Pacific Current Group Limited

Hello, and thank you for standing by. My name is Lacey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Pacific Current Group 2026 Full Year Results Conference Call. 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 one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Michael Clark, Managing Director. Please go ahead.

Welcome to the Pacific Current Group, or PAC, investor presentation call for 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 PAC in February 2024 as a non-executive director, becoming Acting Chief Executive in July 2024 and was appointed Managing Director in November 2025. I'm joined on the call by Ron Patel, the CFO of Pacific Current Group. Ron joined PAC over 17 years ago. In our full year update to shareholders in August last year, we highlighted The Pact 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 the FY25 financial year has continued into this financial year. Today's call is in two parts. Ron and I will first take you through the full year results for FY26. I will then speak to the separate announcement we lodged this morning regarding the commencement of a strategic review for Pacific Current Group and our FY27 priorities before we open the line for questions. Turning to slide three in the presentation pack, again Pacific Current Group is pleased to update on the company's results for the 12 months ending 30th of June 2026. FY26 was another year of successful transition of Pax Business to a more simplified structure featuring increased transparency of asset values, successful capital management initiatives, eradication of debt, further material reduction in operating expenses and the strengthened balance sheet, all aimed at enhancing shareholder value. Against this strategic backdrop, it is pleasing to report that total shareholder return over both the past financial year and the past five financial years exceeded the broader share market by meaningful amounts. Ron will speak more about that in his part of the presentation. Key elements of the result include declaring an underlying net profit after tax, or NPAT, of AU$14.8 million for the period. This is down from AU$26 million in the previous corresponding period on a reshaped earning space, following the sale of boutique interest and the return of surplus capital to shareholders. The statutory result was a net loss after tax of AU$1.5 million, compared with a profit of AU$58.2 million in FY25. driven by non-cash fair value adjustments and the absence of the prior year's gains on sale. One will take you through that detail also shortly. 2D Current has declared total dividends of $0.48 per share for the financial year, an increase of 12% over the previous corresponding period, and including the first frank dividends the company has paid since 2023. declaring an increased partially-cranked dividend, continues the capital management initiatives of the past two years aimed at efficiently and effectively returning surplus capital to shareholders. Further, the implementation of cost saving initiatives resulted in a 41% reduction in total overhead expenses compared to the previous corresponding period, with scope for further material cost reduction in FY27 and a further reduction in the number of ordinary shares on issue through the ongoing on-market share buyback. Due to capital management initiatives, asset sales during the period and related considerations, PAC's fair value estimate of net asset value increased to $16.18 per share at 30 June. This is up over 4% on the $15.51 per share estimate a year earlier. Over the past five years, fair value NAV per share has compounded at over 14% per annum, from $8.39 per share to $16.18 per share. Again, Ron will take you through those numbers in more detail shortly. Funds under management ended the year at AU$26.4 billion, down from AU$30 billion. The movement principally reflects the exit from Ether in June and a stronger Australian dollar, with three of the five continuing boutiques growing FUM in reporting currency over the year. Turning to activity now, it was another busy period, particularly for transaction activity with the following portfolio transactions completed. Firstly, the partial sale of Victory Park Capital. In September 2025, Pax sold a portion of its interest, specifically 2% equity in Victory Park Capital and 0.8% interest in Victory Park Capital Holco Future Carrier Interest Entitlements to CNO Financial Group. for AU$8.1 million. Following the transaction, PAC's interest reduced to 9.2% equity, 18.6% future carry and 24.9% existing carry. PAC received AU$7.7 million net proceeds in October 2025. Secondly, full repayment of the Senior Secured Debt Facility. In October 2025, PAC-40 were paid with Senior Secure Debt Facility with WH-SOL patents. Total repayment of US$42.1 million included a $0.8 million US dollar early repayment premium and $0.3 million US dollars interest for October. The facility was settled using the US$42.5 million restricted deposit account which WH-SP held security over. The on-market share buyback commenced. In October 2035, PAC announced an on-market share buyback of up to 2 million shares or 6.8% of issued capital funded from existing cash reserves. On 1 June, PAC increased the maximum number of shares bought back from 2 million shares to just over 2.6 million shares, approximately 8.6% of issued capital prior to the buyback, funded again from cash reserves. As at 30th of June, PAC had repurchased over 2.2 million shares at a cost of AU$22.9 million. As a result, shares on issue have declined by 7% during the period from 30.2 million shares to 27.9 million shares. We also exited our holding in Janus Henderson Group in November of 2025. PAC sold its entire holding, generating US$9.4 million in proceeds. We continued deploying growth capital between December and February. FAC agreed three new secured loan facilities, including a $2 million Australian loan as an affiliate of ROC Partners, a US $2.1 million facility with Northern Lights Alternative Advisors, and a $25.1 million US dollar facility with Independent Financial Partners, or IFP, all bearing interest at between 10% and 11% per annum. and maturing between 2028 and 2031. As of 30th of June, 14.6 million Australian dollars was drawn across those facilities. The IFP facility, particularly, is a four-year board, currently drawn to 8.2 million US dollars, and is supporting IFPs recruiting and acquisition momentum. We also included, concluded the investment management agreement with an affiliate of GQG. In May, PAC concluded its two-year management agreement in accordance with its terms and assumed responsibility for investment management of its portfolio of assets. We've also exited or begun the exit of Abacus Global Management. PAC commenced its sale through the financial year in its holding in Abacus shares, realising AU$11.4 million during the period. We also finally exited from Ether. taxed all its entire revenue share in ETH for US $1.8 million, together with its 25% stake in ETH's general partner during the period. Clearly a very busy time. I'd now like to hand over to Ron to cover financials for the year.

Thank you, Michael. Turning to slide four in the presentation pack, FY26 reflects the reshaped earnings base that follows two years of planned routine realizations. and the return of surplus capital to shareholders. Underlying net profit after tax was $14.8 million, down 43% from $26 million. Total underlying income of $25.1 million was down 48%, with boutique income of $7.1 million, reflecting the ethics Michael has covered. Interest income of $16.8 million is now 67% of underlying income and the largest single component of earnings. Total overheads fell 41% to $9.4 million. Corporate overheads of $5.4 million went down 21% following the cost reset. Interest expense fell from $6.7 to $2.6 million after the October debt repayment and the investment management fees were $1.4 million. Interest income now covers corporate overheads more than three times over. Looking to FY27, both interest expense and investment management fees roll off entirely. The debt facility is repaid and released and the GTG investment management agreement concluded in May 2026. Underlying earnings per share of 50.2 cents declined 10%, a much smaller fall than NPAT, supported by the 36.8% reduction in weighted average shares on issue from the buybacks. Cash conversion remained strong, with underlying pre-tax earned cash earnings of 14.4 million dollars representing 91% of underlying profit before tax. The legal schedule is included in the presentation. Total dividends for the year are $0.48 per share. The fully franked $0.20 interim dividend was paid in April and the final dividend of $0.28 franked to 17.5% with a record date of 4 September and payment on 8 October. Turning to slide 5, alternate balance sheet. The alternate balance sheet presents SPAC on a look-through basis, separating our corporate net assets from our investment exposures. Corporate net assets increased $274.9 million from $144.3 million at 30 June 2025. the WHSP debt facility and the restricted deposit tax security have both left the balance sheet and the deferred tax liability has almost halved. Cash and short-term deposits ended the year at $157.7 million up $19.8 million. Realization proceeds and release of the restricted deposit more than funded the $60.5 million of debt repayment, $22.9 million of buyback, and $14.4 million of dividends. The reduction in assets held at fair value through profit and loss reflects the partial sale of victory parts and the lower fair value of the retained interest. Financial assets of 100.3 million dollars comprise the abacus bonds and shares and 15.4 million dollars of loans to pet boutiques. The petersville default consideration was collected in full in May. Pet now carries no financial debt and total liabilities are down 89% to 8.6 million dollars. Turning to slide 6, shareholder value. Statutory NAV at 30 June was $13.96 per share and our fair value estimate of NAV was $16.18, up 4% on last year and a premium of $2.22 or 16% to statutory NAV. The accounting standards require different measurement basis across the portfolio. Several of our larger boutiques positions are carried at cost and can be written down, but not up. This year's fair value uplift came largely from those boutiques held as associates. In total return terms, share price plus dividends, PAC delivered 10.4% in FY26. and 18.4% per annum over the five years to prediction 2026, against 6.1% and 7.8% for the ASX 200. Turning to slide seven, fair value versus book value. As part of preparing the statutory accounts, we value every investment, both to test assets carried at cost for impairment and to set the fair value of assets measured at fair value. These valuations follow the accounting standards. They are estimates, not the precise price at which an investment would change hands, and the methodology is set out in the presentation and financials. The notable movements this year. Rock's fair value rose from 37.2 to 16.1 million dollars on a stronger growth outlook for the business. IFP rose from $9.6 to $35.8 million, reflecting an improved growth trajectory that a debt facility is healthy to fund. Victory has reduced to $44.3 million, reflecting slower fundraising and higher discount rates for private credit strategies, together with the partial sale. FTA increased $14.4 million on successful fundraising and improved carried interest expectations. And financial assets reflect tactics from Janice Henderson and higher values for the Abacus bonds and shares. Bringing it together, fair value net assets of $452 million with corporate net assets largely cashed and stated after implied tax on the fair value uplift. Slide 8 summarizes the portfolio transactions Michael has already covered. So with that, I will hand back to Michael for the strategic review and the FY26 outlook.