Hi MuscatAgree there are some questions, have put the below...

Hi Muscat

Agree there are some questions, have put the below together. In summary:1) High costs -agree, think there is something a bit deeper here. Impairment costs keepon rising leading to higher costs/expenses. Do you have an issue with the$20M in employee costs? It seems to be stable.2) Victory Park- the thesis was $9.5M in revenue with the investment and it doesn’t seem tohave been delivered.3) SeizertCapital - Another contributor to the write off's. $13M remaining as anasset value.
Information on Impairments and Nereus

Operating result (page 11 of 58)

Impairmentof Investments, $28.857M

Footnote (2)

Theimpairment relates to impairment of investment in associates and goodwill fromsubsidiaries excluding the impairment of capital contributions to Nereusamounting to $542,000 (2018: $781,000)

Broking andConsulting Fees, $1.310M

Footnote (4)

The brokerand consulting fees pertained to the cost of services in relation to theappointment of an external party to identify suitable investors for the twooperating solar PV generation plants of Nereus.

Redundancies,$503k (this could be ex-CFO payout)

FinancialNote 7 – Other Financial Assets

Footnote (9)

Theinvestment in Nereus pertains to the Group’s interest in Class A shares ofNereus, a private equity firm based in India focused on renewable energyassets. On 11 September 2018, the Group entered a Sell-side Advisory Agreementto identify suitable investors for two operating solar PV generation plants ofNereus with Centrum Central Capital. At 30 June 2019, management assessed theinvestment in Nereus to be assets held-for sale in accordance with therequirements of AASB 5: Non-current Assets Held for Sale and Discontinued Operations.As the carrying value of the Group’s investment in Nereus is nil, there were noactual reclassifications made to assets held for sale.

Financial Note 11 – Financial Impairments

Provisionfor estimated liability for Nereus$7.926 Million

Footnote (1)

Pursuant toand in connection with the Aurora Share Subscription and Assignment Deed, dated28 July 2015, between Aurora Investment Management Pty Ltd (as the Trustee ofAurora Trust), the Aurora Trust, Hareon Solar Singapore Private Limited (“Hareon”),Nereus Capital Investments (Singapore) Pte. Ltd (“NCI”) and Nereus agreed tomake a contingent “Additional Contribution” to NCI of up to USD25,000,000. ThisAdditional Contribution can be drawn by NCI only to fund the exercise of thePut Option, which is held by Hareon, when and if it is exercised. In theShareholders’ Deed, dated 28 July 2015, Hareon may put its Class H Shares backto NCI at the “Put Option Price” any time within 60 days following the sixthanniversary of the commissioning of the first solar project sponsored by NCI,which occurred in June 2016. As at 30 June 2019, the fair value of theinvestment in Nereus was Nil (2018: Nil). Refer to Note 7 for details.

Managementassessment of the redemption of Class H Shares is estimated to be $30,996,000(USD21,770,000) and fair value of the solar projects in Nereus is approximately$23,070,000 (USD16,203,000). At 30 June 2019, the difference between theredemption value of the Class H Shares and the fair value of the solar projectsis provided in full as potential obligation of the Group.

ReviewingLinkedIn, have found that Nereus Capital staff had installed thefollowing:
Projects of 7.5 MW of Medak & 8 MW of Dubbak Solar Projects (Location –Medak (Telangana))

Theremay be more, however no one has laid claim to having experience implementing.

Insummary, believe there is actual value in Nereus Capital.Hareon have until June 2022 to exercise theirput option.In a worst-case scenario, PACwill have to pay $30M for a $23M asset.Surely there is generation revenue coming in that PAC will earn to helppay this off.

Also the 15.5MW is less than the 32MW intended to be installed. I wonder if PAC/Nereus have a case against the Put Option if the full 32MW were not installed. The full 32MW may have been installed, but can't find evidence of it anywhere.

Information on Victory Park

(page 35 of 39 of the Investor Presentation)

Victory Park contributed less than expected due to lower than expectedmanagement and incentive fees. Figures excludes A$3.3m of performance feesaccrued by VPC on PAC’s behalf but not recorded by PAC.

Page 9 of 39 - These figures exclude approximately A$3.3m of carriedinterest from VPC that has been accrued on PAC’s behalf but cannot yet berecognized as earnings under IFRS.

(page 8 of 58 of the full year report)

On 3 July 2018, the Group acquired a 24.9% stake in each of Victory ParkCapital Advisors, LLC (“VPC”) and Victory Park Capital GP Holdco, L.P.(“VPC-Holdco”) for $94,825,000 (USD70,000,000). VPC is a Chicago basedinvestment firm specialising in managing funds and mandates investing innon-bank lending. VPC-Holdco holds direct and indirect interest in VPC fundsand its general partner entities. The investments have been accounted for asinvestments in associates using the equity method. For the year ended 30 June2019, the pre-amortisation contributions of VPC and VPC-Holdco to the Groupamounted to $1,774,000 representing the share in net profits of associates.

I think the $1.774M is VPC's contribution made previous financial year.$3.3M to be recognised nextfinancial year.The remainder of thebelow are for Carlisle + GQG + Aether + Seizert. The below table shows the financial year revenue increased by $10.1M, but we know $4.75M came from Carlisle for half a year ($5.35M remaining) and then the GQG increased contribution (I am going with $3.6M averaged contribution of revenue to due FUM growth over the year), which would leave $1.75M for VPC to contribute above previous income.

Million dollar question is, will VPC contribute as expected this coming financial year (question for management on the conference call).

There was more revenue expected at the time of investment as per investorcall. Expectations were at least a $US7 Million return, $9.5M at AUD/USD 75c.Should be $10.3M at AUD/USD 68c. See notes from conference call here:

https://hotcopper.com.au/threads/ann-pac-makes-strategic-investment-in-victory-park-capital-llc.4282680/

On the Seizert investment, it has been written down to $13.719M (note 17 page46 of 58). Most of the intangible value is written off for Seizert. I thought PAC was generating $5-6M from this investment. The book valuation seems to be overly conservative to me.
Best of Luck
Lost