ARC FUNDS LIMITED — AGM Information 2013

Dec 17, 2013

MANAGING DIRECTOR’S ADDRESS TO THE ANNUAL GENERAL MEETING OF TIDEWATER INVESTMENTS LIMITED

WEDNESDAY 18 DECEMBER 2013

As you will have realised from the recent announcements by the Company, we were hoping to have a more fulsome AGM here today. However, we have not been able to finalise everything in relation to the proposals that would have been put before you in time for the meeting date. As a consequence, this address is rather shorter than normal.

Discussions are still ongoing with third parties to introduce new capital and an enhanced investment strategy to Tidewater. The non-executive Directors and myself are very enthusiastic about the proposition and believe it will be to the benefit of all shareholders should it be enacted. It does not involve a change of activities, so we are hopeful that any regulatory involvement will be of a cursory nature, and that the tax losses within Tidewater should prove to be usable over time. We have significantly reduced expenses, including to all of the Directors and have ensured that liabilities are modest with no contingencies.

In the period since the end of June 2013, we have engaged in some passive trading activities that have yielded modest profits to assist in offsetting the operating expenses of the company. In the interim result for 2014, we will have to mark to market the value of the investment in Adelaide Resources whose share price has fallen after a capital raising, as well as reflecting the general malaise in the exploration market, based on the persistent decline in the gold bullion price. It doesn’t reflect the results of Adelaide Resources or the prospectively of its ground in South Australia. As you may be aware, I stepped away from my role as Adelaide Resources Chair at the end if June 2013.

We significantly reduced our passive investment exposure I early in November 2013 feeling that market valuations were unattractive and run ahead of fundamentals especially domestically. The Australian market trades at a premium valuation multiple to many of its peers, especially when the heavy weighting of banking shares is removed, and yet the profit growth prospects over the foreseeable future, as well as the medium term structural prospects are somewhat inferior. As a consequence, we have significant liquidity at the present time.

We hope to be in a position to convene a general meeting in the first quarter of 2014 to place the expansionary propositions before shareholders and provide a more fulsome addressing of future prospects.