Pacific Current : 2022 Annual Report

PACIFIC CURRENT GROUP LIMITED

Annual Report 2022

LIMITED

CONTENTS

1. Key Financial Highlights
2. Chairman's Report
3. Managing Director, Chief Executive Officer and Chief Investment Officer's Report

1. Board of Directors

1. Directors' Report

1. Auditor's Independence Declaration
2. Consolidated Statement of Profit or Loss
3. Consolidated Statement of Comprehensive Income
4. Consolidated Statement of Financial Position
5. Consolidated Statement of Changes in Equity
6. Consolidated Statement of Cash Flows
7. Index to the Notes to the Financial Statements
8. Notes to the Financial Statements

1. Directors' Declaration
2. Independent Auditor's Report

1. ASX Additional Information

1. Corporate Information

In accordance with ASX Listing Rule 4.10.3, Pacific Current Group Limited's Corporate Governance Statement can be found on its website at http://paccurrent.com/shareholders/corporate-governance/

In this Annual Report, a reference to 'Pacific Current Group', 'PAC', 'Group', 'the Group', ' the Company', 'we', 'us' and 'our' is to Pacific Current Group Limited ABN 39 006 708 792 and its subsidiaries unless it clearly means just Pacific Current Group Limited.

In this Annual Report, a reference to funds under management (FUM) means the total market value of all the financial assets which one of our partner boutiques manages on behalf of its clients and themselves.

Annual Report 2022

1

ABOUT US

Pacific Current Group Limited (ASX: PAC) is a global multi-boutique asset management firm dedicated to providing exceptional value to shareholders, investors, and partners.

OUR PHILOSOPHY

Each investment is structured to create exceptional alignment with our boutique managers. We apply flexible capital, strategic insight, and global distribution to support the growth and development of the boutiques in which we invest. Our goal is to help investment managers focus on their core business and what matters most: investing.

WHAT WE OFFER OUR BOUTIQUES

• Flexible capital solutions - we aim to create exceptional alignment with our boutique managers, so every investment is uniquely tailored to fit the boutique's specific needs
• Global distribution and marketing services - we can accelerate the growth of our boutiques by helping them secure new clients and funds to manage
• Access to our global network and strategic insights - our global network of industry contacts and decades of experience allow us to assist boutiques in the management of their businesses and the development and implementation of their growth strategies

LIMITED

FY22 KEY HIGHLIGHTS

FUM across the Group (up from $142b)

$169b

Increased dividends

(up from 36 cents per share)

38cps

Increased underlying NPAT (up from $26.3m)

$27.1m

Net assets per share

(up from $7.92 per share)

$10.26

GQG listed on ASX in largest IPO of 2021

Invested US$35m in private real estate manager, Banner Oak Capital

Funding initiatives anticipated to exploit a strong and growing investment pipeline

Annual Report 2022	2		3

CHAIRMAN'S

REPORT

During a turbulent market, PAC has shown an incredible ability to sustain success and produce positive results through our selective partnerships.

Dear Shareholders,

It has been another strong year for Pacific Current Group Limited ("PAC").

My highlight from the year was the Initial Public Offering ("IPO") of GQG Partners Inc. ("GQG") on the Australian Securities Exchange.

As a reminder of the value that has been created from this single investment, our original cash investment in this business was US$2.7 million (approximately A$3.6 million). The value of our holding on the date of listing was A$307 million; of which we realised approximately A$60 million.

This initial cash investment, however, does not recognise the real value we contributed being the wisdom, experience, and energy of the PAC executive team, which at the time of initial investment also included Mr. Tim Carver, who subsequently joined GQG to further help them on their journey.

This event gave our Shareholders, and other interested parties, an opportunity to see how we can realise value from a boutique investment.

Each year we diligently value all our Boutiques for financial reporting purposes. The nature of the accounting for some of these investments means that sometimes we cannot reflect situations where fair market value of an investment exceeds book value.

Furthermore, these values may not recognise the additional value resulting from the difference between the value of that Boutique investment's future cashflows to a hypothetical investor (as required by the accounting standards) and the value of those cashflows to a specific market participant. That difference is usually only displayed when we are selling our holding because the value realised at that time is the product of that market pricing.

It is satisfying that the IPO of GQG has provided that transparency without us having to totally exit our holding, and importantly, presents a clear statement that GQG has been an outstanding investment.

The transition of the GQG investment from a start-up to its current position is a tribute to the PAC investment team and particularly Mr. Paul Greenwood, for finding the opportunity and partnering with Mr. Rajiv Jain to help him execute his vision for the business.

We have paid a special bonus to Mr. Paul Greenwood and two other executives to recognise the outstanding return that the GQG investment represents and to recognise that there was a residual obligation created at the time of the original merger with Northern Lights Capital Group related to any business that we may partner with Mr. Rajiv Jain.

While the IPO of GQG has been a highlight, it is also important to note that we have seen solid performance from several other Boutiques. This has been achieved in a difficult

period with restrictions on travel and general uncertainties creating strong headwinds for fundraising and hampering opportunities for growth. It is a tribute to the people in these businesses that they have persevered through this period and now are starting to see the results of their efforts.

One of the challenges for our business is to balance the drag created from holding cash versus the earnings that could be generated if it was invested in a business. We must exercise the discipline to be patient and wait for a great investment opportunity rather than be driven by time and a false sense of urgency to deploy cash. The team have managed that well during FY2022 with the cash released from the partial sale of our GQG holding promptly redeployed into Banner Oak Capital Partners, LP ("Banner Oak").

The Banner Oak investment is already generating a solid cashflow for us. I have visited Banner Oak and had the pleasure of meeting some of the key owners. They are a capable group with strong ambitions to continue to grow, and with an investment structure and approach which helps generate great property related returns. This is important for future fund raising and we believe, for these reasons, the outlook for the business is strong.

It is also a tribute to our team that, notwithstanding the COVID related headwinds, the Net Asset Value per share rose over FY 2022 from $7.92 to $10.26. Some of that increase is attributable to currency moments but the majority reflects the success achieved by our Boutique investments.

Our full year profit performance was solid, especially when recognising that the one negative from the IPO of GQG was that we could only bring to account nine months of our share of their earnings in this period, which was another quirk from the accounting standards given that we owned our holding throughout that period.

Given all the above, the quality of our portfolio of Boutique investments and the capabilities of our team, I am very confident we will go on creating value for Shareholders. Certainly, our hopes and expectations for FY2023 are high.

I look forward to seeing you at the Annual General Meeting.

As always, thank you for your continued involvement and belief in us.

Regards

Antony Robinson

Chairman