Thank you for standing by, and welcome to the Pacific Current Group 2024 full year results call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Michael Clark, Executive Director and Acting CEO. Please go ahead. Thank you very much. Welcome everyone to the Pacific Current Group investor presentation call for the 2024 financial year. By way of introduction, my name is Michael Clark, and I'm an Executive Director and Acting CEO of Pacific Current Group. I joined PAC in February of this year as a non-executive director and transitioned to my current role on 1 July of this year. I'm joined on the call by Ashley Killick, the CFO of PAC. Ashley joined PAC five years ago. In our update to shareholders last year, we noted that PAC is committed to taking actions that would result in greater recognition of the value of PAC's portfolio. We're gratified by the progress we've made on this front in FY 2024, as well as the underlying financial results. Turning to Slide 3 in the presentation pack, and to operational highlights. This past year was a transformational year for the Pacific Current Group. After multiple parties sought to purchase PAC, a viable transaction ultimately emerged that PAC believed would be both feasible and beneficial to shareholders. The intent of the strategy was to unlock value by reducing corporate expenses while retaining access to key investment capabilities. It involves simultaneously selling three of PAC's assets to GQG, while externalizing the investment management of PAC's portfolio by appointing an affiliate of GQG to provide investment management services back to us. The transaction results in an expected reduction in ongoing operating expenses of more than 40%, while simultaneously ensuring the continuity of portfolio management of our portfolio. The agreement with GQG will last a minimum of two years, but can be extended at our discretion. Now, turning to transactions throughout the year, because there, there's been quite a lot of activity. To say it was an eventful year for the portfolio is an understatement. You know, the activity involved mostly selling assets, although one new investment was made. Highlights of FY 2024 include the following: In September 2023, PAC purchased a 24.9% stake in private credit manager Avante Capital for $28 million. Then in March 2024, PAC sold its entire stake in GQG. This sale was a culmination of a very successful investment and yielded PAC total proceeds of AUD 257.3 million. Combined with the distributions received throughout the investment, PAC made more than 99 times its initial investment. So obviously a very successful activity. In May of 2024, PAC announced the partial sale of its investment in Pennybacker Capital. The proceeds, which will be paid out over the next two years, are roughly 1.75 times PAC's initial investment. Yet, of course, PAC retains 45% of its original stake in Pennybacker. So again, a very successful transaction. In May of 2024, PAC announced the sale of the three assets related to the GQG, effectively the outsourcing of investment management. Those assets, Proterra, Avante, and Cordillera, and we received consideration in total of $71.25 million, and with the assumption of certain deferred payments and earn-out obligations. So those were the major transactions through the financial year, FY 2024. I mean, clearly, as most on the call would know, we have announced two further activities this year. And I'd just like to summarize those as well. In early July 2024, PAC agreed to sell its entire stake in Carlisle Management Company to Abacus Life, a Nasdaq-listed company. The transaction, which is contingent upon regulatory approval, will result in PAC holding a combination of stock and bonds in Abacus, worth roughly 50% more than PAC's pre-transaction estimate of Carlisle's fair value. Abacus bonds in Abacus will actually result in increased contributions to PAC, in the current financial year and going forward, compared to owning Carlisle equity only. Again, I'm very happy with that successful transaction, yet to be completed. In early August 2024, PAC announced the sale of 55% of its stake in Victory Park Capital to Janus Henderson Group. The initial proceeds from the sale will provide PAC with $33.9 million. This will be supplemented by an earn-out that could provide PAC with an additional $28.7 million. PAC will also retain most of its entitlements to future performance fees. This transaction is expected to close later in 2024, after, again, certain approvals have been received. With so many asset sales, it may appear there has been a strategic decision to sell assets. However, that is not the case. All of these sales have been driven by outside buyers expressing interest in PAC's assets. Fortunately, the prices received for these sales have been quite attractive, with all the transactions occurring in valuations at or above PAC's estimate of fair value. Turning quickly to financial highlights, PAC saw solid growth in revenues and underlying profits in FY 2024. This occurred despite the loss of earnings from selling all or part of our investments in GQG Partners, Pennybacker Capital, Proterra, Cordillera, and Avante. Statutory results were heavily skewed by the gains from the sale of PAC's stake in GQG. Underlying results were strong, with underlying EBITDA growing 18% and underlying NPAT growing 24%. Dividends of AUD 0.38 per share were declared. With no remaining franking credits, all dividends will be unfranked. And finally, on the slide, looking ahead, obviously, PAC's financial results will be notably different in FY 2025. This stems from the fact that many assets have been sold and some of the dispositions, as I've discussed, are still in progress, and also the timing of these transactions remain uncertain. Additionally, some of the proceeds PAC will be receiving will produce earnings for PAC through the assets being held. Lastly, PAC's cost structure will be notably lower going forward due to the various transactions that have been discussed. There is the potential, too, for future cost reduction initiatives. Helping shareholders understand how these different considerations impact financial results in FY 2025, but also into the future, is an important initiative for management this year. As a result of selling so many significant assets, it's fair to say that PAC is flush with cash. In April, we announced our intention to return capital to shareholders via an off-market stock buyback of up to AUD 300 million. The buyback will be subject to PAC obtaining applicable Australian Taxation Office rulings. Again, as with, you know, the settlement of the Carlisle and Victory Park transactions, timing is not certain, but is expected to be later this calendar year or early next calendar year. Quickly looking forward, PAC management, you know, looked to carry forward the strong momentum that has been built in FY 2024 into the current financial year. There are five key focus areas in FY 2025. These include returning capital, as discussed, continuing to enhance capital flexibility, delivering new growth initiatives, optimizing organizational effectiveness, and reducing debt. I'll speak more about these various activities after Ashley has updated on them in more detail on the FY 2024 financials. Ashley, I'd like to pass over to you. Yeah. Thanks, Michael. Michael said, I'll quickly run through some of the numbers. FY 2024, as Michael said, saw some significant transactions occur, especially in the Q4. These transactions impacted our statutory results. Net profit after tax attributable to members rose from a loss of AUD 15.8 million in FY 2023 to a gain of AUD 110 million. Unfortunately, our accounting policies drive us to present our results in a sometimes confusing manner. As an example, the gain on disposal of the GQG shares was recorded as an increase in the fair value of that investment, while the gain on disposal of Pennybacker was disclosed as a gain on the sale of investment. So to try and simplify our results, it's our normal practice to try and present an underlying profit and loss, and we've put that on page four of the presentation. There is a reconciliation of the underlying profit to the statutory results, also shown on page 20 of the deck. But the underlying results for FY 2024 were quite satisfying, with an underlying net profit after tax of AUD 32 million, delivered up 24% on the prior year. This was primarily driven by increased boutique management fees, which were up 23% on the previous year. Corporate costs increased in Australian dollars, but they were relatively flat in US dollars. Most of our costs are actually driven through the US operations. With the small rise in shares on issue, the growth in net profit after tax translated into a slightly lower growth in EPS. But EPS was AUD 0.624 per share, compared to AUD 0.508. The final dividend's being maintained at AUD 0.38 per share, and as Michael said, albeit this year, it will be totally unfranked, while in the previous year it was franked to about 64%. As we've discussed in previous investor updates, our accounting policies cause some boutiques to be reported at current value, while others retain their historical cost. But each reporting period, we perform, for accounting purposes, an exercise to determine their current value, which we call fair value. While PAC's statutory net asset value per share increased by over 16% to AUD 11.48, PAC's fair value estimate of net assets per share increased to AUD 13.47, a premium of almost AUD 2 per share over the statutory NAV. I might move on to a full breakdown of the calculated fair value versus the book value is shown on slide eight. That I'll come back to. But if we can go to slide five, we run through the revenue composition, and as you can see, management fee revenues in FY 2024 have continued that steady growth that we've had over the past few years. The current year's, or FY 2024, result was driven primarily by strong fundraising in Pennybacker's flagship fund and its new infrastructure strategy. There was also a fee crystallization at Bannockburn, which monetized future management fees on a subset of its assets. In FY 2024, we had Avante included, and we had the annualization of Cordillera. And then finally, there were some boutiques that turned around their results and went from losses to profits, such as IFP. As the graph shows, performance fees were slightly down year-on-year. Both Victory Park and Roc increased their contribution this year. But Strategic Capital Investors, which ceased operation during the year, had generated large performance fees in the prior year, so that exclusion caused performance fees to decrease year-on-year. The marked-to-market securities at VPC, again, produced a loss, and negligible commission earnings resulted in lower corporate revenues. Might go to slide six now, where I have presented the ultimate balance sheet. This is designed to provide a walkthrough of PAC's corporate financial positions, and we do this by deconsolidating Aether out of the statutory accounts and, historically, Strategic Capital Investors. Just quickly running through it, the major points are: the sale of the boutiques has led to a large increase in our cash balance. The deferred settlements associated with Pennybacker have also resulted in other current assets increasing. Other non-current assets includes a cash deposit that is used as security for the WHSP debt, which is shown in non-current liabilities. The gain on sale of the boutiques has obviously led to increased tax liabilities. And then we'll look at the boutiques. The impairment in Aether has resulted in subsidiaries decreasing from forty-four million to 26. The impairment in Banner Oak and the sale of Pennybacker has resulted in lower values on the associates and joint venture line. The reduction in fair value through profit and loss is due to the sale of GQG, Cordillera, and Proterra, but it's been offset by the reclassification of the residual portion of Pennybacker, which is now included in fair value through P&L. EAM is the only investment we have fair value through other comprehensive income, and it's risen slightly. But all of those has seen net assets, book value net assets rise from AUD 509 million to AUD 599 million. So maybe if we can skip to page 8. Here we show a breakdown of the fair value compared to book value of our significant boutiques and their changed basis over the financial year. Now, I need to draw your attention to page 30 of the deck, where we describe how we assess fair value. This, as the deck details, this is not the value that a specific investment would be realized at, but the result of a hypothetical exercise for accounting purposes. But slide eight shows an uplifting fair value worth over 13%, as we've risen from AUD 11.92 per share to AUD 13.47 per share. The uplifting fair value was obviously primarily driven by the proceeds from the boutiques.... The increase in book value has been 16% over the period, which shows that on average, we have been able to realize values in excess of our historically recorded fair values. I might quickly go to slide ten, and this slide really summarizes all of the transactions that have been completed in FY 2024, as well as the two transactions that have been announced post-balance sheet, post balance date, and are in the process of being completed. So I think we've covered all of those. If we go to slide eleven, as Michael alluded to, there's been some changes in management leadership, and this slide goes through and describes some of those. We saw the externalization of the investment management to an affiliate of GQG Partners under the Investment Management Agreement, which will be in place for the next two years. We've had the formation of an investment committee, which consists of both board directors and an external member. And we've had significant changes at board level, with the resignation of three directors and the appointment of two new directors. A key focus of FY 2025, obviously, will be for us to bed down these changes and to ensure organizational decision-making and effectiveness is improved. If we now just go to slide 12, which tries to recap FY 2024's results, assuming that all of the boutiques that have been sold during the period, had been undertaken on July 1, 2023, and so therefore, we have the full year loss of the earnings from those transactions. The loss of the earnings associated between Carlisle and Victory Park transactions that were announced after year-end, and the go-forward cost base, adjusted for the externalization of the investment management and potentially other cost synergies. Important to note that it does not represent profit or earnings guidance for FY 2025, but just intended to provide shareholders with an example of how PAC would have performed if all of the transactions had been completed in first of July, 2023. And on that note, I'll hand back to Michael. Thanks, Ashley. Just to now complete the last three or four slides, which really turn to, you know, the outlook looking forward. You know, as we've discussed, or as I mentioned, I think at the start, you know, we have an important initiative to try and, as much as possible, help shareholders to understand in more detail our financial results and the way they're likely to move this year and into the future. Turning to slide fourteen, as I mentioned in my summary at the start, these five key areas are the near-term focus, so the focus in this financial year. Obviously the first one, returning capital, we've mentioned a couple of times. And as we've mentioned, it's subject to an Australian Taxation Office ruling. I think we are the first company to ask for a ruling on the basis of an equal access off-market buyback, so that's why the timing is hard to be clear on. We expect it, as I said earlier, late. A decision on, or sorry, a ruling from Tax Office later this year or early next. Important to stress that, you know, while we've indicated the size of the buyback is up to AUD 300 million, the final sizing has not been set. And obviously, also the price that the buyback will be conducted at has not been set yet, and that is a matter, you know, for the board going forward. We continue to, you know, enhance capital flexibility. I won't discuss that more because we've talked about both the Carlisle and Victory Park transactions in some detail. Again, just to highlight, both of those will settle again in the next three to six months. So there's a little bit of uncertainty in that timing as well, obviously subject to regulatory approval. Important to note, there are no further transactions currently on the horizon, but that's not to say that, you know, if, if we are approached and see attractive opportunities that we would, we wouldn't pursue them. But to reemphasize, there are no further transactions currently on the horizon. Delivering growth initiatives, the focus... You know, I'll talk a little bit more about that in the next three slides, but the focus is to work very closely with existing boutique partners, where we see potential to accelerate growth, but also to pursue new growth initiatives, and again, I'll speak more about those in the next couple of slides. Ashley and I both mentioned organizational effectiveness. Clearly, significant change in the board, investment decision-making particularly, and aspects of our operations. All of these changes need to be bedded down. They are working, you know, well at the moment, but there's certainly more we can get out of all of those areas of operation. And as Ashley and I both mentioned, reducing debt, which relies on negotiating to, you know, potentially be able to pay back. We have, as Ashley mentioned, we are holding cash against, the outstanding debt anyway. Turning now to slide 15. And this is sort of a new slide that's designed to basically give another way to look at the PAC portfolio. And it's really. It It really is, has been, you know, built based on, you know, the significant transactional activity in the portfolio over the past 12 months. I mean, you know, first, the largest part of the portfolio now is cash, around AUD 318 million. And as we've spoken about, you know, we will use that for, or a large portion of that, for a buyback. Second category, financial assets, currently about 34% of the portfolio, which includes Pennybacker and parallel receivables, Abacus bonds, Janus Henderson shares, when these transactions settle, and the Victory Park earn out. All of these are likely to be crystallized to cash as and when possible over the medium term, but clearly, you know, when the terms are attractive. There's no you know, imperative in the short or medium term to change. It's when, you know, the opportunity arises. Management fee-related investments continue, currently 10% of the portfolio. You know, again, as discussed, include Aether, Banner Oak, EAM, Northern Lights, IFP, plus residual stakes in Pennybacker and Victory Park. So there's still a chunk of a fee-based revenue that will continue to be earned. And then finally, carry-related investments, currently 13% of the portfolio. Again, potentially significant contributions over through time from Victory Park, Holcomb, Slates and Rock, the main contributors. But again, these cash flows are lumpy. You know, carry-related, you know, payments are uncertain, but, you know, we'd expect them to be significant into the medium term. And obviously, these are less likely assets to be sold. Turning to slide 16. And this is really thinking about assets, the PAC go forward strategy. And, you know, it's pretty much saying pretty much the obvious, but, you know, the strategy will look to allocate capital to its most accretive uses, including both reinvestment and distribution to shareholders. In addition to the large cash balance and the ongoing distribution from boutiques, PAC has several assets that, you know, you can call in harvest mode. You know, these are financial assets or receivables where PAC is looking for the right opportunity, as I mentioned, to realize the assets to cash. And on the slide there, it lists the various assets. PAC also has mature boutiques that may experience liquidity events in the short to medium term if consideration potentially may be received in the form of more assets, as we received with Carlisle. Carlisle transaction, you know, while it's a complete sale, we effectively exchanged for Abacus asset, Carlisle assets for Abacus assets, obviously at a premium. So there may be more transactions of that nature. But these assets may also be harvested, or if the proceeds received in cash can be immediately, you know, reallocated. And again, key areas for go forward capital allocation include the growth opportunities I've discussed, share buybacks, capital return, and dividends. Turning to the final slide, it's really a summary of the sources of capital. You know, I've spoken about that in the last three slides. The sources, the application there, some more detail on, you know, existing boutiques, you know, working capital, obviously, the funding growth, balance sheet investment, potentially, or the purchase of secondary sell downs from boutique shareholders. You know, PAC can stand and provide liquidity for those events. Potentially also co-invest in a GP stakes fund managed by GQG. You know, we have negotiated the ability to do that, and that's, you know, a consideration that may be taken over time. And then also potentially invest in a number of listed GP stake managers as... You know, we believe the model is powerful, and obviously these investments are subject to quality, price, and the potential growth opportunity. In conclusion of the presentation, PAC part of the update, I'd like to thank our employees and the PAC board, both past and present, for their work to enhance shareholder value. Though great progress was made in this past year, FY 2024, there is still much to do, and we remain relentlessly focused on achieving the best possible outcome for our shareholders in FY 2025 and beyond. We'd now like to open for any questions you may have. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Nick Burgess, from Ord Minnett. Please go ahead. Yeah, morning, gentlemen. A couple of questions, if I can. The pro forma PNL is helpful. Can I ask for a brief discussion around what the pro forma share value nav might look like, if at all possible? Ash, do you want to have a go at that? I haven't done that one, Nick. What would it look like if I put it all back to first of July? I would have thought it'd be pretty similar to the thirty June number. Isn't there the uplift from? I mean, the essence of the question is, what's the expected uplift on fair value for Carlisle and Victory Park transactions? Oh, yeah. So, we have, at 30 June 2024, effectively the fair value estimate for both Carlisle and Victory Park, assuming those transactions had occurred. Hang on a minute. Aren't the comments in the slide contrary to that? I think on the Carlisle one, it says, "We expect a fair value uplift once the transaction finishes. Uh- Sale of partial equity stake in our Pennybacker. Expect fair value uplift. Yeah. So there has been a slight discount applied to the Carlisle value to reflect the need to get regulatory approval. Right. So we can think about those two transactions as being- Victory Park. In the fair value mark, but discounted to account for risk. Yeah, correct. Is that right? Okay. Correct. All right, maybe we can take that offline. Take that offline. Slightly further conversation. Just a couple of other questions. Just in terms of the debt, what's the timing on the debt, and do you expect to pay a penalty there? Yeah, you can have a go. Ashley, if you want to have a go. Yeah. I think it's got about sixteen months to run before we can repay without penalty. Effectively, the quantum of the penalty is to make up for the interest that would be forgone. Right. But since it's in the presentation pack, I'm assuming that the intention is to pay it back early and pay a penalty. Look, that's a consideration for the board. It's not something we've settled on at the moment. It's being actively discussed. But, you know, it's a trade-off on, you know, obviously the cost versus time. You know, it's something we look at regularly, but we haven't made a final decision on that yet. Clearly, the decision we are making is to pay down that debt. We will, as soon as it's, you know, financially sensible, and the funds are being held to do that in cash in the US, we will pay that back completely. Yeah. Okay, that makes sense. And just lastly, on the cost base: so you mentioned the six million saving, which you'd previously announced, and obviously there've been further divestment since then. And then in the pro forma numbers, the saving on the cost base was a bit higher than the six million. So I guess, just in general, as divestments continue, what sort of opportunity is for that cost base to scale down? Is there a minimum that we should be thinking about or have in the back of our mind as a minimum cost that's required to run, you know, the listed business in its, you know, vaguely current form? Ashley, if you want to put a stamp on that one. So there would be further cost reductions that we would hope to achieve, over and above what's shown in the pro forma. You know, obviously, there's costs that we've incurred through 2024 that have been removed from the operation but hadn't fully been factored into that calculation. So you'd hope to get a little bit more out of that. The investment management fee, obviously, is a function of the fair value of the portfolio. So as the portfolio decreases in size, then obviously that fee will decrease. You know, if you turn to slide twelve, you know, you've got the investment management fee line there. It's, you know, three hundred thousand versus two million. If these transactions had occurred at the start of the financial year, that's, you know, the estimated cost for that. And then obviously, the corporate overheads line. I mean, the addition of both of those gives a sense of the total cost reduction likely. And then, as Ashley mentioned, there's potential going forward for a little bit more. Yeah. Okay, that makes sense. Thanks very much. Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Nick McGarrigle from Barrenjoey. Please go ahead. Hi. I just wanted to get a sense of where you see the business in five years. Do you look at it as where you don't hold any actual stakes directly and you're more invested in multiple different GP staking firms? Or do you think that the business ends up being wound up and the fair value being realized? Interesting question. Look, the current activity, which I, you know, as I emphasized, has been driven by, you know, basically groups approaching us. All of these transactions have been conducted at our fair value or above, some materially above the fair value. So I think there's an important element in that, that the valuation approach that has been taken in the past, of course, I've only been involved this year, but the valuation process in the past, I mean, this is not a bad proof point for it, the activity over the last year. So that's one positive. Yeah, as I mentioned, we will look. There will be potentially future disposals going forward. You know, we may invest into some of the existing boutiques, possibly materially. So there'll be regular portfolio activity and review of our current, you know, picks in terms of their situation and needs. You know, without a doubt, over five years, some will progress, some may have run into challenges. I mean, that's to be expected. There is no, there's no sense of winding up the business, and there's no sense of being only a, you know, GP stakes investor business. That's not in the current mindset of the board. You know, we want to continue with our current activity, which is investing in specific opportunities, and, you know, obviously, the opportunities we know best are the existing boutiques, where some of them are performing very, very well. And, you know, there's the opportunity there potentially to upgrade our investment. So I think it's not right to say that the business is on a wind-up path, and it's not right to say that it's gonna be purely a GP multiple GP stakes business. It's continuing to have direct investment, but it may diversify all of those as well. Over time, five years is quite a long period of time. You know, but the most important thing is that we'll always look at, you know, clearly at quality, valuation, normal metrics before undertaking any new investment or any divestments. I don't know if that... Does that answer your question? Yeah, that's helpful. Thanks. And then can you just give us a bit of a rundown on what the earn-out provisions are around the Victory Park stake? Are they more maintenance of existing revenues to crystallize that remaining cash payment? And I guess likewise, is it predominantly cash, or is it Janus Henderson scrip that's being received in that consideration? Actually, I might just quickly start, and then hand over to you. The important point about the Victory Park transaction is that, you know, a number of these payments are based on basically the performance aspects of the underlying business that Janus is acquiring. You know, specifically, you know, sales results, they feed through to these payments. So there is effectively a minimum payment schedule, but then there's, you know, upside in a number of them. Those are performance payments. There's also the potential for a capital return. You know, there's a capital return payment schedule that goes out a number of years for the, in three elements, 15%, 15%, 15%, you know, potential subject to a put and call pricing structure. So, you know, the transaction we assessed as being very attractive. There are, though, uncertain elements in terms of particularly the upside to the transaction, some of which could be material. Ashley, do you want to add to that? Yep, and consideration will be predominantly cash- Mm. but there will be some scrip element, similar sort of proportion to the initial closing split. All right, thanks for that. Thank you. There are no further questions at this time. I'll now hand back to Mr. Clark for closing remarks. Thank you all, and thanks for all of you who dialed in today. You know, we appreciate your support and interest in PAC. I hope you've got a sense of, you know, a bit or a deep sense of the performance of the company in FY 2024, but also the way we think about, you know, the company going forward, which was, you know, an important part of this update and, you know, continuing updates into the future. And that's. We understand that's particularly important given, you know, the degree of, you know, portfolio activity in the past year. So thank you again for your attendance, and we look forward to being in touch in the future. Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.