Pacific Current Group Limited

Good day and welcome to the Pacific Current Group Limited 2026 half-year results. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, please press star 1 again. For operative assistance throughout the call, please press star 0. And finally, I would like to advise all participants, this call is being recorded. Thank you. I'd now like to welcome Michael Clarke, Managing Director, to begin the conference. Michael, over to you.

Thank you for the introduction. Good morning and welcome to the Pacific Current Group Investor Presentation Call for the first half of the 2026 financial year. By way of introduction, my name is Michael Clarke. and I'm the Managing Director of Pacific Current Group. I joined the board of Pacific Current in February 2024 as a non-executive director and transitioned to my current role in July of 2024. I'm joined on the call by Ron Patel, the Acting Chief Financial Officer of Pacific Current Group. Ron joined Pacific Current over 17 years ago. Also on the call is the recently appointed Chief Operating Officer, Gabe Mary. In our full year update to shareholders in August last year, we highlighted The PAC was committed to taking actions that would unlock shareholder value and to report the progress made to achieve this goal. We are gratified to report that the momentum developed in both of the previous financial years, 24 and 25, has continued into this financial year. If we turn to slide 3 in the presentation PAC for the overview, she can't be pleased to update on the company's interim results for the six months ending 31 December 2025. Key results included declaring an underlying net profit after tax, or NTAT, of Australian dollars $6.7 million, down from $15.3 million in the previous corresponding period. NTAT was adversely affected by lower distributions and management fee income from boutiques and lower interest income after the off-market buyback, but was partially offset by continuing cost management initiatives, particularly including debt reduction and corporate cost reduction. Underlying earnings per share declined by a lesser extent to $0.22, a share from $0.29 in the previous corresponding period, supported by a reduction in the number of shares on issue. Statutory profit declined by $11.7 million in the period driven by fair value adjustments to asset valuations. Pacific Current is declaring an interim dividend of 20 cents per share fully franked with a record date of 5 March 2026. This is an increase of 33% on the previous corresponding period and the first fully franked dividend for some time. Declaring an increased fully franked dividend continues the capital management initiatives of the past two years aimed at efficiently and effectively returning surplus capital to shareholders. implementation of further cost-saving initiatives in the half year resulted in a 31% reduction in corporate costs compared to the previous corresponding period. There's also a gain worth highlighting that although underlying net profit and earnings per share declined year-on-year, the number of ordinary shares on issue was significantly reduced following the off-market and the continuing on-market share buyback, further enhancing capital efficiency and shareholder value. Because of capital management initiatives, asset sales during the period and related considerations, PAC's fair value estimate of net asset value increased to $16.34 per share at 31 December 2025. This estimate exceeds the statutory net asset value by $2.42 per share and compares with the fair value estimate of net asset value of $14.32 per share on 31 December 2024. representing an increase of over 14% from the previous corresponding period. As we'll discuss later in the update, fair value net per share has increased by over 14% per annum over the past five years, from $8.40 per share to $16.34 per share, or over 95%. Turning to activity, it was another busy period for transactions and other activity, with the following significant portfolio transactions completed. First is the partial sale of Victory Park Capital. In September 2025, Pax sold a portion of its interest, specifically 2% of its equity interest in Victory Park and 0.8% interest in Victory Park's whole code for future current interest entitlements to CNO Financial Group for US $5.5 million. Following the transaction, Pax's interest reduced in Victory Park reduced to 9.2% equity, 18.6% future carry and 24.9% existing carry. We also fully repaid the senior debt facility in October 2025. This debt facility, the senior secure debt facility with W.H. Stoll-Pattinson amounted to US$42.1 million and the transaction included a US$0.8 million US dollar early repayment premium and a US $0.3 million of interest for October. The facility was settled using the US $43.5 million restricted deposit account over which WA sold patents and held security. PAC also commenced an on-market share buyback in October 2025 for up to 2 million shares, or 6.8% of issued capital, which will be conducted in the following 12 months and fully funded from existing reserves. Ordmanet was appointed as execution-only broker. As at 31 December 2025, PAC had repurchased just under 200,000 shares for around 2 million Australian dollars. The buyback will commence post the results announcement subject to board confirmation of material interest. PAC also exited the Janet Henderson Group shareholding in November 2025, selling its entire stake and generating US$9.4 million in proceeds. Also importantly, PAC conducted growth capital deployment initiatives and as of December 2025, PAC entered into a $2 million loan facility with an affiliate of Rock Partners, bearing a 10% interest rate and maturing on 30 November 2028. In the period since 31 December, PAC has also completed lending facilities for both Northern Lights Alternative Advisors and Independent Financial Plans IFP, designed to accelerate the growth trajectory of each business. I'd now like to hand over to Ron to cover financials for the year.

Thank you, Michael. Turning to slide 4, underlying results. The first half of SY26 reflects a business that continues to transition following the significant portfolio realizations of the past two years. Underlying net profit of the tax was $6.7 million, down from $15.3 million in the prior corresponding period, driven by lower distributions, management fees, and interest income. These impacts were partly offset by lower interest expense following the repayment of the debt facility, together with a 31% reduction in corporate costs. With the balance sheet now debt-free, there will be no interest expense in the second half of FY26. Despite the decline in net profit after tax, underlying earnings per share fell by a lesser extent. supported by the materially lower share count following the off-market buyback. Pacific Current declared a fully frank 20 cents per share interim dividend from up 33% on the prior period, reflecting both the strength of the balance sheet and a disciplined approach to capital management. Turning to Slice 5, Shareholder Value. As at 31 December, statutory NAV was $13.92 per share, while fair value NAV was $16.34 per share, a difference of $2.42 per share. The uplifting fair value NAV reflects mark-to-market gains on financial assets, higher valuations for boutique investments held as associates, and the continued impact of portfolio simplification. Fair value now has grown at 14% per annum over the past five years, increasing from $8.40 to $16.34 per share. Turning to slide 6, revenue composition. Management-free revenues declined due to the realizations of Benarok, Carlyle, and partial exit from Pennybecker and Vitry Park. Performance fees in current period were modest and largely from broke. Financial asset refunds increased, supported by Peter Sell deferred consideration and dividends from Abacus and Janis Anderson shares. Interest income was lower due to reduced cash balances following the substantial off-market buyback and repayment of debt. Overall contributions from boutiques and investments were lower consistent with a portfolio that currently has a higher weighting to cash. Turning to slide seven, alternate balance sheet. The alternate balance sheet provides a clearer view of PECS corporate net assets and investment exposures. PECS corporate net assets increased $264 million up from $144 million at 30 June. This reflects the full repayment of the WHSP tech facility, which eliminated the associated non-current liability, a reduction in deferred tax liabilities, and continued simplification of the balance sheet. The reduction in fair value through profit and loss effects reflects the partial realization of tax interest in Vicky Park and Pennybacker, together with a decrease in deferred value of the remaining minority stakes. Financial assets include abacus shares and bonds, and the Petersell deferred consideration receivable, which remains on track for settlement in May 2026. Turning to slide 9, NAV breakdown. This table shows the movement in book value and fair value across the portfolio. As part of preparing our statutory accounts, we undertake a valuation exercise to assess whether any assets are impaired and to determine the fair value of financial assets measured at fair value. These valuations are performed in accordance with accounting standards. and are not intended to represent the precise value at which an investment would be realized. Further detail on the valuation approach is provided on page 27. Notable moments include ROC recorded a significant fair value uplift reflecting stronger growth forecasts. IFP also saw a material uplift supported by an improved growth outlook and Pacific Current Senior Secured Loan Facility. Victory Park decreased following the partial sale and the softer business outlook. Astarte increased due to successful fundraising and improved carry expectations. Financial effects reflect the sale of China Sanderson shares and higher valuations for Abacus Moines and shares. Corporate cash increased to $152 million, driven by the sale of James Henderson shares and partial sale of interest in Victory Park. Overall, fair value now per share has increased to $16.34, up from $15.51 at $32. The significant proportion of this asset base is in cash and financial assets. Thank you, and I will now hand back to Michael.

Thanks, Ron. Turning to slide 13 in the presentation pack, just some more details on the senior loan facility provided by specific current independent financial planners. This loan is an example of working closely with boutique partners to accelerate the growth trajectory of their businesses. IFP is a Florida-based independent registered investment advisor, or RIA, platform providing compliance, infrastructure, technology and administration services, specifically for RIOs. At present, they have US$16 billion on their platform and are experiencing robust growth, largely propelled by positive trends in the private wealth sector. To accelerate future growth initiatives, PAC is providing IOP with a US$25 million debt facility on commercial terms. This will facilitate IFP refinancing existing debt and importantly provide growth capital to fund advisor book acquisitions and advisor recruitment transition packages. Turning to slide 14 in the presentation pack, looking at the outlook for the remainder of the financial year, Pacific Current Group Management expects to maintain the strong momentum that has been built in the first half by continuing to focus on executing a clear and disciplined plan. We'll do this by following five key initiatives. The first is accelerating growth by pursuing potential opportunities within the existing boutique partners and selectively assessing new investments to drive scalable and sustainable growth. The second major dot point or point is to unlock shareholder value by evaluating targeted capital initiatives aimed at enhancing returns and optimizing the group capital structure. Third key point is controlling operating costs by maintaining disciplined cost management to support margin stability and capital efficiency. Fourth dog point is continuing to strengthen the balance sheet by prioritising balance sheet optimisation to enhance financial flexibility and long-term resilience. And finally, continuing to enhance organisational efficiency by embedding and refining structural and governance changes introduced in the last financial year to improve agility, accountability and decision-making across the organisation. In conclusion, we would like to thank our employees and the PACT Board, both past and present, for their work to enhance shareholder value. Though strong progress was made in the first half of this financial year, there is still much to do and we remain relentlessly focused on achieving the best possible outcome for our shareholders in the remainder of the financial year and beyond. We'd now like to answer any questions you may have. Thank you.

Currently there are no questions so I'd like to hand back.

Thank you very much for your time this morning. We look forward to continuing to work hard on the portfolio and if there are any questions that come to mind, please contact us directly and we look forward to be able to answer those. Thank you.

That does conclude our conference for today. Thank you for participating. You may now all disconnect.