Grupo Aeroportuario del Pacífico, S.A.B. de C.V. Price & Performance (PAC)

Turning to Slide three in the pack. We are pleased to report the company's interim results for the six months ended thirty one December twenty twenty four. Just working through the key highlights. Claudia has been a a big focus on the implementation of an equal access off market share buyback of up to $300,000,000 at a price of $12 per share. The buyback was approved by extraordinary general meeting of PAC's shareholders in January receiving the support of well over 90% of shareholders entitled to vote at that meeting. The buyback time total is well progressed. With the offer closing on July, and settlement expected subject to any necessary scale back. [indiscernible] Obviously update the market on the March 7 to the progress of the buyback. Pacific Current is also declaring an upfront dividend of $0.15 per share with a record date of May. The dividend is equal to the dividend declared in the first half of the previous financial year. Importantly, as the dividend record date is pre the close of the buyback, all shareholders including those shareholders have subscribed into the buyback are entitled to receive the dividend. During period, Pacific Current declared a statutory net profit of just over AUD 1,000,000.

Dollars driven by uplift in the fair value of assets in the portfolio and the gain on disposal of selected assets. This compares with the statutory net profit of AUD 11,700,000.0 in the first half of the previous financial year. Pacific Current recorded a decline in underlying net profit AUD15.3 million dollars from Australian dollars $16,700,000 in the first half of the previous [indiscernible] This decline was driven by the disposal of assets which resulted in a higher level of cash in the portfolio. Importantly, cost saving initiatives implemented in the previous financial year possibly supported the result with a 37% reduction in corporate operating costs during the period. Turning to transaction activity, it was another busy period. Following the work done in the previous financial year. In July of twenty twenty four, Pakena's design of 100% of its interest in Carlisle to Abacus Life. [indiscernible] with a coupon of 9.875% and an aggregate par value of US49.2 million dollars dollars In addition, PAC received 1,360,000.00 shares of Abacus common stock. As a completion of the sale, on 03/2024, the aggregate net proceeds to PAGR estimated to be US60.3 million dollars In August 2024, PAC announced a sale of 55% of its equity stake in Victory Park Capital's management company and 22% of PAC's future carried interest entitlements in Victory Park funds yet to be launched Civic Current received an upfront consideration of US dollars 33.9 and that's before transaction costs of which 75% was in cash and 25% in Janus Henderson stock.

Civic Caron could also receive up to an additional $28,000,000 earn out payment based on certain If you type gross revenue milestones, to be measured in calendar years 2025 and 2026. Finally, the agreement also includes provisions for the potential sale of the remaining 45% of PAC's interest in Victory Park Management Company and an incremental portion of carried interest into the future. In December 2024, PAC announced the redemption of its interest in Banner Oak Capital Partners. PAC originally invested US35 million dollars in Banner Oak in January 2022. The redemption of US19.1 million dollars coupled with US15.9 million dollars of historical distributions from Banner Oak resulting in a full return of PACS invested capital on a pre tax basis. And the final transaction for the six months In December 2024, PAC disposed of all of its interest in NCI or NERIUS. Post the calendar year end in February, PACCAR agreed in principle to restructured its 100% equity ownership in Aetha investment into a revenue share agreement.

This is designed to provide even stronger incentives and alignment related to management. As they work to execute new growth initiatives. As a consequence of fair value uplifts recognized on partial and completed sales of assets during the period, and related considerations. Paxfair had your estimate of NAV increased to AUD 14.1442 per share at thirty one December. This estimate exceeds the statutory NAV by $0.48 per share compares with the estimated fair value NAV of $13.47 per share on the 06/30/2024, I'd now like to hand over to Ashley to cover financials for the first half of the financial year. Thank you, my calls. If we look at Slide four, in the presentation pack, I'll just quickly go through financial highlights. As Michael said, over the past twelve months, we have fully realized our investments in Avante [indiscernible] [indiscernible] [indiscernible] and Proterra. While partially realizing our investments in PennyMac and Victory Park Capital. Realizations have obviously impacted our revenue from VITUCE in this period. As a result of these disposals, management fee revenue is down 61.6% over the prior comparative period in U. S. Dollars In first half twenty twenty four, performance fees were $8.4500000.0 dollars while in the current period, it was 500,000 ounces.

Majority of these fees were generated by our investment in Rockwood Over the past few periods, the list of investments held by Victory Park Capital have had negative mark to market losses But in the current period, they've turned around and have recorded a net [indiscernible] Or 1,500,000 So in May 2024, we outsourced our investment management function to GQG. This has resulted in us significantly reducing our corporate costs structure.

But incurring an investment management fee. The cash realized from the boutique realizations have led to higher interest income being generated [indiscernible] underlying net profit after tax and earnings per share have declined two periods but the Board has decided to maintain our dividend at $0.15 per share. Will however be unfranked turn to Page five, The presentation pack This is effectively a graphical depiction of the revenue trends that we've discussed. If we turn to page six, we can work through the ultimate balance sheet. The intention of the alternate balance sheet is to deconsolidate the results of AIFA [indiscernible] If we look at cash boutique realizations that I've mentioned before have significantly increased our cash balance We hold $300,000,000 of strong loan dollars on short term deposit preparation for the previously announced share buyback. In addition to the reminder $80,000,000 We also had the deferred consideration arising from the partial disposal of Pennybucker of which half will be settled. Six months. We previously borrowed a US41 million dollars which is shown non current liabilities line That's translated into about 64,000,000 It is secured by a corresponding U. S. Dollar bank deposit which is included in assets. During the period, we impaired our investment in As such, the investment in subsidiaries of mine has reduced significantly.

The disposal of Banner Oak and Victory Park partially.

Has resulted in a significant reduction [indiscernible] The remaining interest in fixed capital and the Genus Henderson shares we received as consideration classified as a financial asset [indiscernible] Plus the significant increase in that the value of that asset class. Investment in BAM which has recently changed its name. But its value has maintained 10% to 12 turn to Page eight, We have an analysis of the net asset [indiscernible] increased from $11.48 $13.84 In comparing our statutory accounts, we undertake value question exercise to consider whether any asset is impaired to determine the value for fair assets. Financial assets recorded to fair value. This process is governed by the accounting standards and is not intended to provide a precise value which an investment would be realized at. Through the details of this process, the detail on Page 26 of the presentation. Which I encourage everyone to read. The center columns at the table on Page eight summarize the focus resulting from this process. This suggests that fair value and net asset value per share has increased from AUD 13.47 [indiscernible] Part of the considerations for the disposal of color was bonds in Abacus Life in These bonds are similar in nature to those listed on NASDAQ.

Ticket code ABLLL. We received these volumes at their face value of US25 dollars Historically, they traded a slight premium to that failure. However, at December 31, the close price was [indiscernible] Subsequently, they have returned to the historic The accounting standards require us to report at the price they traded on December 31. Had they been valued at a price more than the historical level. Then a lower value would obviously have been recorded. The blue column on Page eight restates the value of the Saprockis bonds. To a three month volume weighted average price excluding [indiscernible] This restates the fair value of net asset value to $13.09 $6 per share. I'll now hand back to Michael. Thanks, actually.

If we can turn to Slide 12, which So we turn to the outlook for the remainder of this financial year. Civic Cara Group management expects to maintain strong momentum that has been built in the first half by continuing to focus on executing a clear and disciplined plan. Focus of this plan will be to execute five key initiatives The first we've spoken about at length, which is to return capital [indiscernible] as discussed, the buyback, the off market equal access buyback is progressing. And will close Friday week. And obviously, we will update as we know more. The second key focus area is to deliver growth in liquidity. We continue to look for opportunities to both increase investment in current boutique partners where it potentially exists to accelerate growth and also look for other new growth investment opportunities, which something that we've been working on over the last six, seven months or more.

We also will look closely at optimizing organizational effectiveness and we continue to bid down significant changes to the organization structure and decision making processes that were implemented in the previous financial year. These changes impact on all of PAC's operations, but to date, our relationship with GQG and the team there is strong. And the other aspects of that are progressing well. We will continue to focus on lowering corporate costs. Our corporate cost savings, as we've discussed, of 37% achieved in the first half of FY twenty twenty five, obviously compared to the previous financial year. We will continue to explore opportunities to further reduce And finally, reducing debt, which we discussed in the full year result. We'll continue to pursue negotiations to pay down all outstanding But we'll only do that when it's obviously economically Makes sense. In conclusion, we'd like to thank our employees of the PAC board, both past and present, for their work to enhance shareholder value. Strong progress was made in FY 'twenty four but there is still much to do and if we remain relentless focused achieving the best possible outcome for our shareholders in this financial year and beyond. We now like to answer any questions that you may have Thank you.

Your first question comes from Nick McGarragal with Barringer.

Hi, guys. Thanks for taking questions. I guess my main question is just around the buyback. I'm not sure if you've had any early indications on applications or commitments to participate in the buybacks Hope you got strong view that the whole 300 do you think will be Nick, I think we can clearly respond to The buyback is progressing. We're not It's We're not releasing any numbers today.

I think today is a cardinal. Moment. They released the half year results. And there's another Five, eight, eight business days less for the biogas period. We fully expected that many of the shareholders may wait till later next week. But again, we intend to update the market on of what's And we have no indication or more indication than we've had since the beginning of which way particularly the major shareholders will vote. All are supportive. We know that. We the market on that. But we don't expect to receive indication and that's the way it should be. So I guess we've all got to wait till the seventh to get an update on the And no comment on whether $300,000,000 or less [indiscernible] Okay. And then maybe just on Ather that obviously struggled to raise additional funds being impacted by the structure of their management fee margins reducing over time on prior vehicles. What does the contribution look like under under the revenue share versus the equity share that is CRINO was previously intact in place?

Sure. I'll make some comments and then I'm sure Ash will make comments. I mean, Basically, the way we look at Aether is it's really got an existing business, a legacy business, if you like. And [indiscernible] loan. The agreement is very popular in The United States. It is effectively product design for the private wealth market, which provides access to private market assets for high net worth investors with some level of liquidity.

They're in the process of raising that fund. Their early indications are sound. We won't know until we'll know by By the end of the financial year, the progress of that fundraising Basically, the design of the of the revenue sharing agreement is really to return the cash we've invested in the business over the next three years.

There's a different revenue share arrangement for the existing legacy business and the interval fund but the whole thing has been designed up to provide the best net present value result we could achieve.

But much depends on on the progress of the end of the fund at its launch.

Which we'll know more more about that by the end of the financial year. Actually, do you want to add anything to that?

That? I think you covered it quite well. Can you go back a couple of years? Is it Tier one, BT? But the lack of new fundraisings [indiscernible] being able to bring in new revenue sources So therefore, we've got the existing IRA hubs Now being [indiscernible] It's at a point where the revenue contributions not that strong And going forward, analysts get some new thumbs up. It will be difficult to see it producing a positive economic return So moving to the revenue issue. [indiscernible] [indiscernible] [indiscernible] Yes, great. Thanks for that. Maybe a question around the debt. Is there what's the kind of date at which you can pay it back without penalty just to give us a bookend on when that debt could be paid back? [indiscernible] Yes, there'll be some minor penalty at that point in time. [indiscernible] The optimal part.

Yes. Okay. And you're holding cash against that debt is that the requirement of the facility for that cash is incumbent until when you get that time when you can pay back? Yes. We've pretty much drawn €41,000,000 We've got a [indiscernible] [indiscernible] Okay. And then you touched on [indiscernible] US3.4 million dollars in the half. I assume given the trimmed down portfolio of stakes, obviously the management fee pretty formulated, but where do you get that annual run rate of cost going to be too [indiscernible] In terms of forecasting, I would hope [indiscernible] the the decomplication of the asset portfolio would be undertaken clearly, as you said, reduced costs not only across the investment management agreements but also all other aspects of the operation of the business, lots of costs around effectively being a listed company. So we expect to continue making those gains through time, I mean hard to forecast a number. If we couldn't get that down to actually you better correct me if I'm wrong. If it's something like 30% goes, 7% goes to around 50%, Over time, I think That's sort of like a target for us. Ashley, do you agree with that or do you [indiscernible] Whole harness component of the cost structure.

At the moment. Stripping that out will help significantly. [indiscernible] is the value of the portfolio diminishes and obviously the investment management. So will produce as well.

Yes, okay. Then maybe just an update on some of the residual or the remaining affiliates, do you think that you've obviously restructured Aether Are any of the others kind of do you think in a position where you could progress to some sort of event to either realize value or or restructure? Or is that not the intention with the remaining portfolio?

We constantly are in touch with them, obviously. They're all quite separate business activities. There's not a no real linkage between them.

So they're all separate conversations wherein good conversations with all of them. I guess particularly [indiscernible] We are also looking to work with IMC, as it's now called the old EIM. As well. Northern Lights is traveling well, but again, we speak to them All of the marine [indiscernible] may need capital support to accelerate that growth.

Quite hard with them all. Obviously, Pennybacker and Victory Park we are not in that in that sort of phase with them. But in the others, the other six where constantly looking for opportunity. And looking for opportunity to deploy capital that's attractive attractive in an attractive way.

Yes, I guess that's fine. Final question potentially is around what is the intention with the remaining balance sheet even if you get $300,000,000 out the door you're still left with a very substantial balance sheet. There is investment in new affiliates on the cards is the capability to undertake that diligence existing internally or is there a consideration of participating in the private capital solutions fund that TQG has raised?

Well, look, all of those possibilities to be frank. Very importantly, we need to see the results of the buyback and understand what our that's something Bob has been working to very sort of closely for the last $1,900,000 to twelve months. We'll get to that point. And then then certainly, I mean, to us, the obvious place to look to deploy capital is existing boutiques that we're close to or either on board. We know them well. We can work with their businesses and they're in various stages as I said. So the opportunity is there for the deployment potentially of a reasonable amount of capital.

But we will also look at and again particularly driven by the way the buyback goes and looks essentially new growth opportunities. [indiscernible] we mentioned it [indiscernible] extraordinary general meeting that We could maybe co invest with groups like like GQG or others around investments, maybe not put money in a fund, [indiscernible] something we'll consider But maybe as a first, we may have opportunities to co invest selectively We'll pursue all of those. Potential paths to grow it.

All right. Thanks.

The next question comes from Nick Burgess with Ordinance. Please go ahead.

Yes, thanks very much. Good morning. Just a follow-up question. Just so I'm clear, with the two growth options you've mentioned either investing further sums in existing boutiques or investing in new boutiques Who's responsible for that?

What is Paul Greenwood at GKG responsible for, if any of those two outcomes and which are you responsible within Pacific Current?

Sure.

Paul and his team are [indiscernible] for them to originate an investment for us, it will be a conflict. With what they're trying to do with their funds. So So they aren't out there looking for new investment opportunities for us. That's our responsibility. We may ask them to provide advice or analysis, but in terms of originating, that is that will be that's our responsibility through the investment committee PAC.

And then with the existing boutiques, we work actively with Paul and team under the IMA. I mean, that's the point of the IMA to to give us the closest possible relationship with those boutiques and advice through Paul and team.

Mean, the thing that's happened over the last six months is investment committee that we formed back in sort of June, May June is operating effectively Strong contributors are on that committee. That's becoming very, very important decision making body in the company. And likely, we'll increase that importance going forward. Okay. That's clear. Thank you, Michael. Just clarification around costs.

So excluding debt reduction and excluding the variable cost that you pay away to GQG, sounds like there's still an expectation of further cost reductions in the costs that remain within the business on an underlying basis. I just wanted to be clear Are those further cost gains dependent on further reductions in the overall asset footprint or those reductions will happen regardless.

Those reductions are reliant necessarily on the reduction in the asset They are a consequence of the the Amazon exposure. It's sort of [indiscernible] making the business far less complex. And that we will see ongoing savings as a result of that process around every aspect of PAX operations.

We've gone from whatever it was 17 or so boutiques, I don't know, fifteen months ago to now eight.

So there is a logical and natural, if you like, Reduction in complexity and then potential cost savings.

Okay. That's clear. Thank you very much. The next question comes from Charlie Kingston with K Capital.

Please go ahead.

Hi, guys. Thank you. Just I suppose following up around the buyback, I know we don't know how much you will be able to execute, but if it doesn't if you get, I don't know, half of the $300,000,000 or thereabouts, can you just or much less than the full amount, can you talk to Intentions returning that. I think you've been pretty explicit that you don't think there are any other means no other sort of on market buyback I think you said that they would be inefficient. But in the event that you don't get the full $300,000,000 can you just talk to what your intentions are with further buybacks or returning that capital, would you do an on market buyback up to the same price of $12 or what happens in that event please?

That's a good question, Charlie. Obviously, we won't know until Friday week. What that will look like. But there's nothing to stop us doing on market buybacks. We really subject to the success of the off market equal access off market buyback that's really something that you can do [indiscernible] Obviously, the on market buyback you can [indiscernible] no doubt Depending on how the Gulf market value that goes, that's certainly an option for us.

But then it's whatever [indiscernible] the balance sheet results will In terms of strategy going forward and the potential for us doing that. As we said, investing existing affiliates all look for new opportunities. A combination of all of those we look to pursue, but it will always be done with shareholder creating shareholder value of mine, we feel that pressure [indiscernible] not subscribed as much as we would like. We feel no pressure to suddenly spend that money quickly. We'll never do that.

But we will look for opportunities to deploy capital to get The best return that we can share on this through all of the the things that we've discussed. [indiscernible] Good to know that there is that possibility because there's going to be some accretion with fair value NAV at circa 14. So I would think an on market buyback makes sense if the current price prevails, but and jumping to growth. I think you mentioned you've been looking for six to seven months potential deployment into new opportunities, but I don't think we've had anything thus far. But could you just give us a sense of ticket size that you are looking to do because again even if you do deploy the full $300,000,000 bought back you still got an extra $80,000,000 notwithstanding your debt, but another what is circa $200,000,000 of assets in harvest mode. So [indiscernible] like. So regardless of the outcome, you're still going to have a huge amount of cash I'm just Hoping to get some color around ticket size, where you're looking, potential deployment, please?

Sure. Your numbers are pretty close to the money. So whatever the outcome is you say we'll have an investment or an investing focus. It will be a clear priority going forward. Ticket sizes depend on the opportunity. It's something that the Board and this committee will need to review very closely. My own view, that's what it's worth, it would be very unlikely to go and on. It would be more inclined to make a number of investments than one or two large ones is my [indiscernible] risk and diversity, I mean beyond that, it is totally driven by the opportunity. And then managing it and whether we co invest, whether we directly take stakes and other entities is all subject to the opportunity.

And the potential of the opportunity, John, And then just the business going forward, am I right in saying that the overhead is around $8,000,000 or $9,000,000 but in terms of income, I know it's going to be lumpy with earnouts and potential performance type fees, but you're probably going to have don't know, is your largest revenue line going to be interest income, I suppose, or the Abacus bonds? I think they've generating 10%. But just trying to get a sense of What the earnings on the current portfolio look like for this business? Actually, you want to show us that one?

Yes, it will be interest income. And it will be a fraction of how much cash is left after the buyback. I get it.

Okay. It excludes the interest income, but just that the existing portfolio. Nothing else.

Sorry.

From the boutiques.

Yes.

Obviously, just from the management fee, [indiscernible] Will be [indiscernible] down to pretty much PennyMacer and Victory Park being the main drivers of managing fees. Rock and VPC Holker obviously, other ones that will drive out [indiscernible] Difficult to estimate on performance service. Given how long they are.

Okay. Any sort of quantum you can provide or just the base management fees you expect presume they're going to more than cover your overhead. Is that fair?

I don't think we have any problems. [indiscernible] [indiscernible] quantify our forecast. Okay.

And then just on the tax the deferred tax, can you just remind me that the GQG I think you were conservative in that [indiscernible] potential liability, but is there any upside to that? And I think it's around about $70,000,000 deferred tax. High that you've accounted for, is any of could any of that result in franking credits or is that all offshore U. S. Related?

It's all offshore. [indiscernible] [indiscernible] that we have [indiscernible] And as I said, [indiscernible] Revenue to us is fairly much trickier performances at the moment. So they're looking lumpy. [indiscernible] ability to generate friendly credits And the GQG liability, was that just remind me, is that a conservative estimate instead? Potential for that to reduce? Or what have you accounted for there? That will be accessible in The U. S. The election of Donald Trump some speculation around a reduction in corporate tax [indiscernible] In The U. S. [indiscernible] opportunities for us to reduce our tax burden in The U. S. Depending on how that negotiations take place.

Thank you. And just lastly, when do you intend on crystallizing those Abacus bonds? And I think some of the other stock has just grown for a while, but yes, when can we expect those to be harvested is the term you used or converted to cash? [indiscernible] Timing of the Inverselin So we're looking at the best time. To realize that is at the moment they've come back down to [indiscernible] above [indiscernible] And therefore, you simply [indiscernible] 97 Just remind me what's past? On those bonds please? [indiscernible] Okay.

There are no further questions at would now like to hand the call back to Mr. Clark for closing remarks.

Well, thank you very much. I'd just like to thank everybody who joined the call. Now it's great to update. We appreciate your support for PAC.

And look forward to keeping keeping close into the future.

That does conclude our Thank you for participating.