Contents ..................................................................................................................................... 1
Pinnacle Glossary ....................................................................................................................... 3
Chair’s Letter .............................................................................................................................. 6
Overview, Operating and Financial Report ................................................................................ 8
Nature of operations and principal activities ..................................................................................... 9
Key financial highlights ..................................................................................................................... 10
Pinnacle Affiliates .............................................................................................................................. 13
Business strategies and prospects for future financial years ........................................................... 19
Economic conditions and material business risks ............................................................................. 19
Review of Group Results ................................................................................................................... 20
Statement of Comprehensive Income .............................................................................................. 20
Consolidated Statement of Financial Position .................................................................................. 21
Corporate Sustainability .......................................................................................................... 22
Directors’ Profiles ..................................................................................................................... 23
Directors’ Report ...................................................................................................................... 27
Remuneration Report ....................................................................................................................... 29
Letter from the Chair of the Remuneration and Nominations Committee ...................................... 30
Key Management Personnel ............................................................................................................. 32
Role of Remuneration and Nominations Committee ....................................................................... 33
Executive remuneration policy and framework for the Company ................................................... 34
Links between performance and outcomes ..................................................................................... 40
Details of Executive Key Management Personnel remuneration ..................................................... 41
Executive service agreements........................................................................................................... 43
Non-executive director remuneration .............................................................................................. 45
Share-based payment compensation ............................................................................................... 47
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Equity instrument disclosures relating to Key Management Personnel .......................................... 48
Loans to Key Management Personnel .............................................................................................. 49
Equity Capital .................................................................................................................................... 50
Auditor’s Independence Declaration ....................................................................................... 54
Financial Statements ................................................................................................................ 56
Consolidated statement of profit or loss .......................................................................................... 57
Consolidated statement of comprehensive income ......................................................................... 58
Consolidated statement of financial position ................................................................................... 59
Consolidated statement of changes in equity .................................................................................. 60
Consolidated statement of cash flows .............................................................................................. 61
Notes to the consolidated financial statements ............................................................................... 62
Directors’ Declaration ............................................................................................................ 117
Independent Auditor's Report ............................................................................................... 118
Shareholder Information ....................................................................................................... 125
Corporate Directory ............................................................................................................... 129
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Annual Report
01
3
Annual Report
Term
Meaning
2022 Annual Report
the Group’s annual report for the 2022 financial year.
2022 Financial Year
the period 1 July 2021 to 30 June 2022.
2023 Annual Report
this document.
2023 Financial Year
the period 1 July 2022 to 30 June 2023.
Affiliates or Pinnacle Affiliates
Pinnacle affiliated investment managers, being Aikya, Antipodes, Coolabah, Firetrail, Five V, Hyperion,
Langdon, Longwave, Metrics, Palisade, Plato, Resolution Capital, Riparian, Solaris and Spheria.
Aikya
Antipodes
ASX Principles
Auditor
Board
Board Committees
Chair
Company
Aikya Investment Management Limited.
Antipodes Partners Limited.
the Corporate Governance Principles and Recommendations 4th Edition, published by the ASX
Corporate Governance Council.
PricewaterhouseCoopers Australia.
the Board of Directors.
the Audit, Compliance and Risk Management Committee and the Remuneration and Nominations
Committee.
Alan Watson, the Chair of the Board.
Pinnacle Investment Management Group Limited.
Company Secretary
Calvin Kwok, who held the position during the 2023 financial year.
Coolabah or CCI
Coolabah Capital Investments Pty Ltd.
Corporations Act
Corporations Act 2001 (Cth).
EOSP
Firetrail
Five V
Foundation
FUM
Pinnacle Employee Option Share Plan.
Firetrail Investments Pty Limited.
Five V Capital Pty Ltd.
the Pinnacle Charitable Foundation.
Funds Under Management.
Group or Pinnacle Group
Pinnacle and the entities that it controls.
Hyperion
Hyperion Asset Management Limited.
Key Management Personnel
the individuals identified as such on page 32 of the 2023 Annual Report.
Langdon
LTI
Longwave
Langdon Equity Partners Ltd.
long-term incentives offered to individuals who are employees of the Group.
Longwave Capital Partners Pty Limited.
Managing Director
Ian Macoun, who was appointed as an executive director on 25 August 2016.
Metrics or MCP
Metrics Credit Partners Pty Limited.
New Loans
is a reference to the loans more fully described at page 49.
NPAT
NPBT
net profit after tax.
net profit before tax.
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Annual Report
Term
Omega
Palisade
PIML
Meaning
Omega Global Investors Pty Limited.
Palisade Investment Partners Limited.
Pinnacle Investment Management Limited, the principal operating subsidiary of the Group.
PIML Acquisition
the transaction approved by shareholders on 16 August 2016, pursuant to which the Company
acquired the 24.99% equity stake in PIML it did not already own.
Pinnacle or PNI
Pinnacle Investment Management Group Limited.
Pinnacle Omnibus Plan
the Pinnacle Omnibus Incentive Plan described on page 39 of the 2023 Annual Report.
Plato
PL8
Plato Investment Management Limited.
Plato Income Maximiser Limited (ASX: PL8)
Principal Investments
investments made by the Group in listed and unlisted equities and unit trusts on its own behalf.
Resolution Capital or ResCap
Resolution Capital Limited.
Riparian
Solaris
Spheria
STI
Riparian Capital Partners Pty Limited.
Solaris Investment Management Limited.
Spheria Asset Management Pty Limited.
short-term incentives offered to individuals who are employees of the Group.
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Annual Report
02
Dear Fellow Shareholders,
I am pleased to present Pinnacle's Annual Report for the
financial year ended 30 June 2023.
Over the year, your Company has delivered Net Profit
After Tax of $76.5 million, fully diluted earnings of 39.0c
per share and full year dividends of 36c per share.
Throughout this 2023 financial year, the market
continued to grapple with the economic consequences
of the war in Ukraine, other geopolitical tensions and
global spiralling inflation, with central banks responding
by increasing interest rates at unprecedented speed.
Amongst this heightened uncertainty, we experienced
dislocation in some markets which are important to us.
For example, high growth stocks were under pressure in
the first half and rebounded strongly in the second,
whilst other market sectors – for example, REITs –
remained under pressure throughout. Against this
backdrop, we saw caution across virtually the full
spectrum of our client base with net inflows
substantially lower than we have experienced in past
years. These market and funds flow conditions served to
significantly moderate our result relative to our original
expectations.
As we have stated previously, we do not seek to predict
market conditions, but we seek to deliberately and
carefully diversify our platform, across client types,
Affiliates and asset classes, which we believe enables
the business to remain relatively resilient throughout
periods of volatility such as we have recently
experienced and provides the platform from which the
Company can prosper again once conditions become
more favourable. Throughout our history, Pinnacle and
Affiliates have continued to invest significantly, adding
additional capabilities and strategies that, over the
medium-term, provide additional sources of growth for
the Company, and this has been continued in the
current financial year. This year, together with our
Affiliate partners, around $28 million has been invested
in Horizon 2. These additional costs serve to moderate
our earnings in the short-term, yet such Horizon 2
investments have been a major driver of the Company’s
growth to date and remain an important component of
our growth strategy.
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Annual Report
Following a very modest contribution in the first half, we
were pleased that performance fees were earned this
financial year by eleven Affiliates, once again a record
breadth. Still, the revenue contribution from
performance fees was modest relative to longer term
potential at $58.2 million in aggregate, up only slightly
from $57.8 million in FY22 as, once again, none of our
large performance fee FUM strategies, other than
Coolabah and Palisade, contributed meaningfully. This is
further evidence of the strength of our diversified
platform and performance fee potential.
As a result of the circumstances described above, our
key financial results have been lower than we would
otherwise expect, with a very small increase in our
profitability compared with FY22 and a small decline in
our earnings per share. Our people continue to work
exceptionally hard in what have been difficult conditions
for generating new business, and I wish to acknowledge
their good work and thank them for their commitment
on behalf of all shareholders. As a result, we believe our
Company is in excellent shape and retains strong, high
quality capability in all areas to support the Affiliates.
Whilst we are pleased with the work ethic of our team,
we recognize that ultimately the financial results of the
Company must be a key consideration when
determining remuneration. Remuneration outcomes for
all staff have therefore been moderated significantly
from what they would have been in a normal year.
Further operational detail is discussed in the Operating
and Financial Report commencing on page 8. Details on
our approach to remuneration are described from page
29 in the Remuneration Report, including the letter from
the Chair of the Remuneration and Nominations
Committee.
During the year, two long serving Directors, Adrian
Whittingham and Gerard Bradley, retired. On behalf of
all shareholders I reiterate our thanks and gratitude to
both Adrian and Gerard for their valuable contributions
during their years as Directors. The Board is currently
undertaking a process which will increase the
independent Non-Executive Director cohort.
It has been previously advised that the Board and Ian
had agreed that Ian would remain as Managing Director
until “at least December 2023”. The Board and Ian have
regular discussions concerning his succession, and as
part of these we recognise that in businesses such as
Pinnacle, continuity and consistency of approach are
very important to all stakeholders, but particularly to
clients, Affiliates and employees. With that in mind,
following the most recent discussion between the Board
and Ian in relation to his succession, I can confirm that
his retirement is not imminent, and that both the Board
and Ian continue to approach the subject in a
deliberately flexible manner. Over the past few years,
Ian has been consistent that he would neither overstay
his tenure, nor would he leave the Company in an
inconvenient position or in a manner which might set
back the ongoing success and growth of the business.
This continues to be the case. The Board thanks Ian for
his flexibility and looks forward to working with him
over the period ahead, and will keep shareholders
appraised of plans as they develop.
Finally, we wish to again express our thanks to you, our
owners, for your continued support of our Company as
shareholders, notwithstanding the ongoing challenging
market conditions. We are grateful for your
understanding and recognition of the virtues of our
Company’s capabilities and strategies for growth over
the medium- to long-term. We look forward to
welcoming you to the Company’s Annual General
Meeting in Sydney on 27 October, 2023.
Yours sincerely,
Alan Watson
2 August 2023
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03
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Nature of operations and
principal activities
Pinnacle is a global multi-affiliate investment management
firm, headquartered in Australia. Our mission is to establish,
grow and support a diverse stable of world-class investment
management firms.
independence, including separate management
reporting structures and boards of directors, whilst
still offering the economies of scale and financial
support inherent in being part of a larger
investment group.
The principal activities of the Group during the 2023 financial
year continued to be:
Founded in 2006, Pinnacle currently consists of 15 investment
Affiliates. At 30 June 2023, the Pinnacle Affiliates collectively
managed approximately $91.9 billion in assets across a
diverse range of asset classes. Pinnacle offers the Affiliates:
building, growing and operating investment
management businesses; and
providing distribution services, business support
and responsible entity services to the Pinnacle
Affiliates.
The diagram below shows the Pinnacle Affiliates and
Pinnacle’s effective interest in each as at 30 June 2023.
equity, seed capital and working capital;
superior distribution services, business support,
product development and management and
responsible entity services, to allow investment
managers to focus on delivering investment
outperformance; and
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Annual Report
Key financial highlights
During the 2023 financial year, the Group held shareholdings (through its principal
operating subsidiary, PIML) of between 23.5% and 49.9% in each of the Pinnacle
Affiliates, which together have $91.9 billion in FUM as at 30 June 2023.
In the 2023 financial year:
Pinnacle Affiliates generated aggregate revenues (at 100%) of $511.6 million,
slightly up from $505.5 million in the previous year. Of this, $58.2 million was
performance fees ($57.8m in the previous year).
Pinnacle generated total NPAT attributable to shareholders of $76.5 million, up
0.1% from $76.4 million in the prior year.
Pinnacle’s share of NPAT from Pinnacle Affiliates was $67.4 million, down 11.0% on
the prior year.
The table below outlines the performance of the Pinnacle Group for the 2023 and
2022 financial years:
Pinnacle Affiliates (100% aggregate basis)
FY2023
FY2022
FUM ($billion)*
Revenue ($million)
Net profit before tax
Tax expense
Net profit after tax
Pinnacle Group ($million)
Revenue
Expenses
Write-down of investment
Share of Pinnacle Affiliates net profit after tax
NPBT from continuing operations attributable to
shareholders
Taxation
NPAT from continuing operations attributable to
shareholders
Discontinued operations
Total profit attributable to shareholders
Basic earnings per share (cents):
From continuing operations
Total attributable to shareholders
*Non-statutory measure
91.9
511.6
228.4
(61.1)
167.3
45.5
(36.4)
-
67.4
76.5
-
76.5
-
76.5
39.3
39.3
83.7
505.5
264.0
(70.9)
193.1
46.0
(43.5)
(1.8)
75.7
76.4
-
76.4
-
76.4
40.2
40.2
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Annual Report
1 Pinnacle FUM includes 100% of FUM managed by Pinnacle Affiliates.
2 Revenue shown is 100% of all Pinnacle Affiliates’ revenue. This is shown to indicate trend and excludes revenue derived by Pinnacle itself.
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Annual Report
Pinnacle and the Affiliates
continued to focus on
growth and diversification,
with the cost to Pinnacle
of these initiatives being in
the order of $14m
(Pinnacle share, after tax),
together with careful
exploration of attractive
expansion opportunities.
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Annual Report
Pinnacle Affiliates
Pinnacle remains strongly focused on supporting each of the Pinnacle Affiliates and assisting them to grow their businesses
and profitability over the medium-term. Pinnacle continues to carefully invest in additional resourcing ahead of further
growth, in both distribution and in infrastructure, with a continuing focus on growing the Group's international distribution
and infrastructure capabilities. Pinnacle Affiliates have also invested significantly in growth initiatives, with Pinnacle’s
continuing support.
Pinnacle also continues to explore opportunities for growth, both organic and inorganic, within Australia and
internationally.
The quality of the Pinnacle Affiliates was again affirmed and demonstrated during the year. Following is an overview of
each of the Pinnacle Affiliates during the 2023 financial year:
Aikya
Aikya Investment Management was founded in London in 2020 and specialises
in managing Emerging Markets equity portfolios. The team maintains a small
and simple organisational structure in order to avoid the bureaucracy and
distractions that often arise in larger, more complex investment management
businesses.
Aikya’s edge is their long-term approach, which primarily focuses on assessing
the quality of the business owners and managers in Emerging Markets. Aikya
looks to identify long-term stewards who have grown cash flows, navigated a
few economic cycles and demonstrated fairness to all stakeholders. Their
approach has proven over time that such people create shareholder value and
drive long-term investment returns.
Sustainability is at the heart of Aikya's investment approach. The name Aikya
means oneness in Sanskrit which reflects the team's core belief that true
stewards align their businesses with the interests of all stakeholders. Companies
that take short cuts when it comes to customers, employees, suppliers, the
environment, or broader society are unlikely to be rewarding long-term
investments.
During FY23, Aikya onboarded its first clients domiciled in the United States.
Aikya’s investment solutions are now available through vehicles domiciled in
Australia, Ireland and the United States, serving a wide range of end markets.
Antipodes Partners
Antipodes was founded in 2015 and manages global and emerging markets
equities. Its 40+ member team serves a global client base from offices in Sydney,
London and Toronto.
Antipodes adopts a ‘pragmatic value’ style and aspires to grow client wealth
over the long-term by generating absolute returns in excess of the benchmark at
below market levels of risk. Antipodes’ approach seeks to take advantage of the
market’s tendency for irrational extrapolation around change, identify great
businesses that are not valued as such and build high conviction portfolios with
a capital preservation focus.
During FY23, Antipodes continued to expand and diversify its client base and
product suite, with pooled vehicles now available in Australia, New Zealand,
Europe and the United States.
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Annual Report
Coolabah
Coolabah Capital Investments Pty Ltd (CCI) is an independent long and long-short
active credit manager founded in 2011. Pinnacle initially acquired an equity
interest in Coolabah in 2019.
CCI is responsible for managing numerous institutional mandates, the Smarter
Money Investments’ product suite and the BetaShares Active Australian Hybrid
ETF (ASX: HBRD).
CCI’s edge is in alpha generation in liquid, high-grade credit in contrast to
traditional fixed-income strategies that drive returns through adding more
interest rate duration, credit default and/or illiquidity risk (beta). This alpha is a
function of the world-class analytical insights rendered by CCI’s human capital,
which includes 38 executives with a long-term track-record of delivering
prescient insights. In 2019, CCI’s portfolio managers were selected as one of
FE fundinfo’s Top 11 “Alpha Managers” based on their risk-adjusted
performance across all asset-classes.
During FY23, CCI’s portfolios delivered class-leading performance, despite the
extraordinary volatility in global bond and interest rate markets.
Firetrail Investments
Firetrail Investments is a boutique asset manager, founded in 2018, specialising
in high conviction investing. Firetrail has a simple mission: to generate
outstanding long-term performance for its clients.
Firetrail manages Australian equities, Global equities and Alternatives strategies.
It has a diverse range of clients including superannuation funds, institutional
investors, financial advisors, HNW individuals and retail investors.
The Firetrail investment team has a deep history managing high conviction
portfolios with many senior team members working together for more than 15
years. Importantly, the firm is majority owned by its investment staff and the
team invests alongside their clients in their high conviction strategies.
During FY23, Firetrail continued to increase the depth of its investment team
and the availability of its investment products, with the Global Opportunities
Fund listed on the ASX under the ticker S3GO on 11th November, 2022.
Five V Capital
Five V Capital, a Certified B Corporation, is a leading private equity and venture
capital boutique founded in 2016. Pinnacle acquired an equity interest in Five V in
November 2021.
Five V’s strategies span private equity, growth equity and venture capital, so they
can draw on a range of unique insights and experience from both well-established
businesses primed for growth, and start-ups working on some of the newest
ideas, models and industries destined for future success. The core principle of Five
V is alignment: the team are among the largest investors in Five V’s funds and
share the entrepreneurial resilience and passion of founders to go the extra mile.
Five V partners with leading founders and businesses in Australia and New
Zealand. Their recent Venture Capital Fund II sits alongside the Five V private
equity Fund I, Fund II, Fund III, Fund IV and Venture Fund I portfolios, taking its
current funds under management to over $1.4bn.
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Annual Report
Five V believes that building long lasting, personal relationships with the people
who drive their portfolio companies, their investors and those around them
defines its success.
During FY23, Five V reached a successful first close in its VC Fund II and worked
towards the launch of its Horizons Fund, with a significantly lower investment
amount, ahead of an anticipated opening in early FY24.
Hyperion Asset Management
Hyperion Asset Management (Hyperion) was founded in 1996. The firm exists to
sustainably grow clients’ capital over the long term. When investing capital in
listed companies, it has the mindset of a long-term business owner, not a short-
term trader. The average holding period for the companies in Hyperion’s
portfolios is ten years, and long-term economic sustainability is core to its
philosophy.
Hyperion’s mindset is centred on achieving attractive long-term positive real
(inflation-adjusted) portfolio returns.
Its investment philosophy and process aim to compound returns above the
relevant passive benchmarks over long time horizons.
During FY23, Hyperion continued implementing its long-term, consistent
investment process, despite the elevated volatility in global markets.
Langdon Equity Partners
Langdon is a global and Canadian smaller companies investment boutique
founded in Toronto, Canada, in 2022. They are active and engaged owners of
world class smaller companies.
Langdon approaches the public equity markets as a long-term owner of
businesses. They are a patient, primary research-led investment firm,
performing intensive due diligence on every investment idea pursued.
Langdon is focused on high quality, growing companies that are fundamentally
undervalued, with their bottom-up process resulting a in a concentrated, high-
conviction portfolio.
During FY23, Langdon launched their inaugural funds, in Canada and Australia,
delivering above benchmark returns for their clients across all portfolios.
Longwave Capital Partners
Longwave is a boutique investment manager dedicated to delivering superior,
more consistent, long-term results through the innovative combination of
technology, experience and insight.
The founding partners of Longwave have a long history of investing in markets
and designing, building and managing highly successful investment strategies.
From pioneering the Schroders Australia small cap and micro cap strategies to
running global multi-asset portfolios, they have worked with a broad range of
institutional, retail, charitable and sovereign wealth fund clients.
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Annual Report
Longwave currently offers investors a unique, diversified small companies fund
focusing on high quality companies likely to be tomorrow’s winners.
During FY23, Longwave continued to deliver performance ahead of benchmark
whilst working to further broaden their client base.
Metrics
Metrics is an independent, alternative asset manager, founded in 2011.
Metrics is the leading Australian non-bank corporate lender with a presence in
Sydney, Melbourne and Auckland NZ. Metrics specialises in fixed income,
private credit, equity and capital markets. Through its managed funds Metrics
provides unrivalled access to the highly attractive Australian private debt market
to investors ranging from individuals to global institutions.
Metrics launched its first wholesale fund in June 2013 and is the manager of a
number of wholesale and retail investment trusts in addition to the Metrics
Master Income Trust (ASX: MXT), which successfully listed on the ASX in October
2017. Metrics’ second ASX-listed vehicle, Metrics Income Opportunities Trust
(ASX: MOT), was successfully listed on the ASX in April 2019. Pinnacle acquired
an equity interest in Metrics in August 2018, having been its distribution partner
for a number of years.
During FY23, Metrics continued to expand its operations with a focus on
growing its sustainable finance business, real estate equity funds and
distribution of a range of products to offshore investors and the further
investment in building its commercial and consumer finance product offerings.
Palisade
Palisade is a specialist, independent infrastructure manager, founded in 2007.
Palisade provides institutional and wholesale investors with access to
infrastructure assets through co-mingled funds, co-investment mandates and
tailored portfolios. Palisade’s multi-disciplinary and experienced team focuses on
attractive mid-market assets that are essential to the efficient functioning of the
communities and economies they serve.
Palisade manages investments in assets within the Transport, Energy, Utilities,
Renewables, Agri-infrastructure and Social (PPP) sectors. Each asset is specifically
targeted in sectors where Palisade believes it can exhibit a competitive advantage.
During FY23, Palisade secured its first assets in North America and continues to
work towards building out its suite of investment solutions and ability to provide
these into a wider range of end markets.
Plato Investment Management
Plato was founded in Sydney, Australia, in 2006 and is majority owned and
operated by its investment staff.
Plato is a stable, research-led organisation focused on and aligned to client
outcomes. Plato has a team of highly experienced investment professionals,
portfolio managers and quantitative analysts. Plato provides a number of actively
managed strategies, encompassing global and Australian equities, including
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Annual Report
strategies that are tailored to specific investor objectives of wealth accumulation,
income generation and downside protection.
During FY23, Plato continued to build out its suite of complementary solutions,
now offering Low Beta, Fixed Income, Enhanced Low Carbon and ESG-focused
strategies, with the ability to tailor portfolios to specific investor needs, all of
which draw from the team’s deep quantitative research base.
Resolution Capital
ResCap is a highly rated specialist global listed real assets manager, investing in
both listed real estate and infrastructure. The firm was founded in 2004 and the
investment team has a 28 year track record. The firm is majority employee-
owned by eight key staff and is headquartered in Sydney, Australia and
maintains an office in New York. The firm and staff co-invest in the funds that
ResCap manages.
ResCap is an active investment manager with the objective of delivering
superior risk adjusted long-term returns, compared with recognised industry
benchmarks. This is achieved through investment in concentrated portfolios of
carefully selected listed real estate and infrastructure securities with an
emphasis on avoiding fundamental flaws, which could reasonably result in
permanent impairment of the underlying investments. This aligns ResCap’s
investment process and security selection with clients’ objectives of long term
real wealth creation and avoids the culture of index hugging.
The firm continues to grow and diversify its investment capabilities, The firm
also continues to diversify its client base and has notably grown its funds
sourced from international markets. The firm launched an active ETMF for its
Global REIT strategy (Resolution Capital Global Property Securities Fund
(Managed Fund)) on the ASX on 22 February 2022 under the ticker RCAP.
During FY23, the firm secured a cornerstone client for its Global Listed
Infrastructure strategy and continued to grow its retail client base, in a
challenging capital raising market.
Riparian Capital Partners
Riparian is a specialist water, agriculture and food investment firm, established
in early 2019 with the specific purpose of identifying, acquiring and managing
investments across the agricultural sector.
The team has proven its ability to identify key areas for operational and
environmental efficiency, expansion and redevelopment of agri-sector assets
while driving value through active management of water portfolios and
exposures. With investments that span Australian water markets, irrigated
horticulture, annual crops and agricultural infrastructure, the team is focused on
sustainable agri-food systems that drive investor returns.
During FY23, Riparian continued to diversify and grow their client base, from
both Australia and overseas.
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Annual Report
Solaris Investment Management
Solaris is a style neutral, Australian equities fund manager, founded in 2008. The
Solaris team consists of a diverse and experienced group of investment
professionals.
Solaris uses fundamental analysis to choose stocks, to exploit market
inefficiencies in forecasts and valuations. All investment decisions are supported
by detailed analysis of the securities and key financial markets, with an eye on
the global perspective.
Solaris analysts are empowered as portfolio managers, making them fully
accountable for their investment ideas and decisions. Solaris’s tried and tested
investment process offers Core, High Alpha, Income and Long Short strategies
with after-tax investment as a specialty.
During FY23, Solaris continued to increase the depth of its team and maintain
strong ratings across all products.
Spheria
Spheria is a fundamental-based investment manager, founded in 2016,
specialising in small and micro cap companies.
Spheria’s mission is to achieve strong investment performance for its clients
with an emphasis on risk management. The team has grown to nine highly
skilled investment professionals, providing clients with deep expertise in small
and microcap investing.
Spheria’s investment philosophy is to purchase securities where the present
value of future free cash flows can be reasonably ascertained and the security is
trading at a discount to its intrinsic value. Assessing risk is fundamental to
Spheria’s investment philosophy. Explicit risk controls include a preference for
companies with low or no balance sheet gearing.
During FY23, Spheria integrated domestic and global research into a single,
unified team, with added depth.
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Annual Report
Business strategies and
prospects for future financial
years
We continue to build Pinnacle by taking a measured,
medium-term approach to growth, supporting each of
the Pinnacle Affiliates and assisting them to grow their
businesses and profitability, together with careful
exploration of expansion opportunities.
We are carefully investing in additional resources,
particularly in support of our retail and international
distribution capabilities, to enable and drive this growth.
We will also continue to invest in and seed new Affiliates
and strategies where management teams have a strong
track record and growth potential, even though this may
moderate our profitability somewhat in the short-term.
Similarly, growth initiatives are also underway in a
significant number of our Affiliates, which moderate their
profitability in the short-term but provide a range of
additional growth options over the medium-term.
Our platform is strong and sufficiently adaptable to
consider both organic and inorganic growth, both in
Australia and overseas. We will consider acquisitions only
when we believe they are complementary to our existing
core, will not place the Company at risk and offer the
potential of a high medium-term return on the capital
deployed. We retain conviction in the value potential
provided by Horizon 2 and Horizon 3 growth initiatives,
but will pursue these only when quality and price are
sufficiently compelling.
Economic conditions and
material business risks
The major business risks facing the Group are investment
market conditions and regulatory risk.
Investment market conditions
The Group’s results and outlook are influenced by
prevailing equity market conditions and by broader
economic trends and investor sentiment.
During FY23, markets experienced significant volatility as
central banks around the world implemented rapid,
globally synchronised hikes in interest rates, responding
to spiralling inflation following the supply chain
dislocation and monetary stimulation resulting from the
COVID-19 pandemic and the fallout from Russia’s invasion
of Ukraine. This initially truncated the valuations of high
growth stocks, before reversing in the second half of the
financial year as markets began to anticipate the end of
the tightening cycle, particularly in the United States.
Certain sectors of the market were more directly
impacted by the increase in lending rates; the REIT
market declined by 8.8% in the first half and a further
3.9% over the second half, as markets sought to
19
Annual Report
anticipate the impact of higher rates on property values.
Conversely, returns in floating rate fixed income and
credit were boosted by those higher underlying base
rates.
Against this uncertainty, investors across the spectrum
have remained defensively positioned. In the Australian
retail investor market, the negative sentiment that
characterised the second half of FY22 continued across
FY23 as investors and their advisors continued to grapple
with market volatility and the prospect of protractedly
higher cash rates, with industry-wide flow trends into
managed funds overwhelmingly negative. Whilst these
trends have impacted our ability to generate new
business, we have experienced modest retail net inflows
across the financial year, of $0.6 billion, underscoring the
benefits of our diversified model.
Institutionally, consolidation in the superannuation sector
continues apace, which presents both a risk, of fewer
allocators, and an opportunity, with larger allocations on
offer. We have been impacted by both during this
financial year. Overwhelmingly, major institutions remain
defensively positioned and we are not yet seeing a
significant shift back to risk assets. Having experienced
negative domestic institutional flows of $2.5 billion in the
first half of FY23, we were pleased to generate positive
net inflows of $2.3 billion in the second half; we note that
this does not appear to represent a change in the
sentiment of buyers, but is as a result of the Affiliates
seizing market share.
Outside of Australia, in a similarly challenging market for
generating new business, we are growing the assets
under management of the Affiliates and strategies, which
is a result of the careful and deliberate expansion of our
distribution capability in those markets. During the
financial year, we successfully raised in excess of $1
billion of net new money. The opportunity for the
Affiliates in those international markets remains sizeable
and we will continue to expand our capabilities to
support their growth.
We remind shareholders that our earnings and net
inflows can moderate during times of market dislocation.
As we have explained in the past, we have deliberately
sought to build a robust, diverse business that is able to
succeed across market cycles. The growth in size and
breadth of the Affiliate base is delivering clear benefits to
shareholders, with greater diversification across different
asset classes and investment strategies and enhanced
performance fee potential across a range of strategies
and market conditions.
We recognize that global economic conditions remain
uncertain due to, among other things, shifts in monetary
policy and continuing geopolitical tensions, which could
have a significant impact on wider market conditions and
sentiment. We are, however, confident that our business
is in excellent shape and there is cause for optimism for
what lies ahead.
Regulatory risk
The Group operates within a highly regulated
environment. The Group remains vigilant with regard to
regulatory requirements which are continually evolving
and, in response, Pinnacle will continue to develop its
business model to accommodate the changing
environment within which it operates. We continue to
invest in our Risk and Compliance function, including in
support of our expansion outside of Australia with the
recruitment of a Head of Risk and Compliance (UK) in
June 2023 providing additional market specific expertise.
Review of Group Results
Total net profit after tax (NPAT) attributable to
shareholders for the 2023 financial year was $76.5
million. NPAT from continuing operations attributable to
shareholders was also $76.5 million.
The Group delivered a $76.5 million total
NPAT attributable to shareholders for
the 2023 financial year, a 0.1% increase
compared with the 2022 financial year.
Pinnacle’s share of net profits from the
Pinnacle Affiliates decreased by 11.0% to
$67.4 million (of which $13.9 million was
Pinnacle's share of performance fees
earned by eleven Affiliates during the
financial year, after tax, compared with
$14.7 million from ten Affiliates in the
2022 financial year), largely due to the
ongoing spend in Affiliates in support of
future growth, as well as due to the
impact of market dislocation and lower
flows during FY23.
FUM Increased by 9.8% to $91.9 billion
in the 2023 financial year.
Of the increase in FUM over the 2023
financial year, $6.7 billion was due to
market movements/investment
performance, whilst there were net
inflows of $1.5 billion.
Diluted earnings per share attributable
to shareholders of 39.0 cents have
decreased by 1.3% from 39.5 cents.
The Board has declared a fully franked
final dividend of 20.4 cents per share
payable on 15 September 2023.
Consolidated Statement of
Comprehensive Income
The following commentary provides an analysis of
revenues and expenses for the 2023 financial year in
comparison to the prior financial year.
During the 2023 financial year, the Group’s revenues and
expenses were derived from Pinnacle and its controlled
entities, which excludes the revenues and expenses of the
20
Annual Report
Pinnacle Affiliates, the effect of which is reflected through
Pinnacle’s share of equity accounted net profits.
Revenue from Continuing Operations
Revenue from continuing operations decreased $0.5
million to $45.5 million, from $46.0 million in the prior
financial year. Shareholders will be aware that there is
typically a 'skew' in revenues towards the second half of
the financial year, when certain 'performance-based'
distribution fee revenues crystallize. Due to ongoing
dislocation and volatility in markets and the lower retail
net inflows across the financial year, these performance-
based fees were lower than might otherwise have been
expected. Revenues were $22.8 million in the first half of
the financial year and $22.7 million in the second half.
Further information regarding revenues is provided below
and at note 1 of the financial statements.
Return on financial assets at fair value
through profit or loss
This reflects the mark-to-market gains or losses on the
Group’s Principal Investments.
During the year to 30 June 2023, the Group made a net
$14.2 million return on its Principal Investments, on a
mark-to-market basis. This gain consists of distribution
and dividends received of $6.1 million, and net realized
and unrealized gains of $8.1 million. As shareholders will
be aware, we substantially hedge our direct equity
market exposure on these investments. We have a $120
million facility from the CBA, with $20 million of that
facility provided as seed capital to Palisade Real Assets to
enable them to acquire the first asset in their energy
transition portfolio, on which Pinnacle earns a preferred
return of 8% (see note 26d(iii) for further information),
with the balance of the facility invested predominantly in
non-duration and floating rate credit strategies, managed
by Affiliates. The sharp rise in central bank lending rates
has led to a significant increase in returns generated by
these strategies. Offsetting these higher returns
somewhat was the higher interest cost on our CBA
facility, which was $5.9 million in FY23 compared with
$2.2 million in FY22.
Expenses from Continuing Operations
During FY23, the Group continued to carefully add
additional resources to support future growth. Employee
benefits expense increased by $2.6 million to $22.5
million.
STI expense for FY23 was $4.7 million, down from $6.6
million in FY22. Whilst we have an outstanding group of
people who continue to perform at high levels,
remuneration challenges every year are to balance the
need to reward outstanding performance with the
interests of shareholders, both in the short- and long-
term. As our results for the year fell short of our
expectations, STI levels have been reduced accordingly.
Share of net profit of jointly controlled
entities
Share of net profit of jointly controlled entities accounted
for using the equity method relates to the Group’s share
of the profits of the Pinnacle Affiliates. Pinnacle’s share of
the net profits after tax from Pinnacle Affiliates for the
2023 financial year was $67.4 million (of which $13.9
million was Pinnacle's share of performance fees earned
by eleven Affiliates during the financial year, after tax,
compared with $14.7 million from ten Affiliates in the
2022 financial year); down 11.0% or $7.8 million on the
prior financial year. Underlying base management fees
within the Pinnacle Affiliates were slightly ahead of the
prior financial year, with costs higher than the prior year
due predominantly to spending across a number of
Affiliates in support of future growth, in new asset classes
and strategies.
Pinnacle Affiliates’ FUM, which underpins the share of
Pinnacle Affiliates’ profits, increased by 9.8% to $91.9
billion in the 2023 financial year. We remind shareholders
that a significant proportion of Affiliates' FUM is linked to
movements in equity markets which, although broadly up
across the financial year, experienced significant periods
of volatility during the year. Certain sectors of the market
(in particular, the REIT market) were down over the
financial year.
Further information is provided in note 23 to the financial
statements.
Consolidated Statement of
Financial Position
The following commentary provides an analysis of assets
and liabilities for the 2023 financial year.
Cash. Cash and cash equivalents decreased by $10.7
million to $27.6 million at year-end compared to $38.3
million at the end of the prior financial year. Cash
inflows from operating activities were $55.0 million,
which included a further $5.9 million invested in funds
managed by Affiliates and dividends received from
Affiliates of $66.1 million (compared with $68.6 million
in the prior financial year). Our facility with the CBA of
$120.0 million remained fully drawn at 30 June 2023.
Total cash and Principal Investments, net of the CBA
debt facility, was $67.2 million at 30 June 2023,
compared with $58.2 million at 30 June 2022.
Further information is provided at notes 6 and 25.
Trade and other receivables. The value of trade and
other receivables increased by $1.4 million during the
year. Further information is provided at note 7 of the
financial statements.
Financial assets at fair value through profit or loss were
$163.2 million, an increase of $20.3 million on the prior
year. During the year, Pinnacle continued to support the
Affiliates in both equity recycling and through the
provision of seed and foundation FUM for strategies
21
Annual Report
managed by the Affiliates. Of the $163.2 million, $148.5
million was held in strategies managed by Pinnacle
Affiliates. The Group substantially hedged its equity
market exposure to movements in the underlying
indices.
Assets held at amortised cost. The value of current and
non-current assets held at amortised cost increased by
$3.2 million to $6.5 million at year end. This balance
includes loans to entities under joint control. There were
advances to Affiliate executives during the current
financial year to assist with further equity recycling.
Further information is provided at note 9 of the financial
statements.
Investments accounted for using the equity method
reflects the carrying value of Pinnacle’s investments in
the Pinnacle Affiliates. This increased by $3.2 million
during the period to $328.5 million. The change is
attributable to the equity accounted profits of $67.4
million from Pinnacle Affiliates, less the dividends
received from the Pinnacle Affiliates of $66.1 million,
plus additional net capital contributed to the Pinnacle
Affiliates during the year of $1.9 million. Further
information is provided at note 23 of the financial
statements.
Intangible assets decreased by $0.3 million. Plato, the
investment manager of PL8, and the Group previously
entered into a distribution agreement for a period of
three years. The costs associated with the acquisition of
that contract were capitalized as an intangible asset and
were being amortised over the distribution agreement
period of three years that ended in September 2022.
During the prior year, Pinnacle acquired the distribution
contracts previously owned by Winston Capital Partners
for an upfront consideration of $2.0 million. The
distribution contracts acquired are being amortized over
a period of 20 years as revenues are earned. Further
Information is provided at note 13.
Trade and other payables decreased by $3.6 million to
$6.8 million. The decrease largely relates to the
reduction in accrued incentives. Further information is
provided at note 14 of the financial statements.
Provisions. The value of current and non-current
provisions increased by $0.3 million compared with the
prior financial year. The balance relates directly to the
increase in staff costs. Further information is provided at
note 15 of the financial statements.
Lease liabilities decreased by $1.2 million and Right-of-
use assets decreased by $1.2 million compared with the
prior year. The Group leases offices in Brisbane and
Sydney. Further information is provided at note 12.
Borrowings remained at $120.0 million. The Group has a
$120.0 million facility with CBA, which was fully drawn
as at 30 June 2023. The entire facility is currently
invested in certain investment strategies managed by
Affiliates. Further information is provided at note 19.
04
We are focused on continuous improvement, striving to do better by
building a long-term, sustainable firm that focuses on our
employees, customers and shareholders, as well as the communities
in which we engage.
Further information is set out in our Corporate Sustainability Report,
which can be viewed at
https://pinnacleinvestment.com/sustainability-report/.
22
Annual Report
05
23
Annual Report
Alan Watson
(Non-executive Independent Chair; member of Audit, Compliance and Risk Management Committee
and Remuneration and Nominations Committee) BSc, GAICD
Mr Watson became Chair of Pinnacle in 2016.
During his executive career, Mr Watson worked in investment banking, accumulating over 30 years of
experience within various global equity markets. During this period, he was responsible for starting
and leading a number of securities businesses both in Europe and Asia, advising many companies on
capital structuring, initial public offerings, takeovers and mergers and investment relations strategies.
Mr Watson held positions as Managing Director at Barclays de Zoete Wedd Limited, Donaldson,
Lufkin & Jenrette Securities Corporation, at Lehman Brothers Holdings Inc and as Head of Securities
Europe for Macquarie Capital (Europe) Ltd., concluding his executive career in 2011.
Subsequent to this he has been an independent director of various public companies, both in
Australia and North America. In addition to Pinnacle, currently Mr Watson is also an independent
director of Airboss of America, listed on the Toronto Stock Exchange and an independent non-
executive director of Australis Oil and Gas, listed on the ASX.
ASX Listed Company Directorships held in
last 3 years (current & recent):
Interests in shares and options at 30 June 2023
Current Director of Australis
Oil & Gas
174,172 ordinary shares in the
Company
Ian Macoun
(Managing Director) CFA, B Com, MFM, Dip FinSer (FP), FCPA, FAICD
Mr Macoun was appointed Managing Director of the Company on 17 August 2016 and an Executive
Director on 25 August 2016, having been the Managing Director and Chair of PIML since 2006. Mr
Macoun’s career to date has included more than 30 years as the CEO and chief investment officer of
investment management firms, including the establishment of Australia's first "multi-boutique" funds
management firm (Perennial Investment Partners – founding Managing Director from 1998), building
a major new investment corporation (Queensland Investment Corporation (QIC) - inaugural Chief
Executive from 1988), and the management of a major Australian bank's investment operation
(Westpac Investment Management; Managing Director from 1993).
Mr Macoun’s early experience, in more than 10 years at Queensland Treasury, included extensive
involvement with many major Australian and International financial market participants, and the
Queensland Government’s commercial participation in many major industrial development projects
during the late 1970s and the 1980s. He was a First Assistant Under Treasurer when he moved to
build and lead QIC.
Mr Macoun is also a director of the following Pinnacle Affiliates: Aikya, Antipodes, Coolabah, Firetrail
Hyperion, Langdon, Metrics, Palisade, Plato, Resolution Capital and Solaris.
ASX Listed Company Directorships held in
last 3 years (current & recent)
Interests in shares and options at 30 June 2023
None
18,276,077 ordinary shares in
the Company
Deborah Beale AM
(Non-executive Independent Director, Chair of Remuneration and Nominations Committee and
member of the Audit, Compliance and Risk Management Committee) B Comm, Grad Dip App
Fin, MBA
Ms Beale began her working career in the finance industry where she was employed by Merrill Lynch
for over a decade. She then moved to Ernst & Young where she specialised in risk management,
governance and public and government relations. Ms Beale also served and continues to serve on a
number of government, public, private and not-for-profit boards. Her broad experience includes the
areas of finance, corporate governance, risk management, government and public relations.
Ms Beale is also the Chair of the Melbourne Convention Bureau and a director of Visit Victoria.
ASX Listed Company Directorships held in
last 3 years (current & recent)
Interests in shares and options at 30 June 2023
None
129,439 ordinary shares in the
Company
24
Annual Report
Lorraine Berends
(Non-executive Independent Director, Chair of Audit Compliance and Risk Management
Committee and member of Remuneration and Nominations Committee) B Sc, FIAA, MAICD and
FASFA
Ms Berends has worked in the financial services industry for over 40 years and possesses extensive
experience in both investment management and superannuation. Before moving to a non-executive
career in 2014, she worked for 15 years with US based investment manager Marvin & Palmer
Associates. Ms Berends contributed extensively to industry associations throughout her executive
career, serving on the boards of the Investment Management Consultants Association (IMCA
Australia, now the CIMA Society of Australia) for 13 years (7 as Chair) and the Association of
Superannuation Funds Australia (ASFA) for 12 years (3 as Chair). Ms Berends has been awarded Life
Membership of both the CIMA Society and ASFA. Ms Berends holds a BSc from Monash University, is
a Fellow of the Actuaries Institute and a Fellow of ASFA.
Ms Berends is an independent non-executive director of Plato Income Maximiser Limited, Spheria
Emerging Companies Limited and Hearts and Minds Investments Limited (listed investment
companies), a company appointed director of Qantas Superannuation Limited, a non-executive
director of the Pinnacle Charitable Foundation and an independent member of the Australian
Commonwealth Games Foundation Investment Committee.
ASX Listed Company Directorships held in
last 3 years (current & recent)
Interests in shares and options at 30 June 2023
27,000 ordinary shares in the
Company
Current Director of Plato
Income Maximiser Limited
Current Director of Spheria
Emerging Companies Limited
Current Director of Hearts and
Minds Investments Limited
Former Director of Antipodes
Global Investment Company
Limited (resigned 17 December
2021)
25
Annual Report
Andrew Chambers
(Executive Director) MSc, B Arts (Hons), Grad Dip App Fin
Mr Chambers was appointed Executive Director of the Company on 1 September 2016 and is Head of
Institutional and International Distribution. He has been a senior executive with PIML since he
commenced with the firm in March 2008.
Mr Chambers has extensive multi-channel (retail, wholesale and institutional) and multi-jurisdictional
distribution experience and is currently responsible for leading the firm’s institutional and
international distribution divisions. Prior to joining Pinnacle, Mr Chambers worked for Franklin
Templeton, one of the world’s largest, multi-affiliate investment management firms.
Mr Chambers is also a director of the following Pinnacle Affiliates: Five V, Metrics, Plato and Riparian.
ASX Listed Company Directorships held in
last 3 years (current & recent)
Interests in shares and options at 30 June 2023
None
5,303,614 ordinary shares in
the Company
26
Annual Report
06
Your directors present their report on the Group, consisting of the
Company and the entities it controlled at the end of, or during, the
year ended 30 June 2023.
Directors
The directors of the Company during the whole of the financial year and up to the date of this report were:
Mr A Watson
Mr I Macoun
Ms D Beale AM
Ms L Berends
Mr G Bradley AO (retired 1 January 2023)
Mr A Chambers
Mr A Whittingham (retired 14 November 2022)
Information on the qualifications, experience and responsibilities of the directors is included in the directors’ profiles on
pages 23 to 26 of the 2023 Annual Report.
27
Annual Report
Earnings per share
From continuing operations
Basic earnings per share
Diluted earnings per share
Total attributable to shareholders
Basic earnings per share
Diluted earnings per share
Dividends
39.3
39.0
39.3
39.0
40.2
39.5
40.2
39.5
In the 2023 financial year, the following dividends were paid:
a fully franked final dividend of 17.5 cents per share on 16 September 2022.
a fully franked interim dividend of 15.6 cents per share on 17 March 2023.
Since the end of the financial year, the Company has declared:
a fully franked final dividend of 20.4 cents per share, to be paid on 15 September 2023.
Total dividends declared in respect of the FY23 financial year were 36.0 cents per share (2022: 35.0 cents per share).
Operating and Financial Review
The Operating and Financial Review can be found at pages 8 to 21 of the 2023 Annual Report.
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the Group during the reporting period.
Matters subsequent to the end of the financial year
Other than as outlined in note 30 of the financial statements at page 103, there has not arisen in the interval between the
end of the financial year and the date of this directors’ report any item, transaction or event of a material and unusual
nature likely, in the opinion of the directors of the Company, to significantly affect:
the Group’s operations in future financial years; or
the results of those operations in future financial years; or
the Group’s state of affairs in future financial years.
28
Annual Report
Remuneration Report
The Group’s 2023 Remuneration Report sets out remuneration information for the Group’s Key Management Personnel.
The Remuneration Report contains the following sections:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Letter from the Chair of the Remuneration and Nominations Committee
Key Management Personnel
Role of Remuneration and Nominations Committee
Executive remuneration policy and framework for the Company
Links between performance and outcomes
Details of Executive Key Management Personnel remuneration
Executive service agreements
Non-executive director remuneration
Share based payment compensation
10. Equity instrument disclosures relating to Key Management Personnel
11. Loans to Key Management Personnel
12. Equity Capital
Information in this Remuneration Report has been audited as required by section 308(3C) of the Corporations Act.
29
Annual Report
1.
Letter from the Chair of the Remuneration and Nominations
Committee
Dear Fellow Shareholders
In presenting the Remuneration Report for the year ended 30 June 2023 I would like to reinforce our commitment to
delivering strong results for our clients and shareholders. The complexity of the macroeconomic and geopolitical
environment, including high inflation, high energy prices, the ongoing war in Ukraine and residual pandemic effects have
resulted in understandable impacts on market volatility and challenging operating environments.
Despite these conditions, our people remain energised and determined to deliver outstanding results. We remain focused
on hiring top talent who align with our Purpose and Values and have a strong passion for serving our clients and
shareholders. The Company is committed to ongoing professional development, capability building and career growth for
our employees. Many employees progressed their career and increased their areas of responsibility in a year that saw
colleagues come back together to collaborate in person to best serve the interests of our stakeholders. We continue to
focus on providing employees with tools and resources to manage their lives and careers, and in turn deliver better overall
commercial outcomes for all.
Our pay-for-performance compensation approach strives to recognise and reward performance with competitive and fair
pay for the work performed at all levels of the Company. Pay equity is fundamental to our Purpose and Values and in FY23,
we conducted a pay equity analysis to examine employee pay. The Company aims to ensure that our reward outcomes fairly
reflect performance and the meritocratic environment in which we operate.
We believe our remuneration approach is well suited to support our ambitions and provide strong alignment with
shareholder outcomes. Our approach supports pay for performance principles and incentivises both outstanding short-term
and long-term performance. The Company continues to require an assessment of both quantitative and qualitative criteria,
which are weighted differently depending on role, to determine overall performance and remuneration outcomes. Flexibility
is preserved to enable rewarding employees whose results and impact on the business have been outstanding.
As results for shareholders this year are below the expectations we had at the start of the financial year, we have been
focused and disciplined on keeping overall remuneration outcomes modest. Recognising the impact of inflationary pressures
and a heightened competition for talent, at a Group level we have carefully adjusted salaries only in circumstances where it
was appropriate to do so. In recognition that our financial and FUM results were lower than expectations, we have
moderated short-term incentives across the organisation. LTI awards have been proposed only in circumstances where role
scope or responsibility has significantly increased. As we enter the 2024 financial year, salaries for our senior executives
remain unchanged.
Each year we report to shareholders on the key quantifiable factors which have been considered in determining STI grants
for the year. Our financial results and quantitative outcomes are discussed on page 40 of this report, and I repeat the key
factors here for completeness:
•
•
•
•
•
•
decrease in diluted earnings per share attributable to shareholders of 1.3% in the 2023 financial year; compound
annual growth rate (CAGR) in basic earnings per share attributable to shareholders of 24.2% over the five years to
30 June 2023
growth in total NPAT attributable to shareholders from $76.4 million in the 2022 financial year to $76.5 million in
the 2023 financial year; CAGR in total NPAT attributable to shareholders of 27.1% over the five years to 30 June
2023
increase in FUM from $83.7 billion as at 30 June 2022 to $91.9 billion as at 30 June 2023
net FUM inflows of $1.5 billion during the 2023 financial year
net retail FUM inflows of $0.6 billion during the 2023 financial year
81% of Affiliate strategies and products that have a track record of at least 5 years outperformed their benchmarks
over the 5 years to 30 June 2023
30
Annual Report
The process used to determine remuneration outcomes remains unchanged. The Managing Director puts forward
recommendations to the Remuneration and Nominations Committee for STI and LTI payment amounts for every eligible
person. The Remuneration and Nominations Committee reviews the recommended amounts, considers Company results
and decides on the amounts that it will recommend to the Board. Payments to KMP, and the aggregate amounts to be paid
by Pinnacle, are reported and subject to shareholder review in our Annual Report and financial statements.
Our remuneration framework is designed to attract, reward, motivate, empower and retain our most important asset, our
people. We remain confident this approach aligns the interests of our people and shareholders while meeting business
needs and strategy goals.
We hope you find the information set out in this letter and the Remuneration Report that follows to be instructive and
helpful.
Deborah Beale AM
Chair of Remuneration and Nominations Committee
31
Annual Report
2.
Key Management Personnel
This Remuneration Report provides details of the remuneration of the Key Management Personnel of the Group for the
year ended 30 June 2023. The Key Management Personnel for this period are listed in the tables below:
Alan Watson, Deborah Beale, Lorraine Berends and Gerard Bradley (retired 1 January 2023), each being
non-executive directors of the Company;
Ian Macoun, Andrew Chambers and Adrian Whittingham (retired 14 November 2022), each being
executive directors of the Company;
Dan Longan as Chief Financial Officer;
Calvin Kwok as Chief Legal and Commercial Officer.
In accordance with the Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Act
2011 (Cth), the Key Management Personnel of the Group during the year ended 30 June 2023 comprised:
Executive Key Management Personnel
Name
Ian Macoun
Position
Managing Director and Executive Director
Andrew Chambers
Executive Director
Adrian Whittingham
Executive Director (retired 14 November 2022)
Dan Longan
Calvin Kwok
Chief Financial Officer
Chief Legal and Commercial Officer
Non-Executive Key Management Personnel
Name
Alan Watson
Position
Chair
Deborah Beale AM
Non-executive Director
Lorraine Berends
Non-executive Director
Gerard Bradley AO
Non-executive Director (retired 1 January 2023)
32
Annual Report
3.
Role of Remuneration and Nominations Committee
The Remuneration and Nominations Committee is a committee of the Board. The committee performs its role consistent
with the overall objective of ensuring maximum shareholder benefit from the retention of a high quality, high performing
Board and executive team. Its responsibilities during the 2023 financial year included the following:
reviewing and making recommendations in relation to the Group’s remuneration policies and practices
to ensure that the Group provides a competitive and flexible remuneration structure; fairly and
responsibly rewards employees; recognises categories of financial and non-financial performance; links
reward to the creation of shareholder value; and adopts an appropriate balance between fixed
remuneration, short-term incentives and long-term incentives;
reviewing executive remuneration and incentives and making recommendations to the Board in
relation to share option schemes and equity participation plans;
setting the terms and conditions of the employment of the Managing Director; advising the Board on
the Managing Director’s remuneration package; and reviewing the performance of the Managing
Director at least annually including progress made towards achieving the Group’s strategic goals;
reviewing the remuneration of non-executive directors for serving on the Board or any committee
(both individually and in total) and recommending to the Board the remuneration and retirement
policies for non-executive directors having regard to market trends and shareholder interests;
setting the entitlements and expenses policy for the Chair, non-executive directors and the Managing
Director;
ensuring the Group’s remuneration policies and practices comply with the provisions of the ASX Listing
Rules and the Corporations Act and have regard to the ASX Principles;
facilitating the review of individual directors’ performance and of the Board annually;
making recommendations to the Board concerning the appointment of new directors and, to the extent
delegated to it by the Board, the Managing Director;
identifying individuals who, by virtue of their experience, expertise, skills, qualifications, backgrounds,
contacts or other qualities, are suitable candidates for appointment to the Board and recommending
individuals accordingly for consideration by the Board;
establishing procedures, for recommendation to the Chair, for the proper oversight of the Board and
management;
preparing, recommending for approval by the Board and overseeing the implementation of the
Company’s diversity policy;
on an annual basis, reviewing the proportion of women who are employed by the Company, receiving a
pay equity analysis and submitting a report to the Board outlining its findings; and
reviewing and approving relevant policies delegated to the Remuneration and Nominations Committee
by the Board.
During the 2023 financial year, the Remuneration and Nominations Committee received recommendations on the
remuneration for employees from the Managing Director. These recommendations were reviewed and, following
discussion, recommendations were made to the Board.
The Charter for the Remuneration and Nominations Committee is incorporated in the Company’s Corporate Governance
Board Charters which can be found on the Company’s website at
https://pinnacleinvestment.com/shareholders/#corporate-governance
33
Annual Report
4.
Executive remuneration policy and framework for the Company
The Board remains focused on achieving sustainable growth and attractive returns for investors in the medium to long-
term. During the 2023 financial year, we have applied our remuneration framework consisting of base salary, short-term
incentives and long-term incentives and our remuneration policy which is aimed at motivating and retaining highly-skilled
executives and aligning their interests with shareholders. Section 5 of this Remuneration Report illustrates the sustained
growth in Earnings Per Share (EPS) that the Company has delivered for its shareholders over a number of years. We made
some important changes in 2021 to the hurdles in our LTI plan to further align future outcomes for employees with our
shareholders, which we explain in further detail in the sections following.
Our approach to remuneration is aligned with our purpose, to enable better lives through investment excellence, and our
values. Pinnacle has a core set of KPIs, against which the performance of all employees is measured, in addition to KPIs set
at a team or individual level, to ensure that these values are embedded in the behaviours of all employees and considered
consistently as part of the remuneration process. These common KPIs are set out below:
Pinnacle Purpose and Values
Understand, and contribute strongly to Pinnacle’s Purpose and Values
Client Focus
Flexibility
Work Ethic
Innovation
Risk
Sustainability
Demonstrate commitment to and accountability for strong client service and satisfaction,
both with external clients and Affiliates through delivering on the promises we make to our
clients
Demonstrate flexibility and a preparedness to adapt to the changing needs of the Company
Demonstrate a strong personal work ethic and commitment to being highly productive at all
times
Contribute to a culture of innovation and continuous improvement by suggesting ways in
which we can enhance the manner in which we operate and interact with clients
Foster a risk aware culture in which business activity occurs within Pinnacle’s Risk
Management Framework and Risk Appetite Statement
Contribute to a culture of acting lawfully, ethically and responsibly by complying with our
legal, regulatory and ethical obligations in particular adhering to Pinnacle’s Code of Conduct
and policies relevant to your role
Contribute to an inclusive culture that enables performance and fosters collaboration,
leading to investment excellence
The remuneration framework and policy apply to Pinnacle employees only as Affiliates independently determine their own
remuneration practices.
Base salary
Base salary is structured as a package, which may be delivered as a combination of cash and prescribed non-financial
benefits and includes superannuation contributions.
Employees are offered a competitive base salary, which is reviewed on promotion or a substantial change in
responsibilities.
There are no guaranteed base salary increases included in any employee’s contract.
On 1 July 2021, there were revisions to the salaries of Executive Key Management personnel, recognizing the significant
increase in responsibilities across the Group as the business has grown. There were no revisions to base salaries for
Executive Key Management Personnel during FY23 and none are proposed in the annual review cycle at the
commencement of FY24.
34
Annual Report
Short-term incentives (STI)
STI is a discretionary ‘at risk’ cash incentive payment which is paid to employees on an annual basis and in accordance with
remuneration policies and the terms and conditions of employment.
The Remuneration and Nominations Committee is responsible for reviewing recommendations from the Managing
Director for STI and recommending them to the Board for approval.
All executives have an annual ‘maximum’ STI expectation (up to, but not exceeding, 100% of their base salaries) and, if
their personal performance is strong, their work unit delivers on its key objectives and overall business performance meets
or exceeds our objectives, then they should receive that expectation. We are clear that ‘results matter’ in determining
remuneration, both at an individual and overall business level, and we have regard to performance against each of the
common KPIs in determining STI, ensuring that all employees exhibit behaviours aligned with our values, together with
individual performance. We do not believe, however, that inflexible, formulaic targets against which personal performance
is measured would achieve the best outcomes for shareholders. We have a group of 15 Affiliates and supporting those
which are early in their development and those which may be facing more challenging circumstances is as important to
preserving and growing the value of our business as is continuing to deliver for Affiliates in times of great success. Certain
initiatives require a significant investment of time, with no immediate reward, in order to lay the foundation for future
growth in profitability. It is important that we are able to reward people for genuine high-performance, even when the
results of their efforts do not immediately translate into numerical success. It is on that basis that STI is largely
discretionary, with final determination by the Remuneration and Nominations Committee, following recommendations
from the Managing Director, incorporating the input of all members of the leadership group.
As well as individual performance, we also consider the performance of the business as a whole when determining STI for
any given year. During the current financial year, results fell below our expectations and, even though this was to some
extent due to circumstances outside of our control, it is important that the remuneration of our people reflects this, and
reductions are therefore being made to the ‘maximum STI’ people are eligible to receive in respect of results and
performance for FY23. We must always strike a balance between rewarding individual excellence, and recognizing that we
are accountable, as a group, for the overall outcomes of the business.
Performance against KPIs for the five Executive KMP is set out in the tables below:
Managing Director
Key Performance Indicators
Outcomes
Growth in NPAT
Growth in diluted EPS
Institutional and international net inflows, with
particular reference to the Contained Annual
Revenue of net inflows (FUM x Fee rate)
Net Retail FUM inflows
Investment performance of Affiliates
Satisfaction from Affiliate MDs with respect to
Pinnacle Distribution and Infrastructure Services
Progress of Horizon 2 and Horizon 3 initiatives
Succession plans in place for Pinnacle and Affiliate
critical roles
Drive high performance culture
Enhance operational effectiveness
No significant regulatory issues in AU, EU, USA
NPAT increased by less than 1% to $76.5m
KPI not met
Diluted EPS decreased by 1% to 39.0c per share
KPI not met
Net institutional and international FUM inflows
of $0.9 billion
Net FUM inflows low but Contained Annual
Revenue impact was positive - KPI not met
Net Retail FUM inflows of $0.6 billion
KPI not met
81% of Affiliate strategies and products that
have a track record of at least 5 years
outperformed their benchmarks over the 5
years to 30 June 2023
KPI met
KPI met
KPI met
Emergency, ready now succession plans and
medium-term succession processes in place
KPI met
KPI met
KPI met
KPI met
Financial
Growth Strategy, Client and
Investment Performance
People
Operations, Risk Management
and Regulatory
35
Annual Report
Pinnacle Purpose and Values
Client Focus
Flexibility
Work Ethic
Innovation
Risk
Sustainability
Protect and enhance the reputation of Pinnacle and
promote a culture of risk management and
disclosure
Understand, and contribute strongly to Pinnacle’s
Purpose and Values
Demonstrate commitment to and accountability for
strong client service and satisfaction, both with
external clients and Affiliates
Demonstrate flexibility and a preparedness to adapt
to the changing needs of the Company
Demonstrate a strong personal work ethic and
commitment to being highly productive at all times
Lead a culture of innovation and continuous
improvement
Lead a risk aware culture in which business activity
occurs within Pinnacle’s Risk Management
Framework and Risk Appetite Statement
Lead a culture of acting lawfully, ethically and
responsibly by complying with our legal, regulatory
and ethical obligations in particular adhering to
Pinnacle’s Code of Conduct and policies
Lead an inclusive culture that enables performance
and fosters collaboration, contributing to
investment excellence
KPI met
KPI met
KPI met
KPI met
KPI exceeded
KPI met
KPI met
KPI met
Executive Director, Institutional
and International Distribution
Key Performance Indicators
Outcomes
Financial
People
Pinnacle Purpose and Values
Client Focus
Flexibility
Work Ethic
Innovation
Risk
Sustainability
Institutional and international net inflows, with
particular reference to the Contained Annual
Revenue of net inflows (FUM x Fee rate)
Drive high performance culture
Understand, and contribute strongly to Pinnacle’s
Purpose and Values
Net institutional and international FUM inflows
of $0.9 billion
Net FUM inflows low but Contained Annual
Revenue impact was positive - KPI not met
KPI met
KPI met
Demonstrate commitment to and accountability for
strong client service and satisfaction, both with
external clients and Affiliates
KPI met
Demonstrate flexibility and a preparedness to adapt
to the changing needs of the Company
Demonstrate a strong personal work ethic and
commitment to being highly productive at all times
Lead a culture of innovation and continuous
improvement
Lead a risk aware culture in which business activity
occurs within Pinnacle’s Risk Management
Framework and Risk Appetite Statement
Lead a culture of acting lawfully, ethically and
responsibly by complying with our legal, regulatory
and ethical obligations in particular adhering to
Pinnacle’s Code of Conduct and policies
Lead an inclusive culture that enables performance
and fosters collaboration, contributing to
investment excellence
KPI met
KPI exceeded
KPI met
KPI met
KPI met
36
Annual Report
Chief Financial Officer
Key Performance Indicators
Outcomes
Financial
Clients
Process
People
Pinnacle Purpose and Values
Client Focus
Flexibility
Work Ethic
Innovation
Risk
Sustainability
Lead a culture of cost control and focus on value
Optimise aggregate costs across the Affiliates
leveraging scale
Clients (Affiliates, LICs, Pinnacle Foundation) are
satisfied with the quality and value of services
delivered
Deliver Services to Affiliates in a compliant manner
in accordance with agreed SLAs
Ensure PNI, Affiliate and Fund audits are delivered
on time and within budget
Deliver a technology platform that allows Pinnacle
and Affiliates to operate in a secure, scalable
manner
Drive high performance culture
Understand, and contribute strongly to Pinnacle’s
Purpose and Values
Demonstrate commitment to and accountability for
strong client service and satisfaction, both with
external clients and Affiliates
Demonstrate flexibility and a preparedness to adapt
to the changing needs of the Company
Demonstrate a strong personal work ethic and
commitment to being highly productive at all times
Lead a culture of innovation and continuous
improvement
Lead a risk aware culture in which business activity
occurs within Pinnacle’s Risk Management
Framework and Risk Appetite Statement
Lead a culture of acting lawfully, ethically and
responsibly by complying with our legal, regulatory
and ethical obligations in particular adhering to
Pinnacle’s Code of Conduct and policies
Lead an inclusive culture that enables performance
and fosters collaboration, contributing to
investment excellence
KPI met
KPI met
KPI met
KPI met
KPI met
KPI met
KPI met
KPI exceeded
KPI met
KPI met
KPI met
Chief Legal and Commercial
Officer and Company Secretary
Financial
Corporate Activity
Consistency and efficiency of
performance
Professional development and
additional responsibilities
People
Pinnacle Purpose and Values
Client Focus
Key Performance Indicators
Outcomes
Optimise internal and external legal counsel
spending commensurate with workload levels
KPI met
Involvement and contribution towards new
corporate activity of the Company and Affiliates,
including corporate action projects (capital raising,
acquisitions, equity arrangements) and new
strategic initiatives (Affiliates, products,
geographies)
Demonstrate ability to meet deadlines and maintain
quality of work and advice
Develop new competencies and taking on or
expanding scope of additional responsibilities
Drive high performance culture
Understand, and contribute strongly to Pinnacle’s
Purpose and Values
KPI met
KPI met
KPI met
KPI met
KPI met
Demonstrate commitment to and accountability for
strong client service and satisfaction, both with
external clients and Affiliates
KPI met
37
Annual Report
Flexibility
Work Ethic
Innovation
Risk
Sustainability
Demonstrate flexibility and a preparedness to adapt
to the changing needs of the Company
Demonstrate a strong personal work ethic and
commitment to being highly productive at all times
Lead a culture of innovation and continuous
improvement
Lead a risk aware culture in which business activity
occurs within Pinnacle’s Risk Management
Framework and Risk Appetite Statement
Lead a culture of acting lawfully, ethically and
responsibly by complying with our legal, regulatory
and ethical obligations in particular adhering to
Pinnacle’s Code of Conduct and policies
Lead an inclusive culture that enables performance
and fosters collaboration, contributing to
investment excellence
KPI met
KPI exceeded
KPI met
KPI met
KPI met
Following the assessment of each KMP’s performance as outlined above, the following STI awards were made:
KMP
Ian Macoun
Andrew Chambers
Adrian Whittingham (retired 14
November 2022)
Dan Longan
Calvin Kwok
% of Maximum STI
awarded
25%
50%
0%
50%
50%
Further detail relating to the Company’s approach to STI is set out in the letter from the Chair of the Remuneration and
Nominations Committee at the beginning of this Remuneration Report.
38
Annual Report
Long-term incentives (LTI)
LTI is designed to encourage alignment of the interests of employees with increased value to shareholders in the long-
term. Participants are granted LTI, which only vest subject to specific conditions being met by the end of the vesting
period.
LTI awards are granted at the Board’s discretion following recommendations from the Remuneration and Nominations
Committee, which has responsibility for reviewing recommendations made by the Managing Director in relation to LTI
awards.
Omnibus incentive plan
On 22 August 2018, the Board approved the Pinnacle Omnibus Incentive Plan, which constitutes a set of LTI arrangements
that provide for the ability to offer options, performance rights and loan funded shares to employees.
Executives will principally be offered loan funded ordinary shares in the Company, whereby the Company will provide
limited recourse loans to executives to acquire shares at their current market value at the time of grant. Shares issued
prior to FY21 only vest if the employee remains employed with the Group for 5 years from the time of grant, with a portion
vesting only upon the satisfaction of the following performance condition (in addition to the 5 year service condition): the
Company’s earnings per share grows by an average annual growth rate of at least 15% per annum over the 5 year period.
Shares issued from 1 July 2021 and beyond are 100% are subject to the satisfaction of various performance conditions and
employment, as follows:
o
o
o
for Operations employees, 100% of their award will vest on a graduated basis, based on EPS growing by an
average annual growth rate of at least 10% - 15% p.a. over a five-year period;
for Retail Distribution employees, 50% of their award will vest on a graduated basis, based on EPS growing by an
average annual growth rate of at least 10% - 15% p.a. over a five-year period, and the remaining 50% will be
earnt on a graduated basis, subject to the satisfaction of total annual retail net inflow targets; and
for Institutional Distribution employees, 50% of their award will vest on a graduated basis, based on EPS growing
by an average annual growth rate of at least 10% - 15% p.a. over a five-year period, and the remaining 50% will
be earnt on a graduated basis, subject to the satisfaction of Contained Annual Revenue in net inflow targets
During the 2023 financial year, 150,000 loan shares were forfeited by departing employees. Additionally, 1,017,000 loan
shares and 100,000 options were issued to existing employees.
39
Annual Report
5.
Links between performance and outcomes
During the 2023 financial year, the Managing Director conducted performance reviews of executives and made
recommendations to the Remuneration and Nominations Committee in respect of their STIs and any awards of LTI. In
making those recommendations, regard was given to the Group, team and individual performance relative to expectations
(both financial and non-financial) over the period, as well as to the degree of responsibility involved in each role.
The table below shows key financial performance indicators which have been applied consistently over many years, with
the support and encouragement of shareholders, to measure the progress of the Group’s performance during the 2023
financial year and over the last five financial years.
decrease in diluted earnings per share attributable to shareholders of 1.3% in the 2023 financial year;
compound annual growth rate (CAGR) in basic earnings per share attributable to shareholders of 24.2%
over the five years to 30 June 2023
growth in total NPAT attributable to shareholders from $76.4 million in the 2022 financial year to $76.5
million in the 2023 financial year; CAGR in total NPAT attributable to shareholders of 27.1% over the
five years to 30 June 2023
increase in FUM from $83.7 billion as at 30 June 2022 to $91.9 billion as at 30 June 2023
net FUM inflows of $1.5 billion during the 2023 financial year
net retail FUM inflows of $0.6 billion during the 2023 financial year
81% of Affiliate strategies and products that have a track record of at least 5 years outperformed their
benchmarks over the 5 years to 30 June 2023
Key indicators of the Company’s progress towards achieving its medium-term objectives included:
Net profit/(loss) after tax from continuing operations attributable to
shareholders ($m)
76.5
Total net profit/(loss) after tax attributable to shareholders ($m)
76.5
Funds Under Management ($bn)*
Net FUM Inflows*
Net Retail FUM Inflows*
Closing share price ($)
Dividend per share (cents)
Basic earnings per share (cents) from continuing operations
Diluted earnings per share (cents) from continuing operations
Basic earnings per share (cents) attributable to shareholders
Diluted earnings per share (cents) attributable to shareholders
* Non-statutory measure
91.9
1.5
0.6
9.98
36.0
39.3
39.0
39.3
39.0
76.4
76.4
83.7
0.6
3.6
7.03
35.0
40.2
39.5
40.2
39.5
67.0
67.0
89.4
16.7
4.5
32.4
32.2
58.7
3.0
0.9
30.5
30.5
54.3
6.5
2.9
11.97
3.92
4.38
28.7
38.2
36.5
38.2
36.5
15.40
15.40
18.9
18.0
18.8
17.9
18.3
17.1
18.3
17.1
40
Annual Report
6.
Details of Executive Key Management Personnel remuneration
The relative weightings of the three remuneration components for Key Management Personnel are set out in the table
below for the year to 30 June 2023.
71%
46%
100%
46%
44%
STI
17%
23%
0%
21%
22%
LTI
12%
31%
0%
33%
34%
Ian Macoun
Andrew Chambers
Adrian Whittingham
Dan Longan
Calvin Kwok
Ian Macoun
Mr Macoun’s base salary remained unchanged at $750,000 per annum (inclusive of superannuation) during the year. For
FY23, he earned an STI of $187,500 (inclusive of superannuation). STI is a performance incentive of up to 100% of base
salary awarded on the basis of meeting business and strategic objectives.
Andrew Chambers
Mr Chambers’ base salary remained unchanged at $510,000 per annum (inclusive of superannuation) during the year. For
FY23, he earned an STI of $255,000 (inclusive of superannuation). STI is a performance incentive of up to 100% of base
salary awarded on the basis of meeting business and strategic objectives.
Adrian Whittingham
Mr Whittingham’s base salary remained unchanged at $450,000 per annum (inclusive of superannuation). For FY23, he
earned an STI of nil. STI is a performance incentive of up to 100% of base salary awarded on the basis of meeting business
and strategic objectives. Mr Whittingham retired from the board on 14 November 2022 and was a KMP until this date. He
ceased employment on 31 December 2022.
Dan Longan
Mr Longan’s base salary remained unchanged at $350,000 per annum (inclusive of superannuation) during the year. For
FY23, he earned an STI of $175,000 (inclusive of superannuation). STI is a performance incentive of up to 100% of base
salary awarded on the basis of meeting business and strategic objectives.
Calvin Kwok
Mr Kwok’s base salary remained unchanged at $352,000 per annum (inclusive of superannuation) during the year. For
FY23, he earned an STI of $176,000 (inclusive of superannuation). STI is a performance incentive of up to 100% of base
salary awarded on the basis of meeting business and strategic objectives.
Remuneration details for Executive Key Management Personnel (calculated in accordance with applicable accounting
standards) are set out in the table below:
41
Annual Report
Short-term
employee
benefits
Post-
employm
ent
benefits
Cash salary
& fees
$
Cash Bonus (STI)
$
Non-
monetar
y
benefits
$
Super
annu
ation
$
Retire
-ment
Benef
its
$
Long-
term
benef
its
Long
Service
leave
$
Total
short-
term and
post-
employ-
ment
benefits
$
Share based
pay-ments
Termi
nation
benefi
ts
$
Total
$
Options & Rights (LTI)
$
Portion
of
remun
eration
at risk -
STI
%
Portion of
remunerati
on at risk -
LTI
%
Name
Managing
Director
Ian Macoun
2023
2022
722,500
187,500
722,500
375,000
-
-
27,500
27,500
--
--
937,500
11,695
129,917
1,125,000 48,358
129,917
Other Key
Management
Personnel
Andrew
Chambers
2023
2022
Adrian
Whittingham
482,500
255,000
482,500
357,000
2023*
197,500
-
2022
422,500
315,000
Dan Longan
2023
2022
Calvin Kwok
2023
2022
Totals
2023
2022
322,500
175,000
322,500
245,000
324,500
176,000
324,500
246,400
2,049,500
793,500
2,274,500
1,538,400
* Remuneration is pro-rated to 31 December 2022.
-
-
-
-
-
-
-
-
-
-
27,500
27,500
27,500
27,500
27,500
27,500
27,500
27,500
--
--
--
--
--
--
--
--
765,000
8,214
346,447
867,000
12,957
346,447
225,000
(7,930)
765,000
6,318
-
-
525,000
18,821
271,871
595,000
13,593
271,871
528,000
7,054
276,363
598,400
20,409
276,363
137,500`
--
2,980,500 37,854
1,024,598
137,500`
--
3,950,400 101,635
1,024,598
--
--
--
--
--
--
--
--
--
--
--
--
1,079,112
17%
12%
1,303,275
29%
9%
1,119,661
23%
31%
1,226,404
29%
28%
217,070
0%
0%
771,318
41%
0%
815,692
21%
33%
880,464
28%
31%
811,417
22%
34%
895,172
27%
31%
4,042,952
5,076,633
42
Annual Report
7.
Executive service agreements
Remuneration and other terms of employment for Executive Key Management Personnel are formalised in service
agreements.
Ian Macoun
Mr Macoun’s contract provides for termination by either party upon giving three months’ notice except where termination
is due to misconduct. In addition, as part of the PIML Acquisition, shareholders voted to approve the payment of
termination benefits to Mr Macoun in an amount of $900,000 or 12 months’ salary (whichever is higher), should Mr
Macoun’s employment be terminated in certain circumstances and consistent with his previous terms of employment. The
termination provisions were agreed between Mr Macoun and PIML as part of his employment agreement in 2006 when he
was initially employed by the Group. Termination benefits are not payable in the event of misconduct. No termination
benefits were paid during the 2023 financial year.
In November 2018, 300,000 loan shares were issued to Mr Macoun under the Pinnacle Omnibus Plan, approved by the
board on 22 August 2018. The shares were subject to service and performance conditions and vested after three years. The
loans are interest free and limited in recourse to the shares. They are repayable 10 years from grant date, on termination
of employment or when the underlying equity is sold, whichever occurs earlier.
Andrew Chambers
Andrew Chambers, an executive director of the Company, is engaged under an employment agreement dated 9 March
2008 and subsequently amended on 7 May 2015 and 25 August 2016. The contract provides for termination by either
party on at least three months’ notice, except where termination is due to misconduct.
In June 2009, July 2011 and January 2012, PIML advanced to Mr Chambers’ nominated shareholding entity three
unsecured, limited recourse and interest free loans to acquire shares in PIML. The loans were immediately repayable if Mr
Chambers ceased employment with the Company or sold some or all of his shares.
In November 2018, 800,000 loan shares were issued to Mr Chambers under the Pinnacle Omnibus Plan, approved by the
board on 22 August 2018. The shares are subject to service and performance conditions and will vest after five years, if
those conditions are met. The loans are interest free and limited in recourse to the shares. They are repayable 10 years
from grant date, on termination of employment or when the underlying equity is sold, whichever occurs earlier.
Adrian Whittingham
Mr Whittingham retired from the board on 14 November 2022 and ceased employment on 31 December 2022.
Dan Longan
Dan Longan, the Chief Financial Officer, is engaged under an employment agreement dated 9 November 2015. The
contract provides for termination by either party on one month’s notice except where termination is due to misconduct.
In September 2018, 150,000 loan shares were issued to Mr Longan under the Pinnacle Omnibus Plan, approved by the
board on 22 August 2018. The shares are subject to service and performance conditions and will vest after five years, if
those conditions are met. The loans are interest free and limited in recourse to the shares. They are repayable 10 years
from grant date, on termination of employment or when the underlying equity is sold, whichever occurs earlier.
In September 2020, a further 200,000 loan shares were issued to Mr Longan under the Pinnacle Omnibus Plan. The shares
are all subject to both service and performance conditions and will vest after five years, if all of those conditions are met.
The loans are interest free and limited in recourse to the shares. They are repayable on termination of employment or
when the underlying equity is sold, whichever occurs earlier.
In September 2021, a further 100,000 loan shares were issued to Mr Longan under the Pinnacle Omnibus Plan. The shares
are all subject to both service and performance conditions and will vest after five years, if all of those conditions are met.
The loans are interest free and limited in recourse to the shares. They are repayable on termination of employment or
when the underlying equity is sold, whichever occurs earlier.
43
Annual Report
Calvin Kwok
Calvin Kwok, the Chief Legal and Commercial Officer, is engaged under an employment agreement dated 10 November
2014. The contract provides for termination by either party on one month’s notice except where termination is due to
misconduct.
In September 2018, 250,000 loan shares were issued to Mr Kwok under the Pinnacle Omnibus Plan, approved by the board
on 22 August 2018. The shares are subject to service and performance conditions and will vest after five years, if those
conditions are met. The loans are interest free and limited in recourse to the shares. They are repayable 10 years from
grant date, on termination of employment or when the underlying equity is sold, whichever occurs earlier.
In September 2020, a further 200,000 loan shares were issued to Mr Kwok under the Pinnacle Omnibus Plan. The shares
are all subject to both service and performance conditions and will vest after five years, if all of those conditions are met.
The loans are interest free and limited in recourse to the shares. They are repayable on termination of employment or
when the underlying equity is sold, whichever occurs earlier.
In September 2021, a further 50,000 loan shares were issued to Mr Kwok under the Pinnacle Omnibus Plan. The shares are
all subject to both service and performance conditions and will vest after five years, if all of those conditions are met. The
loans are interest free and limited in recourse to the shares. They are repayable on termination of employment or when
the underlying equity is sold, whichever occurs earlier.
44
Annual Report
8.
Non-executive director remuneration
The structure of non-executive director remuneration is separate and distinct from that of executive remuneration.
The Board seeks to set aggregate remuneration at a level that provides the Group with the ability to attract and retain non-
executive directors with the appropriate skills and experience while incurring a cost that is acceptable to shareholders and
other stakeholders.
Non-executive directors’ fees are determined within an aggregate non-executive directors’ fee pool limit, with any increase
in the fee pool requiring approval by shareholders. The fee pool is a maximum annual limit and does not indicate that fees
will necessarily be increased according to that limit. During the previous financial year, the fee pool was increased from
$600,000 per annum to $1,200,000 per annum. The increase in the fee pool was:
-
-
to allow for some growth in non-executive directors’ remuneration now and in the future to align closer to non-
executive director remuneration of companies of similar size, profitability, growth and risk profile in the financial
services sector; and
to enable the Board to appoint up to two new non-executive directors in the future and to ensure that the
Company has the ability to remunerate competitively and attract and retain high calibre non-executive directors.
The increase in the fee pool to $1,200,000 per annum was approved by shareholders at the Company’s annual general
meeting on 26 October 2021.
Non-executive directors are able to sacrifice up to 100% of their fees in favour of immediately vesting performance rights
under the Pinnacle Omnibus Incentive Plan, as approved at the AGM on 15 November 2018. To align the interests of non-
executive directors with the long term interests of shareholders, each non-executive director is required to acquire and
hold Company shares equal to 150% of their annual gross Director Fees (inclusive of Board Committee fees). During the
2023 financial year, nil (2022: 5,274) performance rights were granted to non-executive directors; 3,516 (2022: 19,497)
were exercised during the year. The performance rights were granted in lieu of fees.
The annual fees paid to non-executive directors for Board and Committee positions are set out in the table below:
Chair
Non-executive Director
Audit Compliance and Risk Management Committee
Chair
Member
Remuneration and Nominations Committee
Chair
Member
Base fees
$240,000
$130,000
$20,000
$7,500
$20,000
$7,500
Non-executive directors do not receive, nor are eligible for, STI, any non-monetary benefits, termination allowances, long-
service leave or LTI. The Company does not provide retirement allowances for non-executive directors, which is consistent
with the guidance contained in the ASX Principles. Superannuation contributions required under the Australian
superannuation guarantee legislation are deducted from the relevant directors’ overall fee entitlements where their fees
are paid through payroll.
45
Annual Report
Total remuneration for the non-executive directors in relation to the Company, Committee positions and subsidiaries for
the 2023 financial year was $652,250 and is presented in accordance with applicable accounting standards and shown in
the table below:
Name
Non-executive Directors
Alan Watson
2023
2022
Deborah Beale AM
2023
2022
Gerard Bradley AO
2023*
2022*
Lorraine Berends
2023
2022
Totals
2023
2022
Cash salary & fees
$
Superannuation
$
Performance Rights
$
Total
$
227,107
180,875
126,527
92,692
70,871
136,461
136,878
121,212
561,383
531,240
23,518
18,088
13,285
9,269
7,441
-
14,372
12,121
58,616
39,478
-
27,704
17,688
43,039
17,688
43,039
-
-
35,376
113,782
250,625
226,667
157,500
145,000
96,000
179,500
151,250
133,333
655,375
684,500
*Includes $17,250 (2022: $34,500) fee for Pinnacle Fund Services Limited compliance committee. Mr Bradley retired from the board on 1st January 2023.
New non-executive director appointments
On appointment to the Board, new non-executive directors are provided with a letter of appointment setting out the
Company’s expectations, their responsibilities, rights and the terms and conditions of their engagement. All new non-
executive directors participate in an induction process, which covers the operation of the Board and its committees and
financial, strategic, operational and risk management issues. For further detail, refer to the Corporate Governance
Statement on the Company’s website.
46
Annual Report
9.
Share-based payment compensation
Loan Shares
The terms and conditions of each grant of equity and associated loan to Key Management Personnel is provided at pages
43 to 44. Details of the loan arrangements affecting remuneration in the previous, this or future reporting periods as at 30
June 2023 are as follows:
Share based
payments value
(i)
Vesting date
Number of
shares vested
Value ($) of
shares vested
(ii)
Final
repayment
date
Number
of
shares
forfeited
/lapsed
/sold
Value ($) of
shares
forfeited
/lapsed /sold
Date of
grant
Number of loan
shares
Loan value at
date of grant
Name
Key Management Personnel of the Group
Ian Macoun
Loan
shares
Loan
Shares
Loan
Shares
Loan
Shares
Sub-
Total
25-Aug-16 288,210
$273,799
$30,799
31-Dec-18
288,210
$1,265,242
25-Aug-16 287,888
$273,494
$33,846
31-Jan-20
287,888
$1,378,984
25-Aug-16 1,111,112
$500,000
$14,162
25-Aug-16
1,111,112
$1,955,555
15-Nov-18 300,000
$1,697,460
$649,587
14-Nov-21
300,000
$5,385,000
1,987,210
$2,744,753
$728,394
1,987,210
$9,984,781
Andrew Chambers
Loan
Shares
Loan
Shares
Loan
Shares
Loan
Shares
Loan
Shares
Sub-
Total
25-Aug-16 133,509
$126,834
$1,221
21-Mar-17 133,509
$311,076
25-Aug-16 288,210
$273,799
$30,799
31-Dec-18
288,210
$1,265,242
25-Aug-16 287,888
$273,494
$36,392
31-Dec-20
287,888
$2,044,005
25-Aug-16 1,111,112
$500,000
$14,162
25-Aug-16
1,111,112
$1,955,555
15-Nov-18 800,000
$4,526,560
$1,732,233
14-Nov-23
-
-
2,620,719
$5,700,687
$1,814,807
1,820,719
$5,575,878
Adrian Whittingham
-
-
-
-
-
-
-
-
-
-
-
25-Aug-16 1,111,112
$500,000
$14,162
25-Aug-16
1,111,112
$1,955,555
-
-
-
-
-
-
-
-
-
-
-
-
-
18-Mar-22
18-Mar-22
25-Aug-21
18-Mar-22
18-Mar-22
25-Aug-21
25-Aug-21
Loan
Shares
Loan
Shares
Sub-
Total
15-Nov-18 300,000
$1,697,460
$649,587
14-Nov-23
-
-
300,000 $1,697,460
1,411,112
$2,197,460
$663,749
1,111,112
$1,955,555
300,000 $1,697,460
Dan Longan
Loan
Shares
Loan
Shares
Loan
Shares
Sub-
Total
17-Sep-18 150,000
$1,093,755
$388,592
16-Sep-23
11-Sep-20 200,000
$1,048,080
$497,565
10-Sep-25
17-Sep-21 100,000
$1,681,750
$597,724
16-Sep-26
450,000
$3,823,585
$1,483,881
Calvin Kwok
Loan
Shares
Loan
Shares
Loan
Shares
Sub-
Total
17-Sep-18 250,000
$1,822,925
$647,653
16-Sep-23
11-Sep-20 200,000
$1,048,080
$497,565
10-Sep-25
17-Sep-21 50,000
$840,890
$298,862
16-Sep-26
500,000
$3,711,895
$1,444,080
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(i) Fair values are calculated using a Black-Scholes option pricing model that takes into account the exercise price, the terms of the arrangement, the share price at grant date and
expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the arrangement. (ii) The amount is based on the intrinsic
value of the option or right at vesting date.
47
Annual Report
10.
Equity instrument disclosures relating to Key Management
Personnel
Options and rights holdings
The number of options and rights over ordinary shares in the Company held during the 2023 financial year by the directors
of the Company and other Key Management Personnel of the Group, including personally related parties, are set out
below.
Balance start of the year
Granted as compensation
Exercised
Expired and another changes
Balance at end of the year
Shareholdings
2023
3,516
-
2022
17,739
5,274
(3,516)
(19,497)
-
-
-
3,516
The numbers of shares in the Company held during the financial year by each director of the Company and other Key
Management Personnel of the Group, including their related parties, are set out below.
Non-executive directors
Alan Watson
Lorraine Berends
Deborah Beale AM
Gerard Bradley AO (retired 1 January
2023)
Executive directors
Ian Macoun
Andrew Chambers
Adrian Whittingham (retired 14
November 2022)
Key Management Personnel
Dan Longan
Calvin Kwok
Balance at
start of year
174,172
27,000
127,681
77,430
18,276,077
5,303,614
2,228,614
450,000
514,014
-
-
-
-
-
-
-
-
-
Granted
during
reporting
year as
compensation
Received
during the
year on the
exercise of
rights
Other
changes
during the
year
Balance at the
end of the year
or on date of
ceasing to be
KMP if earlier
-
-
-
-
-
-
-
-
-
-
-
1,758
1,758
-
-
-
-
-
-
-
-
-
-
-
-
-
-
174,172
27,000
129,439
79,188
18,276,077
5,303,614
2,228,614
450,000
514,014
48
Annual Report
11.
Loans to Key Management Personnel
Details of loans made to directors of the Company and other Key Management Personnel of the Group, including their
related parties, are set out below.
(i) Aggregates for Key Management Personnel
Other
changes
during the
year
$
Balance at
start of year
$
Repayments
made
$
New Loans
Issued
$
Loan Shares
Forfeited
$
Interest paid
and payable for
the year
$
Interest not
charged
$
Balance at
end of year
$
Number
in Group at
end of year
2023
12,938,391
-
(528,132)
-
-
-
726,667
12,410,259 4
Details of options provided as remuneration to Executive Key Management Personnel are set out below.
(ii) Individuals with loans above $100,000 during the financial year
Other
changes
during the
year
$
Balance at
start of year
$
Repayments
made
$
New Loans
Issued
$
Loan Shares
Forfeited
$
Interest paid
and payable for
the year
$
Interest not
charged
$
Balance at
end of year
$
Highest
indebtedne
ss during
the year
Ian Macoun
1,522,568
Andrew Chambers 4,294,442
Adrian
Whittingham
-
Dan Longan
3,645,015
Calvin Kwok
3,476,323
-
-
-
-
-
(75,180)
(214,882)
-
(112,770)
(125,300)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
85,130
1,447,388 1,522,568
239,750
4,079,560 4,294,442
-
-
-
205,941
3,532,245 3,645,015
195,845
3,351,023 3,476,323
The loans referenced in the above table comprise:
loans originally advanced by PIML for the purpose of acquiring shares in PIML
the New Loans
loans granted under the Pinnacle Omnibus Plan.
As part of the PIML Acquisition, shareholders approved the repayment of the original loans with the proceeds of loans
reissued by the Company on 25 August 2016, as well as the advance of the New Loans. See pages 43 to 44 for further detail
on the terms of the loans.
During the year to 30 June 2022, 150,000 loan shares were issued to Key Management Personnel (having been granted in
relation to FY21). No further loan shares were Issued to Key Management Personnel during FY23. See pages 43 to 44 for
further details on the terms of the loans.
The amounts shown for interest not charged in the tables above represent the difference between the amount paid and
payable for the year and the amount of interest that would have been charged on an arms’ length basis.
End of Remuneration Report
49
Annual Report
Equity Capital
Shares under option
Unissued ordinary shares of the Company under option at 30 June 2023 are as follows:
Date options granted
Expiry date
Exercise price of options
Number under option
15 November 2018
15 November 2028
25 March 2020
25 March 2030
11 September 2020
11 September 2030
30 December 2020
30 December 2030
$5.6582
$2.9683
$5.2404
$6.8447
17 September 2021
17 September 2031
$16.8178
30 September 2022
30 September 2032
$8.6456
TOTAL
100,000
200,000
200,000
100,000
100,000
100,000
800,000
On 15 November 2018, 250,000 options were issued to overseas employees under the Pinnacle Omnibus Plan. 150,000 of
these options were forfeited by departing employees during the year ended 30 June 2021.
On 25 March 2020, 200,000 options were issued to overseas employees under the Pinnacle Omnibus Plan.
On 11 September 2020 and 30 December 2020, 200,000 and 100,000 options respectively were issued to overseas
employees under the Pinnacle Omnibus Plan.
On 17 September 2021, 100,000 options were issued to overseas employees under the Pinnacle Omnibus Plan.
On 30 September 2022, 100,000 options were issued to overseas employees under the Pinnacle Omnibus Plan.
50
Annual Report
Meetings of Board and Board Committees
The number of meetings of the Company’s Board and of the Board Committees held during the year ended 30 June 2023
and the number of meetings attended by each director were as follows:
Board
Audit, Compliance and Risk
Management Committee
Remuneration and Nominations
Committee
Attended
Eligible to Attend
Attended
Eligible to Attend
Attended
Eligible to Attend
A Watson
I Macoun
D Beale AM
12
12
12
G Bradley AO (retired
1 January 2023)
6
L Berends
A Chambers
12
12
12
12
12
6
12
12
6
6
6
3
6
-
3*
-**
6
3
6
-
8
8
8
4
8
-
8
-**
8
4
8
-
A Whittingham
(retired 14 November
2022)
* A Watson was appointed member of the Audit, Compliance and Risk Management Committee (ACRMC) on 30 January 2023. Prior to 30 January 2023, A Watson attended ACRMC
meetings by invitation.
** I Macoun attended respective meetings by invitation.
3
3
-
-
-
-
Board Committee Membership
As at the date of this report, the Company had an Audit, Compliance and Risk Management Committee and a
Remuneration and Nominations Committee.
Members acting on the Board Committees are:
Audit, Compliance and Risk Management
Committee
L Berends (Chair)
D Beale AM
A Watson
Company Secretary
Remuneration and Nominations Committee
D Beale AM (Chair)
L Berends
A Watson
The role of Company Secretary is performed by Mr Calvin Kwok. Mr Kwok is also Chief Legal and Commercial Officer of the
Company with prior experience at Herbert Smith Freehills, UBS Global Asset Management and Deutsche Bank. Mr Kwok
holds a Masters of Applied Finance, a Graduate Diploma of Applied Corporate Governance, a Bachelor of Laws and a
Bachelor of Commerce.
Environmental regulation
The Group is not affected by any significant environmental regulation in respect of its operations.
51
Annual Report
Insurance of officers
The Company has paid a premium for a contract insuring all directors and executive officers of the Company and certain
related bodies corporate against all liabilities and expenses arising as a result of work performed in their respective
capacities, to the extent permitted by law. The directors have not included in this report details of the nature of the
liabilities covered or the amount of the premium paid in respect of the directors and executive officers insurance liability
contract as disclosure is prohibited under the terms of the contract.
The Company has agreed to indemnify each person who is, or has been, a director, officer or agent of the Company and/or
of certain of its related bodies corporate against all liabilities to another person (other than the Company or a related body
corporate) that may arise from their position as director, officer or agent, except where the liability arises out of conduct
involving a lack of good faith. The Company is required to meet the full amount of any such liabilities, including costs and
expenses for a period of seven years.
No liability has arisen since the end of the previous financial year which the Company would, by operation of the above
indemnities, be required to meet.
Audit and non-audit services
The Company may decide to employ the Auditor (PricewaterhouseCoopers Australia) on assignments additional to their
statutory audit duties.
Details of the amounts paid or payable to the Auditor for audit and non-audit services provided during the year are set out
below.
The Board has considered the position and, in accordance with the advice received from the Audit, Compliance and Risk
Management Committee, is satisfied that the provision of the non-audit services is compatible with the general standard
of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-
audit services by the Auditor, as set out below, did not compromise the auditor independence requirements of the
Corporations Act 2001 for the following reasons:
all non-audit services have been reviewed by the Audit, Compliance and Risk Management Committee
to ensure they do not impact the impartiality and objectivity of the Auditor; and
none of the services undermine the general principles relating to auditor independence as set out in
APES 110 Code of Ethics for Professional Accountants, including reviewing or auditing the Auditor’s own
work, acting in a management or a decision-making capacity for the Company, acting as advocate for
the Company or jointly sharing economic risk and rewards.
52
Annual Report
During the 2023 financial year the following fees were paid or are payable for services provided by the Auditor, its related
practices and non-related audit firms:
(i) Audit and other assurance services
Audit and review of financial statements
289,635
291,100
Other assurance services:
Audit of regulatory returns
Audit of compliance plan – Responsible entity *
Other assurance services
25,560
131,905
-
24,000
137,350
-
Total remuneration for audit and other assurance services
447,100
452,450
(ii) Taxation services
Tax services
Total remuneration for taxation services
(iii) Other services
Other services
Total remuneration of PricewaterhouseCoopers Australia
Total remuneration of auditors
37,165
37,165
-
484,265
484,265
56,657
56,657
-
509,197
509,197
* Compliance plan audit charges are on-charged to managed funds to which responsible entity services are provided.
Auditor’s independence declaration
A copy of the Auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out
on page 55 of the 2023 Annual Report.
Rounding of amounts
The Company 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.
Auditor
PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act. This report is made in
accordance with a resolution of directors.
A Watson
Chair
Pinnacle Investment Management Group Limited
Sydney
2 August 2023
53
Annual Report
07
54
Annual Report
Auditor’s Independence Declaration
As lead auditor for the audit of Pinnacle Investment Management Group Limited for the year ended 30
June 2023, I declare that 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; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Pinnacle Investment Management Group Limited and the entities it
controlled during the period.
Ben Woodbridge
Partner
PricewaterhouseCoopers
Brisbane
2 August 2023
PricewaterhouseCoopers, ABN 52 780 433 757
480 Queen Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001
T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
5
Annual Report
5
08
Pinnacle Investment Management Group Limited
ABN 22 100 325 184
Financial Report – 30 June 2023
Contents
Consolidated statement of profit or loss
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
57
58
59
60
61
62
These financial statements are the consolidated financial statements of the consolidated entity consisting of Pinnacle
Investment Management Group Limited and its subsidiaries. The financial statements are presented in the Australian
currency.
Pinnacle Investment Management Group Limited is a Company limited by shares, incorporated and domiciled in Australia.
Its registered office is Level 19, 307 Queen St, Brisbane QLD 4000 and its principal place of business is Level 25, 264 George
Street, Sydney NSW 2000.
A description of the nature of the consolidated entity’s operations and its principal activities is included in the directors'
report, which is not part of these financial statements.
These financial statements were authorised for issue by the directors on 2 August 2023. The directors have the power to
amend and reissue the financial statements.
Through the use of the internet, we have ensured that our corporate reporting is timely and complete. All press releases,
financial reports and other information are available at the ‘about us’ and investor relations pages on our website:
www.pinnacleinvestment.com/shareholders-investor-centre
56
Annual Report
Consolidated statement of profit or loss
For the year ended 30 June 2023
Revenue from contracts with customers and other revenue
1
45,513
45,997
Fair value gains/(losses) on financial assets at fair value through profit or loss
8,095
(3,875)
Fair value gains/(losses) on financial assets at fair value through profit or loss (non-current)
600
-
Notes
2023
$’000
2022
$’000
Employee benefits expense
Short-term incentives expense
Long-term incentives expense
Professional services expense
Property expense
Travel and entertainment expense
Technology and communications expense
Donations
Finance cost
(22,541)
(19,991)
(4,711)
(6,586)
28
(3,408)
(2,848)
(1,817)
(1,681)
2
(1,308)
(973)
(1,076)
(676)
(1,842)
(1,484)
(709)
(760)
(6,064)
(2,382)
(1,619)
(2,251)
-
(1,811)
Other expenses from operating activities
Provision for impairment of jointly controlled entities
2
23
Share of net profit of associates and joint ventures accounted for using the equity method
23(d)
67,359
75,686
Profit before income tax
Income tax expense
76,472
76,365
3
-
-
Profit from continuing operations
76,472
76,365
Profit/(loss) from discontinued operations (attributable to equity holders of the Company)
-
-
Profit for the year
Profit for the year is attributable to:
76,472
76,365
Owners of Pinnacle Investment Management Group Limited
76,472
76,365
Earnings per share:
Cents
Cents
For profit from continuing operations attributable to owners of Pinnacle Investment Management Group Limited
Basic earnings per share
Diluted earnings per share
For profit attributable to owners of Pinnacle Investment Management Group Limited
Basic earnings per share
Diluted earnings per share
The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes.
5
5
5
5
39.3
39.0
39.3
39.0
40.2
39.5
40.2
39.5
57
Annual Report
Consolidated statement of comprehensive income
For the year ended 30 June 2023
Profit for the year
Other comprehensive income:
Items that may be reclassified to profit or loss
Notes
2023
$’000
2022
$’000
76,472
76,365
Changes in the fair value of financial assets at fair value through other comprehensive income
-
-
Total comprehensive income/(loss) for the year
76,472
76,365
Total comprehensive income for the year is attributable to:
Owners of Pinnacle Investment Management Group Limited
Total comprehensive income for the year attributable to owners of Pinnacle Investment Management
Group Limited arises from:
Continuing operations
Discontinued operations
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
76,472
76,472
76,365
76,365
76,472
76,365
-
-
76,472
76,365
58
Annual Report
Consolidated statement of financial position
For the year ended 30 June 2023
Notes
2023
$’000
2022
$’000
6
7
8
13
9
23
8
13
12
11
14
12
19
15
12
19
15
27,616
24,632
38,265
23,258
159,594
139,912
-
911
167
552
212,753
202,154
328,465
325,252
3,600
76
1,821
336
5,585
3,000
111
1,921
1,584
2,736
339,883
334,604
552,636
536,758
6,834
357
20,137
2,414
29,742
10,445
1,223
85
2,236
13,989
-
348
100,000
120,000
321
237
100,321
120,585
130,063
134,574
422,573
402,184
16
17(a)
17(b)
418,479
412,066
(43,282)
(47,099)
47,376
37,217
422,573
402,184
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Financial assets at fair value through profit or loss
Intangible assets
Assets held at amortised cost
Total current assets
Non-current assets
Investments accounted for using the equity method
Financial assets at fair value through profit or loss
Property, plant and equipment
Intangible assets
Right-of-use assets
Assets held at amortised cost
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Lease liabilities
Borrowings
Provisions
Total current liabilities
Non-current liabilities
Lease liabilities
Borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained Earnings/(Losses)
Total equity
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
59
Annual Report
Consolidated statement of changes in equity
For the year ended 30 June 2023
Balance at 1 July 2021
266,274
(50,494)
28,112
243,892
Total comprehensive income for the year
-
-
76,365
76,365
Contributed
equity
$’000
Reserves
$’000
Retained
earnings
$’000
Notes
Total equity
$’000
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS:
Share-based payments
17(a)
-
2,848
Institutional placement (net of issue costs)
Shares issued via underwritten DRP
108,876
31,158
Dividends paid to shareholders
18
1,379
-
-
2,848
108,876
31,158
(67,260)
(65,881)
114
4,812
-
-
-
-
(15)
562
129
16, 17(a) 4,250
145,792
3,395
(67,260)
81,927
412,066
(47,099)
37,217
402,184
412,066
(47,099)
37,217
402,184
Performance rights
Employee loan arrangements
Balance at 30 June 2022
Balance at 1 July 2022
Total comprehensive income for the year
-
-
76,472
76,472
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS:
Share-based payments
17(a)
-
3,408
Shared issued on exercise of options
Dividends paid to shareholders
Performance rights
1,572
18
3,234
64
Employee loan arrangements
16, 17(a) 1,543
-
-
(29)
438
-
-
3,408
1,572
(66,313)
(63,079)
35
-
1,981
6,413
3,817
(66,313)
(56,083)
Balance at 30 June 2023
418,479
(43,282)
47,376
422,573
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
60
Annual Report
Consolidated statement of cash flows
For the year ended 30 June 2023
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Notes
2023
$’000
2022
$’000
40,646
40,248
(41,291)
(37,608)
Dividends and distributions received from financial assets at fair value through profit or loss
905
916
Dividends and distributions received from jointly controlled entities
66,090
68,591
Interest received
Finance and borrowings costs paid
Proceeds from disposal of financial assets at fair value through profit or loss
Payments for financial assets at fair value through profit or loss
551
(6,002)
85,568
130
(2,279)
66,081
(91,426)
(151,005)
Net cash inflow/(outflow) from operating activities
25
55,041
(14,926)
Cash flows from investing activities
Payments for property, plant and equipment
Proceeds from sale of investments accounted for using the equity method
Payments for intangible assets
(9)
-
-
(13)
2,907
(2,000)
Payments for investments accounted for using the equity method
(4,389)
(140,927)
Loan repayments from employee shareholders
Loan repayments from related parties
Loan advances to related parties
Net cash inflow/(outflow) from investing activities
Cash flows from financing activities
Dividends paid to shareholders
Lease payments
Proceeds from borrowings
Proceeds from issue of shares, net of issue costs
Net cash (outflow)/inflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at end of year
6
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
1,980
734
(1,276)
(2,960)
4,813
872
(1,375)
(135,723)
(63,079)
(65,881)
(1,223)
-
(1,375)
20,000
1,572
140,034
(62,730)
92,778
(10,649)
(57,871)
38,265
27,616
96,136
38,265
61
Annual Report
Notes to the consolidated financial statements
Group Results
1
2
3
4
5
Revenue
Expenses
Income tax expense
Segment information
Earnings per share
Operating Assets and Liabilities
6
7
8
9
10
11
12
13
14
15
Cash and cash equivalents
Trade and other receivables
Financial assets at fair value through profit or loss
Assets held at amortised cost
Net deferred tax assets
Assets held at amortised cost – non-current
Leases
Intangible assets
Trade and other payables
Provisions
Capital and Financial Risk Management
16
17
18
19
20
21
Group Structure
22
23
24
Other Notes
25
26
27
28
29
30
31
32
Contributed equity
Reserves and retained earnings
Dividends
Borrowings and financing arrangements
Financial risk management
Contingencies and commitments
Subsidiaries
Investments accounted for using the equity method
Parent Entity financial information
Additional cash flow information
Related party transactions
Key Management Personnel
Share-based payments
Remuneration of auditors
Events occurring after the reporting period
Critical accounting estimates and judgements
Summary of significant accounting policies
62
Annual Report
Page
63
64
64
65
66
67
67
68
68
69
69
70
71
72
72
73
75
76
77
78
85
86
87
90
91
92
94
95
103
103
104
105
Group Results
This section provides information regarding the results and performance of the group during the year, including further
detail regarding revenue and expenses, income tax, segment reporting and earnings per share.
1. Revenue from contracts with customers and other income
a) Disaggregation of revenue from contracts with customers and other income
The Group derives its revenue from contracts with customers from the transfer of services over time. A disaggregation of
the Group’s revenue is shown below.
Revenue from contracts with customers
Service charges – over time
Other income
Interest received or due
Dividends and distributions
Other income
Total revenue and other income
Dividends and distributions are received from financial assets held at fair value through profit or loss.
2023
$’000
38,650
38,650
727
6,136
-
6,863
45,513
2022
$’000
41,771
41,771
126
3,923
177
4,226
45,997
63
Annual Report
2. Expenses
PROFIT BEFORE INCOME TAX INCLUDES THE FOLLOWING SPECIFIC EXPENSES:
Finance cost expense – included in other expenses from operating activities
Interest and finance charges
Total finance cost expense
Lease amortisation expense – included in property costs
Depreciation and amortisation expense – included in other expenses from operating activities
Depreciation – property, plant and equipment
Amortization - intangible assets
Total depreciation and amortisation expense
3. Income tax expense
a) Income tax expense/(benefit)
Income tax expenses is attributable to:
Continuing operations
Discontinued operations
Total income tax expense/(benefit)
Current tax
Deferred tax
Adjustments for tax in respect of prior periods
Total current tax expense
Deferred income tax expense/(benefit) included in income tax expense/(benefit) comprises:
(Increase)/decrease in deferred tax assets
Increase in deferred tax liabilities
Total deferred tax expense/(benefit)
2023
$’000
6,064
6,064
1,247
43
267
310
2022
$’000
2,382
2,382
1,330
55
937
992
2023
$’000
2022
$’000
-
-
-
-
-
-
1,637
5,379
(1,637)
(5,379)
-
-
1,637
-
1,637
-
-
5,379
-
5,379
b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit from continuing operations before income tax expense
76,472
76,365
Profit /(Loss) from discontinued operations before income tax expense
Profit before income tax
Tax at the Australian tax rate of 30% (2022: 30%)
-
76,472
22,942
-
76,365
22,910
64
Annual Report
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Share of profits of entities under joint control
(20,208)
(22,163)
Impairment
Non-deductible expenditure
Sundry items
Adjustments for current tax in respect of prior periods
Deferred tax assets not recognised
Total income tax expense/(benefit)
c) Tax losses not recognised
-
1,092
2,995
6,821
-
-
928
2,659
4,334
-
(6,821)
(4,334)
-
-
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit at 30%
19,978
5,993
25,076
7,523
A deferred tax asset in relation to tax losses is regarded as recoverable and therefore recognised only when, on the basis of
all 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 have not
been recognised in full on the basis that there remains uncertainty regarding the timing and quantum of the generation of
taxable profits.
d) Tax consolidation legislation
Pinnacle Investment Management Group Limited and its wholly-owned Australian controlled entities implemented the tax
consolidation legislation from 1 July 2003. Next Financial Holding Company Pty Ltd (see note 22) and its subsidiaries joined
the tax consolidated group on 1 April 2009. Pinnacle Investment Management Limited and its subsidiaries joined the tax
consolidated Group on 25 August 2016. The accounting policy in relation to this legislation is set out in note 32(f) and
further information is provided at Note 32(z).
4. Segment information
The Group operates one business segment being the funds management operations of Pinnacle. The business is principally
conducted in one geographic location, being Australia.
65
Annual Report
5. Earnings per share
a) Basic earnings per share
From continuing operations
2023
Cents
39.3
Total basic earnings per share attributable to the ordinary equity shareholders of the Company
39.3
b) Diluted earnings per share
Attributable to the ordinary equity shareholders of the Company
From continuing operations
39.0
Total diluted earnings per share attributable to the ordinary equity shareholders of the Company
39.0
c) Reconciliations of earnings used in calculating earnings per share
Basic and diluted earnings per share
2022
Cents
40.2
40.2
39.5
39.5
Profit/(loss) attributable to the ordinary owners of the Company used in calculating basic and diluted earnings per share:
From continuing operations
Profit used in calculating basic and diluted earnings per share
76,472
76,472
76,365
76,365
d) Reconciliations of earnings used in calculating earnings per share
Weighted average number of ordinary shares used as the denominator in calculating basic earnings
per share
194,353,235
189,938,458
Adjustments for calculation of diluted earnings per share:
Weighted average treasury stock (see note 16(d))
1,402,386
2,709,553
Weighted average options
340,502
596,702
Weighted average number of ordinary and potential ordinary shares used as the denominator in
calculating diluted earnings per share
196,096,123
193,244,713
e)
Information concerning the classification of securities
Options and loan shares granted to employees under the employee share schemes are considered to be potential ordinary
shares and have been included in the determination of diluted earnings per share to the extent to which they are dilutive.
The options and loan shares have not been included in the determination of basic earnings per share.
66
Annual Report
Operating assets and liabilities
This section provides information regarding the assets and liabilities of the entity and includes more detailed breakdowns
of individual balance sheet items.
6. Cash and cash equivalents
Available cash at bank and on hand
2023
$’000
27,616
27,616
2022
$’000
38,265
38,265
a) Risk exposure
The Group's exposure to interest rate risk is discussed in note 20. The maximum exposure to credit risk at the end of each
reporting period is the carrying amount of each class of cash and cash equivalents mentioned above.
b)
Fixed term and at call deposits
Fixed-term and at-call deposits bear floating interest rates between 0.25% and 5.21% (2022: 0.01% and 0.25%). At-call
deposits have an average maturity of 30 days. Fixed-term deposits have a maturity ranging from 90 days to 1 year.
7. Trade and other receivables
Trade receivables
Income receivables
Other receivables
Prepayments
2023
$’000
6,276
2022
$’000
7,347
14,422
12,516
3,043
891
2,657
738
24,632
23,258
a) Fair values of trade and other receivables
Due to the short-term nature of the current receivables, their carrying amount is considered to be the same as their fair
value.
b) Impairment and risk exposure
Information about the impairment of trade and other receivables and the Group's exposure to credit risk, foreign currency
risk and interest rate risk can be found in note 20(a) and 20(b).
67
Annual Report
8.
Financial assets at fair value through profit or loss
Current
Australian listed equity securities
Unlisted unit trusts*
Derivative financial assets
Other unlisted instruments
*see note 20 for further details
Non-current
Unlisted equity securities
2023
$’000
14,884
2022
$’000
7,430
120,818
126,749
3,716
20,176
5,151
582
159,594
139,912
2023
$’000
3,600
3,600
2022
$’000
3,000
3,000
Risk exposure and fair value measurements
Information about the Group's exposure to price risk and the methods and assumptions used in determining fair value is
provided in note 20(d). See also note 26.
9. Assets held at amortised cost
Loans to entities under joint control
2023
$’000
911
911
2022
$’000
552
552
Loans to entities under joint control includes any adjustments for accumulated equity accounted losses where the
associated equity investment value is less than zero as a result of accumulated losses being greater than the carrying value
of the investment.
68
Annual Report
10. Net deferred tax assets
Deferred tax assets (a)
Deferred tax liabilities (b)
Net deferred tax assets
a) Deferred tax assets
The deferred tax asset balance comprises temporary differences attributable to:
Unrealised loss on fair value assets
Lease liabilities
Other
Total deferred tax assets
Set-off of deferred tax liabilities pursuant to set-off provisions
Net deferred tax assets
2023
$’000
2,618
(2,618)
-
-
-
2,478
2,478
(2,478)
-
2022
$’000
579
(579)
-
54
475
50
579
(579)
-
A deferred tax asset in relation to tax losses is regarded as recoverable and therefore recognised only when, on the basis of
all available evidence, it can be regarded as probable that there will be suitable taxable income against which to recover
the losses and from which the future reversal of underlying timing differences can be deducted. The deferred tax assets of
the consolidated entity are currently not recognised under these criteria - refer note 3(c).
b) Deferred tax liabilities
The deferred tax liabilities balance comprises temporary differences attributable to:
Financial assets at fair value through profit or loss
1,603
579
2023
$’000
2022
$’000
Intangible assets
Right-of-use assets
Receivables
726
101
48
-
-
-
Total deferred tax liabilities
2,478
579
11.
Assets held at amortised cost – non-current
Loans to entities under joint control
Note
26
2023
$’000
5,585
5,585
2022
$’000
2,736
2,736
As outlined in note 32(l)(ii) loans to entities under joint control (including affiliate executives) are assessed at least annually
for possible indicators of impairment. Where indicators of impairment exist, the recoverability of these loans is
determined. If the carrying amount exceeds the recoverable amount an impairment expense is recorded. See note 26.
69
Annual Report
12. Leases
The Group leases offices in Brisbane and Sydney. Rental contracts are typically made for fixed periods of 3 – 5 years. See
note 32(g) for further details. The Group moved to new premises in Sydney on 2 July 2023, with a new lease commencing
on that date.
The balance sheet shows the following amounts relating to leases:
RIGHT-OF-USE ASSETS
30 June 2023
$'000
30 June 2022
$'000
Office leases
4,249
4,249
Office leases – accumulated amortization
Additions to the right-of-use assets during the 2023 financial year were $nil (2022: $nil)
LEASE LIABILITIES
Current
Non-current
The statement of profit or loss shows the following amounts relating to leases:
DEPRECIATION CHARGE OF RIGHT-OF-USE ASSETS (INCLUDED IN PROPERTY EXPENSES)
Office leases
Interest expense (included in other expenses from operating activities)
(3,913)
(2,665)
336
1,584
357
-
357
1,247
1,247
10
1,223
348
1,571
1,330
1,330
40
70
Annual Report
13. Intangible assets
Software
$'000
Customer Contracts
$'000
Total
$'000
15
(15)
-
-
-
-
-
15
(15)
-
-
-
-
-
15
(15)
-
2,574
2,589
(1,549)
(1,564)
1,025
1,025
1,025
2,000
(937)
2,088
1,025
2,000
(937)
2,088
4,574
4,589
(2,486)
(2,501)
2,088
2,088
2,088
-
(267)
1,821
2,088
-
(267)
1,821
4,574
4,589
(2,753)
(2,768)
1,821
1,821
AT 1 JULY 2021
Cost
Accumulated amortisation
Net book value
YEAR ENDED 30 JUNE 2022
Opening net book value
Additions
Amortisation charge
Closing net book value
AT 30 JUNE 2022
Cost
Accumulated amortisation
Net book value
YEAR ENDED 30 JUNE 2023
Opening net book value
Additions
Amortisation charge
Closing net book value
AT 30 JUNE 2023
Cost
Accumulated amortisation
Net book value
71
Annual Report
14. Trade and other payables
Trade payables
Accrued expenses
Accrued bonuses
Other payables
15. Provisions
Current
Employee benefits - annual leave and long service leave
Non-Current
Employee benefits - long service leave
a) Movements in provisions
Movements in each class of provision during the financial year, are set out below:
Current
BALANCE AT 1 JULY 2022
Amounts provided for during the year
Balance at 30 June 2023
Non-Current
BALANCE AT 1 JULY 2022
-
Amounts provided for during the year
-
Balance at 30 June 2023
72
Annual Report
2023
$’000
1,008
723
4,569
534
6,834
2023
$’000
2,414
2,414
321
321
-
2022
$’000
2,115
1,017
6,675
638
10,445
2022
$’000
2,236
2,236
237
237
Employee Benefits
$'000
2,236
178
2,414
237
84
321
16. Contributed equity
a) Share capital
Ordinary shares:
2023
Shares
2022
Shares
2023
$'000
Fully paid contributed equity (b)
194,601,091
193,860,297
418,479
Total contributed equity
194,601,091
193,860,297
418,479
2022
$'000
412,066
412,066
b) Movements in ordinary share capital
Date
Details
Number of shares
Issue price
$'000
1 July 2021
Opening balance
178,467,333
266,274
Share purchase plan, net of costs
420,436
$16.14
6,720
Share placement, net of costs
6,287,426
$16.70
102,156
Issue of ordinary shares via underwritten DRP, net of costs
1,884,272
$16.82
31,158
Issue of ordinary shares on exercise of performance rights
19,497
Transfer from performance rights reserve on exercise of
performance rights
-
-
-
-
129
Dividend reinvestment
Treasury stock vested (d)
30 June 2022
Closing Balance
114,661
$12.03
1,379
6,666,672
193,860,297
4,250
412,066
Issue of ordinary shares on exercise of options
400,000
$3.93
1,572
Issue of ordinary shares on exercise of performance rights
Transfer from performance rights reserve on exercise of
performance rights
Dividend reinvestment
Treasury stock vested (d)
30 June 2023
Closing Balance
c) Ordinary shares
3,516
-
-
-
-
64
337,278
$9.59
3,234
-
194,601,091
1,543
418,479
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy is entitled to one vote and
upon a poll each share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
73
Annual Report
d) Treasury stock
Treasury stock are shares in Pinnacle Investment Management Group Limited that are subject to share mortgage under
employee loans used for the purposes of acquiring interests in the Company. The value ascribed to treasury stock is the
value of the loans secured by share mortgage at period end.
Treasury stock movement for the year includes the issue of 1,017,000 and the forfeiture of 150,000 loan shares to
employees, issued under the Pinnacle Omnibus Plan approved by the board on 22 August 2018.
Date
Details
1 July 2021
Opening balance
Number of treasury
shares
$'000
12,116,672
34,400
Issue of loan shares under Pinnacle Omnibus Plan
700,000
11,776
Forfeited loan shares
(450,000)
(2,473)
Treasury stock vested during the year
(6,666,672)
(4,250)
30 June 2022
Closing Balance
5,700,000
39,453
Issue of loan shares under Pinnacle Omnibus Plan
1,017,000
8,792
Forfeited loan shares
(150,000)
(1,285)
Treasury stock vested during the year
-
(1,543)
30 June 2023
Closing Balance
6,567,000
45,417
e) Employee share plans
Information relating to the Pinnacle Investment Management Group Employee Option Share Plan and Pinnacle Omnibus
Plan, including details of options issued, exercised and lapsed during the financial year and options outstanding at the end
of the financial year, is set out in note 28.
f) Capital risk management
The Group's objective when managing capital is to safeguard its ability to continue as a going concern, so it can continue to
provide returns for shareholders, benefits for other stakeholders and to maintain an optimal capital structure to reduce
the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets.
The Group monitors capital on the basis of both Group liquidity and capital and liquidity ratios required under various
licenses held by subsidiaries.
There have been no reportable instances of non-compliance with externally imposed capital requirements in the current
period.
74
Annual Report
17. Reserves and retained earnings
a) Reserves
Share-based payments reserve
2023
$'000
16,321
2022
$'000
12,476
Transactions with non-controlling interests reserve
(59,603)
(59,603)
Performance rights reserve
MOVEMENTS:
Share-based payments reserve
Balance at 1 July
Share-based payments expense
Employee loans subject to share-based payments arrangements
-
28
(43,282)
(47,099)
12,476
3,408
437
9,065
2,848
563
Balance at 30 June
16,321
12,476
Transactions with non-controlling interests reserve
Balance at 1 July
Balance at 30 June
The share-based payments reserve is used to recognise:
(59,603)
(59,603)
(59,603)
(59,603)
the grant date fair value of options issued to employees but not exercised;
the grant date fair value of shares issued to employees;
the issue of shares held by employee share plans to employees; and
the grant date fair value of reissued loans under the Pinnacle Long-term Employee Incentive Plan
and Pinnacle Omnibus Incentive Plan approved by the board on 22 August 2018.
The transactions with non-controlling interests reserve is used to recognise the excess of the consideration paid to acquire
non-controlling interests above the carrying value of the non-controlling interest at time of acquisition.
The options reserve is used to recognise the value of zero-priced options issued by Pinnacle associated with investments in
entities under joint control (see note 23).
b) Retained earnings
Movements in retained earnings were as follows:
Balance at 1 July
2023
$'000
2022
$'000
37,217
28,112
Profit/(loss) for the year attributable to owners of Pinnacle Investment Management Group Limited
76,472
76,365
Dividends paid to shareholders
Balance at 30 June
(66,313)
(67,260)
47,376
37,217
75
Annual Report
18. Dividends
a) Ordinary shares
2023
$'000
2022
$'000
Interim dividend for the year ended 30 June 2023 of 15.6 cents per fully paid ordinary share paid on 17 March 2023 (2022 – 17.5 cents paid on 18
March 2022)
Fully franked based on tax paid @ 30%
31,389
34,910
Final dividend for the year ended 30 June 2022 of 17.5 cents per fully paid ordinary share paid on 16 September 2022 (2021 – 17.5 cents paid on 17
September 2021)
Fully franked based on tax paid @ 30%
Total dividends paid
34,924
32,350
66,313
67,260
b) Dividends not recognised at the end of the reporting period
In addition to the above dividends, since year end the directors have recommended the payment of a final dividend of 20.4
cents per fully paid ordinary share (2022 – 17.5 cents). The aggregate amount of the proposed dividend to be paid on 15
September 2023 out of retained earnings at 30 June 2023, but not recognised as a liability at year end, is $41,038,000
(2022 – $34,924,000).
c) Franked dividends
The final dividends recommended after 30 June 2023 will be fully franked out of existing franking credits.
Franking credits available for subsequent financial years based on a tax rate of 30% (2022: 30%)
19,582
23,943
2023
$'000
2022
$'000
The above amounts represent the balance of the franking account as at the end of the reporting period, adjusted for:
a) franking credits that will arise from the payment of the amount of the provision for income tax;
b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date; and
c) franking credits that will arise from the receipt of dividends recognised as receivables at the end of each reporting
date.
The consolidated amounts include franking credits that would be available to the Company if distributable profits of
subsidiaries were paid as dividends.
76
Annual Report
19. Borrowings and Financing arrangements
a) Secured liabilities and assets pledged as security
In June 2023, the Group entered into an amended facility deed, which is secured by a general security deed over the assets
of the Group and guarantees provided by the Company and other Group entities. The availability periods for the Corporate
Card Facility and Bank Guarantee are until 30 June 2024, for the Loan Facility (Tranche A and B) until 30 June 2025 and
Tranche C until 15 September 2023. The Loan Facility remained unchanged at $120 million during the year. Further details
regarding the Corporate Card Facility and Bank Guarantee are provided in Note 21.
Secured
Bank Loan
2023
Current
$’000
Non-Current
$’000
Total
$’000
20,137
100,000
120,137
Total Borrowings
20,137
100,000
120,137
The amended facility agreement includes the following covenants:
2022
Current
$’000
85
85
Non-Current
$’000
Total
$’000
120,000
120,085
120,000
120,085
The interest cover ratio must be at least 4.0 times
The net leverage cover ratio is no more than 2.0 times
The minimum tangible net wealth in respect of any financial year must be at least the greater of:
$130 million; and
an amount equal to 75% of the tangible net wealth in respect of the previous financial year.
The Group has provided the bank with a security interest over its property, excluding its holdings in Affiliates. Compliance
with covenants is reviewed on a regular basis and compliance has been maintained during the period. As at 30 June 2023,
the interest cover ratio was 14 times, the net leverage cover ratio was 1.12 times and the tangible net wealth was $420
million (105% of the tangible net wealth at 30 June 2022).
The Loan Facility is split into three Tranches – ‘Tranche A’ is $60 million and is for general corporate purposes. ‘Tranche B’
is $40 million and is for acquisitions, or investments into certain liquid investment strategies managed by the Pinnacle
Affiliates. ‘Tranche C’ is $20 million and for investments into certain investment strategies managed by a specific Pinnacle
Affiliate. The Loan Facility was fully drawn as at 30 June 2023. At 30 June 2023, $20 million of the facility was provided as
seed capital to Palisade Real Assets to enable them to acquire the first asset in their energy transition portfolio, with the
balance of the facility invested predominantly in non-duration and floating rate credit strategies, managed by Affiliates.
The loan is a variable rate, Australian-dollar denominated loan, which is carried at amortised cost. The facility term is three
years from drawdown.
The carrying amounts of assets pledged as security at balance date in relation to the bank guarantees are set out below:
Current
Cash and cash equivalents
Financial assets at fair value through profit or loss
Assets held at amortised cost
Receivables
Total current assets pledged as security
Non-current
Plant and equipment
Financial assets at fair value through profit or loss
Assets held at amortised cost
Total non-current assets pledged as security
Total assets pledged as security
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Annual Report
2023
$'000
27,616
159,594
911
24,632
212,753
76
3,600
5,585
9,261
2022
$'000
38,265
139,912
552
23,258
201,987
111
3,000
2,736
5,847
222,014
207,834
b) Interest rate risk exposure
Information about the Group's exposure to interest rate changes are provided in note 20.
20. Financial risk management
The Group's activities expose it to a variety of financial risks: market risk (including interest rate risk, foreign currency risk
and price risk), credit risk and liquidity risk. A core focus of the Group's overall risk management program is on the volatility
of the financial markets and seeks to minimise potential adverse effects on the financial performance of the Group.
Risk governance is managed through the Board’s Audit, Compliance and Risk Management Committee, which provides
direct oversight of the Group's Risk Management Framework and performance. The Board approves written principles for
risk management covering areas such as Principal Investments, including the use of appropriate hedging strategies, and
cash flow management. Financial support to Affiliates or Affiliate executives is subject to Board approval, following
consideration of the strategic merits of providing support and the financial standing of the counterparty. The management
of risk throughout the Group is achieved through the procedures, policies, people competencies and risk monitoring
functions that form part of the overall Group Risk Management Framework. This is achieved through regular updates in the
form of targeted risk management analysis and reporting functions that provide an assessment of the Group's risk
exposure levels and performance to benchmarks/tolerance limits.
The Group holds the following financial instruments:
Financial assets
Cash and cash equivalents
Trade and other receivables*
2023
$'000
2022
$'000
27,616
38,265
23,741
22,520
Financial assets at fair value through profit or loss (current)
159,594
139,912
3,600
911
5,585
3,000
552
2,736
221,047
206,985
2023
$'000
2022
$'000
6,834
10,445
357
-
20,137
1,223
348
85
100,000
120,000
127,328
132,101
Financial assets at fair value through profit or loss (non-current)
Loans to jointly controlled associates (including Affiliate executives) (current)
Loans to jointly controlled associates (including Affiliate executives) (non-current)
*Excludes prepayments (see note 7)
Financial liabilities
Trade and other payables
Lease liabilities (current)
Lease liabilities (non-current)
Borrowings (current)
Borrowings (non-current)
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Annual Report
a) Market risk
(i) Foreign exchange risk
The Group is not materially exposed to foreign exchange risk. All of its major contracts with counterparties are
denominated and settled in Australian dollars, which is the reporting and operating currency of the Group. Substantially all
of the Group’s Principal Investments are also quoted and priced in Australian Dollars.
(ii) Price risk
Through its business transactions and investments, the Group is exposed to equity securities price risk. This risk is the
potential for losses in Group earnings as a result of adverse market movements and arises from investments held by the
Group that are classified on the consolidated statement of financial position as financial assets at fair value through profit
or loss (FVPL).
The Group manages the price impact of market risk through an established Risk Management Framework. This includes the
procedures, policies and functions undertaken by the business to manage market risk within tolerances set by the Board.
Equity derivatives are used as an active risk mitigation function and the Group currently utilises such derivatives to reduce
the market risk of its equity exposures. The performance of the Group’s direct equity exposures and market risk mitigants
are monitored on a regular basis.
The majority of the Group's equity investments are Australian listed equity securities and unlisted unit trusts as shown in
the table below:
30 June 2023
ASSETS
Australian listed equity securities
Other unlisted instruments
Unlisted unit trusts
Derivative financial instruments
Total assets at FVPL
30 June 2022
ASSETS
Australian listed equity securities
Other unlisted equity securities
Unlisted unit trusts
Derivative financial instruments
Total assets at FVPL
Sensitivity
Total
$'000
14,884
4,005
120,818
3,716
143,423
7,430
3,582
126,749
5,151
142,912
The table below summarises the impact of increases/decreases in equity securities prices on the Group’s after tax profit for
the year and on equity. The analysis is based on the assumption that equity securities prices had increased/decreased by
+/- 15% (2022: +/- 15%) at 30 June 2023 with all other variables held constant and all the Group’s equity investments
included in financial assets at fair value through profit and loss moved in correlation with the index.
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Annual Report
Impact on after-tax profit
Impact on equity
2023
$'000
2022
$'000
2023
$'000
2022
$'000
Group
+5,584/-5,584 +2,691/-2,691
+5,584/-5,584
+2,691/-2,691
(iii) Interest rate risk
The Group's main interest rate risk arises from holding cash and cash equivalents and borrowings with variable rates.
During 2023 and 2022, substantially all of the Group’s cash and cash equivalents were denominated in Australian dollars.
The Group’s borrowings were also denominated in Australian dollars. The Group reviews its interest rate exposure as part
of the Group’s cash flow management and takes into consideration the yields, duration and alternative financing options
as part of the renewal of existing positions. As at the reporting date, the Group had the following cash and cash
equivalents and borrowings:
30 June 2023
30 June 2022
Weighted
average
interest rate
%
Floating
interest rate
$'000
Weighted
average
interest rate
%
Floating
interest rate
$'000
Cash and cash equivalents
3.86%
27,616
0.25%
38,265
Exposure to cash flow interest rate risk
27,616
38,265
30 June 2023
30 June 2022
$’000
% of total
borrowings
$’000
% of total
borrowings
Variable rate borrowings
120,000
100%
120,000
100%
Exposure to cash flow interest rate risk
100%
100%
The Group's loans to jointly controlled associates (including Affiliate executives) are subject to fixed interest rates and
carried at amortised cost. They are therefore not subject to interest rate risk as defined by AASB 7.
Sensitivity
At 30 June 2023, if interest rates had changed by -/+200 basis points from the year end rates with all other variables held
constant, after tax profit and equity for the year would have been $1,293,000 lower/higher (2022: change of 100 basis
points: $1,144,000 lower/higher).
b) Credit risk
Credit risk arises from cash and cash equivalents, financial assets at fair value through profit or loss, loans to entities under
joint control, loans to shareholders and outstanding receivables.
Credit risk is managed on a Group basis. Credit risk relates to the risk of a client or counterparty defaulting on their
financial obligations resulting in a loss to the Group. These obligations primarily relate to distribution and management
fees. The Group does not carry significant trade receivable exposure to either a single counterparty or a group of
counterparties. For banks and financial institutions, only independently rated parties with a minimum rating of BBB+ / A-1
are accepted as counterparties. Loans to Affiliates or Affiliate executives are subject to Board approval, following
consideration of the strategic merits of providing support and the financial standing of the counterparty. Additionally,
loans to individuals to purchase shares are structured in such a way that they are either full recourse or secured on the
shares issued. As at the reporting date, the Group held the following credit risks:
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Annual Report
Cash and cash equivalents
Trade and other receivables*
Financial assets at fair value through profit or loss (current)
Loans to jointly controlled associates (including Affiliate executives) (non-current)
Loans to jointly controlled associates (including Affiliate executives) (current)
*Excludes prepayments (see note 7).
2023
$'000
27,616
23,741
19,771
5,585
911
2022
$'000
38,265
22,520
-
2,736
552
77,624
64,073
Impaired trade, other and loan receivables
The Group has the following types of financial assets that are subject to the expected credit loss model:
Trade and other receivables
Loans to jointly controlled associates (including affiliate executives)
While cash and cash equivalents and financial assets at fair value through profit or loss are also subject to the impairment
requirements of AASB 9, the identified impairment loss was nil (2022: nil).
Loans to jointly controlled associates (including Affiliate executives)
All loans to jointly controlled associates are considered low credit risk, have had no significant increase in credit risk during
the year, and as such the loss allowance was limited to 12 months' expected credit losses. Loans to joint associates are
considered to be low credit risk when they have a low risk of default and the borrower has a strong capacity to meet its
contractual cash flow obligations in the near term. New loans provided to joint associates are only provided once the
underlying prospects of the entity have been fully evaluated and are within our risk appetite. Additionally, loans to
individuals to purchase shares are structured in such a way that they are either full recourse or secured on the shares
issued. As such, at 30 June 2023 and 30 June 2022, the expected credit loss rate in relation to loans to joint associates was
0% and the loss allowance was $nil.
Refer to note 32(l) for more information on the investments and other financial assets policy of the Group.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are considered to be low credit risk when the borrower has a strong
capacity to meet its contractual cash flow obligations over the term. New funding provided to affiliates is only provided
once the underlying prospects of the entity have been fully evaluated and are within our risk appetite.
Trade and other receivables
The group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss
allowance for all trade receivables. The expected loss rate and loss allowance has been assessed as $nil as at 30 June 2023
(30 June 2022: $nil). This is because there is no history of default, revenue is generated primarily through providing
services to jointly controlled entities and cost recharges are also primarily to jointly controlled entities, hence the
recoverability of receivables can be determined with a high degree of certainty on a forward-looking basis. Refer to note
32(k) for more information on the trade receivables policy of the Group.
The Group records trade receivables and loans in the following classifications:
Neither past due nor impaired trade receivables and loans are those that are within their relevant contractual payment
terms and thus have no expected credit loss due to the reasons above.
Past due but not impaired trade receivables and loans are those that have fallen outside of their contractual settlement
terms.
81
Annual Report
Past due and impaired trade receivables and loans are those that have fallen outside of the prescribed settlement terms
and/or there is evidence to suggest that the client or counterparty will fail to meet their obligations and thus would result
in an expected credit loss. This is $nil as at 30 June 2023 (2022 - $nil).
Trade and other receivables
Neither past due nor impaired
Past due but not impaired
Loans held at amortised cost
Neither past due nor impaired
Total trade, other and loan receivables
Credit quality
2023
$'000
2022
$'000
23,232
22,520
509
-
23,741
22,520
6,495
6,495
3,288
3,288
The credit quality of financial assets can be assessed by reference to credit ratings. These credit ratings are only available
for cash assets:
Cash at bank and short-term bank deposits
AA-
c) Liquidity risk
2023
$'000
2022
$'000
27,616
38,265
27,616
38,265
The Group manages liquidity risk by continuously monitoring actual and forecast cash flows. Due to the dynamic nature of
the underlying businesses, the Group aims at maintaining flexibility in funding through available cash and readily
liquefiable investments in the Group’s Principal Investments portfolio. At 30 June 2023 the Group has $187 million in
available cash and Principal Investments ($67 million net of the $120 million debt facility).
Subsidiaries of the Company, Pinnacle Funds Services Limited, Pinnacle Investment Management Limited and Pinnacle RE
Services Limited hold Australian Financial Services Licences and hold amounts in liquid assets in accordance with relevant
ASIC regulations on the basis of expected cash flows. In addition, the Group’s liquidity management policy involves
projecting cash flows and considering the level of liquid assets necessary to meet these, monitoring liquidity ratios against
internal and external regulatory requirements and maintaining debt financing plans.
Maturities of financial liabilities
The table below analyses the Group's financial liabilities. The financial liabilities are broken down into maturity groupings
based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table
are the contractual undiscounted cash flows.
CONTRACTUAL MATURITIES OF FINANCIAL
LIABILITIES
1 - 30 days
30 days to 90
days
90 days to
1 year
At 30 June 2023
$'000
$'000
$'000
Trade and other payables
2,265
4,569
-
Borrowings (see note 19)
Lease liabilities (see note 12)
-
32
20,029
65
Total financial liabilities
2,297
24,663
108
260
368
1 to 2
years
$'000
Total
contractual
cash flows
Carrying
amount
2 to 5 years
$'000
$'000
$'000
-
-
-
-
-
6,834
6,834
100,000
120,137
120,137
-
357
357
100,000
127,328
127,328
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Annual Report
At 30 June 2022
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Trade and other payables
3,770
6,675
Borrowings (see note 19)
-
-
Lease liabilities (see note 12)
115
232
Total financial liabilities
3,885
6,907
-
85
875
960
-
-
10,445
10,445
20,000
100,000
120,085
120,085
357
-
1,579
1,571
20,357
100,000
132,109
132,101
d) Fair value measurements
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes.
AASB 13 Fair Value Measurement requires disclosure of fair value measurements by level of the following fair value
measurement hierarchy:
a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
b)
c)
inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (as prices) or indirectly (derived from prices) (level 2); and
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
The following table presents the Group's Principal Investments measured and recognised at fair value:
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
30 June 2023
ASSETS
Australian listed equity securities
14,884
-
-
Other unlisted instruments
Unlisted unit trusts
-
-
Derivative financial instruments
3,716
-
19,771
4,005
120,818
-
-
14,884
23,776
120,818
3,716
Total assets
18,600
140,589
4,005
163,194
No liabilities were held at fair value at 30 June 2023.
30 June 2022
ASSETS
Australian listed equity securities
Other unlisted equity securities
Unlisted unit trusts
7,430
-
-
-
-
126,749
Derivative financial instruments
5,151
-
-
3,582
-
-
7,430
3,582
126,749
5,151
Total assets
12,581
126,749
3,582
142,912
No liabilities were held at fair value at 30 June 2022.
There were no transfers between levels for recurring fair value measurements during the current year. The Group's policy
is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.
83
Annual Report
The fair value of Australian listed securities and exchange traded futures is based on quoted market prices at the end of
the reporting period. The quoted price used for Australian listed securities and exchange traded options held by the Group
is the current bid price. These instruments are included in level 1.
The quoted market price used for unlisted unit trusts is the current exit unit price. These instruments are included in level
2. The fair value of unlisted debt instruments (see note 26(d)(iii)) is based on observable and quoted returns third party
investors would expect to earn for similar assets in markets. These instruments are included in level 2.
The fair value of unlisted equity securities is determined using valuation techniques. The Group uses a variety of methods
and makes assumptions that are based on market conditions existing at the end of each reporting period. In the
circumstances where a valuation technique for these instruments is based on significant unobservable inputs, such
instruments are included in level 3.
The carrying amounts of cash and cash equivalents and trade receivables and payables are assumed to approximate their
fair values due to their short-term nature. Loans to entities under joint control and loans to shareholders are carried at
amortised cost. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future
contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.
Fair value measurements using significant unobservable inputs (level 3)
Level 3 items include unlisted equity securities held by the Group. The following table presents the changes in level 3
instruments for the years ended 30 June 2023 and 30 June 2022:
Closing balance 30 June 2021
Contingent consideration received
Assets acquired
Fair value adjustments recognised in profit or loss
Closing balance 30 June 2022
Contingent consideration received
Assets acquired
Fair value adjustments recognised in profit or loss
Closing balance 30 June 2023
(i) Valuation process
Unlisted equity
securities
$'000
631
(471)
3,000
422
3,582
-
-
423
4,005
Unlisted equities valued under level 3 are investments in unlisted companies. Where available, the investments are valued
based on the most recent transaction involving the securities of the company. Where there is no recent information or the
information is otherwise unavailable, the value is derived from calculations based on the value per security of the
underlying net tangible assets of the investee company.
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Annual Report
21. Contingencies and commitments
a) Secured liabilities and assets pledged as security
(i) Guarantees
Pinnacle Investment Management Group Limited has provided guarantees in relation to Australian Financial Services
License Net Tangible Asset obligations (via bank guarantee) in respect of:
(i) Pinnacle Funds Services Limited - $5,000,000 (2022: $5,000,000)
(ii) Pinnacle RE Services Limited - $50,000 (2022: $50,000)
The Group has also provided guarantees in respect of its leased premises:
(iii) Pinnacle Services Administration Pty Ltd - $2,480,000 (30 June 2022 - $632,000)
The guarantee for the leases noted above is held between Pinnacle Investment Management Group Limited ($175,000),
Pinnacle Investment Management Limited ($457,000) and Pinnacle Services Administration Pty Ltd ($1,848,000). The
Group entered into a new premises lease that commences in July 2023 and was required to establish a guarantee in the
current financial year. The guarantee for the expiring lease will be returned after the premises are vacated.
The unused bank guarantee facility available at balance date was $275,000 (30 June 2022: $275,000). The Group has also
provided guarantees in relation to its corporate credit card facility (facility limit of $400,000 of which $352,000 was unused
at balance date).
These guarantees may give rise to liabilities in the Company if the related entities do not meet their obligations that are
subject to the guarantees.
No material losses are anticipated in respect of any of the above contingent liabilities.
b) Commitments
(i) Capital commitments
There were no capital expenditure commitments and no other expenditure commitments at balance sheet date.
The Group has previously entered into agreements whereby it has agreed to advance sufficient funds to entities under
joint control to cover their operating expenses until such time as the entity becomes profitable on a monthly basis and is
generating positive cash flows. Further information in relation to these balances is provided in note 26.
85
Annual Report
Group Structure
This section provides information regarding the Group’s subsidiaries and associates, and detail regarding discontinued
operations.
22. Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following significant subsidiaries
in accordance with the accounting policy described in note 32(b). The country of incorporation of all subsidiaries is also
their principal place of business.
Name of entity
Country of
incorporation
Class of security
Equity holding
2023
%
2022
%
Pinnacle Investment Management Limited
Australia
Ordinary share
Pinnacle Funds Services Limited
Australia
Ordinary share
Pinnacle Services Administration Pty Ltd
Australia
Ordinary share
Pinnacle RE Services Limited
Australia
Ordinary share
Priority Funds Management Pty Ltd
Australia
Ordinary share
Priority Investment Management Pty Ltd
Australia
Ordinary share
Ariano Pty Ltd
Australia
Ordinary share
Next Financial Holding Company Pty Ltd
Australia
Ordinary share
PNI Option Plan Managers Pty Ltd
Australia
Ordinary share
Pingroup IM Limited
United States
Ordinary share
Pinnacle Investment Management (Canada) Ltd.
Canada
Ordinary share
Pinnacle Investment Management (UK) Ltd
United Kingdom
Ordinary share
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
86
Annual Report
23. Investment accounted for using the equity method
a) Carrying amounts
The Group holds investments in entities under joint control that undertake investment management activities. Information
relating to these entities under joint control is set out below.
Ownership interest
Carrying Value
Name of company
Principal Activity
2023
2022
2023
Unlisted
%
%
$'000
Plato Investment Management Limited
Funds Management
42.59
42.59
6,814
2022
$'000
6,063
Palisade Investment Partners Limited
Funds Management
35.90
37.60
12,424
13,781
Hyperion Holdings Limited
Funds Management
49.99
49.99
20,904
21,723
Foray Enterprises Pty Limited (holding company for
Resolution Capital)
SolCorp Holdings Pty Ltd (holding company for
Solaris)
Funds Management
49.50
49.50
39,320
35,840
Funds Management
44.50
44.50
5,596
Spheria Asset Management Pty Ltd
Funds Management
40.00
40.00
2,241
6,065
3,585
Antipodes Partners Holdings Pty Ltd
Funds Management
24.24
25.54
9,177
10,033
Firetrail Investments Limited
Funds Management
23.50
23.50
17,449
18,096
Metrics Credit Holdings Pty Limited
Funds Management
35.00
35.00
50,629
50,090
Longwave Capital Partners Pty Limited
Funds Management
40.00
40.00
3,069
Riparian Capital Partners Pty Limited
Funds Management
40.00
40.00
1,362
2,962
1,382
Coolabah Capital Investments Pty Ltd
Funds Management
35.00
35.00
73,886
72,219
Five V Capital Pty Ltd
Funds Management
25.00
25.00
76,481
77,685
Langdon Equity Partners Ltd
Funds Management
32.50
32.50
2,635
983
Aikya Investment Management Limited
Funds Management
32.50
32.50
6,478
4,745
328,465
325,252
Each of the above entities under joint control is incorporated and has their principal place of business in Australia (except
for Aikya Investment Management Limited (United Kingdom) and Langdon Equity Partners Ltd (Canada). Each of the above
entities is accounted for using the equity method.
Impairment testing is carried out on the carrying value of the Group’s investments accounted for using the equity method
at each reporting date. For the purpose of impairment testing, each investment is assessed individually as each represents
a separate ‘cash generating unit’ (CGU), with the carrying value compared to the ‘recoverable amount’. The ‘recoverable
amount’ is defined as the higher of each CGU’s fair value less costs of disposal and its value in use.
An impairment trigger assessment was carried out at 30 June 2023 and no impairment triggers were deemed to exist at
this date. As a result of these analyses, there has been no impairment to the Group’s investments accounted for using the
equity method in the financial year ended 30 June 2023 (30 June 2022: Reminiscent Capital Pty Ltd $1,811,000).
Revenues generated by Affiliates are impacted by movements in equities and other markets which, in turn, could impact
the Group’s share of net profit of associates and joint ventures accounted for using the equity method. Revenues
generated by Affiliates may also be impacted by movements in interest rates which, in turn, could impact the Group’s
share of net profit of associates and joint ventures accounted for using the equity method.
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Annual Report
b) Summarised financial information for joint ventures
The tables below provide summarised financial information for those joint ventures and associates that are material to the
group. The Group assesses materiality based on each joint venture's relative contribution to share of carrying value and
share of net profits, and other qualitative factors. The information disclosed reflects the amounts presented in the financial
statements of the relevant associates and joint ventures and not Pinnacle Investment Management Group Limited’s share
of those amounts. They have been amended to reflect adjustments made by the entity when using the equity method,
including fair value adjustments and modifications for differences in accounting policy.
Hyperion Holdings Limited
Foray Enterprises Pty Limited* Metrics Credit Holdings Pty Ltd
Coolabah Capital Investments
Pty Ltd
2023
$000
2022
$000
2023
$000
2022
$000
2023
$000
2022
$000
2023
$000
2022
$000
Summarised statement of financial position
Total current assets
44,153
38,759
42,191
40,227
83,904
54,373
21,072
14,368
Total non-current assets
6,386
10,849
5,932
5,086
354,911
95,575
11,593
10,156
Total current liabilities
(8,909)
(6,322)
(14,585)
(19,608)
(221,007)
(31,527)
(7,154)
(5,010)
Total non-current liabilities
(22)
(47)
(1,458)
(677)
(161,426)
(64,566)
(3,514)
(2,611)
Net Assets
41,608
43,239
32,080
25,028
56,382
53,855
21,997
16,903
Reconciliation to carrying
amounts:
Opening net assets 1 July
43,239
37,050
25,028
18,885
53,855
44,207
16,903
13,582
Issued shares
Reserves
-
-
-
-
-
-
-
73
1,200
852
1,294
(806)
262
(81)
1,717
-
Total comprehensive income 40,591
40,179
25,552
33,070
14,975
23,160
18,120
13,169
Dividends paid
(42,222)
(33,990)
(18,500)
(27,000)
(14,500)
(14,000)
(13,207)
(11,565)
Closing net assets
41,608
43,239
32,080
25,028
56,382
53,855
21,997
16,903
Non-controlling Interest
-
-
-
-
4,514
-
-
-
Closing net assets (parent)
41,608
43,239
32,080
25,028
51,868
53,855
21,997
16,903
Group share in %
49.99%
49.99%
49.5%
49.5%
35.0%
35.0%
35.0%
35.0%
Group's share of net assets
20,800
21,615
15,880
12,388
18,153
18,849
7,699
5,916
Excess consideration over
share of net assets
104
108
23,440
23,452
32,476
31,241
66,187
66,303
Carrying amount
20,904
21,723
39,320
35,840
50,629
50,090
73,886
72,219
Summarised statement of comprehensive
income
Revenue
70,898
79,813
67,687
78,754
102,146
78,314
41,950
31,243
Net profit for the year after
tax
40,591
40,179
25,552
33,070
14,975
23,160
18,120
13,169
Total comprehensive income 40,591
40,179
25,552
33,070
14,975
23,160
18,120
13,169
Non-controlling interest
-
-
-
-
(1,063)
(440)
-
-
Total comprehensive income
(parent)
Dividends received from joint
venture entities (Pinnacle
share)
40,591
40,179
25,552
33,070
16,038
23,600
18,120
13,169
21,111
16,995
9,158
12,465
5,075
4,900
4,676
2,971
*holding company for Resolution Capital Limited
88
Annual Report
Individually immaterial jointly controlled entities
In addition to the interests disclosed above, the Group also has interests in a number of individually immaterial entities
under joint control that are accounted for using the equity method.
Aggregate carrying amount of individually immaterial joint ventures
Aggregate amounts of the Group's share of:
Profit for the year
Other comprehensive income
Total comprehensive income
c) Movements in carrying amounts
Carrying amount at the beginning of the financial year
Purchase of shares in entities under joint control
Sales of shares in entities under joint control
Share of profit after income tax
Impairment provision of entities under joint control
2023
$'000
143,726
2022
$'000
145,380
22,475
27,937
-
-
22,475
27,937
2023
$'000
325,252
4,389
(2,445)
67,359
-
2022
$'000
186,957
133,011
-
75,686
(1,811)
Dividends received/receivable
(66,090)
(68,591)
Carrying amount at the end of the financial year
328,465
325,252
d) Share of entities' revenue, expenses and results
2023
$'000
2022
$'000
193,591
191,781
(101,042)
(87,701)
92,549
104,080
(25,190)
(28,394)
67,359
75,686
Revenues
Expenses
Profit before income tax
Income tax expense
Profit after income tax
89
Annual Report
e) Summary of entities under joint control
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
2023
$'000
142,537
152,156
294,693
132,244
65,010
197,254
97,439
2022
$'000
132,279
67,063
199,342
60,007
25,711
85,718
113,624
24. Parent Entity financial information
a) Summary financial information
The individual financial statements for the Parent Entity (PNI) show the following aggregate amounts:
2023
$'000
2022
$'000
961
704
312,977
317,177
313,938
317,881
122
9,483
9,605
180
10,008
10,188
304,333
307,693
417,949
407,356
(65,490)
(51,302)
(48,126)
(48,361)
304,333
307,693
66,548
67,442
66,548
67,442
Statement of financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Contributed equity
Reserves
Accumulated losses
Total equity
Profit/(loss) for the year
Total comprehensive income/(loss)
b) Guarantees entered into by the Parent Entity
Details of guarantees entered into by the Group are provided at note 21.
90
Annual Report
25. Additional cash flow information
a) Reconciliation to cash at the end of the year
For the purposes of the consolidated statement of cash flows, cash and cash equivalents include cash at bank and on hand,
deposits at call and cash held in trust net of outstanding bank overdrafts. Cash and cash equivalents at the end of the
reporting period as shown in the consolidated statement of cash flows can be reconciled to the related items in the
consolidated statement of financial position as follows:
Cash and cash equivalents
Balances per statement of cash flows
2023
$'000
27,616
2022
$'000
38,265
27,616
38,265
b) Reconciliation of net cash flow from operating activities to profit
Profit/(loss) for the year
Depreciation and amortisation
Impairment provision
Right-of-use asset depreciation and interest charge
2023
$'000
76,472
310
-
1,257
2022
$'000
76,365
992
1,811
1,370
Reinvested distributions received
(5,684)
(2,998)
Equity settled share-based payments and performance rights
3,443
2,962
Interest Expense
52
63
Net losses/(gains) on financial assets at fair value through profit or loss
(10,853)
5,647
Interest on assets at amortised cost
(220)
4
Change in operating assets and liabilities, net of effects from acquisition and disposal of businesses:
Trade and other receivables
Investments accounted for using the equity method
Financial assets at fair value through profit or loss
Trade and other payables
Provisions
(1,374)
(5,898)
(1,272)
(7,095)
(3,745)
(86,695)
(3,607)
(2,050)
262
598
Net cash inflow/(outflow) from operating activities
55,041
(14,924)
The reconciliation of net cash flow from operating activities to profit/(loss) includes continuing operations only.
91
Annual Report
26. Related party transactions
a) Parent entity
The Parent Entity of the Group is Pinnacle Investment Management Group Limited (refer note 24).
b) Subsidiaries and jointly controlled entities
Interests in subsidiaries are set out in note 22.
Interests in jointly controlled entities are set out in note 23.
Details of service charges to jointly controlled entities are provided in note 1 and note 26(g).
Details of dividend payments from entities under joint control are provided in note 23.
c) Key Management Personnel (KMP) and Compensation
Disclosure relating to KMP is set out in note 27.
Disclosure relating to share-based payments is set out in note 28.
d) Transactions with other related parties
The following transactions occurred with related parties:
(i) Movement in loans to KMP - Loans re-issued 25 August 2016
Upon acquisition of the non-controlling interest of Pinnacle Investment Management Limited, existing loans amounting to
$4,303,485 issued by Pinnacle Investment Management Limited in prior years to its senior executives to assist executives
to acquire equity were re-issued by the Company. This included existing loans to Mr Ian Macoun, Mr Adrian Whittingham
and Mr Andrew Chambers who are or have been KMP of the Group.
The loans date from 2009, 2011, 2012 and 2015 and were used to assist the executives to acquire equity in PIML. The loans
are interest free and repayable on termination of employment or when the underlying equity is sold, whichever event
occurs earlier. The re-issued loans are also secured by share mortgages with limited recourse to the shares.
The value of re-issued loans for each of the KMP and repayments made during the year were as follows:
Key Management
Personnel
Loan balance – 1 July
2022
$
Repayments made
$
Other changes during the
year
$
Loan balance – 30 June 2023
$
Andrew Chambers
234,253
(14,402)
-
219,851
(ii) Loan Shares issued under the Pinnacle Omnibus Plan
During the year to 30 June 2023, no additional loan shares were issued to KMP under the Pinnacle Omnibus Plan (150,000
loan shares were issued during the year to 30 June 2022).
The loan shares issued in the year to 30 June 2022 and year to 30 June 2021 are subject to service and performance
conditions and will vest after five years, if those conditions are met. The loans are interest free and limited in recourse to
the shares. They are repayable on termination of employment or when the underlying equity is sold, whichever occurs
earlier.
The remaining loan shares are subject to service and performance conditions and will vest after five years, if the conditions
are met. The loans are interest free and limited in recourse to the shares. They are repayable 10 years from grant date, on
termination of employment or when the underlying equity is sold, whichever occurs earlier.
The value of the loans issued for each of the KMP at period end and repayments made during the year were as follows:
92
Annual Report
Key Management
Personnel
Loan balance –
1 July 2022
$
Ian Macoun
1,522,570
Andrew Chambers
4,060,187
Dan Longan
3,645,015
Calvin Kwok
3,476,323
New loans issued
$
Repayments made
$***
Loan shares
forfeited* $
Other changes
during the year*
$
Loan balance – 30
June 2023
$
-
-
-
-
(75,180)
(200,480)
(112,770)
(125,300)
-
-
-
-
1,447,390
3,859,707
3,532,245
3,351,023
***Repayments are from dividends received In relation to the loan shares.
(iii) Loans to other Related Parties
On 27 October 2017, a subsidiary of the Company provided loan funding totalling $5,226,000 to a number of executives of
Palisade, to facilitate their purchase of shares in Palisade from an exiting shareholder. The loans have terms of between
five and seven years, are interest-bearing and secured by shares in Palisade. During the current financial year, further loan
funding totalling $2,493,000 was provided to facilitate further recycling of equity. The loans are recorded within other
current and non-current assets in the consolidated statement of financial position.
During the year, interest of $114,000 accrued on these loans and repayments of $375,000 were made. The balance of the
loans at 30 June 2023 including capitalized interest was $3,590,000.
During the year, Palisade Real Assets acquired its first energy transition asset in Malaby, Wiltshire, UK. This has been
funded initially by Pinnacle, with a fixed return on the capital provided of 8% and a term of 1 year. The asset is recorded
within financial assets at fair value through profit or loss in the statement of financial position. The balance at 30 June 2023
including the return was $19,772,000.
e) Loans to/from related parties
Loans to joint associates (including Affiliate executives)
Balance at 1 July
Loans advanced
Interest accrued
Loans repaid
2023
$
2022
$
3,287,326
2,788,054
3,672,761
1,374,951
220,368
121,897
(685,090)
(997,576)
Share of equity accounted losses from Affiliates
-
-
Balance at 30 June
6,495,365
3,287,326
f) Guarantees
The Group has provided guarantees to subsidiaries as described in note 21.
93
Annual Report
g) Transactions with other related parties and jointly controlled entities
The following transactions occurred with related parties:
Sales of services to other related parties/jointly controlled affiliates $36,959,227 (2022: $39,552,938)
Transactions associated with Principal Investments managed by jointly controlled Affiliates
Acquisition of financial assets at fair value through profit and loss $82,040,581 (2022: $131,005,069)
Proceeds for disposal of financial assets at fair value through profit and loss $81,801,838 (2022:
$46,081,234)
Balance of financial assets at fair value through profit and loss at 30 June 2023 $148,456,759 (2022:
$134,179,716)
Dividend revenue $6,136,168 (2022: $3,922,607)
Balance of trade receivables to jointly controlled entities at 30 June 2023 $19,832,525 (2022:
$20,302,751)
27. Key Management Personnel
a) Key Management Personnel compensation
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
Total Key Management Personnel compensation
2023
$
2022
$
2,843,000
3,812,900
137,500
137,500
37,854
101,635
1,024,598
1,024,598
4,042,952
5,076,633
Certain Executive KMP are party to the long-term employee incentive arrangements described in note 32(s)(vii). At 30 June
2023, the balance of loans issued to Executive KMP was $12,410,259 (2022: $12,938,391) relating to 2,296,583 shares
issued in the Company (2022: 2,296,583 shares).
Detailed remuneration disclosures for KMP are provided in the Remuneration Report.
94
Annual Report
b) Loans to Key Management Personnel
Details of loans made to executive directors of Pinnacle Investment Management Group Limited and other Executive KMP
of the Group, including their related parties, are set out below.
(i) Aggregates for Key Management Personnel
Balance at the
start of the
year
$
Interest paid
and payable
for the year
$
Loans
advanced
during the year
$
Loan repayments
received
$
Other
Changes*
$
Balance at the
end of the year
$
Interest not
charged
$
Number of
KMP in
Group at the
end of the
year
2023
12,938,391
-
-
(528,132)
2022
12,993,205
6,483
2,522,670
(2,583,967)
-
-
12,410,259
726,667
12,938,391
595,783
4
5
The amounts shown for interest not charged in the table above represents the difference between the amount paid and
payable for the year and the amount of interest that would have been charged on an arm’s length basis.
28. Share-based payments
Options were granted for no consideration and vest based on fulfilment of specified service conditions. Vested options are
exercisable for a period of 6 months after vesting. The fair value of options was determined using a Black-Scholes pricing
model taking into account the exercise price, the term of the option, the share price at grant date and expected price
volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the instrument.
a) Pinnacle Long-term Employee Incentive Plan
Information regarding the Pinnacle Long-term Employee Incentive Plan is provided in notes 32(s)(vii) and 26(d).
b) Pinnacle Omnibus Plan
The establishment of the Pinnacle Omnibus Plan was approved by the Board on 22 August 2018 and by shareholders at the
AGM on 18 October 2018. The plan is designed to provide long-term incentives for employees (including executive and
non-executive directors) to deliver long-term shareholder returns. The plan provides for the ability to offer options,
performance rights and loan funded shares to employees. Under the plan, the shares and options only vest if certain
service and performance conditions are met. Participation in the plan is at the Board's discretion and no individual has a
contractual right to participate in the plan or to receive any guaranteed benefits.
Set out below are summaries of options and loan shares granted under the plan.
95
Annual Report
(i) Loan Shares
Grant
date
2023
Expiry
date
Exercise
price
Balance at
start of
the year
Granted
during
the year
Exercised
during
the year
Forfeit
during
the year
Balance
at end of
the year
Vested and
exercisable
at end of
the year
17 September 2018
16 September 2023
$7.2917
1,850,000
15 November 2018
14 November 2023
$5.6582
1,100,000
12 March 2019
11 March 2024
$5.1234
400,000
25 March 2020
24 March 2025
$2.9683
150,000
11 September 2020
10 September 2025
$5.2404
1,150,000
30 December 2020
29 December 2025
$6.8450
350,000
17 September 2021
16 September 2026
$16.8178
700,000
-
-
-
-
-
-
-
30 September 2022
29 September 2027
$8.6451
-
1,017,000
5,700,000
1,017,000
Weighted average exercise price
$7.44
$8.65
2022
17 September 2018
16 September 2023
$7.2917
2,000,000
15 November 2018
14 November 2023
$5.6582
1,100,000
12 March 2019
11 March 2024
$5.1234
700,000
25 March 2020
24 March 2025
$2.9683
150,000
11 September 2020
10 September 2025
$5.2404
1,150,000
30 December 2020
29 December 2025
350,000
-
-
-
-
-
-
17 September 2021
16 September 2026
$6.8450
-
700,000
5,450,000
700,000
Weighted average exercise price
$6.10
$16.82
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,850,000
1,100,000
400,000
150,000
1,150,000
350,000
700,000
(150,000)
867,000
(150,000)
6,567,000
$8.65
$7.60
(150,000)
1,850,000
-
1,100,000
(300,000)
400,000
-
-
-
-
150,000
1,150,000
350,000
700,000
(450,000)
5,700,000
$5.84
$7.44
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,017,000 loan shares were issued to employees during the financial year and 150,000 loan shares were forfeited by
employees during the year. The shares are subject to service and performance conditions and will vest after five years, if
the conditions are met. The loans are interest free (until vesting date) and limited in recourse to the shares. They are
repayable 10 years from grant date, on termination of employment or when the underlying equity is sold, whichever
occurs earlier.
Loan shares issued under the plan carry dividend and voting rights.
96
Annual Report
Fair value of interests granted – 17 September 2018
The fair value of loan shares were determined using a Black-Scholes pricing model taking into account the exercise price,
the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected
dividend yield and the risk free interest rate for the term of the instrument.
Fair value at grant date: $2.59 per loan share
Exercise price: $7.2917
Grant date: 17 September 2018
Vesting date: 16 September 2023
Share price at grant date: $7.31
Expected price volatility of the Company's shares: 36%
Expected dividend yield: 0.0%
Risk-free interest rate: 2.28%
Fair value of interests granted – 15 November 2018
The fair value of loan shares were determined using a Black-Scholes pricing model taking into account the exercise price,
the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected
dividend yield and the risk free interest rate for the term of the instrument.
Fair value at grant date: $2.17 per loan share
Exercise price: $5.6582
Grant date: 15 November 2018
Vesting date: 14 November 2023
Share price at grant date: $5.64
Expected price volatility of the Company's shares: 40%
Expected dividend yield: 0.0%
Risk-free interest rate: 2.28%
Fair value of interests granted – 12 March 2019
The fair value of loan shares were determined using a Black-Scholes pricing model taking into account the exercise price,
the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected
dividend yield and the risk free interest rate for the term of the instrument.
Fair value at grant date: $2.31 per loan share
Exercise price: $5.1234
Grant date: 12 March 2019
Vesting date: 11 March 2024
Share price at grant date: $5.18
Expected price volatility of the Company's shares: 49%
Expected dividend yield: 0.0%
Risk-free interest rate: 1.76%
97
Annual Report
Fair value of interests granted – 25 March 2020
The fair value of loan shares were determined using a Black-Scholes pricing model taking into account the exercise price,
the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected
dividend yield and the risk free interest rate for the term of the instrument.
Fair value at grant date: $1.02 per loan share
Exercise price: $2.9683
Grant date: 25 March 2020
Vesting date: 24 March 2025
Share price at grant date: $2.51
Expected price volatility of the Company's shares: 53%
Expected dividend yield: 0.0%
Risk-free interest rate: 0.48%
Fair value of interests granted – 11 September 2020
The fair value of loan shares were determined using a Black-Scholes pricing model taking into account the exercise price,
the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected
dividend yield and the risk free interest rate for the term of the instrument.
Fair value at grant date: $2.4878 per loan share
Exercise price: $5.2404
Grant date: 11 September 2020
Vesting date: 10 September 2025
Share price at grant date: $4.99
Expected price volatility of the Company's shares: 61%
Expected dividend yield: 0.0%
Risk-free interest rate: 0.28%
Fair value of interests granted – 30 December 2020
The fair value of loan shares were determined using a Black-Scholes pricing model taking into account the exercise price,
the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected
dividend yield and the risk free interest rate for the term of the instrument.
Fair value at grant date: $3.7704 per loan share
Exercise price: $6.8450
Grant date: 30 December 2020
Vesting date: 29 December 2025
Share price at grant date: $7.24
Expected price volatility of the Company's shares: 61%
Expected dividend yield: 0.0%
Risk-free interest rate: 0.34%
98
Annual Report
Fair value of interests granted – 17 September 2021
The fair value of loan shares were determined using a Black-Scholes pricing model taking into account the exercise price,
the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected
dividend yield and the risk free interest rate for the term of the instrument.
Fair value at grant date: $5.9772 per loan share
Exercise price: $16.8178
Grant date: 17 September 2021
Vesting date: 16 September 2026
Share price at grant date: $17.08
Expected price volatility of the Company's shares: 39%
Expected dividend yield: 0.0%
Risk-free interest rate: 0.65%
Fair value of interests granted – 30 September 2022
The fair value of loan shares were determined using a Black-Scholes pricing model taking into account the exercise price,
the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected
dividend yield and the risk free interest rate for the term of the instrument.
Fair value at grant date: $3.8435 per loan share
Exercise price: $8.6451
Grant date: 30 September 2022
Vesting date: 29 September 2027
Share price at grant date: $8.31
Expected price volatility of the Company's shares: 49%
Expected dividend yield: 0.0%
Risk-free interest rate: 3.76%
99
Annual Report
(ii) Options
Grant
date
2023
Expiry
date
Exercise
price
Balance at
start of
the year
Granted
during
the year
Exercised
during
the year
Forfeited
during
the year
Balance
at end of
the year
Vested and
exercisable
at end of
the year
15 November 2018
14 November 2023
$5.6582
100,000
25 March 2020
24 March 2025
$2.9683
200,000
11 September 2020
10 September 2025
$5.2404
200,000
30 December 2020
29 December 2025
$6.8450
100,000
17 September 2021
16 September 2026
$16.8178
100,000
-
-
-
-
-
30 September 2022
29 September 2027
$8.6451
-
100,000
700,000
100,000
Weighted average exercise price
$6.54
$8.65
2022
15 November 2018
14 November 2023
$5.6582
100,000
25 March 2020
24 March 2025
$2.9683
200,000
11 September 2020
10 September 2025
$5.2404
200,000
30 December 2020
29 December 2025
$6.8450
100,000
-
-
-
-
17 September 2021
16 September 2026
$16.8178
-
100,000
Weighted average exercise price
$4.82
$16.82
600,000
100,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,000
200,000
200,000
100,000
100,000
100,000
800,000
$6.80
100,000
200,000
200,000
100,000
100,000
700,000
$6.54
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Fair value of interests granted – 15 November 2018
250,000 options were granted for no consideration and vest based on fulfilment of specified service and performance
conditions and will vest after five years if the conditions are met. The fair value of options were determined using a Black-
Scholes pricing model taking into account the exercise price, the term of the option, the share price at grant date and
expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of
the instrument.
Fair value at grant date: $1.86 per option
Exercise price: $5.6582
Grant date: 15 November 2018
Vesting date: 14 November 2023
Share price at grant date: $5.64
Expected price volatility of the Company's shares: 40%
Expected dividend yield: 1.6%
Risk-free interest rate: 2.28%
Options issued under the plan carry no dividend and voting rights.
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Annual Report
Fair value of interests granted – 25 March 2020
200,000 options were granted for no consideration and vest based on fulfilment of specified service and performance
conditions and will vest after five years if the conditions are met. The fair value of options were determined using a Black-
Scholes pricing model taking into account the exercise price, the term of the option, the share price at grant date and
expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of
the instrument.
Fair value at grant date: $0.75 per option
Exercise price: $2.9683
Grant date: 25 March 2020
Vesting date: 24 March 2025
Share price at grant date: $2.51
Expected price volatility of the Company's shares: 53%
Expected dividend yield: 3.7%
Risk-free interest rate: 0.48%
Options issued under the plan carry no dividend and voting rights.
Fair value of interests granted – 11 September 2020
200,000 options were granted for no consideration and vest based on fulfilment of specified service and performance
conditions and will vest after five years if the conditions are met. The fair value of options were determined using a Black-
Scholes pricing model taking into account the exercise price, the term of the option, the share price at grant date and
expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of
the instrument.
Fair value at grant date: $1.88 per option
Exercise price: $5.2404
Grant date: 11 September 2020
Vesting date: 10 September 2025
Share price at grant date: $4.99
Expected price volatility of the Company's shares: 61%
Expected dividend yield: 3.7%
Risk-free interest rate: 0.28%
Options issued under the plan carry no dividend and voting rights.
Fair value of interests granted – 30 December 2020
100,000 options were granted for no consideration and vest based on fulfilment of specified service and performance
conditions and will vest after five years if the conditions are met. The fair value of options were determined using a Black-
Scholes pricing model taking into account the exercise price, the term of the option, the share price at grant date and
expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of
the instrument.
Fair value at grant date: $2.86 per option
Exercise price: $6.8450
Grant date: 30 December 2020
Vesting date: 29 December 2025
Share price at grant date: $7.24
Expected price volatility of the Company's shares: 61%
Expected dividend yield: 3.7%
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Risk-free interest rate: 0.34%
Options issued under the plan carry no dividend and voting rights.
Fair value of interests granted – 17 September 2021
100,000 options were granted for no consideration and vest based on fulfilment of specified service and performance
conditions and will vest after five years if the conditions are met. The fair value of options were determined using a Black-
Scholes pricing model taking into account the exercise price, the term of the option, the share price at grant date and
expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of
the instrument.
Fair value at grant date: $4.70 per option
Exercise price: $16.8178
Grant date: 17 September 2021
Vesting date: 16 September 2026
Share price at grant date: $17.08
Expected price volatility of the Company's shares: 39%
Expected dividend yield: 2.4%
Risk-free interest rate: 0.65%
Options issued under the plan carry no dividend and voting rights.
Fair value of interests granted – 30 September 2022
100,000 options were granted for no consideration and vest based on fulfilment of specified service and performance
conditions and will vest after five years if the conditions are met. The fair value of options were determined using a Black-
Scholes pricing model taking into account the exercise price, the term of the option, the share price at grant date and
expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of
the instrument.
Fair value at grant date: $2.53 per option
Exercise price: $8.6451
Grant date: 30 September 2022
Vesting date: 29 September 2027
Share price at grant date: $8.31
Expected price volatility of the Company's shares: 49%
Expected dividend yield: 5.0%
Risk-free interest rate: 3.76%
Options issued under the plan carry no dividend and voting rights.
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Annual Report
c) Expenses arising from share-based transactions
Total expenses arising from share-based payment transactions recognised during the period as part of incentive expenses
were as follows:
Pinnacle Investment Management Group Employee Option Share Plan
Pinnacle Omnibus Plan
Pinnacle Long-term Employee Incentive Plan
2023
$’000
-
3,408
-
2022
$’000
-
2,848
-
Total share-based payment transactions
3,408
2,848
29. Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the Company and its related
practices:
2023
$
2022
$
PricewaterhouseCoopers Australia
(i)
The deferred tax asset balance comprises temporary differences attributable to:
Audit and review of financial statements
289,635
291,100
Other assurance services:
Audit of regulatory returns
25,560
24,000
Audit of compliance plan - Responsible entity *
131,905
137,350
Other assurance services
-
-
Total remuneration for audit and other assurance services
447,100
452,450
(ii) Taxation services
Tax services
Total remuneration for taxation services
(iii) Other services
Other services
37,165
37,165
56,657
56,657
-
-
Total remuneration of PricewaterhouseCoopers Australia
484,265
509,107
Total remuneration of auditors
484,265
509,107
* Compliance plan audit charges are on-charged to managed funds to which responsible entity services are provided.
30. Events occurring after the reporting period
No matter or circumstance has occurred subsequent to year-end that has significantly affected, or may significantly affect,
the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent financial
years.
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Annual Report
31. Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that may have a financial impact on the Group and that are believed to be reasonable under
the circumstances.
a) Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future in the preparation of the financial statements. The
resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below.
(i) Estimated impairment of non-financial assets
The Group tests at least annually whether assets have suffered any impairment, in accordance with the accounting policy
stated in note 32(i). Where required, the recoverable amounts of assets have been determined based on value-in-use
calculations. These calculations require the use of assumptions. For impairment policies regarding financial assets see
notes 32(k) and 32(l).
(ii) Income taxes
The Group can recognise deferred tax assets relating to carried forward tax losses and deductible timing differences to the
extent that it is considered probable that there will be future taxable profits relating to the same taxation authority against
which the carried forward tax losses and deductible timing differences will be utilized. As at the reporting date the
deferred tax assets of the consolidated entity have not been recognised on the basis that their recovery is not considered
probable.
(b) Critical judgements in applying the Group's accounting policies
(i) Fair value of financial assets
The fair value of financial assets that are not traded in an active market is determined by using valuation techniques. The
Group uses its judgement to select a variety of methods and make assumptions that are mainly based on market
conditions existing at each reporting date (refer to note 20(d) for further details).
(ii) Entities subject to joint control
Entities subject to joint control are not considered controlled entities for the purposes of AASB 10 on the basis that the
group holds a minority shareholding (20%-49.99%) of the voting rights (with no preferential rights to returns) and there is a
requirement for unanimous decision making in relation to a number of strategic matters contained in the shareholders
agreements. (refer to note 32(b) for further details).
(iii) Share-based payments
The Group measures equity settled share-based payment transactions by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by management using option pricing
models that use estimates and assumptions. Management exercises judgement in preparing the valuations and these may
affect the value of any share-based payments recorded in the financial statements (refer to notes 32(s)(iv) and 26 for
further details).
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Annual Report
32. Summary of significant accounting policies
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements
are for the consolidated entity consisting of Pinnacle Investment Management Group Limited and its subsidiaries ("the
Group") - refer to note 22.
a) Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The Group is a
for profit entity for the purpose of preparing the financial statements.
(i) Compliance with AASB
The consolidated financial statements of the Group also comply with International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board (IASB).
(ii) New and amended standards adopted by the Group
There are no new or amended standards adopted by the Group for the first time for their annual reporting period
commencing 1 July 2022 that have had any impact on the Group's accounting policies nor have had any impact on the
amounts recognised in prior periods and are not expected to significantly affect the current or future periods.
(iii) Early adoption of standards
The Group has elected not to apply any of the pronouncements before their operative date in the annual reporting period
beginning 1 July 2022.
(iv) Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of
available for sale financial assets, and financial assets (including derivative instruments) at fair value through profit or loss.
b) Principles of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Pinnacle Investment
Management Group Limited as at 30 June 2023 and the results of all subsidiaries for the year then ended. Pinnacle
Investment Management Group Limited and its subsidiaries together are referred to in these financial statements as the
“Group” or the “consolidated entity”.
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity
when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated
from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group (refer to note 32(h)).
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of
comprehensive income, consolidated statement of changes in equity and consolidated statement of financial position,
respectively.
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Annual Report
(ii) Employee share trust
The Group has formed a trust to administer the Group's employee share plans. Where the substance of the relationship is
that control rests with the Group, the employee share trust is consolidated and any shares held by the trust are disclosed
as treasury stock and deducted from contributed equity (refer to note 16 and note 28(a)).
(iii) Entities under joint control
Entities under joint control are all entities over which the Group has a shareholding of between 20% and 49.99% of the
voting rights, which have been assessed to meet the classification of joint venture under AASB 11 Joint arrangements, due
to the requirement for unanimous decision making in relation to a number of strategic matters contained in the
shareholders agreements. Further, the Group does not have direct rights to the assets, and obligations for the liabilities of
the entities. Investments in entities under joint control are accounted for in the consolidated financial statements using the
equity method of accounting, after initially being recognised at cost. The Group's investment in entities under joint control
includes goodwill (net of any accumulated impairment loss) identified on acquisition (refer to note 23).
The Group’s share of the post-acquisition profits or losses and other comprehensive income of entities under joint control
is recognised in the consolidated statement of comprehensive income.
The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Dividends
received or receivable from entities under joint control are recognised as a reduction in the carrying amount of the
investment in the consolidated statement of financial position.
When the Group's share of losses in an entity under joint control equals or exceeds its interest in the entity under joint
control, including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the entity under joint control.
Unrealised gains on transactions between the Group and entities under joint control are eliminated to the extent of the
Group's interest in the entities under joint control. Unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred. Accounting policies of entities under joint control have been changed
where necessary to ensure consistency with the policies adopted by the Group.
The carrying amounts of investments in entities under joint control is tested for impairment in accordance with the policy
described in note 32(i).
(iv) Changes in ownership interests
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with
equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the
controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the
amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate
‘transactions with non-controlling interests’ reserve within equity attributable to owners of Pinnacle Investment
Management Group Limited.
When the Group ceases to consolidate or equity account for an investment because of a loss of control, joint control or
significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount
recognised in the consolidated statement of comprehensive income. This fair value becomes the initial carrying amount for
the purposes of subsequently accounting for the retained interest as an associate, entity under joint venture or financial
asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are
accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts
previously recognised in other comprehensive income are reclassified to the consolidated statement of comprehensive
income.
If the ownership interest in an entity under joint control is reduced but joint control or significant influence is retained,
only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or
loss where appropriate.
c) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker.
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Annual Report
d) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary
economic environment in which the entity operates (the ‘functional currency'). The consolidated financial statements are
presented in Australian dollars, which is also the functional and presentation currency of all entities in the Group.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised
in the consolidated statement of comprehensive income.
e) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net
of amounts collected on behalf of third parties. The Group recognises revenue based on the principle that revenue is
recognised when control of a good or service transfers to a customer.
Revenue is recognised for the major business activities as follows:
(i) Service charges
Revenue for providing services is recognised over time using the output method in the accounting period when the
services are rendered. Fees are not recognised where there is a risk of significant revenue reversal. Where the contracts
include multiple performance obligations, the transaction will be allocated based on the stand-alone selling prices.
Consideration is payable when invoiced.
(ii) Interest received or due
Interest income is recognised using the effective interest method. Interest income is calculated by applying the effective
interest rate to the gross carrying amount of a financial asset except for financial assets that subsequently become credit-
impaired. For credit impaired financial assets, interest income is calculated by applying the effective interest rate to the net
carrying amount of the financial asset (after deduction of the loss allowance).
(iii) Dividends and distributions
Dividends and distributions are recognised as revenue when the right to receive payment is established. This applies even
if they are paid out of pre-acquisition profits. However, the investment may need to be tested for impairment as a
consequence (refer to note 32(i))
f)
Income tax
The income tax expense or benefit for the period is the tax payable or receivable on the current period's taxable income
based on the national income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary
differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the
reporting period in the countries where the Company's subsidiaries and entities under joint control operate and generate
taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax
liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted
for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the
time of the transaction affects neither accounting nor taxable profit or loss.
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Annual Report
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end
of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred
income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases
of investments in controlled entities where the Company is able to control the timing of the reversal of the temporary
differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are
offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the
asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or
directly in equity, respectively.
(i) Tax consolidation legislation
Pinnacle Investment Management Group Limited and its wholly-owned Australian controlled entities have implemented
the tax consolidation legislation. As a consequence, these entities are taxed as a single entity and the deferred tax assets
and liabilities of these entities are set off in the consolidated statement of financial position.
The head entity, Pinnacle Investment Management Group Limited, and the controlled entities in the tax consolidated
group continue to account for their own current and deferred tax amounts. These tax amounts are measured as if each
entity in the tax consolidated group continues to be a standalone taxpayer in its own right.
In addition to its own current and deferred amounts, Pinnacle Investment Management Group Limited also recognises the
current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed
from controlled entities in the tax consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the Group. Any difference between the amounts assumed and amounts
receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) wholly-
owned tax consolidated entities. Details about the tax funding agreement are disclosed in note 32(z)(ii).
g) Leases
The Group leases offices in Brisbane and Sydney. Rental contracts are typically made for fixed periods of 3 – 5 years. The
lease agreements do not impose any covenants. Until the current financial year, leases of property were classified as
operating leases. Payments made under operating leases (net of any incentives received from the lessor) were charged to
profit or loss on a straight-line basis over the period of the lease.
Leases are recognized as a right-of-use asset and 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. 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. Lease liabilities include the net
present value of the following lease payments:
fixed payments (including in-substance fixed payments), less any lease incentives receivable
variable lease payments that are based on an index or a rate
amounts expected to be payable by the lessee under residual value guarantees
the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and
payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that
option.
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Annual Report
Lease payments to be made under reasonably certain extension options are also included in the measurement of the
liability.
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.
To determine the incremental borrowing rate, the Group:
where possible, uses recent third-party financing received by the individual lessee as a starting point,
adjusted to reflect changes in financing conditions since third party financing was received
uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held
by the Group, which does not have recent third party financing, and
makes adjustments specific to the lease, e.g. term, country, currency and security.
Right-of-use assets are measured at cost comprising the following:
the amount of the initial measurement of the lease liability
any lease payments made at or before the commencement date, less any lease incentives received
any initial direct costs, and
restoration costs.
h) Business combinations
The acquisition method of accounting is used to account for all business combinations, including business combinations
involving entities or businesses under common control, regardless of whether equity instruments or other assets are
acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets
transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also
includes the fair value of any contingent consideration arrangement and the fair value of any pre-existing equity interest in
the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values
at the acquisition date. On an acquisition by acquisition basis, the Group recognises any non-controlling interest in the
acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree's net identifiable
assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition
date fair value of any previous equity interest in the acquiree over the fair value of the Group's share of the net identifiable
assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the
subsidiary acquired, the difference is recognised directly in the consolidated statement of comprehensive income as a
bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their
present value as at the date of exchange. The discount rate used is the Group’s incremental borrowing rate, being the rate
at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.
Contingent consideration for a business combination is classified either as equity or a financial liability. Amounts classified
as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in the consolidated
statement of comprehensive income.
i)
Impairment of non-financial assets
Non-financial assets are tested for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and
value-in-use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets
(cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible
reversal of the impairment at the end of each reporting period.
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Annual Report
j) Cash and cash equivalents
For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents includes cash on
hand, deposits held at call with financial institutions, and other short-term, highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
k) Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method, less loss allowance. Trade receivables are amounts due from customers for goods sold or services
performed in the ordinary course of business. They are generally due for settlement within 30 days and therefore are all
classified as current. Trade receivables are recognised initially at the amount of consideration that is unconditional unless
they contain significant financing components, when they are recognised at fair value. The group holds the trade
receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at
amortised cost using the effective interest method.
For trade receivables, the group applies the simplified approach permitted by AASB 9, which requires lifetime expected
losses to be recognised from initial recognition of the receivables. The expected loss rates are based on the payment
profiles of sales over a period of 36 months before the reporting date and the corresponding historical credit losses
experienced within this period. The historical loss rates are also adjusted to reflect current and forward-looking
information on factors affecting the ability of the customers to settle the receivables.
Trade receivables are written off if there is no reasonable expectation of recovery. Indicators that there is 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 180 days past due. Impairment losses on trade
receivables are presented as net impairment losses within operating profit. Subsequent recoveries of amounts previously
written off are credited against the same line item.
l)
Investments and other financial assets
Classification and measurement
The classification and measurement of financial instruments is determined by the accounting standard AASB 9 Financial
Instruments. AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets
and liabilities, and is driven by the Group’s business model for managing the financial assets and the contractual cash flow
characteristics of the financial instruments.
In accordance with AASB 9 Financial Instruments: Recognition and Measurement, the Group's investments and other
financial assets are categorised in one of the three categories: amortised cost, fair value through other comprehensive
income and fair value through profit or loss.
(i) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this
category if acquired principally for the purpose of selling in the short-term. Derivatives are also carried at fair value
through profit or loss unless they are designated as hedges (see note 32(m) for further details about the types of derivates
held).
At initial recognition, the Group measures a financial instrument at fair value through profit or loss at its fair value.
Transaction costs of financial assets and liabilities at fair value through profit or loss are expensed in the statement of
comprehensive income.
Subsequent to initial recognition, all financial assets at fair value through profit or loss are measured at fair value. Gains
and losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are
presented in the statement of comprehensive income within net gains/(losses) on financial instruments at fair value
through profit or loss in the period in which they arise.
Assets in this category are classified as current assets if they are expected to be settled within 12 months, otherwise they
are classified as non-current.
(ii) Loans at amortised cost
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Annual Report
A financial asset is classified at amortised cost if the objective of the business model is to hold the financial asset for the
collection of the contractual cash flows and the contractual cash flows under the instrument represent solely payments of
principal and interest (SPPI) on the principal outstanding. This comprises loans to joint associates (including Affiliate
executives) which are included in other current and non-current assets within the statement of financial position.
Loans are held for collection of contractual cash flows and the contractual cash flows under the instrument represent SPPI
on the principal outstanding. Loans assets are measured initially at fair value plus transaction costs and subsequently at
amortised cost using the effective interest rate method, less impairment losses if any. Such assets are reviewed at each
reporting date to determine whether there is objective evidence of impairment.
At each reporting date, the Group measures the loss allowance on loans at an amount equal to the lifetime expected credit
losses if the credit risk has increased significantly since initial recognition. If, at the reporting date, the credit risk has not
increased significantly since initial recognition, the Group shall measure the loss allowance at an amount equal to 12-
month expected credit losses. Significant financial difficulties of the counterparty, probability that the counterparty will
enter bankruptcy or financial reorganisation, and default in payments are all considered indicators that a loss allowance
may be required. If the credit risk increases to the point that it is considered to be credit impaired, interest income will be
calculated based on the gross carrying amount adjusted for the loss allowance.
The amount of the impairment loss is recognised in the statement of comprehensive income on a separate line item. When
a loan receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it
is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against
other expenses in the statement of comprehensive income.
Recognition and derecognition
The Group recognises financial assets on the date it becomes party to the contractual agreement (trade date) and
recognises changes in fair value of the financial assets from this date.
Financial assets are derecognised when the right to receive cash flows from the investments has expired or the Group has
transferred substantially all risks and rewards of ownership.
m) Derivative financial instruments
Derivative instruments are initially recognised at fair value on the date a derivative contract is entered into and are
subsequently remeasured to their fair value through profit and loss at each reporting date. Derivative instruments include
equity futures, interest rate futures and equity options.
The Group enters into transactions in certain derivative financial instruments which have certain risks. A derivative is a
financial instrument or other contract which is settled at a future date and whose value changes in response to the change
in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates,
credit rating or credit index or other variable.
Derivative financial instruments require no initial net investment or an initial net investment that is smaller than would be
required for other types of contracts that would be expected to have a similar response to changes in market factors.
Derivative transactions include many different instruments such as forwards, futures and options. The Group uses
derivatives to manage its exposure to equity investments held.
The Group holds the following derivative instruments:
Futures are contractual obligations to buy or sell financial instruments on a future date at a specified price established in
an organised market. The futures contracts are collateralised by cash or marketable securities. Changes in futures
contracts’ values are usually settled net daily with the exchange.
n) Property, plant and equipment
All property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably. All repairs and maintenance are charged to profit or loss during the reporting period in which they are
incurred.
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Annual Report
Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their
estimated useful lives or in the case of leasehold improvements, the shorter lease term as follows:
-
-
-
Plant and equipment
Furniture and fittings
2 - 5 years
2 - 5 years
Leasehold improvements
3 - 10 years
The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater
than its estimated recoverable amount (note 32(i)).
Gains and losses on disposal are determined by comparing proceeds with carrying amount. These are included in the
consolidated statement of comprehensive income.
o) Intangible assets
IT development and software
Costs incurred in developing products or systems and acquiring software and licences that will contribute to future period
financial benefits through revenue generation and/or cost reduction are capitalised to software and systems. The costs
capitalised are external direct costs of materials and services, and where applicable the direct payroll and payroll related
costs of employees' time spent on the project. Amortisation is calculated on a straight-line basis over periods generally
ranging from 3 to 5 years from the point at which the asset is ready to use.
IT development costs include only those costs directly attributable to the development phase that can be reliably
measured and are only recognised following completion of technical feasibility and where the Group has an intention and
ability to use the asset.
Customer contracts
Costs incurred which are directly associated with the acquisition of a customer contract, have been capitalized as an
intangible asset and are being amortised over the agreement term of (3 years – 20 years). Amortisation is calculated on a
straight-line basis over the contract term.
p) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which
are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are
presented as current liabilities unless payment is not due within 12 months after the reporting date. They are recognised
initially at their fair value and subsequently measured at amortised cost using the effective interest method.
q) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured
at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is
recognised in profit or loss over the period of the borrowings using the effective interest method.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or
expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to
another party and the consideration paid, including any noncash assets transferred or liabilities assumed, is recognised in
profit or loss as other income or finance costs.
Where the terms of a financial liability are renegotiated and the entity issues equity instruments to a creditor to extinguish
all or part of the liability (debt for equity swap), a gain or loss is recognised in profit or loss, which is measured as the
difference between the carrying amount of the financial liability and the fair value of the equity instruments issued.
AASB101(69) Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement
of the liability for at least 12 months after the reporting period.
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Annual Report
r) Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.
Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is
determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow
with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of management's best estimate of the expenditure required to settle the
present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax
rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase
in the provision due to the passage of time is recognised as interest expense.
s) Employee benefits
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled within 12
months after the end of each reporting period in which the employees render the related service are recognised in respect
of employees' services up to the end of the reporting period and are measured at the amounts expected to be paid when
the liabilities are settled. The liability for annual leave is recognised in the provision for employee benefits. All other short-
term employee benefit obligations are presented as payables.
(ii) Other long-term employee benefit obligations
The liabilities for long service leave and annual leave which are not expected to be settled wholly within 12 months after
the end of the reporting period in which the employees render the related service are recognised in the provision for
employee benefits. They are measured as the present value of expected future payments to be made in respect of services
provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is
given to expected future wage and salary levels, experience of employee departures and periods of service. Expected
future payments are discounted using market yields at the end of the reporting period on high quality corporate bonds
with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
Remeasurement as a result of experience adjustments and changes in assumption are recognised in the consolidated
statement of comprehensive income.
The obligations are presented as current liabilities in the consolidated statement of financial position if the Group does not
have an unconditional right to defer settlement for at least 12 months after the reporting period, regardless of when the
actual settlement is expected to occur.
(iii) Retirement benefit obligations
Contributions to defined contribution funds are recognised as an employee benefits expense as they become payable.
Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is
available. The Group has no further payment obligations once the contributions have been paid.
(iv) Share-based payments
Share-based compensation benefits are provided to certain employees via the Pinnacle Investment Management Group
Employee Option Share Plan, the Pinnacle Omnibus Plan and where applicable, Pinnacle long-term employee incentive
agreements. Information relating to these schemes is set out in note 28.
The fair value of options and rights granted under the plans is recognised as an employee benefits expense with a
corresponding increase in share based payments reserve. The total amount to be expensed is determined by reference to
the fair value of the options and rights granted, which includes any market performance conditions and the impact of any
non-vesting conditions but excludes the impact of any service and non-market performance vesting conditions.
Non-market performance vesting conditions are included in assumptions about the number of options that are expected to
vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting
conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options and
rights that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to
original estimates, if any, in the consolidated statement of comprehensive income, with a corresponding adjustment to the
share based payment reserve.
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Annual Report
The plan is administered by AET Structured Finance Services Pty Ltd, see note 32(b)(ii). When the options are exercised, the
trust transfers the appropriate amount of shares to the employee. The proceeds received net of any directly attributable
transaction costs are credited directly to equity.
The fair value at grant date of the plans is determined using option pricing models that take into account the exercise
price, the vesting period, the vesting and performance criteria, the impact of dilution, the share price at grant date,
expected price volatility of the underlying share, the expected dividend yield, and the risk-free interest rate for the vesting
period.
(v) Bonuses
The Group recognises a liability and an expense for bonuses where contractually obliged or where there is a past practice
that has created a constructive obligation.
(vi) Termination benefits
Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or
when an employee accepts voluntary redundancy in exchange for these benefits. The group recognises termination
benefits at the earlier of the following dates: (a) when the group can no longer withdraw the offer of those benefits; and
(b) when the entity recognises costs for a restructuring that is within the scope of AASB 137 and involves the payment of
terminations benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are
measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after
the end of the reporting period are discounted to present value.
(vii) Long-term employee incentive agreements
The Group has long-term employee incentive schemes which enable certain employees of the Group, under full recourse
and limited recourse loan arrangements, to acquire PNI shares. The schemes are designed to align the interests of the
employees with those of shareholders.
The fair value of the limited recourse loan arrangements under the long-term employee incentive schemes are recognised
as an employee benefits expense with a corresponding increase in share-based payment reserve. The total amount to be
expensed is determined by reference to the fair value of the limited recourse loan arrangements, which includes any
market performance conditions and the impact of any non-vesting conditions but excludes the impact of any service and
non-market performance vesting conditions. The total expense is recognised over the vesting period, which is the period
over all of the specified vesting conditions are to be satisfied. The inflows and outflows associated with these
arrangements are accounted for on a net basis, as the arrangements are expected to be settled net.
Certain entities under joint control have similar incentive schemes and Pinnacle may provide cash funding to certain
employees of these entities in order for the employees to acquire shares in the entities. Pinnacle accounts for these
contributions as investments in entities under joint control. Remuneration of the employees is recorded in the entities
under joint control and Pinnacle records its share of the profits or losses of these entities upon equity accounting. A liability
is recorded to the extent that Pinnacle has a net obligation to the employee of a jointly-controlled entity under the
employee contract.
t) Contributed equity
Ordinary shares are classified as equity (note 16).
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.
u) Dividends
Provision is made for the amount of any dividend declared being appropriately authorised and no longer at the discretion
of the Group, on or before the end of the reporting period but not distributed at the end of the reporting period.
v) Earnings per share
(i) Basic earnings per share
Basic earnings after tax per share is calculated by dividing:
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Annual Report
the profit attributable to owners of the Company, excluding any costs of servicing equity
other than ordinary shares, by;
the weighted average number of ordinary shares outstanding during the financial year,
adjusted for bonus elements in ordinary shares issued during the year and excluding treasury
shares (see note 16(d)).
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
the after income tax effect of interest and other financing costs associated with dilutive
potential ordinary shares, and
the weighted average number of additional ordinary shares that would have been
outstanding assuming the conversion of all dilutive potential ordinary shares.
w) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part
of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the consolidated
statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to, the taxation authority, are presented as operating cash flows.
x) Rounding of amounts
The Company 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
financial statements. Amounts in the financial statements have been rounded off in accordance with that instrument to
the nearest thousand dollars, or in certain cases, the nearest dollar.
y) New accounting standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published which are not mandatory for 30 June 2023
reporting periods and have not been early adopted by the Group. These standards, amendments or interpretations are not
expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future
transactions.
z) Parent Entity financial information
The financial information for the Parent Entity, Pinnacle Investment Management Group Limited, disclosed in note 24 has
been prepared on the same basis as the consolidated financial statements, except as set out below.
(i) Investments in subsidiaries
Investments in subsidiaries are accounted for at cost in the financial statements of Pinnacle Investment Management
Group Limited.
(ii) Tax consolidation legislation
Pinnacle Investment Management Group Limited and its wholly-owned Australian controlled entities have implemented
the tax consolidation legislation – refer note 32(f)(i).
The entities have entered into a tax funding agreement under which the wholly-owned entities fully compensate Pinnacle
Investment Management Group Limited for any current tax payable assumed and are compensated by Pinnacle
Investment Management Group Limited for any current tax receivable and deferred tax assets relating to unused tax losses
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Annual Report
or unused tax credits that are transferred to Pinnacle Investment Management Group Limited under the tax consolidation
legislation. The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities'
financial statements.
The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the
head entity. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax
instalments.
(iii) Share based payments
The grant by the Parent Entity of options over its equity instruments to the employees of subsidiaries in the Group is
treated as a capital contribution to that subsidiary. The fair value of employee services received, measured by reference to
the grant date fair value, is recognised over the vesting period as an increase to investments in subsidiaries, with a
corresponding credit to share based payment reserve.
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Annual Report
09
In the directors’ opinion:
a) the financial statements and notes set out on pages 56 to 116 are in accordance with the Corporations Act, including:
(i)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements, and
(ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2023 and of its
performance for the year ended on that date, and
b) there are reasonable grounds to believe that Pinnacle Investment Management Group Limited will be able to pay its
debts as and when they become due and payable.
Note 32(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board.
The directors have been given the declarations by the Managing Director and Chief Financial Officer required by section
295A of the Corporations Act.
This declaration is made in accordance with a resolution of the directors.
Alan Watson, Chair
Sydney, 2 August 2023
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Annual Report
10
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Annual Report
Independent auditor’s report
To the members of Pinnacle Investment Management Group Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Pinnacle Investment Management Group Limited (the Company)
and its controlled entities (together the Group) is in accordance with the Corporations Act 2001,
including:
(a) giving a true and fair view of the Group's financial position as at 30 June 2023 and of its financial
performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
●
●
●
●
●
●
●
the consolidated statement of financial position
the consolidated statement of comprehensive income for the year then ended
the consolidated statement of profit or loss for the year then ended
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information
the directors’ declaration.
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
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 & 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.
PricewaterhouseCoopers, ABN 52 780 433 757
480 Queen Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001
T: +61 7 3257 5000, F: +61 7 3257 5999
Liability limited by a scheme approved under Professional Standards Legislation.
11
Annual Report
9
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
During the year, the Group held equity interests in fifteen affiliated fund managers (the Pinnacle
Affiliates or Affiliates) with differing investment styles and offerings. The Group also provides
distribution services, business support, and responsible entity services to the Pinnacle Affiliates and
external parties via subsidiaries.
The Group has minority shareholdings in the Pinnacle Affiliates and has assessed them to be joint
ventures due to the requirement for unanimous decision making in relation to a number of strategic
matters contained in the shareholders agreements. The financial results of the Group include the
consolidation of subsidiaries and the share of net profit of associates and joint ventures accounted for
using the equity method for the Pinnacle Affiliates.
Materiality
●
For the purpose of our audit we used overall Group materiality of $3,800,000 which represents
approximately 5% of the Group’s profit before tax from continuing operations.
● We applied this threshold, together with qualitative considerations, to determine the scope of
our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of
misstatements on the financial report as a whole.
● We chose Group profit before tax because, in our view, it is the benchmark against which the
performance of the Group is most commonly measured.
● We utilised a 5% threshold based on our professional judgement, noting it is within the range of
commonly acceptable thresholds.
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Annual Report
20
Audit scope
● Our audit focused on where the Group made subjective judgements; for example, significant
accounting estimates involving assumptions and inherently uncertain future events.
● We audited the most financially significant subsidiaries within the Group, being Pinnacle
Investment Management Limited, Pinnacle Funds Services Limited, Pinnacle Services
Administration Pty Ltd and Pinnacle RE Services Limited. We performed targeted audit
procedures over the remaining significant balances and further audit procedures over the
consolidation process.
● We, or component auditors, performed an audit of each of the financially significant Pinnacle
Affiliates on a standalone basis. In establishing the overall approach to the Group audit, we
considered the type of work that needed to be performed by us, as the Group’s auditor, or by
the component auditors operating under our instructions.
● We audited the Group’s equity accounting for the Pinnacle Affiliates, including the Group’s
share of net profit of jointly controlled associates and joint ventures accounted for using the
equity method and the Group’s investments accounted for using the equity method recognised
in the Group financial statements.
Key audit matters
Amongst other relevant topics, we communicated the following key audit matter to the Audit,
Compliance and Risk Management Committee:
• Share of net profit of associates and joint ventures accounted for using the equity method
This is further described in the Key audit matters section below.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report for the current period. The key audit matter was addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context.
1
1 Annual Report
2
Key audit matter
How our audit addressed the key audit matter
Share of net profit of associates and
joint ventures accounted for using
the equity method
Refer to note 23(d) - $67,359k
The share of net profit of associates and
joint ventures accounted for using the
equity method is calculated by reference
to Pinnacle’s share of each Affiliate’s net
profit for the year.
Pinnacle Affiliates’ funds under
management have the potential to earn
performance fees, based on an
assessment of actual performance
relative to benchmarks. These
benchmarks are agreed between the
Affiliates and their clients and are set out
in relevant Product Offering Documents
and Investment Services Agreements.
The performance fee revenue has a
significant impact on Pinnacle’s share of
net profits of jointly controlled associates
and joint ventures accounted using the
equity method.
This was a key audit matter because the
share of net profit of associates and joint
ventures accounted for using the equity
method is material, and the performance
fee revenues recognised by Pinnacle
Affiliates are material in nature, and the
variability of returns can be significant
depending on the performance relative
to contractual benchmarks.
We performed the following procedures, amongst
others:
● For a sample of Pinnacle Affiliates, we
● Obtained supporting evidence for a sample
of changes in Pinnacle’s equity ownership
during the year.
● Obtained the share registers of the Affiliates
and recalculated Pinnacle’s ownership
percentage.
● Obtained the Affiliates’ profit and loss
statement and recalculated Pinnacle’s share
of net profit.
●
Assessed whether the accounting policies
across the Group were reasonable and
consistent.
● For a sample of performance fees recorded by
Pinnacle Affiliates, we obtained the relevant
source documents and:
●
●
Assessed whether the calculation
methodologies used by management were
in accordance with the contractual
arrangements, the Group accounting policy
and requirements of Australian Accounting
Standards.
Compared the hurdle rates and any
accumulated deficiency clauses to the
relevant contracts.
● Obtained evidence from relevant external
sources to assess key inputs into the
calculations (for example net asset values
and fund returns).
●
Reperformed the performance fee
calculation with reference to the key inputs
used in the calculations.
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Annual Report
22
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 30 June 2023, but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
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 that we 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.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related 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 the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
auditor's report.
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Annual Report
23
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 29 to 49 of the directors’ report for the
year ended 30 June 2023.
In our opinion, the remuneration report of Pinnacle Investment Management Group Limited for the
year ended 30 June 2023 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.
PricewaterhouseCoopers
Ben Woodbridge
Partner
Brisbane
2 August 2023
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Annual Report
24
11
125
Annual Report
The shareholder information set out below is correct as at 27 July 2023.
Shares on issue
Distribution of securities
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – 9,999,999,999
Rounding
Total
No. of shareholders
No. of shares
% of issued
shares
3,574
2,570
621
563
112
1,455,845
6,409,561
4,487,714
14,917,599
0.72
3.19
2.23
7.42
173,897,372
86.44
0.00
7,440
201,168,091
100.00
Unmarketable parcels
Minimum $500 parcel at $10.58 per unit
48
301
3610
Minimum parcel size
No. of shareholders
No. of shares
Twenty largest shareholders (as at 27 July 2023)
Rank
Name
HSBC Custody Nominees (Australia) Limited
No. of shares
% of issued
shares
41,761,406
20.76
1
2
3
4
5
6
7
8
9
10
11
J P Morgan Nominees Australia Pty Limited
21,573,524
10.72
Citicorp Nominees Pty Limited
Macoun Generation Z Pty Ltd
National Nominees Limited
Andrew Chambers & Fleur Chambers
Mr Alexander William Macdonald
Macoun Superannuation Pty Ltd
BNP Paribas Noms Pty Ltd
HSBC Custody Nominees (Australia) Limited
Mr David Francis Cleary
14,665,698
13,993,985
6,258,516
7.29
6.96
3.11
5,303,614
2.64
5,045,090
3,882,092
3,707,535
3,017,882
2,807,149
2.51
1.93
1.84
1.50
1.40
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Annual Report
Rank
Name
No. of shares
% of issued
shares
12
13
14
15
16
17
18
19
20
Mr David Noel Groth
Vestinoz Pty Ltd
Earlston Nominees Pty Ltd
Kinauld Pty Ltd
Mr Mark Bryant Cormack and Mrs Melanie Louise Cormack
Warragai Investments Pty Ltd
Kinauld Pty Ltd
Ms Alison Jane Fraser
Mr Adrian Whittingham
Total
Total remaining holders balance
2,801,224
2,752,766
2,450,000
2,000,000
1,999,293
1,950,000
1,900,000
1,346,657
1,228,614
1.39
1.37
1.22
0.99
0.99
0.97
0.94
0.67
0.61
140,445,045
69.81%
60,723,046
30.19%
The names of the shareholders who have notified the Company of a substantial holding in accordance with section 671B of
the Corporations Act are:
Substantial shareholder
Steve Wilson and associates
Ian Macoun and associates
Ethical Partners Funds Management Pty Ltd
No. of shares
% of shares
22,640,240
11.25
18,276,077
9.1%
10,604,041
5.27%
Voting rights
Upon a poll each share shall have one vote.
Options and performance rights on issue
Distribution of securities
Options
There are 800,000 options on issue as at 27 July 2023.
The options are held by:
A&T Structured Finance Services Pty Ltd as trustee for the Pinnacle Investment Management Group Employee Option
Share Plan;
Alison Maschmeyer;
Ben Cossey; and
David Batty.
The options are not listed.
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Performance rights
There are no performance rights on issue as at 27 July 2023.
Voting rights
There are no voting rights attaching to the options.
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Pinnacle Investment Management Group Limited
Incorporated in Queensland on 23 April 2002
ABN
22 100 325 184
Directors
Alan Watson,
Chair (appointed director 15 July 2013, appointed Chair 23 October
2015)
Ian Macoun,
Managing Director (appointed MD 17 August 2016; appointed
director 25 August 2016)
Deborah Beale AM (appointed 1 September 2016)
Lorraine Berends (appointed 1 September 2018)
Andrew Chambers (appointed 1 September 2016)
Chief Legal and Commercial Officer
and Company Secretary
Calvin Kwok
Chief Financial Officer
Dan Longan
Share Registry
Computershare Investor Services Pty Limited
Level 1, 200 Mary Street
Brisbane QLD 4000
Telephone 1300 850 505
ASX Code
PNI
Shares are listed on the Australian Securities Exchange.
Bankers
Commonwealth Bank of Australia
240 Queen Street,
Brisbane QLD 4000
Auditor
PricewaterhouseCoopers
480 Queen Street,
Brisbane QLD 4000
Australia
Brisbane
Registered Office
Level 19, 307 Queen Street
Brisbane QLD 400
Telephone 1300 651 577
Sydney
Level 25, 264 George Street
Sydney NSW 2000
Telephone 1300 651 577
Melbourne
Level 8, 90 Collins Street
Melbourne VIC 3000
United Kingdom
London
Floor 8, 125 Old Broad St
London EC2N 1AR
Canada
Toronto
7th Floor
30A Hazelton Ave Suite 400
Toronto, ON M5R 2E2
United States
New York
Office 1146
One Rockefeller Plaza
11th floor
New York, NY 10020
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Website address
www.pinnacleinvestment.com
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