenwood participates
in the Group’s North American qualified retirement plan whereby matching contributions are paid towards
Mr. Greenwood’s retirement benefits up to approximately USD13,000 each year. He also participates in the
Group’s health plans whereby the Group pays for coverage for health-related services for Mr. Greenwood
and his dependents at a current net annual cost of approximately USD19,500.
If Mr. Greenwood suffers a permanent disability or dies during the term of the Contract, Mr. Greenwood (or
his estate, as applicable) will be entitled to receive (i) any amount of base salary not paid and any accrued but
untaken annual leave (“Accrued Obligations”), (ii) any vested but unpaid amounts owed to Mr. Greenwood
under the Company’s retirement, non-qualified deferred compensation or incentive compensation plans
(“Accrued Plan Obligations”), (iii) any other applicable bonus/ incentive payments as per the terms of the
contract and grant or plan documents (“Accrued Bonus Obligations”), and (iv) 12 months-continuation
coverage under the Company’s health plans under which Mr. Greenwood and his dependents participated
immediately prior to Mr. Greenwood’s date of death or permanent disability.
The Company may terminate Mr. Greenwood’s employment at any time for Cause by issuing a Cause Notice
and allowing Mr. Greenwood at least 15 days to discuss the reasons for the Cause Notice and at least 30 days
to cure the reasons for the Cause Notice. If after that period Mr. Greenwood has not cured the Cause Event,
the Company may terminate his employment with immediate effect. In this circumstance, Mr. Greenwood will be
entitled to receive (i) his Accrued Obligations, (ii) his Accrued Plan Benefits and (iii) his Accrued Bonus Obligations.
The Company may terminate Mr. Greenwood’s employment without cause by giving six months’ prior
written notice. In this circumstance, Mr. Greenwood will be entitled to (i) his Accrued Obligations, (ii) his
Accrued Plan Benefits and (iii) his accrued bonus obligations (iv) a lump sum severance payment equal to
his then current 12 months’ base salary, and (v) 12 months-continuation coverage under the Company’s
health plans under which Mr. Greenwood and his dependents participated immediately prior to his date of
termination.
Resignation for
Other than Good
Reason
Mr. Greenwood may voluntarily terminate his employment for any reason upon at least six months’ prior
written notice. On the date of termination, Mr. Greenwood will be entitled to receive (i) his Accrued
Obligations, (ii) his Accrued Plan Benefits and (iii) his Accrued Bonus Obligations.
Resignation for Good
Reason
Non-compete
Dispute resolution
Mr. Greenwood may terminate his employment at any time for Good Reason by giving the Company
written notice, which specifies the date of termination and the reason therefor. On the date of termination,
Mr. Greenwood will be entitled to receive (i) his Accrued Obligations, (ii) his Accrued Plan Benefits and
(iii) his accrued bonus obligations; (iv) a lump sum payment equal to the Severance Amount payable by
the Company, and (v) for a period equal to the Severance Period, continuation coverage payable by
the Company under the Company’s group health plans for which Mr. Greenwood and his dependents
participated immediately prior to his date of termination.
Upon termination of his employment, Mr. Greenwood will be subject to non-competition restrictions for
6 months (where termination is without cause or by Mr. Greenwood for good reason) or 12 months (where
termination is for any other reason).
The terms of the LTI are governed by the laws of the Commonwealth of Australia and the state of Victoria
and all other provisions of the employment agreement are governed by the laws of the state of Washington,
USA. Any controversy or claim is required to be resolved by arbitration in Seattle Washington USA. The
Company is required to pay all costs and fees of the arbitration.
Annual Report 2023 DIRECTORS’
REPORT
continued
Key terms of employment agreement of Mr. Ashley Killick
Title
CFO
Term of Contract
Ongoing, with effect from 31 October 2020
Base Salary
$470,000
STI
Mr. Killick is eligible to participate in the Company’s STI Plan for annual cash bonuses of up to one third of
the base salary each year subject to satisfying the key performance indicators for the relevant year.
The following are the CFO’s KPIs for 2023:
– Achievement of EPS growth targets;
– Effectively manage certain corporate costs; and
– Improve financial reporting processes, content and timing.
LTI
Mr. Killick is eligible to participate in the Company’s LTI Plan.
Termination of
Employment
Under the terms of the contract, the Company may terminate the contract by giving 12 weeks’ notice with
no termination benefits. Under the terms of the contract, Mr. Killick may terminate the contract by giving
6 weeks’ notice.
8. Nature and amount of each element of KMP Remuneration in FY2023
Details of the nature and amount of each element of the remuneration of each Director of the Company and each of the KMP of
the Company for the financial year are set out below:
Short term
Salary
and fees
$
Cash
bonus
$
Other
$
Super/401k
benefits
$
Share based
payments
Options/
Perfor-mance
rights
$
Shares
$
Performance
related¹
%
Total
$
Non-Executive
Directors
A. Robinson
J. Chafkin
M. Donnelly
G. Guérin
P. Kennedy2
Executive KMP
P. Greenwood3
A. Killick
Total 2023
Non-Executive
Directors
A. Robinson
J. Chafkin
M. Donnelly
G. Guérin
P. Kennedy2
Executive KMP
P. Greenwood3
A. Killick
Total 2022
200,000
130,000
117,647
130,000
160,000
–
–
–
–
–
–
–
–
–
–
1,114,585
449,708
2,301,940
297,223
104,557
401,780
29,011
–
29,011
200,000
130,000
118,182
130,000
160,000
–
–
–
–
–
–
–
–
–
–
999,646
439,932
2,177,760
1,725,417
120,000
1,845,417
35,159
–
35,159
–
–
12,353
–
–
19,314
25,292
56,959
–
–
11,818
–
–
16,821
23,568
52,207
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
200,000
130,000
130,000
130,000
160,000
832,083
268,968
1,101,051
2,292,216
848,525
3,890,741
–
–
–
–
–
200,000
130,000
130,000
130,000
160,000
1,000,171
89,655
1,089,826
3,777,214
673,155
5,200,369
–
–
–
–
–
49
44
39
–
–
–
–
–
72
31
56
There were no non-monetary benefits paid to KMP during the current and prior year.
Notes:
1
2
This is calculated based on the short-term cash bonus and share based payments as a percentage of total remuneration.
Mr. Kennedy receives additional fee of $30,000 for acting as Chairman of Treasury Group Investment Services Pty Ltd.
28
29
3
Mr. Greenwood and his dependents are entitled to a health-related cover paid for by the Group. In consideration of Mr. Greenwood’s performance
that has led to the growth and success of the Company’s investments, in particular GQG Partners, culminating in the successful listing of GQG Inc
and the liquidity which has flowed to the Company the Board approved in FY2022 a special short term cash bonus.
The relative proportions of the elements of remuneration of KMP that are linked to performance:
Maximum potential of
short-term incentive based
on fixed remuneration
Actual short-term
incentive based on fixed
remuneration linked to
performance
Maximum potential
of long-term incentive
based on fixed
remuneration1
Actual long-term
incentive based on fixed
remuneration linked to
performance1
2023
51%
33%
2022
51%
32%
2023
26%
22%
2022
164%
26%
2023
100%
100%
2022
100%
100%
2023
72%
57%
2022
95%
19%
P. Greenwood2
A. Killick
Notes:
1
2
Valuation based on fair value at grant date using a Black Scholes pricing model. In prior years, valuation was based on fair-value at grant date using
Black Scholes pricing model.
In consideration of Mr. Greenwood’s performance that has led to the growth and success of the Company’s investments, in particular GQG LP,
culminating in the successful listing of GQG Inc and the liquidity which has flowed to the Company the Board approved in FY2022 a special short
term cash bonus payment to Mr. Greenwood in the amount of $1,614,720 (USD1,151,418). This payment is to be made in two equal installments of
$807,360 (USD575,709).
9. Share based remuneration
As detailed above in this Remuneration Report, the Group operates an Employee LTI Plan for eligible employees and the MD &
CEO LTI Plan for Mr. Greenwood. The number of options and performance rights granted under these Plans are detailed in the
table below.
2023
P. Greenwood1
A. Killick2
Other employees3
2022
P. Greenwood1,4
A. Killick2
Other employees3,5
Notes:
Numbers
granted
Numbers
vested
% of grant
vested
% of grant
forfeited
–
–
–
–
–
–
1,740,000
285,000
835,500
14,336
–
4,300
0%
0%
0%
1%
0%
1%
0%
0%
0%
99%
0%
99%
% of
compensation
consisting of
Share based
remuneration
36%
32%
0%
26%
13%
0%
1
2
3
4
5
On 19 November 2021, Mr. Greenwood was issued with options as approved by shareholders at the AGM held on 19 November 2021.
On 24 February 2022, Mr. Killick was issued with 210,000 options and 75,000 performance rights.
On 24 February 2022, other employees were issued with 480,000 options and 355,500 performance rights.
Based on a report provided by an external actuarial services expert, the Board determined that 14,336 of the 1,250,000 performance rights vested
as at 30 June 2022.
Based on a report provided by an external actuarial services expert, the Board determined that 4,300 of the 375,000 performance rights vested as
at 30 June 2022.
Annual Report 2023 DIRECTORS’
REPORT
continued
10. KMP shareholdings
Details of KMP equity holdings for the financial year and at the date of the Directors’ Report are set out below
2023
Non-Executive Directors
A. Robinson
J. Chafkin
M. Donnelly
G. Guérin
P. Kennedy
Executive KMP
P. Greenwood1
A. Killick
2022
Non-Executive Directors
A. Robinson
J. Chafkin
M. Donnelly
G. Guérin
P. Kennedy
Executive KMP
P. Greenwood
A. Killick
Opening
balance
Granted as
remuneration
Received on
vesting of
performance
rights
Net change
other
Balance held
nominally
70,795
100,816
20,000
–
272,628
654,781
11,059
55,795
64,816
20,000
–
272,628
654,781
10,446
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8,602
–
–
–
–
–
–
–
–
–
–
–
–
–
–
605
15,000
36,000
–
–
–
–
613
70,795
100,816
20,000
–
272,628
663,383
11,664
70,795
100,816
20,000
–
272,628
654,781
11,059
Directors are not required under the constitution or any other Board policy to hold any shares in the Company.
Notes:
1
Of the 14,336 performance rights which vested on 30 June 2022, 8,602 ordinary shares were issued on 13 October 2022 and the cash equivalent to
5,734 performance rights was paid to the USA tax authorities (on Mr. Greenwood’s behalf) in accordance with the terms of the Performance Rights
Plan.
11. Shares under option
Total number of options outstanding as at 30 June 2023 were 2,430,000 (2022: 2,430,000) with a value of $3,802,582 (2022:
$3,802,582).
Details of options on issue are as follows:
2023
P. Greenwood
A. Killick
Other employees
Total
2022
P. Greenwood
A. Killick
Other employees
Total
Opening
balance
Granted as
compensation
Received on
vesting
Net change
other
Number
Number
Number
Number
1,740,000
210,000
480,000
2,430,000
–
–
–
–
–
–
–
–
1,740,000
210,000
480,000
2,430,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Closing
balance
Number
1,740,000
210,000
480,000
2,430,000
1,740,000
210,000
480,000
2,430,000
30
31
Where the vesting conditions applicable to any options (as varied) have been satisfied or waived, the Company may, with the
agreement of the holder of the options, elect to cancel any of those options on terms that the market value of the options as
determined by the Board is payable to the holder in consideration for their cancellation and:
– the Option Cancellation Consideration is paid in money to the holder;
– the Option Cancellation Consideration is applied to acquire for the holder a number of shares the market value of which
as determined by the Board is equivalent to the Option Cancellation Consideration, and the Company issues or otherwise
procures the provision of those shares to the holder; or
– a combination of the above
The amount of options amortisation expense for FY2023 was $1,213,161 (2022: $647,078).
Grant and vesting dates and the valuation of options outstanding as at the date of this Remuneration Report are as follows:
2022
Issued to
Number
issued
Grant Date
Share price on
Grant Date
Exercise Price
Vesting Date
Exercise/
Expiry Date
Valuation4
P. Greenwood
580,000 19 November 20211
1,160,000 19 November 20211
A. Killick
70,000
24 February 20222
140,000
24 February 20222
Other employees
160,000
24 February 20223
320,000
24 February 20223
2,430,000
Total
Notes:
$7.31
$7.31
$7.40
$7.40
$7.40
$7.40
$7.28
1 July 2024
1 July 2026
$7.28
1 July 2025
1 July 2026
$7.28
1 July 2024
1 July 2026
$7.28
1 July 2025
1 July 2026
$7.28
1 July 2024
1 July 2026
$7.28
1 July 2025
1 July 2026
$1.49
$1.57
$1.57
$1.64
$1.57
$1.64
1
2
3
The options issued to Mr. Greenwood on 19 November 2021, was approved by shareholders at the AGM held on 19 November 2021. The options
will vest in two tranches, one third being 580,000 (Tranche 1) will vest on 1 July 2024 and the two thirds being 1,160,000 (Tranche 2) will vest on
1 July 2025. Both tranches require Mr. Greenwood’s continued employment. The average value of each option was $1.54. The total value at grant
date of these options was $2,687,113 for an equivalent number of shares of 1,740,000. The options on issue were valued on 19 November 2021 by
an independent adviser using a Black Scholes pricing model.
On 24 February 2022, Mr. Killick was issued 210,000 options. The options will vest in two tranches, one third being 70,000 (Tranche 1) will vest
on 1 July 2024 and the two thirds being 140,000 (Tranche 2) will vest on 1 July 2025. Both tranches require Mr. Killick’s continued employment.
The average value of each option was $1.62. The total value at grant date of these options was $339,500 for an equivalent number of shares of
210,000. The options on issue were valued on 11 July 2022 by an independent adviser using a Black Scholes pricing model.
On 24 February 2022, other employees were issued 480,000 options. The options will vest in two tranches, one third being 160,000 (Tranche 1) will
vest on 1 July 2024 and the two thirds being 320,000 (Tranche 2) will vest on 1 July 2025. Both tranches require the continued employment of the
other employees. The average value of each option was $1.62. The total value at grant date of these options was $776,000 for an equivalent number
of shares of 480,000. The options on issue were valued on 11 July 2022 by an independent adviser using a Black Scholes pricing model.
4 The valuation of options issued are based on average valuations of each tranche issued and the following inputs:
Date of issue of options
P. Greenwood
- 19 November 2021
A. Killick
- 24 February 2022
Other employees
- 24 February 2022
Volatility of the
underlying share price
Expected dividend
yield per annum
Risk free rates
per annum
40%
40%
40%
5.10%
4.9%
4.9%
0.95% and 1.40%
1.60% and 1.70%
1.60% and 1.70%
Annual Report 2023 DIRECTORS’
REPORT
continued
12. Performance rights
Total performance rights outstanding as at 30 June 2023 were 412,500 (2022: 412,500) with a value of $2,605,624 (2022:
$2,605,624).
Details of performance rights on issue are as follows:
2023
P. Greenwood
A. Killick
Other employees
Total
2022
P. Greenwood¹
A. Killick
Other employees²
Total
Opening
balance
Granted as
compensation
Received on
vesting
Net change
other
Number
Number
Number
Number
Closing
balance
Number
–
75,000
337,500
412,500
–
–
–
–
–
–
–
–
–
75,000
337,500
412,500
1,250,000
–
–
–
–
–
(14,336)
(1,235,664)
–
–
75,000
–
–
75,000
450,000
355,500
(4,300)
(463,700)
337,500
1,700,000
430,500
(18,636)
(1,699,364)
412,500
1
2
Based on a report provided by an external actuarial services expert, the Board determined that 14,336 of the 1,250,000 performance rights vested
as at 30 June 2022. The remaining 1,235,664 performance rights were forfeited.
Based on a report provided by an external actuarial services expert, the Board determined that 4,300 of the 450,000 performance rights vested as at
30 June 2022. The remaining 445,700 performance rights were forfeited plus the 18,000 performance rights of a resigned employee were cancelled.
2023
P. Greenwood
A. Killick
Other employees
Total
2022
P. Greenwood
A. Killick
Other employees
Total
Balance
Vested
Number
Vested
but not
exercisable
Number
Vested and
exercisable
Number
Rights
vested
Number
–
–
–
–
14,336
–
4,300
18,636
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
14,336
14,336
–
4,300
18,636
–
4,300
18,636
Any securities to be allocated on vesting of the performance rights under the MD & CEO LTI Plan and Employee LTI Plan may be
purchased on market, and therefore shareholder approval is not required or at the Board’s discretion, shareholder approval may
be sought.
The amount of performance rights amortisation expense for FY2023 was $841,414 (2022: $559,667).
32
33
Grant and vesting dates and the valuation of performance rights outstanding as at the date of this Remuneration Report are
as follows:
2022
Issued to
A. Killick
Other employees
Number
issued
Grant Date
Share price on
Grant Date
Vesting Date
Valuation1
25,000
24 February 2022
25,000
24 February 2022
25,000
24 February 2022
118,500
24 February 2022
118,500
24 February 2022
118,500
24 February 2022
$7.40
$7.40
$7.40
$7.40
$7.40
$7.40
30 June 2024
30 June 2025
30 June 2026
30 June 2024
30 June 2025
30 June 2026
$6.62
$6.31
$6.02
$6.62
$6.31
$6.02
Total
430,500
Refer to Section 3 of this Remuneration Report for applicable performance criteria and further details.
The performance rights are subject to the following vesting conditions:
a. continuous employment; and,
b. adjusted net assets per share threshold.
Notes:
1 The valuation of performance rights issued are based on average valuations of each tranche issued and the following inputs:
Date of issue of performance rights
Volatility of the
underlying share price
Expected dividend
yield per annum
Risk free rates
per annum
A. Killick
- 24 February 2022
Other employees
- 24 February 2022
40%
40%
4.90%
4.90%
1.30%, 1.70% and 1.80%
1.30%, 1.70% and 1.80%
13. Loans to Directors and executives
No loans were made to Directors and executives of the Company including their close family and entities related to them during
FY2023.
Directors’ Meetings
This table shows membership of standing Committees of the Board that operated during the year ended 30 June 2023. All
Directors may attend standing Board Committee meetings even if they are not a member of the relevant Committee. From time
to time the Board may form other committees or request Directors to undertake specific extra duties. The number of meetings of
Directors (including meetings of standing committees of Directors) held during the year and the number of meetings attended by
each Director were as follows:
Total number of meetings held
A. Robinson
P. Greenwood
J. Chafkin
M. Donnelly
G. Guérin
P. Kennedy
– End of Remuneration Report –
Directors’ Meetings
Audit and Risk Committee
Remuneration,
Nomination and
Governance Committee
Meetings of Committees
15
4
4
Meetings
eligible to
attend
Meetings
attended
Meetings
eligible to
attend
Meetings
attended
Meetings
eligible to
attend
Meetings
attended
15
15
15
15
15
15
15
14
14
14
15
15
4
–
4
4
4
4
4
4
4
4
4
4
4
–
4
4
4
4
4
4
3
4
4
4
Annual Report 2023 DIRECTORS’
REPORT
continued
Committee membership
As at the date of this report, the Company had an Audit and Risk Committee and a Remuneration, Nomination and Governance
Committee of the Board of Directors.
Members acting on the committees of the Board during the year were:
Audit and Risk Committee
M. Donnelly (Chairperson)
J. Chafkin
G. Guérin
P. Kennedy
A. Robinson
Remuneration, Nomination and Governance Committee
P. Kennedy (Chairman)
J. Chafkin
G. Guérin
M. Donnelly
A. Robinson
Indemnification and Insurance of Directors, Officers and Auditors
The Company has entered into an agreement for the purpose of indemnifying Directors and officers of the Company in certain
circumstances against losses and liabilities incurred by the Directors or officers on behalf of the Company.
The following liabilities, except for a liability for legal costs, are excluded from the above indemnity:
– A liability owed to the Company or related body corporate or another group entity (except, in the case of another group
entity, where the indemnified party acted in the best interests of the Company and did not receive a financial benefit);
– A liability for pecuniary penalty order under section 1317G or a compensation order under sections 961M, 1317H, 1317HA,
1317HB, 1317HC or 1317HE of the Corporations Act 2001;
– A liability that did not arise out of conduct in good faith; and,
– Any other liability against which the Company is precluded by law from indemnifying the Director.
The insurance contract prohibits the disclosure of the insurance premium for insuring officers of the Company against a liability
which may be incurred in that person’s capacity as an officer of the Company.
During or since the end of the financial year the Company has not indemnified or made a relevant agreement to indemnify an
auditor of the Company or of any related body corporate against a liability incurred as such an auditor. In addition, the Company
has not paid, or agreed to pay, a premium in respect of a contract insuring against a liability incurred by an auditor.
Corporate Governance
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors support the
principles of corporate governance. The Company’s Corporate Governance Statement is available on the Company’s website at
www.paccurrent.com/shareholders/corporate-governance.
Environmental Regulation and Performance
The Company’s operations are not presently subject to significant environmental regulation under the law of the Commonwealth
and State.
Auditor Independence
The Directors received an independence declaration from the auditors of the Group. A copy of the declaration is set out on
page 36.
Non-audit Services
Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in
Note 26 to the consolidated financial statements.
The Directors are satisfied that the provision of non-audit services, during the year, by the auditor (or by another person or firm
on the auditor’s behalf) is compatible with the general standard of independence for auditors imposed by Corporations Act 2001.
The Directors are of the opinion that the services as disclosed in Note 26 to the consolidated financial statements do not compromise
the external auditor’s independence, based on advice received from the Audit & Risk Committee, for the following reasons:
– All non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of
the auditor; and
– None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of
Ethics for Professional Accountants issued by the Accounting Professional & Ethical Standards Board, including reviewing or
auditing the auditor’s own work, acting in a management or decision-making capacity for the Group, acting as advocate for
the Group or jointly sharing economic risks and rewards.
34
35
Other Matters
On 17 September 2019, the Company received an originating application in the Federal Court of Australia in Melbourne by Michael
Brendan Patrick de Tocqueville and ASI Mutual Pty Limited (collectively “ASI”) seeking leave of the court to commence a derivative
action on behalf of the Company against individuals serving as Directors at the time of the 2014 merger between the Company
and the Northern Lights Capital Group, LLC (including two current Directors) for matters arising out of the merger. On 20 February
2020, the Federal Court of Australia granted ASI leave to bring the proceedings. Omni Bridgeway (Fund 5) Australian Invt. Pty Ltd
(“Litigation Funder”) has given an undertaking to cover the Company’s costs and any liabilities or adverse cost orders made against
the Company in favour of the defendants. As a result, the claims are not expected to have a material adverse financial effect on
the Company. If the proceedings are successful or are settled on terms that the defendants pay an agreed amount, the Company
will be entitled to the net proceeds after deducting specified legal costs and the Litigation Funder’s share. The proceedings are
currently part heard. It is anticipated that closing submissions will be made by the parties in October 2023 with judgment to follow.
Rounding of Amounts
The Group is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors reports) Instrument 2016/191, issued by the
Australian Securities and Investments Commission, relating to the “rounding off” of amounts in the Directors’ report. Amounts in this
report have been rounded off in accordance with that Instrument to the nearest thousand dollars, or in certain cases, to the nearest dollar.
Likely Developments
The Group will continue to operate in accordance with its investment objectives and strategy as defined in the Nature of Operations
and Principal Activities.
Significant Events Subsequent to Reporting Date
On 26 July 2023, the Company received an unsolicited, non-binding, indicative proposal from Regal Partners Limited (ASX: RPL)
(“Regal”) in co-operation with River Capital Pty Ltd, both major shareholders of the Company, to acquire 100% of the shares in the
Company by way of a scheme of arrangement. Under Regal’s proposal, the Company’s shareholders will receive an implied total
value of $11.12 per share, with the consideration comprising $7.50 in cash per Company share plus $3.62 being 2.2 x GQG Inc
shares based on the closing price of GQG Inc shares on 25 July 2023 of $1.655. Regal’s proposal also states that the Company
shareholders may elect to substitute either or both elements of the consideration for Regal shares. A due diligence process is
currently underway including the evaluation of Regal’s proposal by the Independent Board Committee of the Company.
On 27 July 2023, the Company was notified by GQG Inc that the latter intends to submit a non-binding indicative proposal to
acquire 100% of the shares in the Company.
On 25 August 2023, the Directors of the Company declared a final dividend on ordinary shares in respect of the 2023 financial
year. The total amount of the dividend is $11,862,000 which represents a 67.3% franked dividend of 23.00 cents per share. The
dividend has not been provided for in the 30 June 2023 consolidated financial statements.
Other than the matters detailed above, there has been no matter or circumstance, which has arisen since 30 June 2023 that has
significantly affected or may significantly affect either the operations or the state of affairs of the Group.
Signed in accordance with a resolution of the Directors made pursuant to s.298(2) of the Corporations Act 2001.
On behalf of the Directors
A. Robinson
Chairman
25 August 2023
Annual Report 2023 AUDITOR’S INDEPENDENCE
DECLARATION
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Audit or’s independence declarat ion t o t he Direct ors of Pacific Current
Group Limit ed
As lead auditor for the audit of the financial report of Pacific Current Group Limited for the financial
year ended 30 June 2023, I declare to the best of my knowledge and belief, there have been:
a) No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit;
b) No contraventions of any applicable code of professional conduct in relation to the audit ; and
c) No non-audit services provided that contravene any applicable code of professional conduct in
relation to the audit .
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
This declaration is in respect of Pacific Current Group Limited and the entities it controlled during the
financial year.
Ernst & Young
Rita Da Silva
Partner
25 August 2023
Audit or’s independence declarat ion t o t he Direct ors of Pacific Current
Group Limit ed
As lead auditor for the audit of the financial report of Pacific Current Group Limited for the financial
year ended 30 June 2022, I declare to the best of my knowledge and belief, there have been:
a) No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit;
b) No contraventions of any applicable code of professional conduct in relation to the audit ; and
c) No non-audit services provided that contravene any applicable code of professional conduct in
relation to the audit.
This declaration is in respect of Pacific Current Group Limited and the entities it controlled during the
financial year.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
37
Ernst & Young
Rita Da Silva
Partner
26 August 2022
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
38
CONSOLIDATED STATEMENT
OF PROFIT OR LOSS
For the year ended 30 June 2023
Revenue
Other income and net gains/(losses) on investments and financial instruments
Distributions and dividend income
Sundry income
Net change in fair values of financial assets and liabilities
Expenses
Salaries and employee benefits
Impairment expense
Administration and general expenses
Depreciation and amortisation expense
Interest expense
Share of net profits of associates and joint venture accounted for using the equity
method
Loss before income tax expense
Income tax benefit
Loss for the year
Attributable to:
The members of the Company
Non-controlling interests
Loss per share attributable to the members of the Company (cents per share):
– Basic
– Diluted
Franked dividends paid per share (cents per share) for the year
The accompanying notes form part of these consolidated financial statements.
36
37
Note
2023
$’000
2022
$’000
1
2
2
2
3
3
3
3
3
22
4
6
6
17
18,097
21,646
27,293
204
(14,681)
12,816
(15,832)
(14,022)
(19,635)
(3,717)
(3,314)
22,418
138
(66,741)
(44,185)
(14,381)
(4,182)
(11,885)
(3,269)
(60)
(56,520)
(33,777)
8,062
8,130
(17,545)
(48,186)
3,291
15,419
(14,254)
(32,767)
(15,791)
(35,270)
1,537
2,503
(14,254)
(32,767)
(30.76)
(30.76)
38.00
(69.15)
(69.15)
41.00
Annual Report 2023 CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
For the year ended 30 June 2023
Loss for the year
Other comprehensive income:
Items that will not be reclassified subsequently to profit or loss
Change in fair value of financial assets, net of income tax
Foreign currency movement of investment revaluation reserve
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations
Share in foreign currency reserve of an associate, net of income tax
Other comprehensive income for the year
Total comprehensive income
Attributable to:
The members of the Company
Non-controlling interests
The accompanying notes form part of these consolidated financial statements.
Note
2023
$’000
2022
$’000
(14,254)
(32,767)
16a(i)
16a(i)
(4,071)
138,507
(1)
2,978
(4,072)
141,485
16a(ii)
16a(ii)
19,242
33,476
(15)
51
19,227
15,155
901
33,527
175,012
142,245
(711)
139,825
1,612
2,420
901
142,245
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
As at 30 June 2023
Current assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Current tax assets
Other assets
Total current assets
Non-current assets
Trade and other receivables
Other financial assets
Plant and equipment
Right-of-use assets
Intangible assets
Investments in associates and joint venture
Other assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Financial liabilities
Lease liabilities
Current tax liabilities
Total current liabilities
Non-current liabilities
Provisions
Financial liabilities
Lease liabilities
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity attributable to the members of the Company
Non-controlling interests
Total equity
The accompanying notes form part of these consolidated financial statements.
38
39
Note
2023
$’000
2022
$’000
8
9
10
4
9
10
11a(i)
21
22
12
13
14
11a(ii)
4
13
14
11a(ii)
4
15
16
23,201
34,886
7,295
808
11,521
1,230
44,055
9,017
1,190
753
1,156
47,002
646
1,796
324,893
304,785
3,396
2,140
781
834
41,388
54,315
189,715
195,117
77
562,255
606,310
87
557,715
604,717
7,756
409
—
359
680
8,800
12,822
133
281
737
9,204
22,773
38
48,655
2,467
35,716
86,876
96,080
34
11,064
771
43,349
55,218
77,991
510,230
526,726
189,897
186,927
90,413
229,212
509,522
708
73,415
264,468
524,810
1,916
510,230
526,726
Annual Report 2023 CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
For the year ended 30 June 2023
Balance as at 1 July 2022
(Loss)/profit for the year
Other comprehensive income:
(i)
Net movement in investment revaluation reserve
net of income tax (Note 16)
(ii) Net movement in foreign currency translation
reserve (Note 16)
(iii) Share in foreign currency reserve of an associate,
net of income tax (Note 16)
Total comprehensive income for the year
Transactions with members in their capacity as
members:
(i)
Issuance of shares, net of share issue costs and
income tax (Note 15)
(ii) Dividends paid (Note 17)
(iii) Share-based payments (Note 16a(iii))
(iv) Settlement of vested performance rights
(Note 16a(iii))
Total transactions with members in their capacity as
members
Balance as at 30 June 2023
Balance as at 1 July 2021
(Loss)/profit for the year
Other comprehensive income:
(i)
Net movement in investment revaluation reserve
net of income tax (Note 16)
(ii) Net movement in foreign currency translation
reserve (Note 16)
(iii) Share in foreign currency reserve of an associate,
net of income tax (Note 16)
Total comprehensive income for the year
Transfers between reserves
Transactions with members in their capacity as
members:
(i)
Issuance of shares, net of share issue costs and
income tax (Note 15)
(ii) Dividends paid (Note 17)
(iii) Share-based payments (Note 16a(iii))
Total transactions with members in their capacity as
members
Balance as at 30 June 2022
Share
capital
$’000
Reserves
$’000
Retained
earnings
$’000
186,927
73,415
264,468
—
(15,791)
Non-
controlling
interests
$’000
1,916
1,537
—
—
—
—
—
(4,072)
19,167
(15)
—
—
—
—
75
—
15,080
(15,791)
1,612
Total
equity
$’000
526,726
(14,254)
(4,072)
19,242
(15)
901
2,970
—
—
—
—
—
2,055
(137)
—
—
2,970
(19,465)
(2,820)
(22,285)
—
—
—
—
2,055
(137)
2,970
189,897
1,918
90,413
(19,465)
(2,820)
(17,397)
229,212
708
510,230
Share
capital
$’000
Reserves
$’000
Retained
earnings
$’000
Non-
controlling
interests
$’000
Total
equity
$’000
184,655
120,847
96,876
432
402,810
—
—
—
—
—
—
—
(35,270)
2,503
(32,767)
141,485
33,559
51
—
—
—
—
141,485
(83)
33,476
—
51
175,095
(35,270)
2,420
142,245
(223,733)
223,733
—
—
2,272
—
—
—
—
1,206
—
(20,871)
—
—
(936)
—
2,272
(21,807)
1,206
2,272
186,927
1,206
73,415
(20,871)
264,468
(936)
1,916
(18,329)
526,726
The accompanying notes form part of these consolidated financial statements.
CONSOLIDATED STATEMENT
OF CASH FLOWS
For the year ended 30 June 2023
Cash flow from operating activities
Receipts from customers
Payments to suppliers and employees
Dividends and distributions received
Interest received
Interest paid
Income tax paid
Net cash provided by operating activities
7
Cash flow from investing activities
Collections of receivable from EAM Global
Collections of sublease receivable
Collections of receivable from Raven Capital Management, LLC (“Raven”)
Collections of loans from an associate
Loans provided to associates
Proceeds from partial disposal of investment in Proterra
Proceeds from disposal of GQG LLC net of transaction costs
Payments for the purchase of interest in Cordillera (2022: other)
Repayment of earn-out obligations
Repayment of Hareon liability
Payments for the purchase of associates (2022: Banner Oak)
Additional contributions to associates
Payment for the purchase of plant and equipment
Proceeds from disposal of plant and equipment
Net cash (used in)/provided by investing activities
Cash flow from financing activities
Proceeds from the Debt Facility
Transaction costs paid and discount from the Debt Facility
Repayments of principal portion of lease liabilities
Dividends paid
Dividends paid to non-controlling interest in a subsidiary
Payments to settle share based payments
Net cash provided by/(used in) financing activities
Net (decrease)/increase in cash and cash equivalents held
Cash at beginning of the financial year
Foreign exchange difference in cash
Cash at end of financial year
Non-cash investing and financing activities
Investing activities
Financing activities
The accompanying notes form part of these consolidated financial statements.
8
7
7
40
41
Note
2023
$’000
2022
$’000
21,110
(27,504)
46,014
204
(2,970)
(15,032)
21,822
557
—
653
67
(1,608)
12,364
18,340
(19,933)
33,762
149
(47)
(8,803)
23,468
517
122
1,332
620
(345)
—
—
58,089
(44,405)
(2,459)
(17,638)
—
(28)
(2,641)
23
(69)
(3,020)
(276)
(48,257)
(6,973)
(275)
—
(55,115)
1,465
44,583
(2,714)
(318)
(16,580)
(2,820)
(52)
—
—
(346)
(18,599)
(936)
—
22,099
(19,881)
(11,194)
34,886
(491)
23,201
5,052
28,298
1,536
34,886
1,937
4,822
632
2,905
Annual Report 2023 INDEX TO THE NOTES TO
THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
43
A. BASIS OF PREPARATION
44
44
46
47
48
52
57
58
59
59
59
61
65
66
67
68
68
69
70
71
72
77
79
79
80
83
91
92
93
93
95
95
95
B. GROUP RESULTS FOR THE FINANCIAL YEAR
1. Revenue
2. Other income and net gains/(losses) on investments and financial instruments
3. Expenses
4.
Income tax
5. Segment information
6. Loss per share
7. Notes to consolidated statement of cash flows
C. OPERATING ASSETS AND LIABILITIES
8. Cash and cash equivalents
9. Trade and other receivables
10. Other financial assets
11. Right-of-use assets and related lease liabilities
12. Trade and other payables
13. Provisions
D. CAPITAL, FINANCING AND FINANCIAL RISK MANAGEMENT
14. Financial liabilities
15. Share capital
16. Reserves
17. Dividends paid and proposed
18. Financial risk management
19. Capital commitments, operating lease commitments and contingencies
E. GROUP STRUCTURE
20. Interests in subsidiaries
21. Intangible assets
22. Investment in associates and joint ventures
23. Parent entity disclosures
24. Related party transactions
F. OTHER INFORMATION
25. Share-based payments
26. Auditors’ remuneration
27. Significant events subsequent to reporting date
28. Adoption of new and revised Standards
42
43
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
A. BASIS OF PREPARATION
This general-purpose financial report for the Company and the consolidated entities (“Group”) for the year ended 30 June 2023,
was authorised for issue in accordance with a resolution of the Directors on 25 August 2023 and the Directors have the power to
amend and reissue this financial report.
It has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative
pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. Compliance with Australian
Accounting Standards ensures that the financial statements and notes of the Group comply with International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Consequently, this financial report has been
prepared in accordance with and complies with IFRS as issued by the IASB.
All amounts are presented in Australian dollars, unless otherwise stated.
The Company is a company limited by shares incorporated and domiciled in Australia. Its shares are listed for trading on the ASX
with a ticker code PAC. It is a for-profit entity for financial reporting purposes under the Australian Accounting Standards.
The nature of operations, principal activities, and operating and financial review of the Company are disclosed in the Directors’
report.
a. Historical cost convention
The consolidated financial statements have been prepared on the basis of historical cost, except for certain financial instruments
that are measured at fair value at the end of each reporting period, as explained in the relevant accounting policies.
Historical cost is generally based on the fair values of the consideration given in exchange for goods and services.
Fair value is 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, regardless of whether that price is directly observable or estimated using another valuation
technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or
liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement
date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a
basis, except for share based payment transactions that are within the scope of AASB 2 ‘Share Based Payments’ (“AASB 2”), leasing
transactions that are within the scope of AASB 16 ‘Leases’ (“AASB 16”) and measurements that have some similarities to fair value
but are not fair value, such as value in use in AASB 136 ‘Impairment of Assets’ (“AASB 136”) (Refer to Notes 21 and 22).
b. Significant accounting policies
The accounting policies adopted in the preparation of this financial report are contained within the notes to which they relate. The
accounting policies have been consistently applied to all the years presented, unless otherwise stated.
c. Going concern
This general-purpose financial report has been prepared on a going concern basis, which assumes that the Group will be able to
meet its debts as and when they become due and payable. The Group prepared cash flow forecast analysis using various scenarios
including a base-case and a worse-case scenario. Under these scenarios, the Group can continue as a going concern.
d. Comparatives
The accounting policies adopted by the Group in the preparation and presentation of the financial statements have been
consistently applied. Where necessary, comparative information has been reclassified, repositioned, and restated for consistency
with current year disclosures.
e. Critical accounting estimates, judgments, and assumptions
The preparation of the consolidated financial statements requires management to make estimates, judgments and assumptions
that affect the reported amounts in the consolidated financial statements. Management continually evaluates its estimates
and judgments in relation to assets, liabilities, contingent liabilities, revenue, and expenses. Management bases its estimates
and judgments on historical information and other factors, including expectations of future events that may have an impact
on the Group. All estimates, judgments, and assumptions made are believed to be reasonable based on the most current set of
circumstances available to management. Actual results may differ from the estimates, judgments, and assumptions.
Annual Report 2023 NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
A. BASIS OF PREPARATION (continued)
Significant estimates, judgments and assumptions made by management in the preparation of these consolidated financial
statements are outlined below:
– Revenue recognition of performance fees – refer to Note 1c;
– Income tax, tax basis for USA investments and recovery of deferred tax assets – refer to Note 4c;
– Impairment of trade and other receivables – refer to Note 9c;
– Valuation of financial assets at fair value and impairment of financial assets at amortised cost – refer to Note 10c and
Note 18f;
– Valuation of financial liabilities at fair value – refer to Note 14c and Note 18f;
– Impairment of goodwill and other identifiable intangible assets – refer to Note 21c;
– Impairment of investments in associates and a joint venture – refer to Note 22d; and
– Share-based payment transactions – refer to Note 25c.
f. Rounding of amounts
The Group is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors reports) Instrument 2016/191, issued
by the Australian Securities and Investments Commission, relating to the “rounding off” of amounts in the consolidated financial
statements. Amounts in the consolidated financial statements have been rounded off in accordance with that Instrument to the
nearest thousand dollars, or in certain cases, to the nearest dollar.
B. GROUP RESULTS FOR THE FINANCIAL YEAR
This section provides information regarding the results and performance of the Group during the year, including further details on
revenue, other income, and net gains/(losses) on investments and financial instruments, expenses, income tax, segment information,
earnings per share and reconciliation of cashflows.
1. Revenue
a. Analysis of balances
The Group derives its revenue from the transfer of services over time and at a point in time as below:
Timing of revenue recognition
Over time
– Fund management fees
– Performance fees
– Commission revenue
– Retainer revenue
– Sundry revenue
At a point in time
– Commission revenue
– Sundry revenue
Total revenue
b. Accounting policies
2023
$’000
2022
$’000
12,599
4,322
—
520
74
12,181
5,603
118
708
37
17,515
18,647
582
—
582
2,962
37
2,999
18,097
21,646
(i) Fund management fees
The revenue is recognised over time in the accounting period in which the asset management services are rendered, and the
performance obligation is met. The transaction price for fund management fees for each performance obligation is the defined
contractual rate of the average assets under management or committed capital for the relevant accounting period.
44
45
The relevant Investment Management Agreement contains a series of performance obligations relating to the provision of
asset management services to the underlying funds and mandates. A performance obligation within the series is identified as
the performance of asset management and associated record management for monthly reporting. This performance obligation
is repeated monthly for the term of the contract and as such the contract meets the definition of a series of obligations.
The performance obligation is satisfied over the month when services have been provided to the client.
(ii) Performance fees
Performance fees arise when the performance of the asset under management exceeds a threshold. As the services provided
under the Investment Management Agreement constitute a series of performance obligations performed on a monthly basis,
subject to performance of the asset under management, the Group may meet those obligations throughout the term of the
contract. However, as the performance fee is contingent on the performance of the funds under management for the full period of
the contract, the revenue cannot be recognised, as it is not highly probable that this revenue will not be reversed. The performance
fee is calculated in accordance with the calculation methodology of the underlying funds as defined in the relevant agreements.
(iii) Commission revenue
Commission revenue arises when the Group provides sales services to its clients. Commissions are recognised as follows:
Variable commission (recognised over time)
The Group is generally entitled to a trail commission over a multi-year period in accordance with the Sales and Marketing Services
Agreement when the client has invested in the funds or mandates of the asset managers and performance obligations have been
met. The transaction price is the gross revenue generated from the mandate multiplied by the contractual rates.
The relevant Sales and Marketing Services Agreement contains a series of performance obligations relating to sales and marketing
support services. A performance obligation within the series is identified as the performance of sales and marketing support. This
performance obligation is repeated monthly for the term of the contract and as such the contract meets the definition of a series
of obligations. The performance obligation is satisfied over the month when services have been provided to the client.
As the commission revenue correlates to the gross revenues of the mandates, the revenue cannot be recognised on a straight-line
basis. The revenue is only recognised in the period where the gross management fees generated from the mandates, and it is not
highly probable that this revenue will not be significantly reversed.
If the mandate with the asset manager is lost before the end of the trail commission period, the commission revenue will cease
from the time the mandate is lost.
Fixed commission (recognised at a point in time)
The Group is entitled to a commission in accordance with the Sales and Marketing Services Agreement when the client has
committed a capital to the asset manager’s closed end vehicles where the client cannot redeem. Once the client invested its
committed capital to a closed end vehicle, it is deemed that the performance obligation has been met. The transaction price is the
committed capital multiplied by the contractual rates.
As the commission revenue correlates to the committed capital, the revenue is recognised upon closing of the transaction, and it
is not highly probable that this revenue will not be significantly reversed.
c. Key estimates, judgments, and assumptions
Revenue recognition of performance fees
Performance fees are only recognised every end of the financial year of the controlled entity when the performance fees are
realised, and it is highly probable that no significant reversal will occur. The performance fee is variable and contingent upon
performance of the funds under management for the full period.
Annual Report 2023 NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
B. GROUP RESULTS FOR THE FINANCIAL YEAR (continued)
2. Other income and net gains/(losses) on investments and financial instruments
a. Analysis of balances
Distributions and dividend income:
– Financial assets at FVTPL
– Financial assets at fair value through other comprehensive income (“FVTOCI”)
Sundry income:
Interest income:
– Other persons/corporations
– Related party
Total other income
Changes in fair values of financial assets and liabilities:
Financial assets through profit or loss:
– Investment in Carlisle
– Investment in GQG Inc
– Investment in Proterra
– Receivable from Raven
– Other
Financial liabilities through profit or loss:
– Earn-out obligations and deferred considerations
Total changes in fair values of financial assets and liabilities through profit or loss
2023
$’000
2022
$’000
25,535
1,758
27,293
15,183
7,235
22,418
129
75
204
123
15
138
(12,722)
(15,119)
10,123
13
(199)
10,761
(81,274)
3,938
93
155
(17,904)
(66,327)
3,223
(414)
(14,681)
(66,741)
b. Accounting policies
(i) Distributions and dividend income
Distribution and dividend income from investments are recognised when the Group’s right to receive payment has been established
and the amount can be reliably measured.
3. Expenses
Analysis of balances
Salaries and employee benefits:
– Salaries and employee benefits
– Share-based payment expense
Total salaries and employee benefits
Impairment expenses:
– Impairment in goodwill in subsidiaries (refer to Note 21):
– Aether
– Impairment of investment in associates (refer to Note 22):
– Blackcrane
– CAMG
– Impairment of financial assets at amortised cost:
– Expected credit losses of loans receivable and trade and other receivables
(refer to Notes 9 and 10)
Total impairment expenses
Administration and general expenses
– Accounting and audit fees
– Commission and marketing expenses
– Computer and software maintenance expenses
– Deal, establishment and litigation costs
– Directors’ fees
– Hareon liability settlement expense (refer to Note 13)
– Insurance expense
– Lease expenses
– Net foreign exchange loss
– Professional and consulting fees
– Share registry and regulatory fees
– Taxes and license fees
– Travel and accommodation costs
– Other general expenses
Total administration and general expenses
Depreciation and amortisation expense:
– Depreciation of plant and equipment
– Amortisation of management rights (refer to Note 21)
– Amortisation of right-of-use assets (refer to Note 11a(i))
Total depreciation and amortisation expense
Interest expense:
– Lease liabilities (refer to Note 11a(ii))
– Debt facility
Total interest expenses
Total expenses
46
47
2023
$’000
2022
$’000
13,777
2,055
15,832
13,175
1,206
14,381
11,731
—
(9)
1,934
1,925
366
14,022
2,030
705
626
3,788
749
4,927
856
118
1,087
1,825
167
799
815
1,143
19,635
367
3,024
326
3,717
125
3,189
3,314
1,693
2,103
3,796
386
4,182
1,486
380
495
2,117
752
983
757
148
646
2,063
188
686
484
700
11,885
263
2,761
245
3,269
60
—
60
56,520
33,777
Annual Report 2023 NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
B. GROUP RESULTS FOR THE FINANCIAL YEAR (continued)
4.
Income tax
a. Analysis of balances
Income tax benefit
Components of income tax benefit:
– Current tax
– Deferred tax
– (Over)/under provision in prior years
Total income tax benefit recognised in profit or loss
Reconciliation of income tax benefit recognised in profit or loss to prima facie income tax:
Loss before income tax
Prima facie income tax benefit at 30% (2022: 30%)
Add/(deduct) the tax effect of:
– Hareon settlement
– Franking credits received
– Non-assessable income
– USA state income tax benefit
– Tax losses not carried forward
– Share-based payments
– Impact of difference in tax rates in other countries
– Non-deductible foreign expenses
– Other
– (Over)/under provision in prior years
2023
$’000
2022
$’000
3,715
(6,405)
(601)
(3,291)
18,320
(34,517)
778
(15,419)
(17,545)
(5,264)
(48,186)
(14,456)
(3,928)
(420)
(285)
(140)
6,006
616
573
123
29
(601)
–
(257)
(464)
(3,112)
411
362
283
744
292
778
Income tax benefit attributable to profit or loss
(3,291)
(15,419)
Net deferred income tax liabilities recognised in income tax benefit:
– Investments
– (Reversal of tax losses)/tax losses carried forward
– Deductible capital expenditures
– Dividend receivable
– Impact of leases
– Earn-out liability
– Accruals and provisions
– Others
Deferred income tax related to items charged or credited directly to equity:
– Movement of the Group’s investment revaluation reserve
– Movement of the Group’s foreign currency revaluation reserve of an associate
(4,414)
(2,065)
(480)
(349)
(10)
677
223
13
(35,382)
362
(290)
356
(13)
912
(469)
7
(6,405)
(34,517)
(1,589)
46,976
(7)
22
(1,596)
46,998
48
49
2023
$’000
25,102
7,436
2022
$’000
5,131
1,324
Tax losses not recognised
– Unused tax losses for which no deferred tax asset has been recognised
– Potential tax benefit at relevant tax rate
The unused tax losses pertained to the parent entity in Australia (consisted of $5,179,000 incurred revenue and capital losses and
$18,020,000 capital losses not yet incurred) and the UK (consisted of $908,000 incurred capital losses and $995,000 not yet
incurred) [2022: parent entity in Australia (consisted of $3,178,000 incurred revenue and capital losses) and the UK (consisted of
$932,000 incurred capital losses and $1,021,000 capital losses not yet incurred)].
Current tax assets
Income tax receivable1
Current tax liabilities
Provision for income tax2
Notes:
1 This is the estimated income receivable in the USA (2022: Australia).
2 This is the estimated income tax liability in the UK (2022: $174,000 in the USA and $563,000 in the UK).
Non-current liabilities – net deferred tax liabilities
Components of net deferred tax liabilities:
Liabilities:
– Investments
– Dividend receivable
Assets:
– Reversal of carried forward tax losses
– Adjustment on financial liabilities at FVTPL
– Deductible capital expenditures
– Accruals and provisions
– Impact of leases
– Others
Net deferred tax liabilities
2023
$’000
2022
$’000
11,521
680
753
737
2023
$’000
2022
$’000
41,754
35
41,789
(2,065)
(1,733)
(1,764)
(514)
(24)
27
(6,073)
35,716
47,220
383
47,603
–
(2,351)
(1,258)
(633)
(16)
4
(4,254)
43,349
Annual Report 2023 NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
B. GROUP RESULTS FOR THE FINANCIAL YEAR (continued)
4.
Income tax (continued)
b. Accounting policies
The income tax (benefit)/expense for the year comprises current income tax (benefit)/expense and deferred tax (benefit)/expense.
Current income tax expense charged to the profit or loss is the tax payable on taxable income measured at the amounts expected to
be paid to or recovered from the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as
unused tax losses.
Current and deferred income tax (benefit)/expense is charged or credited outside profit or loss when the tax relates to items that are
recognised outside profit or loss.
Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability, where there
is no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or
the liability is settled and their measurement also reflects the manner in which management expects to recover or settle the carrying
amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that
future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
Current tax assets and liabilities are offset where a legally enforceable right of set off exists and it is intended that net settlement or
simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset
where: (a) a legally enforceable right of set off exists; and (b) the deferred tax assets and liabilities relate to income taxes levied by
the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or
simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts
of deferred tax assets or liabilities are expected to be recovered or settled.
c. Key estimates, judgments, and assumptions
(i) Income tax
The Group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the
provision for income tax. There are a number of transactions and calculations undertaken during the ordinary course of business for
which the ultimate tax determination may differ from the taxation authorities’ view. The Group recognises the impact of the anticipated
tax liabilities based on the Group’s current understanding of the tax laws. Where the final tax outcome of these matters is different from
the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is
made.
(ii) Tax basis for USA investments
The Group determines its tax obligation in the event of liquidation and/or disposal of its USA investments. This is calculated by
determining the tax basis and tax basis adjustments as permitted under the USA Internal Revenue Code. The tax basis adjustments
involved an estimation of the additional tax basis specific to the USA investments.
The tax calculated at the Group level is also dependent on the notification of allocated taxable income by the USA investments
that are deemed as partnerships in the USA. The amount of taxable income allocated from such partnerships to the Group may be
subject to judgement and hence be amended in future periods.
(iii) Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the Group considers it is probable that future
taxable amounts will be available to utilise those temporary differences.
(iv) Tax losses not recognised
A deferred tax asset in relation to tax losses is regarded as recoverable and therefore recognised only when, on the basis of available
evidence, it can be regarded as probable that there will be suitable taxable profits against which to recover the losses and from which
the future reversal of underlying timing differences can be deducted. Deferred tax assets in relation to tax losses in Australia have not
been recognised on the basis that there remains uncertainty regarding the timing and quantum of the generation of taxable profits.
50
51
d. Tax consolidation and status in other jurisdictions
(i) Tax status of the Company in Australia
The Company and its wholly-owned Australian subsidiaries formed a tax consolidated group for income tax purposes. The Company
is the head entity of the tax consolidated group. Members of the tax consolidated group have entered a tax sharing arrangement
in order to allocate income tax expense to the wholly-owned entities on a pro-rata basis. Under a tax funding agreement, each
member of the tax consolidated group is responsible for funding their share of any tax liability. In addition, the agreement provides
for the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. At the
balance date, the possibility of default is remote.
(ii) Tax status of the Company in the USA
The Group’s investments in the USA are generally pass-through vehicles for tax purposes. The tax on earnings will be paid for by
the Company as the ultimate entity liable for the tax obligations in the USA.
e. Uncertainty over income tax treatments
The Group operates in multiple geographic regions and is therefore subject to various taxation jurisdictions. Furthermore, the
nature of the Group’s business model and its bespoke approach to tailoring investment structures can often lead to complex and
unique tax treatments. The Group continually assesses these tax treatments and as part of this process it obtains advice from its
tax advisors to ensure that it is properly complying with the specific jurisdiction’s regulations.
These assessments often involve judgement and maybe based on a specific set of assumptions. For example, the Group provides
for deferred tax liability on the unrealised appreciation in the value of its Boutique Investments relating to uncertain tax positions
when such liabilities [are probable and] can be reasonably estimated. Generally, for this tax to become due and payable, the
appreciation in value would need to be realised. The nature by which this realisation occurs can often impact on the specific tax
outcome. In determining a deferred tax liability, at a specific point in time, the most likely circumstances surrounding the realisation
need to be assumed. These circumstances, combined with changes to enforcing tax regulations as of realisation date, may change
through time or not occur as previously assumed therefore adding uncertainty to the taxable outcome.
The Group assesses whether a tax position is probable to be sustained upon examination by the applicable taxing authority,
including resolution of any related appeals or litigation processes, based on the technical merits of the position. In determining
this, the Group assesses whether there is a greater than 50% likelihood of the tax authority accepting this tax position. If this is
less than 50%, the Group records as a tax liability its best estimate of the amount that would be realised upon ultimate settlement
of the tax position.
The Group has analysed the positions held during the period ended 30 June 2023 In its major jurisdictions to determine whether or
not there are uncertain tax positions that require financial statement recognition. Based on this review, the Group has determined
deferred tax liabilities of $41,789,000 has been recorded in the accompanying consolidated financial statements.
The tax calculated at the Group level is dependent on the notification of allocated taxable income by investments in the USA
deemed as pass-through vehicles for tax purposes. The amount of taxable income allocated from such partnerships to the Group
may be subject to judgement and hence be amended in future periods.
Other than the above, the Group’s income taxes provision does not currently include any tax treatments for which there is
uncertainty over whether the relevant taxation authority will accept the tax treatment under current taxation laws.
Annual Report 2023 NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
B. GROUP RESULTS FOR THE FINANCIAL YEAR (continued)
5. Segment information
a. Reportable segments
Information reported to the Company’s Board of Directors (the “Board”) as chief operating decision maker (“CODM”) for the
purposes of resource allocation and assessment of performance is focused on the profit/(loss) for the year earned by each segment.
The Group’s segment reporting is categorised on the following criteria:
– Tier 1 boutiques – investments where the Group expects at least $4,000,000 of annual earnings; and
– Tier 2 boutiques – investments where the Group expects less than $4,000,000 of annual earnings.
For subsequent segment reporting purposes, transfer from/to Tier 1 boutiques to/from Tier 2 boutiques will be based on either
of the following:
– their annual earnings contribution for either of two consecutive immediately prior reporting periods. For example, an
investment with an earnings contribution of $4,000,000 in the first reporting period and $3,000,000 in the second
reporting period will still be classified as a Tier 1 boutique since one of its two reporting periods has an earnings contribution
of $4,000,000; or
– assessment of the Board that the category of a particular investment be amended because of a substantial loss of funds
under management (“FUM”) and significant decline in the contribution to the Group.
The Group’s categorisation of its reportable segments under AASB 8: ‘Operating Segments’ are as follows:
Aether Investment Partners, LLC
Aether General Partners
Banner Oak Capital Partners, LP
Carlisle Management Company S.C.A.
Cordillera Investment Partners, LP¹
GQG Partners, Inc2
Proterra Investment Partners, LP
Victory Park Capital Advisors, LLC
Victory Park Capital GP Holdco, L.P.
Astarte Capital Partners, LLP
ASOP Profit Share LP
Blackcrane Capital, LLC2
Capital & Asset Management Group, LLP
EAM Global Investors, LLC
IFP Group, LLC
Nereus Capital Investments (Singapore) Pte Ltd (“NCI”)
Nereus Holdings, L.P.
Northern Lights Alternative Advisors, LLP (“NLAA”)
Pennybacker Capital Management, LLC
Roc Group
Strategic Capital Investments, LLP
Notes:
2023
Segment
Category
2022
Segment
Category
Tier 1
Tier 1
Tier 1
Tier 1
Tier 1
Tier 1
Tier 1
Tier 1
Tier 1
Tier 2
Tier 2
–
Tier 2
Tier 2
Tier 2
Tier 2
Tier 2
Tier 2
Tier 2
Tier 2
Tier 2
Tier 1
Tier 1
Tier 1
Tier 1
–
Tier 1
Tier 1
Tier 1
Tier 1
Tier 2
Tier 2
Tier 2
Tier 2
Tier 2
Tier 2
Tier 2
Tier 2
Tier 2
Tier 2
Tier 2
Tier 2
1 Cordillera was acquired on 6 April 2023 (refer to Note 10 footnote 7 for details).
2
Blackcrane ceased to be an associate effective 1 July 2022 after Blackcrane purchase and redeemed the 25% equity ownership of the Group (refer to
Note 22a(iii) for details).
52
53
b. Analysis of balances
(i) Segment revenues and results
The following is an analysis of the Group’s revenues and results by reportable segments. The results reflect the elimination of
intragroup transactions including those between the Group and its boutiques.
Tier 1 boutiques
Tier 2 boutiques
Central administration
Total per consolidated statement of
profit or loss
The following details of segment revenue:
2023
Over time
– Fund management fees
– Performance fees
– Commission revenue
– Retainer revenue
– Sundry revenue
At a point in time
– Commission revenue
2022
Over time
– Fund management fees
– Performance fees
– Commission revenue
– Retainer revenue
– Sundry revenue
At a point in time
– Commission revenue
– Sundry revenue
Segment revenue
Share of net profits of
associates and joint venture
2023
$’000
13,039
5,052
18,091
6
2022
$’000
15,090
6,556
21,646
–
2023
$’000
8,057
5
8,062
–
2022
$’000
6,915
1,215
8,130
Segment profit/(loss)
for the year
2023
$’000
2022
$’000
6,596
1,016
7,612
(33,741)
3,246
(30,495)
(2,272)
–
(21,866)
18,097
21,646
8,062
8,130
(14,254)
(32,767)
Tier 1
boutiques
$’000
Tier 2
boutiques
$’000
Central
administra-
tion
$’000
Total
$’000
12,420
–
–
–
37
179
4,322
–
520
31
12,457
5,052
582
13,039
–
5,052
12,093
–
(2)
–
37
88
5,603
120
708
–
12,128
6,519
2,962
–
2,962
15,090
–
37
37
6,556
–
–
–
–
6
6
–
6
–
–
–
–
–
–
–
–
–
–
12,599
4,322
–
520
74
17,515
582
18,097
12,181
5,603
118
708
37
18,647
2,962
37
2,999
21,646
Annual Report 2023 NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
B.
GROUP RESULTS FOR THE FINANCIAL YEAR (continued)
5. Segment information (continued)
The following details segment profit after tax for central administration:
Revenue
Sundry income
Changes in fair values of financial assets and liabilities
2023
$’000
2022
$’000
6
64
13
83
(10,540)
(10,884)
(524)
(3,292)
(25,240)
3,291
(21,866)
–
14
93
107
(9,198)
(8,211)
(349)
(40)
(17,798)
15,419
(2,272)
Salaries and employee benefits
Administration and general expenses
Depreciation and amortisation expense
Interest expense
Income tax benefit
(ii) Segment assets and liabilities
Tier 1 boutiques
Tier 2 boutiques
Central administration1
Total per consolidated statement
of financial position
Notes:
Segment assets
Segment liabilities
Segment net assets
2023
$’000
2022
$’000
451,371
489,688
75,966
87,746
527,337
577,434
78,972
27,283
2023
$’000
43,553
8,479
52,032
44,047
2022
$’000
2023
$’000
2022
$’000
48,260
407,818
441,428
27,495
75,755
2,236
67,487
60,251
475,305
501,679
34,925
25,047
606,309
604,717
96,079
77,991
510,230
526,726
1
The total assets and liabilities under central administration consisted of the following:
Segment assets
2023
$’000
2022
$’000
Cash and cash equivalents
16,095
23,480
Trade and other payables
Trade and other receivables
Income tax receivable
Other financial assets
Plant and equipment
Right-of-use assets
Other assets
Total
1
11,521
44,924
3,320
1,966
1,145
(5)
Provisions
753
689
699
636
1,031
Lease liabilities
Financial liabilities
Provision for income tax
Net deferred tax (assets)
Segment liabilities
2023
$’000
3,543
447
2,627
42,789
680
2022
$’000
4,050
499
823
–
737
(6,039)
(3,873)
78,972
27,283
Total
44,047
2,236
54
55
2022
$’000
–
4,182
–
4,182
2,920
–
349
3,269
Total
$’000
1,530
14,387
5,692
37
21,646
1,943
6,363
(176)
8,130
(iii) Other segment information
Impairment expense of segments
– Tier 1 boutiques
– Tier 2 boutiques
– Central administration
Total
Depreciation and amortisation of segments
– Tier 1 boutiques
– Tier 2 boutiques
– Central administration
Total
(iv) Geographical information
Revenues and results:
2023
$’000
11,731
2,292
–
14,023
3,193
–
524
3,717
30 June 2023
30 June 2022
Tier 1
boutiques
$’000
Tier 2
boutiques
$’000
Central
admin-
istration
$’000
Total
$’000
Tier 1
boutiques
$’000
Tier 2
boutiques
$’000
Central
admin-
istration
$’000
Revenues
– Australia
– USA
– UK
– Luxembourg
Share of net profits/
(losses) of associates
and joint venture
– Australia
– USA
– UK
Profit/(loss) after tax
– Australia
– USA
– UK
– Luxembourg
– India
–
13,002
–
37
–
551
4,501
–
13,039
5,052
–
8,057
–
8,057
–
12,580
–
(5,984)
1,787
(2,129)
347
5
1,787
3,275
1,676
–
–
(5,722)
–
6
–
–
6
–
–
–
–
–
13,559
4,501
37
1,530
13,523
–
37
–
864
5,692
–
18,097
15,090
6,556
1,787
5,928
347
8,062
–
1,943
6,915
–
(552)
(176)
6,915
1,215
–
–
–
–
–
–
–
–
–
(10,991)
(9,204)
1,530
1,943
(6,805)
(3,332)
6,185
(53,397)
20
4,688
(48,689)
(9,670)
(1,205)
–
–
471
(5,984)
(5,722)
18,126
–
–
3,217
(155)
3,062
18,126
(1,934)
–
–
–
(1,934)
3,246
6,596
1,016
(21,866)
(14,254)
(33,741)
(2,272)
(32,767)
Other than the USA and UK, no other country represents more than 10% of revenue for the Group (2022: USA and UK). Other than
Goodhart Partners Longitude Fund SICAV-SIF - Strategic Capital Fund, Aether Real Assets IV, L.P. and Aether Real Assets V, L.P.
(2022: Goodhart Partners Longitude Fund SICAV-SIF - Strategic Capital Fund, Aether Real Assets IV, L.P., Aether Real Assets V,
L.P. and VPC), no individual funds and clients represent more than 10% revenue for the Group.
Annual Report 2023 NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
B.
GROUP RESULTS FOR THE FINANCIAL YEAR (continued)
5. Segment information (continued)
Non-current assets excluding financial assets:
30 June 2023
30 June 2022
Tier 1
boutiques
$’000
Tier 2
boutiques
$’000
Central
admin-
istration
$’000
Total
$’000
Tier 1
boutiques
$’000
Tier 2
boutiques
$’000
Central
admin-
istration
$’000
Total
$’000
–
132,210
–
132,210
10,011
38,514
8,980
57,505
–
–
–
–
10,011
–
170,724
134,579
8,980
–
189,715
134,579
9,547
40,635
10,356
60,538
–
76
76
175
41,388
–
–
–
–
–
112
3,208
3,320
112
3,284
3,396
–
82
82
1,965
2,140
175
–
41,388
54,315
–
–
–
–
–
–
–
–
–
9
690
699
9,547
175,214
10,356
195,117
9
772
781
659
834
–
54,315
–
173,849
–
173,849
10,011
38,514
8,980
57,505
112
5,173
–
10,123
217,536
8,980
–
189,151
–
5,285
236,639
189,151
9,547
40,635
10,356
60,538
9
1,349
–
1,358
9,556
231,135
10,356
251,047
Investment in associates
and joint venture
– Australia
– USA
– UK
Plant and equipment
– Australia
– USA
Right-of-use assets
– USA
Intangible assets
– USA
Total non-current assets
excluding financial
assets
– Australia
– USA
– UK
b. Accounting policies
The accounting policies of the reportable segments are the same as the Group’s accounting policies. Segment profit represents
the profit after tax earned by each segment without allocation of central administration costs. This is the measure reported to the
CODM for purposes of resource allocation and assessment of segment performance.
56
57
6. Loss per share
The following reflects the income and share data used in the calculations of basic and diluted loss per share:
Basic loss per share:
Net loss attributable to the members of the Company ($’000)
Weighted average number of ordinary shares for basic loss per share
Basic loss per share (cents)
Diluted loss per share:
Net loss attributable to the members of the Company ($’000)
Weighted average number of ordinary shares for diluted loss per share
Diluted loss per share (cents)
Reconciliation of loss used in calculating loss per share:
Net loss attributable to the members of the Company used in the calculation of basic loss
per share ($’000)
Net loss attributable to the members of the Company used in the calculation of diluted loss
per share ($’000)
2023
2022
(15,791)
(35,270)
51,334,916
51,004,607
(30.76)
(69.15)
(15,791)
(35,270)
51,334,916
51,004,607
(30.76)
(69.15)
(15,791)
(35,270)
(15,791)
(35,270)
Reconciliation of weighted average number of ordinary shares in calculating loss per share:
Weighted average number of ordinary shares for basic and diluted loss per share
Weighted average number of ordinary shares for diluted loss per share
51,334,916
51,004,607
51,334,916
51,004,607
The options outstanding at 30 June 2023 are anti-dilutive and were not included in determining the weighted average number of
ordinary shares for diluted loss per share.
a. Accounting policies
Basic earnings per share is calculated as net profit attributable to members of the Company, divided by the weighted average
number of ordinary shares, adjusted for any bonus element.
Diluted earnings per share is calculated as net profit or loss attributable to members of the parent, including, if any:
– the after-tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as
expenses/income;
– other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential
ordinary shares; and,
– divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus if any.
Annual Report 2023 NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
B.
GROUP RESULTS FOR THE FINANCIAL YEAR (continued)
7. Notes to consolidated statement of cash flows
a. Analysis of balances
(i) Reconciliation of loss to net cash inflow from operating activities
Loss from ordinary activities after income tax
Adjustments and non-cash items:
– Changes in fair values of financial assets and liabilities
– Dividends received/receivable from associates and joint venture
– Impairment of assets
– Hareon liability settlement expense
– Depreciation and amortisation expense
– Net foreign exchange losses
– Share-based payments
– Share of net profit from associates and joint venture
– Other
Changes in operating assets and liabilities:
- Decrease/(increase) in trade and other receivables
– Increase in other assets
- (Decrease)/increase in trade and other payables
- (Decrease)/increase in current taxes
– Decrease in deferred taxes
– Decrease in provisions
2023
$’000
2022
$’000
(14,254)
(32,767)
14,681
18,544
14,014
4,927
3,717
2,394
2,055
(8,062)
496
3,184
(41)
(1,447)
(10,766)
(7,557)
(63)
66,741
10,194
3,796
983
3,269
765
1,206
(8,130)
26
(1,773)
(115)
3,533
10,381
(34,603)
(38)
Cash flows provided by operating activities
21,822
23,468
(ii) Non–cash investing and financing activities
Investing activities:
– Recognition of right–of–use assets
– Recognition of leasehold improvements
Financing activities:
– Dividends reinvested
– Recognition of lease liabilities
1,497
440
1,937
2,885
1,937
4,822
505
127
632
2,272
633
2,905
58
59
C. OPERATING ASSETS AND LIABILITIES
This section provides information regarding the operating assets and liabilities of the Group as at end of the year, including further
details on cash and cash equivalents, trade and other receivables, other financial assets, right-of-use assets and related lease
liabilities, trade and other payables and provisions.
8. Cash and cash equivalents
a. Analysis of balances
Cash at bank
2023
$’000
2022
$’000
23,201
34,886
b. Accounting policies
Cash and cash equivalents consist of cash at bank and in hand and short-term deposits with an original maturity of three months
or less, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.
For the purposes of the consolidated statement of cash flows, cash consist of cash.
For short-term deposits with an original maturity of more than three months but less than one year, these are classified separately
as short-term deposits.
9. Trade and other receivables
a. Analysis of balances
Current
Trade receivables
Dividend receivable
Sundry receivables
Loss allowance for expected credit losses
Non-current
Trade receivables
2023
$’000
2022
$’000
2,043
5,214
44
7,301
(6)
7,295
3,947
5,391
90
9,428
(411)
9,017
646
1,796
(i) Impairment
The loss allowance for trade receivables, contract assets, dividend and sundry receivables as at 30 June 2023 was determined
as follows:
Current
Past due
31 - 60 days
Past due
61 - 90 days
Past due
over 90 days
Past due
with full loss
allowance
Total
2023
Expected loss rate
Gross carrying amount ($)
Loss allowance ($)
Dividend and sundry receivables ($)
Total loss allowance ($)
2022
Expected loss rate
Gross carrying amount ($)
Loss allowance ($)
Dividend and sundry receivables ($)
Total loss allowance ($)
0.050%
2,689,000
1,000
0.050%
–
–
2.564%
–
–
5.263%
–
–
100%
–
–
0.050%
5,337,000
3,000
0.050%
–
–
2.564%
–
–
5.263%
–
–
100%
406,000
406,000
2,689,000
1,000
5,000
6,000
5,743,000
409,000
2,000
411,000
Annual Report 2023 NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
C. OPERATING ASSETS AND LIABILITIES (continued)
9. Trade and other receivables (continued)
Movement of the loss allowance for expected credit losses:
Opening balance
Additions
Write-off
Effect of foreign currency differences
Closing balance
2023
$’000
411
8
(424)
11
6
2022
$’000
5
386
–
20
411
b. Accounting policies
Trade and other receivables, which are generally on 30 days to 90 days terms, are recognised at fair value and subsequently valued
at amortised cost, less any allowance for uncollectible amounts. Cash flows relating to short term receivables are not discounted
as any discount would be immaterial.
To measure the expected credit losses, trade receivables and contract assets and dividend receivable and sundry receivables
have been grouped based on shared credit risk characteristics and the days past due. The contract assets relate to unbilled
asset management and distribution services and have substantially the same risk characteristics as the trade receivables for the
same types of contracts. The Group has therefore concluded that the expected loss rates for trade receivables are a reasonable
approximation of the loss rates for the contract assets. In determining the expected loss rates, the Group reviewed the collection
history, anticipated collection trend for the year and the credit worthiness of its counterparties. The Group’s counterparties are
institutional clients with high credit ratings with no known history of default.
Trade and other receivables are written off when there is no reasonable expectation of recovery. Indicators that there are no
reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group,
and a failure to make contractual payments for a period of greater than 90 days past due.
c. Key estimates, judgments, and assumptions
Impairment of trade and other receivables
The Group applied the AASB 9 ‘Financial Instruments’ (“AASB 9”) simplified approach to measuring expected credit losses which
uses an expected loss allowance for all trade and other receivables. The loss allowance was determined on the days past due and
the credit risk characteristics of the balances.
The Group undertook a review of its trade, dividends and sundry receivables and the expected credit losses for each. The expected
loss rates are then based on the payment profiles over a period of 36 months before 30 June 2023 and the corresponding historical
credit losses experienced within this period. The historical loss rates are then adjusted to reflect current and forward-looking
information on various factors affecting the ability of the counterparties to settle the receivables including the review of their
financial statements.
60
61
Type of
Instrument
2023
$’000
2022
$’000
Debt
Debt
Debt
Debt
Debt
Debt
433
375
808
–
808
936
–
–
936
(7)
929
567
–
567
623
1,190
–
407
65
472
(6)
466
Equity
Debt and Equity
Equity
Equity
Debt
164,983
65,067
44,855
39,612
116
314,633
173,917
75,179
–
40,404
306
289,806
Equity
9,331
14,513
324,893
304,785
10. Other financial assets
a. Analysis of the balances
Current
Financial assets at amortised cost:
– Receivable from EAM Global1
– Loans receivable from IFP2
Financial assets at FVTPL:
– Receivable from Raven3
Non-current
Financial assets at amortised cost:
– Loans receivable from Astarte4
– Receivable from EAM Global1
– Loans receivable from IFP
Loss allowance for expected credit losses
Financial assets at FVTPL:
– Investment in GQG Inc5
– Investment in Carlisle6
– Investment in Cordillera7
– Investment in Proterra8
– Other
Financial assets at FVTOCI:
– Investment in EAM Global9
Notes:
1
2
3
4
The receivable from EAM Global is the USD2,250,000 loan provided by the Group on 21 February 2018. The loan has a term of six-years with
interest of 10% per annum to assist EAM Global in financing the repurchase of its equity from an outside shareholder. Repayments are received on
a quarterly basis and the loan is expected to be fully settled by EAM Global in June 2024.
On 27 January 2023, the Group extended a Short-Term Credit Facility Promissory Note to IFP amounted to $372,000 (USD250,000). This facility
bears 10% to 15% interest per annum and is expected to be fully settled on 31 August 2023.
The receivable from Raven was the earn-out component of the consideration on the sale of the investment on 14 October 2016. The Group is paid
33.33% of the management fees earned by Raven on new FUM. Payments are calculated quarterly until the USD3,500,000 earn-out cap is met. The
receivable was fully collected on 11 August 2022.
On 2 December 2022, the Group extended a Secured Credit Facility Promissory Note to Astarte of up to $892,000 (USD600,000). This facility has
a term of five years and bears a 10% interest per annum. A full draw down was made by Astarte during the year.
5 Pertains to the 4% equity interest in GQG Inc.
GQG Inc is a global boutique asset management firm focused on active equity portfolios. GQG Inc was incorporated in Delaware USA as a
corporation. On 13 September 2021, it was registered as a foreign company in Australia under the applicable provisions of the Corporation Act 2001.
On 29 October 2021, GQG was listed in the ASX.
6 The investment in Carlisle comprises 12,500 Preferred Shares of Carlisle and 5,000,000 units of Contingent Convertible Bonds issued by Carlisle.
The Group is entitled to 16% of the revenues and 40% of the liquidation proceeds in the event of a sale.
Carlisle, founded in 2009, is a fully regulated alternative investment fund manager which manages alternative investment funds exclusively investing
in life settlements in the USA. Carlisle is organised under the laws of Luxembourg as a partnership limited by shares.
Annual Report 2023
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
C. OPERATING ASSETS AND LIABILITIES (continued)
10. Other financial assets (continued)
7
On 6 April 2023, the Group acquired an interest in Cordillera and special limited partnership interests in limited partnership vehicles managed by
Cordillera for $44,405,000 (USD29,880,000). The Group is entitled to 16.38% gross revenues, funds, carried interest and proceeds received by
Cordillera less certain costs and expenses and 24.90% liquidation proceeds in the event of sale.
Cordillera is based in San Francisco, California, USA and has three strategies that focus on investing in niche, non-correlated private investments with
the objective of delivering diversifying and attractive risk-adjusted returns. It targets unique asset classes that are not yet heavily trafficked by other
institutional investors.
8
This pertains to the 16% equity interest in Proterra acquired on 21 September 2019. The Group is entitled to 8% of the gross management revenues
and 16% of the liquidation proceeds in the event of a sale.
On 14 June 2023, Proterra Investment Partners, LP (“Proterra”) and the Group agreed to sell Proterra’s line of business held by its subsidiary Proterra
Investment Partners Asia PTE. Ltd to Challenger Funds Management Holdings Pty Limited, a subsidiary of Challenger Limited (ASX: CGF) On 17 June
2023 the Group received its share of the proceeds of $12,364,000 (USD8,320,000) less transaction costs. The sale of Proterra Asia did not change
the Group’s equity interest in Proterra.
Proterra is an alternative investment manager based in Minneapolis, Minnesota, USA offering private equity investment strategies focused on global
natural resources.
9 This pertains to the Group’s 18.75% equity interest in EAM Global.
EAM Global was founded in March 2014, organised as a Delaware Limited Liability Company and is registered with the USA Securities and Exchange
Commission. EAM Global manages emerging markets small cap, international small cap and international micro-cap public equities strategies.
(i) Impairment of other financial assets at amortised cost
Movement of the loss allowance for expected credit losses:
Opening balance
Additions
Write-off
Foreign currency movement
Closing balance
(ii) Movement of financial assets at amortised cost
2023
$’000
6
358
(358)
1
7
2023
Current
Non-current
2022
Current
Non-current
Opening
balance
$’000
Additions
and interest
accrued
$’000
Collections
$’000
Impairment
$’000
Effect of
foreign
currency
differences
$’000
Reclassi-
fications
$’000
567
472
1,039
1,045
810
1,855
434
1,236
1,670
457
–
457
(701)
–
(701)
(1,384)
–
(1,384)
–
(358)
(358)
–
–
–
485
(485)
–
388
(388)
–
23
71
94
61
50
111
2022
$’000
6
–
–
–
6
Closing
balance
$’000
808
936
1,744
567
472
1,039
62
63
(iii) Movement of financial assets at FVTPL
Opening
balance
$’000
623
289,806
Additions
$’000
–
44,405
290,429
44,405
1,198
92,086
93,284
–
69
69
Recognition
of
restructured
investment
$’000
–
–
–
–
246,8311
246,831
Collections/
disposals
$’000
Change in
fair value
$’000
Reclassi-
fications
$’000
Effect of
foreign
currency
differences
$’000
Closing
balance
$’000
(653)
(12,364)
13
(17,917)
(13,017)
(17,904)
–
–
–
17
10,703
–
314,633
10,720
314,633
(1,332)
2,811
1,479
93
594
70
623
(66,420)
(2,577)2
17,006
289,806
(66,327)
(1,983)
17,076
290,429
2023
Current
Non-current
2022
Current
Non-current
Notes:
1 This pertains to the recognition of the investment in GQG Inc as a result of the restructure of GQG LP.
2
This amount included the transfer of $1,983,000 investment in IFP - preferential distribution to investment in associate as a result of the restructure
of IFP.
(iv) Movement of financial assets at FVTOCI
2023
Non-current
2022
Opening
balance
$’000
14,513
Non-current
128,884
Additions
$’000
Restructure
$’000
Derecog-
nition of
restructured
investment
$’000
Change in
fair value
$’000
Effect of
foreign
currency
differences
$’000
Closing
balance
$’000
–
–
–
–
(5,654)
472
9,331
(58,089)
(246,831)
185,546
5,003
14,513
b. Accounting policies
Financial assets are recognised when the Group becomes a party to the contractual provisions of the instrument.
(i) Classification
The Group classifies its financial assets in the following measurement categories:
– those to be measured at amortised cost; and,
– those to be measured subsequently at fair value, either through profit or loss or through other comprehensive income.
The classification depends on the Group’s business model for managing the financial assets and the contractual terms of the cash flows.
For financial assets measured at fair value, gains and losses will either be recorded in profit or loss or in other comprehensive income.
For investments in equity instruments that are not held for trading, this will depend on whether the Group had made an irrevocable
election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.
The Group reclassifies debt instruments when and only when its business model for managing those assets changes.
(ii) Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value,
transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried
at fair value are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely
payment of principal and interest.
(ii.a) Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow
characteristics of the asset. There are two measurement categories into which the Group classifies its debt instruments:
Annual Report 2023 NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
C. OPERATING ASSETS AND LIABILITIES (continued)
10. Other financial assets (continued)
(ii.a.1) At amortised cost
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and
interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the
effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in
other gains/(losses), together with foreign exchange gains and losses. Impairment losses are presented as a separate line item in
the statement of profit or loss.
(ii.a.2) FVTPL
Assets that do not meet the criteria for amortised cost or FVTOCI are measured at FVTPL. A gain or loss on a debt investment that
is subsequently measured at fair value through profit or loss is recognised in profit or loss and presented net within other gains/
(losses) in the period in which it arises.
(ii.b) Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group’s management has elected to present fair
value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value
gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be
recognised in profit or loss as dividend income when the Group’s right to receive payments is established.
Changes in the fair value of FVTPL are recognised in other gains/(losses) in the statement of profit or loss as applicable.
(iii) Derecognition of financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers
the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Group neither
transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the
Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains
substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial
asset and recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the
consideration received and receivable is recognised in profit or loss. For equity instruments at fair value through other comprehensive
income, the cumulative change in fair value is transferred from investment revaluation reserve to retained earnings.
On derecognition of a financial asset other than in its entirety (e.g. when the Group retains an option to repurchase part of a
transferred asset), the Group allocates the previous carrying amount of the financial asset between the part it continues to
recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts
on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the
sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it is recognised
in profit or loss.
c. Key estimates, judgments, and assumptions
(i) Valuation of financial assets at fair value
The Group exercises significant judgement in areas that are highly subjective. The valuation of financial assets and the assessment
of carrying values require that a detailed assessment be undertaken which reflects assumptions on markets, manager performance
and expected growth to project future cash flows that are discounted at a rate that imputes relative risk and cost of capital
considerations. Refer to Note 18f for the fair value disclosures.
(ii) Impairment of financial assets at amortised cost
The loss allowances for financial assets at amortised cost are based on assumptions about risk of default and expected loss rates.
The Group uses judgement in making these assumptions and selecting the inputs to the impairment calculation based on the
Group’s past history, existing market conditions and forward-looking estimates at the end of each reporting period.
The Group assesses on a forward-looking basis the expected credit losses associated with its debt instruments carried at amortised
cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
64
65
2023
$’000
2,140
2022
$’000
834
11. Right-of-use assets and related lease liabilities
a. Analysis of balances
(i) Right-of-use assets
Office leases, net of accumulated amortisation
Movement of right-of-use assets
Cost
Opening balance
Additions
Write-off
Effect of foreign currency differences
Closing balance
Accumulated amortisation
Opening balance
Amortisation
Write-off
Effect of foreign currency differences
Closing balance
(ii) Lease liabilities
Current
Non-current
Movement of lease liabilities
2023
Current
Non-current
2022
Current
Non-current
Office
Leases
$’000
1,521
1,588
–
72
3,181
(687)
(326)
–
(28)
(1,041)
2,140
2023
Equipment
Leases
$’000
–
–
–
–
–
–
–
–
–
–
–
Total
$’000
1,521
1,588
–
72
3,181
(687)
(326)
–
(28)
(1,041)
2,140
Office
Leases
$’000
912
505
–
104
1,521
(401)
(240)
–
(46)
(687)
834
2022
Equipment
Leases
$’000
21
–
(22)
1
–
(16)
(5)
22
(1)
–
–
2023
$’000
359
2,467
2,826
Opening
balance
$’000
Additions
$’000
Imputed
interest
$’000
Repay-
ments
$’000
Reclassi-
fication
$’000
281
771
1,052
302
378
680
95
1,941
2,036
14
618
632
125
–
125
60
–
60
(443)
–
(443)
(393)
–
(393)
290
(290)
–
274
(274)
–
Effect of
foreign
currency
differences
$’000
11
45
56
24
49
73
Total
$’000
933
505
(22)
105
1,521
(417)
(245)
22
(47)
(687)
834
2022
$’000
281
771
1,052
Closing
balance
$’000
359
2,467
2,826
281
771
1,052
Annual Report 2023 NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
C. OPERATING ASSETS AND LIABILITIES (continued)
11. Right-of-use assets and related lease liabilities (continued)
b. Accounting policies
(i) Right-of-use-assets and the related lease liabilities
The Group’s leasing activities and how these are accounted for
Leases are recognised as a right-of-use asset with a corresponding liability at the date at which the leased asset is available for use
by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss
over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Subsequent to initial recognition, the right-of-use assets are measured at cost (adjusted for any remeasurement of the associated
lease liability) less accumulated amortisation. The right-of-use asset is depreciated over the shorter of the asset’s useful life and
the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. The lease payments are discounted using
the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used, being the
rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic
environment with similar terms and conditions.
(ii) Short-term leases and leases of low-value assets
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in
profit or loss. Short-term leases are leases with a lease term of 12 months or less without a purchase option.
(iii) Variable lease payments
For leases where the future increases are variable based on an index or rate, these are not included in the lease liability until they
take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted
against the right-of-use asset.
During the current financial year, the Group does not have variable lease payments.
12. Trade and other payables
a. Analysis of balances
Current
Trade payables
Accrued expenses
Other payables
2023
$’000
916
4,861
1,979
7,756
2022
$’000
61
5,091
3,648
8,800
b. Accounting policies
Trade and other payables are carried at amortised cost and given their short-term nature; they are not discounted. They represent
liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when
the Group becomes obliged to make future payments in respect of the purchase of the goods and services. The amounts are
unsecured and are usually paid within 30 days of recognition.
66
67
2023
$’000
2022
$’000
–
409
409
12,356
466
12,822
38
34
13. Provisions
a. Analysis of balances
Current
Provision for estimated liability to Hareon1
Provision for annual leave
Non-current
Provision for long service leave
Notes:
1
Pertained to the value of the Hareon put option pursuant to the Aurora Share Subscription and Assignment Deed (“Aurora Subscription Deed”),
dated 28 July 2015, between Aurora Investment Management Pty Ltd (as the Trustee of The Aurora Trust), the Aurora Trust, Hareon, NCI and Nereus
Holdings Inc. The Group agreed to make a contingent additional contribution to NCI of up to five over seven (5/7) of Hareon’s capital contribution
less any amounts funded under the Guarantee. The Additional Contribution to NCI in the amount of USD13,500,000 is reduced by the amount
of Guarantee paid of USD1,605,000. The put option price is equivalent to a return of Hareon’s invested capital plus a specified return on the
invested capital.
On 31 August 2022, the Group through Aurora Investment Management Pty Ltd (as the Trustee of Aurora Trust), Hareon, NCI and Nereus Holdings
Inc Group executed the Deed whereby the parties have agreed to the full satisfaction of the obligations of the Group to Hareon in the amount
of $17,638,000 (USD11,869,000). The Group paid Hareon $10,403,000 (USD7,000,000) on 16 September 2022 and the remaining balance of
$7,235,000 (USD4,869,000) on 31 October 2022. With the full settlement of the liability to Hareon, the Group’s obligations to Hareon were
terminated in its entirety pursuant to the Deed.
The Group now classifies its investment in NCI as a joint venture and continues to look for opportunities to exit the investment in an orderly fashion
by actively offering the underlying investments for sale. At 30 June 2023, the carrying value of the Group’s investment in NCI is $nil.
Movement of provision for estimated liability to Hareon for the year
Opening balance
Expense for the year
Repayments
Effect of foreign currency differences
Closing balance
b. Accounting policies
2023
$’000
12,356
4,927
(17,638)
355
–
2022
$’000
10,698
983
(276)
951
12,356
(i) Provisions
Provisions are recognised when the Group has a present obligation (contractual, legal, or constructive) as a result of a past event,
it is probable that 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 end
of the reporting period, considering the risks and uncertainties surrounding the obligation. Where a provision is measured using the
cash flows estimated to settle the present obligation, the carrying amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a
receivable is recognised as an asset if it is virtually certain that reimbursement will be received, and the amount of the receivable
can be measured reliably.
(ii) Provision for annual leave and long service leave
A liability is recognised for benefits accruing to employees in respect of annual leave and long service leave in the period the related
service is rendered, when it is probable that settlement will be required, and they are capable of being measured reliably.
Liabilities recognised in respect of short-term employee benefits are measured at their nominal values using the remuneration rate
expected to apply at the time of settlement. Liabilities recognised in respect of long-term employee benefits are measured as the
present value of the estimated future cash outflows to be made by the Group in respect of services provided by employees up to
reporting date.
Annual Report 2023
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
D. CAPITAL, FINANCING AND FINANCIAL RISK MANAGEMENT
This section provides information regarding the capital, financing, and financial risk management of the Group during the year,
including further details on financial liabilities, share capital, reserves, dividends paid and proposed, financial risk management and
capital commitments, short-term operating lease commitments and contingencies.
14. Financial liabilities
a. Analysis of balances
Current
Financial liabilities at FVTPL:
2023
$’000
2022
$’000
– Deferred payment - former owners of EAM Global
–
133
Non-current
Financial liabilities at amortised cost:
– Senior Secured Debt Facility¹
Financial liabilities at FVTPL:
– Earn-out liability - Aether²
– Earn-out liability - Pennybacker³
Notes:
42,789
–
3,614
2,252
5,866
48,655
4,639
6,425
11,064
11,064
1
On 24 October 2022, the Company secured a $74,306,000 (USD50,000,000) Debt Facility from WHSP. The Debt Facility has a term of five years
from the first draw down (subject to extension option) and bears an interest per annum of the aggregate of a term secured overnight financing rate
(subject to a floor of 1%) and 4.8% margin. In addition, the Group is required to maintain a loan to net assets ratio of less than 0.5 times. The Debt
Facility is secured by the assets of the Group.
On 26 October 2022, the initial amount of $44,583,000 (USD30,000,000), excluding the 2.5% discount on the proceeds of $1,115,000 (USD750,000)
was drawn down. The remaining $29,723,000 (USD20,000,000) can be drawn down in two equal amounts as requested by the Company.
The transaction costs incurred on the Debt Facility amounted to $1,599,000.
2
3
The earn-out liability represents the amount owed by the Group to the former owners of Aether, for marketing and offering interests in the ARA
Fund V. This is due at the earlier of the final close of ARA Fund VII or three years after the close of ARA Fund VI. ARA Fund VI or ARA Fund VII are
yet to be launched.
The earn-out liability represents the potential obligation to Pennybacker with a maximum additional consideration for $11,146,000 (USD7,500,000),
which would be paid between the closing of the acquisition date and 31 December 2024 if certain revenue thresholds for Pennybacker’s emerging
growth and income platforms are met.
On 21 December 2022, the Group partially settled its earn-out obligation to Pennybacker of $2,364,000 (USD1,591,000) as a result of reaching
certain revenue thresholds for Pennybacker’s income platforms.
(i) Movement of financial liabilities at FVTPL
Additions
$’000
Revaluation
$’000
Repayments
$’000
(41)
(2,459)
(3,182)
(3,223)
–
(2,459)
Reclassi-
fications
$’000
2,364
(2,364)
–
2023
Current
Non-current
2022
Current
Non-current
Opening
balance
$’000
133
11,064
11,197
258
9,857
10,115
–
–
–
–
–
–
(59)
472
413
(208)
–
(208)
126
(126)
–
Effect of
foreign
currency
differences
$’000
3
348
351
16
861
877
Closing
balance
$’000
–
5,866
5,866
133
11,064
11,197
68
69
b. Accounting policies
The Group’s financial liabilities are classified in accordance with the substance of the contractual arrangement.
(i) Financial liabilities at amortised cost
These financial liabilities are initially measured at fair value, net of transaction costs, and subsequently measured at amortised cost.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense
over the relevant period. The effective interest rate is the rate that discounts estimated future cash payments through the expected
life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
(ii) Financial liabilities at FVTPL
The Group designates its financial liabilities as at fair value through profit or loss upon initial recognition if:
– such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
– the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed, and its
performance is evaluated on a fair value basis, in accordance with the Group’s documented management or investment
strategy, and information about the grouping is provided internally on that basis; or
– it forms part of a contract containing one or more embedded derivatives, and the standard permits the entire combined
contract to be designated as at fair value through profit or loss.
(iii) Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled, or have
expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable
is recognised in the statement of profit or loss under net gains/(losses) on financial liabilities.
c. Key estimates, judgements, and assumptions
(i) Valuation of financial liabilities at fair value
The Group exercises significant judgement in areas that are highly subjective (refer to Note 18f). The valuation of liabilities and the
assessment of carrying values require that a detailed assessment be undertaken which reflects assumptions on markets, manager
performance and expected growth to project future cash outflows that are discounted at a rate that imputes relative risk and cost
of capital considerations.
15. Share capital
a. Analysis of balances
Issued and fully paid ordinary shares
Movements in ordinary shares on issue
Opening balance
Shares issued:
2023
$’000
2022
$’000
189,897
186,927
2023
2022
No. of shares
$’000
No. of shares
$’000
51,149,723
186,927
50,828,844
184,655
– 13 April 2023 under the DRP
236,267
1,621
– 13 October 2022 issuance to settle the vested
11,182
176,562
–
–
85
1,264
–
–
–
–
–
–
–
–
112,171
208,708
786
1,486
51,573,734
189,897
51,149,723
186,927
performance rights
– 11 October 2022 under the DRP
– 14 April 2022 under the DRP
– 7 October 2021 under the DRP
Closing balance
Annual Report 2023 NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
D. CAPITAL, FINANCING AND FINANCIAL RISK MANAGEMENT (continued)
15. Share capital (continued)
The Company offers shareholders the opportunity to increase their holdings by participation in the DRP. The Company’s DRP
offers shareholders the option to reinvest all or part of their dividend in new ordinary shares.
The new shares rank equally with existing shares. Fully paid ordinary shares carry one vote per share and carry the right to dividends.
b. Accounting policies
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.
c. Capital management
The Company’s capital management policies focus on ordinary share capital. When managing capital, the Board’s objective
is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and benefits to
other stakeholders.
During the year ended 30 June 2023, the Company paid dividends of $19,465,000 including dividends reinvested of $2,885,000
(2022: dividends of $20,871,000 including dividends reinvested of $2,272,000). The Board anticipates that the payout ratio is
60% to 80% of the underlying net profit after tax of the Group. The Board continues to monitor the appropriate dividend payout
ratio over the medium term.
The Board is constantly reviewing the capital structure to take advantage of favourable cost of capital or high returns on assets.
As the market is constantly changing, the Board may change the amount of dividends to be paid to shareholders or conduct
share buybacks.
16. Reserves
a. Analysis of balances
Investment revaluation reserve
Foreign currency translation reserve
Equity-settled employee benefits reserve
(i) Investment revaluation reserve
This reserve records the Group’s net gain on its financial assets at FVTOCI.
Movements in reserve:
Opening balance
Movement in the other comprehensive income:
– Change in fair value of financial assets at FVTOCI, net of income tax
– Effect of foreign currency differences
Transfers between reserve:
– Transfer of the cumulative change in fair value, net of income tax, on derecognised financial
assets at FVTOCI
Closing balance
2023
$’000
2022
$’000
(2,970)
1,102
83,557
64,405
9,826
7,908
90,413
73,415
1,102
83,350
(4,071)
138,507
(1)
2,978
(4,072)
141,485
–
(223,733)
(2,970)
1,102
(ii) Foreign currency translation reserve
The reserve records the Group’s foreign currency translation reserve on foreign operations.
Movements in reserve:
Opening balance
Movement in the other comprehensive income:
– Exchange differences on translating foreign operations of the Group
– Share in foreign currency reserve of an associate, net of income tax
– Share of non-controlling interests
Closing balance
70
71
2023
$’000
2022
$’000
64,405
30,795
19,242
33,476
(15)
(75)
51
83
83,557
64,405
(iii) Equity-settled employee benefits reserve
This reserve is used to record the value of equity benefits provided to employees and Directors as part of their remuneration.
Refer to Note 25 for further details of these plans.
Movements in reserve:
Opening balance
Share-based payments (refer to Note 25(ii))
Value of shares to settle performance rights vested (refer to Note 25(iii))
Closing balance
17. Dividends paid and proposed
a. Analysis of balances
Previous year final:
7,908
2,055
(137)
9,826
6,702
1,206
–
7,908
2023
$’000
2022
$’000
Fully franked dividend (23 cents per share) (2022: 26 cents per share)
11,764
13,215
Current year interim:
Fully franked dividend (15 cents per share) (2022: 15 cents per share)
7,701
19,465
7,656
20,871
Declared after the reporting period and not recognised:
67.3% franked dividend (23 cents per share) (2022: Fully franked dividend of 23 cents per share)¹
11,862
11,764
b. Franking credit balance
The balance at the end of the financial year at 30% (2022: 30%)²
3,422
11,933
Franking credits that will arise from the receipt of dividends recognised as receivables by the
parent entity at the reporting date
The impact on the franking account of dividends proposed or declared before the financial report
was authorised for issue but not recognised as a distribution to the members of the Company
The amounts of franking credits available for future reporting periods
–
300
(3,421)
1
(5,042)
7,191
The tax rate at which paid dividends have been franked and dividends proposed will be franked is 30% (2022: 30%).
Notes:
1 Calculation was based on the ordinary shares on issue as at 31 July 2023 (2022: 31 July 2022).
2 The decrease in franking credits arose from the payment of dividends to the members of the Company.
Annual Report 2023 NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
D. CAPITAL, FINANCING AND FINANCIAL RISK MANAGEMENT (continued)
18. Financial risk management
The Group is exposed to a variety of financial risks comprising interest rate risk, credit risk, liquidity risk, foreign currency risk and
price risk.
The Board have overall responsibility for identifying and managing operational and financial risks.
Details of significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement
and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity
instrument are disclosed in the relevant notes.
The Group holds the following financial instruments:
At amortised
cost
At FVTPL
At FVTOCI
Total
2023
$’000
2022
$’000
2023
$’000
2022
$’000
2023
$’000
2022
$’000
2023
$’000
2022
$’000
Financial assets
Cash and cash
equivalents
Trade and other
receivables
– current
– non-current
Other financial assets
– current
– non-current
Other assets
– non-current
Financial liabilities
Trade and other
payables
Other financial
liabilities
– current
– non-current
Lease liabilities
– current
– non-current
23,201
34,886
7,295
646
9,017
1,796
808
929
567
–
–
–
–
–
–
–
623
–
–
–
–
–
23,201
34,886
–
–
–
7,295
646
9,017
1,796
808
1,190
466
314,633
289,806
9,331
14,513
324,893
304,785
66
76
–
–
–
–
66
76
32,945
46,808
314,633
290,429
9,331
14,513
356,909
351,750
7,756
8,800
–
42,789
359
2,467
–
–
281
771
–
–
–
133
5,866
11,064
–
–
–
–
53,371
9,852
5,866
11,197
–
–
–
–
–
–
–
7,756
8,800
–
–
–
–
–
–
133
48,655
11,064
359
2,467
281
771
59,237
21,049
a. Interest rate risk
At the reporting date, the Group had the following direct exposure to global variable interest rate risk:
Interest bearing financial assets:
– Cash and cash equivalents
Interest bearing financial liabilities:
– Senior Secured Debt Facility
72
73
2023
$’000
2022
$’000
23,201
34,886
42,789
–
Sensitivity analysis
The following sensitivity analysis is based on the interest rate risk exposures in existence at the reporting date.
If interest rates had moved during the year as illustrated in the table below (using an average balance), with all other variables held
constant, post tax profit/(loss) would have been affected as follows:
Net impact on profit after tax
+1% [2022: 1%]/ 100 basis points, [2022: 100 basis points]
-1% [2022: 1%]/ (100 basis points), [2022: 100 basis points]
2023
$’000
(102)
252
2022
$’000
134
–
b. Credit risk
Credit risk arises from the financial assets of the Group which comprise, trade and other receivables, and other debt instruments.
The Group’s exposure to credit risk arises from potential default of the counterparty, with the maximum exposure equal to the
carrying amount of these instruments. Exposure at reporting date is addressed in each applicable note. The Group does not hold
any credit derivatives to offset its credit exposure.
The Group transacts only with related parties and recognised creditworthy third parties. As such collateral is not generally
requested nor is it the Group’s policy to securitise its trade and other receivables and other debt instruments.
Receivable balances and loans made to related entities are monitored on an ongoing basis and remain within approved levels, with
the result that the Group’s exposure to bad debts is not significant. Refer to Note 9a(i) and Note 10a(i).
The Company provides financing to the members of the Group in certain circumstances where these entities are deemed credit
worthy. The maximum exposure to credit risk is the carrying value of the loans.
c. Liquidity risk
The Group manages liquidity risk by maintaining adequate reserves and cash in bank balance by continuously monitoring forecast
and actual cash flows and by matching the maturity profiles of financial liabilities.
The following tables detail the Group's remaining contractual maturity for its financial liabilities with agreed repayment periods.
The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which
the Group can be required to pay. The table includes both principal and interest cash flows. To the extent that interest rates are
floating, the undiscounted amount is derived from interest rate curves at the end of the reporting period.
2023
Trade and other payables
Earn-out liability (Aether)
Earn-out liability (Pennybacker)
Lease liabilities
Debt facility
Weighted
average
effective
interest rate
0%
9.95%
13.20%
8.29%
11.41%
1 to
3 months
$’000
3 months to
1 year
$’000
6,588
1,168
–
–
107
1,140
7,835
–
–
280
3,394
4,842
1 to
2 years
$’000
–
–
2,728
284
4,522
7,534
2 to
5 years
$’000
–
5,040
–
2,014
Total
$’000
7,756
5,040
2,728
2,685
55,528
64,584
62,582
82,793
Annual Report 2023 NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
D. CAPITAL, FINANCING AND FINANCIAL RISK MANAGEMENT (continued)
18. Financial risk management (continued)
2022
Trade and other payables
Earn-out liability (Aether)
Earn-out liability (Pennybacker)
Deferred payment (EAM Global)
Lease liabilities
Weighted
average
effective
interest rate
1 to
3 months
$’000
3 months to
1 year
$’000
0%
7,355
1,445
12.71%
13.68%
18.34%
6.29%
–
–
–
89
–
954
150
271
7,444
2,820
1 to
2 years
$’000
–
4,863
–
–
243
5,106
2 to
5 years
$’000
–
–
7,767
–
273
Total
$’000
8,800
4,863
8,721
150
876
8,040
23,410
d. Foreign currency risk
The Group adopted an accounting treatment to hedge its dollar net assets for its Investment in Northern Lights Midco, LLC
(“Midco”) for foreign exchange exposure arising between the Australian dollar and USA dollar. At 30 June 2023, the Group’s
foreign exchange exposure from its USD denominated Debt Facility is considered minimal therefore hedging of its dollar net assets
investment in Midco was not utilised.
(i) Consolidated statement of profit or loss
Profits and losses are translated at an average exchange rate. A falling Australian dollar relative to the USA dollar, UK pound (“GBP”)
and Euro (“EUR”) results in a higher net profit in the Group. The regular expenses of the operations in Australia, the USA and the
UK are predominantly funded with cash flows from those local operations.
(ii) Consolidated statement of financial position
The Group is an international multi boutique business with operations primarily within Australia, the USA, and the UK. In addition,
the Group has an investment based in Luxembourg where the transactions are denominated in Euro. The impact of the Euro
denominated transactions being the distributions and the related receivable from Carlisle is taken up through profit or loss.
The impact of foreign currency translation of the foreign operations is taken up in the equity reserves of the Group.
At year end, the carrying amounts of the Group’s financial assets and liabilities that are different from the functional currency of
the Company and transactions that are denominated in foreign currency are as follows:
Financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Other assets
Financial liabilities
Trade and other payables
Other financial liabilities
Lease liabilities
USD
$’000
2023
GBP
$’000
EUR
$’000
USD
$’000
16,182
5,652
324,765
64
2,316
451
936
–
–
1,734
–
–
24,051
5,890
305,975
41
2022
GBP
$’000
7,904
1,848
–
24
EUR
$’000
–
1,814
–
–
346,663
3,703
1,734
335,957
9,776
1,814
2,745
48,655
2,826
54,226
3,547
–
–
3,547
–
–
–
–
3,403
11,197
1,052
15,652
4,200
–
–
4,200
–
–
–
–
74
75
(iii) Sensitivity analysis
The following sensitivity analysis is based on the foreign currency risk exposures in existence at the reporting date.
2023
2022
Increase
$’000
Decrease
$’000
Increase
$’000
Decrease
$’000
USD - change in rate by 1% - impact on profit after tax
EUR - change in rate by 1% - impact on profit after tax
27
14
(27)
(14)
(112)
14
112
(14)
Apart for the above sensitivities, the Group has no other material exposure in USD and GBP foreign currencies. The Group
exposure in USD and GBP foreign currencies is mitigated because the balances of the Group in USD and GBP are from the Group’s
foreign operations. The impact of the foreign currencies is recognised as part of the foreign currency translation reserve, offsetting
the exchange differences.
(iv) Accounting policies
Hedges of a net investment in a foreign operation that qualify for hedge accounting
The effective portion of the changes in the foreign currency risk component that is designated and qualifies as a hedge of a net
investment in a foreign operation is recognised as part of foreign currency translation reserve within equity. The gain or loss
relating to any ineffective portion is recognised immediately in profit or loss, within other expenses.
The accumulated gains and losses on the hedging instrument relating to the effective portion of the foreign currency risk component
is reclassified from foreign currency translation reserve to profit or loss on the disposal or partial disposal of the foreign operation.
e. Price risk
The Group is exposed to securities price risk. This arises from the Group’s investments in financial instruments held at fair value.
Sensitivity analysis
As at year end, if the key inputs discussed in Note 18f(i) have moved, post tax profit and reserves would have been affected as
follows:
2023
2022
Increase
$’000
Decrease
$’000
Increase
$’000
Decrease
$’000
Financial assets at FVTPL
– 1% variable inputs - impact on profit after tax
10,593
(8,963)
7,108
(6,206)
Financial assets at FVTOCI
– 1% variable inputs - impact on equity
372
(326)
475
(417)
Financial liabilities at FVTPL
– 1% variable inputs - impact on profit after tax
110
(114)
116
(120)
f. Fair value estimation
(i) Fair value hierarchy
Some of the Group’s financial assets and financial liabilities are measured on a recurring basis at fair value at the end of each
reporting period.
The Group classifies fair value measurements using the fair value hierarchy categorised into Level 1, 2 or 3 based on the degree to
which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement
in its entirety, which are described as follows:
– Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at
the measurement date;
– Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either
directly or indirectly; and
– Level 3 inputs are unobservable inputs for the asset or liability.
Annual Report 2023 NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
D. CAPITAL, FINANCING AND FINANCIAL RISK MANAGEMENT (continued)
18. Financial risk management (continued)
The following table represents the Group’s assets and liabilities measured and recognised at fair value as at 30 June 2023 and
2022.
2023
Financial assets
Financial liabilities
2022
Financial assets
Financial liabilities
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
164,983
–
41
–
158,940
323,964
5,866
5,866
173,917
234
130,791
304,942
–
–
11,197
11,197
The following table gives information about how the fair values of those financial assets / liabilities categorised as Level 3 items are
determined (in particular, the valuation techniques and inputs used):
Financial
instruments
2023
$’000
2022
$’000
Valuation techniques
and unobservable inputs
Range of inputs
Sensitivity analysis
Financial assets at
FVTPL
Investments
149,609
115,655 Discounted Cash Flow
– Revenue growth derived
from FUM growth
– Discount rate
-4.09% to 32.97%
(2022: 5.83% to
42.88%)
10.95% to 14.29%
(2022: 12.21% to
15.82%)
– Terminal growth rate
3% (2022: 3%)
–
623 Discounted Cash Flow
– Projected revenue from
the new FUM of the
business
– Discount rate
(2022: 33.33%)
(2022: 5.91%)
Receivable
from Raven
(fully collected on
11 August 2022)
Financial assets at
FVTOCI
Investments
9,331
14,513 Discounted Cash Flow
– Revenue growth derived
from FUM growth
– Discount rate
6.04% to 12.18%
(2022: 7.56% to
12.17%)
18.10% (2022:
18.34%)
– Terminal growth rate
3% (2022: 3%)
Total
158,940
130,791
1% (2022: 1%) lower or
higher terminal growth rate
while all the other variables
were held constant, the fair
value would decrease by
$9,120,000 and increase by
$11,047,000 (2022: decrease
by $5,508,000 and increase
by $6,525,000).
(2022: 1%) lower or higher
discount rate while all the
other variables were held
constant, the fair value would
(2022: increase by $2,000
and decrease by $2,000).
1% (2022: 1%) lower or higher
terminal growth rate while all
the other variables were held
constant, the fair value would
decrease by $429,000 and
increase by $490,000 (2022:
decrease by $549,000 and
increase by $625,000).
76
77
Financial
instruments
2023
$’000
2022
$’000
Valuation techniques
and unobservable inputs
Range of inputs
Sensitivity analysis
Financial liabilities
at FVTPL
Earn out liabilities
and deferred
payments
5,866
11,197 Discounted Cash Flow
– Projected revenue
– Earn-out factor to
earn-out multiplier
– Discount rate
1% (2022: 1%) lower or
higher discount rate while all
the other variables were held
constant, the fair value would
increase by $150,000 and
decrease by $145,000 (2022:
increase by $157,000 and
decrease by $153,000).
$4,795,000
(2022: $12,850,000)
50% (2022: 50%)
9.95% to 13.20%
(2022: 9.88% to
18.34%)
Total
5,866
11,197
(ii) Transfers between levels and changes in valuation techniques
There were no transfers between the levels of fair value hierarchy during the financial year. There were also no changes made to
any of the valuation techniques applied as at 30 June 2023.
(iii) Fair value of financial assets and financial liabilities that are not measured at fair value (but fair value disclosures are
required)
Except as detailed in the table below, the carrying amounts of financial assets (cash and cash equivalents, trade and other
receivables and security deposits) and financial liabilities (trade and other payables) recognised in the consolidated financial
statements approximate their fair values.
Financial assets at amortised cost
– Receivable from EAM Global
– Loans receivable from IFP
– Loans receivable from Astarte
Financial liabilities at amortised cost
– Debt facility
2023
Carrying
amount
$’000
2022
Fair
value
$’000
Carrying
amount
$’000
433
375
936
433
375
1,006
974
65
–
Fair
value
$’000
989
74
–
42,789
43,466
–
–
19. Capital commitments, operating lease commitments and contingencies
a. Capital commitments
The Group has outstanding capital commitments as follows:
– Aether GPs (USD272,000) (2022: USD264,000)
– Additional Contribution to NCI (USDnil) (2022: USD11,895,000)¹
Total capital commitments
Notes:
2023
$’000
2022
$’000
404
–
404
382
17,229
17,611
1
With the full settlement of the liability to Hareon as disclosed in Note 13, the Group’s capital commitments were terminated in its entirety pursuant
to the Deed.
At 30 June 2022, under the Aurora Subscription Deed and Shareholder’s Deed referred in Note 13, the Group agreed to make an Additional
Contribution to NCI in the amount of USD13,500,000; reduced by the amount of Guarantee paid of USD1,605,000.
Annual Report 2023
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
D. CAPITAL, FINANCING AND FINANCIAL RISK MANAGEMENT (continued)
19. Capital commitments, operating lease commitments and contingencies (continued)
b. Earn-out payments for future funds of Aether
This represents the potential commitment by the Group to the two founders of Aether, for marketing and offering interests for the
set-up and successful launching of future Aether funds (ARA Fund VI and interim funds related to ARA Fund V and ARA Fund VI).
c. Contingent liabilities
The Group has outstanding contingent liabilities as follows:
– Guarantee to NCI (USDnil) (2022: USD5,000,000)¹
Notes:
2023
$’000
–
2022
$’000
7,242
1
With the full settlement of the liability to Hareon as disclosed in Note 13, the Group’s contingent liabilities were terminated in its entirety pursuant
to the Deed.
Prior to the full settlement of the liability to Hareon on 31 October 2022, the Group agreed to provide a guarantee (“Guarantee”) to NCI of up to
USD5,000,000 a year for each of the six years following the date of commission of the first solar project sponsored by NCI. This Guarantee was to
cover any shortfall payments, which were basically the amounts that were drawn upon by NCI if and when certain prescribed thresholds in respect
to annual revenues of NCI were not met.
d. Lease commitments
Commitments for minimum lease payments:
– not later than one year
– later than one year and not later than five years
– later than five years
Total lease commitments
2023
$’000
2022
$’000
11
19
–
30
10
29
–
39
The lease commitments relate to leases that are short-term and low value which were not capitalised.
e. Contingent assets
On 17 September 2019, the Company received an originating application in the Federal Court of Australia in Melbourne by Michael
Brendan Patrick de Tocqueville and ASI Mutual Pty Limited (collectively “ASI”) seeking leave of the court to commence a derivative
action on behalf of the Company against individuals serving as Directors at the time of the 2014 merger between the Company
and the Northern Lights Capital Group, LLC (including two current Directors) for matters arising out of the merger. On 20 February
2020, the Federal Court of Australia granted ASI leave to bring the proceedings. Omni Bridgeway (Fund 5) Australian Invt. Pty Ltd
(“Litigation Funder”) has given an undertaking to cover the Company’s costs and any liabilities or adverse cost orders made against
the Company in favour of the defendants. As a result, the claims are not expected to have a material adverse financial effect on
the Company. If the proceedings are successful or are settled on terms that the defendants pay an agreed amount, the Company
will be entitled to the net proceeds after deducting specified legal costs and the Litigation Funder’s share. The proceedings are
currently part heard. It is anticipated that closing submissions will be made by the parties in October 2023 with judgment to follow.
78
79
E. GROUP STRUCTURE
This section provides information regarding the group structure of the Group, including further details on interests in subsidiaries,
intangible assets, investment in associates and joint venture, parent entity disclosure and related party transactions.
20. Interests in subsidiaries
The following are the Company’s subsidiaries:
Name of subsidiaries
Aurora Investment Management Pty Ltd
The Aurora Trust
Treasury Group Investment Services Pty Ltd
Treasury ROC Pty Ltd1
Northern Lights MidCo, LLC
Carlisle Acquisition Vehicle, LLC (“CAV”)2
Northern Lights Capital Group, LLC
NLCG Distributors, LLC
Northern Lights Capital Partners (UK) Ltd (“NLCPUK”)
Strategic Capital Investments, LLP
Northern Lights MidCo II, LLC
Aether Investment Partners, LLC
Notes:
Country of
incorporation
Australia
Australia
Australia
Australia
USA
USA
USA
USA
UK
UK
USA
USA
Ownership interest held by the
Company
%
100
100
100
100
100
100
100
100
100
60
100
100
%
100
100
100
100
100
100
100
100
100
60
100
100
1 This subsidiary is a holding company and non-operating.
2 CAV is a limited liability company that holds the Group’s investment in Carlisle. Midco owns 1% and NLCPUK owns 99% of CAV.
a. Accounting policies
(i) Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities (including structured
entities) controlled by the Company and its subsidiaries. Control is achieved when the Company has power over the investee, is
exposed, or has rights, to variable returns from its involvement with the investee, and has the ability to use its power to affect
its returns.
When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting
rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers
all relevant facts and circumstances in assessing whether or not the Company’s voting rights in an investee are sufficient to give
it power, including the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other
vote holders, potential voting rights held by the Company, other vote holders or other parties, rights arising from other contractual
arrangements, and any additional facts and circumstances that indicate that the Company has, or does not have, the current ability
to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’
meetings.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses
control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in
the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the
date when the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income/(loss) are attributed to the members of the Company and to
the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the members of the Company and to the
non-controlling interests even if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with
the Group’s accounting policies. The financial statements of the Australian, US and UK subsidiaries are prepared for the same
reporting period as the Company (30 June).
All intragroup assets and liabilities, equity, income, expenses, and cash flows relating to transactions between members of the
Group are eliminated in full upon consolidation.
Annual Report 2023 NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
E. GROUP STRUCTURE (continued)
20. Interests in subsidiaries (continued)
(ii) Foreign currency translations and balances
Functional and presentation currency
The individual financial statements of each Group entity are presented in the currency of the primary economic environment in
which the entity operates (its functional currency). For the purposes of the consolidated financial statements, the results and
financial position of the Group are expressed in Australian dollars, which is the functional currency of the Company and the
presentation currency for the consolidated financial statements.
Transactions and balances
In preparing the consolidated financial statements, transactions in currencies other than the Group’s functional currency (foreign
currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period,
monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried
at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was
determined.
Exchange differences on monetary items are recognised in profit or loss in the period in which they arise except for:
– exchange differences on transactions entered into in order to hedge certain foreign currency risks; and
– exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither
planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognised
initially in other comprehensive income and reclassified from equity to profit or loss on repayment of the monetary items.
Translation of foreign operations
For the purposes of presenting these consolidated financial statements, the assets and liabilities of the Group’s foreign operations
are translated into Australian dollar using exchange rates prevailing at the end of the reporting period. Income and expense items
are translated at the average exchange rates for the year, unless exchange rates fluctuated significantly during that period, in which
case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other
comprehensive income and accumulated in equity (and attributed to non-controlling interests as appropriate).
Goodwill and fair value adjustments to identifiable assets acquired and liabilities assumed through acquisition of a foreign operation
are treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of each
reporting period. Exchange differences arising are recognised in other comprehensive income.
For the purposes of presenting the transactions disclosed in the condensed notes to the financial statements, these transactions
are translated into Australian dollar using the exchange rates prevailing at the date of transaction. For other amounts disclosed at
the end of the reporting period, these amounts are translated into Australian dollar using the exchange rates prevailing at the end
of the reporting period.
21. Intangible assets
a. Analysis of balances
Goodwill, net of impairment
Other identifiable intangible assets, at carrying amount
– Brand and trademark
– Management rights
Total intangible assets
2023
$’000
2022
$’000
26,722
37,217
8,106
6,560
14,666
41,388
7,821
9,277
17,098
54,315
80
81
Goodwill
$’000
Brand and
trademark
$’000
Management
rights
$’000
Total
$’000
37,217
7,821
–
(11,731)
1,236
26,722
34,282
—
2,935
37,217
–
–
285
8,106
7,205
—
616
7,821
9,277
(3,024)
–
307
6,560
11,218
(2,761)
820
9,277
54,315
(3,024)
(11,731)
1,828
41,388
52,705
(2,761)
4,371
54,315
26,722
8,106
6,560
41,388
37,217
7,821
9,277
54,315
Movement of intangible assets
2023
Opening balance
Amortisation
Impairment
Effect of foreign currency differences
Closing balance
2022
Opening balance
Amortisation
Effect of foreign currency differences
Closing balance
Cash generating units
Goodwill and other identifiable intangible assets:
2023
– Aether
2022
– Aether
b. Accounting policies
(i) Goodwill
Goodwill arising on an acquisition of a business is carried at cost as established at the date of the acquisition of the business less
accumulated impairment losses, if any.
(ii) Brand and trademark and management rights
Brand and trademark and management rights acquired as part of a business combination are recognised separately from goodwill.
These are initially recognised at their fair value at the acquisition date (which is regarded as their cost).
– Brand and trademark – Subsequent to initial recognition, brand and trademark which have indefinite lives are reported at
cost less accumulated impairment losses.
– Management rights – Subsequent to initial recognition, management rights are reported at cost less accumulated
amortisation and accumulated impairment losses. Management rights are amortised as follows:
– Acquired in 2014 – based on a straight-line basis over its estimated useful life of 12 years; and
– Acquired in 2019 – based on 50% of the revenue from ARA Fund V over 12 years.
Annual Report 2023 NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
E. GROUP STRUCTURE (continued)
21. Intangible assets (continued)
(iii) Impairment of goodwill, brand and trademark and management rights
For the purposes of impairment testing, goodwill, brand and trademark, and management rights are allocated to each of the Group’s
cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination.
A cash-generating unit to which goodwill, brand and trademark and management rights have been specifically identified to the
cash-generating unit is tested for impairment annually, or more frequently when there is an indication that the unit may be
impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated
first to reduce the carrying amount of any goodwill to the unit, then to brand and trademark and management rights and then
to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. A further impairment test is
performed to the brand and trademark and management rights to determine individually if there is an indication that these other
identifiable intangible assets may be impaired. Any impairment loss for the cash generating units (goodwill, brand and trademark
and management rights) are recognised directly in profit or loss. Any impairment loss recognised for goodwill are not reversed in
subsequent periods. For brand and trademark and management rights, any impairment loss recognised are reversed in subsequent
periods if a business recovers or exceeds previous levels of financial performance.
c. Key estimates, judgments, and assumptions
Impairment of goodwill and other identifiable intangible assets
At the end of each reporting period, management assesses the level of goodwill and other identifiable intangible assets of each of
the underlying assets of the Group. Should assets underperform or not meet expected growth targets from prior expectations,
a resulting impairment of the goodwill and other identifiable intangible assets is recognised if that deterioration in performance
is deemed not to be derived from short term factors such as market volatility. Factors that are considered in assessing possible
impairment in addition to financial performance include changes to key investment staff, significant investment underperformance
and litigation. Impairments of goodwill in relation to subsidiaries cannot be reversed if a business recovers or exceeds previous
levels of financial performance.
Aether
The recoverable amount of Aether, a cash-generating unit, is determined based on its fair value calculation which uses cash flow
projections. These cash flow projections include expected revenues from existing funds, which are largely certain, as well as
anticipated new fund raising. A five-year discrete period was applied as it is believed that it is sufficient time for the business to
be in a steady state in terms of launching new funds based on the existing plan for the business. During the year, the goodwill
and other identifiable intangible assets were assessed and tested for impairment. At 30 June 2023, impairment of the goodwill of
$11,731,000 (2022: no impairment) was recognised due Aether’s new fund raising activity being slower than previously anticipated.
A weighted average discount rate of 9.95% to 16.65% (2022: 12.71% to 14.01%) in the cash flow projections during the discrete
period, tax rate of 21% (2022: 21%) and the terminal growth rate of 3% (2022: 3%) were applied.
Sensitivity analysis
An analysis was conducted to determine the sensitivity of the impairment test to reasonable changes in the key assumptions used
to determine the recoverable amount of the CGU. The sensitivities tested include a 5% reduction in the annual cash flow of the
CGU, a 1% decrease in the terminal growth rate used to extrapolate cash flows beyond the end of the discrete cash flows and a
1% increase in the discount rate applied to cash flow projections.
The impact on the impairment as result of these sensitivities is shown below:
Sensitivity
Impact on impairment assessment
A 5% decrease in cash flows
Further impairment of goodwill
A 1% decrease in terminal growth rate
Further impairment of goodwill
A 1% increase in discount rate
Further impairment of goodwill
Impairment
$’000
1,948
2,477
2,917
AASB 136 requires that where a reasonably possible change in a key assumption would cause the carrying amount of the CGU to
exceed its recoverable amount, the value at which an impairment first arises shall be disclosed.
22. Investment in associates and joint ventures
a. Analysis of balances
Investment in associates
Opening balance
Acquisition of associates
Additional contribution to associates
Subsequent reclassification from FVTPL to investment in associate (Note 22a(iv))
Share of net profits of associates
Dividends and distributions received/receivable
Impairment (Note 3)
Share in foreign currency reserve of an associate
Effect of foreign currency differences
Closing balance
Investment in joint ventures
Opening balance
Share of net profits of a joint venture
Dividends and distributions received/receivable
Effect of foreign currency differences
Closing balance
Total
82
83
2023
$’000
2022
$’000
164,050
102,803
—
28
—
7,827
(17,098)
(1,925)
(22)
5,879
48,257
6,973
1,983
7,968
(9,374)
(3,796)
72
9,164
158,739
164,050
31,067
235
(1,446)
1,120
30,976
29,255
162
(820)
2,470
31,067
189,715
195,117
Annual Report 2023 NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
E. GROUP STRUCTURE (continued)
22. Investment in associates and joint ventures (continued)
(i) Details of associates and joint venture
Associates
Aether General Partners1
ASOP Profit Share LP2
Astarte Capital Partners, LLP2
Banner Oak Capital Partners, LP3
Blackcrane Capital, LLC4
Capital & Asset Management Group, LLP5
IFP Group, LLC6
Northern Lights Alternative Advisors LLP7
Roc Group8
Victory Park Capital Advisors, LLC9
Victory Park Capital GP Holdco, L.P.10
Joint ventures
Copper Funding, LLC11
Nereus Capital Investments (Singapore) Pte. Ltd12
Associate of the joint venture Copper Funding, LLC
Principal activity
Funds Management
Investment Entity
Funds Management
Funds Management
Funds Management
Funds Management
Investment Adviser
Placement Agent
Funds Management
Funds Management
Funds Management
Investment Entity
Investment Entity
Ownership interest
2023
%
2022
%
Place of
incorporation
and operation
25.00
39.06
44.46
35.00
-
40.00
24.90
23.00
30.01
24.90
24.90
50.00
74.19
25.00
USA
39.03 Cayman Islands
44.46
35.00
25.00
40.00
24.90
23.00
30.01
24.90
24.90
50.00
UK
USA
USA
USA/UK
USA
UK
Australia
USA
USA
USA
8.72
Singapore
Pennybacker Capital Management, LLC13
Funds Management
16.50
16.50
USA
Notes:
1
2
3
Aether Real Assets GP I, LLC, Aether Real Assets GP II, LLC, Aether Real Assets GP III, LLC and Aether Real Assets III Surplus GP, LLC (collectively
the “Aether General Partners”) are the General Partners of Aether Real Assets I, L.P., Aether Real Assets II, L.P., Aether Real Assets III, L.P. and Aether
Real Assets III Surplus, L.P. (collectively the “Funds”). The General Partners are responsible for the operation of the Funds and the conduct and
management of its business.
Astarte is based in London, England, is an investment manager focused on private markets real asset strategies. Astarte’s business model is distinctive
in that it provides anchor/seed capital, working capital, and fundraising support to operating experts and emerging investment managers to support
their growth. ASOP-PSP was set-up to receive the portion of the revenues and income of ASOP Fund vehicles.
Banner Oak is an alternative investment manager offering a private real estate strategy focused on the creation of growth of fully integrated private
real estate operating companies. It is based in Dallas, Texas, USA.
4 Blackcrane is a boutique asset management firm focusing on global and international equities.
5 CAMG is a private infrastructure investment firm based in London and Washington DC, USA.
6
IFP is a multi-custodial registered investment adviser focused on delivering personalised, concierge-level service to advisors in the USA specialising
in wealth management and retirement plan consulting.
7 NLAA is a strategic partner and placement agent based in London, England that focused on private equity and hedge funds.
8
Roc Group is a specialised investment firm offering both pooled and customised Asia Pacific private equity solutions. Roc Group includes Roc
Partners Pty Ltd and Roc Partners (Cayman) Limited. The Group holds stapled securities in Roc Group.
9 VPC is a focused on private debt strategies-direct lending to financial service companies (Specialty Finance) with some investments in private equity.
10 VPC-Holdco holds direct and indirect interest in VPC funds and their general partner entities.
11 CFL is a limited liability company established as a joint venture of the Group with Kudu Investments Management, LLC (“Kudu”) to hold the investment
in Pennybacker.
12 During the year, as a result of the settlement agreement, the Group’s effective interest in NCI increased from 8.72% to 74.19%. The Group reassessed
its investment in NCI and determined that the investment is a joint venture since the Group jointly controls NCI.
Although the Group has 74.19% effective interest in NCI, the Group has one out of three board representation and all decision making and approval
rights either requiring unanimous written consent of the directors or written consent of at least two directors.
13 Pennybacker is an alternative investment manager based in Austin, Texas, USA offering private equity investment strategies focused on both
commercial, retail, office, and industrial assets, as well as affordable multifamily residential real estate in certain markets in the USA.
CFL owns 33% equity interest in Pennybacker, therefore the Group has an effective 16.50% ownership by virtue of its 50% equity interest in its joint
venture investment in CFL.
84
85
(ii) Acquisitions of associates
On 31 December 2021, the Group acquired a 35% equity interest in Banner Oak for $48,257,000 (USD35,000,000). The acquisition
included goodwill and other identifiable intangible assets of $47,885,000 (USD34,730,000).
(iii) Disposal of associates
On 31 December 2022, with the effect from 1 July 2022, Blackcrane purchased and redeemed the 25% equity ownership of
the Group in Blackcrane with a potential value of up to $372,000 (USD250,000) to be paid as an earn-out. Blackcrane shall
pay the Group in one or more installments in an amount equal to, for each financial year, 50% of all Blackcrane’s revenues in
excess of $2,229,000 (USD1,500,000) until such time as the full amount of purchase price has been paid in full to the Group. At
30 June 2023, Blackcrane is in the process of winding down its operations therefore the Group did not recognise any value on the
potential earn-out.
(iv) Restructuring of associates
On 27 December 2021, the Group restructured its investment in IFP with an additional contribution of $5,515,000 (USD4,000,000)
in exchange for an additional 20% of the economics or share in profit/losses of IFP and a preference in distribution. The restructure
did not change the accounting treatment of the Group’s investment in IFP.
(v) Wind-up of an associate
On 16 May 2023, the directors of CAMG resolved to take the necessary steps for the dissolution of CAMG. The decision to
wind-up CAMG was the result of no visible short or medium term prospect of securing funds or generating income. As a result, the
Group impaired its investment in CAMG. In addition, the Credit Facility of $358,000 (GBP200,000) with a term of two years and
bears 10% interest per annum extended to CAMG on 14 December 2022, including the related accrued interest were also impaired
(refer to Note 9 and Note 10 for the details).
b. Summarised financial information for associates and joint ventures
2023
Comprehensive income
Revenue and other income for the year
Profit after tax for the year
Other comprehensive income for the year
Banner
Oak
$’000
23,501
12,559
–
Pennybacker
$’000
VPC
$’000
VPC-Holdco
$’000
Aggregate of
immaterial
associates
and joint
venture
$’000
Total
$’000
50,632
39,834
23,367
169,593
306,927
9,883
(5,873)
22,780
1,394
40,743
–
–
–
62
62
Total comprehensive income for the year
12,559
9,883
(5,873)
22,780
1,456
40,805
Dividends/distributions received during
the year
The above profit after tax includes the
following:
8,686
1,446
671
5,811
1,930
18,544
– Depreciation and amortisation
347
1,042
1,806
– Interest income
– Interest expense
– Income tax expense
Financial position
Current assets
Non–current assets
Current liabilities
Non–current liabilities
Net assets/(liabilities)
Notes:
–
39
–
–
83
–
3,665
13,289
1,746
661
(922)
(233)
(74)
1,817
–
50,519
22,939
–
–
–
–
–
–1
4,207
7,402
(20)
493
3,427
(94)
2,432
3,427
41,653
109,126
37,327
62,673
(9,263)
(50,700)
(1,941)
(31,362)
(94,188)
(785)
(27,533)
–
(13,793)
(42,344)
3,171
4,987
(4,775)
(1,941)
33,825
35,267
1
The non-current assets balance of VPC-Holdco included the carried interest amounting to $36,615,000, of which the Group has $9,117,000 share,
was not recognised in accordance with AASB 15: ‘Revenue’ (“AASB 15”).
Annual Report 2023 NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
E. GROUP STRUCTURE (continued)
22. Investment in associates and joint ventures (continued)
Banner
Oak
$’000
Pennybacker
$’000
VPC
$’000
VPC-Holdco
$’000
Aggregate of
immaterial
associates
and joint
venture
$’000
Total
$’000
2023
Reconciliation of the summarised financial
position to the carrying amount recognised
by the Group:
– Net assets/(liabilities) before determination
of fair values
3,171
4,987
(4,775)
(1,941)
33,825
35,267
– Ownership interest in %
35.00%
16.50%1
24.90%
24.90%
51.87%2
– Proportion of the Group’s ownership interest
– (Increase)/decrease in net assets/liabilities
– Acquired goodwill and other identifiable
1,110
(705)
823
(762)
(1,189)
(2,306)
(483)
(101)
17,545
4,999
17,806
1,125
intangibles
48,532
30,144
56,299
22,199
3,356
160,530
– Impairment during the year
– Undistributed profits
– Foreign exchange movement
–
1,309
–
–
771
–
–
6,004
–
–
–
–
(2,053)
(2,053)
4,173
12,257
50
50
Closing balance
50,246
30,976
58,808
21,615
28,070
189,715
The above assets and liabilities include the
following:
– Cash and cash equivalents
3,105
1,428
3,744
– Current financial liabilities (excluding trade
and other payables and provisions)
(250)
(455)
(1,134)
– Non–current financial liabilities (excluding
trade and other payables and provisions)
(233)
(785)
(27,533)
–
–
–
15,214
23,491
(4,066)
(5,905)
(10,888)
(39,439)
Notes:
1
The effective ownership interest of the Group of 16.50% was used calculating the proportion of the Group’s ownership at Pennybacker through the
joint venture in CFL.
2 The rate relates to multiple different % across multiple entities.
86
87
2022
Comprehensive income
Banner
Oak1
$’000
Pennybacker
$’000
VPC
$’000
VPC-Holdco
$’000
Aggregate of
immaterial
associates
and joint
venture
$’000
Total
$’000
Revenue and other income for the year
10,886
32,326
Profit after tax for the year
5,524
8,188
Other comprehensive income for the year
–
–
61,510
16,670
–
8,187
7,661
–
165,291
278,200
3,601
41,644
240
240
Total comprehensive income for the year
5,524
8,188
16,670
7,661
3,841
41,884
Dividends/distributions received during the
year
The above profit after tax includes the
following:
– Depreciation and amortisation
– Interest income
– Interest expense
– Income tax expense
Financial position
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets/(liabilities)
Notes:
1,903
820
2,696
2,133
2,642
10,194
196
–
31
–
608
–
90
–
1,690
89
1,089
–
4,421
1,033
24,279
–
73,626
31,235
–
–
–
–
–
–2
4,549
–
956
2,973
7,043
89
2,166
2,973
37,451
139,777
30,975
63,243
(1,031)
(4,170)
(85,324)
(1,440)
(35,402)
(127,367)
(466)
–
(9,264)
–
(14,627)
(24,357)
3,957
20,109
10,273
(1,440)
18,397
51,296
1
2
Banner Oak was acquired on 31 December 2021; therefore the comprehensive income information only covers the period from acquisition to
30 June 2022.
The non-current assets balance of VPC-Holdco included the carried interest amounting to $70,513,000, of which the Group has $17,558,000 share,
was not recognised in accordance with AASB 15.
Annual Report 2023 NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
E. GROUP STRUCTURE (continued)
22. Investment in associates and joint ventures (continued)
Banner
Oak
$’000
Pennybacker
$’000
VPC
$’000
VPC-Holdco
$’000
Aggregate of
immaterial
associates
and joint
venture
$’000
Total
$’000
2022
Reconciliation of the summarised financial
position to the carrying amount recognised
by the Group:
– Net assets/(liabilities) before determination
of fair values
3,957
20,109
10,273
(1,440)
18,397
51,296
– Ownership interest in %
35%
16.50%1
24.90%
24.90%
– Proportion of the Group’s ownership interest
1,385
– (Increase)/decrease in net assets/liabilities
(994)
3,318
(3,259)
2,558
(5,930)
(359)
(70)
29%2
5,267
17,932
12,169
7,679
– Acquired goodwill and other identifiable
intangibles
49,144
30,323
56,132
21,418
8,368
165,385
– Impairment during the year
– Undistributed profits
– Foreign exchange movement
–
1,773
–
–
685
–
–
7,855
–
–
–
–
(3,795)
3,294
72
(3,795)
13,607
72
Closing balance
51,308
31,067
60,615
20,989
31,138
195,117
The above assets and liabilities include the
following:
– Cash and cash equivalents
3,703
2,993
31,486
– Current financial liabilities (excluding trade
and other payables and provisions)
– Non–current financial liabilities (excluding
trade and other payables and provisions)
Notes:
(296)
(466)
–
–
(11,856)
(9,264)
–
–
–
16,402
54,584
(4,603)
(16,755)
(13,422)
(23,152)
1
The effective ownership interest of the Group of 16.50% was used calculating the proportion of the Group’s ownership at Pennybacker through the
joint venture in CFL.
2 The rate relates to multiple different % across multiple entities.
88
89
c. Accounting policies
(i) Associates and joint ventures
An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the
financial and operating policy decisions of the investee but does not control or joint control over those policies. A joint venture is an
entity over which the Group has joint control over its net assets. Joint control is the power to control in the financial and operating
policy decisions of the investee.
The financial statements of the associate that is domiciled in Australia and certain associates in the USA are prepared for the
same reporting period as the Group (i.e., 30 June). For the other associates and joint venture, their reporting period vary between
31 March, 31 May, and 31 December. For equity accounting purposes, the Group takes up the proportionate share of the net
profits/(losses) of these associates and joint venture based on their pro-rata financial statements as at 30 June, so as to align the
proportionate share of their net profits/losses with the Group.
The results of associates and joint ventures are incorporated in the consolidated financial statements using the equity method of
accounting from the date on which the investee becomes an associate or a joint venture. Under the equity method, an investment
in an associate or joint venture is initially recognised in the statement of financial position at cost and deferred consideration and
adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income or loss of the associate or
joint venture. When the Group’s share of losses of an associate or joint venture exceeds the Group’s interest in that associate or
joint venture (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate
or joint venture), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent
that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture.
On acquisition of the investment in an associate or joint venture, any excess of the cost of the investment over the Group’s share
of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the
carrying amount of the investment.
Distributions or dividends received from the associates or joint venture are reduced from the carrying value. Any excess of the
Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is
recognised immediately in profit or loss in the period in which the investment is acquired.
(ii) Impairment
The requirements of AASB 136 are applied to determine whether it is necessary to recognise any impairment loss with respect to
the Group’s investment in an associate or a joint venture. When necessary, the entire carrying amount of the investment (including
goodwill and other identifiable intangible assets) is tested for impairment in accordance with AASB 136 as a single asset by
comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment
loss recognised forms part (as a reduction) of the carrying amount of the investment.
(iii) Disposal
The Group discontinues the use of the equity method from the date when the investment ceases to be an associate or joint
venture, or when the investment is classified as held for sale. When the Group retains an interest in the former associate or joint
venture and the retained interest is a financial asset, the Group measures the retained interest at fair value at that date and the fair
value is regarded as its fair value on initial recognition in accordance with AASB 9. The difference between the carrying amount
of the associate or joint venture at the date the equity method was discontinued, and the fair value of any retained interest and
any proceeds from disposing of a part interest in the associate or joint venture is included in the determination of the gain or
loss on disposal of the associate or joint venture. In addition, the Group accounts for all amounts previously recognised in other
comprehensive income in relation to that associate or joint venture on the same basis as would be required if that associate or
joint venture had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognised in other
comprehensive income by that associate or joint venture would be reclassified to profit or loss on the disposal of the related assets
or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when the equity
method is discontinued.
Annual Report 2023 NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
E. GROUP STRUCTURE (continued)
22. Investment in associates and joint ventures (continued)
d. Key estimates, judgments, and assumptions
Impairment of investments in associates and joint venture
At the end of each reporting period, management is required to assess the carrying values of each of the underlying investments
in associates and joint venture of the Group. Should assets underperform or not meet expected growth targets from prior
expectations, a resulting impairment of the investments is recognised if that deterioration in performance is deemed not to be
derived from short term factors such as market volatility. Factors that are considered in assessing possible impairment in addition to
financial performance include changes to key investment staff, significant investment underperformance and litigation. A significant
or prolonged decline in the fair value of an associate or joint venture below its cost is also an objective evidence of impairment.
During the year, the investments in associates and joint venture were tested for impairment. CAMG was impaired for $1,934,000
(2022: $3,796,000 for Blackcrane and CAMG). CAMG was fully impaired at 30 June 2023 (refer to Note 22a(v) for details).
Sensitivity analysis
An analysis was conducted to determine the sensitivity of the impairment test to reasonable changes in the key assumptions used
to determine the recoverable amount of the Group’s investment in associates and joint ventures. The sensitivities tested include a
5% reduction in the annual cash flow of the associates, a 1% decrease in the terminal growth rate used to extrapolate cash flows
beyond financial year 2023 and a 1% increase in the discount rate applied to cash flow projections.
The impact on the impairment as result of these sensitivities is shown below:
Sensitivity
Impact on impairment assessment
A 5% decrease in cash flows
A 1% decrease in terminal growth rate
A 1% increase in discount rate
No impairment
No impairment
No impairment
Impairment
$’000
nil
nil
nil
AASB 136 requires that where a reasonably possible change in a key assumption would cause the carrying amount of the investment
in associates to exceed its recoverable amount, the value at which an impairment first arises shall be disclosed.
23. Parent entity disclosures
Summarised presentation of the parent entity, Pacific Current Group Limited, financial statements:
Summarised statement of financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Accumulated losses
Reserves
Total equity
Summarised statement of profit or loss and other comprehensive income
Loss for the year
Other comprehensive income for the year
Total comprehensive loss for the year
90
91
2023
$’000
2022
$’000
5,416
3,609
227,968
225,791
233,384
229,400
64,816
44,677
109,493
79,402
1,284
80,686
123,891
148,714
189,897
186,927
(75,832)
(46,122)
9,826
7,909
123,891
148,714
(10,245)
(5,444)
–
–
(10,245)
(5,444)
The accounting policies of the Company being the ultimate parent entity are consistent with the Group except for the investment
in subsidiaries. Investments in subsidiaries are accounted for at costs in the financial statements of the Company. The Company
effectively provides commitments and guarantees to the Group as disclosed in Note 19.
Annual Report 2023 NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
E. GROUP STRUCTURE (continued)
24. Related party transactions
Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on
consolidation and are not disclosed in this note. Transactions between the Group and its related parties are disclosed below.
Compensation paid to key management personnel (“KMP”) of the Company
Short-term employee benefits
Post-employment benefits
Share based payments
2023
$
2022
$
2,732,731
4,058,336
56,959
52,207
1,101,051
1,089,826
3,890,741
5,200,369
Detailed remuneration disclosures are provided in the Remuneration Report.
Apart from the above, the Group had no other transactions with Directors, their related parties, or loans to KMP.
Transactions with associates and affiliated entities
Revenue and other income transactions
– Management fees - Aether funds under management
– Commission income - (2022: Blackcrane, and VPC)
– Retainer fees - Roc Group (2022: Blackcrane and Roc Group)
– Interest income - Astarte, CAMG and IFP (2022: IFP)
2023
$
2022
$
12,420,169
12,092,648
–
3,081,984
520,457
707,844
74,649
15,190
– Dividends and distributions income - GQG Inc (2022: GQG Inc and GQG LP )
13,578,014
9,646,442
– Other income - (2022: Blackcrane)
Investments in associates and joint venture transactions
–
36,873
– Additional contributions - Aether GPs (2022: Aether GPs, IFP and CAMG )
28,265
6,972,680
– Dividends and distributions - Aether GPs, BannerOak, CFL, NLAA, Roc Group, VPC, and VPC-
Holdco (2022: Aether GPs, BannerOak, CFL, NLAA, Roc Group, VPC, and VPC-Holdco)
18,544,027
10,194,442
– Loans to associates - Astarte, CAMG and IFP (2022: IFP)
– Collections of loans to associates - IFP (2022: IFP)
– Conversion of investment at FVTPL to associate - (2022: IFP)
Affiliated entities
– Proceeds from the restructure of investment - (2022: GQG LLC)
Balances at the end of the reporting period
– Trade receivables - Aether funds under management, Roc Group and VPC (2022: Aether funds
under management, Blackcrane, Roc Group and VPC)
– Dividend receivable - NLAA and Roc Group (2022: NLAA and Roc Group)
– Interest receivable - IFP (2022: IFP)
– Loans receivable - Astarte and IFP (2022: IFP)
The above transactions with related parties were on normal terms and conditions.
1,607,584
344,692
66,875
620,446
–
–
1,983,438
60,247,178
1,937,660
3,843,106
484,088
1,790,510
24,390
1,311,485
10,771
65,178
92
93
F. OTHER INFORMATION
This section provides other information of the Group, including further details of share-based payments, auditor’s remuneration,
significant events subsequent to reporting date and adoption of new and revised Standards.
25. Share-based payments
a. The Group Long-Term Incentive (“LTI”) Plan
(i) Options and performance rights
Options
Performance Rights
19 November
2021
24 February
2022
21 June
2018
25 June
2019
1 August
2019
24 February
2022
1 July 2024
1 July 2024
30 June 2021
30 June 2021
30 June 2021
30 June 2024
1 July 2025
1 July 2025
30 June 2022
30 June 2022
30 June 2022
30 June 2025
n/a
n/a
n/a
n/a
n/a
30 June 2026
$1.49
$1.57
n/a
$1.57
$1.64
n/a
$0.55
$0.67
n/a
$0.14
$0.23
n/a
$1.28
$1.31
n/a
$6.62
$6.31
$6.02
1,740,000
690,000
2,500,000
750,000
200,000
430,500
$7.28
$7.28
$nil
$nil
$nil
$nil
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
14,336
–
–
4,300
–
–
–
–
1,250,000
1,235,664
–
–
375,000
370,700
–
–
75,000
75,000
–
50,000
Continued
employment,
share price
hurdle and total
shareholder
return hurdle
Continued
employment,
share price
hurdle and total
shareholder
return hurdle
Continued
employment,
share price
hurdle and total
shareholder
return hurdle
–
–
–
–
–
–
18,000
Continued
employment,
and net asset
value hurdle
Performance hurdles
Continued
employment
Continued
employment
The fair values of the options and performance rights were independently determined by valuation specialists Leadenhall Valuation
Services Pty Ltd using Black Scholes pricing model. AON Solutions Australia Limited was commissioned to provide a report on the
vesting of the performance rights.
Date Granted
Vesting dates:
Tranche 1
Tranche 2
Tranche 3
Fair value per
option/performance
rights:
Tranche 1
Tranche 2
Tranche 3
No of options/
performance rights
issued
Exercise price per
share
Number of options/
performance rights
vested:
Tranche 1
Tranche 2
Tranche 3
Number of options/
performance rights
forfeited:
Tranche 1
Tranche 2
Tranche 3
Cancelled
Annual Report 2023
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended 30 June 2023
F. OTHER INFORMATION (continued)
25. Share-based payments (continued)
(ii) Options and performance rights recognised in the profit or loss
The amount of option expense for the year was $1,213,000 (2022: $646,000) and the performance rights amortisation expense
for the year was $842,000 (2022: $560,000).
(iii) Payments to settle share-based payments
Settlement of vested performance rights amounted to $137,000 (2022: $nil).
b. Accounting policies
The Company provides benefits to employees (including senior executives and Directors) of the Company in the form of
share-based payment transactions, whereby employees render services in exchange for shares or rights over shares (equity settled
transactions).
The Company’s LTI plan is in place whereby the Company, at the discretion of the Board of Directors, awards performance rights
to Directors, executives, and certain members of staff of the Company. Each performance right at the time of grant represents one
company share upon vesting.
The cost of equity settled transactions is recognised, together with a corresponding increase in equity, over the vesting period
based on the Group’s estimate of equity instruments that will eventually vest.
The cumulative expense recognised for equity-based transactions at each reporting date until vesting date reflects (i) the extent to
which the vesting period has expired and (ii) the Company’s best estimate of the number of equity instruments that will ultimately
vest. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is
included in the determination of fair value at grant date. The consolidated statement of profit or loss charge or credit for a period
represents the movement in cumulative expense recognised as at the beginning and end of that period.
No cumulative expense is recognised for awards that do not ultimately vest because of the non-fulfilment of a non-market condition.
c. Key estimates, judgments, and assumptions
Share-based payment transactions
The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined using Black Scholes/ Monte-Carlo simulation model
with the following assumptions used in arriving at the valuations:
Options
– 19 November 2021
– 24 February 2022
Performance rights
– 21 June 2018
– 25 June 2019
– 1 August 2019
– 24 February 2022
Volatility of the
underlying share price
Expected dividend
yield per annum
Risk free rates
per annum
40%
40%
30%
30%
30%
40%
5.10%
4.90%
3.84%
4.48%
3.60%
4.90%
0.95% and 1.40%
1.60% and 1.70%
2.07% and 2.15%
0.89% and 0.90%
0.87% and 0.83%
1.30%, 1.70% and 1.80%
The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying
amounts of assets and liabilities within the next annual reporting period but may impact expenses and equity.
26. Auditors’ remuneration
Ernst & Young and related network firms:
Audit or review of financial reports
– Group
– Subsidiaries
Statutory assurance services required by legislation provided by the auditor
Other auditors and their related network firms
– Subsidiaries
Statutory assurance services required by legislation provided by the auditor
Total auditors’ remuneration
94
95
2023
$
2022
$
760,000
760,000
45,772
30,000
48,533
30,000
835,772
838,533
264,862
99,755
364,617
141,713
54,186
195,899
1,200,389
1,034,432
27. Significant events subsequent to reporting date
On 26 July 2023, the Company received an unsolicited, non-binding, indicative proposal from Regal Partners Limited (ASX: RPL)
(“Regal”) in co-operation with River Capital Pty Ltd, both major shareholders of the Company, to acquire 100% of the shares in the
Company by way of a scheme of arrangement. Under Regal’s proposal, the Company’s shareholders will receive an implied total
value of $11.12 per share, with the consideration comprising $7.50 in cash per Company share plus $3.62 being 2.2 x GQG Inc
shares based on the closing price of GQG Inc shares on 25 July 2023 of $1.655. Regal’s proposal also states that the Company
shareholders may elect to substitute either or both elements of the consideration for Regal shares. A due diligence process is
currently underway including the evaluation of Regal’s proposal by the Independent Board Committee of the Company.
On 27 July 2023, the Company was notified by GQG Inc that the latter intends to submit a non-binding indicative proposal to
acquire 100% of the shares in the Company.
On 25 August 2023, the Directors of the Company declared a final dividend on ordinary shares in respect of the 2023 financial
year. The total amount of the dividend is $11,862,000 which represents a 67.3% franked dividend of 23.00 cents per share. The
dividend has not been provided for in the 30 June 2023 consolidated financial statements.
Other than the matters detailed above, there has been no matter or circumstance, which has arisen since 30 June 2023 that has
significantly affected or may significantly affect either the operations or the state of affairs of the Group.
28. Adoption of new and revised Standards
a. New and amended AASB standards that are effective from 1 July 2022
All new and revised accounting standards relevant to the Group that are mandatorily effective for the current year have been
adopted by the Group. Adoption of these other new and revised accounting standards did not result in a material financial impact
to the consolidated financial statements of the Group.
b. Standards and interpretations in issue not yet adopted
The AASB has issued several new and amended accounting standards and Interpretations that have mandatory application dates
for future reporting periods have not been early adopted by the Group.
These standards are not expected to have a material impact on the Group in the current or future reporting periods and on
foreseeable future transactions.
Annual Report 2023 DIRECTORS’
DECLARATION
The Directors declare that:
1. in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable;
2. in the Directors’ opinion, the attached consolidated financial statements are in compliance with International Financial
Reporting Standards, as stated in Section A in the notes to the financial statements;
3. in the Directors’ opinion, the attached consolidated financial statements and notes thereto are in accordance with the
Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial
position and performance of the Group; and
4. the Directors have been given the declarations required by s.295A of the Corporations Act 2001.
Signed in accordance with a resolution of the Directors made pursuant to s.295(5) of the Corporations Act 2001.
On behalf of the Directors
A. Robinson
Chairman
25 August 2023
INDEPENDENT
AUDITOR’S REPORT
For the year ended 30 June 2023
96
97
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Independent audit or’s report t o t he members of Pacific Current Group Limit ed
Report on t he audit of t he financial report
Opinion
We have audited the financial report of Pacific Current Group Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
2023, the consolidated statement of profit or loss, the consolidated statement of comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the year then
ended, notes to the financial statements, including a summary of significant accounting policies, and the
directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023 and
of its consolidated financial performance for the year ended on that date; and
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. 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 auditor independence requirements
of 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 also
fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Emphasis of mat t er – Subsequent event s
We draw attention to Note 27 to the financial statements which describes subsequent events related to a
non-binding indicative proposal received from Regal Partners Limited (ASX: RPL) in co-operation with
River Capital Pty Ltd, a major shareholder of the Group, to acquire 100%of the shares in the Group and to
a notification by GQG Inc (ASX: GQG) that the latter intends to submit a non-binding indicative proposal to
acquire 100%of the shares in the Group. Our opinion is not modified in respect of these matters.
Key audit mat t ers
Key audit matters are those matters that , in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter is
provided in that context.
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106
Annual Report 2023 INDEPENDENT
AUDITOR’S REPORT
For the year ended 30 June 2023
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial
report section of our report, including in relation to these matters. Accordingly, our audit included the
performance of procedures designed to respond to our assessment of the risks of material misstatement of
the financial report. The results of our audit procedures, including the procedures performed to address
the matters below, provide the basis for our audit opinion on the accompanying financial report.
Invest ment s in associat es and joint vent ures
Why significant
How our audit addressed t he key audit mat t er
As at 30 June 2023, the carrying value of the invest ment s in
associates and joint venture totals $190m, which is 31%of
the total asset s and the share of profit s totals $8m, which is
21%of the total income for the year.
The Group classifies investments in ent ities over which it has
significant influence as associates in the statement of
financial position and applies the equity method account ing in
accordance with AASB 128 Investments in Associates and
Joint Ventures.
The Group performs an annual assessment to determine
whether there is any objective evidence that investment s in
associates and joint ventures are impaired. The identif ication
of indicators of impairment requires the application of
significant judgement in terms of future cash flows, discount
rates and terminal growth rates. This was considered a key
audit matter due to its subjective nature and the quant itative
impact on the Group’s financial statements.
Our procedures included:
- Evaluating the Group’s assessment of signif icant inf luence
over the investments, and the accounting treat ment and
presentat ion thereon;
- Testing the appropriateness of the equity account ing for
the Group’s investments in associates. For the material
associates, we issued group instructions to associate’s
auditors covering mat ters significant to the audit . We
assessed the auditor ’s final report to confirm procedures
were performed in accordance with the instructions and
the conclusion reached was appropriate for the purposes
of our audit;
- Assessing the methodology used in the impairment models
to calculate the recoverable amount of the associate in
accordance with relevant Australian Accounting
St andards;
- Testing the mathemat ical accuracy of the impairment
models;
- Assessing assumptions applied in calculat ing the
recoverable amount, including future cash flows, discount
rates and terminal growth rates, in conjunction with our
internal valuat ion specialists; and
- Assessing the adequacy and appropriateness of the
disclosures in Note 22 to the financial report.
Invest ment s valuat ion
Why significant
The Group has a signif icant portfolio of financial asset s at fair
value. As at 30 June 2023, the value of these asset s, as
disclosed in Note 10 to the financial report was $324m, which
equates to 53% of the total asset s held by t he Group.
As disclosed in Note 10, $315m of the Group’s fair value
investment s were classif ied as ‘f inancial assets at fair value
through profit or loss’ (“ FVTPL” ), and $9m are classified as
‘financial assets at fair value through other comprehensive
income’ (“ FVTOCI” ).
For the financial instruments classified as Level 3, the fair
value measurement is based on unobservable input s and has a
high level of complexity. Significant judgement and high level
of uncertainty is involved in developing unobservable input s,
including forecasted future cash flows, terminal growth rates,
and discount rates. This was considered a key audit mat ter
due to its subject ive nature and the quant itat ive impact on the
Group’s financial statement s.
How our audit addressed t he key audit mat t er
Our procedures included:
- Agreeing the fair value of investments in the portfolio held
at 30 June 2023 to independent pricing sources for listed
securities;
For Level 3 investments:
- Assessing the methodology used by management to
calculate the fair value of the invest ment in accordance
with relevant Aust ralian Accounting Standards;
- Testing the mathemat ical accuracy of the model;
- Assessing the assumptions applied in calculat ing the fair
value, including future cash flows, discount rates and
terminal growth rates, in conjunct ion wit h our internal
valuation specialists; and
- Assessing the adequacy of the disclosures in Note 10 to
the financial report.
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107
98
99
Impairment assessment of goodwill
Why significant
As at 30 June 2023, the Group has goodwill of $27m.
Goodwill has been recognised as a result of the Group’s
historical acquisit ions, representing the excess of the
purchase considerat ion over the fair value of asset s and
liabilities acquired. On acquisition date, the goodwill has been
allocated to the applicable Cash Generating Units (“ CGUs” ).
Goodwill is required to be tested for impairment annually.
The determination of recoverable amount requires significant
judgement in both identifying and then calculat ing the value
of the relevant CGUs. Recoverable amounts are based on the
Group’s view of the key inputs and assumptions applied in
measuring the recoverable amount of asset s, including future
cash flows, terminal growth rates, and discount rates.
Accordingly, it was considered a key audit matter.
How our audit addressed t he key audit mat t er
Our procedures included:
- Assessing the Group’s determinat ion of the CGUs to which
goodwill is allocated;
- Assessing the methodology used by management in the
impairment model to calculate the recoverable amount of
the CGU in accordance with relevant Australian
Accounting Standards;
- Testing the mathemat ical accuracy of the impairment
model;
- Assessing the assumptions applied in calculat ing the
recoverable amount, including future cash flows, discount
rates and terminal growth rates, in conjunction with our
internal valuat ion specialist ; and
- Assessing the adequacy of the disclosures in Note 21 to
the financial report.
Informat ion ot her t han t he financial report and audit or’s report t hereon
The directors are responsible for the other information. The other information comprises the information
included in the Group’s 2023 annual report other than the financial report and our auditor’s report
t hereon. We obtained the Directors’ Report and Corporate Directory that are to be included in the annual
report, prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the
annual report after the date of this auditor’s report .
Our opinion on the financial report does not cover the other information and we do not and will not express
any form of assurance conclusion thereon, wit h the exception of the Remuneration Report and our related
assurance opinion.
In connection wit h our audit of the financial report, our responsibility is to read the other information and,
in doing so, 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.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilit ies of t he direct ors for t he financial report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement , whether due to fraud or
error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue
as a going concern, disclosing, as applicable, matters relating to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
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108
Annual Report 2023 INDEPENDENT
AUDITOR’S REPORT
For the year ended 30 June 2023
Audit or’s responsibilit ies for t he audit of t he financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whet her 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 the Australian Auditing Standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of this financial report.
As part of an audit in accordance wit h the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
► Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
► Obtain an understanding of internal control relevant to t he audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
► Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
► Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s abilit y to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue as a going
concern.
► Evaluate the overall presentation, st ructure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are responsible
for the direction, supervision and performance of the Group audit. We remain solely responsible for
our audit opinion.
We communicate wit h the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislat ion
109
100
101
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate
threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communication.
Report on t he audit of t he Remunerat ion Report
Opinion on t he Remunerat ion Report
We have audited the Remuneration Report included in pages 21 to 33 of the Directors’ Report for the year
ended 30 June 2023.
In our opinion, the Remuneration Report of Pacific Current Group Limited for the year ended 30 June
2023, complies wit h section 300A of the Corporations Act 2001.
Responsibilit ies
The directors of the Company are responsible for the preparation and present ation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
Ernst & Young
Rita Da Silva
Partner
Sydney
25 August 2023
Jaddus Manga
Partner
Sydney
25 August 2023
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislat ion
110
Annual Report 2023 ASX ADDITIONAL
INFORMATION
Corporate Governance
In accordance with ASX Listing Rule 4.10.3, the Group’s Corporate Governance Statement can be found on its website at www.
paccurrent.com/shareholders/corporate-governance/
The Corporate Governance statement has been approved by the Board and is current as at 25 August 2023.
Shareholder Information as at 8 September 2023
Additional information required by the Australian Securities Exchange listing rules and not shown elsewhere in this report is
as follows:
a. Distribution of equity securities (as at 8 September 2023)
The number of shareholders by size of holding for fully paid ordinary shares are:
Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of
shareholders
1,379
1,023
251
182
29
2,864
Number
of shares
539,580
2,611,960
1,868,875
4,674,976
41,878,343
51,573,734
The number of shareholders holding less than a marketable parcel of 48 shares is 227, a total of 895 shares.
b. Twenty largest shareholders (as at 8 September 2023)
The names of the 20 largest holders of quoted shares are:
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
CITICORP NOMINEES PTY LIMITED
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
UBS NOMINEES PTY LTD
BELLWETHER INVESTMENTS PTY LTD
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