Pacific Current Group Ltd
Annual Report 2024

Plain-text annual report

Annual Report 2024 2 FY2024 Key Highlights 3 Chairman’s Report 4 Executive Director and Acting Chief Executive Officer’s Report 6 Board of Directors 7 Directors’ Report 36 Auditor’s Independence Declaration 37 Consolidated Statement of Profit or Loss 38 Consolidated Statement of Comprehensive Income 39 Consolidated Statement of Financial Position 40 Consolidated Statement of Changes in Equity 41 Consolidated Statement of Cash Flows 42 Index to the Notes to the Financial Statements 43 Notes to the Financial Statements 97 Consolidated Entity Disclosure Statement 98 Directors’ Declaration 99 Independent Auditor’s Report 105 ASX Additional Information 107 Corporate Information CONTENTS 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. 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/ LIMITED 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, and strategic insight 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 • 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 1 Annual Report 2024 FUM across the Group excluding sold investments (up from $40b) $42b Comparable dividends (from 38 cps) 38cps Underlying EBITDA (up from $35.3m) $41.6m “Fair Value” of Net Assets per Share (up from $11.92) $13.47 FY2024 KEY HIGHLIGHTS Invested US$28m in private credit manager, Avante Sale of entire stake in GQG for more than 99x of initial investment (A$257.3m) Partial sale of investment in Pennybacker roughly 1.75X PAC’s initial investment Sale of interests in Proterra, Cordillera and Avante to GQG for US$71.25m as part of the Strategic Initiative Externalise the investment management of PAC’s portfolio to an affiliate of GQG LIMITED CHAIRMAN’S REPORT To our shareholders It has been a momentous year. Significant changes in our Board and Management, our portfolio of investments and a small and subtle change in our operating strategy with a shift to look for more early-stage investment opportunities. This shift in strategy, at least in part, is a product of the enormous success we achieved with our investment in GQG Partners Inc. (“GQG”) at its start-up moment and also our history of successfully investing in other start-ups such as Investors Mutual Limited and RARE Infrastructure Limited. We have worked hard with the equity market over a number of years to create a level of interest and understanding about our business and its underlying value with the goal being to have a trading price for our shares that reflected that value. While we did get the share price to occasionally meet that aspiration, we could not achieve it sustainably. Recognising that difficulty and after an approach from a party to acquire the whole of PAC in calendar year 2023, we formed an independent Board sub-committee to run a process to see if we could interest a party in bidding at a price which would be acceptable to sufficient shareholders to make a takeover possible. We did not obtain interest from any party at a price that met that goal. Consequently, we revisited our strategy and decided that, as we could not raise funds at a share price economically favourable to shareholders, and so lower the impact of the cost structure on the profit by building our scale, we need to lower our costs. We felt the best way to do that was to externalise the management of the investments to an Australian listed company, GQG in conjunction with the sale of three of our boutiques to GQG. This both lowered our costs and translated a significant portion of them into a variable cost. We also elected to sell our holding in GQG as we do not believe we could add value to a holding that could be directly accessed by our shareholders and we exited at a price we believed was an approximation of fair value at the time. A discussion of that sale is in our Annual Report. Since then, we have also been dragged into sale processes by the majority shareholders in a number of our underlying boutiques. These sales have highlighted the good sense in the decision to change our cost structure. This has left us with significant cash holdings and significantly more cash than we can deploy in a reasonable time and in a time frame which would see us able to generate returns on our assets that is appropriate for our shareholders. We have consequently started the process of undertaking an off-market share buyback. The year brought significant change and that is already delivering value for our shareholders via a significant improvement in our share trading price. We continue to look for opportunities consistent with our strategy and are confident of executing on some opportunities over this financial year. We continue to hold investments in some wonderful underlying boutiques. Consequently, the outlook for the year is very positive. Good outcomes are the product of hard work and good people, and we have had a number of our capable and experienced people leave the group during the last 12 months. Some have left as part of the externalisation of the management of the investments, and some have left to be involved in other activities. I would like to thank all those who left during this period and specifically call out 5 people who have made huge contributions over their time with us. They are Peter Kennedy, Melda Donnelly and Jerry Chafkin who have made invaluable contributions at the Board level and Paul Greenwood and Trent Erickson who have made similarly significant contributions as executives. We continue to benefit from the skills of Paul and Trent and also from the key executives who remain with us and also Gilles Guérin who continues to play a significant role as a Board member. Finally, I would like to welcome Joanne Dawson to the Board and welcome and thank Michael Clarke, who has only recently joined the Board but nonetheless has been willing to step into an executive director role during this period of change. We will continue to provide updates on the progress of the buyback project as we get new insights, and I look forward to seeing you at the Annual General Meeting. Antony Robinson Chairman 3 2 Annual Report 2024 Despite the loss of earnings from selling all or part of PAC’s investments, PAC saw solid growth in revenues and underlying profits in FY24. In our letter to Pacific Current Group Limited (“PAC”) shareholders last year we noted that PAC was committed to taking actions that would result in greater recognition of the value of PAC’s portfolio. We are gratified by the progress we have made on this front in FY24, as well as the underlying financial results. Financial Results PAC saw solid growth in revenues and underlying profits in FY24. This occurred despite the loss of earnings from selling all or part of PAC’s investments in GQG, Pennybacker Capital Management, LLC (“Pennybacker”), Proterra Investment Partners, LP (“Proterra”), Cordillera Investment Partners, LP (“Cordillera”) and Avante Capital Partners, LP (“Avante”). Statutory results were heavily skewed by the gains from the sale of PAC’s stake in GQG. Underlying results were strong, with underlying EBITDA growing 18% and underlying NPAT growing 24%. Dividends of $0.38/share were declared. With no remaining franking credits, all dividends were unfranked. Business Overview FY24 was a transformational year for PAC. After multiple parties sought to purchase PAC, a viable transaction ultimately emerged that PAC believed would be both feasible and beneficial to shareholders. The intent of this strategy was to unlock value by reducing corporate expenses, while retaining access to key investment capabilities. It involved simultaneously selling three of PAC’s assets to GQG, while externalising the investment management of PAC’s portfolio by appointing an affiliate of GQG to provide investment management services to PAC. The transaction results in a significantly lower cost structure for PAC while ensuring continuity of portfolio management of PAC’s portfolio. The agreement will last a minimum of two years but can be extended at PAC’s discretion. Portfolio Update To say it was an eventful year for the PAC portfolio is an understatement. There was considerable activity in the portfolio, most of which involved selling assets, though one new investment was made. Highlights of FY24 included the following: – In September of 2023 PAC purchased a 24.9% stake in private credit manager, Avante, for US$28m. – In March of 2024, PAC sold its entire stake in GQG. This sale was the culmination of a highly successful investment, and yielded PAC proceeds of A$257.3m. Combined with the distributions received throughout the investment, PAC made more than 99X its initial investment. – In May of 2024, PAC announced the partial sale of its investment in Pennybacker. The proceeds, which will be paid out over two years, are roughly 1.75X PAC’s initial investment, yet PAC retains 45% of its original stake in Pennybacker. – In May of 2024, PAC announced the sale of three assets, Proterra, Cordillera and Avante to GQG for US$71.25m plus the assumption of certain deferred payments and earnout obligations. – In early July 2024, PAC agreed to sell its entire stake in Carlisle Management Company, S.C.A. (“Carlisle”) to Abacus Life, Inc. (“Abacus”). The transaction, which is contingent upon regulatory approval, will result in PAC holding a combination of stock and bonds in Abacus worth roughly 50% more than PAC’s pre-transaction estimate of Carlisle’s fair value. Owning bonds in Abacus will actually result in increased contributions to PAC versus owning only Carlisle equity. – In early August 2024, PAC announced the sale of 55% of its stake in Victory Park Capital Advisors, LLC (“VPC”) to Janus Henderson Group. The initial proceeds will provide PAC with US$33.9m. This amount will be supplemented by an earnout that could provide PAC with an additional US$28.7m (pre-equity plan dilution). PAC will also retain most of its entitlements to future performance fees. This transaction is expected to close later in 2024 after certain approvals have been received. EXECUTIVE DIRECTOR AND ACTING CHIEF EXECUTIVE OFFICER’S REPORT With so many recent asset sales it may appear there has been a strategic decision to sell assets; however, this is not the case. All of these sales have been driven by outside buyers expressing interest in PAC assets. Fortunately, the prices received for these investments have been quite attractive, with all of the transactions occurring at valuations at or above PAC’s estimate of fair value. Looking Ahead PAC’s financial results will be notably different in FY25. This stems from the fact that many assets have been sold and some of the dispositions are in progress, and the timing of when these transactions are completed remains uncertain. Additionally, some of the proceeds PAC will be receiving will produce earnings for PAC so long as the assets continue to be held. Lastly, PAC’s cost structure will be notably lower going forward due to the GQG transaction and future cost reduction initiatives. Helping shareholders understand how these different considerations impact financial results will be an important initiative in FY25. As a result of selling so many significant assets, PAC is flush with cash. In April 2024 it announced its intention to return capital to shareholders via an off-market stock buy- back, currently estimated to be of up to $300m. The buy- back will be subject to PAC obtaining applicable Australian Tax Office rulings. PAC management expects to carry over the strong momentum built in FY24 into FY25. The focus will be to: – Return capital – Progress and execute the plan to complete a substantial off-market, equal access share buy-back, either late in calendar 2024 or early the following year; – Enhance Capital flexibility – Continue to take advantage of asset disposals on attractive terms to enhance capital flexibility. FY25 is off to a good start following the announcement of transactions for Carlisle and VPC with both expected to settle in the next 3-6 months; – Deliver Growth initiatives – Look for both opportunities to increase investment in current boutique partners where the potential exists to accelerate growth and other new growth investments; – Optimise organisational effectiveness – Continue to bed down significant changes to the organisation structure and decision-making processes implemented in FY24. These changes potentially impact all aspects of PAC’s operations; and – Reduce debt – continue to pursue negotiations to pay down outstanding debt. We would like to thank our employees and the PAC board, both past and present, for their work to enhance shareholder value. Though great progress was made in FY24, there is still much to do, and we remain relentlessly focused on achieving the best possible outcome for our shareholders in FY25 and beyond. Michael Clarke Executive Director and Acting Chief Executive Officer 5 4 Annual Report 2024 BOARD OF DIRECTORS Antony Robinson Non-Executive Chairman1 Joanne Dawson Non-Executive Director3 Michael Clarke Executive Director2 Gilles Guérin Non-Executive Director4 See pages 7 to 8 for further information Notes: 1 Mr. Robinson is not presently considered to be independent by the Board. Refer to the Company’s Corporate Governance Statement available on its website at Corporate Governance – Pacific Current Group (paccurrent.com). 2 Mr. Clarke was appointed as a Non-executive Director on 14 February 2024 and became an Executive Director on 1 July 2024. 3 Ms. Dawson was appointed as a Non-executive Director on 1 July 2024. 4 Mr. Guerin was appointed by the Board as Lead Independent Director on 24 August 2023 Your Directors submit their Report for the year ended 30 June 2024. 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 2024 were: Name Role Date Mr. Antony Robinson Non-Executive Chairman¹ Mr. Michael Clarke Executive Director² Appointed – 14 February 2024 Ms. Joanne Dawson Non-Executive Director Appointed – 1 July 2024 Mr. Gilles Guérin Non-Executive Director³ Mr. Paul Greenwood Executive Managing Director Resigned – 18 May 2024 Mr. Jeremiah Chafkin Non-Executive Director Resigned – 17 November 2023 Ms. Melda Donnelly Non-Executive Director Resigned – 4 March 2024 Mr. Peter Kennedy Non-Executive Director Resigned - 16 November 2023 Ms. Clare Craven Company Secretary Notes: 1 Mr. Robinson is not presently considered to be independent by the Board. Refer to the Company’s Corporate Governance Statement available on its website at Corporate Governance - Pacific Current Group (paccurrent.com). 2 Mr. Clarke was appointed as a Non-executive Director and became an Executive Director on 1 July 2024. 3 Mr. Guerin was appointed by the Board as Lead Independent Director on 24 August 2023. Names, Qualifications, Experience and Special Responsibilities of Current Directors 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 (“CEO”). 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) (October 2015 - November 2019). Mr. Robinson is a member of the Audit and Risk Committee and the Remuneration, Nomination and Governance Committee. Mr. Michael Clarke, BSc E.E., MBA (Executive Director) Mr. Clarke joined the Board on 14 February 2024, in the capacity of Non-Executive Director. He became an Executive Director on 1 July 2024. Mr Clarke has over 30 years’ experience in asset management in both Australia and overseas. He has held various roles including responsibility for managing equity, fixed income and currency portfolios and building asset management businesses. His most recent leadership role was CEO (acting) of Challenger Funds Management, based in Sydney. Prior to that, he was Managing Director of Russell Investments’ institutional business in Australia and New Zealand, Director of Strategy and International at AMP Capital Investors, CEO and CIO at Goldman Sachs JBWere Asset Management, Investment Director at EquitiLink Australia, and Division Director at Macquarie Bank. Mr Clarke is currently a Director of Perpetual Equity Investment Company Limited (ASX:PIC). Mr. Clarke is a member of the Investment Committee and formerly a member of the Audit and Risk Committee, Investment Committee and the Remuneration, Nomination and Governance Committee. DIRECTORS’ REPORT 7 6 Annual Report 2024 Ms. Joanne Dawson, B Com, MBA, CA, FAICD Ms. Dawson joined the Board on 1 July 2024. She has experience in highly regulated, service businesses coupled with a long history of corporate transactions. Her prior roles include senior positions at Deloitte and National Australia Bank, and Chair of EL&C Baillieu Ltd (stockbrokers). She worked with Deloitte in both Australia and the USA in their Financial Services, Assurance and Advisory Division. Ms. Dawson is presently a Non-Executive Director of Centuria Capital Group (ASX: CNI), PSC Insurance Group Ltd (ASX:PSI), AMA Group Ltd (ASX: AMA), PetSure (Australia) Pty Ltd, Bank First and an Independent Trustee Director and Chair of the Investment Committee of Vision Super. Her previous board experience includes Templeton Global Growth Fund Limited (ASX:TGG delisted in November 2021). She was also founder and CEO of Executive Wealth Strategies. Ms. Dawson is the Chair of the Audit and Risk Committee and the Remuneration, Nomination and Governance Committee. Mr. Gilles Guérin, BA MSc, (Non-Executive 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 and operated distribution capabilities (new product and investment) across the world, in particular Europe, the United States of America (the “USA”), Japan, the Middle East and Australia. He has also liaised with regulators across various jurisdictions and worked with thought leaders of the investment industry. He is a Director of U-Access (Ireland) UCITS plc. and CIAM funds in Luxembourg and member of the investment committee of UBP Private debt fund. He is also Portfolio Investment Manager at Siena Investment Manager. Mr. Guerin was formerly the CEO of BNP Paribas Capital Partners, 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 the Chair of the Investment Committee and a member of the Audit and Risk Committee and the Remuneration, Nomination and Governance 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. 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, 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. continued DIRECTORS’ REPORT OPERATING AND FINANCIAL REVIEW REVIEW OF OPERATIONS Strategic Initiative On 15 March 2024, the Company entered into agreements to externalise its investment management function by appointing an affiliate of GQG Partners Inc. (ASX:GQG) (“GQG”) to provide investment management services and also agreed to sell three boutique investments (“Strategic Initiative”). This Strategic Initiative was subject to shareholder approval. Details of the Strategic Initiative were: – The Company would appoint an affiliate of GQG to provide investment management services to the Group for two years, with the possibility of extending the relationship for an additional two years upon mutual agreement (the “Externalisation Transaction”). – The majority of the Group’s US-based employees, including the investment team led by the former Chief Executive Officer and Global Chief Investment Officer (“MD, CEO and CIO”), Mr. Greenwood, would become full time employees of GQG, ensuring continuity while providing the Group a significantly lower cost structure more appropriate for the nature of its portfolio going forward. – Mr. Greenwood would continue to act as portfolio manager, and the Board would continue to consider and approve all major portfolio and company actions. – The investment management fee would be 0.75% of the fair value of the Group’s investment portfolio (excluding cash). – The Group would receive USD71,250,000 ($108,696,000) from the sale of its holdings in Avante Capital Partners, LP (“Avante”), Cordillera Investment Partners, LP (“Cordillera”) and Proterra Investment Partners, LP (“Proterra”), in-line with the Group’s assessed aggregate net fair market value for these three investments as at 31 December 2023. In connection with the sale of the Group’s interest in Avante, GQG would also become responsible for future deferred and contingent consideration payments outstanding as at the date of completion of the Externalisation Transaction. – The Company would also have the right, but not the obligation, to invest in any GQG sponsored investment vehicles focused on general partner stakes. At the Extraordinary General Meeting held on 18 April 2024, shareholders approved the Strategic Initiative. Post that approval, on 18 May 2024, PAC and GQG finalised the completion of the transactions and Mr. Greenwood resigned as MD, CEO and CIO. Investment activities during the year Acquisition of a new investment On 21 September 2023, the Group acquired 24.90% equity interest in Avante and 12.50% limited partnership interests in Avante GP entities (“Avante GPs”), (collectively “Avante Group”) for an initial contribution of USD15,000,000 ($22,884,000); deferred contribution of USD13,000,000 ($19,832,000) payable in September 2024; and an additional deferred contribution of up to USD12,000,000 ($18,307,000). This additional deferred contribution would be paid based on Avante’s new run rate management fees on capital commitments as at 31 August 2025. At the date of acquisition, the fair value of the additional deferred contribution of the Group was USD5,800,000 ($8,848,000) and had been added to the acquisition cost of Avante Group and the related liability was offset to the investment in associate account. As Avante Group was expected to produce an average of at least $4,000,000 of annual earnings contribution over the next three years, it was classified as Tier 1 Boutique. The investment had been accounted for as an investment in associate until sold on 18 April 2024 as part of the Strategic Initiative (disclosed in sale of investments section). For the financial year, the share in profits from Avante Group amounted to $744,000. Avante is based in San Francisco, California, USA and manages three closed-end small business investment company private credit funds. Avante provides loans to sponsor-backed lower-middle-market companies in the USA and also allocates a small portion of its funds to make equity co-investments alongside its sponsors. Additional contribution to existing investment On 14 September 2023, the Group, alongside the other owners of Astarte Capital Partners, LLP (“Astarte”), contributed additional capital to Astarte of which the Group’s proportionate contribution amounted to GBP508,000 ($980,000). Since one of Astarte’s owners opted not to make a contribution, this resulted in the minimal increase of the Group’s ownership in Astarte from 44.46% to 44.51%. The existing accounting treatment of the investment as an associate did not change. Sale of investments On 8 March 2024, the Group completed the sale of its 119,121,254 shares representing 4.03% of the market capitalisation of GQG. The sale was effected through an underwritten block trade of shares to institutional investors. The sale price of $259,325,000 or USD169,987,000, represented a 3.60% discount to the 7 March 2024 closing price of GQG shares. On 12 March 2024, the Group received the proceeds of the sale of $258,599,000 (USD169,511,000) net of sales commission of $726,000 (USD476,000). Prior to the sale, the investment has been accounted for as a financial asset at fair value through profit or loss (“FVTPL”). 9 8 Annual Report 2024 On 18 April 2024 following shareholders’ approval of the Strategic Initiative, the Group sold the following investments to GQG: – 24.90% equity and 12.50% limited partnership interests in Avante Group for USD15,000,000 ($22,884,000) which was the equivalent amount of the initial contribution made by the Group on 21 September 2023. In addition GQG assumed the deferred contribution of USD13,000,000 ($19,832,000) and the additional deferred contribution of up to USD12,000,000 ($18,307,000). Prior to the sale, the investment has been accounted for as an associate. The sale resulted in a gain of $576,000; – 16.38% revenue share interests in Cordillera for USD31,250,000 ($47,674,000). Prior to the sale, the investment has been accounted for as a financial asset at FVTPL; and – 16.00% revenue share interests in Proterra for USD25,000,000 ($38,139,000). Prior to the sale, the investment has been accounted for as a financial asset at FVTPL. The total proceeds of the sale of the three investments of USD71,250,000 ($108,697,000) were received on 18 May 2024. On 9 May 2024, the Group sold its 9.00% equity interest and 2.50% carried interest entitlement in Pennybacker Capital Management, LLC (“Pennybacker”) to Goldman Sachs Asset Management’s Petershill program for USD41,627,000 ($63,504,000). The consideration is to be paid in three equal instalments: USD15,191,000 ($23,175,000) at completion less transactions costs and earn-out liability, another USD15,191,000 ($23,175,000) will be paid at the first anniversary of the completion of the transaction and, the final instalment, with a net present value of USD11,245,000 ($17,154,000), will be paid at the second anniversary of the completion of the transaction. As a result of the partial sale of the Group’s interest in Pennybacker, the original accounting treatment of the investment as an associate has now been accounted for as a financial asset at FVTPL. The remaining 7.50% equity interest in Pennybacker had a fair value of USD23,623,000 ($36,038,000) at the completion date of the partial sale. The partial sale resulted in a gain of $60,615,000 (comprised of $39,217,000 gain for the sold interest and $21,398,000 for the fair value of the remaining interest). On 14 May 2024, the Group received USD4,878,000 ($7,442,000) which was net of transaction costs of USD4,404,000 ($6,718,000) and earn-out liability of USD5,909,000 ($9,015,000). For the financial year, the net share in profits from Pennybacker up to the date of partial sale amounted to $6,174,000. Other investment activities On 30 November 2023, the Group collected USD250,000 ($381,000) from a short-term Credit Facility Promissory Note from IFP Group, LLC (“IFP”). Changes in fair values and impairment At 30 June 2024, the Company assessed and tested the carrying values of all its investments and recognised the increase and decrease of these investments through changes in fair values and impairment. Aether Investment Partners LLC’s (“Aether”) carrying value decreased by $15,738,000 due to delays in new fund-raising activities and smaller than expected fund sizes. Despite preparing to launch a new strategy with improved margins, the Company adjusted the probabilities of different outcomes, resulting in an impairment of the goodwill. Banner Oak Capital Partners, LP’s (“Banner Oak”) carrying value decreased by $25,087,000 due to the economic conditions and impact on capital raising over the last six months being below forecast and the lower probability of success for new funds. Financing activities during the year The 67.3% franked final dividend declared on 25 August 2023 in respect of the 2023 financial year was paid on 12 October 2023 totalling $11,862,000. The unfranked interim dividend declared on 23 February 2024 in respect of the 2024 financial year was paid on 12 April 2024 totalling $7,735,000. Refer to Dividend section in this report for further details. On 20 September 2023, the Company made an additional drawdown of USD11,000,000 ($16,781,000) from its Senior Secured Debt Facility (“Debt Facility”) with Washington H. Soul Pattinson and Company Limited (“WHSP”). A 2.5% discount of USD275,000 ($424,000) was deducted upon receipt of the proceeds. On 13 March 2024, the Company and WHSP executed a Deposit Account Security Agreement granting WHSP security interest to the USD41,333,039 ($63,056,000) deposit account of the Company in a financial institution in the USA. This deposit account was therefore restricted and was excluded in the Group’s cash and cash equivalents and recorded separately as part of other non- current assets. On 17 April 2024, the Company informed the market that it intends to seek shareholders’ approval to return up to $275,000,000 (currently estimated to be $300,000,000) of surplus capital to shareholders by way of an equal access off-market share buy-back. The size of the buy-back proposal to be put to shareholders for approval may differ if there is a significant change in the Company’s circumstances prior to distribution of meeting materials and the Australian Taxation Office rulings. continued DIRECTORS’ REPORT Other activities during the year 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 (“River Capital”), 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 would 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 shares based on the closing price of GQG shares on 25 July 2023 of $1.655. Regal’s proposal also stated that the Company’s shareholders may elect to substitute either or both elements of the consideration for Regal shares. On 27 July 2023, the Company was notified by GQG that the latter intended to submit a non-binding indicative proposal to acquire 100% of the shares in the Company. The Company’s Board of Directors had established an Independent Board Committee (“IBC”) to facilitate a strategic review of options to realize the underlying value of the business for shareholders. The IBC then oversaw a process to identify and engage with any further interested parties and evaluate any resulting proposals. On 28 September 2023, Regal notified the Company that it was formally withdrawing its unsolicited, non-binding, indicative proposal. On 1 November 2023, the Company received a non-binding indicative proposal from GQG for the acquisition of 100% of the issued shares of the Company for $11.00 in cash consideration per share by way of a scheme of arrangement, following completion of its due diligence. A condition of the proposal was that the Company’s largest shareholder River Capital would provide its support for the GQG proposal (in the absence of a superior proposal). GQG subsequently informed the Company that GQG had been unable to obtain River Capital’s support. On 7 November 2023, the Company received a signed letter in draft format from River Capital outlining its proposed acquisition of 100% of the issued shares of the Company for $10.50 cash consideration per share by way of a scheme of arrangement, subject to due diligence and other conditions. The River Capital proposal would be predominantly funded by the sale of most of the Company’s interests in its affiliates/investments to GQG for cash consideration at a premium to their fair market value as published in the Company’s FY2023 results. Upon inquiry from the IBC, GQG confirmed that it was unaware of the submission of the River Capital proposal, but in any event was not prepared to provide funding on the terms proposed. The IBC was then informed by River Capital that discussions between River Capital and GQG had ceased. On 16 November 2023, the Company, after considering other potential strategic alternatives, determined that the process of reviewing strategic transactions to sell the Company’s entire business had not resulted in a binding offer for the Company that can be recommended to its shareholders. In light of this, the Board determined to conclude the strategic transaction process and dissolve the IBC. Funds under management (“FUM”) As at 30 June 2024, the FUM of the Group’s asset managers was $42,485,878,000 (2023: $204,349,907,000). Open-end Boutiques Closed-end Boutiques FUM as at 30 June 2023 USD’000 FUM as at 30 June 2024 USD’000 FUM as at 30 June 2023 USD’000 FUM as at 30 June 2024 USD’000 Total FUM as at 30 June 2023 USD’000 Total FUM as at 30 June 2024 USD’000 Tier-1 - Boutiques reporting in USD Banner Oak Capital Partners, LP¹ – – 7,388,800 6,944,400 7,388,800 6,944,400 Carlisle Management Company, S.C.A. 987,619 928,278 1,002,931 995,198 1,990,550 1,923,476 Pennybacker Capital Management, LLC² 273,567 265,038 2,690,504 3,792,245 2,964,071 4,057,283 Victory Park Capital Advisors, LLC³ – – 5,712,846 5,788,987 5,712,846 5,788,987 1,261,186 1,193,316 16,795,081 17,520,830 18,056,267 18,714,146 11 10 Annual Report 2024 continued DIRECTORS’ REPORT Open-end Boutiques Closed-end Boutiques FUM as at 30 June 2023 USD’000 FUM as at 30 June 2024 USD’000 FUM as at 30 June 2023 USD’000 FUM as at 30 June 2024 USD’000 Total FUM as at 30 June 2023 USD’000 Total FUM as at 30 June 2024 USD’000 Tier-2 - Boutiques reporting in USD Aether Investment Partners, LLC2 – – 1,545,245 1,545,245 1,545,245 1,545,245 Astarte Capital Partners, LLP4 – – 642,226 700,187 642,226 700,187 EAM Global Investors, LLC 1,477,911 1,667,217 – – 1,477,911 1,667,217 1,477,911 1,667,217 2,187,471 2,245,432 3,665,382 3,912,649 FUM (USD) - Boutiques reporting in USD excluding Boutiques sold during the year 2,739,097 2,860,533 18,982,552 19,766,262 21,721,649 22,626,795 Boutiques sold during the year Avante Capital Partners, LP⁵ – – – – – – Cordillera Investment Partners, LP 158,234 – 1,253,512 – 1,411,746 – GQG Partners Inc. 104,100,000 – – – 104,100,000 – Proterra Investment Partners, LP¹ – – 3,711,960 – 3,711,960 – FUM (USD) - Boutiques reporting in USD including Boutiques sold during the year 106,997,331 2,860,533 23,948,024 19,766,262 130,945,355 22,626,795 $’000 $’000 $’000 $’000 $’000 $’000 FUM (AUD) - Boutiques reporting in USD 160,621,682 4,291,100 35,950,167 29,651,469 196,571,849 33,942,569 Tier-2 - Boutiques reporting in Australian dollar Roc Partners Capital Pty Ltd – – 7,778,058 8,543,309 7,778,058 8,543,309 Total FUM (AUD) 160,621,682 4,291,100 43,728,225 38,194,778 204,349,907 42,485,878 Boutique Total FUM as at 30 June 2023 $’000 Inflows from Boutique Acquisitions/ (Divestments) $’000 Net Flows⁶ $’000 Other7 $’000 Foreign Exchange Movement8 $’000 Total FUM as at 30 June 2024 $’000 Tier-1 (Excluding boutiques sold) 27,105,611 – 429,311 589,523 (51,260) 28,073,185 Tier-2 13,280,436 (257,665) 252,699 1,146,203 (8,980) 14,412,693 Subtotal 40,386,047 (257,665) 682,010 1,735,726 (60,240) 42,485,878 Tier-1 (Boutiques sold) 163,963,860 (185,159,162) 5,966,688 19,464,583 (4,235,969) – Total Boutiques 204,349,907 (185,416,827) 6,648,698 21,200,309 (4,296,209) 42,485,878 Notes: 1 Banner Oak and Proterra represent regulatory FUM from one quarter in arrears. 2 From 1 July 2023, Pennybacker has been moved from Tier 2 to Tier 1 since it has been assessed that Pennybacker would produce at least an average of $4,000,000 of annual earnings for the Group over the next three years. Aether has been moved from Tier 1 to Tier 2 since it has been assessed that Aether would no longer meet the $4,000,000 annual earnings for the Group. 3 Victory Park Capital Advisors, LLC (“VPC”) FUM includes its regulatory capital for 30 June 2024, as well as other client FUM where VPC is paid a one-time, upfront fee. 4 Astarte FUM 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. 5 The Group invested in Avante on 21 September 2023. As part of the Strategic Initiative, Avante was sold on 18 April 2024. At the date of the acquisition, the FUM of Avante was USD558,061,000. 6 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. 7 Other includes investment performance, market movement and distributions. 8 The Australian dollar (“AUD”) strengthened against the USA dollar (“USD”) during the period resulting to a favourable foreign exchange movement of USD denominated FUM when converted to AUD. The AUD/USD was 0.6666 as at 30 June 2024 compared to 0.6661 as at 30 June 2023. The Net Flows and Other items are calculated using the average rates. 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 from 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. 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. 13 12 Annual Report 2024 Ownership Adjusted FUM by Pacific Current Group boutique manager in USD Private Market / Public Market Strategy Total FUM as at 30 June 2023 USD’000 Total FUM as at 30 June 2024 USD’000 Group Interest 30 June 2023 Group Interest 30 June 2024 Ownership Adjusted FUM as at 30 June 2023 USD’000 Ownership Adjusted FUM as at 30 June 2024 USD’000 Tier-1 Banner Oak Capital Partners, LP Private 7,388,800 6,944,400 35.00% 35.00% 2,586,080 2,430,540 Carlisle Management Company, S.C.A. Private 1,990,550 1,923,476 40.00% 40.00% 796,220 769,390 Pennybacker Capital Management, LLC¹ Private 2,964,071 4,057,283 7.50% 7.50% 222,305 304,296 Victory Park Capital Advisors, LLC Private 5,712,846 5,788,987 24.90% 24.90% 1,422,499 1,441,458 Tier-2 Aether Investment Partners, LLC Private 1,545,245 1,545,245 100.00% 100.00% 1,545,245 1,545,245 Astarte Capital Partners, LLP Private 642,226 700,187 44.46% 44.51% 285,534 311,653 EAM Global Investors, LLC Public 1,477,911 1,667,217 18.75% 18.75% 277,108 312,603 Roc Partners Capital Pty Ltd Private 5,181,313 5,695,137 30.01% 29.71% 1,554,912 1,692,025 Total (USD) - Excluding Boutiques sold 26,902,962 28,321,932 8,689,903 8,807,210 Boutiques sold during the year Avante Capital Partners, LP Private – – 24.90% –% – – Cordillera Investment Partners, LP Private 1,411,746 – 24.90% –% 351,525 – GQG Partners Inc. Public 104,100,000 – 4.03% –% 4,195,230 – Proterra Investment Partners, LP Private 3,711,960 – 16.00% –% 593,914 – Pennybacker Capital Management, LLC¹ Private – – 9.00% –% 266,767 – Total 136,126,668 28,321,932 14,097,339 8,807,210 Notes: 1 Pennybacker under Tier-1 pertained to the remaining interest held by the Group at 30 June 2024. Pennybacker under Boutiques sold during the year pertained to the interest sold on 14 May 2024. The Group interest used in the calculation of Ownership Adjusted FUM 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 7 full time equivalent employees at 30 June 2024 (2023: 20) working in its Australian office located in Melbourne and USA office located in Tacoma. This headcount excluded the employees of portfolio companies that are consolidated into the Group. continued DIRECTORS’ REPORT Financial Review Operating results for the year The Group’s net profit/(loss) after tax (“Statutory Results”) and earnings/(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 profit before tax (“NPBT”) of $142,275,000 for the year ended 30 June 2024 (2023: $17,545,000 was net loss before tax (“NLBT”)); an increase in profit of 710.91%. 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 $32,186,000 (2023: $26,053,000), an increase of 23.54%. 2024 $’000 2023 $’000 Reported NPBT/(NLBT) 142,275 (17,545) Non-cash items – Amortisation of identifiable intangible assets¹ 7,791 8,977 – Fair value adjustments of financial assets at FVTPL (112,378) 17,904 – Fair value adjustments of financial liabilities at FVTPL 7,643 (3,223) – Impairment of investments and boutique receivables² 42,243 14,022 – Net loss on transfer and impairment of right-of-use assets and leasehold improvements 2,574 – – Share-based payment expenses 4,555 2,055 – Other – 130 (47,572) 39,865 Other normalising adjustments/items – Deal, establishment and litigation costs³ 3,960 3,788 – Gain on disposal of investments (61,191) – – Net foreign exchange (gain)/loss (628) 657 – Severance payments and other one-off payments to employees⁴ 1,763 – – Hareon Solar Singapore Private Limited ("Hareon") liability settlement expense – 4,927 (56,096) 9,372 Unaudited underlying NPBT 38,607 31,692 Income tax expense5 (6,150) (4,102) Unaudited underlying NPAT 32,457 27,590 Less: non-controlling interests (271) (1,537) Unaudited underlying NPAT attributable to the members of the Company 32,186 26,053 Notes: 1 The amortisation of identifiable intangible assets included the amortisation of intangible assets of the associates and joint venture amounting to $5,943,000.(2023: $5,953,000). The amortisation is recorded as an offset to the share in net profit of the associates. 2 The impairment relates to the impairment of investment in Aether and Banner Oak (2023: Aether and CAMG LLP (“CAMG”), and loan receivable from CAMG). 3 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 and disposals of investments. In addition, the current period also include costs and related expenses incurred by the Group in relation to the unsolicited, non-binding, indicative proposal from Regal, River Capital and GQG and costs related to Strategic Initiative. 4 These were employment costs as a result of the Strategic Initiative. 5 The net income tax expense is the reported income tax expense adjusted for the tax effect of the normalisation adjustments. 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. 15 14 Annual Report 2024 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 – Other normalising adjustments/items items relate to income and expenses from events that are non-recurring and infrequent in nature including their related costs and foreign exchange impact. Earnings/(loss) per share Set out below is a summary of the earnings/(loss) per share. 2024 2023 Reported NPAT/net loss after tax (“NLAT”) attributable to the members of the Company ($'000) 110,082 (15,791) Unaudited underlying NPAT attributable to the members of the Company ($’000) 32,186 26,053 Weighted average number of ordinary shares on issue (Number) 51,577,151 51,334,916 Basic earnings/(loss) per share (cents) 213.43 (30.76) Diluted earnings/(loss) per share (cents) 213.43 (30.76) Unaudited underlying earnings per share (cents) 62.40 50.75 The options and performance rights outstanding in the prior financial year ended 30 June 2023 were anti-dilutive and were not included in determining the weighted average number of ordinary shares for diluted earnings/(loss) per share at 30 June 2023. Dividends Dividends paid or declared by the Company to members since the end of the previous financial year: Cents per Share Total Amount $’000 Franked at 30% Date of Payment Declared and paid during the financial year: – Final for 2023 on ordinary shares 23.00 11,862 67.3% 12 October 2023 – Interim for 2024 on ordinary shares 15.00 7,735 0% 12 April 2024 19,597 Declared after the end of the financial year: – Final for 2024 on ordinary shares 23.00 12,005 0% 3 October 2024 Total dividends relating to financial year 2024 amounted to 38.00 cents per share which is comparable to 38.00 cents per share in the financial year 2023. On 25 August 2023, the Company declared a 67.3% franked final dividend of 23.00 cents per share (26 August 2022: fully franked 23.00 cents per share) in respect of the 2023 financial year. The total amount of the dividend was $11,862,000. On 23 February 2024, the Company declared an unfranked interim dividend of 15.00 cents per share (24 February 2023: fully franked 15.00 cents per share) in respect of the 2024 financial year. The total amount of the dividend was $7,735,000. On 23 August 2024, the Directors of the Company determined to pay an unfranked final dividend of 23.00 cents per share. The dividend has not been provided for in the 30 June 2024 consolidated financial statements. continued DIRECTORS’ REPORT Cash flows Set out below is a summary of the cash flows for the year ended 30 June 2024. 2024 $’000 2023 $’000 Cash provided by operating activities 20,614 21,822 Cash provided by/(used in) investing activities 63,465 (55,115) Cash (used in)/provided by financing activities (10,455) 22,099 Net increase/(decrease) in cash and cash equivalents 73,624 (11,194) Operating activities Cash flows from operations have decreased from a net inflow of $21,822,000 for the year ended 30 June 2023 to net inflow of $20,614,000 for the year ended 30 June 2024. This was mainly attributable to the increase in payment of interest from $2,970,000 in the prior year to $6,188,000 this year mainly from the interest on the Debt Facility. In addition, payments to suppliers and employees also increased from $27,504,000 in the prior year to $34,534,000 this year mainly due to the costs incurred from the Strategic Initiative. This was offset by the decrease in income tax paid from $15,032,000 in the prior year to $7,806,000 this year. Investing activities Cash flows from investing activities have increased from a net outflow of $55,115,000 for the year ended 30 June 2023 to net inflow of $63,465,000 for the year ended 30 June 2024. This was primarily attributable to the sale of investments with total proceeds of $374,738,000 (GQG - $258,599,000, Avante - $22,884,000, Cordillera - $47,674,000, Proterra - $38,139,000 and Pennybacker - $7,442,000) and offset by acquisition of investment (Avante - $22,883,000), short-term investments made in May 2024 ($225,000,000) and restricted deposit ($63,056,000). In the prior year, this was primarily attributable to the acquisition of investment (Cordillera - $44,405,000), repayment of Hareon liability ($17,638,000), and offset by the proceeds from sale of investment (Proterra Asia - $12,364,000). Financing activities Cash flows from financing activities decreased from a net inflow of $22,099,000 for the year ended 30 June 2023 to net outflow of $10,455,000 for the year ended 30 June 2024. This was mainly attributed to the payment of dividends of $19,598,000 (2023: payment of dividends of $16,580,000 excluding dividends reinvested of $2,855,000), and offset by the proceeds from the additional drawdown of the Debt Facility of $16,781,000 (2023: $44,583,000). 17 16 Annual Report 2024 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. 2024 $’000 2023 $’000 Unaudited underlying NPBT 38,607 31,692 Cash items1 – Dividends and distributions received 52,645 46,014 – Net interest paid (3,316) (2,766) 49,329 43,248 Non-cash items2 – Dividends and distributions income (27,281) (27,293) – Share of profits of associates and joint venture3 (27,522) (14,015) – Net interest expense 2,284 3,110 – Depreciation of plant and equipment and amortisation of right-of-use assets 833 693 (51,686) (37,505) Increase/decrease in assets and liabilities4 (2,717) 1,470 Unaudited underlying pre-tax cash from operations 33,533 38,905 Other normalising adjustments/items5 – Deal, establishment and litigation costs (3,960) (3,788) – Net foreign exchange (gain)/loss (1,153) 1,737 (5,113) (2,051) Pre-tax cash from operations 28,420 36,854 Income tax paid (7,806) (15,032) Cash provided by operating activities 20,614 21,822 The main drivers for the decrease in the cash provided by operating activities during the year is primarily the increase in payment of interest arising from additional drawdown during the year and increase in payments to suppliers and employees due to the costs incurred from the Strategic Initiative. Notes: 1 Cash items are added to reflect the actual receipts. 2 Non-cash items are either deducted if income or added if expense to remove the non-cash components in the unaudited underlying NPBT. 3 Share of profits of associates and joint venture exclude the related amortisation of associates and joint venture intangible assets of $5,943,000 (2023: $5,953,000). 4 Increase/decrease in assets and liabilities relate to the differences in the beginning and closing balances of operating assets and liabilities. 5 Other normalising adjustments/items are included as deductions since these items were excluded in the determination of unaudited underlying NPBT. continued DIRECTORS’ REPORT Financial position Set out below is a summary of the financial position at end of financial year. 2024 $’000 2023 $’000 Cash and cash equivalents 95,537 23,201 Short-term deposits 225,000 – Other current assets 42,912 20,854 Current liabilities (5,838) (9,204) 357,611 34,851 Non-current assets 364,432 562,255 Non-current liabilities (122,984) (86,876) 599,059 510,230 Non-controlling interest – (708) Net assets attributable to the members of the Company 599,059 509,522 $ $ Net assets per share at end of financial year 11.48 9.88 Included in the cash balances are amounts held by operating subsidiaries. The remainder of the cash and cash equivalents at 30 June 2024 amounted to $92,727,000 (2023: $16,096,000) which was held by Central Administration that can be used to provide the Group with liquidity and flexibility to fund the return of capital and future acquisition of new businesses. The increase in net assets is attributed mainly to the proceeds received from the sale of investments (GQG, Avante, Cordillera, Proterra and Pennybacker) which are deposited into high-yield interest short-term deposits. Set out below is a summary of the contribution to the net assets of the Group from the Boutique Investments: 2024 $’000 2023 $’000 Aether and Aether General Partners 23,573 41,254 Astarte and ASOP Profit Share LP (“ASOP PSP”) 9,097 8,224 Banner Oak 23,049 50,247 Carlisle Management Company, S.C.A. (“Carlisle”) 77,585 65,067 Cordillera – 44,855 EAM Global Investors, LLC (“EAM Global”) 10,704 9,331 GQG – 164,983 IFP 6,533 7,537 Pennybacker 44,055 28,724 Proterra – 39,612 Roc Group 11,147 10,011 VPC and Victory Park Capital GP Holdco, L.P. (“VPC-Holdco”) 75,660 80,423 Other 1,557 1,934 Book value of Boutique Investments 282,960 552,202 19 18 Annual Report 2024 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. Outsourced service provider risk As a result of the Strategic Initiative, the Group has outsourced its investment management function by appointing an affiliate of GQG to provide investment management services. To ensure continuity of the Group’s investment strategy and operations, the Group’s former MD, CEO and CIO continues to provide investment services to the Group under the GQG arrangement. The success of the outsourcing arrangement to GQG is dependent, in part, on the oversight efforts by the Group’s newly constituted Investment Committee and Board. continued DIRECTORS’ REPORT 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 (“KMP”) 6. Remuneration of Non-Executive Directors 7. Remuneration of Executive KMP 8. Nature and amount of each element of KMP Remuneration in FY2024 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 2024 for the Company’s KMP. 2. Defined terms used in the Remuneration Report Term Meaning EPS 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. Fixed Remuneration 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. KMP Key Management Personnel. Those people who have the authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly. LTI 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 Option. Means an option to acquire a Share. Security 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 Share. Means an ordinary share in the Company. STI 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. 21 20 Annual Report 2024 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’s 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 to 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. continued DIRECTORS’ REPORT 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 FY2024, Executive KMP had a target STI opportunity generally of up to 50% of base salary. 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 FY2024, the total amount available for the payment of STIs to Executive KMP was $768,558 (2023: $751,112). Outcomes and goals 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. How is performance measured? 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. 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. What happens if there is a change of control? 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. 23 22 Annual Report 2024 continued DIRECTORS’ REPORT A summary of the Employee LTI Plan is set out below: Feature   Terms of the Employee LTI Plan Employee Share Ownership 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). What is the objective of the Employee LTI Plan? 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? 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. Terms of Options 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. 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 2024. 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. 2024 2023 2022 2021 2020 Revenue and other income ($) 42,910,417 45,594,048 44,202,495 47,045,429 62,727,233 Statutory net profit/(loss) before tax ($) 142,275,818 (17,545,221) (48,185,737) 23,464,856 (27,316,939) Statutory net profit/(loss) after tax ($) 110,353,916 (14,254,525) (32,766,534) 17,687,455 (16,289,332) Underlying net profit after tax ($) 32,185,969 26,053,845 27,134,348 26,264,820 25,033,552 Share price at start of year ($) 7.41 6.92 5.81 5.48 4.55 Share price at end of year ($) 11.08 7.41 6.92 5.81 5.48 Interim dividend (cps) 15.001 15.002 15.002 10.002 10.002 Final dividend (cps) 23.003 23.004 23.002 26.002 25.002 Earnings/(loss) per share (cps) 213.43 (30.76) (69.15) 34.50 (35.88) Diluted earnings/(loss) per share (cps) 213.43 (30.76) (69.15) 34.50 (35.88) Underlying earnings per share (cps) 62.40 50.75 53.20 52.04 51.30 KMP bonuses ($) 587,6645 401,7806 1,845,4176 333,0676 298,4797 The Group’s FY2024 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 FY2024 is set out in Section 8 of this Remuneration Report. Notes: 1 Unfranked dividend at 30% corporate income tax. 2 Fully franked dividend at 30% corporate income tax. 3 Unfranked dividend at 30% corporate income tax. 4 67.3% franked dividend at 30% corporate income tax. 5 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. On 18 May 2024, the Board determined that following completion of the Externalisation Transaction and his resignation as MD, CEO and CIO, Mr. Greenwood should be paid a pro-rata portion of his STI entitlement. 6 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 Mr. Greenwood’s individual performance against a set of pre-determined key performance indicators set out by the Board. ⁷ 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 Non-Executive Chairman¹ Mr. G. Guérin Lead Independent Director² Ms. J. Dawson Non-Executive Director Appointed - 1 July 2024 Mr. J. Chafkin Non-Executive Director Resigned - 17 November 2023 Ms. M. Donnelly Non-Executive Director Resigned - 4 March 2024 Mr. P. Kennedy Non-Executive Director Resigned - 16 November 2023 25 24 Annual Report 2024 Name Position Executive KMP Mr. M. Clarke Executive Director³ Appointed - 14 February 2024 Mr. P. Greenwood MD, CEO and CIO⁴ Resigned - 18 May 2024 Mr. A. Killick Chief Financial Officer (“CFO”) Notes: 1 Mr. Robinson is not presently considered to be independent by the Board. 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. 3 Mr. Clarke was appointed by the Board as a Non-Executive Director on 14 February 2024. On 1 July 2024, Mr. Clarke was appointed Executive Director and Acting CEO. 4 Following completion of the Externalisation Transaction, Mr. Greenwood resigned as MD, CEO and CIO on 18 May 2024. 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. 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: 2024 $ 2023 $ 2022 $ 2021 $ 2020 $ Chairman 200,000 200,000 200,000 175,000 175,000 Non-Executive Director (per Director) 130,000 130,000 130,000 110,000 110,000 The fees above are inclusive of superannuation contributions, except for the Directors’ fees paid to Mr. Robinson, Mr. Guérin, Mr. Chafkin and Mr. Kennedy. In addition, Mr. Kennedy received a fee of $12,500 for acting as Chairman of a related entity, Treasury Group Investment Services Pty Ltd (“TIS”) until his resignation on 16 November 2023. Total fees paid to Non-Executive Directors in FY2024 were $569,760 (FY2023: $750,000). Refer to Section 8 of this Remuneration Report for details of remuneration paid to Non-Executive Directors. In July 2023, the Board formed an IBC to consider ways to enhance value for shareholders, including the possible sale of the Company. The Board determined that participation on the IBC amounted to a “special exertion” under the Company’s constitution due to the substantial increase in workload, and that the IBC chair and members were entitled to receive additional compensation for their service. Refer to Section 8 of this Remuneration Report. Upon announcement of the Strategic Initiative, the Board requested Mr. Clarke and Mr. Guérin to undertake additional work in connection with the Strategic Initiative in March 2024 and resolved that they be paid special exertion fees for this additional work, pursuant to the Company Constitution. Mr. Clarke was paid an additional special exertion fee from 1 June 2024 to 30 June 2024 in recognition of the additional work performed prior to his commencement as an Executive Director and Acting CEO. continued DIRECTORS’ REPORT 7. Remuneration of Executive KMP Key terms of employment contract with Paul Greenwood (resigned on 18 May 2024) 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 Mr. Greenwood was 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 were the CEO’s KPIs for 2024: – Achievement of EPS growth targets; – Completion of targeted deal opportunities; and – Achievement of strategic plan milestones. LTI As detailed in Section 3 of this Remuneration Report, Mr. Greenwood’s long-term incentive was provided through the grant of the Company share entitlements conditional on certain performance criteria being met. Other employee benefit plans Mr. Greenwood was also entitled to participate in any and all other employee benefit plans which were made available to the senior executives of the Group from time to time. Mr. Greenwood participated in the Group’s North American qualified retirement plan whereby matching contributions were paid towards Mr. Greenwood’s retirement benefits up to approximately USD13,000 each year. He also participated in the Group’s health plans whereby the Group paid for coverage for health-related services for Mr. Greenwood and his dependents at a current net annual cost of approximately USD20,460. Termination upon death or permanent disability 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. Termination by the Company for cause 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. Termination by the Company without cause 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 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, (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. 27 26 Annual Report 2024 Title MD, CEO and CIO Non-compete 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). Dispute resolution 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. Key terms of employment agreement with Mr. Michael Clarke Mr. Clarke was appointed by the Board as a Non-Executive Director on 14 February 2024. On 1 July 2024, Mr Clarke was appointed Executive Director and Acting CEO. The terms of his employment are: Title Executive Director and Acting CEO Term of Contract Ongoing, with effect from 1 July 2024 Base Salary $360,000 per annum (inclusive of superannuation) STI Mr. Clarke is not eligible to participate in the Company’s STI Plan. The Key Performance Objectives for FY25 whilst in the Acting CEO role are: – Achievement of EPS growth targets; – Completion of targeted deal opportunities; and – Achievement of strategic plan milestones. LTI Mr. Clarke is eligible to participate in the Company’s LTI Plan. Termination of Employment Refer to paragraph 7.1 and 7.2 of the Company’s constitution. 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 2024: – 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. continued DIRECTORS’ REPORT 8. Nature and amount of each element of KMP Remuneration in FY2024 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 Super/401k benefits $ Share based payments Total $ Performance related2 % Salary and fees $ Cash bonus $ Other1 $ Shares $ Options/ Performance rights $ Non-Executive Directors A. Robinson 200,000 – – – – – 200,000 – M. Clarke3 39,947 – 44,166 9,387 – – 93,500 – J. Dawson4 – – – – – – – – G. Guérin 130,000 – 69,000 – – – 199,000 – J. Chafkin5 54,167 – 41,600 – – – 95,767 – M. Donnelly6 78,979 – – 8,688 – – 87,667 – P. Kennedy7 66,667 – 38,000 – – – 104,667 – Executive KMP M. Clarke3 – – – – – – – – P. Greenwood8 1,023,153 429,331 28,593 18,485 – 1,334,978 2,834,540 62 A. Killick 447,601 158,333 – 27,399 – 454,631 1,087,964 56 Total 2024 2,040,514 587,664 221,359 63,959 – 1,789,609 4,703,105 51 Non-Executive Directors A. Robinson 200,000 – – – – – 200,000 – J. Chafkin 130,000 – – – – – 130,000 – M. Donnelly 117,647 – – 12,353 – – 130,000 – G. Guérin 130,000 – – – – – 130,000 – P. Kennedy6 160,000 – – – – – 160,000 – Executive KMP P. Greenwood 1,114,585 297,223 29,011 19,314 – 832,083 2,292,216 49 A. Killick 449,708 104,557 – 25,292 – 268,968 848,525 44 Total 2023 2,301,940 401,780 29,011 56,959 – 1,101,051 3,890,741 39 There were no non-monetary benefits paid to KMP during the current and prior year. At the Company’s 2023 AGM held on 15 November 2023, in excess of 25% of the votes cast were against the adoption of the Company’s 2023 Remuneration Report, giving the Company a first strike under the Corporations Act. After the meeting, the Board has further considered the Company’s remuneration framework and engaged with the Company’s shareholders and other stakeholders to understand the concerns being expressed through the vote. The Board believes that actions taken since the 2023 AGM, including the outsourcing of the Company’s investment services functions to GQG and the resulting reduction in the Company’s cost structure as described in the Company’s ASX announcement on 15 March 2024 and elsewhere in this Annual Report, appropriately address the concerns that led to the Company receiving a first strike. The Board also believes that the Company’s remuneration framework remains appropriately structured to align with shareholder’s interests and to deliver on the Company’s strategy. Notes: 1 Given the additional work associated with the IBC, the Board resolved to pay the chair and members of the IBC, additional amounts by way of special exertion fees. Special exertion fees were also paid in relation to additional work on the Strategic Initiative and other duties. Mr. Greenwood and his dependents were entitled to health-related cover paid for by the Group. 2 This is calculated based on the short-term cash bonus and share based payments as a percentage of total remuneration. 3 Mr. Clarke was appointed by the Board as a Non-Executive Director on 14 February 2024. On 1 July 2024, Mr Clarke was appointed as Executive Director and Acting CEO. 4 Ms. Dawson was appointed by the Board as a Non-Executive Director on 1 July 2024. 29 28 Annual Report 2024 5 Mr. Chafkin resigned on 17 November 2023. 6 Ms. Donnelly resigned on 4 March 2024. 7 Mr. Kennedy received an additional fee of $12,500 (FY2023: $30,000) for acting as Chairman of TIS until his resignation on 16 November 2023. 8 Following completion of the Externalisation Transaction, Mr. Greenwood resigned as MD, CEO and CIO on 18 May 2024 and is no longer a KMP. An element of the Externalisation Transaction was the outsourcing of the Group’s investment management services to GQG. Mr. Greenwood will continue to act as portfolio manager, and GQG will charge the Group an investment management fee based on 0.75% of the fair value of the Group’s investment portfolio (excluding cash). 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 2024 2023 2024 2023 2024 2023 2024 2023 P. Greenwood2 57% 51% 40% 26% 100% 100% 125% 72% A. Killick 33% 33% 33% 22% 100% 100% 96% 57% Notes: 1 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. 2 On 18 May 2024, the Board determined that following completion of the Externalisation Transaction, Mr Greenwood should be paid a pro-rata portion of his STI entitlement. 9. Share based remuneration As detailed above in this Remuneration Report, the Group operates an Employee LTI Plan for eligible employees for Mr. Greenwood. The number of options and performance rights granted under these Plans are detailed in the table below. 2024 Numbers granted Numbers vested % of grant vested % of grant forfeited % of compensation consisting of Share based remuneration P. Greenwood1 4 – 1,740,000 100% 0% 47% A. Killick2 5 – 285,000 100% 0% 42% Other employees3 6 – 817,500 100% 0% 0% 2023 P. Greenwood1 – – 0% 0% 36% A. Killick2 – – 0% 0% 32% Other employees3 – – 0% 0% 0% Notes: 1 On 19 November 2021, Mr. Greenwood was issued with 1,740,000 options as approved by shareholders at the AGM held on 19 November 2021. 2 On 24 February 2022, Mr. Killick was issued with 210,000 options and 75,000 performance rights. 3 On 24 February 2022, other employees were issued with 480,000 options and 337,500 performance rights. 4 On 18 May 2024, the Board determined that following completion of the Externalisation Transaction, 1,740,000 options fully vested. 5 On 18 May 2024, the Board determined that following completion of the Externalisation Transaction, 210,000 options and 75,000 performance rights fully vested. 6 On 18 May 2024, the Board determined that following completion of the Externalisation Transaction, 480,000 options and 337,500 performance rights fully vested continued DIRECTORS’ REPORT 10. KMP shareholdings Details of KMP equity holdings for the financial year and at the date of the Directors’ Report are set out below 2024 Opening balance Granted as remuneration Received on vesting of options and performance rights Net change other¹ Balance held nominally Non-Executive Directors A. Robinson 70,795 – – – 70,795 M. Clarke – – – – – G. Guérin – – – – – J. Chafkin2 100,816 – – (100,816) – M. Donnelly3 20,000 – – (20,000) – P. Kennedy4 272,628 – – (272,628) – Executive KMP P. Greenwood5 663,383 – 353,062 (1,016,445) – A. Killick6 11,664 – 87,611 – 99,275 2023 Non-Executive Directors A. Robinson 70,795 – – – 70,795 J. Chafkin 100,816 – – – 100,816 M. Donnelly 20,000 – – – 20,000 G. Guérin – – – – – P. Kennedy 272,628 – – – 272,628 Executive KMP P. Greenwood7 654,781 – 8,602 – 663,383 A. Killick 11,059 – – 605 11,664 Directors are not required under the constitution or any other Board policy to hold any shares in the Company. Notes: 1 Net change other included the removal of shareholdings of former Directors and Executive KMP who resigned during the year. 2 Mr. Chafkin resigned as a director on 17 November 2023 and is no longer a KMP. 3 Ms. Donnelly resigned as a director on 4 March 2024 and is no longer a KMP. 4 Mr. Kennedy resigned as a director on 16 November 2023 and is no longer a KMP. 5 On 18 May 2024, the Board determined that following completion of the Externalisation Transaction, 1,740,000 options were fully vested. This led to the issuance of 353,062 ordinary shares on 28 June 2024 and the cash equivalent of 235,374 ordinary shares was paid to the USA tax authorities (on Mr. Greenwood’s behalf) in accordance with the terms of the Employee LTI Plan. Following completion of the Externalisation Transaction, Mr. Greenwood resigned as MD, CEO and CIO and as a director on 18 May 2024 and is no longer a KMP. 6 On 18 May 2024, the Board determined that following completion of the Externalisation Transaction, 210,000 options and 75,000 performance rights were fully vested. This led to the issuance of 87,611 ordinary shares on 28 June 2024. 7 On 30 June 2022, 14,336 performance rights of Mr. Greenwood vested. 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 LTI Plan. 31 30 Annual Report 2024 continued DIRECTORS’ REPORT 11. Shares under option Total number of options outstanding as at 30 June 2024 were nil (2023: 2,430,000) with a value of $nil (2023: $3,802,582). Details of options on issue are as follows: Opening balance Granted as compensation Received on vesting Net change other Closing balance 2024 Number Number Number Number Number P. Greenwood 1,740,000 – (1,740,000) – – A. Killick 210,000 – (210,000) – – Other employees 480,000 – (480,000) – – Total 2,430,000 – (2,430,000) – – 2023 P. Greenwood 1,740,000 – – – 1,740,000 A. Killick 210,000 – – – 210,000 Other employees 480,000 – – 480,000 Total 2,430,000 – – – 2,430,000 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. On 18 May 2024, the Board determined that following completion of the Externalisation Transaction, 2,430,000 options fully vested. This led to the issuance of 456,545 fully paid ordinary shares on 28 June 2024. The amount of options amortisation expense for FY2024 was $2,371,455 (2023: $1,213,161). 12. Performance rights Total performance rights outstanding as at 30 June 2024 were nil (2023: 412,500) with a value of $nil (2023: $2,605,624). Details of performance rights on issue are as follows: Opening balance Granted as compensation Received on vesting Net change other Closing balance 2024 Number Number Number Number Number A. Killick 75,000 – (75,000) – – Other employees 337,500 – (337,500) – – Total 412,500 – (412,500) – – 2023 A. Killick 75,000 – – – 75,000 Other employees 337,500 – – – 337,500 Total 412,500 – – – 412,500 On 18 May 2024, the Board determined that following completion of the Externalisation Transaction, all the performance rights fully vested. This led to the issuance of 167,100 fully paid ordinary shares on 28 June 2024. Balance Vested Vested but not exercisable Vested and exercisable Rights vested 2024 Number Number Number Number A. Killick 75,000 – – 75,000 Other employees 337,500 – – 337,500 Total 412,500 – – 412,500 Any securities to be allocated on vesting of the performance rights under the 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 FY2024 was $2,183,430 (2023: $841,414). 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 FY2024. Directors’ Meetings This table shows membership of standing Committees of the Board that operated during the year ended 30 June 2024. 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: Meetings of Committees Directors’ Meetings Audit and Risk Committee Investment Committee Remuneration, Nomination and Governance Committee Independent Board Committee1 Total number of meetings held 23 5 1 7 20 Meetings eligible to attend Meetings attended Meetings eligible to attend Meetings attended Meetings eligible to attend Meetings attended Meetings eligible to attend Meetings attended Meetings eligible to attend Meetings attended A. Robinson 23 23 5 5 – – 7 7 – 1 M. Clarke2 14 14 3 3 1 1 4 4 – – G. Guérin 23 23 5 5 1 1 7 7 20 20 P. Greenwood3 22 21 – 5 1 1 – 6 – 20 J. Chafkin4 4 4 2 2 – – 3 2 20 20 M. Donnelly5 12 10 3 3 – – 3 3 – – P. Kennedy6 4 3 2 1 – – 3 2 20 20 Notes: 1 The IBC was a special purpose committee established on 26 July 2023 for the Strategic Process and was dissolved on 16 November 2023. The members of the IBC were Mr. Chafkin, Mr. Kennedy and Mr. Guérin. 2 Mr. Clarke was appointed as a director on 14 February 2024. 3 Mr. Greenwood resigned as a director on 18 May 2024. Mr. Greenwood attended one Investment Committee meeting as an external non-voting member. 4 Mr. Chafkin resigned as a director on 17 November 2023. 5 Ms. Donnelly resigned as a director on 4 March 2024. 6 Mr. Kennedy resigned as a director on 16 November 2023. 33 32 Annual Report 2024 continued DIRECTORS’ REPORT Committee membership As at the date of this report, the Company had an Audit and Risk Committee, an Investment Committee and, a Remuneration, Nomination and Governance Committee of the Board of Directors. Members acting on the committees of the Board were: Audit and Risk Committee Investment Committee Remuneration, Nomination and Governance Committee J. Dawson (Chair) G. Guérin (Chair) J. Dawson (Chair) A. Robinson M. Clarke A. Robinson G. Guérin G. Guérin 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 27 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. There were no non-audit services provided by the auditor during the financial year ended 30 June 2024 therefore auditor independence was not compromised. 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 hearing of the proceeding concluded on 31 October 2023, and the parties are currently awaiting the decision of the Court. 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 19 July 2024, the Company has agreed to sell its interest in Carlisle to Abacus Life, Inc. (NASDAQ: ABL) (“Abacus”) in exchange for a combination of Abacus bonds and common stock. The agreement is expected to provide the Company with 1.99 million newly issued Abacus bonds (NASDAQ: ABLLL), or equivalent bonds with associated registration rights, with a coupon of 9.875%. In addition, the Company will receive 1.37 million of Abacus common stock. The Company is expected to receive 90% of the total value of the sale at closing. The bonds will not be subject to restrictions, whilst the equity will become tradable no later than January 2026. The remaining 10% of the proceeds will be held back for 18 months from closing and will be freely tradable upon receipt. Despite the holdback , the Company will be entitled to earnings on these securities. The transaction is subject to Luxembourg regulatory approval and is expected to close in the coming months. On 12 August 2024, the Company has agreed to sell its 13.7% equity interest in VPC and 5.5% interest in VPC-Holdco’s future carried interest entitlements to Janus Henderson Group (NYSE: JHG) (“JHG”) in exchange for 75% cash and 25% JHG stock. The Company would receive upfront consideration of USD33,900,000 (excluding transaction costs). After the transaction, the Company will have 11.2% equity interest in VPC, 19.4% interest in VPC-Holdco’s future carried interest entitlements and 24.9% carried interest entitlements in VPC-Holdco’s existing funds/funds currently being raised. The Company could receive and additional earn-out payment of up to USD28,700,000 based on certain VPC gross revenue milestones measured in calendar years 2025 and 2026. The agreement also includes provisions for the potential sale of the remaining equity interest in VPC and an incremental portion of VPC-Holdco’s carried interest in the future. The transaction is subject to certain consent processes and is expected to close in the coming months. On 23 August 2024, the Directors of the Company determined to pay a final dividend on ordinary shares in respect of the 2024 financial year. The total amount of the dividend is $12,005,000 which represents an unfranked dividend of 23.00 cents per share. The dividend has not been provided for in the 30 June 2024 consolidated financial statements. Other than the matters detailed above, there has been no matter or circumstance, which has arisen since 30 June 2024 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 23 August 2024 35 34 Annual Report 2024 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 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 Auditor’s independence declaration to the Directors of Pacific Current Group Limited As lead auditor for the audit of the financial report of Pacific Current Group Limited for the financial year ended 30 June 2024, 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. Ernst & Young Rita Da Silva Partner 23 August 2024 37 AUDITOR’S INDEPENDENCE DECLARATION Note 2024 $’000 2023 $’000 Revenue 2 11,221 18,097 Other income and net gains/(losses) on investments and financial instruments Distributions and dividend income 3 27,281 27,293 Interest income 3 4,407 204 Net change in fair values of financial assets and liabilities 3 104,735 (14,681) Gain on sale of investments 3 61,191 – 197,614 12,816 Expenses Salaries and employee benefits 4 (20,136) (15,832) Impairment expense 4 (42,243) (14,022) Administration and general expenses 4 (16,388) (19,635) Depreciation and amortisation expense 4 (2,681) (3,717) Interest expense 4 (6,691) (3,314) (88,139) (56,520) Share of net profits of associates and joint venture accounted for using the equity method 23 21,579 8,062 Profit/(loss) before income tax expense 142,275 (17,545) Income tax (expense)/benefit 5 (31,922) 3,291 Profit/(loss) for the year 110,353 (14,254) Attributable to: The members of the Company 110,082 (15,791) Non-controlling interests 271 1,537 110,353 (14,254) Earnings/(loss) per share attributable to the members of the Company (cents per share): – Basic 7 213.43 (30.76) – Diluted 7 213.43 (30.76) Dividends paid per share (cents per share) for the year 18 38.00 38.00 The accompanying notes form part of these consolidated financial statements. For the year ended 30 June 2024 CONSOLIDATED STATEMENT OF PROFIT OR LOSS 37 36 Annual Report 2024 Note 2024 $’000 2023 $’000 Profit/(loss) for the year 110,353 (14,254) 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 17a(i) 1,010 (4,071) Foreign currency movement of investment revaluation reserve 17a(i) (15) (1) 995 (4,072) Items that may be reclassified subsequently to profit or loss Exchange differences on translating foreign operations 17a(ii) 240 19,242 Share in foreign currency reserve of an associate, net of income tax 17a(ii) (16) (15) 224 19,227 Other comprehensive income for the year 1,219 15,155 Total comprehensive income 111,572 901 Attributable to: The members of the Company 111,296 (711) Non-controlling interests 276 1,612 111,572 901 The accompanying notes form part of these consolidated financial statements. For the year ended 30 June 2024 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Note 2024 $’000 2023 $’000 Current assets Cash and cash equivalents 9 95,537 23,201 Short-term deposits 9 225,000 – Trade and other receivables 10 8,821 7,295 Other financial assets 11 22,788 808 Current tax assets 5 10,598 11,521 Other assets 12 705 1,230 Total current assets 363,449 44,055 Non-current assets Trade and other receivables 10 66 646 Other financial assets 11 150,180 324,893 Plant and equipment 79 3,396 Right-of-use assets 13a(i) 638 2,140 Intangible assets 22 24,068 41,388 Investments in associates and joint venture 23 127,325 189,715 Other assets 12 62,076 77 Total non-current assets 364,432 562,255 Total assets 727,881 606,310 Current liabilities Trade and other payables 14 4,920 7,756 Provisions 257 409 Lease liabilities 13a(ii) 213 359 Current tax liabilities 5 448 680 Total current liabilities 5,838 9,204 Non-current liabilities Provisions 64 38 Financial liabilities 15 63,158 48,655 Lease liabilities 13a(ii) 636 2,467 Deferred tax liabilities 5 59,126 35,716 Total non-current liabilities 122,984 86,876 Total liabilities 128,822 96,080 Net assets 599,059 510,230 Equity Share capital 16 196,757 189,897 Reserves 17 81,801 90,413 Retained earnings 320,501 229,212 Total equity attributable to the members of the Company 599,059 509,522 Non-controlling interests – 708 Total equity 599,059 510,230 The accompanying notes form part of these consolidated financial statements. As at 30 June 2024 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 39 38 Annual Report 2024 Share capital $’000 Reserves $’000 Retained earnings $’000 Non- controlling interests $’000 Total equity $’000 Balance as at 1 July 2023 189,897 90,413 229,212 708 510,230 Profit for the year – – 110,082 271 110,353 Other comprehensive income: (i) Net movement in investment revaluation reserve net of income tax (Note 17a(i)) – 995 – – 995 (ii) Net movement in foreign currency translation reserve (Note 17a(ii)) – 235 – 5 240 (iii) Share in foreign currency reserve of an associate, net of income tax (Note 17a(ii)) – (16) – – (16) Total comprehensive income for the year – 1,214 110,082 276 111,572 Transactions with members in their capacity as members: (i) Issuance of shares, net of share issue costs and income tax (Note 16) 6,860 – – – 6,860 (ii) Dividends paid (Note 18) – – (19,597) (984) (20,581) (iii) Share-based payments (Note 17a(iii)) – 4,555 – – 4,555 (iv) Settlement of vested options and performance rights (Note 17a(iii)) – (13,577) – – (13,577) Total transactions with members in their capacity as members 6,860 (9,022) (19,597) (984) (22,743) Transfers between reserves (Note 17a(iii)) – (804) 804 – – Balance as at 30 June 2024 196,757 81,801 320,501 – 599,059 Share capital $’000 Reserves $’000 Retained earnings $’000 Non- controlling interests $’000 Total equity $’000 Balance as at 1 July 2022 186,927 73,415 264,468 1,916 526,726 (Loss)/profit for the year – – (15,791) 1,537 (14,254) Other comprehensive income: (i) Net movement in investment revaluation reserve net of income tax (Note 17a(i)) – (4,072) – – (4,072) (ii) Net movement in foreign currency translation reserve (Note 17a(ii)) – 19,167 – 75 19,242 (iii) Share in foreign currency reserve of an associate, net of income tax (Note 17a(ii)) – (15) – – (15) Total comprehensive income for the year – 15,080 (15,791) 1,612 901 Transactions with members in their capacity as members: (i) Issuance of shares, net of share issue costs and income tax (Note 16) 2,970 – – – 2,970 (ii) Dividends paid (Note 18) – – (19,465) (2,820) (22,285) (iii) Share-based payments (Note 17a(iii)) – 2,055 – – 2,055 (iv) Settlement of vested performance rights (Note 17a(iii)) – (137) – – (137) Total transactions with members in their capacity as members 2,970 1,918 (19,465) (2,820) (17,397) Balance as at 30 June 2023 189,897 90,413 229,212 708 510,230 The accompanying notes form part of these consolidated financial statements. For the year ended 30 June 2024 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Note 2024 $’000 2023 $’000 Cash flow from operating activities Receipts from customers 13,625 21,110 Payments to suppliers and employees (34,534) (27,504) Dividends and distributions received 52,645 46,014 Interest received 2,872 204 Interest paid (6,188) (2,970) Income tax paid (7,806) (15,032) Net cash provided by operating activities 8 20,614 21,822 Cash flow from investing activities Investment in short-term deposits (225,000) – Collections of receivable from EAM Global 429 557 Collections of receivable from Raven Capital Management, LLC – 653 Collections of loans from IFP 381 67 Loans provided to associates – (1,608) Proceeds from disposal of investment in GQG 258,599 – Proceeds from disposal of investment in Cordillera 47,674 – Proceeds from disposal of investment in Proterra 38,139 12,364 Payments for the purchase of investment in Cordillera – (44,405) Payments for the purchase of investment in Avante (22,883) – Additional contributions to associates (1,041) (28) Proceeds from disposal of investment in Avante 22,884 – Proceeds from partial disposal of investment in Pennybacker 7,442 – Repayment of earn-out obligations – (2,459) Repayment of Hareon liability – (17,638) Payment for the purchase of plant and equipment (103) (2,641) Proceeds from disposal of plant and equipment – 23 Additions to other assets (restricted deposits) (63,056) – Net cash provided by/(used in) investing activities 63,465 (55,115) Cash flow from financing activities Proceeds from the Debt Facility 16,781 44,583 Transaction costs paid and discount from the Debt Facility (424) (2,714) Repayments of principal portion of lease liabilities (376) (318) Dividends paid (19,598) (16,580) Dividends paid to non-controlling interest in a subsidiary (984) (2,820) Payments to settle share based payments (5,854) (52) Net cash (used in)/provided by financing activities (10,455) 22,099 Net increase/(decrease) in cash and cash equivalents held 73,624 (11,194) Cash at beginning of the financial year 23,201 34,886 Foreign exchange difference in cash (1,288) (491) Cash at end of financial year 9 95,537 23,201 Non-cash investing and financing activities Investing activities 8 597 1,937 Financing activities 8 7,457 4,822 The accompanying notes form part of these consolidated financial statements. For the year ended 30 June 2024 CONSOLIDATED STATEMENT OF CASH FLOWS 41 40 Annual Report 2024 For the year ended 30 June 2024 INDEX TO THE NOTES TO THE FINANCIAL STATEMENTS 43 A. BASIS OF PREPARATION 44 B. GROUP RESULTS FOR THE FINANCIAL YEAR 44 1. Strategic initiative 45 2. Revenue 47 3. Other income and net gains/(losses) on investments and financial instruments 48 4. Expenses 49 5. Income tax 53 6. Segment information 58 7. Earnings/(loss) per share 59 8. Notes to consolidated statement of cash flows 60 C. OPERATING ASSETS AND LIABILITIES 60 9. Cash and cash equivalents and short-term deposits 60 10. Trade and other receivables 62 11. Other financial assets 66 12. Other assets 66 13. Right-of-use assets and related lease liabilities 68 14. Trade and other payables 68 D. CAPITAL, FINANCING AND FINANCIAL RISK MANAGEMENT 68 15. Financial liabilities 70 16. Share capital 71 17. Reserves 72 18. Dividends paid and proposed 73 19. Financial risk management 78 20. Capital commitments, operating lease commitments and contingencies 79 E. GROUP STRUCTURE 79 21. Interests in subsidiaries 81 22. Intangible assets 83 23. Investment in associates and joint ventures 92 24. Parent entity disclosures 93 25. Related party transactions 94 F. OTHER INFORMATION 94 26. Share-based payments 95 27. Auditors’ remuneration 96 28. Significant events subsequent to reporting date 96 29. Adoption of new and revised Standards A. BASIS OF PREPARATION This general-purpose financial report for the Company and the Group for the year ended 30 June 2024, was authorised for issue in accordance with a resolution of the Directors on 23 August 2024 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 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 22 and 23). 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. For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS 43 42 Annual Report 2024 For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS 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 2c; – Income tax, tax basis for USA investments and recovery of deferred tax assets – refer to Note 5c; – Valuation of financial assets at fair value and impairment of financial assets at amortised cost – refer to Note 11c and Note 19f; – Valuation of financial liabilities at fair value – refer to Note 15c and Note 19f; – Impairment of goodwill and other identifiable intangible assets – refer to Note 22c; and – Impairment of investments in associates and a joint venture – refer to Note 23d. 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 Strategic Initiative, 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. Strategic initiative On 15 March 2024, the Company entered into agreements to externalise its investment management function and agreed to sell three boutique investments. This Strategic Initiative was subject to shareholder approval. Details of the Strategic Initiative were: – The Company would appoint an affiliate of GQG to provide investment management services to the Group for two years, with the possibility of extending the relationship for an additional two years upon mutual agreement (the “Externalisation Transaction”). – The majority of the Group’s US-based employees, including the investment team led by the former MD, CEO and CIO, Mr. Greenwood, would become full time employees of GQG, ensuring continuity while providing the Group a significantly lower cost structure more appropriate for the nature of its portfolio going forward. – Mr. Greenwood would continue to act as portfolio manager, and the Board would continue to consider and approve all major portfolio and company actions. – The investment management fee would be 0.75% of the fair value of the Group’s investment portfolio (excluding cash). – The Group would receive $108,696,000 (USD71,250,000) from the sale of its holdings in Avante, Cordillera and Proterra, in-line with the Group’s assessed aggregate net fair market value for these three investments as at 31 December 2023. In connection with the sale of the Group’s interest in Avante, GQG would also become responsible for future deferred and contingent consideration payments outstanding as at the date of completion of the Proposed Transaction. Refer to Note 11 a(ii), Note 15 a(iii) and Note 23 a(iv) for details. – The Company would also have the right, but not the obligation, to invest in any GQG sponsored investment vehicles focused on General Partner stakes. Other Matters: – Assignment of the lease at the Group’s office in Tacoma, Washington, USA. Refer to Note 13 for details. – The PAC Board’s intention to vest all outstanding options and substantially all performance rights in accordance with the discretion accorded by the LTI plan. The Board believed that the intended objectives of the LTI plan, namely shareholder value creation, will have been achieved by enacting the Strategic Initiative. The LTI would be predominantly payable in Company shares, indicatively equating to a 2% increase in the Company shares on issue, with a portion in cash. 40% of the LTI shares would be held in escrow in line with the investment management services period. Refer to Note 26 a(i) for details. At the Extraordinary General Meeting held on 18 April 2024, shareholders approved the Strategic Initiative. Post that approval, on 18 May 2024, PAC and GQG finalised the completion of the transactions and Mr. Greenwood resigned as MD, CEO and CIO. 2. 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: 2024 $’000 2023 $’000 Timing of revenue recognition Over time – Fund management fees 10,444 12,599 – Performance fees 119 4,322 – Retainer revenue 384 520 – Sundry revenue 91 74 11,038 17,515 At a point in time - Commission revenue 183 582 Total revenue 11,221 18,097 b. Accounting policies (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. 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. 45 44 Annual Report 2024 For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS B. GROUP RESULTS FOR THE FINANCIAL YEAR (continued) 2. Revenue (continued) (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 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. 3. Other income and net gains/(losses) on investments and financial instruments a. Analysis of balances 2024 $’000 2023 $’000 Distributions and dividend income: – Financial assets at FVTPL 25,535 25,535 – Financial assets at fair value through other comprehensive income (“FVTOCI”) 1,746 1,758 Total distributions and dividend income 27,281 27,293 Interest income: – Other persons/corporations 4,289 129 – Related party 118 75 Total interest income 4,407 204 Changes in fair values of financial assets and liabilities: Financial assets through profit or loss: – Investment in Carlisle 12,777 (12,722) – Investment in Cordillera 2,090 – – Investment in GQG 90,936 (15,119) – Investment in Pennybacker 8,764 – – Investment in Proterra (2,116) 10,123 – Other (73) (186) 112,378 (17,904) Financial liabilities through profit or loss: – Earn-out obligations and deferred considerations (7,643) 3,223 Total changes in fair values of financial assets and liabilities through profit or loss 104,735 (14,681) Gain on sale of investments: - Investment in Pennybacker¹ 60,615 – - Investment in Avante 576 – Total gain on sale of investments 61,191 – Notes: 1 Comprised of $39,217,000 gain for the sold interest and $21,398,000 for the fair value of the remaining interest. b. Accounting policies (i) Distributions and dividend income Distribution and dividend income from investments is recognised when the Group’s right to receive payment has been established and the amount can be reliably measured. (ii) Interest income Interest income is recognised on an accrual basis, taking into account the effective yield of the financial asset. (iii) Gain on sale of investments Gain on sale of investment is recognised in the period in which the transaction is concluded. The value is determined as the difference between the carrying amount of the asset and liabilities being disposed and the fair value of the consideration received. 47 46 Annual Report 2024 For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS B. GROUP RESULTS FOR THE FINANCIAL YEAR (continued) 4. Expenses a. Analysis of balances 2024 $’000 2023 $’000 Salaries and employee benefits: – Salaries and employee benefits 15,581 13,777 – Share-based payment expense 4,555 2,055 Total salaries and employee benefits 20,136 15,832 Impairment expenses: – Impairment in goodwill in subsidiaries (refer to Note 22): – Aether 15,738 11,731 – Impairment of investment in associates (refer to Note 23): – Banner Oak 25,087 – – Blackcrane Capital, LLC – (9) – CAMG – 1,934 – IFP 1,418 – 26,505 1,925 – Impairment of financial assets at amortised cost: – Expected credit losses of loans receivable and trade and other receivables (refer to Notes 10 and 11) – 366 Total impairment expenses 42,243 14,022 Administration and general expenses – Accounting and audit fees 1,965 2,030 – Commission and marketing expenses 1,083 705 – Computer and software maintenance expenses 905 626 – Deal, establishment and litigation costs 3,960 3,788 – Directors’ fees 780 749 – Hareon liability settlement expense – 4,927 – Insurance expense 783 856 – Lease expenses 137 118 – Net loss on transfer and impairment of right-of-use assets and leasehold improvements 2,574 – – Management fee expense 327 – – Net foreign exchange (gain)/loss (617) 1,087 – Professional and consulting fees 855 1,825 – Share registry and regulatory fees 172 167 – Taxes and license fees 1,115 799 – Travel and accommodation costs 622 815 – Other general expenses 1,727 1,143 Total administration and general expenses 16,388 19,635 Depreciation and amortisation expense: – Depreciation of plant and equipment 475 367 – Amortisation of management rights (refer to Note 22) 1,848 3,024 – Amortisation of right-of-use assets (refer to Note 13a(i)) 358 326 Total depreciation and amortisation expense 2,681 3,717 Interest expense: – Lease liabilities (refer to Note 13a(ii)) 181 125 – Debt facility (refer to Note 15a(v)) 6,510 3,189 Total interest expenses 6,691 3,314 Total expenses 88,139 56,520 b. Accounting policies (i) Interest expense Interest expense is recognised as it accrues using effective interest method. 5. Income tax a. Analysis of balances 2024 $’000 2023 $’000 Income tax expense/(benefit) Components of income tax expense/(benefit): – Current tax 7,555 3,715 – Deferred tax 22,338 (6,405) – Under/(over) provision in prior years 2,029 (601) Total income tax expense/(benefit) recognised in profit or loss 31,922 (3,291) Reconciliation of income tax expense/(benefit) recognised in profit or loss to prima facie income tax: Profit/(loss) before income tax 142,275 (17,545) Prima facie income tax expense/(benefit) at 30% (2023: 30%) 42,683 (5,264) Add/(deduct) the tax effect of: – Hareon settlement – (3,928) – Franking credits received (693) (420) – Non-assessable income (2,598) (285) – USA state income tax payments/(benefit) 3,587 (140) – Tax losses not carried forward 1,739 6,006 – Share-based payments 1,366 616 – Impact of difference in tax rates in other countries (17,747) 573 – Non-deductible foreign expenses 1,542 123 – Other 14 29 – Under/(over) provision in prior years 2,029 (601) Income tax expense/(benefit) attributable to profit or loss 31,922 (3,291) Net deferred income tax liabilities recognised in income tax expense/(benefit): – Investments 20,313 (4,414) – Tax losses carried forward/(reversal of tax losses) 983 (2,065) – Deductible capital expenditures 43 (480) – Dividend receivable (25) (349) – Impact of leases (31) (10) – Earn-out liability 934 677 – Accruals and provisions (74) 223 – Others 195 13 22,338 (6,405) Deferred income tax related to items charged or credited directly to equity: – Movement of the Group’s investment revaluation reserve 393 (1,589) – Movement of the Group’s foreign currency revaluation reserve of an associate (7) (7) 386 (1,596) 49 48 Annual Report 2024 For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS B. GROUP RESULTS FOR THE FINANCIAL YEAR (continued) 5. Income tax (continued) 2024 $’000 2023 $’000 Tax losses not recognised – Unused tax losses for which no deferred tax asset has been recognised 51,887 25,102 – Potential tax benefit at relevant tax rate 15,035 7,436 The unused tax losses pertained to the parent entity in Australia (consisted of $21,162,000 incurred revenue and capital losses and $20,108,000 capital losses not yet incurred) and the UK (consisted of $5,067,000 incurred capital losses and $5,550,000 not yet incurred) [2023: 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 capital losses not yet incurred)]. 2024 $’000 2023 $’000 Current tax assets Income tax receivable1 10,598 11,521 Current tax liabilities Provision for income tax2 448 680 Notes: 1 This is the estimated income receivable in the USA (2023: USA). 2 This is the estimated income tax liability in the UK (2023: UK). 2024 $’000 2023 $’000 Non-current liabilities – net deferred tax liabilities Components of net deferred tax liabilities: Liabilities: – Investments 62,369 41,754 – Dividend receivable 10 35 62,379 41,789 Assets: – Deductible capital expenditures (1,930) (1,764) – Adjustment on financial liabilities at FVTPL (967) (1,733) – Accruals and provisions (496) (514) – Reversal of carried forward tax losses – (2,065) – Impact of leases (58) (24) – Others 198 27 (3,253) (6,073) Net deferred tax liabilities 59,126 35,716 b. Accounting policies The income tax expense/(benefit) for the year comprises current income tax expense/(benefit) and deferred tax expense/(benefit). 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 expense/(benefit) 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. 51 50 Annual Report 2024 B. GROUP RESULTS FOR THE FINANCIAL YEAR (continued) 5. Income tax (continued) 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 may be based on a specific set of assumptions. For example, the Group provides for deferred tax liability on the appreciation in the value of its Boutique Investments relating to uncertain tax positions when such liabilities are probable and can be reasonably estimated. 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 and each jurisdictions respective statute of limitation, 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 year ended 30 June 2024 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 uncertain tax liability of $57,320,000 (30 June 2023: $35,226,000) which has been recorded in the 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. In some tax jurisdictions, legislation is announced that when enacted it will apply from the date of announcement. At a specific point in time, there may be tax legislation that has not yet been enacted (and therefore not yet in force) that may subsequently be enacted and thereby affect the taxation treatment at that point in time. Given the uncertainty of this legislation being enacted, the Group has only adopted tax treatments that are in force at the date of these financial statements. 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. For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS 6. Segment information a. Reportable segments Information reported to the Company’s 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 to produce at least an average of $4,000,000 of annual earnings; and – Tier-2 boutiques – investments where the Group expects to produce less than an average of $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 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: 2024 Segment Category 2023 Segment Category Avante Capital Partners, LP¹ Tier-1 – Banner Oak Capital Partners, LP Tier-1 Tier-1 Carlisle Management Company S.C.A. Tier-1 Tier-1 Cordillera Investment Partners, LP Tier-1 Tier-1 GQG Partners, Inc Tier-1 Tier-1 Pennybacker Capital Management, LLC2 Tier-1 Tier-2 Proterra Investment Partners, LP Tier-1 Tier-1 Victory Park Capital Advisors, LLC Tier-1 Tier-1 Victory Park Capital GP Holdco, L.P. Tier-1 Tier-1 Aether Investment Partners, LLC3 Tier-2 Tier-1 Aether General Partners3 Tier-2 Tier-1 Astarte Capital Partners, LLP Tier-2 Tier-2 ASOP Profit Share LP Tier-2 Tier-2 CAMG, LLP Tier-2 Tier-2 EAM Global Investors, LLC Tier-2 Tier-2 IFP Group, LLC Tier-2 Tier-2 Nereus Capital Investments (Singapore) Pte Ltd (“NCI”) Tier-2 Tier-2 Nereus Holdings, L.P. Tier-2 Tier-2 Northern Lights Alternative Advisors, LLP (“NLAA”) Tier-2 Tier-2 Roc Group Tier-2 Tier-2 Strategic Capital Investors, LLP Tier-2 Tier-2 Notes: 1 Avante was acquired on 21 September 2023 (refer to Note 23 a(ii) for details). 2 Pennybacker was recategorised from Tier 2 boutique to Tier 1 boutique beginning 1 July 2023. 3 Aether and Aether General Partners were recategorised from Tier 1 boutiques to Tier 2 boutiques beginning 1 July 2023. 53 52 Annual Report 2024 B. GROUP RESULTS FOR THE FINANCIAL YEAR (continued) 6. Segment information (continued) 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. Segment revenue Share of net profits of associates and joint venture Segment profit/(loss) for the year 2024 2023 2024 2023 2024 2023 $’000 $’000 $’000 $’000 $’000 $’000 Tier-1 boutiques 223 13,039 16,729 8,057 182,944 7,553 Tier-2 boutiques 10,947 5,021 4,850 5 (9,115) 28 11,170 18,060 21,579 8,062 173,829 7,581 Central administration 51 37 – – (63,476) (21,835) Total per consolidated statement of profit or loss 11,221 18,097 21,579 8,062 110,353 (14,254) The following details of segment revenue: Tier-1 boutiques $’000 Tier-2 boutiques $’000 Central administra- tion $’000 Total $’000 2024 Over time – Fund management fees – 10,444 – 10,444 – Performance fees – 119 – 119 – Commission revenue – – – – – Retainer revenue – 384 – 384 – Sundry revenue 40 – 51 91 40 10,947 51 11,038 At a point in time – Commission revenue 183 – – 183 223 10,947 51 11,221 2023 Over time – Fund management fees 12,420 179 – 12,599 – Performance fees – 4,322 – 4,322 – Commission revenue – – – – – Retainer revenue – 520 – 520 – Sundry revenue 37 – 37 74 12,457 5,021 37 17,515 At a point in time – Commission revenue 582 – – 582 13,039 5,021 37 18,097 For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS The following details segment profit after tax for central administration: 2024 $’000 2023 $’000 Revenue 51 37 Sundry income 4,278 64 Changes in fair values of financial assets and liabilities (76) 13 4,253 114 Salaries and employee benefits (14,799) (10,540) Administration and general expenses (13,624) (10,884) Depreciation and amortisation expense (701) (524) Interest expense (6,683) (3,292) (35,807) (25,240) Income tax (expense)/benefit (31,922) 3,291 (63,476) (21,835) (ii) Segment assets and liabilities Segment assets Segment liabilities Segment net assets 2024 2023 2024 2023 2024 2023 $’000 $’000 $’000 $’000 $’000 $’000 Tier-1 boutiques 225,633 496,714 61,319 43,553 164,314 453,161 Tier-2 boutiques 70,118 75,479 6,522 8,479 63,596 67,000 295,751 572,193 67,841 52,032 227,910 520,161 Central administration1 432,130 34,117 60,981 44,048 371,149 (9,931) Total per consolidated statement of financial position 727,881 606,310 128,822 96,080 599,059 510,230 Notes: 1 The total assets and liabilities under central administration consisted of the following: Segment assets 2024 $’000 2023 $’000 Cash and cash equivalents 317,727 16,095 Trade and other receivables 1,543 1 Income tax receivable 10,598 11,521 Other financial assets 39,649 69 Plant and equipment – 3,320 Right-of-use assets – 1,966 Other assets 62,613 1,145 Total 432,130 34,117 Segment liabilities 2024 $’000 2023 $’000 Trade and other payables 4,033 3,544 Provisions 321 447 Lease liabilities 234 2,627 Financial liabilities 59,208 42,789 Provision for income tax 448 680 Net deferred tax (assets) (3,263) (6,039) Total 60,981 44,048 55 54 Annual Report 2024 B. GROUP RESULTS FOR THE FINANCIAL YEAR (continued) 6. Segment information (continued) (iii) Other segment information 2024 $’000 2023 $’000 Impairment expense of segments – Tier-1 boutiques 25,087 11,731 – Tier-2 boutiques 17,156 2,292 – Central administration – – Total 42,243 14,023 Depreciation and amortisation of segments – Tier-1 boutiques – 3,193 – Tier-2 boutiques 1,979 – – Central administration 701 524 Total 2,680 3,717 (iv) Geographical information Revenues and results: 30 June 2024 30 June 2023 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 Revenues – Australia 163 – – 163 – – – – – USA 21 10,766 51 10,838 13,002 520 37 13,559 – UK – 181 – 181 – 4,501 – 4,501 – Luxembourg 39 – – 39 37 – – 37 223 10,947 51 11,221 13,039 5,021 37 18,097 Share of net profits/ (losses) of associates and joint venture – Australia – 4,128 – 4,128 – 1,787 – 1,787 – USA 16,729 279 – 17,008 8,057 (2,129) – 5,928 – UK – 443 – 443 – 347 – 347 16,729 4,850 – 21,579 8,057 5 – 8,062 Profit/(loss) after tax – Australia 163 4,128 (19,205) (14,914) – 1,787 (10,990) (9,203) – USA 163,223 (14,166) (43,471) 105,586 13,537 2,287 (9,640) 6,184 – UK – 923 (800) 123 – 1,676 (1,205) 471 – Luxembourg 19,558 – – 19,558 (5,984) – – (5,984) – India – – – – – (5,722) – (5,722) 182,944 (9,115) (63,476) 110,353 7,553 28 (21,835) (14,254) Other than the USA, no other country represents more than 10% of revenue for the Group (2023: USA and UK). Other than Aether Real Assets III, L.P., Aether Real Assets IV, L.P., Aether Real Assets V, L.P. and Aether Real Assets Seed Partners, L.P. (2023: Goodhart Partners Longitude Fund SICAV-SIF - Strategic Capital Fund, Aether Real Assets IV, L.P. and Aether Real Assets V, L.P.), no individual funds and clients represent more than 10% revenue for the Group.  For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS Non-current assets excluding financial assets: 30 June 2024 30 June 2023 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 $’000 Investment in associates and joint venture – Australia – 11,147 – 11,147 – 10,011 – 10,011 – USA 98,710 7,799 – 106,509 132,210 38,514 – 170,724 – UK – 9,669 – 9,669 – 8,980 – 8,980 98,710 28,615 – 127,325 132,210 57,505 – 189,715 Plant and equipment – Australia – – – – – – 112 112 – USA – 79 – 79 76 – 3,208 3,284 – 79 – 79 76 – 3,320 3,396 Right-of-use assets – USA – 638 – 638 175 – 1,965 2,140 Intangible assets – USA – 24,068 – 24,068 41,388 – – 41,388 Total non-current assets excluding financial assets – Australia – 11,147 – 11,147 – 10,011 112 10,123 – USA 98,710 32,584 – 131,294 173,849 38,514 5,173 217,536 – UK – 9,669 – 9,669 – 8,980 – 8,980 98,710 53,400 – 152,110 173,849 57,505 5,285 236,639 b. Accounting policies The accounting policies of the reportable segments are the same as the Group’s accounting policies. Segment profit represents the profit after tax earned by each segment without allocation of central administration costs. This is the measure reported to the CODM for purposes of resource allocation and assessment of segment performance. 57 56 Annual Report 2024 B. GROUP RESULTS FOR THE FINANCIAL YEAR (continued) 7. Earnings/(loss) per share The following reflects the income and share data used in the calculations of basic and diluted earnings/(loss) per share: 2024 2023 Basic earnings/(loss) per share: Net profit/(loss) attributable to the members of the Company ($’000) 110,082 (15,791) Weighted average number of ordinary shares for basic earnings/(loss) per share 51,577,151 51,334,916 Basic earnings/(loss) per share (cents) 213.43 (30.76) Diluted earnings/(loss) per share: Net profit/(loss) attributable to the members of the Company ($’000) 110,082 (15,791) Weighted average number of ordinary shares for diluted earnings/(loss) per share 51,577,151 51,334,916 Diluted earnings/(loss) per share (cents) 213.43 (30.76) Reconciliation of loss used in calculating earnings/(loss) per share: Net profit/(loss) attributable to the members of the Company used in the calculation of basic loss per share ($’000) 110,082 (15,791) Net profit/(loss) attributable to the members of the Company used in the calculation of diluted loss per share ($’000) 110,082 (15,791) Reconciliation of weighted average number of ordinary shares in calculating earnings/(loss) per share: Weighted average number of ordinary shares for basic and diluted earnings/(loss) per share 51,577,151 51,334,916 Weighted average number of ordinary shares for diluted earnings/(loss) per share 51,577,151 51,334,916 The options and performance rights outstanding in the prior financial year ended 30 June 2023 were anti-dilutive and were not included in determining the weighted average number of ordinary shares for diluted earnings/(loss) per share at 30 June 2023. 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. For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS 8. Notes to consolidated statement of cash flows a. Analysis of balances (i) Reconciliation of loss to net cash inflow from operating activities 2024 $’000 2023 $’000 Profit/(loss) from ordinary activities after income tax 110,353 (14,254) Adjustments and non-cash items: – Changes in fair values of financial assets and liabilities (104,735) 14,681 – Gain on sale of investments (61,191) – – Impairment of assets 42,243 14,014 – Dividends received/receivable from associates and joint venture 27,183 18,544 – Share of net profit from associates and joint venture (21,579) (8,062) – Share-based payments 4,555 2,055 – Depreciation and amortisation expense 2,681 3,717 – Loss on transfer and write-off of right-of-use assets and leasehold improvements 2,533 – – Net foreign exchange (gains)/losses (1,781) 2,394 – Hareon liability settlement expense – 4,927 – Other 513 496 Changes in operating assets and liabilities: – (Increase)/decrease in trade and other receivables (962) 3,184 – Decrease/(increase) in other assets 530 (41) – Decrease in trade and other payables (3,716) (1,447) – Increase/(decrease) in current taxes 700 (10,766) – (Increase)/decrease in deferred taxes 23,416 (7,557) – Decrease in provisions (129) (63) Cash flows provided by operating activities 20,614 21,822 (ii) Non-cash investing and financing activities Investing activities: – Recognition of right-of-use assets 597 1,497 – Recognition of leasehold improvements – 440 597 1,937 Financing activities: – Issuance of shares to settle vested options and performance rights 6,860 85 – Dividends reinvested – 2,885 – Recognition of lease liabilities 597 1,937 7,457 4,907 59 58 Annual Report 2024 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, other assets, right-of-use assets and related lease liabilities and trade and other payables. 9. Cash and cash equivalents and short-term deposits a. Analysis of balances 2024 $’000 2023 $’000 Cash and cash equivalents Cash at bank 95,537 23,201 Short-term deposits Term deposits¹ 225,000 – 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 and cash equivalents. 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. Notes: 1 The term deposits will mature on 16 September 2024 and 23 September 2024 with interest rates of 4.65% and 4.68% per annum, respectively. 10. Trade and other receivables a. Analysis of balances 2024 $’000 2023 $’000 Current Trade receivables 203 2,043 Dividend receivable 7,033 5,214 Sundry receivables 1,591 44 8,827 7,301 Loss allowance for expected credit losses (6) (6) 8,821 7,295 Non-current Trade receivables 66 646 For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS (i) Impairment The loss allowance for trade receivables, dividend and sundry receivables as at 30 June 2024 was determined as follows: Current Past due 31 - 60 days Past due 61 - 90 days Past due over 90 days Past due with full loss allowance Total 2024 Expected loss rate 0.050% 0.050% 2.564% 5.263% 100% Gross carrying amount ($) 269,000 – – – – 269,000 Loss allowance ($) – – – – – – Dividend and sundry receivables ($) 6,000 Total loss allowance ($) 6,000 2023 Expected loss rate 0.050% 0.050% 2.564% 5.263% 100% Gross carrying amount ($) 2,689,000 – – – – 2,689,000 Loss allowance ($) 1,000 – – – – 1,000 Dividend and sundry receivables ($) 5,000 Total loss allowance ($) 6,000 Movement of the loss allowance for expected credit losses: 2024 $’000 2023 $’000 Opening balance 6 411 Additions – 8 Write-off – (424) Effect of foreign currency differences – 11 Closing balance 6 6 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 2024 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. 61 60 Annual Report 2024 C. OPERATING ASSETS AND LIABILITIES (continued) 11. Other financial assets a. Analysis of the balances Type of Instrument 2024 $’000 2023 $’000 Current Financial assets at amortised cost: – Deferred consideration1 Debt 22,788 – – Receivable from EAM Global Debt – 433 – Loans receivable from IFP Debt – 375 22,788 808 Non-current Financial assets at amortised cost: – Deferred consideration1 Debt 16,868 – – Loans receivable from Astarte2 Debt 931 936 17,799 936 Loss allowance for expected credit losses (7) (7) 17,792 929 Financial assets at FVTPL: – Investment in GQG3 Equity – 164,983 – Investment in Carlisle4 Debt and Equity 77,585 65,067 – Investment in Cordillera5 Equity – 44,855 – Investment in Pennybacker6 Equity 44,055 – – Investment in Proterra7 Equity – 39,612 – Other Debt 44 116 121,684 314,633 Financial assets at FVTOCI: – Investment in EAM Global8 Equity 10,704 9,331 150,180 324,893 Notes: 1 Pertains to the receivable from the partial sale of the investment in Pennybacker to Goldman Sachs Asset Management’s Petershill program on 9 May 2024. The current portion is due at the first anniversary of the transaction whilst the non-current portion is due at the second anniversary of the transaction. Refer to Note 23 a(v) for details. 2 Pertains to a Secured Credit Facility Promissory Note to Astarte extended by the Group on 2 December 2022. This facility has a term of five years and bears a 10% interest per annum. 3 At 30 June 2023, pertained to the 4.03% equity interest in GQG. GQG is a global boutique asset management firm focused on active equity portfolios. GQG was incorporated in Delaware USA as a corporation. GQG is listed in the ASX. 4 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. 5 At 30 June 2023, pertained to the equity interest in Cordillera whereby the Group has a 16.38% entitlement to the 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. 6 Pertains to the 7.50% equity interest in Pennybacker after the partial sale of the investment to Goldman Sachs Asset Management’s Petershill program on 9 May 2024. Refer to Note 23 a(v) for details. 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. For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS 7 At 30 June 2023, pertained to the 16% equity interest in Proterra whereby the Group was entitled to 8% of the gross management revenues and 16% of the liquidation proceeds in the event of a sale. Proterra is an alternative investment manager based in Minneapolis, Minnesota, USA offering private equity investment strategies focused on global natural resources. 8 Pertains to the 18.75% equity interest in EAM Global. EAM Global manages emerging markets small cap, international small cap and international micro-cap public equities strategies. (i) Acquisition of investments In the prior year (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. (ii) Disposals of investments On 8 March 2024, the Group completed the sale of its 119,121,254 shares representing 4.03% of the market capitalisation of GQG. The sale was effected through an underwritten block trade of shares to institutional investors. The sale price of $259,325,000 (USD169,987,000), represented a 3.60% discount to the 7 March 2024 closing price of GQG shares. On 12 March 2024, the Group received the proceeds of the sale of $258,599,000 (USD169,511,000) net of sales commission of $726,000 (USD476,000). On 18 April 2024 following the shareholders approval of the Strategic Initiative (refer to Note 1 for details), the Group sold to GQG the following financial assets at FVTPL: – 16.38% revenue share interests in Cordillera for $47,674,000 (USD31,250,000); and – 16.00% revenue share interests in Proterra was sold to GQG for $38,139,000 (USD25,000,000). The proceeds from sale was received on 18 May 2024. In the prior year (14 June 2023), 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 $12,364,000 (USD8,320,000) less transaction costs. The sale of Proterra Asia did not change the Group’s equity interest in Proterra. (iii) Impairment of other financial assets at amortised cost Movement of the loss allowance for expected credit losses: 2024 $’000 2023 $’000 Opening balance 7 6 Additions – 358 Write-off – (358) Foreign currency movement – 1 Closing balance 7 7 (iv) Movement of financial assets at amortised cost 2024 Opening balance $’000 Additions and interest accrued $’000 Collections $’000 Impairment $’000 Reclassi- fications $’000 Effect of foreign currency differences $’000 Closing balance $’000 Current 808 23,214 (861) – – (373) 22,788 Non-current 936 17,244 (89) – – (292) 17,799 1,744 40,458 (950) – – (665) 40,587 2023 Current 567 434 (701) – 485 23 808 Non-current 472 1,236 – (358) (485) 71 936 1,039 1,670 (701) (358) – 94 1,744 63 62 Annual Report 2024 C. OPERATING ASSETS AND LIABILITIES (continued) 11. Other financial assets (continued) (v) Movement of financial assets at FVTPL 2024 Opening balance $’000 Additions $’000 Collections/ disposals $’000 Change in fair value $’000 Effect of foreign currency differences $’000 Closing balance $’000 Current – – – – – – Non-current 314,633 36,038 (344,412) 112,378 3,047 121,684 314,633 36,038 (344,412) 112,378 3,047 121,684 2023 Current 623 – (653) 13 17 – Non-current 289,806 44,405 (12,364) (17,917) 10,703 314,633 290,429 44,405 (13,017) (17,904) 10,720 314,633 (vi) Movement of financial assets at FVTOCI 2024 Opening balance $’000 Change in fair value $’000 Effect of foreign currency differences $’000 Closing balance $’000 Non-current 9,331 1,403 (30) 10,704 2023 Non-current 14,513 (5,654) 472 9,331 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: For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS (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 instruments 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. 65 64 Annual Report 2024 C. OPERATING ASSETS AND LIABILITIES (continued) 12. Other assets a. Analysis of balances 2024 $’000 2023 $’000 Current Prepayments 705 1,230 Non-current Restricted deposits1 62,004 – Other assets 72 77 62,076 77 Notes: 1 On 13 March 2024, the Company and WHSP executed a Deposit Account Security Agreement granting WHSP security interest to the $63,056,000 (USD41,333,039) deposit account of the Company in a financial institution in the USA (Refer to 15 a(i) for details). The deposit bears interest of 4.85% per annum. 13. Right-of-use assets and related lease liabilities a. Analysis of balances (i) Right-of-use assets 2024 $’000 2023 $’000 Office leases, net of accumulated amortisation 638 2,140 Movement of right-of-use assets 2024 $’000 2023 $’000 Cost Opening balance 3,181 1,521 Additions 597 1,588 Assignment and transfer of office lease1 (1,537) – Reversal of expired lease and impairment of existing lease2 (1,017) – Effect of foreign currency differences 30 72 Closing balance 1,254 3,181 Accumulated amortisation Opening balance (1,041) (687) Amortisation (358) (326) Assignment and transfer of office lease1 186 – Reversal of expired lease and impairment of existing lease2 602 – Effect of foreign currency differences (5) (28) Closing balance (616) (1,041) 638 2,140 For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS (ii) Lease liabilities 2024 $’000 2023 $’000 Current 213 359 Non-current 636 2,467 849 2,826 Movement of lease liabilities 2024 Opening balance $’000 Additions $’000 Imputed interest $’000 Repay- ments $’000 Assignment and transfer of office lease¹ $’000 Remea- surement of lease liabilities² $’000 Reclassi- fication $’000 Effect of foreign currency differences $’000 Closing balance $’000 Current 359 103 181 (557) (112) 26 212 1 213 Non-current 2,467 494 – – (1,757) (386) (212) 30 636 2,826 597 181 (557) (1,869) (360) – 31 849 2023 Current 281 95 125 (443) – – 290 11 359 Non-current 771 1,941 – – – – (290) 45 2,467 1,052 2,036 125 (443) – – – 56 2,826 Notes: 1 As part of the Strategic Initiative, the Group’s office located in Tacoma, Washington, USA was assigned to GQG. Refer to Note 1 for details. 2 The reversal pertained to the fully amortised and expired lease (old Tacoma, Washington, USA office). The impairment pertained to the existing lease (Denver, Colorado, USA) that was no longer being utilised as a result of the Strategic Initiative. The related lease liabilities for the Denver Colorado, USA lease was remeasured and adjusted up to the end of the lease contract (28 February 2027). Prior to remeasurement, the lease liability included the present value of the minimum lease payments of the additional five year renewal. 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. 67 66 Annual Report 2024 C. OPERATING ASSETS AND LIABILITIES (continued) 14. Trade and other payables a. Analysis of balances 2024 $’000 2023 $’000 Current Trade payables 737 916 Accrued expenses 3,170 4,861 Other payables 1,013 1,979 4,920 7,756 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. 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. 15. Financial liabilities a. Analysis of balances 2024 $’000 2023 $’000 Non-current Financial liabilities at amortised cost: – Senior Secured Debt Facility¹ 59,208 42,789 Financial liabilities at FVTPL: – Earn-out liability - Aether² 3,950 3,614 – Earn-out liability - Pennybacker³ – 2,252 3,950 5,866 63,158 48,655 Notes: 1 Pertains to the $76,278,000 (USD50,000,000) Debt Facility with 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. At 30 June 2024, the remaining undrawn debt facility amounted to $13,730,000 (USD9,000,000). 2 Pertains to 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. 3 Pertains to the potential obligation to Pennybacker 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. At 30 June 2024, the liability was extinguished as a result of the partial sale of the Group’s investment in Pennybacker (refer to Note 23a(v) for details). For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS (i) Debt facility transactions On 21 September 2023, the Company made an additional drawdown of $16,781,000 (USD11,000,000) from its Debt Facility. A 2.5% discount of $424,000 (USD275,000) was deducted upon receipt of the proceeds. In the prior year (26 October 2022), the Company made an initial drawdown of $44,583,000 (USD30,000,000) from its Debt Facility. A 2.5% discount of $1,115,000 (USD750,000) was deducted upon receipt of the proceeds. The transaction costs incurred in securing the Debt Facility amounted to $1,599,000. On 13 March 2024, an additional cash collateral was added to the Debt Facility to secure prompt payment in full when the loan becomes due, whether at stated maturity, by acceleration or otherwise. An amount of USD41,333,039 which was equivalent to the outstanding loan balance was deposited in a financial institution in the USA. WHSP was granted control over the deposit in accordance with the Deposit Account Control Agreement executed by the Company, the financial institution and WHSP. The Company classified the restricted deposit as part of other assets (refer to Note 12). (ii) Additions to financial liabilities On 21 September 2023, as part of the acquisition of an equity interest in Avante, the Company owed $19,832,000 (USD13,000,000) representing the deferred contribution payable in September 2024. This was subsequently settled as part of the Strategic Initiative disclosed in Note 1 and Note 15a(iii). (iii) Transfer and settlement of financial liabilities On 18 April 2024, following the shareholders approval of the Strategic Initiative (refer to Note 1 for details), the Group sold to GQG its equity interest in Avante, including the transfer of the deferred consideration. On 18 May 2024, the settlement of the $19,832,000 (USD13,000,000) deferred consideration was transferred to GQG. Refer to Note 23 a(iv) for details. On 14 May 2024, the Company settled its $9,015,000 (USD5,909,000) earn-out liability to Pennybacker as part of the partial sale of its equity interest in Pennybacker. The full payment of the earn-out liability was offset from the proceeds from the partial sale. Refer to Note 23 a(v) for details. (iv) Movement of financial liabilities at FVTPL 2024 Opening balance $’000 Additions $’000 Revaluation $’000 Repayments $’000 Reclassi- fications $’000 Effect of foreign currency differences $’000 Closing balance $’000 Current – 19,832 – (19,832) – – – Non-current 5,866 – 7,071 (9,015) – 28 3,950 5,866 19,832 7,071 (28,847) – 28 3,950 2023 Current 133 – (41) (2,459) 2,364 3 – Non-current 11,064 – (3,182) – (2,364) 348 5,866 11,197 – (3,223) (2,459) – 351 5,866 (v) Movement of financial liabilities at amortised cost 2024 Opening balance $’000 Additions $’000 Interest accrued $’000 Interest paid $’000 Effect of foreign currency differences $’000 Closing balance $’000 Non-current 42,789 16,357 6,510 (6,007) (441) 59,208 2023 Non-current – 41,869 3,189 (2,845) 576 42,789 69 68 Annual Report 2024 D. CAPITAL, FINANCING AND FINANCIAL RISK MANAGEMENT (continued) 15. Financial liabilities (continued) 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 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. 16. Share capital a. Analysis of balances 2024 $’000 2023 $’000 Issued and fully paid ordinary shares 196,757 189,897 Movements in ordinary shares on issue 2024 2023 No. of shares $’000 No. of shares $’000 Opening balance 51,573,734 189,897 51,149,723 186,927 Shares issued: – 28 June 2024 issuance to settle the vested options 456,545 5,022 – – – 28 June 2024 issuance to settle the vested performance rights 167,100 1,838 – – – 13 April 2023 under the Dividend Reinvestment Plan ("DRP") – – 236,267 1,621 – 13 October 2022 issuance to settle the vested performance rights – – 11,182 85 – 11 October 2022 under the DRP – – 176,562 1,264 Closing balance 52,197,379 196,757 51,573,734 189,897 In the prior year, the Company offered shareholders the opportunity to increase their holdings by participation in the DRP. The Company’s DRP offered 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. For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS 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 2024, the Company paid dividends of $19,597,000 (2023: dividends of $19,465,000 including dividends reinvested of $2,855,000). 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. 17. Reserves a. Analysis of balances 2024 $’000 2023 $’000 Investment revaluation reserve (1,975) (2,970) Foreign currency translation reserve 83,776 83,557 Equity-settled employee benefits reserve – 9,826 81,801 90,413 (i) Investment revaluation reserve This reserve records the Group’s net gain on its financial assets at FVTOCI. Movements in reserve: Opening balance (2,970) 1,102 Movement in the other comprehensive income: – Change in fair value of financial assets at FVTOCI, net of income tax 1,010 (4,071) – Effect of foreign currency differences (15) (1) 995 (4,072) Closing balance (1,975) (2,970) (ii) Foreign currency translation reserve The reserve records the Group’s foreign currency translation reserve on foreign operations. Movements in reserve: Opening balance 83,557 64,405 Movement in the other comprehensive income: – Exchange differences on translating foreign operations of the Group 240 19,242 – Share in foreign currency reserve of an associate, net of income tax (16) (15) – Share of non-controlling interests (5) (75) Closing balance 83,776 83,557 71 70 Annual Report 2024 For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS D. CAPITAL, FINANCING AND FINANCIAL RISK MANAGEMENT (continued) 17. Reserves (continued) (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 26 for further details of these plans. Movements in reserve: 2024 $’000 2023 $’000 Opening balance 9,826 7,908 Share-based payments (Note 26a(ii)) 4,555 2,055 Settlement of vested options and performance rights (Note 26a(iii)) (13,577) (137) Transfer of reserve to retained earnings (804) – Closing balance – 9,826 18. Dividends paid and proposed a. Analysis of balances 2024 $’000 2023 $’000 Previous year final: 67.3% franked dividend of 23 cents per share (2023: Fully franked dividend of 23 cents per share) 11,862 11,764 Current year interim: Unfranked dividend of 15 cents per share (2023: Fully franked dividend of 15 cents per share) 7,735 7,701 19,597 19,465 Declared after the reporting period and not recognised: Unfranked dividend of 23 cents per share (2023: 67.3% franked dividend of 23 cents per share)¹ 12,005 11,862 b. Franking credit balance 2024 $’000 2023 $’000 The balance at the end of the financial year at 30% (2023: 30%)² 991 3,422 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 – (3,421) The amounts of franking credits available for future reporting periods 991 1 The tax rate at which paid dividends have been franked and dividends proposed will be franked is 30% (2023: 30%). Notes: 1 Calculation was based on the ordinary shares on issue as at 31 July 2024 (2023: 31 July 2023). 2 The decrease in franking credits arose from the payment of dividends to the members of the Company. 19. 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 2024 $’000 2023 $’000 2024 $’000 2023 $’000 2024 $’000 2023 $’000 2024 $’000 2023 $’000 Financial assets Cash and cash equivalents 95,537 23,201 – – – – 95,537 23,201 Short-term deposits 225,000 – – – – – 225,000 – Trade and other receivables – current 8,821 7,295 – – – – 8,821 7,295 – non-current 66 646 – – – – 66 646 Other financial assets – current 22,788 808 – – – – 22,788 808 – non-current 17,792 929 121,684 314,633 10,704 9,331 150,180 324,893 Other assets – non-current 62,076 66 – – – – 62,076 66 432,080 32,945 121,684 314,633 10,704 9,331 564,468 356,909 Financial liabilities Trade and other payables 4,920 7,756 – – – – 4,920 7,756 Other financial liabilities – current – – – – – – – – – non-current 59,208 42,789 3,950 5,866 – – 63,158 48,655 64,128 50,545 3,950 5,866 – – 68,078 56,411 73 72 Annual Report 2024 For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS D. CAPITAL, FINANCING AND FINANCIAL RISK MANAGEMENT (continued) 19. Financial risk management (continued) a. Interest rate risk At the reporting date, the Group had the following direct exposure to global variable interest rate risk: 2024 $’000 2023 $’000 Interest bearing financial assets: – Cash and cash equivalents 95,537 23,201 – Other assets (restricted cash) 62,004 – 157,541 23,201 Interest bearing financial liabilities: – Senior Secured Debt Facility 59,208 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: 2024 $’000 2023 $’000 Net impact on profit after tax +1% [2023: 1%]/ 100 basis points, [2023: 100 basis points] (70) (102) -1% [2023: 1%]/ (100 basis points), [2023: 100 basis points] 182 252 b. Credit risk Credit risk arises from the financial assets of the Group which comprise cash and cash equivalents, short-term deposits, 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. For cash and cash equivalents and short-term deposits, the Group transacts only with financial institutions with a minimum rating of BBB+ (investment grade). 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 10a(i) and Note 11a(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. 2024 Weighted average effective interest rate 1 to 3 months $’000 3 months to 1 year $’000 1 to 2 years $’000 2 to 5 years $’000 Total $’000 Trade and other payables 0% 4,276 644 – – 4,920 Earn-out liability (Aether) 10.19% – – – 5,037 5,037 Lease liabilities 7.51% 46 143 195 271 655 Debt facility 11.36% 1,629 4,731 6,326 69,858 82,544 5,951 5,518 6,521 75,166 93,156 2023 Trade and other payables 0% 6,588 1,168 – – 7,756 Earn-out liability (Aether) 9.95% – – – 5,040 5,040 Earn-out liability (Pennybacker) 13.20% – – 2,728 – 2,728 Lease liabilities 8.29% 107 280 284 2,014 2,685 Debt facility 11.41% 1,140 3,394 4,522 55,528 64,584 7,835 4,842 7,534 62,582 82,793 d. Foreign currency risk The Group is an international multi boutique business with operations primarily within Australia, the USA, and the UK. Foreign currency risk arises when transactions are denominated in currencies other than the functional currency. (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 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. In addition, the Company being the parent entity has a long term debt denominated USD. The impact of the USD denominated transactions being the drawdowns and payment interests 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: 2024 2023 USD $’000 GBP $’000 EUR $’000 USD $’000 GBP $’000 EUR $’000 Financial assets Cash and cash equivalents 91,000 196 – 16,182 2,316 – Trade and other receivables 4,371 – 3,286 5,652 451 1,734 Other financial assets 172,968 – – 324,765 936 – Other assets 62,075 – – 64 – – 330,414 196 3,286 346,663 3,703 1,734 Financial liabilities Trade and other payables 2,961 171 – 2,745 3,547 – Other financial liabilities 63,158 – – 48,655 – – Lease liabilities 849 – – 2,826 – – 66,968 171 – 54,226 3,547 – 75 74 Annual Report 2024 For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS D. CAPITAL, FINANCING AND FINANCIAL RISK MANAGEMENT (continued) 19. Financial risk management (continued) (iii) Sensitivity analysis The following sensitivity analysis is based on the foreign currency risk exposures in existence at the reporting date. 2024 2023 Increase $’000 Decrease $’000 Increase $’000 Decrease $’000 USD - change in rate by 1% - impact on profit after tax 13 (13) 27 (27) EUR - change in rate by 1% - impact on profit after tax 32 (32) 14 (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. 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 19f(i) have moved, post tax profit and reserves would have been affected as follows: 2024 2023 Increase $’000 Decrease $’000 Increase $’000 Decrease $’000 Financial assets at FVTPL – 1% variable inputs - impact on profit after tax (480) 490 10,593 (8,963) Financial assets at FVTOCI – 1% variable inputs - impact on equity 445 (388) 372 (326) Financial liabilities at FVTPL – 1% variable inputs - impact on profit after tax 51 (86) 110 (114) 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. The following table represents the Group’s assets and liabilities measured and recognised at fair value as at 30 June 2024 and 2023. 2024 Level 1 $’000 Level 2 $’000 Level 3 $’000 Total $’000 Financial assets – 44 132,344 132,388 Financial liabilities – – 3,950 3,950 2023 Financial assets 164,983 41 158,940 323,964 Financial liabilities – – 5,866 5,866 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 2024 $’000 2023 $’000 Valuation techniques and unobservable inputs Range of inputs Sensitivity analysis Financial assets at FVTPL Investments 121,640 149,609 2024: Valuation based on the sale transactions – Discount rate 2023: Discounted Cash Flow – Revenue growth derived from FUM growth – Discount rate – Terminal growth rate 12.44% to 17.44% -4.09% to 32.97% 10.95% to 14.29% 3% 2024: 1% lower or higher discount rate while all the other variables were held constant, the fair value would increase by $577,000 and decrease by $565,000. 2023: 1% lower or higher terminal growth rate while all the other variables were held constant, the fair value would decrease by decrease by $9,120,000 and increase by $11,047,000. Financial assets at FVTOCI Investments 10,704 9,331 Discounted Cash Flow – Revenue growth derived from FUM growth – Discount rate – Terminal growth rate 6.04% to 12.18% (2023: 6.04% to 12.18%) 17.69% (2023: 18.10%) 3% (2023: 3%) 1% (2023: 1%) lower or higher terminal growth rate while all the other variables were held constant, the fair value would decrease by $511,000 and increase by $490,000 (2023: decrease by $429,000 and increase by $490,000). Total 132,344 158,940 Financial liabilities at FVTPL Earn out liabilities and deferred payments 3,950 5,866 Discounted Cash Flow – Projected revenue – Earn-out factor to earn-out multiplier – Discount rate (2023: $4,795,000) (2023: 50%) 10.19% (2023: 9.95% to 13.20%) 1% (2023: 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 (2023: increase by $150,000 and decrease by $145,000). Total 3,950 5,866 77 76 Annual Report 2024 For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS D. CAPITAL, FINANCING AND FINANCIAL RISK MANAGEMENT (continued) 19. Financial risk management (continued) (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 2024. (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. Fair values are calculated based on the discounted cash flow. 2024 2023 Carrying amount $’000 Fair value $’000 Carrying amount $’000 Fair value $’000 Financial assets at amortised cost – Deferred consideration 39,656 39,656 – – – Loans receivable from Astarte 931 1,004 936 1,006 – Receivable from EAM Global – – 433 433 – Loans receivable from IFP – – 375 375 – Other assets (restricted cash) 62,004 62,004 – – Financial liabilities at amortised cost – Debt facility 59,208 60,235 42,789 43,466 20. Capital commitments, operating lease commitments and contingencies 2024 $’000 2023 $’000 a. Capital commitments The Group has outstanding capital commitments as follows: – Aether GPs (USD224,000) (2023: USD269,000) 336 404 Total capital commitments 336 404 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. Lease commitments 2024 $’000 2023 $’000 Commitments for minimum lease payments: – not later than one year – 11 – later than one year and not later than five years – 19 – later than five years – – Total lease commitments – 30 The lease commitments relate to leases that are short-term and low value which were not capitalised. d. 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 hearing of the proceeding concluded on 31 October 2023, and the parties are currently awaiting the decision of the Court. 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. 21. Interests in subsidiaries The following are the Company’s subsidiaries: Country of incorporation Ownership interest held by the Company Name of subsidiaries 2024 % 2023 % Aurora Investment Management Pty Ltd Australia 100 100 The Aurora Trust Australia 100 100 Treasury Group Investment Services Pty Ltd Australia 100 100 Treasury ROC Pty Ltd1 Australia 100 100 Northern Lights MidCo, LLC (“Midco”) USA 100 100 Carlisle Acquisition Vehicle, LLC (“CAV”)2 USA 100 100 Northern Lights Capital Group, LLC USA 100 100 NLCG Distributors, LLC USA 100 100 Northern Lights Capital Partners (UK) Ltd (“NLCPUK”) UK 100 100 Strategic Capital Investors, LLP (“SCI”)3 UK – 60 Northern Lights MidCo II, LLC USA 100 100 Aether Investment Partners, LLC USA 100 100 Notes: 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. 3 SCI was wound-up on 28 June 2024 and in the process of deregistration. 79 78 Annual Report 2024 E. GROUP STRUCTURE (continued) 21. Interests in subsidiaries (continued) 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. (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. For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS 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. 22. Intangible assets a. Analysis of balances 2024 $’000 2023 $’000 Goodwill, net of impairment 11,228 26,722 Other identifiable intangible assets, at carrying amount – Brand and trademark 8,101 8,106 – Management rights 4,739 6,560 12,840 14,666 Total intangible assets 24,068 41,388 Goodwill $’000 Brand and trademark $’000 Management rights $’000 Total $’000 Movement of intangible assets 2024 Opening balance 26,722 8,106 6,560 41,388 Amortisation – – (1,848) (1,848) Impairment (15,738) – – (15,738) Effect of foreign currency differences 244 (5) 27 266 Closing balance 11,228 8,101 4,739 24,068 2023 Opening balance 37,217 7,821 9,277 54,315 Amortisation – – (3,024) (3,024) Impairment (11,731) – – (11,731) Effect of foreign currency differences 1,236 285 307 1,828 Closing balance 26,722 8,106 6,560 41,388 Cash generating units Goodwill and other identifiable intangible assets: 2024 - Aether 11,228 8,101 4,739 24,068 2023 - Aether 26,722 8,106 6,560 41,388 81 80 Annual Report 2024 E. GROUP STRUCTURE (continued) 22. Intangible assets (continued) 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 ARA Fund V estimated life of 12 years. (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 2024, impairment of the goodwill of $15,738,000 (2023: no impairment) was recognised due Aether’s new fund raising activity being slower than previously anticipated. A weighted average discount rate of 10.19% to 16.57% (2023: 9.95% to 16.65%) in the cash flow projections during the discrete period, tax rate of 21% (2023: 21%) and the terminal growth rate of 3% (2023: 3%) were applied. For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS 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 Impairment $’000 A 5% decrease in cash flows No impairment of goodwill – A 1% decrease in terminal growth rate No impairment of goodwill – A 1% increase in discount rate No impairment of goodwill – 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. 23. Investment in associates and joint ventures a. Analysis of balances 2024 $’000 2023 $’000 Investment in associates Opening balance 158,739 164,050 Acquisition of associates 42,716 – Additional contribution to associates 1,041 28 Disposal of an associate (42,139) – Share of net profits of associates 15,405 7,827 Dividends and distributions received/receivable (21,755) (17,098) Impairment (Note 4) (26,505) (1,925) Share in foreign currency reserve of an associate (22) (22) Change in fair value of the deferred consideration of an associate (572) – Effect of foreign currency differences 401 5,879 Closing balance 127,309 158,739 Investment in joint ventures Opening balance 30,976 31,067 Disposal of an associate of the JV (32,209) – Share of net profits of a joint venture 6,174 235 Dividends and distributions received/receivable (5,428) (1,446) Effect of foreign currency differences 503 1,120 Closing balance 16 30,976 Total 127,325 189,715 83 82 Annual Report 2024 E. GROUP STRUCTURE (continued) 23. Investment in associates and joint ventures (continued) (i) Details of associates and joint venture Ownership interest Place of incorporation and operation Principal activity 2024 % 2023 % Associates Aether General Partners1 Funds Management 25.00 25.00 USA ASOP Profit Share LP2 Investment Entity 39.06 39.06 Cayman Islands Astarte Capital Partners, LLP2 Funds Management 44.51 44.46 UK Avante3 Funds Management – – USA Banner Oak Capital Partners, LP4 Funds Management 35.00 35.00 USA CAMG, LLP5 Funds Management – 40.00 USA/UK IFP Group, LLC6 Investment Adviser 24.90 24.90 USA Northern Lights Alternative Advisors LLP7 Placement Agent 23.00 23.00 UK Roc Group8 Funds Management 29.71 30.01 Australia Victory Park Capital Advisors, LLC9 Funds Management 24.90 24.90 USA Victory Park Capital GP Holdco, L.P.10 Funds Management 24.90 24.90 USA Joint ventures Copper Funding, LLC11 Investment Entity 50.00 50.00 USA Nereus Capital Investments (Singapore) Pte. Ltd12 Investment Entity 74.19 74.19 Singapore Associate of the joint venture Copper Funding, LLC Pennybacker Capital Management, LLC13 Funds Management – 16.50 USA Notes: 1 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. 2 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. 3 Avante Group consisted of 24.9% equity interest in Avante and 12.5% limited partnership interests in Avante GP entities (refer to Note 23a(ii) and Note 23a(iv) for details. Avante is based in San Francisco, California, USA and manages three closed-end small business investment company private credit funds. Avante provides loans to sponsor-backed lower-middle-market companies in the USA and also allocates a small portion of its funds to make equity co-investments alongside its sponsors. 4 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. 5 CAMG was dissolved and deregistered on 4 June 2024. CAMG was 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. On 15 August 2023, Roc Group granted one of its executive 1% equity interest in Roc Partners Pty Ltd resulting in the reduction of the Group’s equity interest in Roc Partners Pty Ltd from 30.01% to 29.71%. The Group’s equity interest in Roc Partners (Cayman) Limited remained at 30.01% 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. For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS 12 Nereus Capital Investments (Singapore) Pte. Ltd (“NCI”) is an investment holding company based in Singapore. The subsidiaries of NCI operate solar power plants in India. 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. During the year, the Company partially sold its investment in Pennybacker (refer to Note 23a(iv) for details). (ii) Acquisition of an associates On 21 September 2023, the Group acquired 24.90% equity interest in Avante and 12.50% limited partnership interests in Avante GPs, for an initial contribution of $22,884,000 (USD15,000,000); deferred contribution of $19,832,000 (USD13,000,000) payable in September 2024; and an additional deferred contribution of up to $18,307,000 (USD12,000,000). This additional deferred contribution would be paid based on Avante’s new run rate management fees on capital commitments as at 31 August 2025. At the date of acquisition, the fair value of the additional deferred contribution of the Group was $8,848,000 (USD5,800,000) and had been added to the acquisition cost of Avante Group and the related liability was offset to the investment in associate account. As part of the Strategic Initiative (Note 1), the investment in Avante was sold (refer to Note 23a(iv) for details). From acquisition to sale date, the share in profits from Avante Group amounted to $744,000. (iii) Additional contributions to an associate On 14 September 2023, the Group alongside the other owners of Astarte contributed additional capital to Astarte of which the Group’s proportionate contribution amounted to $980,000 (GBP508,000). Since one of Astarte’s owners opted not to make a contribution, this resulted in the minimal increase of the Group’s ownership in Astarte from 44.46% to 44.51%. (iv) Sale of associates On 18 April 2024, following the shareholders approval of the Strategic Initiative (refer to Note 1 for details), the Company sold to GQG its 24.90% equity and 12.50% limited partnership interests in Avante Group for $22,884,000 (USD15,000,000) which was the equivalent amount of the initial contribution made by the Group on 21 September 2023 (refer to Note 23a(ii) for details). In addition, GQG assumed the deferred contribution of $19,832,000 (USD13,000,000) (refer to Note 15a(iii) for details) and the additional deferred contribution of up to $18,307,000 (USD12,000,000). Proceeds from the sale was received on 18 May 2024. The sale resulted in a gain of $576,000. (v) Partial sale of an associate in the joint venture On 9 May 2024, the Group sold its 9.00% equity interest and 2.50% carried interest entitlement in Pennybacker to Goldman Sachs Asset Management’s Petershill program for $92,824,000 (USD63,504,000). The sale is to be paid in three equal installments, of which $23,175,000 (USD15,191,000) at completion less transactions costs of and earn-out liability, another $23,175,000 (USD15,191,000) will be paid at the first anniversary of the transaction and final installment with a net present value of $17,154,000 (USD11,245,000) will be paid at the second anniversary of the transaction. Refer to Note 11 footnote 1. As a result of the partial sale of the Group’s interest in Pennybacker, the original accounting treatment of the investment as an associate has now been accounted for as a financial asset at FVTPL. The remaining 7.50% equity interest in Pennybacker has a fair value of $36,038,000 (USD23,623,000). Refer to Note 11 footnote 6. On 14 May 2024, the Group received $7,442,000 (USD4,878,000) which was net of transaction costs of $6,718,000 (USD4,404,000) and earn-out liability of $9,015,000 (USD5,909,000) (refer to Note 15a(iii)). The partial sale resulted in a gain of $60,615,000 (comprised of $39,217,000 gain for the sold interest and $21,398,000 for the fair value of the remaining interest). 85 84 Annual Report 2024 E. GROUP STRUCTURE (continued) 23. Investment in associates and joint ventures (continued) b. Summarised financial information for associates and joint ventures 2024 Avante¹ $’000 Banner Oak $’000 Pennybacker² $’000 VPC $’000 VPC-Holdco $’000 Aggregate of immaterial associates and joint venture $’000 Total $’000 Comprehensive income Revenue and other income "for the year 10,866 27,384 82,060 48,041 25,873 198,516 392,740 Profit after tax for the year 2,988 15,986 44,729 (10,730) 25,873 15,887 94,733 Other comprehensive income for the year – – – – – 7 7 Total comprehensive income for the year 2,988 15,986 44,729 (10,730) 25,873 15,894 94,740 Dividends/distributions received during the year 748 10,484 5,428 234 6,412 3,876 27,182 The above profit after tax includes the following: – Depreciation and amortisation 74 518 399 1,848 – 2,171 5,010 – Interest income 6 – – 160 – – 166 – Interest expense 25 47 43 2,150 – 494 2,759 – Income tax expense 32 – – – – 7,041 7,073 Financial position Current assets – 3,665 – 56,155 19,194 49,215 128,229 Non–current assets – 267 – 17,201 –3 30,939 48,407 Current liabilities – (885) – (73,439) (1,346) (30,420) (106,090) Non–current liabilities – – – (14,718) – (13,359) (28,077) Net assets/(liabilities) – 3,047 – (14,801) 17,848 36,375 42,469 Notes: 1 Avante was acquired on 14 September 2023 and sold on 18 April 2024; therefore, the comprehensive income information only covers the period from acquisition date to sale date. 2 Pennybacker was partially sold on 9 May 2024; therefore, the comprehensive income information only covers up to partial sale date. The remaining interest in Penybacker was reclassified as a financial asset at FVTPL. 3 The non-current assets balance of VPC-Holdco included the carried interest amounting to $29,046,000, of which the Group has $7,233,000 share, was not recognised in accordance with AASB 15: Revenue (“AASB 15”). For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS 2024 Avante¹ $’000 Banner Oak $’000 Pennybacker² $’000 VPC $’000 VPC-Holdco $’000 Aggregate of immaterial associates and joint venture $’000 Total $’000 Reconciliation of the summarised financial position to the carrying amount recognised by the Group: – Net assets/(liabilities) before determination of fair values – 3,047 – (14,800) 17,847 36,375 42,469 – Ownership interest in % 0% 35.00% 0% 24.90% 24.90% 52.84%3 47.50% – Proportion of the Group’s ownership interest – 1,066 – (3,685) 4,444 19,301 21,126 – (Increase)/decrease in net assets/liabilities – (662) – 193 (4,997) 2,255 (3,211) – Acquired goodwill and other identifiable intangibles – 46,097 – 54,381 22,183 2,895 125,556 – Impairment during the year – (24,669) – – – (1,395) (26,064) – Undistributed profits – 1,216 – 3,142 – 5,434 9,792 – Foreign exchange movement – – – – – 126 126 Closing balance – 23,048 – 54,031 21,630 28,616 127,325 The above assets and liabilities include the following: – Cash and cash equivalents – 3,290 – 8,511 – 21,717 33,518 – Current financial liabilities (excluding trade and other payables and provisions) – (150) – (16,246) – (2,665) (19,061) – Non–current financial liabilities (excluding trade and other payables and provisions) – – – (14,718) – (12,218) (26,936) Notes: 1 Avante was acquired on 14 September 2023 and sold on 18 April 2024; therefore, the financial position information have no balances at 30 June 2024. 2 Pennybacker was partially sold on 9 May 2024. The remaining interest was reclassified as a financial asset at FVTPL; therefore, the financial position information have no balances at 30 June 2024. 3 The rate relates to multiple different % across multiple entities. 87 86 Annual Report 2024 E. GROUP STRUCTURE (continued) 23. Investment in associates and joint ventures (continued) 2023 Banner Oak $’000 Pennybacker $’000 VPC $’000 VPC-Holdco $’000 Aggregate of immaterial associates and joint venture $’000 Total $’000 Comprehensive income Revenue and other income for the year 23,501 50,632 39,834 23,367 169,593 306,927 Profit after tax for the year 12,559 9,883 (5,873) 22,780 1,394 40,743 Other comprehensive income for the year – – – – 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 8,686 1,446 671 5,811 1,930 18,544 The above profit after tax includes the following: – Depreciation and amortisation 347 1,042 1,806 – 4,207 7,402 – Interest income – – (74) – (20) (94) – Interest expense 39 83 1,817 – 493 2,432 – Income tax expense – – – – 3,427 3,427 Financial position Current assets 3,665 13,289 50,519 – 41,653 109,126 Non-current assets 661 1,746 22,939 –1 37,327 62,673 Current liabilities (922) (9,263) (50,700) (1,941) (31,362) (94,188) Non-current liabilities (233) (785) (27,533) – (13,793) (42,344) Net assets/(liabilities) 3,171 4,987 (4,775) (1,941) 33,825 35,267 Notes: 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. For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS 2023 Banner Oak $’000 Pennybacker $’000 VPC $’000 VPC-Holdco $’000 Aggregate of immaterial associates and joint venture $’000 Total $’000 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 1,110 823 (1,189) (483) 17,545 17,806 – (Increase)/decrease in net assets/liabilities (705) (762) (2,306) (101) 4,999 1,125 – Acquired goodwill and other identifiable intangibles 48,532 30,144 56,299 22,199 3,356 160,530 – Impairment during the year – – – – (2,053) (2,053) – Undistributed profits 1,309 771 6,004 – 4,173 12,257 – Foreign exchange movement – – – – 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 – 15,214 23,491 – Current financial liabilities (excluding trade and other payables and provisions) (250) (455) (1,134) – (4,066) (5,905) – Non-current financial liabilities (excluding trade and other payables and provisions) (233) (785) (27,533) – (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. 89 88 Annual Report 2024 E. GROUP STRUCTURE (continued) 23. Investment in associates and joint ventures (continued) 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. For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS 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. Banner Oak and IFP was impaired for $26,505,000 (2023: $1,934,000 for Blackcrane and CAMG). The investment in Banner Oak was impaired due to the economic conditions and impact on capital raising over the last six months being below forecast and the lower probability of success for new funds. The following were the rates applied in the cash flow projections during the discrete period on associates with impairment: Associates Weighted average discount rate Tax rate Terminal growth rate Banner Oak 14.57% 24% 3% IFP 15.94% 24% 3% 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 2024 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 Impairment $’000 A 5% decrease in cash flows Further impairment of IFP 514 A 1% decrease in terminal growth rate Further impairment of IFP 278 A 1% increase in discount rate Further impairment of IFP 352 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. 91 90 Annual Report 2024 E. GROUP STRUCTURE (continued) 24. Parent entity disclosures Summarised presentation of the parent entity, Pacific Current Group Limited, financial statements: 2024 $’000 2023 $’000 Summarised statement of financial position Assets Current assets 231,008 5,416 Non-current assets 226,127 227,968 Total assets 457,135 233,384 Liabilities Current liabilities 84,675 64,816 Non-current liabilities 61,622 44,677 Total liabilities 146,297 109,493 Net assets 310,838 123,891 Equity Share capital 196,757 189,897 Retained earnings/(accumulated losses) 114,081 (75,832) Reserves – 9,826 Total equity 310,838 123,891 Summarised statement of profit or loss and other comprehensive income Income/(loss) for the year 208,706 (10,245) Other comprehensive income for the year – – Total comprehensive income/(loss) for the year 208,706 (10,245) 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 20. For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS 25. 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. 2024 $ 2023 $ Compensation paid to key management personnel (“KMP”) of the Company Short-term employee benefits 2,849,537 2,732,731 Post-employment benefits 63,959 56,959 Share based payments 1,789,609 1,101,051 4,703,105 3,890,741 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. 2024 $ 2023 $ Transactions with associates and affiliated entities Revenue and other income transactions – Management fees - Aether funds under management 10,382,147 12,420,169 – Commission income - VPC 183,447 – – Retainer fees - Roc Group (2023: Roc Group) 383,921 520,457 – Interest income - Astarte and IFP (2023: Astarte, CAMG and IFP) 118,095 74,649 – Dividends and distributions income - GQG (2023: GQG) 12,902,607 13,578,014 Investments in associates and joint venture transactions – Contributions to associates - Avante - net of deferred consideration 22,883,430 – – Additional contributions - Astarte and Aether GPs (2023: Aether GPs) 1,041,124 28,265 – Proceeds from disposal of associates - Avante - net of deferred consideration and Pennybacker 115,707,444 – – Dividends and distributions - Aether GPs, Avante, BannerOak, CFL, NLAA, Roc Group, VPC, and VPC-Holdco (2023: Aether GPs, BannerOak, CFL, NLAA, Roc Group, VPC, and VPC-Holdco) 27,182,783 18,544,027 – Loans to associates – (2023: Astarte, CAMG and IFP) – 1,607,584 – Collections of loans to associates - IFP (2023: IFP) 381,391 66,875 Balances at the end of the reporting period – Trade receivables - Aether funds under management and VPC (2023: Aether funds under management, Roc Group and VPC) 268,649 1,937,660 – Dividend receivable - NLAA (2023: NLAA and Roc Group) 336,933 484,088 – Interest receivable - (2023: IFP) – 24,390 – Loans receivable - Astarte (2023: Astarte and IFP) 930,935 1,311,485 The above transactions with related parties were on normal terms and conditions. 93 92 Annual Report 2024 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. 26. Share-based payments a. The Group Long-Term Incentive (“LTI”) Plan (i) Options and performance rights Options Performance Rights Date Granted 19 November 2021 24 February 2022 24 February 2022 Vesting dates: Tranche 1 1 July 2024 1 July 2024 30 June 2024 Tranche 2 1 July 2025 1 July 2025 30 June 2025 Tranche 3 n/a n/a 30 June 2026 Fair value per option/performance rights: Tranche 1 $1.49 $1.57 $6.62 Tranche 2 $1.57 $1.64 $6.31 Tranche 3 n/a n/a $6.02 No of options/ performance rights issued 1,740,000 690,000 430,500 Exercise price per share $7.28 $7.28 $nil Number of options/ performance rights vested: Tranche 1 580,000 230,000 137,500 Tranche 2 1,160,000 460,000 137,500 Tranche 3 – – 137,500 Number of options/ performance rights forfeited: Tranche 1 – – – Tranche 2 – – – Tranche 3 – – – Cancelled – – 18,000 Performance hurdles Continued employment Continued employment Continued employment, and net asset value hurdle The Board approved the full early vesting of options and performance rights in accordance with the discretion accorded by the LTI Plan. The Board believed that the intended objectives of the LTI Plan, namely shareholder value creation, had been achieved by enacting the Strategic Initiative. On 17 May 2024, the options and performance rights vested with a strike price of $11 per ordinary share following the completion of the Strategic Initiative. For cash settled LTI, payments were made in May 2024 and July 2024. For equity settled LTI, 623,645 ordinary shares were issued on 28 June 2024, of which 456,545 shares pertained to the converted options and 167,100 shares pertained to converted performance rights. 415,763 ordinary shares of the total ordinary shares issued are in escrow until 18 May 2026. For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS (ii) Options and performance rights recognised in the profit or loss 2024 $’000 2023 $’000 The amount recognised in the profit or loss: Option expense 2,371 1,213 Performance rights amortisation 2,184 842 4,555 2,055 (iii) Payments to settle share-based payments 2024 $’000 2023 $’000 Settlement of vested performance rights: Equity-settled options and performance rights 11,175 137 Cash-settled options and performance rights 2,402 – 13,577 137 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. 27. Auditors’ remuneration Ernst & Young and related network firms: 2024 $ 2023 $ Audit or review of financial reports  – Group 784,500 760,000  – Subsidiaries 48,818 45,772 Statutory assurance services required by legislation provided by the auditor 31,000 30,000 Non-audit services – – 864,318 835,772 Non Ernst & Young auditors and their related network firms - Subsidiaries 386,935 264,862 Statutory assurance services required by legislation provided by the auditor 6,049 99,755 Non-audit services – – 392,984 364,617 Total auditors’ remuneration 1,257,302 1,200,389 95 94 Annual Report 2024 F. OTHER INFORMATION (continued) 28. Significant events subsequent to reporting date On 19 July 2024, the Company has agreed to sell its interest in Carlisle to Abacus Life, Inc. (NASDAQ: ABL) (“Abacus”) in exchange for a combination of Abacus bonds and common stock. The agreement is expected to provide the Company with 1.99 million newly issued Abacus bonds (NASDAQ: ABLLL), or equivalent bonds with associated registration rights, with a coupon of 9.875%. In addition, the Company will receive 1.37 million of Abacus common stock. The Company is expected to receive 90% of the total value of the sale at closing. The bonds will not be subject to restrictions, whilst the equity will become tradable no later than January 2026. The remaining 10% of the proceeds will be held back for 18 months from closing and will be freely tradable upon receipt. Despite the holdback, the Company will be entitled to earnings on these securities. The transaction is subject to Luxembourg regulatory approval and is expected to close in the coming months. On 12 August 2024, the Company has agreed to sell its 13.7% equity interest in VPC and 5.5% interest in VPC-Holdco’s future carried interest entitlements to Janus Henderson Group (NYSE: JHG) (“JHG”) in exchange for 75% cash and 25% JHG stock. The Company would receive upfront consideration of USD33,900,000 (excluding transaction costs). After the transaction, the Company will have 11.2% equity interest in VPC, 19.4% interest in VPC-Holdco’s future carried interest entitlements and 24.9% carried interest entitlements in VPC-Holdco’s existing funds/funds currently being raised. The Company could receive an additional earn-out payment of up to USD28,700,000 based on certain VPC gross revenue milestones measured in calendar years 2025 and 2026. The agreement also includes provisions for the potential sale of the remaining equity interest in VPC and an incremental portion of VPC-Holdco’s carried interest in the future. The transaction is subject to certain consent processes and is expected to close in the coming months. On 23 August 2024, the Directors of the Company determined to pay a final dividend on ordinary shares in respect of the 2024 financial year. The total amount of the dividend is $12,005,000 which represents an unfranked dividend of 23.00 cents per share. The dividend has not been provided for in the 30 June 2024 consolidated financial statements. Other than the matters detailed above, there has been no matter or circumstance which has arisen since 30 June 2024 that has significantly affected or may significantly affect either the operations or the state of affairs of the Group. 29. Adoption of new and revised Standards a. New and amended AASB standards that are effective from 1 July 2023 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. The impact of these standards are currently being assessed. For the year ended 30 June 2024 NOTES TO THE FINANCIAL STATEMENTS Entity name Entity type Country of incorporation Ownership interest held by the Company Country of Tax residence 2024 % 2023 % Aurora Investment Management Pty Ltd Body corporate Australia 100 100 Australia The Aurora Trust Trust Australia 100 100 Australia Treasury Group Investment Services Pty Ltd Body corporate Australia 100 100 Australia Treasury ROC Pty Ltd Body corporate Australia 100 100 Australia Northern Lights MidCo, LLC Body corporate USA 100 100 USA Carlisle Acquisition Vehicle, LLC Body corporate USA 100 100 USA Northern Lights Capital Group, LLC Body corporate USA 100 100 USA NLCG Distributors, LLC Body corporate USA 100 100 USA Northern Lights Capital Partners (UK) Ltd Body corporate UK 100 100 UK Strategic Capital Investors, LLP Partnership UK – 60 UK Northern Lights MidCo II, LLC Body corporate USA 100 100 USA Aether Investment Partners, LLC Body corporate USA 100 100 USA CONSOLIDATED ENTITY DISCLOSURE STATEMENT 97 96 Annual Report 2024 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; 4. the consolidated entity disclosure statement required by section 295(3A) of the Corporations Act 2001 is true and correct; and 5. 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 23 August 2024 DIRECTORS’ DECLARATION A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 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 auditor’s report to the members of Pacific Current Group Limited Report on the audit of the 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 2024, 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 material accounting policy information, the consolidated entity disclosure statement 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 2024 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. Key audit matters 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. 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. 112 For the year ended 30 June 2024 INDEPENDENT AUDITOR’S REPORT 99 98 Annual Report 2024 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Investments in associates and joint ventures Why significant How our audit addressed the key audit matter As at 30 June 2024, the carrying value of the investments in associates and joint venture totals $127m, which is 17% of the total assets and the share of profits for the year then ended totals $21m, which is 9%of the total income for the year. During the year, the group has disposed of a number of investments which have been assessed in accordance with the requirements of AASB 9 Financial Instruments and AASB 128 Investments in Associates and Joint Ventures. The Group classifies investments in entities over which it has significant influence as associates in the statement of financial position and applies the equity method accounting 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 investments in associates and joint ventures are impaired. The identification 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 quantitative impact on the Group’s financial statements. Our audit procedures included: - Evaluating the Group’s assessment of significant influence over the investments, and the accounting treatment and presentation thereon; - Testing the appropriateness of the equity accounting for the Group’s investments in associates. For the material associates, we issued group instructions to the associate’s auditors covering matters significant to the audit. We assessed the auditor’s final report to confirm procedures were performed in accordance with the instructions and the opinions reached were appropriate for the purposes of our audit; - Assessing the methodology used by management in the impairment models to calculate the recoverable amount of the associate in accordance with the requirements of Australian Accounting Standards; - Testing the mathematical accuracy of the impairment models; - In conjunction with our valuation specialists, assessing assumptions applied in calculating the recoverable amount, including future cash flows, discount rates and terminal growth rates; - Testing the appropriateness and accuracy of the accounting for sale of investments; and - Assessing the adequacy and appropriateness of the disclosures in Note 23 to the financial report. Investments valuation Why significant How our audit addressed the key audit matter The Group has a significant portfolio of financial assets at fair value. As at 30 June 2024, these assets as disclosed in Note 11 to the financial report value $132m, which equates to 18% of the total assets held by the Group. As disclosed in Note 11, $121m of the Group’s fair value investments are classified as ‘financial assets at fair value through profit or loss’ (“FVTPL”), and $11m 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 inputs and has a high level of complexity. Significant judgement and high level of uncertainty is involved in developing unobservable inputs, including forecasted future cash flows, terminal growth rates, and discount rates. This was considered a key audit matter due to its subjective nature and the quantitative impact on the Group’s financial statements. Our audit procedures included: - Assessing the methodology used by management to calculate the fair value of the level 3 investment in accordance with relevant Australian Accounting Standards; - Testing the mathematical accuracy of the model; - Assessing the assumptions applied in calculating the fair value, including future cash flows, discount rates and terminal growth rates, in conjunction with our internal valuation specialists; and - Assessing the adequacy and appropriateness of the disclosures in Note 11 to the financial report. 113 For the year ended 30 June 2024 INDEPENDENT AUDITOR’S REPORT A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Impairment assessment of goodwill Why significant How our audit addressed the key audit matter As at 30 June 2024, the Group has goodwill of $11m. Goodwill has been recognised as a result of the Group’s historical acquisitions, representing the excess of the purchase consideration over the fair value of assets 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 calculating 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 assets, including future cash flows, terminal growth rates, and discount rates. Accordingly, it was considered a key audit matter. Our audit procedures included: - Assessing the Group’s determination 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 the requirements of Australian Accounting Standards; - Testing the mathematical accuracy of the impairment model; - Assessing the assumptions applied in calculating the recoverable amount, including future cash flows, discount rates and terminal growth rates, in conjunction with our internal valuation specialist; and - Assessing the adequacy and appropriateness of the disclosures in Note 22 to the financial report. Information other than the financial report and auditor’s report thereon The directors are responsible for the other information. The other information comprises the information included in the Group’s 2024 annual report other than the financial report and our auditor’s report thereon. 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, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the financial report, our responsibility is to read the other information 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 on the other information obtained prior to the date of this auditor’s report, 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. 114 101 100 Annual Report 2024 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Responsibilities of the directors for the financial report The directors of the Company are responsible for the preparation of: a. The financial report (other than the consolidated entity disclosure statement) that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001; and; b. The consolidated entity disclosure statement that is true and correct in accordance with the Corporations Act 2001, and for such internal control as the directors determine is necessary to enable the preparation of: i. The financial report (other than the consolidated entity disclosure statement) that gives a true and fair view and is free from material misstatement, whether due to fraud or error; and ii. The consolidated entity disclosure statement that is true and correct and is free of 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. Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with 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 with 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 the 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. 115 For the year ended 30 June 2024 INDEPENDENT AUDITOR’S REPORT A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation ► 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 ability 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, structure 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 with 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. 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. 116 103 102 Annual Report 2024 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Report on the audit of the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 21 to 33 of the Directors’ Report for the year ended 30 June 2024. In our opinion, the Remuneration Report of Pacific Current Group Limited for the year ended 30 June 2024, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our 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 Jaddus Manga Partner Partner Sydney Sydney 23 August 2024 23 August 2024 117 For the year ended 30 June 2024 INDEPENDENT AUDITOR’S REPORT 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 23 August 2024. Shareholder Information as at 9 September 2024 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 9 September 2024) The number of shareholders by size of holding for fully paid ordinary shares are: Holding Number of shareholders Number of shares % 1 – 1,000 1,222 472,637 0.90 1,001 – 5,000 926 2,348,175 4.50 5,001 – 10,000 232 1,710,556 3.28 10,001 – 100,000 157 4,082,075 7.82 100,001 and over 29 43,583,936 83.50 Total 2,566 52,197,379 100.00 The number of shareholders holding less than a marketable parcel of 46 shares is 200, a total of 817 shares. (b) Twenty largest shareholders (as at 9 September 2024) The names of the 20 largest holders of quoted shares are: Name Number of shares % 1 J P MORGAN NOMINEES AUSTRALIA LIMITED 12,528,055 24.00 2 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 11,822,859 22.65 3 CITICORP NOMINEES PTY LIMITED 5,348,603 10.25 4 REGAL PARTNERS LIMITED 1,603,561 3.07 5 MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED 1,352,469 2.59 6 BELLWETHER INVESTMENTS PTY LTD 1,160,160 2.22 7 BNP PARIBAS NOMINEES PTY LTD 1,112,446 2.13 8 PAUL GREENWOOD 1,016,445 1.95 9 RIVER CAPITAL NOMINEES PTY LTD 980,112 1.88 10 UBS NOMINEES PTY LTD 920,943 1.76 11 MRS ANTONIA CAROLINE COLLOPY 825,000 1.58 12 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 604,840 1.16 13 BNP PARIBAS NOMS PTY LTD 556,037 1.07 14 BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD> 542,423 1.04 15 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSI EDA 478,368 0.92 16 BOND STREET CUSTODIANS LIMITED 460,000 0.88 17 NEWECONOMY COM AU NOMINEES PTY LIMITED <900 ACCOUNT> 433,270 0.83 18 WARBONT NOMINEES PTY LTD 276,506 0.53 19 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 198,778 0.38 20 DRAKEVALE PTY LTD 197,619 0.38 Total 20 Holders 42,418,494 81.27 Balance of Register 9,778,885 18.73 Total Register 52,197,379 100.00 105 104 Annual Report 2024 ASX ADDITIONAL INFORMATION (c) Substantial shareholders The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are: Name Number of Shares Current Interest River Capital Pty Ltd 11,610,985 22.24% Perpetual Limited and its related bodies corporate 7,958,363 15.25% Regal Partners Limited and Regal Funds Management Pty Limited 5,496,633 10.53% (d) Unquoted Securities As at 9 September 2024, the Company has no unquoted securities. (e) Voting rights All ordinary shares (whether fully paid or not) carry one vote per share without restriction. (f) Buyback PAC has intended to return capital to shareholders estimated to be up to $300,000,000 via an off-market share buy-back. The buy- back is subject to the timing of receipt of a ruling from the Australian Taxation Office and shareholder approval at the Extraordinary General Meeting. ABN 39 006 708 792 Directors Mr. Antony Robinson Non-Executive Chairman Mr. Michael Clarke Executive Director (appointed: 14 February 2024) Ms. Joanne Dawson Non-Executive Director (appointed: 1 July 2024) Mr. Gilles Guérin Non-Executive Director Executive Management Mr. Michael Clarke Acting CEO (appointed: 1 July 2024) Mr. Ashley Killick Chief Financial Officer Company Secretary Ms. Clare Craven Registered Office/Principal Place of Business Suite 3, Level 3, 257 Collins Street, Melbourne, VIC, 3000 Phone +61 3 8375 9611 www.paccurrent.com Share Register Computershare Investor Services Pty Ltd 452 Johnston Street, Abbotsford, VIC, 3067 Phone +61 3 9415 5000 Bankers Westpac Banking Corporation Auditor Ernst & Young 200 George Street Sydney, NSW, 2000 Stock Exchange Listing Pacific Current Group Limited shares are listed on the Australian Securities Exchange, code: PAC. CORPORATE INFORMATION 107 106 Annual Report 2024 MELBOURNE Suite 3, Level 3 257 Collins Street Melbourne, VIC 3000 Ph: +61 3 8375 9611 – TACOMA 909 A Street, Suite 810 Tacoma, WA 98402 Ph: +1 (253) 238 0417 –

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