Release Date: February 24, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Pacific Current Group Ltd (TSRUF) reported a significant increase in statutory net profit to over AUD $100 million, compared to AUD $11.7 million in the previous year.
• The company successfully implemented a share buyback program of up to $300 million, which received strong shareholder support.
• A 37% reduction in corporate operating costs was achieved, demonstrating effective cost-saving initiatives.
• The company declared an unfranked dividend of $0.15 per share, maintaining the dividend level from the previous year.
• Successful asset sales, including interests in Carlisle and Victory Park Capital, resulted in substantial cash inflows and improved financial flexibility.

Negative Points

• Underlying net profit declined to AUD $15.3 million from AUD $16.7 million in the previous year, primarily due to asset disposals.
• Management fee revenue decreased by 61.6% over the prior period, impacting overall revenue.
• The company faces challenges in raising new funds for certain affiliates, affecting future revenue potential.
• There is uncertainty regarding the full subscription of the $300 million buyback, with no clear indication of shareholder participation levels.
• The company holds significant cash reserves against debt, which may limit financial flexibility until the debt is repaid.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Sign with TSRUF.

Q: Have there been any early indications or commitments for the share buyback? A: Michael Clarke, Acting CEO: The buyback is progressing, but we are not releasing any numbers yet. We expect many shareholders to decide closer to the deadline, and we will update the market on March 7th. We don't have a clear indication of whether the full $300 million will be subscribed.

Q: How does the revenue share agreement compare to the previous equity share structure? A: Michael Clarke, Acting CEO: The revenue share agreement is designed to return the cash invested over the next three years. It includes different arrangements for the legacy business and the new interval fund. The success of the interval fund will significantly impact the revenue share outcome.

Q: When can the debt be paid back without penalty? A: Ashley Killick, CFO: The optimal point to pay back the debt without significant penalty is October 2025. There will be a minor penalty at that time, but it is the most economically sensible option.

Q: What are the plans if the full $300 million buyback is not achieved? A: Michael Clarke, Acting CEO: If the full amount is not achieved, we may consider on-market buybacks, which can be done annually. The balance sheet outcome will guide our strategy, including potential investments in existing affiliates or new opportunities.

Q: What is the intention with the remaining balance sheet after the buyback? A: Michael Clarke, Acting CEO: We will assess the balance sheet post-buyback and consider deploying capital in existing boutiques or new growth opportunities. We may also explore co-investment opportunities with partners like GQG.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.