Annual Report
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Contents
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
Consolidated 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
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
Consolidated Entity Disclosure Statement ..................................................................................... 119
Directors’ Declaration ............................................................................................................ 120
Independent Auditor's Report ............................................................................................... 121
Shareholder Information ....................................................................................................... 127
Corporate Directory ............................................................................................................... 131
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01
Pinnacle
Glossary
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Term
Meaning
2023 Annual Report
the Group’s annual report for the 2023 financial year.
2023 Financial Year
the period 1 July 2022 to 30 June 2023.
2024 Annual Report
this document.
2024 Financial Year
the period 1 July 2023 to 30 June 2024.
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
Aikya Investment Management Limited.
Antipodes
Antipodes Partners Limited.
ASX Principles
the Corporate Governance Principles and Recommendations 4th Edition, published by the ASX
Corporate Governance Council.
Auditor
PricewaterhouseCoopers Australia.
Board
the board of directors of Pinnacle.
Board Committees
the Audit, Compliance and Risk Management Committee and the Remuneration and Nominations
Committee.
Chair
Alan Watson, the Chair of the Board.
Company
Pinnacle Investment Management Group Limited.
Company Secretary
Calvin Kwok, who held the position during the 2024 financial year.
Coolabah or CCI
Coolabah Capital Investments Pty Ltd.
Corporations Act
Corporations Act 2001 (Cth).
EOSP
Pinnacle Employee Option Share Plan.
Firetrail
Firetrail Investments Pty Limited.
Five V
Five V Capital Pty Ltd.
FUM
Funds Under Management.
Group or Pinnacle Group
Pinnacle and the wholly-owned entities that it controls.
Hyperion
Hyperion Asset Management Limited.
Key Management Personnel
the individuals identified as such on page 32 of the 2024 Annual Report.
Langdon
Langdon Equity Partners Ltd.
LTI
long-term incentives offered to individuals who are employees of the Group.
Longwave
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
net profit after tax.
NPBT
net profit before tax.
Palisade
Palisade Investment Partners Limited.
PIML
Pinnacle Investment Management Limited, the principal operating subsidiary of the Group.
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Term
Meaning
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 2024 Annual Report.
Plato
Plato Investment Management Limited.
PNI Foundation
previously the Pinnacle Charitable Foundation.
Principal Investments
investments made by the Group in listed and unlisted equities and unit trusts on its own behalf.
Resolution Capital
Resolution Capital Limited.
Riparian
Riparian Capital Partners Pty Limited.
Solaris
Solaris Investment Management Limited.
Spheria
Spheria Asset Management Pty Limited.
STI
short-term incentives offered to individuals who are employees of the Group.
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02
Chair’s Letter
Dear Fellow Shareholders,
On behalf of your Board, I am pleased to present
Pinnacle's Annual Report for the financial year ended 30
June 2024.
Over the year, your Company has delivered Net Profit
After Tax of $90.4 million, fully diluted earnings of 45.5c
per share and full year dividends of 42.0c per share,
which have grown of 18%, 17% and 17% respectively
over the prior year.
During this financial year, markets continued to face
prolonged geopolitical tensions, most notably conflicts
in Ukraine and the Middle East, with concomitant
effects on global supply chains. In addition, as central
banks sought to address inflation across the world,
prospects for interest rate reductions were continually
deferred as the year progressed. This produced
challenging conditions in many asset markets that are
important to us; however the Affiliates continued to
respond well to these pressures and I am delighted to
report that of those strategies that have a 5 year track
record, 85% outperformed their relevant benchmarks.
Complementing the Affiliates’ investment performance,
Pinnacle’s distribution teams delivered a strong level of
total inflows across the platform and the combination of
these produced the robust financial outcomes described
in the paragraph above.
FY24 was another year in which we continued to invest
in the firm, with the twin objectives of preparing
foundations for future growth and continuing to
broaden the firm’s diversification across client types,
Affiliates and asset classes. Pinnacle’s net share of these
Horizon 2 investments was approximately $11.5m. We
note as evidence of our medium-term diversification, as
recently as 5 years ago, around 89% of gross Affiliate
FUM, and 81% of gross Affiliate revenues were derived
solely from equity assets. By FY24 these numbers have
reduced to 70% and 54% respectively, reflecting our
growth in fixed income, private equity, private credit
and debt and infrastructure within our gross FUM.
Whilst such Horizon 2 investments may reduce earnings
in the short term, and the level of investment will vary
year to year, the benefits resulting from these
investments are an important part of our growth
strategy.
Where appropriate, and as part of alignment with
clients, the Affiliates have continued to actively seek the
ability to earn performance fees. Currently around 35%
of gross FUM, across 25 diverse strategies and 13
Affiliates is eligible to earn significant performance fees;
and, reflecting the strong investment performance
referred to above, it was pleasing to see performance
fees of $109.8m in aggregate compared to $58.2m in
the previous year, generated by all 13 Affiliates this
year.
Pinnacle’s distribution teams, both institutional and
retail, produced very creditable results; with overall net
inflows for the year of $9.9bn. Highlights included
offshore inflows of $7.0bn and consistent strong retail
flows into private markets and alternative strategies.
These were pleasing results within a market context of
anaemic retail equity flows during the first three
quarters of the financial year, noting however tentative
signs of improvement were evident towards the end of
the year. We recognize that the work required to
crystallise these inflows does not produce major results
overnight and is the result of consistent diligent longer-
term work, at which our people excel. Whilst we have
continued to be pleased with the work ethic of our
people over recent years, we have always recognized
that ultimately the financial results of the Company
must be a key consideration when determining
remuneration. As a result, remuneration outcomes for
all staff were relatively muted in FY22 and FY23;
however, the strong growth in financial results this year
has merited a return to a more robust level of overall
compensation outcomes. 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,
and further operational detail is discussed in the
Operating and Financial Report commencing on page 8.
In our interim results announcement in February, we
ventured that we enter the second half “with grounds
for cautious optimism”. As we have stated before, we do
not set out to be soothsayers of future market levels,
nor would we be immune to the consequences of any
major market dislocation; but rather that our optimism
for the future is derived from a view that Pinnacle enters
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FY25 with a variety of growth opportunities both in train
and yet to be prosecuted and these continue to broaden
and deepen. Indeed, as we engage with investment
firms and investment professionals both in Australia and
overseas, we continue to believe that the opportunity
set for Pinnacle’s ability to deliver “supported
independence” to future new Affiliates remains very
significant and very attractive.
We are delighted to announce that Ms. Christa Lenard
will be appointed to the Board effective from 2 August
2024. Ms. Lenard specialises in employment and
workplace law, with a practice that spans both the
public and private sectors. She has 20 years’ experience
in advising and representing clients on a wide range of
contentious and non-contentious employment law
matters, including discrimination law, industrial
disputation, enterprise bargaining, day to day
employment law advisory, managing psychosocial
welfare and organisational change, workplace
investigations and alternative dispute resolution. She is
a trusted advisor to many government agencies and
works with clients across a range of industries, including
banking and financial services, health and aged care,
maritime and logistics, technology and the amusement
industry. Pinnacle is delighted to welcome Ms. Lenard
to the Board.
Finally, we wish to thank you, our owners, for your
continued support of the Company, and look forward to
welcoming you to the Company’s Annual General
Meeting in Sydney on 25th October, 2024.
Yours sincerely,
Alan Watson
1 August 2024
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03
Overview,
Operating and
Financial
Report
Annual Report
9
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.
Founded in 2006, Pinnacle currently consists of 15 investment
Affiliates. At 30 June 2024, the Pinnacle Affiliates collectively
managed approximately $110.1 billion in assets across a
diverse range of asset classes. Pinnacle offers the Affiliates:
•
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
•
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 2024 financial
year continued to be:
•
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 2024.
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Key financial highlights
During the 2024 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 $110.1 billion in FUM as at 30 June 2024.
In the 2024 financial year:
Pinnacle Affiliates generated aggregate revenues (at 100%) of $663.4 million, up
from $511.6 million in the previous year. Of this, $109.8 million was performance
fees ($58.2m in the previous year).
Pinnacle generated total NPAT attributable to shareholders of $90.4 million, up
18.2% from $76.5 million in the prior year.
Pinnacle’s share of NPAT from Pinnacle Affiliates was $90.8 million, up 34.7% on the
prior year.
The table below sets out in summary form the performance of the Pinnacle Group
for the 2024 and 2023 financial years:
FY2024
FY2023
Pinnacle Affiliates (100% aggregate basis)
FUM ($billion)*
110.1
91.9
Revenue ($million)
663.4
511.6
Net profit before tax
302.7
228.4
Tax expense
(79.9)
(61.1)
Net profit after tax
222.8
167.3
Pinnacle Group ($million)
Revenue
49.0
45.5
Expenses
(49.4)
(36.4)
Write-down of investment
-
-
Share of Pinnacle Affiliates net profit after tax
90.8
67.4
NPBT from continuing operations attributable to
shareholders
90.4
76.5
Taxation
-
-
NPAT from continuing operations attributable to
shareholders
90.4
76.5
Discontinued operations
-
-
Total profit attributable to shareholders
90.4
76.5
Basic earnings per share (cents):
From continuing operations
45.8
39.3
Total attributable to shareholders
45.8
39.3
*Non-statutory measure
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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.
1.7
3.5
4.4
7.9
10.3
10.0
10.9
12.3
16.1
19.8
26.5
38.0
54.3
58.7
89.4
83.7
91.9
110.1
0
5
10
15
20
25
30
35
40
45
50
55
60
65
70
75
80
85
90
95
100
105
110
115
120
Jun 07 Jun 08 Jun 09 Jun 10 Jun 11 Jun 12 Jun 13 Jun 14 Jun 15 Jun 16 Jun 17 Jun 18 Jun 19 Jun 20 Jun 21 Jun 22 Jun 23 Jun 24
FUM ($bn) - at 100%
3.2
3.4
7.0
12.6
15.5
27.1
37.9
38.0
42.5
48.5
60.9
75.0
111.6
151.2
221.4
264.5
329.3
447.7
453.4
553.6
-
1.0
1.2
0.4
0.5
0.9
0.1
0.7
4.6
7.2
11.1
17.8
16.7
17.2
15.3
26.7
86.2
57.8
58.2
109.8
-
100
200
300
400
500
600
700
Jun 05 Jun 06 Jun 07 Jun 08 Jun 09 Jun 10 Jun 11 Jun 12 Jun 13 Jun 14 Jun 15 Jun 16 Jun 17 Jun 18 Jun 19 Jun 20 Jun 21 Jun 22 Jun 23 Jun 24
Revenue ($millions)
Affiliate performance fees - 100%
Affiliate revenues - 100% (excl. performance fees)
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Pinnacle and the Affiliates
continued to focus on growth and
diversification, together with
careful exploration of attractive
expansion opportunities. At 30
June 2024, private markets FUM
was $22.8bn, or 21% of total FUM,
up from $1.5bn or 6% at 30 June
2016. FUM sourced from
international clients was $18.4bn,
or 17% of total FUM, up from
$0.5bn or 2% at 30 June 2016
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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, including during the 2024 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 FY24, Aikya continued to expand and diversify its client base. 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
and London.
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 FY24, Antipodes continued to expand and diversify its client base and
product suite, including by acquiring the management rights for three retail
managed funds from another manager: Antipodes Asia Fund, Antipodes China
Fund and Antipodes Asia Income Fund.
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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 47 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 FY24, CCI seeded its global sovereign bond strategy and began
distributing its strategies into the UK and European markets. CCI’s portfolios
once again delivered class-leading performance.
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 FY24, Firetrail continued to increase the depth of its investment team
whilst working to further diversify its client base.
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 Fund V sits alongside the Five V private equity Fund I, Fund
II, Fund III, Fund IV and Venture Fund I and II portfolios, taking its current funds
under management to over $2.4bn.
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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 FY24, Five V reached a successful first and final close for Fund V and
launched its Horizons Fund, with a significantly lower minimum investment
amount, targeting the wholesale market for the first time.
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 FY24, Hyperion continued implementing its long-term, consistent
investment process, delivering leading returns for clients, and continued to
expand the availability of its products to clients in Australia and overseas.
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 FY24, Langdon again delivered above benchmark returns for their clients
across all portfolios and continued to broaden their investor base, in Canada,
Australia and beyond.
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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Longwave currently offers investors a unique, diversified small companies fund
focusing on high quality companies likely to be tomorrow’s winners.
During FY24, Longwave continued to deliver performance above of benchmark
and significantly expanded its client base, ending the year managing $870m.
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, Auckland and London. 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 FY24, Metrics continued to expand its operations with a focus on
growing its consumer and sustainable finance businesses, real estate equity
funds and distribution of a range of products to offshore investors.
Palisade
Palisade is an independent, global infrastructure and real assets manager,
founded in 2007.
Palisade provides institutional and wholesale investors with access to
infrastructure and infrastructure-like 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 Airports, Ports, Bulk Liquid
Storage, Energy, Renewables, Digital, Waste, Social and Agri-infrastructure
sectors.
During FY24, Palisade continued to build out its offshore strategy with two US
investments completed, as well as securing a significant commitment from Dutch
pension fund APG for its UK-focused bioenergy platform (BioticNRG). Palisade also
launched a wholesale feeder fund, Palisade’s Feeder Infrastructure Trust, to allow
wholesale investors access to Palisade’s flagship Australian-focused institutional
fund, with the new fund achieving ‘Recommended’ ratings from Zenith and
Lonsec.
Plato Investment Management
Plato was founded in Sydney, Australia, in 2006 and is majority owned and
operated by its investment staff.
Annual Report
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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
strategies that are tailored to specific investor objectives of wealth accumulation,
income generation and downside protection.
During FY24, Plato continued to build out its suite of complementary solutions,
now offering equity income (Australian and Global), alpha equity (Australian and
Global), enhanced low carbon, low volatility and a range of 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. FUM passed
$15bn for the first time during FY24.
Resolution Capital
Resolution Capital is a highly rated specialist global listed real assets manager,
investing in both listed real estate and infrastructure securities. The firm was
founded in 2004 and the investment team has over a 30-year track record. The
firm is majority employee-owned by 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 Resolution Capital manages to ensure strong alignment with clients.
Resolution Capital 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 their
investment process and security selection with clients’ objectives of long-term
real wealth creation.
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 as its investment capability is recognised by asset
consultants globally. 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 FY24, the firm continued to deliver strong investment outcomes for its
clients and notably continued to grow its retail client base, in a challenging
capital raising market for public markets.
Riparian Capital Partners
Riparian is a specialist water, agriculture and food investment firm, founded 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 FY24, Riparian continued to diversify and grow their client base, from
both Australia and overseas.
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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, Income and Long Short strategies with after-tax
investment and ESG criteria as specialties.
During FY24, Solaris maintained strong ratings across all products and continued
to focus on delivering for their clients.
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 micro cap 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 FY24, Spheria delivered strong performance for its clients and continued
to diversify its client base.
Annual Report
19
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 continue to carefully invest 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 continue 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. During
FY24, we began to see the results of this latest round of
Horizon 2 investing in Affiliates with Affiliate revenues
increasing significantly and net cost to Pinnacle reducing
as these additional growth options began to mature.
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.
Market conditions
The Group’s results and outlook are influenced by
prevailing equity market conditions and by broader
economic trends and investor sentiment.
Following the extremely challenging market conditions
we faced in the second half of FY22 and across FY23,
there was something of a recovery, at least in headline
market returns, during FY24, as inflation began to
stabilize and central bank rhetoric shifted toward base
rates moderating (albeit leaving investors guessing as to
the timing). That headline picture, however, masked
significant volatility and complexity within certain sectors,
with gains being driven by the outsized performance of
technology firms leveraged to generative AI and,
domestically, the banks. Uncertainty therefore remained
high and, together with the continuing war in Ukraine and
growing political instability in many regions, investors
remained cautious, many continuing to seek refuge from
the volatility in cash, or at least away from traditional risk
assets.
As shareholders will be aware, we have sought to build a
platform of Affiliates and investment strategies that
enables us to be ‘more relevant to more clients, more
often’ and have invested in our distribution and
infrastructure capabilities meaningfully to allow us to
make this broader range of products available to a wider
range of clients and geographies. We have particularly
seen the benefits of this diversification in our business
outcomes during FY24.
Across the financial year, we delivered total net inflows of
$9.9 billion, with $7.0 billion of those net inflows coming
from investors outside of Australia. Total FUM sourced
from non-Australian clients stood at $18.4 billion, or
16.7%, of total FUM at 30 June 2024, up from 2.4% at 30
June 2016.
This international success has been achieved after a
lengthy process of building a product set relevant to
international markets and building relationships in those
markets, augmented in more recent years by the
investment in highly capable distribution executives
based in key international markets. Our international
growth is now showing meaningful momentum and, with
a further expansion of our product range and continuing
investment in our distribution capabilities, we are
confident that we can build further on our success in the
years ahead.
Similarly important has been the broadening of our
product set as market conditions and investor appetites
have changed. At 30 June 2016, 67% of our FUM was in
Australian equities, compared with 38% of FUM at 30
June 2024. During FY24, we raised $5.6 billion into private
markets asset classes, with a further $2.2 billion into
liquid alternatives. As flows into ‘traditional’ equities have
remained under pressure, it has been pleasing to see the
robust flow outcomes across other parts of the platform.
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.
Annual Report
20
Regulatory risk
The Group operates within a highly regulated
environment. The Group remains vigilant with regard to
regulatory requirements which are continually evolving.
In response, Pinnacle continues 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.
Review of Group Results
Total net profit after tax (NPAT) attributable to
shareholders for the 2024 financial year was $90.4
million. NPAT from continuing operations attributable to
shareholders was also $90.4 million.
•
The Group delivered a $90.4 million total
NPAT attributable to shareholders for
the 2024 financial year, an 18.2%
increase compared with the 2023
financial year. Pinnacle’s share of net
profits from the Pinnacle Affiliates
increased by 34.7% to $90.8 million (of
which $28.3 million was Pinnacle's share
of performance fees earned by thirteen
Affiliates during the financial year, after
tax, compared with $13.9 million from
eleven Affiliates in the 2023 financial
year). Complementing the Affiliates’
strong investment performance, the
distribution team delivered a strong level
of total inflows across the platform, also
contributing to the result for the year.
•
FUM Increased by 19.8% to $110.1
billion in the 2024 financial year.
•
Of the increase in FUM over the 2024
financial year, $8.3 billion was due to
market movements/investment
performance, whilst there were net
inflows of $9.9 billion.
•
Diluted earnings per share attributable
to shareholders of 45.5 cents have
increased by 16.7% from 39.0 cents.
•
The Board has declared a 72% franked
final dividend of 26.4 cents per share
payable on 20 September 2024.
Consolidated Statement of
Comprehensive Income
The following commentary provides an analysis of
revenues and expenses for the 2024 financial year in
comparison to the prior financial year.
During the 2024 financial year, the Group’s revenues and
expenses were derived from Pinnacle and its controlled
entities. Revenues and expenses of the Pinnacle Affiliates,
is reflected through Pinnacle’s Share of net profit of
associates accounted for using the equity method.
Revenue from Continuing Operations
Revenue from contracts with customers increased $2.5
million to $41.2 million, from $38.7 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. Revenues were
$19.6 million in the first half of the financial year and
$21.6 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 (PI).
During the year to 30 June 2024, the Group made a net
$17.4 million return on its PI, on a mark-to-market basis.
This gain consists of distribution and dividends received
of $6.4 million, and net realized and unrealized gains of
$11.0 million. As shareholders will be aware, we partially
hedge our direct equity market exposure on these
investments. The group repaid $20.0 million of the CBA
facility at the end of September (at the end of the 18-
month term). That tranche was provided as seed capital
to Palisade Real Assets to enable them to acquire the first
asset in their energy transition portfolio, on which
Pinnacle earned a preferred return of 8.0% (see note
26d(iii) for further information). The balance of the
facility ($100.0 million), remains fully drawn and invested
predominantly in non-duration and floating rate credit
strategies, managed by Affiliates. Offsetting these higher
returns somewhat was the higher interest cost on our
CBA facility, which was $6.9 million in FY24 compared
with $5.9 million in FY23. The net overall return on PI, net
of the interest expense on the CBA loan, was $10.5
million in FY24 and $8.3 million in FY23.
We also marked our investment in the digital wealth
platform, OpenInvest (which has not been carried within
our PI portfolio), to the value at which the business most
recently raised funding (Pinnacle did not participate in
that funding round). This resulted in a $3.4 million write-
down during FY24, compared with an appreciation in the
value of that holding in FY23 of $0.6 million, with our
holding now valued at $0.2 million.
Expenses from Continuing Operations
During FY24, the Group continued to carefully add
additional resources to support future growth. Employee
benefits expense increased by $1.7 million to $24.2
million.
STI expense for FY24 was $12.0 million, up from $4.7
million in FY23. 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
Annual Report
21
shareholders, both in the short- and long-term. As a
result, remuneration outcomes for all staff were relatively
muted in FY22 and FY23; however, the strong growth in
financial results this year has merited a return to a more
robust level of overall compensation outcomes.
Share of net profit of associates accounted
for using the equity method
Share of net profit of associates 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 2024
financial year was $90.8 million (of which $28.3 million
was Pinnacle's share of performance fees earned by
thirteen Affiliates during the financial year, after tax,
compared with $13.9 million from eleven Affiliates in the
2023 financial year); up 34.7% or $23.4 million on the
prior financial year. Underlying base management fees
within the Pinnacle Affiliates were up 22.1% on 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, with that spending now beginning to deliver
meaningful revenue growth.
Pinnacle Affiliates’ FUM, which underpins the share of
Pinnacle Affiliates’ profits, increased by 19.8% to $110.1
billion in the 2024 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 and complexity within certain sectors during
the year. This produced challenging fundraising
conditions in many asset markets that are important to
us. 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 2024 financial year.
Cash. Cash and cash equivalents increased by $5.0
million to $32.6 million at year-end compared to $27.6
million at the end of the prior financial year. Cash
inflows from operating activities were $96.3 million,
which included net proceeds of $21.3 million received
from funds managed by Affiliates and dividends received
from Affiliates of $84.8 million (compared with $66.1
million in the prior financial year). The group repaid
$20.0 million of our CBA facility at the end of September
(at the end of the 18-month term). Our remaining
facility of $100.0 million remained fully drawn at 30 June
2024.
Total cash and PI, net of the CBA debt facility, was $86.2
million at 30 June 2024, compared with $67.2 million at
30 June 2023. Further information is provided at notes 6
and 25.
Trade and other receivables. The value of trade and
other receivables increased by $10.0 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
$153.9 million, a decrease of $9.3 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
managed by the Affiliates. Of the $153.9 million, $141.4
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
$3.1 million to $9.6 million at year end. This balance
includes loans to affiliates. There were advances to
Affiliate executives during the current financial year to
assist with further equity recycling. Further information
is provided at note 9 and 11 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 $12.8 million
during the period to $341.3 million. The change is
attributable to the equity accounted profits of $90.8
million from Pinnacle Affiliates, less the dividends
received from the Pinnacle Affiliates of $84.8 million,
plus additional net capital contributed to the Pinnacle
Affiliates during the year of $6.8 million. Further
information is provided at note 23 of the financial
statements.
Intangible assets decreased by $0.1 million. During FY23,
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 increased by $8.0 million to
$14.8 million. The increase largely relates to the
increase 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 $0.2 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 increased by $8.9 million and Right-of-
use assets increased by $8.8 million compared with the
prior year. The Group leases offices in Brisbane and
Sydney. The Group moved to new premises in Sydney,
with a new lease commencing on 1 December 2023.
Further information is provided at note 12.
Borrowings decreased by $20.0m, to $100.0 million. The
group repaid $20 million of our CBA facility at the end of
September (at the end of the 18-month term). Our
remaining facility of $100.0 million remained fully drawn
at 30 June 2024. The entire facility is currently invested
in certain investment strategies managed by Affiliates.
Further information is provided at note 19.
Annual Report
22
04
Corporate
Sustainability
We are focused on continuous improvement, striving to do better by
building a long-term, sustainable firm that focuses on our
employees, clients 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/.
Annual Report
23
05
Directors’
Profiles
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):
•
Current Director of Australis
Oil & Gas
Interests in shares and options at 30 June 2024
•
174,172 ordinary shares in the
Company
Annual Report
24
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)
•
None
Interests in shares and options at 30 June 2024
•
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)
•
None
Interests in shares and options at 30 June 2024
•
114,439 ordinary shares in the
Company
Annual Report
25
Lorraine Berends AM
(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 PNI Foundation and an independent member of the Australian Commonwealth Games
Foundation Investment Committee.
ASX Listed Company Directorships held in
last 3 years (current & recent)
•
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)
Interests in shares and options at 30 June 2024
•
27,000 ordinary shares in the
Company
Annual Report
26
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)
•
None
Interests in shares and options at 30 June 2024
•
4,253,614 ordinary shares in
the Company
Annual Report
27
06
Directors’
Report
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 2024.
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 AM
•
Mr A Chambers
Information on the qualifications, experience and responsibilities of the directors is included in the directors’ profiles on
pages 23 to 26 of the 2024 Annual Report.
Annual Report
28
Earnings per share
2024
Cents
2023
Cents
From continuing operations
Basic earnings per share
45.8
39.3
Diluted earnings per share
45.5
39.0
Total attributable to shareholders
Basic earnings per share
45.8
39.3
Diluted earnings per share
45.5
39.0
Dividends
In the 2024 financial year, the following dividends were paid:
•
a fully franked final dividend of 20.4 cents per share on 15 September 2023.
•
a fully franked interim dividend of 15.6 cents per share on 22 March 2024.
Since the end of the financial year, the Company has declared:
•
a 72% franked final dividend of 26.4 cents per share, to be paid on 20 September 2024.
Total dividends declared in respect of the FY24 financial year were 42.0 cents per share (2023: 36.0 cents per share).
Operating and Financial Review
The Operating and Financial Review can be found at pages 8 to 21 of the 2024 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 105, 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.
Annual Report
29
Remuneration Report
The Group’s 2024 Remuneration Report sets out remuneration information for the Group’s Key Management Personnel.
The Remuneration Report contains the following sections:
1.
Letter from the Chair of the Remuneration and Nominations Committee
2.
Key Management Personnel
3.
Role of Remuneration and Nominations Committee
4.
Executive remuneration policy and framework for the Company
5.
Links between performance and outcomes
6.
Details of Executive Key Management Personnel remuneration
7.
Executive service agreements
8.
Non-executive director remuneration
9.
Share based payment compensation
10.
Equity instrument disclosures relating to Key Management Personnel
11.
Loans to Key Management Personnel
Information in this Remuneration Report has been audited as required by section 308(3C) of the Corporations Act.
Annual Report
30
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 2024 I would like to recognise the efforts of our
employees in delivering robust results for our clients and shareholders. This has occurred against the backdrop of an
uncertain economic environment including inflation, interest rate developments and geopolitical turbulence, which has
created complexity and volatility in some asset classes. Notwithstanding this environment, our people have continued to
deliver growth.
We believe that a major strength and principal reason for our success is the quality, dedication and determination of our
people, which enables us to serve our clients, generate long-term value for our shareholders and contribute strongly to the
broader community. We invest heavily in developing and supporting our people throughout their careers and we strive to
maintain a work environment that fosters professionalism, excellence, high standards of business ethics, diversity and
collaboration among our employees worldwide.
Our ongoing investment in employee development is enabled by our supportive leaders and managers and we offer a range
of development initiatives to help cultivate their skills. This helps equip our employees for success and facilitate career
progression, strengthening our pipeline of leaders. Relatedly, our commitment to diversity and inclusion ensures an
equitable approach is taken to our workforce across all aspects of the employee cycle, from hiring through to development,
promotion and remuneration.
We remain committed to building on our competitive and flexible benefits programs and continue to invest in our teams and
provide opportunities for long-term career growth at our Company. Recognising the importance of physical and mental
wellness for our employees, and listening to their feedback in this area, has enabled us to focus more strongly on these
aspects. Providing supportive care through our Employee Assistance Program and other external partnerships has provided
our employees with access to helpful skills to enable them to succeed and deliver results.
The Company’s pay-for-performance compensation approach recognises and rewards performance through the provision of
competitive pay, at all levels. We strive to pay our employees fairly based on market rates for their roles, experience and
individual performance, and we regularly benchmark both within and outside our industry to help confirm that our
remuneration structure remains competitive. Our commitment to pay equity is evidenced by our ongoing annual pay equity
analyses, which inform remuneration decisions, to ensure reward outcomes accurately reflect performance and our
Company values.
Our remuneration approach is well suited to support our ambitions and provide strong alignment with shareholders through
incentivising both 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.
We believe that our results for this financial year were creditable given the market and economic conditions. In recognition
of this and the ongoing competitive talent environment, with respect to short-term incentives, we have enabled employees
to receive up to their maximum earning potential this year. Salaries have been adjusted in circumstances where role scope
or responsibilities have been increased and long-term incentives have been proposed for key people. The provision of such
incentives is a powerful retention and motivational tool for the company.
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:
•
increase in diluted earnings per share attributable to shareholders of 16.7% in the 2024 financial year; compound
annual growth rate (CAGR) in basic earnings per share attributable to shareholders of 21.7% over the five years to
30 June 2024
Annual Report
31
•
growth in total NPAT attributable to shareholders from $76.5 million in the 2023 financial year to $90.4 million in
the 2024 financial year; CAGR in total NPAT attributable to shareholders of 24.3% over the five years to 30 June
2024
•
increase in FUM from $91.9 billion as at 30 June 2023 to $110.1 billion as at 30 June 2024
•
net FUM inflows of $9.9 billion during the 2024 financial year
•
net retail FUM inflows of $3.9 billion during the 2024 financial year
•
85% 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 2024
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 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.
We remain confident our remuneration framework enables us to attract, reward and retain our employees in a way that
aligns with shareholders and meets business needs.
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
Annual Report
32
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 2024. 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 2024
comprised:
Executive Key Management Personnel
Name
Position
Ian Macoun
Managing Director and Executive Director
Andrew Chambers
Executive Director
Dan Longan
Chief Financial Officer
Calvin Kwok
Chief Legal and Commercial Officer
Non-Executive Key Management Personnel
Name
Position
Alan Watson
Chair
Deborah Beale AM
Non-executive Director
Lorraine Berends AM
Non-executive Director
Annual Report
33
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 2024 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 employee 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;
•
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 2024 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 and Committees Charter which can be found on the Company’s website at
https://pinnacleinvestment.com/shareholders/#corporate-governance
Annual Report
34
4.
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 2024 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
employees 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.
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
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
Flexibility
Demonstrate flexibility and a preparedness to adapt to the changing needs of the Company
Work Ethic
Demonstrate a strong personal work ethic and commitment to being highly productive at all
times
Innovation
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
Risk
Foster a risk aware culture in which business activity occurs within Pinnacle’s Risk
Management Framework and Risk Appetite Statement
Sustainability
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 had grown. There were no revisions to base salaries for
Executive Key Management Personnel during FY23 or FY24, given the challenging economic and market conditions
prevailing. Remuneration for Executive Key Management Personnel for FY25 will be considered in the annual review cycle
in August/September 2024.
Annual Report
35
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 employees 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 challenging conditions we experienced in FY22 and FY23, results fell below our expectations
and, even though this was to a significant extent due to circumstances outside of our control, it is important that the
remuneration of our people reflects shareholder outcomes, and reductions were therefore made relative to the maximum
STI people were eligible to receive in respect of results and performance for both of those years. In FY24, whilst market
conditions have been complex, we have delivered what we believe to be a robust set of results in those circumstances and
have determined that it is appropriate that our people are eligible to earn up to 100% of their maximum STI in respect of
FY24, subject to a review and assessment of individual performance.
Performance against KPIs for the five Executive KMP is set out in the tables below:
Managing Director
Key Performance Indicators
Outcomes
Financial
•
Growth in NPAT
•
NPAT increased by 18.2% to 90.4m
KPI met
•
Growth in diluted EPS
•
Diluted EPS increased by 16.7% to 45.5c per
share
KPI met
•
Institutional and international net inflows
•
Net institutional and international FUM inflows
of $9.9 billion
KPI met
•
Net Retail FUM inflows
•
Net Retail FUM inflows of 3.9 billion
KPI met
Growth Strategy, Client and
Investment Performance
•
Investment performance of Affiliates
•
85% 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 2024
KPI met
•
Horizon 1 – protect and grow existing Affiliates;
advance new strategies in existing Affiliates
•
KPI met
•
Growth initiatives (Horizon 2 and Horizon 3)
•
KPI met
People
•
Succession plans in place for Pinnacle and Affiliate
critical roles
•
Emergency, ready now succession plans and
medium-term succession processes in place
KPI met
•
Drive high performance culture
•
KPI met
Operations, Risk Management
and Regulatory
•
Enhance operational effectiveness
•
KPI met
Annual Report
36
•
No significant regulatory issues in AU, EU, USA
•
KPI met
•
Protect and enhance the reputation of Pinnacle and
promote a culture of risk management and
disclosure
•
KPI met
Pinnacle Purpose and Values
•
Understand, and contribute strongly to Pinnacle’s
Purpose and Values
•
KPI met
Client Focus
•
Demonstrate commitment to and accountability for
strong client service and satisfaction, both with
external clients and Affiliates
•
KPI met
Flexibility
•
Demonstrate flexibility and a preparedness to adapt
to the changing needs of the Company
•
KPI met
Work Ethic
•
Demonstrate a strong personal work ethic and
commitment to being highly productive at all times
•
KPI exceeded
Innovation
•
Lead a culture of innovation and continuous
improvement
•
KPI met
Risk
•
Lead a risk aware culture in which business activity
occurs within Pinnacle’s Risk Management
Framework and Risk Appetite Statement
•
KPI met
Sustainability
•
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
Executive Director, Institutional
and International Distribution
Key Performance Indicators
Outcomes
Financial
•
Growth in NPAT
•
Growth in EPS (diluted)
•
Total combined institutional and international
contained annual revenue (CAR)
•
NPAT increased by 18.2% to 90.4m
KPI met
•
Diluted EPS increased by 16.7% to 45.5c per
share
KPI met
•
Net institutional and international FUM inflows
of $6.1 billion
KPI met
Growth Strategy, Client and
Investment Performance
•
Horizon 1 (affiliate MD satisfaction with Pinnacle’s
Institutional and International team)
•
Horizon 2 (emphasis on international start-ups
across traditional and alternative asset classes)
•
Horizon 3 (emphasis on international, alternative
asset managers and platforms of strategic value)
•
KPI met
•
KPI met
•
KPI met
People
•
Drive high performance culture
•
KPI met
Collaboration
•
Support cross-department collaboration
•
KPI met
Pinnacle Purpose and Values
•
Understand, and contribute strongly to Pinnacle’s
Purpose and Values
•
KPI met
Client Focus
•
Demonstrate commitment to and accountability for
strong client service and satisfaction, both with
external clients and Affiliates
•
KPI met
Flexibility
•
Demonstrate flexibility and a preparedness to adapt
to the changing needs of the Company
•
KPI met
Work Ethic
•
Demonstrate a strong personal work ethic and
commitment to being highly productive at all times
•
KPI exceeded
Annual Report
37
Innovation
•
Lead a culture of innovation and continuous
improvement
•
KPI met
Risk
•
Lead a risk aware culture in which business activity
occurs within Pinnacle’s Risk Management
Framework and Risk Appetite Statement
•
KPI met
Sustainability
•
Lead a culture of acting lawfully, ethically and
responsibly by complying with our legal, regulatory
and ethical obligations in particular adhering to
Pinnacles Code of Conduct and policies
•
Lead an inclusive culture that enables performance
and fosters collaboration, contributing to
investment excellence
•
KPI met
Chief Financial Officer
Key Performance Indicators
Outcomes
Financial
•
Contribute to a culture of cost control and focus on
value
•
Optimise aggregate costs across the Affiliates
leveraging scale
•
Ensure PNI, Affiliate and Fund audits are delivered
on time and within budget
•
KPI met
Growth Strategy, Client and
Investment Performance
•
Operational SLAs consistently met
•
Satisfaction from Affiliate MDs with respect to
Pinnacle Infrastructure Services
•
Deliver a technology platform that allows Pinnacle
and Affiliates to operate in a secure, scalable
manner
•
KPI met
People
•
Mentor, challenge and develop talented
professionals
•
KPI met
Collaboration
•
Support cross department collaboration
•
KPI met
Pinnacle Purpose and Values
•
Understand, and contribute strongly to Pinnacle’s
Purpose and Values
•
KPI met
Client Focus
•
Demonstrate commitment to and accountability for
strong client service and satisfaction, both with
external clients and Affiliates
•
KPI met
Flexibility
•
Demonstrate flexibility and a preparedness to adapt
to the changing needs of the Company
•
KPI met
Work Ethic
•
Demonstrate a strong personal work ethic and
commitment to being highly productive at all times
•
KPI exceeded
Innovation
•
Lead a culture of innovation and continuous
improvement
•
KPI met
Risk
•
Lead a risk aware culture in which business activity
occurs within Pinnacle’s Risk Management
Framework and Risk Appetite Statement
•
KPI met
Sustainability
•
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
Chief Legal and Commercial
Officer and Company Secretary
Key Performance Indicators
Outcomes
Financial
•
Optimise internal and external legal counsel,
product and company secretarial spending
commensurate with workload levels.
•
KPI met
Clients
•
Clients are satisfied with the quality and value of
services delivered
•
KPI met
Annual Report
38
Following the assessment of each KMP’s performance as outlined above, the following STI awards were made:
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.
Process
•
Deliver Services to Affiliates in a compliant manner
in accordance with agreed SLA
•
KPI met
Corporate Activity
•
Involvement and contribution towards new
corporate activity of the Company and Affiliates,
including corporate action projects (capital raising,
acquisitions, equity arrangements), new strategic
initiatives (Affiliates, products, geographies).
•
KPI met
People
•
Drive high performance culture
•
KPI met
Collaboration
•
Support cross-department collaboration
•
KPI met
Pinnacle Purpose and Values
•
Understand, and contribute strongly to Pinnacle’s
Purpose and Values
•
KPI met
Client Focus
•
Demonstrate commitment to and accountability for
strong client service and satisfaction, both with
external clients and Affiliates
•
KPI met
Flexibility
•
Demonstrate flexibility and a preparedness to adapt
to the changing needs of the Company
•
KPI met
Work Ethic
•
Demonstrate a strong personal work ethic and
commitment to being highly productive at all times
•
KPI exceeded
Innovation
•
Lead a culture of innovation and continuous
improvement
•
KPI met
Risk
•
Lead a risk aware culture in which business activity
occurs within Pinnacle’s Risk Management
Framework and Risk Appetite Statement
•
KPI met
Sustainability
•
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
KMP
% of Maximum STI
awarded
Ian Macoun
80%
Andrew Chambers
100%
Dan Longan
100%
Calvin Kwok
100%
Annual Report
39
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.
Relevant employees will principally be offered loan funded ordinary shares in the Company, whereby the Company will
provide limited recourse loans to employees 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 subject to the satisfaction of various performance conditions and
employment, as follows:
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;
o
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
o
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 2024 financial year, 337,500 loan shares were forfeited by departing employees. Additionally, 2,017,500 loan
shares and 292,500 options were issued to current employees.
Annual Report
40
5.
Links between performance and outcomes
During the 2024 financial year, the Managing Director conducted performance reviews of executives and made
recommendations to the Remuneration and Nominations Committee in respect of all employees’ 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 2024
financial year and over the last five financial years.
•
increase in diluted earnings per share attributable to shareholders of 16.7% in the 2024 financial year;
compound annual growth rate (CAGR) in basic earnings per share attributable to shareholders of 21.7%
over the five years to 30 June 2024
•
growth in total NPAT attributable to shareholders from $76.5 million in the 2023 financial year to $90.4
million in the 2024 financial year; CAGR in total NPAT attributable to shareholders of 24.3% over the
five years to 30 June 2024
•
increase in FUM from $91.9 billion as at 30 June 2023 to $110.1 billion as at 30 June 2024
•
net FUM inflows of $9.9 billion during the 2024 financial year
•
net retail FUM inflows of $3.9 billion during the 2024 financial year
•
85% of Affiliate strategies and products that have a track record of at least 5 years outperformed their
benchmarks over the 5 years to 30 June 2024
Key indicators of the Company’s progress towards achieving its medium-term objectives included:
2024
2023
2022
2021
2020
Net profit/(loss) after tax from continuing operations attributable to
shareholders ($m)
90.4
76.5
76.4
67.0
32.4
Total net profit/(loss) after tax attributable to shareholders ($m)
90.4
76.5
76.4
67.0
32.2
Funds Under Management ($bn)*
110.1
91.9
83.7
89.4
58.7
Net FUM Inflows*
9.9
1.5
0.6
16.7
3.0
Net Retail FUM Inflows*
3.9
0.6
3.6
4.5
0.9
Closing share price ($)
14.18
9.98
7.03
11.97
3.92
Dividend per share (cents)
42.0
36.0
35.0
28.7
15.40
Basic earnings per share (cents) from continuing operations
45.8
39.3
40.2
38.2
18.9
Diluted earnings per share (cents) from continuing operations
45.5
39.0
39.5
36.5
18.0
Basic earnings per share (cents) attributable to shareholders
45.8
39.3
40.2
38.2
18.8
Diluted earnings per share (cents) attributable to shareholders
45.5
39.0
39.5
36.5
17.9
* Non-statutory measure
Annual Report
41
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 2024.
Fixed Remuneration
Performance-based remuneration
STI
LTI
Ian Macoun
54%
43%
3%
Andrew Chambers
44%
42%
14%
Dan Longan
35%
35%
30%
Calvin Kwok
37%
37%
26%
Ian Macoun
Mr Macoun’s base salary remained unchanged at $750,000 per annum (inclusive of superannuation) during the year. For
FY24, he earned an STI of $600,000 (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.
Andrew Chambers
Mr Chambers’ base salary remained unchanged at $510,000 per annum (inclusive of superannuation) during the year. For
FY24, he earned an STI of $510,000 (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.
Dan Longan
Mr Longan’s base salary remained unchanged at $350,000 per annum (inclusive of superannuation) during the year. For
FY24, he earned an STI of $350,000 (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
FY24, he earned an STI of $352,000 (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.
Annual Report
42
Remuneration details for Executive Key Management Personnel (calculated in accordance with applicable accounting
standards) are set out in the table below:
Short-term
employee
benefits
Post-
employm
ent
benefits
Long-
term
benefits
Share based
pay-ments
Cash salary
& fees
Cash Bonus (STI)
Non-
monetar
y
benefits
Super
annu
ation
Retire-
ment
Benefits
Total
short-term
and post-
employ-
ment
benefits
Long Service
leave
Options & Rights
(LTI)
Terminati
on
benefits
Total
Portion
of
remuner
ation at
risk - STI
Portion
of
remuner
ation at
risk - LTI
Name
$
$
$
$
$
$
$
$
$
$
%
%
Managing
Director
Ian Macoun
2024
722,500
600,000
-
27,500
--
1,350,000
11,624
48,719
--
1,410,343
43%
3%
2023
722,500
187,500
-
27,500
--
937,500
11,695
129,917
--
1,079,112
17%
12%
Other Key
Management
Personnel
Andrew
Chambers
2024
482,500
510,000
-
27,500
--
1,020,000
8,163
172,724
--
1,200,887
42%
14%
2023
482,500
255,000
-
27,500
--
765,000
8,214
346,447
--
1,119,661
23%
31%
Dan Longan
2024
322,500
350,000
-
27,500
--
700,000
1,958
301,495
--
1,003,453
35%
30%
2023
322,500
175,000
-
27,500
--
525,000
18,821
271,871
--
815,692
21%
33%
Adrian
Whittingham
2023*
197,500
-
-
27,500
-
225,000
(7,930)
-
-
217,070
0%
0%
Calvin Kwok
2024
324,500
352,000
-
27,500
--
704,000
3,234
254,675
--
961,909
37%
26%
2023
324,500
176,000
-
27,500
--
528,000
7,054
276,363
--
811,417
22%
34%
Totals
2024
1,852,000
1,812,000
-
110,000
--
3,774,000
24,979
777,613
--
4,576,592
2023
2,049,500
793,500
-
137,500`
--
2,980,500
37,854
1,024,598
--
4,042,952
* Remuneration is pro-rated to 31 December 2022. Mr Whittingham ceased to be a KMP from this date.
Annual Report
43
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 2024 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. These loans were repaid in full during
the year.
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 were subject to service and performance conditions and vested after five years. The
loan was interest free and limited in recourse to the shares and was repaid in full during the year.
In October 2023, a further 100,000 loan shares were issued to Mr Chambers 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 10 years from grant date, on
termination of employment or when the underlying equity is sold, whichever occurs earlier.
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 were subject to service and performance conditions and vested after five 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.
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.
Annual Report
44
In September 2023, an additional 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 10 years from grant date, on
termination of employment or when the underlying equity is sold, whichever occurs earlier.
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 were subject to service and performance conditions and vested after five 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.
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.
In September 2023, an additional 100,000 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 10 years from grant date, on
termination of employment or when the underlying equity is sold, whichever occurs earlier.
Annual Report
45
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. The fee pool was last increased during the FY22 financial year, when it
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
2024 financial year, nil (2023: nil) performance rights were granted to non-executive directors; nil (2023: 3,516) 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:
Base fees
Chair
$240,000
Non-executive Director
$130,000
Audit Compliance and Risk Management Committee
•
Chair
$20,000
•
Member
$7,500
Remuneration and Nominations Committee
•
Chair
$20,000
•
Member
$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.
Annual Report
46
Total remuneration for the non-executive directors in relation to the Company, Committee positions and subsidiaries for
the 2024 financial year was $570,000 and is presented in accordance with applicable accounting standards and shown in
the table below:
Cash salary & fees
Superannuation
Performance Rights
Total
Name
$
$
$
$
Non-executive Directors
Alan Watson
2024
229,420
25,580
-
255,000
2023
227,107
23,518
-
250,625
Gerard Bradley
2023*
70,871
7,441
17,688
96,000
Deborah Beale AM
2024
141,892
15,608
-
157,500
2023
126,527
13,285
17,688
157,500
Lorraine Berends AM
2024
153,598
3,902
-
157,500
2023
136,878
14,372
-
151,250
Totals
2024
524,910
45,090
-
570,000
2023
561,383
58,616
35,376
655,375
*Includes $17,250 fee for Pinnacle Fund Services Limited compliance committee. Mr Bradley retired from the board on 1st January 2023.
New non-executive director appointments
On appointment to the Board, new non-executive directors are provided with a letter of appointment setting out the
Company’s expectations, their responsibilities, rights and the terms and conditions of their engagement. All new non-
executive directors participate in an induction process, which covers the operation of the Board and its committees and
financial, strategic, operational and risk management issues. For further detail, refer to the Corporate Governance
Statement on the Company’s website.
Annual Report
47
9.
Share-based payment compensation
Loan Shares
The terms and conditions of each grant of equity and associated loan to Key Management Personnel is provided at pages
43 to 44. Details of the loan arrangements affecting remuneration in the previous, this or future reporting periods as at 30
June 2024 are as follows:
Name
Date of
grant
Number of loan
shares
Loan value at
date of grant
Share based
payments value
(i)
Vesting date
Number of
shares vested
Value ($) of
shares vested
(ii)
Number
of
shares
forfeited
/lapsed
/sold
Value ($) of
shares
forfeited
/lapsed /sold
Final
repayment
date
Key Management Personnel of the Group
Ian Macoun
Loan
Shares 15-Nov-18 300,000
$1,697,460
$649,587
14-Nov-21
300,000
$5,385,000
-
-
Sub-
Total
300,000
$1,697,460
$649,587
300,000
$5,385,000
-
-
Andrew Chambers
Loan
Shares 25-Aug-16 133,509
$126,834
$1,221
21-Mar-17
133,509
$311,076
133,509 $311,076
30-May-24
Loan
Shares 15-Nov-18 800,000
$4,526,560
$1,732,233
14-Nov-23
800,000
$6,744,000
800,000 $6,744,000
30-May-24
Loan
Shares 30-Oct-23 100,000
$780,721
$321,048
29-10-28
-
-
-
-
Sub-
Total
1,033,509
$5,434,115
$2,054,502
933,509
$7,055,076
933,509 $7,055,076
Dan Longan
Loan
Shares 17-Sep-18 150,000
$1,093,755
$388,592
16-Sep-23
150,000
$1,423,500
-
-
Loan
Shares 11-Sep-20 200,000
$1,048,080
$497,565
10-Sep-25
-
-
-
-
Loan
Shares 17-Sep-21 100,000
$1,681,750
$597,724
16-Sep-26
-
-
-
-
Loan
Shares 11-Sep-23 100,000
$919,960
$391,080
10-Sep-28
-
-
-
-
Sub-
Total
550,000
$4,743,545
$1,874,961
150,000
$1,423,500
-
-
Calvin Kwok
Loan
Shares 17-Sep-18 250,000
$1,822,925
$647,653
16-Sep-23
250,000
$2,372,500
125,000 $1,186,250
Loan
Shares 11-Sep-20 200,000
$1,048,080
$497,565
10-Sep-25
-
-
-
-
Loan
Shares 17-Sep-21 50,000
$840,890
$298,862
16-Sep-26
-
-
-
-
Loan
Shares 11-Sep-23 100,000
$919,960
$391,080
10-Sep-28
-
-
-
-
Sub-
Total
600,000
$4,631,855
$1,835,160
250,000
$2,372,500
125,000 $1,186,250
(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.
Annual Report
48
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 2024 financial year by the directors
of the Company and other Key Management Personnel of the Group, including personally related parties, are set out
below.
2024
2023
Balance start of the year
-
3,516
Granted as compensation
-
-
Exercised
-
(3,516)
Expired and another changes
-
-
Balance at end of the year
-
-
Shareholdings
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.
Balance at
start of year
Other changes
Granted
during
reporting
year as
compensation
Received
during the
year on the
exercise of
rights
Disposals
during the
year
Balance at the
end of the year
or on date of
ceasing to be
KMP if earlier
Non-executive directors
Alan Watson
174,172
-
-
-
-
174,172
Lorraine Berends AM
27,000
-
-
-
-
27,000
Deborah Beale AM
129,439
-
-
-
(15,000)
114,439
Executive directors
Ian Macoun
18,276,077
-
-
-
-
18,276,077
Andrew Chambers
5,303,614
-
100,000
-
(1,150,000)
4,253,614
Key Management Personnel
Dan Longan
450,000
-
100,000
-
-
550,000
Calvin Kwok
514,014
-
100,000
-
(125,000)
489,014
Annual Report
49
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
Balance at
start of year
$
Other
changes
during the
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
2024
12,410,216 -
(5,065,539)
2,620,641
-
-
1,152,267
9,965,318
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
Balance at
start of year
$
Other
changes
during the
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
1,447,388
-
-
-
-
-
121,741
1,447,388 1,569,131
Andrew Chambers 4,079,560
-
(4,091,369)
780,721
-
-
357,155
768,912
5,159,745
Dan Longan
3,532,245
-
(93,578)
919,960
-
-
351,376
4,358,627 4,710,003
Calvin Kwok
3,351,023
-
(880,592)
919,960
-
-
321,995
3,390,391 4,410,288
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 2024, 300,000 loan shares were issued to Key Management Personnel (having been granted in
relation to FY23). No loan shares were Issued to Key Management Personnel during the previous financial year. 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
Annual Report
50
Equity Capital
Shares under option
Unissued ordinary shares of the Company under option at 30 June 2024 are as follows:
Date options granted
Expiry date
Exercise price of options
Number under option
25 March 2020
25 March 2030
$2.9683
200,000
11 September 2020
11 September 2030
$5.2404
200,000
30 December 2020
30 December 2030
$6.8447
100,000
17 September 2021
17 September 2031
$16.8178
100,000
30 September 2022
30 September 2032
$8.6456
100,000
11 September 2023
11 September 2033
$9.1996
92,500
4 March 2024
4 March 2034
$11.036
200,000
TOTAL
992,500
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.
On 11 September 2023, 92,500 options were issued to overseas employees under the Pinnacle Omnibus Plan.
On 4 March 2024, 200,000 options were issued to an overseas employee under the Pinnacle Omnibus Plan.
Annual Report
51
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 2024
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
12
12
6
6
8
8
I Macoun
12
12
6
-*
8
-*
D Beale AM
11
12
6
6
8
8
L Berends AM
12
12
6
6
8
8
A Chambers
11
12
-
-
-
-
* I Macoun attended respective meetings by invitation.
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
Remuneration and Nominations Committee
L Berends AM (Chair)
D Beale AM (Chair)
D Beale AM
L Berends AM
A Watson
A Watson
Company Secretary
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.
Annual Report
52
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.
Annual Report
53
During the 2024 financial year the following fees were paid or are payable for services provided by the Auditor, its related
practices and non-related audit firms:
2024
$
2023
$
(i) Audit and other assurance services
Audit and review of financial statements
297,920
289,635
Other assurance services:
Audit of regulatory returns
26,340
25,560
Audit of compliance plan – Responsible entity *
161,235
131,905
Other assurance services
-
-
Total remuneration for audit and other assurance services
485,495
447,100
(ii) Taxation services
Tax services
46,275
37,165
Total remuneration for taxation services
46,275
37,165
(iii) Other services
Other services
-
-
Total remuneration of PricewaterhouseCoopers Australia
531,770
484,265
Total remuneration of auditors
531,770
484,265
* Compliance plan audit charges are on-charged to managed funds to which responsible entity services are provided.
An additional amount of $935,000 for audit fees and $284,000 for non-audit fees (tax and distribution review fees) was paid or payable to PricewaterhouseCoopers as fees for services
to various funds that are not part of the Consolidated Group but for which Pinnacle Fund Services Limited acts as Responsible Entity.
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 2024 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
1 August 2024
Annual Report
54
07
Auditor’s
Independence
Declaration
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Auditor’s Independence Declaration
As lead auditor for the audit of Pinnacle Investment Management Group Limited for the year ended 30
June 2024, 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.
R Balding
Sydney
Partner
PricewaterhouseCoopers
1 August 2024
55
Annual Report
Annual Report
56
08
Financial
Statements
Pinnacle Investment Management Group Limited
ABN 22 100 325 184
Financial Report – 30 June 2024
Contents
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
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 1 August 2024. 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
Annual Report
57
Consolidated statement of profit or loss
For the year ended 30 June 2024
Notes
2024
$’000
2023
$’000
Revenue from contracts with customers and other revenue
1
48,988
45,513
Fair value gains/(losses) on financial assets at fair value through profit or loss
10,993
8,095
Fair value gains/(losses) on financial assets at fair value through profit or loss (non-current)
(3,360)
600
Employee benefits expense
(24,235)
(22,541)
Short-term incentives expense
(12,043)
(4,711)
Long-term incentives expense
28
(3,160)
(3,408)
Professional services expense
(1,633)
(1,817)
Property expense
2
(1,347)
(1,308)
Travel and entertainment expense
(1,692)
(1,076)
Technology and communications expense
(2,351)
(1,842)
Donations
(977)
(709)
Finance cost
2
(7,372)
(6,064)
Other expenses from operating activities
2
(2,276)
(1,619)
Share of net profit/(loss) of associates accounted for using the equity method
23(d)
90,816
67,359
Profit before income tax
90,351
76,472
Income tax expense
3
-
-
Profit from continuing operations
90,351
76,472
Profit/(loss) from discontinued operations (attributable to equity holders of the Company)
-
-
Profit for the year
90,351
76,472
Profit for the year is attributable to:
Owners of Pinnacle Investment Management Group Limited
90,351
76,472
Earnings per share:
Cents
Cents
For profit from continuing operations attributable to owners of Pinnacle Investment Management Group Limited
Basic earnings per share
5
45.8
39.3
Diluted earnings per share
5
45.5
39.0
For profit attributable to owners of Pinnacle Investment Management Group Limited
Basic earnings per share
5
45.8
39.3
Diluted earnings per share
5
45.5
39.0
The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes.
Annual Report
58
Consolidated statement of comprehensive income
For the year ended 30 June 2024
Notes
2024
$’000
2023
$’000
Profit for the year
90,351
76,472
Other comprehensive income:
Items that may be reclassified to profit or loss
Changes in the fair value of financial assets at fair value through other comprehensive income
-
-
Total comprehensive income/(loss) for the year
90,351
76,472
Total comprehensive income for the year is attributable to:
Owners of Pinnacle Investment Management Group Limited
90,351
76,472
90,351
76,472
Total comprehensive income for the year attributable to owners of Pinnacle Investment Management
Group Limited arises from:
Continuing operations
90,351
76,472
Discontinued operations
-
-
90,351
76,472
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
Annual Report
59
Consolidated statement of financial position
For the year ended 30 June 2024
Notes
2024
$’000
2023
$’000
ASSETS
Current assets
Cash and cash equivalents
6
32,565
27,616
Trade and other receivables
7
34,644
24,632
Financial assets at fair value through profit or loss
8
153,679
159,594
Assets held at amortised cost
9
922
911
Total current assets
221,810
212,753
Non-current assets
Investments accounted for using the equity method
23
341,300
328,465
Financial assets at fair value through profit or loss
8
240
3,600
Property, plant and equipment
92
76
Intangible assets
13
1,721
1,821
Right-of-use assets
12
9,121
336
Assets held at amortised cost
11
8,708
5,585
Total non-current assets
361,182
339,883
Total assets
582,992
552,636
LIABILITIES
Current liabilities
Trade and other payables
14
14,772
6,834
Lease liabilities
12
1,761
357
Borrowings
19
131
20,137
Provisions
15
2,574
2,414
Total current liabilities
19,238
29,742
Non-current liabilities
Lease liabilities
12
7,536
-
Borrowings
19
100,000
100,000
Provisions
15
324
321
Total non-current liabilities
107,860
100,321
Total liabilities
127,098
130,063
Net assets
455,894
422,573
EQUITY
Contributed equity
16
430,735
418,479
Reserves
17(a)
(39,902)
(43,282)
Retained earnings/(losses)
17(b)
65,061
47,376
Total equity
455,894
422,573
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Annual Report
60
Consolidated statement of changes in equity
For the year ended 30 June 2024
Notes
Contributed
equity
$’000
Reserves
$’000
Retained
earnings
$’000
Total equity
$’000
Balance at 1 July 2022
412,066
(47,099)
37,217
402,184
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
-
3,408
Shared issued on exercise of options
1,572
-
-
1,572
Dividends paid to shareholders
16(b), 18 3,234
-
(66,313)
(63,079)
Performance rights
64
(29)
-
35
Employee loan arrangements
16(b),
17(a)
1,543
438
-
1,981
6,413
3,817
(66,313)
(56,083)
Balance at 30 June 2023
418,479
(43,282)
47,376
422,573
Balance at 1 July 2023
418,479
(43,282)
47,376
422,573
Total comprehensive income for the year
-
-
90,351
90,351
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS:
Share-based payments
17(a)
-
3,160
-
3,160
Shared issued on exercise of options
566
-
-
566
Dividends paid to shareholders
16(b), 18 1,658
-
(72,666)
(71,008)
Performance rights
-
-
-
-
Employee loan arrangements
16(b),
17(a)
10,032
220
-
10,252
12,256
3,380
(72,666)
(57,030)
Balance at 30 June 2024
430,735
(39,902)
65,061
455,894
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Annual Report
61
Consolidated statement of cash flows
For the year ended 30 June 2024
Notes
2024
$’000
2023
$’000
Cash flows from operating activities
Receipts from customers
35,308
40,646
Payments to suppliers and employees
(41,002)
(41,291)
Dividends and distributions received from financial assets at fair value through profit or loss
1,977
905
Dividends and distributions received from jointly controlled entities
84,787
66,090
Interest received
975
551
Finance and borrowings costs paid
(7,068)
(6,002)
Proceeds from disposal of financial assets at fair value through profit or loss
76,739
85,568
Payments for financial assets at fair value through profit or loss
(55,415)
(91,426)
Net cash inflow/(outflow) from operating activities
25
96,301
55,041
Cash flows from investing activities
Payments for property, plant and equipment
(36)
(9)
Proceeds from sale of investments accounted for using the equity method
2,221
-
Payments for investments accounted for using the equity method
(11,964)
(4,389)
Loan repayments from employee shareholders
10,252
1,980
Loan repayments from related parties
1,841
734
Loan advances to related parties
(1,749)
(1,276)
Net cash inflow/(outflow) from investing activities
565
(2,960)
Cash flows from financing activities
Dividends paid to shareholders
(71,008)
(63,079)
Lease payments
(1,475)
(1,223)
Repayment of borrowings
(20,000)
-
Proceeds from issue of shares, net of issue costs
566
1,572
Net cash (outflow)/inflow from financing activities
(91,917)
(62,730)
Net increase/(decrease) in cash and cash equivalents
4,949
(10,649)
Cash and cash equivalents at the beginning of the financial year
27,616
38,265
Cash and cash equivalents at end of year
6
32,565
27,616
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Annual Report
62
Notes to the consolidated financial statements
Page
Group Results
1
Revenue from contracts with customers and other income
63
2
Expenses
64
3
Income tax expense
64
4
Segment information
65
5
Earnings per share
66
Operating Assets and Liabilities
6
Cash and cash equivalents
67
7
Trade and other receivables
67
8
Financial assets at fair value through profit or loss
68
9
Assets held at amortised cost
68
10
Net deferred tax assets
69
11
Assets held at amortised cost – non-current
69
12
Leases
70
13
Intangible assets
71
14
Trade and other payables
72
15
Provisions
72
Capital and Financial Risk Management
16
Contributed equity
73
17
Reserves and retained earnings
75
18
Dividends
76
19
Borrowings and financing arrangements
77
20
Financial risk management
78
21
Contingencies and commitments
85
Group Structure
22
Subsidiaries
86
23
Investments accounted for using the equity method
87
24
Parent Entity financial information
90
Other Notes
25
Additional cash flow information
91
26
Related party transactions
92
27
Key Management Personnel
94
28
Share-based payments
95
29
Remuneration of auditors
105
30
Events occurring after the reporting period
105
31
Critical accounting estimates and judgements
106
32
Summary of significant accounting policies
107
Annual Report
63
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.
2024
$’000
2023
$’000
Revenue from contracts with customers
Service charges – over time
41,235
38,650
41,235
38,650
Other income
Interest received or due
1,315
727
Dividends and distributions*
6,382
6,136
Other income
56
-
7,753
6,863
Total revenue and other income
48,988
45,513
*Dividends and distributions are received from financial assets held at fair value through profit or loss.
Annual Report
64
2. Expenses
PROFIT BEFORE INCOME TAX INCLUDES THE FOLLOWING SPECIFIC EXPENSES:
2024
$’000
2023
$’000
Finance cost
Interest and finance charges
7,372
6,064
Total finance cost expense
7,372
6,064
Lease amortisation expense – included in property expense
1,319
1,247
Depreciation and amortisation expense – included in other expenses from operating activities
Depreciation – property, plant and equipment
22
43
Amortization - intangible assets
100
267
Total depreciation and amortisation expense
122
310
3. Income tax expense
2024
$’000
2023
$’000
a) Income tax expense/(benefit)
Income tax expenses is attributable to:
Continuing operations
-
-
Discontinued operations
-
-
Total income tax expense/(benefit)
-
-
Current tax
3,485
1,637
Deferred tax
(3,485)
(1,637)
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
3,485
1,637
Increase in deferred tax liabilities
-
-
Total deferred tax expense/(benefit)
3,485
1,637
Annual Report
65
b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit from continuing operations before income tax expense
90,351
76,472
Profit /(Loss) from discontinued operations before income tax expense
-
-
Profit before income tax
90,351
76,472
Tax at the Australian tax rate of 30% (2023: 30%)
27,105
22,942
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Share of profits of affiliates
(27,245)
(20,208)
Impairment
-
-
Non-deductible expenditure
1,022
1,092
Sundry items
4,082
2,995
4,964
6,821
Adjustments for current tax in respect of prior periods
-
-
Deferred tax assets previously not recognised
(4,964)
(6,821)
Total income tax expense/(benefit)
-
-
c) Tax losses not recognised
Unused tax losses for which no deferred tax asset has been recognised
3,431
19,978
Potential tax benefit at 30%
1,029
5,993
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.
Annual Report
66
5. Earnings per share
2024
Cents
2023
Cents
a) Basic earnings per share
From continuing operations
45.8
39.3
Total basic earnings per share attributable to the ordinary equity shareholders of the Company
45.8
39.3
b) Diluted earnings per share
Attributable to the ordinary equity shareholders of the Company
From continuing operations
45.5
39.0
Total diluted earnings per share attributable to the ordinary equity shareholders of the Company
45.5
39.0
c) Reconciliations of earnings used in calculating earnings per share
Basic and diluted earnings per share
Profit/(loss) attributable to the ordinary owners of the Company used in calculating basic and diluted earnings per share:
From continuing operations
90,351
76,472
Profit used in calculating basic and diluted earnings per share
90,351
76,472
d) Reconciliations of holdings used in calculating earnings per share
Weighted average number of ordinary shares used as the denominator in calculating basic earnings
per share
197,227,386
194,353,235
Adjustments for calculation of diluted earnings per share:
Weighted average treasury stock (see note 16(d))
977,917
1,402,386
Weighted average options
285,983
340,502
Weighted average number of ordinary and potential ordinary shares used as the denominator in
calculating diluted earnings per share
198,491,286
196,096,123
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.
Annual Report
67
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
2024
$’000
2023
$’000
Available cash at bank and on hand
32,565
27,616
32,565
27,616
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% (2023: 0.25% and 5.21%). At-call
deposits have an average maturity of 30 days.
7. Trade and other receivables
2024
$’000
2023
$’000
Trade receivables
6,335
6,276
Income receivables
21,241
14,422
Other receivables
5,841
3,043
Prepayments
1,227
891
34,644
24,632
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).
Annual Report
68
8.
Financial assets at fair value through profit or loss
Current
2024
$’000
2023
$’000
Australian listed equity securities
13,772
14,884
Unlisted unit trusts*
138,079
120,818
Derivative financial assets
1,423
3,716
Other unlisted instruments
405
20,176
153,679
159,594
*see note 20 for further details
Non-current
2024
$’000
2023
$’000
Unlisted equity securities
240
3,600
240
3,600
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
2024
$’000
2023
$’000
Loans to associates
922
911
922
911
Loans to associates 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.
Annual Report
69
10. Net deferred tax assets
2024
$’000
2023
$’000
Deferred tax assets (a)
3,705
2,478
Deferred tax liabilities (b)
(3,705)
(2,478)
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
707
-
Tax losses
2,998
2,478
Total deferred tax assets
3,705
2,478
Set-off of deferred tax liabilities pursuant to set-off provisions
(3,705)
(2,478)
Net deferred tax assets
-
-
2024
$’000
2023
$’000
b) Deferred tax liabilities
The deferred tax liabilities balance comprises temporary differences attributable to:
Financial assets at fair value through profit or loss
3,030
1,603
Intangible assets
516
726
Right-of-use assets
101
101
Receivables
58
48
Total deferred tax liabilities
3,705
2,478
11.
Assets held at amortised cost – non-current
Note
2024
$’000
2023
$’000
Loans to associates
26
8,708
5,585
8,708
5,585
As outlined in note 32(l)(ii) loans to associates (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.
Annual Report
70
12. Leases
The Group leases offices in Brisbane and Sydney. Rental contracts are typically made for fixed periods of 3 – 6 years. See
note 32(g) for further details. The Group moved to new premises in Sydney, with a new lease commencing on 1 December
2023.
The balance sheet shows the following amounts relating to leases:
RIGHT-OF-USE ASSETS
30 June 2024
$'000
30 June 2023
$'000
Office leases
14,352
4,249
Office leases – accumulated amortization
(5,231)
(3,913)
9,121
336
Additions to the right-of-use assets during the 2024 financial year were $10,104,000 (2023: $nil)
LEASE LIABILITIES
Current
1,761
357
Non-current
7,536
-
9,297
357
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
1,319
1,247
1,319
1,247
Interest expense (included in finance costs)
309
10
Annual Report
71
13. Intangible assets
Software
$'000
Customer Contracts
$'000
Total
$'000
AT 1 JULY 2022
Cost
15
4,574
4,589
Accumulated amortisation
(15)
(2,486)
(2,501)
Net book value
-
2,088
2,088
YEAR ENDED 30 JUNE 2023
Opening net book value
-
2,088
2,088
Additions
-
-
-
Amortisation charge
-
(267)
(267)
Closing net book value
-
1,821
1,821
AT 30 JUNE 2023
Cost
15
4,574
4,589
Accumulated amortisation
(15)
(2,753)
(2,768)
Net book value
-
1,821
1,821
YEAR ENDED 30 JUNE 2024
Opening net book value
-
1,821
1,821
Additions
-
-
-
Amortisation charge
-
(100)
(100)
Closing net book value
-
1,721
1,721
AT 30 JUNE 2024
Cost
15
4,574
4,589
Accumulated amortisation
(15)
(2,853)
(2,868)
Net book value
-
1,721
1,721
Annual Report
72
14. Trade and other payables
2024
$’000
2023
$’000
Trade payables
1,216
1,008
Accrued expenses
1,513
723
Accrued employee incentives
11,185
4,569
Other payables
858
534
14,772
6,834
15. Provisions
2024
$’000
2023
$’000
Current
Employee benefits - annual leave and long service leave
2,574
2,414
2,574
2,414
Non-Current
Employee benefits - long service leave
324
321
324
321
a) Movements in provisions
Movements in each class of provision during the financial year, are set out below:
Employee Benefits
$'000
Current
BALANCE AT 1 JULY 2023
2,414
Amounts provided for during the year
160
Balance at 30 June 2024
2,574
Non-Current
BALANCE AT 1 JULY 2023
321
Amounts provided for during the year
3
Balance at 30 June 2024
324
Annual Report
73
16. Contributed equity
a) Share capital
2024
Shares
2023
Shares
2024
$'000
2023
$'000
Ordinary shares:
Fully paid contributed equity (b)
198,214,482
194,601,091
430,735
418,479
Total contributed equity
198,214,482
194,601,091
430,735
418,479
b) Movements in ordinary share capital
Date
Details
Number of shares
Issue price
$'000
1 July 2022
Opening balance
193,860,297
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
3,516
-
-
Transfer from performance rights reserve on exercise of
performance rights
-
-
64
Dividend reinvestment
337,278
$9.59
3,234
Employee loan share repayments (d)
-
1,543
30 June 2023
Closing Balance
194,601,091
418,479
Issue of ordinary shares on exercise of options
100,000
$5.66
566
Issue of ordinary shares on exercise of performance rights
-
-
-
Dividend reinvestment
163,391
$10.15
1,658
Treasury stock vested (d)
3,350,000
-
Employee loan share repayments (d)
-
10,032
30 June 2024
Closing Balance
198,214,482
430,735
c) Ordinary shares
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.
Annual Report
74
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 2,017,500 and the forfeiture of 337,500 loan shares to
employees, issued under the Pinnacle Omnibus Plan approved by the board on 22 August 2018.
Date
Details
Number of treasury
shares
$'000
1 July 2022
Opening 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)
Employee loan share repayments
-
(1,543)
30 June 2023
Closing Balance
6,567,000
45,417
Issue of loan shares under Pinnacle Omnibus Plan
2,017,500
18,558
Forfeited loan shares
(337,500)
(3,706)
Treasury stock vested during the year
(3,350,000)
-
Employee loan share repayments
-
(10,032)
30 June 2024
Closing Balance
4,897,000
50,237
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.
Annual Report
75
17. Reserves and retained earnings
a) Reserves
2024
$'000
2023
$'000
Share-based payments reserve
19,701
16,321
Transactions with non-controlling interests reserve
(59,603)
(59,603)
(39,902)
(43,282)
MOVEMENTS:
Share-based payments reserve
Balance at 1 July
16,321
12,476
Share-based payments expense
3,160
3,408
Employee loans subject to share-based payments arrangements
220
437
Balance at 30 June
19,701
16,321
Transactions with non-controlling interests reserve
Balance at 1 July
(59,603)
(59,603)
Balance at 30 June
(59,603)
(59,603)
The share-based payments reserve is used to recognise:
•
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. In 2016, the
Company acquired the remaining 24.99% interest in its subsidiary Pinnacle Investment Management Limited that it did not
own. The difference between the fair value of the consideration paid and the carrying value of the non-controlling interest
is reflected in the Transactions with non-controlling interests reserve.
b) Retained earnings
Movements in retained earnings were as follows:
2024
$'000
2023
$'000
Balance at 1 July
47,376
37,217
Profit/(loss) for the year attributable to owners of Pinnacle Investment Management Group Limited
90,351
76,472
Dividends paid to shareholders
(72,666)
(66,313)
Balance at 30 June
65,061
47,376
Annual Report
76
18. Dividends
a) Ordinary shares
2024
$'000
2023
$'000
Interim dividend for the year ended 30 June 2024 of 15.6 cents per fully paid ordinary share paid on 22 March 2024 (2023 – 15.6 cents paid on 17
March 2023)
Fully franked based on tax paid @ 30%
31,679
31,389
Final dividend for the year ended 30 June 2023 of 20.4 cents per fully paid ordinary share paid on 15 September 2023 (2023 – 17.5 cents paid on 16
September 2022)
Fully franked based on tax paid @ 30%
40,987
34,924
Total dividends paid
72,666
66,313
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 26.4
cents per fully paid ordinary share (2023 – 20.4 cents). The aggregate amount of the proposed dividend to be paid on 20
September 2024 out of retained earnings at 30 June 2024, but not recognised as a liability at year end, is $53,621,000
(2023 – $41,038,000).
c) Franked dividends
The final dividends recommended after 30 June 2024 will be 72% franked out of existing franking credits.
2024
$'000
2023
$'000
Franking credits available for subsequent financial years based on a tax rate of 30% (2023: 30%)
16,723
19,582
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.
Annual Report
77
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. Further details regarding the Corporate
Card Facility and Bank Guarantee are provided in Note 21.
2024
2023
Secured
Current
$’000
Non-Current
$’000
Total
$’000
Current
$’000
Non-Current
$’000
Total
$’000
Bank Loan
131
100,000
100,131
20,137
100,000
120,137
Total Borrowings
131
100,000
100,131
20,137
100,000
120,137
The amended facility agreement includes the following covenants:
•
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 2024,
the interest cover ratio was 14 times, the net leverage cover ratio was 0.69 times and the tangible net wealth was $417
million (132% of the tangible net wealth at 30 June 2023).
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’ was $20 million and was repaid during the period in line with the loan term. The Loan Facility of
$100m was fully drawn as at 30 June 2024. The loan is a variable rate, Australian-dollar denominated loan, which is carried
at amortised cost. The facility term is two years from drawdown.
The carrying amounts of assets pledged as security at balance date in relation to the bank guarantees are set out below:
2024
$'000
2023
$'000
Current
Cash and cash equivalents
32,565
27,616
Financial assets at fair value through profit or loss
153,679
159,594
Assets held at amortised cost
922
911
Receivables
34,644
24,632
Total current assets pledged as security
221,810
212,753
Non-current
Plant and equipment
92
76
Financial assets at fair value through profit or loss
240
3,600
Assets held at amortised cost
8,708
5,585
Total non-current assets pledged as security
9,040
9,261
Total assets pledged as security
230,850
222,014
Annual Report
78
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 PI, 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:
2024
$'000
2023
$'000
Financial assets
Cash and cash equivalents
32,565
27,616
Trade and other receivables*
33,417
23,741
Financial assets at fair value through profit or loss (current)
153,679
159,594
Financial assets at fair value through profit or loss (non-current)
240
3,600
Loans to associates (including Affiliate executives) (current)
922
911
Loans to associates (including Affiliate executives) (non-current)
8,708
5,585
229,531
221,047
*Excludes prepayments (see note 7)
2024
$'000
2023
$'000
Financial liabilities
Trade and other payables
14,772
6,834
Lease liabilities (current)
1,761
357
Lease liabilities (non-current)
7,536
-
Borrowings (current)
131
20,137
Borrowings (non-current)
100,000
100,000
124,200
127,328
Annual Report
79
a) Market risk
(i) Foreign exchange risk
The Group is not materially exposed to foreign exchange risk. Major contracts with counterparties are denominated and
settled in Australian dollars, which is the reporting and operating currency of the Group. Most of the Group’s PI are also
quoted and priced in Australian Dollars. As certain of the Group's Affiliates have grown their product sets in international
markets, those Affiliates have begun receiving management fees in currencies other than Australian Dollars and the Group
has begun to invest in strategies denominated in currencies other than Australian Dollars. The Group hedges part of its
direct foreign currency exposure through the use of forward foreign exchange contracts and will continue to review its
approach as its international business grows.
(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:
Total
$'000
30 June 2024
ASSETS
Australian listed equity securities
13,772
Other unlisted instruments
645
Unlisted unit trusts
138,079
Derivative financial instruments
1,423
Total assets at FVPL
153,919
30 June 2023
ASSETS
Australian listed equity securities
14,884
Other unlisted instruments
4,005
Unlisted unit trusts
120,818
Derivative financial instruments
3,716
Total assets at FVPL
143,423
Sensitivity
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% (2023: +/- 15%) at 30 June 2024 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.
Annual Report
80
Impact on after-tax profit
Impact on equity
2024
$'000
2023
$'000
2024
$'000
2023
$'000
Group
+5,713/-5,713 +5,584/-5,584
+5,713/-5,713
+5,584/-5,584
(iii) Interest rate risk
The Group's main interest rate risk arises from holding cash and cash equivalents and borrowings with variable rates.
During 2024 and 2023, 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 2024
30 June 2023
Weighted
average
interest rate
%
Floating
interest rate
$'000
Weighted
average
interest rate
%
Floating
interest rate
$'000
Cash and cash equivalents
4.01%
32,565
3.86%
27,616
Exposure to cash flow interest rate risk
32,565
27,616
30 June 2024
30 June 2023
$’000
% of total
borrowings
$’000
% of total
borrowings
Variable rate borrowings
100,000
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 2024, 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 $944,000 lower/higher (2023: change of 200 basis
points: $1,293,000 lower/higher).
b) Credit risk
Credit risk arises from cash and cash equivalents, 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:
Annual Report
81
2024
$'000
2023
$'000
Cash and cash equivalents
32,565
27,616
Trade and other receivables*
33,417
23,741
Financial assets at fair value through profit or loss (current)
-
19,771
Loans to associates (including Affiliate executives) (non-current)
922
5,585
Loans to associates (including Affiliate executives) (current)
8,708
911
75,612
77,624
*Excludes prepayments (see note 7).
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 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 (2023: nil).
Loans to 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 2024 and 30 June 2023, 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 2024
(30 June 2023: $nil). This is because there is no history of default, revenue is generated primarily through providing
services to associates and cost recharges are also primarily to associates, 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.
Annual Report
82
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 2024 (2023 - $nil).
2024
$'000
2023
$'000
Trade and other receivables
Neither past due nor impaired
33,234
23,232
Past due but not impaired
1,410
509
34,644
23,741
Loans held at amortised cost
Neither past due nor impaired
9,630
6,495
Total trade, other and loan receivables
9,630
6,495
Credit quality
The credit quality of financial assets can be assessed by reference to credit ratings. These credit ratings are only available
for cash assets:
2024
$'000
2023
$'000
Cash at bank and short-term bank deposits
AA-
32,565
27,616
32,565
27,616
c) Liquidity risk
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 PI portfolio. At 30 June 2024 the Group has $186 million in available cash and PI
($86 million net of the $100 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
1 to 2
years
2 to 5 years
Total
contractual
cash flows
Carrying
amount
At 30 June 2024
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Trade and other payables
3,589
11,183
-
-
-
14,772
14,772
Borrowings (see note 19)
-
1,126
5,353
100,000
-
106,479
100,131
Lease liabilities (see note 12)
141
282
1,339
1,871
7,072
10,705
9,297
Total financial liabilities
3,730
12,591
6,692
101,871
7,072
131,956
124,200
Annual Report
83
At 30 June 2023
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Trade and other payables
2,265
4,569
-
-
-
6,834
6,834
Borrowings (see note 19)
-
21,587
4,761
6,348
100,000
132,696
120,137
Lease liabilities (see note 12)
32
65
260
-
-
357
357
Total financial liabilities
2,297
26,221
5,021
6,348
100,000
139,887
127,328
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) 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
c)
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 PI measured and recognised at fair value:
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
30 June 2024
ASSETS
Australian listed equity securities
13,772
-
-
13,772
Other unlisted instruments
-
-
645
645
Unlisted unit trusts
-
138,079
-
138,079
Derivative financial instruments
1,423
-
-
1,423
Total assets
15,195
138,079
645
153,919
No liabilities were held at fair value at 30 June 2024.
30 June 2023
ASSETS
Australian listed equity securities
14,884
-
-
14,884
Other unlisted equity securities
-
19,771
4,005
23,776
Unlisted unit trusts
-
120,818
-
120,818
Derivative financial instruments
3,716
-
-
3,716
Total assets
18,600
140,589
4,005
163,194
No liabilities were held at fair value at 30 June 2023.
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.
Annual Report
84
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 associates 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 2024 and 30 June 2023:
Unlisted equity
securities
$'000
Closing balance 30 June 2022
3,582
Fair value adjustments recognised in profit or loss
423
Closing balance 30 June 2023
4,005
Fair value adjustments recognised in profit or loss
(3,360)
Closing balance 30 June 2024
645
(i) Valuation process
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.
Annual Report
85
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 (2023: $5,000,000)
(ii) Pinnacle RE Services Limited - $50,000 (2023: $50,000)
The Group has also provided guarantees in respect of its leased premises:
(iii) Pinnacle Services Administration Pty Ltd - $2,789,000 (30 June 2023 - $2,480,000)
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 ($2,157,000).
The unused bank guarantee facility available at balance date was $275,000 (30 June 2023: $275,000). The Group has also
provided guarantees in relation to its corporate credit card facility (facility limit of $400,000 of which $336,000 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 associates to
cover their operating expenses until such time as the entity becomes profitable and is generating positive cash flows.
Further information in relation to these balances is provided in note 26.
Annual Report
86
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 material 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.
Equity holding
Name of entity
Country of
incorporation
Class of security
2024
%
2023
%
Pinnacle Investment Management Limited
Australia
Ordinary share
100
100
Pinnacle Funds Services Limited
Australia
Ordinary share
100
100
Pinnacle Services Administration Pty Ltd
Australia
Ordinary share
100
100
Pinnacle RE Services Limited
Australia
Ordinary share
100
100
Priority Funds Management Pty Ltd
Australia
Ordinary share
100
100
Priority Investment Management Pty Ltd
Australia
Ordinary share
100
100
Ariano Pty Ltd
Australia
Ordinary share
100
100
Next Financial Holding Company Pty Ltd
Australia
Ordinary share
100
100
PNI Option Plan Managers Pty Ltd
Australia
Ordinary share
100
100
Pingroup IM Limited
United States
Ordinary share
100
100
Pinnacle Investment Management (Canada) Ltd.
Canada
Ordinary share
100
100
Pinnacle Investment Management (UK) Ltd
United Kingdom
Ordinary share
100
100
Annual Report
87
23. Investments accounted for using the equity method
a) Carrying amounts
The Group holds investments in associates that undertake investment management activities. Information relating to these
entities is set out below.
Ownership interest
Carrying Value
Name of company
Principal Activity
2024
2023
2024
2023
Unlisted
%
%
$'000
$'000
Plato Investment Management Limited
Funds Management
42.29
42.59
8,052
6,814
Palisade Investment Partners Limited
Funds Management
35.90
35.90
11,422
12,424
Hyperion Holdings Limited
Funds Management
49.99
49.99
19,507
20,904
Foray Enterprises Pty Limited (holding company for
Resolution Capital)
Funds Management
49.50
49.50
44,010
39,320
SolCorp Holdings Pty Ltd (holding company for
Solaris)
Funds Management
44.50
44.50
5,625
5,596
Spheria Asset Management Pty Ltd
Funds Management
40.00
40.00
1,569
2,241
Antipodes Partners Holdings Pty Ltd
Funds Management
23.88
24.24
9,174
9,177
Firetrail Investments Limited
Funds Management
28.50
23.50
23,644
17,449
Metrics Credit Holdings Pty Limited
Funds Management
35.00
35.00
51,570
50,629
Longwave Capital Partners Pty Limited
Funds Management
40.00
40.00
3,594
3,069
Riparian Capital Partners Pty Limited
Funds Management
40.00
40.00
1,347
1,362
Coolabah Capital Investments Pty Ltd
Funds Management
35.00
35.00
72,522
73,886
Five V Capital Pty Ltd
Funds Management
25.00
25.00
77,150
76,481
Langdon Equity Partners Ltd
Funds Management
32.50
32.50
3,198
2,635
Aikya Investment Management Limited
Funds Management
32.50
32.50
8,916
6,478
341,300
328,465
Each of the above entities 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 2024 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 2024 (30 June 2023: nil).
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 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
accounted for using the equity method.
Annual Report
88
b) Summarised financial information for associates
The tables below provide summarised financial information for those associates that are individually material to the group.
The Group assesses materiality based on each associate’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 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
2024
$000
2023
$000
2024
$000
2023
$000
2024
$000
2023
$000
2024
$000
2023
$000
Summarised statement of financial position
Total current assets
49,514
44,153
52,594
42,191
107,231
83,904
23,435
21,072
Total non-current assets
3,881
6,386
8,074
5,932
389,909
354,911
10,647
11,593
Total current liabilities
(14,476)
(8,909)
(17,880)
(14,585)
(380,007)
(221,007)
(12,048)
(7,154)
Total non-current liabilities
(92)
(22)
(1,234)
(1,458)
(63,267)
(161,426)
(3,009)
(3,514)
Net Assets
38,827
41,608
41,554
32,080
53,866
56,382
19,025
21,997
Reconciliation to carrying
amounts:
Opening net assets 1 July
41,608
43,239
32,080
25,028
56,382
53,855
21,997
16,903
Issued shares
-
-
-
-
-
1,200
913
262
Non-controlling interest
-
-
-
-
(5,311)
-
-
-
Reserves
-
-
-
-
1,179
852
(76)
(81)
Total comprehensive income 57,478
40,591
29,474
25,552
21,616
14,975
32,216
18,120
Dividends paid
(60,259)
(42,222)
(20,000)
(18,500)
(20,000)
(14,500)
(36,025)
(13,207)
Closing net assets
38,827
41,608
41,554
32,080
53,866
56,382
19,025
21,997
Non-controlling Interest
-
-
-
-
5,311
4,514
-
-
Closing net assets (parent)
38,827
41,608
41,554
32,080
59,177
51,868
19,025
21,997
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
19,409
20,800
20,569
15,880
20,713
18,153
6,659
7,699
Excess consideration over
share of net assets
98
104
23,441
23,440
30,857
32,476
65,863
66,187
Carrying amount
19,507
20,904
44,010
39,320
51,570
50,629
72,522
73,886
Summarised statement of comprehensive
income
Revenue
98,065
70,898
72,628
67,687
157,492
102,146
68,020
41,950
Net profit for the year after
tax
57,478
40,591
29,474
25,552
21,617
14,975
32,216
18,120
Total comprehensive income 57,478
40,591
29,474
25,552
21,617
14,975
32,216
18,120
Non-controlling interest
-
-
-
-
(1,074)
(1,063)
-
-
Total comprehensive income
(parent)
57,478
40,591
29,474
25,552
22,691
16,038
32,216
18,120
Dividends received from
associate entities (Pinnacle
share)
30,129
21,111
9,900
9,158
7,000
5,075
12,639
4,676
*holding company for Resolution Capital Limited
Annual Report
89
Individually immaterial associates
In addition to the interests disclosed above, the Group also has interests in a number of individually immaterial entities
that are accounted for using the equity method.
2024
$'000
2023
$'000
Aggregate carrying amount of individually immaterial associates
153,691
143,726
Aggregate amounts of the Group's share of:
Profit for the year
28,276
22,475
Other comprehensive income
-
-
Total comprehensive income
28,276
22,475
c) Movements in carrying amounts
2024
$'000
2023
$'000
Carrying amount at the beginning of the financial year
328,465
325,252
Purchase of shares in associates
11,964
4,389
Sales of shares in associates
(5,158)
(2,445)
Share of profit after income tax
90,816
67,359
Impairment provision
-
-
Dividends received/receivable
(84,787)
(66,090)
Carrying amount at the end of the financial year
341,300
328,465
d) Share of entities' revenue, expenses and results
2024
$'000
2023
$'000
Revenues
252,260
193,591
Expenses
(128,081)
(101,042)
Profit before income tax
124,179
92,549
Income tax expense
(33,363)
(25,190)
Profit after income tax
90,816
67,359
Annual Report
90
e) Summary of investments accounted for using the equity method
2024
$'000
2023
$'000
Current assets
160,877
142,537
Non-current assets
169,021
152,156
Total assets
329,898
294,693
Current liabilities
184,304
132,244
Non-current liabilities
25,740
65,010
Total liabilities
210,044
197,254
Net assets
119,854
97,439
24. Parent Entity financial information
a) Summary financial information
The individual financial statements for the Parent Entity (PNI) show the following aggregate amounts:
2024
$'000
2023
$'000
Statement of financial position
Current assets
1,150
961
Non-current assets
330,192
312,977
Total assets
331,342
313,938
Current liabilities
123
122
Non-current liabilities
14,321
9,483
Total liabilities
14,444
9,605
Net assets
316,898
304,333
Shareholders' equity
Contributed equity
430,205
417,949
Reserves
(65,270)
(65,490)
Accumulated losses
(48,037)
(48,126)
Total equity
316,898
304,333
Profit/(loss) for the year
72,755
66,548
Total comprehensive income/(loss)
75,755
66,548
b) Guarantees entered into by the Parent Entity
Details of guarantees entered into by the Group are provided at note 21.
Annual Report
91
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:
2024
$'000
2023
$'000
Cash and cash equivalents
34,644
27,616
Balances per statement of cash flows
34,644
27,616
b) Reconciliation of net cash flow from operating activities to profit
2024
$'000
2023
$'000
Profit/(loss) for the year
90,351
76,472
Depreciation and amortisation
120
310
Right-of-use asset depreciation and interest charge
1,628
1,257
Reinvested distributions received
(4,408)
(5,684)
Equity settled share-based payments and performance rights
3,160
3,443
Interest Expense
(6)
52
Net losses/(gains) on financial assets at fair value through profit or loss
(5,913)
(10,853)
Interest on assets at amortised cost
(290)
(220)
Change in operating assets and liabilities, net of effects from acquisition and disposal of businesses:
Trade and other receivables
(10,011)
(1,374)
Investments accounted for using the equity method
(6,029)
(1,272)
Financial assets at fair value through profit or loss
19,596
(3,745)
Trade and other payables
7,940
(3,607)
Provisions
163
262
Net cash inflow/(outflow) from operating activities
96,301
55,041
The reconciliation of net cash flow from operating activities to profit/(loss) includes continuing operations only.
Annual Report
92
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 associates
Interests in subsidiaries are set out in note 22.
Interests in associates are set out in note 23.
Details of service charges to associates are provided in note 1 and note 26(g).
Details of dividend payments from associates 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 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
2023
$
Repayments made
$
Other changes during the
year
$
Loan balance – 30 June 2024
$
Andrew Chambers
219,851
(219,851)
-
-
(ii) Loan Shares issued under the Pinnacle Omnibus Plan
During the year to 30 June 2024, 300,000 loan shares were issued to KMP under the Pinnacle Omnibus Plan (no loan shares
were issued during the year to 30 June 2023).
The loan shares issued in the year to 30 June 2024, 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:
Annual Report
93
Key Management
Personnel
Loan balance –
1 July 2023
$
New loans issued
$
Repayments made
$
Loan shares
forfeited* $
Other changes
during the year*
$
Loan balance – 30
June 2024
$
Ian Macoun
1,447,390
-
-
-
1,447,390
Andrew Chambers
3,859,707
780,721
(3,871,517)
-
768,911
Dan Longan
3,532,245
919,960
(93,578)
-
4,358,627
Calvin Kwok
3,351,023
919,960
(880,592)
-
3,390,391
(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. The loans are recorded within other current
and non-current assets in the consolidated statement of financial position.
During the year, interest of $23,000 accrued on these loans and repayments of $910,000 were made. The balance of the
loans at 30 June 2024 including capitalized interest was $214,000 (balance at 30 June 2023 $1,101,000).
During the year to 30 June 2023, Palisade Real Assets acquired its first energy transition asset in Malaby, Wiltshire, UK. This
was funded initially by Pinnacle, with a fixed return on the capital provided of 8% and a term of 1.5 year. The asset was
recorded within financial assets at fair value through profit or loss in the statement of financial position and repaid during
the year to 30 June 2024.
e) Loans to/from related parties
2024
$
2023
$
Loans to associates (including Affiliate executives)
Balance at 1 July
6,495,365
3,287,326
Loans advanced
4,693,372
3,672,761
Interest accrued
371,523
220,368
Loans repaid
(1,929,798)
(685,090)
Balance at 30 June
9,630,462
6,495,365
f) Guarantees
The Group has provided guarantees to subsidiaries as described in note 21.
Annual Report
94
g) Transactions with other related parties and affiliates
The following transactions occurred with related parties:
•
Sales of services to other related parties/ affiliates $41,234,952 (2023: $36,959,227)
•
Transactions associated with PI managed by Affiliates:
o
Acquisition of financial assets at fair value through profit and loss $47,107,902 (2023:
$82,040,581)
o
Proceeds for disposal of financial assets at fair value through profit and loss
$67,809,617 (2023: $81,801,838)
o
Balance of financial assets at fair value through profit and loss at 30 June 2024
$141,442,285 (2023: $148,456,759)
o
Dividend revenue $6,041,481 (2023: $6,136,168)
•
Balance of trade receivables to affiliates at 30 June 2024 $30,027,652 (2023: $19,832,525)
27. Key Management Personnel
a) Key Management Personnel compensation
2024
$
2023
$
Short-term employee benefits
3,664,000
2,843,000
Post-employment benefits
110,000
137,500
Long-term benefits
24,979
37,854
Share-based payments
777,613
1,024,598
Total Key Management Personnel compensation
4,576,592
4,042,952
Certain Executive KMP are party to the long-term employee incentive arrangements described in note 32(s)(vii). At 30 June
2024, the balance of loans issued to Executive KMP was $9,965,319 (2023: $12,410,259) relating to 1,550,000 shares
issued in the Company (2023: 2,296,583 shares).
Detailed remuneration disclosures for KMP are provided in the Remuneration Report.
Annual Report
95
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
2024
12,410,216
-
2,620,641
(5,065,538)
-
9,965,319
1,152,267
4
2023
12,938,391
-
-
(528,175)
-
12,410,216
726,667
4
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.
Annual Report
96
(i) Loan Shares
Grant
date
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
2024
17 September 2018
16 September 2023
$7.2917
1,850,000
-
(1,850,000)
-
-
-
15 November 2018
14 November 2023
$5.6582
1,100,000
-
(1,100,000)
-
-
-
12 March 2019
11 March 2024
$5.1234
400,000
-
(400,000)
-
-
-
25 March 2020
24 March 2025
$2.9683
150,000
-
-
-
150,000
-
11 September 2020
10 September 2025
$5.2404
1,150,000
-
-
(100,000)
1,050,000
-
30 December 2020
29 December 2024
$6.8450
350,000
-
-
-
350,000
-
17 September 2021
16 September 2026
$16.8178
700,000
-
-
(150,000)
550,000
-
30 September 2022
29 September 2027
$8.6451
867,000
-
-
(30,000)
837,000
-
11 September 2023
10 September 2033
$9.1996
-
1,817,500
-
(57,500)
1,760,000
-
30 October 2023
29 October 2033
$7.8072
-
100,000
-
-
100,000
-
5 February 2024
4 February 2034
$10.5669
-
100,000
-
-
100,000
-
6,567,000
2,017,500
(3,350,000)
(337,500)
4,897,000
-
Weighted average exercise price
$7.60
$9.20
$6.50
$11.36
$8.75
-
2023
17 September 2018
16 September 2023
$7.2917
1,850,000
-
-
-
1,850,000
-
15 November 2018
14 November 2023
$5.6582
1,100,000
-
-
-
1,100,000
-
12 March 2019
11 March 2024
$5.1234
400,000
-
-
-
400,000
-
25 March 2020
24 March 2025
$2.9683
150,000
-
-
-
150,000
-
11 September 2020
10 September 2025
$5.2404
1,150,000
-
-
-
1,150,000
-
30 December 2020
29 December 2024
$6.8450
350,000
-
-
-
350,000
-
17 September 2021
16 September 2026
$16.8178
700,000
-
-
-
700,000
-
30 September 2022
29 September 2027
$8.6451
-
1,017,000
-
(150,000)
867,000
-
5,700,000
1,017,000
-
(150,000)
6,567,000
-
Weighted average exercise price
$7.44
$8.65
-
$8.65
$7.60
-
2,017,500 loan shares were issued to employees during the financial year and 337,500 loan shares were forfeited by
employees during the year. Additionally, 3,350,000 loan shares vested 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.
Annual Report
97
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%
Annual Report
98
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%
Annual Report
99
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%
Fair value of interests granted – 11 September 2023
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: $3.9108 per loan share
•
Exercise price: $9.1996
•
Grant date: 11 September 2023
•
Vesting date: 10 September 2024
•
Share price at grant date: $9.15
•
Expected price volatility of the Company's shares: 43%
•
Expected dividend yield: 0.0%
•
Risk-free interest rate: 3.90%
Annual Report
100
Fair value of interests granted – 30 October 2023
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: $3.2105 per loan share
•
Exercise price: $7.8072
•
Grant date: 30 October 2023
•
Vesting date: 29 October 2028
•
Share price at grant date: $7.69
•
Expected price volatility of the Company's shares: 40%
•
Expected dividend yield: 0.0%
•
Risk-free interest rate: 4.51%
Fair value of interests granted – 5 February 2024
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: $3.9603 per loan share
•
Exercise price: $10.5669
•
Grant date: 5 February 2024
•
Vesting date: 4 February 2029
•
Share price at grant date: $10.80
•
Expected price volatility of the Company's shares: 33%
•
Expected dividend yield: 0.0%
•
Risk-free interest rate: 3.73%
Annual Report
101
(ii) Options
Grant
date
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
2024
15 November 2018
14 November 2023
$5.6582
100,000
-
(100,000)
-
-
-
25 March 2020
24 March 2025
$2.9683
200,000
-
-
-
200,000
-
11 September 2020
10 September 2025
$5.2404
200,000
-
-
-
200,000
-
30 December 2020
29 December 2025
$6.8450
100,000
-
-
-
100,000
-
17 September 2021
16 September 2026
$16.8178
100,000
-
-
-
100,000
-
30 September 2022
29 September 2027
$8.6451
100,000
-
-
-
100,000
-
11 September 2023
10 September 2028
$9.1996
-
92,500
-
-
92,500
-
4 March 2024
3 March 2029
$11.036
-
200,000
-
-
200,000
-
800,000
292,500
(100,000)
-
992,500
-
Weighted average exercise price
$6.80
$10.46
$5.66
-
$7.99
-
2023
15 November 2018
14 November 2023
$5.6582
100,000
-
-
-
100,000
-
25 March 2020
24 March 2025
$2.9683
200,000
-
-
-
200,000
-
11 September 2020
10 September 2025
$5.2404
200,000
-
-
-
200,000
-
30 December 2020
29 December 2025
$6.8450
100,000
-
-
-
100,000
-
17 September 2021
16 September 2026
$16.8178
100,000
-
-
-
100,000
-
30 September 2022
29 September 2027
$8.6451
-
100,000
-
-
100,000
-
700,000
100,000
-
-
800,000
-
Weighted average exercise price
$6.54
$8.65
-
-
$6.80
-
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%
Annual Report
102
•
Expected dividend yield: 1.6%
•
Risk-free interest rate: 2.28%
•
Options issued under the plan carry no dividend and voting rights.
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
Annual Report
103
•
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%
•
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.
Annual Report
104
Fair value of interests granted – 11 September 2023
92,500 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: $2.82 per option
•
Exercise price: $9.1996
•
Grant date: 11 September 2023
•
Vesting date: 10 September 2028
•
Share price at grant date: $9.15
•
Expected price volatility of the Company's shares: 43%
•
Expected dividend yield: 3.6%
•
Risk-free interest rate: 3.90%
•
Options issued under the plan carry no dividend and voting rights.
Fair value of interests granted – 4 March 2024
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: $2.54 per option
•
Exercise price: $11.0360
•
Grant date: 4 March 2024
•
Vesting date: 3 March 2029
•
Share price at grant date: $11.15
•
Expected price volatility of the Company's shares: 30%
•
Expected dividend yield: 3.6%
•
Risk-free interest rate: 3.77%
•
Options issued under the plan carry no dividend and voting rights.
Annual Report
105
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:
2024
$’000
2023
$’000
Pinnacle Investment Management Group Employee Option Share Plan
-
-
Pinnacle Omnibus Plan
3,160
3,408
Pinnacle Long-term Employee Incentive Plan
-
-
Total share-based payment transactions
3,160
3,408
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:
2024
$
2023
$
PricewaterhouseCoopers Australia
(i)
Audit and other assurance services
Audit and review of financial statements
297,920
289,635
Other assurance services:
Audit of regulatory returns
26,340
25,560
Audit of compliance plan - Responsible entity *
161,235
131,905
Other assurance services
-
-
Total remuneration for audit and other assurance services
485,495
447,100
(ii) Taxation services
Tax services
46,275
37,165
Total remuneration for taxation services
46,275
37,165
(iii) Other services
Other services
-
-
Total remuneration of PricewaterhouseCoopers Australia
531,770
484,265
Total remuneration of auditors
531,770
484,265
* Compliance plan audit charges are on-charged to managed funds to which responsible entity services are provided.
An additional amount of $935,000 for audit fees and $284,000 for non-audit fees (tax and distribution review fees) was paid or payable to PricewaterhouseCoopers as fees for services
to various funds that are not part of the Consolidated Group but for which Pinnacle Fund Services Limited acts as Responsible Entity.
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.
Annual Report
106
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 considers 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 arising from tax losses 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) Investments accounted for using the equity method
Entities accounted for using the equity method 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).
Annual Report
107
32. Summary of material accounting policies
The material 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 2023 that have had any material impact on the Group's accounting policies nor have had any material
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 2023.
(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 2024 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.
Annual Report
108
(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) Investments accounted for using the equity method
Entities accounted for using the equity method are all entities over which the Group has a shareholding of between 20%
and 49.99% of the voting rights, and there is 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 these entities 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 these entities 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 accounted for using
the equity method 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 these entities 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 equals or exceeds its interest in that entity, 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 that entity.
Unrealised gains on transactions between the Group and these entities are eliminated to the extent of the Group's interest
in the entity. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset
transferred. Accounting policies of entities accounted for using the equity method have been changed where necessary to
ensure consistency with the policies adopted by the Group.
The carrying amounts of investments accounted for using the equity method 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.
Annual Report
109
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.
Annual Report
110
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 – 6 years. The
lease agreements do not impose any covenants. 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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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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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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113
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 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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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
2 - 5 years
-
Furniture and fittings
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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115
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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116
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:
Annual Report
117
•
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 2024
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
Annual Report
118
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.
Annual Report
119
Consolidated Entity Disclosure Statement
As at 30 June 2024
Name of entity
Type of entity
Trustee, partner
or participant in
JV
Country of
incorporation
%
Owners
hip
Australian
resident
or foreign
resident
Foreign
jurisdiction(s) of
foreign
residents
Pinnacle Investment Management Limited
Body corporate
-
Australia
100
Australian
n/a
Pinnacle Funds Services Limited
Body corporate
-
Australia
100
Australian
n/a
Pinnacle Services Administration Pty Ltd
Body corporate
-
Australia
100
Australian
n/a
Pinnacle RE Services Limited
Body corporate
-
Australia
100
Australian
n/a
Priority Funds Management Pty Ltd
Body corporate
-
Australia
100
Australian
n/a
Priority Investment Management Pty Ltd
Body corporate
-
Australia
100
Australian
n/a
Ariano Pty Ltd
Body corporate
-
Australia
100
Australian
n/a
Next Financial Holding Company Pty Ltd
Body corporate
-
Australia
100
Australian
n/a
Investment Solutions Client Services Pty Ltd
Body corporate
-
Australia
100
Australian
n/a
Next Financial Nominees No. 2 Pty Ltd
Body corporate
-
Australia
100
Australian
n/a
Next Financial Nominees Pty Ltd
Body corporate
-
Australia
100
Australian
n/a
PNI Option Plan Managers Pty Ltd
Body corporate
-
Australia
100
Australian
n/a
Pingroup IM Limited
Body corporate
-
United States
100
Foreign
United States
Pinnacle Investment Management (Canada)
Ltd.
Body corporate
-
Canada
100
Foreign
Canada
Pinnacle Investment Management (UK) Ltd
Body corporate
-
United Kingdom
100
Foreign
United Kingdom
Basis of preparation
This consolidated entity disclosure statement (CEDS) has been prepared in accordance with the Corporations Act 2001 and
includes information for each entity that was part of the consolidated entity as at the end of the financial year in
accordance with AASB 10 Consolidated Financial Statements.
Determination of tax residency
Section 295 (3A)(vi) of the Corporation Act 2001 defines tax residency as having the meaning in the Income Tax
Assessment Act 1997. The determination of tax residency involves judgement as there are different interpretations that
could be adopted, and which could give rise to a different conclusion on residency.
In determining tax residency, the consolidated entity has applied the following interpretations:
Australian tax residency
The consolidated entity has applied current legislation and judicial precedent, including having regard to the Tax
Commissioner's public guidance in Tax Ruling TR 2018/5.
Foreign tax residency
Where necessary, the consolidated entity has used independent tax advisers in foreign jurisdictions to assist in its
determination of tax residency to ensure applicable foreign tax legislation has been complied with (see section 295(3A)(vii)
of the Corporations Act 2001).
Partnerships and trusts
Australian tax law generally does not contain corresponding residency tests for partnerships and trusts and these entities
are typically taxed on a flow-through basis. Additional disclosures on the tax status of partnerships and trusts have been
provided where relevant.
Annual Report
120
09
Directors’
Declaration
In the directors’ opinion:
a) the financial statements and notes set out on pages 56 to 118 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 2024 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, and
c) The consolidated entity disclosure statement on page 119 is true and correct.
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, 1 August 2024
Annual Report
121
10
Independent
Auditor's
Report
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999
Liability limited by a scheme approved under Professional Standards Legislation.
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 2024 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 as at 30 June 2024
•
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, including material accounting policy
information and other explanatory information
•
the consolidated entity disclosure statement as at 30 June 2024
•
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.
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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
associates 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 accounted for using the equity
method for the Pinnacle Affiliates.
Audit scope
Key audit matters
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. 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 associates accounted for using the equity
method and the Group’s investments accounted for
using the equity method recognised in the Group
financial statements.
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 accounted for
using the equity method.
This is further described in the Key audit matters
section of our report.
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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 matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context.
Key audit matter
How our audit addressed the key audit matter
Share of net profit of associates accounted for
using the equity method
(Refer to note 23(d) - $90.8m)
The share of net profit of associates 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 associates
accounted using the equity method.
This was a key audit matter because the share of net
profit of associates 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.
This was a key audit matter because the share of net
profit of associates accounted for using the equity
method is material. The performance fee revenues
recognised by Pinnacle Affiliates are material and
inherently complex 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.
124 Annual Report
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 2024, 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 through our opinion on the financial report. We
have issued a separate opinion on the remuneration report.
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 in accordance
with Australian Accounting Standards and the Corporations Act 2001, including giving a true and fair
view, and for such internal control as the directors determine is necessary to enable the preparation of
the financial report that 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.
125 Annual Report
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in the directors’ report for the year ended 30 June
2024.
In our opinion, the remuneration report of Pinnacle Investment Management Group Limited for the
year ended 30 June 2024 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
R Balding
Sydney
Partner
1 August 2024
126 Annual Report
Annual Report
127
11
Shareholder
Information
Annual Report
128
The shareholder information set out below is correct as at 26 July 2024.
Shares on issue
Distribution of securities
Range
No. of shareholders
No. of shares
% of issued
shares
1 – 1,000
3,201
1,262,525
0.62
1,001 – 5,000
2,253
5,576,325
2.75
5,001 – 10,000
556
3,995,753
1.97
10,001 – 100,000
492
12,794,244
6.30
100,001 – 9,999,999,999
116
179,482,635
88.37
Rounding
-0.01
Total
6,618
203,111,482
100.00
Unmarketable parcels
Minimum parcel size
No. of shareholders
No. of shares
Minimum $500 parcel at $15.93 per unit
32
242
1,249
Twenty largest shareholders (as at 26 July 2024)
Rank
Name
No. of shares
% of issued
shares
1
HSBC Custody Nominees (Australia) Limited
37,145,370
18.29
2
J P Morgan Nominees Australia Pty Limited
31,429,221
15.47
3
Citicorp Nominees Pty Limited
17,813,946
8.77
4
Macoun Generation Z Pty Ltd
13,993,985
6.89
5
National Nominees Limited
5,057,893
2.49
6
Mr Alexander William Macdonald
5,041,850
2.48
7
Andrew Chambers & Fleur Chambers
4,253,614
2.09
8
Macoun Superannuation Pty Ltd
3,882,092
1.91
9
HSBC Custody Nominees (Australia) Limited
2,991,249
1.47
10
Mr David Francis Cleary
2,807,149
1.38
11
Mr David Noel Groth
2,801,224
1.38
Annual Report
129
Rank
Name
No. of shares
% of issued
shares
12
BNP Paribas Noms Pty Ltd
2,647,388
1.30
13
Vestinoz Pty Ltd
2,552,766
1.26
14
Earlston Nominees Pty Ltd
2,500,000
1.23
15
Kinauld Pty Ltd
2,200,000
1.08
16
Kinauld Pty Ltd
2,000,000
0.98
17
Mr Mark Bryant Cormack and Mrs Melanie Louise Cormack
1,999,293
0.98
18
Warragai Investments Pty Ltd
1,800,000
0.89
19
BNP Paribas Nominees Pty Ltd
1,455,879
0.72
20
BNP Paribas Nominees Pty Ltd
1,412,899
0.70
Total
145,785,818
71.78
Total remaining holders balance
57,325,664
28.22
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
No. of shares
% of shares
Steve Wilson and associates
24,284,240
11.96
Ian Macoun and associates
18,276,077
9.0
Voting rights
Upon a poll each share shall have one vote.
Options and performance rights on issue
Distribution of securities
Options
There are 992,500 options on issue as at 26 July 2024. These options have been issued to six employees under the Pinnacle
Omnibus Plan.
Range
No. of holders
No. of options
% of options
1 – 1,000
-
-
-
1,001 – 5,000
1
2,500
0.25
5,001 – 10,000
1
10,000
1
10,001 – 100,000
-
-
-
100,001 – 9,999,999,999
4
980,000
98.74
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130
Rounding
0.01
Total
6
992,500
100.00
On-market buy-backs
There is no current on-market buy back in relation to the Company’s securities.
Performance rights
There are no performance rights on issue as at 26 July 2024.
Voting rights
There are no voting rights attaching to the options.
Annual Report
131
12
Corporate
Directory
Annual Report
132
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 AM (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
One International Towers Sydney
Watermans Quay
Barangaroo NSW 2000
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
Suite 354
1185 Avenue of the Americas
11th floor
New York, NY 10036
Annual Report
133
Website address
www.pinnacleinvestment.com