GENERATION DEVELOPMENT GROUP LIMITED — Annual Report 2009

Aug 26, 2009

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Austock Group Limited Full Year Results to 30 June 2009

27 August 2009

Presented By: Tim Boyle, Managing Director

Contents

1. Core Focus Through 2009

2. Financial Overview

3. Segment Review

4. Strategy and Outlook

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1. Core Focus Throu h 2009 g

Cash position remains Cash position remains strong & cost base strong & cost base significantly reduced significantly reduced

• Strong cash balance of $20.6m.

• Cost base reduced by voluntary salary decreases, head count reductions & attrition and further cuts in Group expenses.

• Divested businesses through 2009 (Asset Management, APX & Agribusiness).

Focus returned to Focus returned to Core Businesses Core Businesses

• Ready to enter 2010 with a leaner, cleaner and simpler model.

• Investment Management businesses remain solid with FUM holding up well through the current global economic turmoil.

Early Restructuring Early Restructuring now paying off now paying off

• Austock has continued to restructure the business in preparation for the next growth cycle.

• In a position to identify, attract and provide incentives for individuals who will add to the profitability of Austock.

Establishing a scalable Establishing a scalable platform for growth platform for growth

• The foundations of a solid underlying business are in place.

• The coming period will provide the opportunity to leverage this platform as market conditions become more favourable.

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2. Financial Overview: Summar y

1. Revenue of $40.0 million, a decrease of 43% from the previous corresponding year.

2. An underlying[1 ] loss before tax of $1.3 million, a decline from $11.1 million underlying profit in the previous corresponding year.

3. Annuity revenue streams of $10.9 million, holding steady from the previous year.

4. Cash reserves remain strong at $20.6 million (excluding Life benefit funds and Trust cash).

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1 Underlying earnings exclude discontinued operations, impairment losses and Life benefit funds.

2. Financial Overview: O eratin Result p g

Operating results($m u_nless stated)_
Year ended 30 June	2009	2008	% Change
Revenue	40.0	70.6	(43.3%)
Personnel costs	(28.3)	(43.3)	(34.6%)
Operating costs	(13.0)	(16.2)	(19.8%)
Underlying profit / (loss) before income tax	(1.3)	11.1
Income tax	2.1	(2.3)
Impairment charges	(21.1)	(2.5)
Losses from discontinued operations	(0.6)	(6.2)
Reportedprofit (loss) after tax	(20.9)	0.1

Note: Excludes Life benefit funds

• Revenue directly correlated to difficult trading conditions (decreased brokerage & fewer corporate deals).

• Cost base significantly reduced due to active expense management program through 2009.

• Austock is now highly scalable to take advantage of expected strong growth in corporate activity and trading volumes into 2010.

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2. Financial Overview: Revenue Anal sis y

Revenue($m u_nless stated)_
Year ended 30 June	2009	2008	% Change
Corporate & Securities	28.9	59.9	(51.8%)
Investment Management	10.9	10.9	-
Other	0.2	(0.2)
Total Revenue	40.0	70.6	(43.3%)

• Corporate and Securities revenue $10.0m for 2H09 and $28.9m for the full year reflecting:

  • Lower trading volumes through the whole period.

  • Corporate started 2009 strongly however there were fewer deals in our space in the second half.

• Despite divestment of Asset Management business, Investment Management revenue remained steady through the period at $10.9m. This result emphasises the importance of Austock’s longer term strategy to invest in annuity-type businesses.

• Net FUM remained consistent through the period despite the Asset Management divestment as a result of consistent growth in the Life business and strong growth in the Financial Planning business.

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2. Financial Overview: Ex ense Anal sis p y

Expenses($m u_nless stated)_
Year ended 30 June	2009	2008	% Change
Personnel	28.3	43.3	(34.6%)
Occupancy	1.5	1.6	(6.3%)
Communications	0.9	1.1	(18.2%)
Finance	0.6	0.9	(33.3%)
Dealing & settlement	4.0	4.7	(14.9%)
Marketing & promotion	1.3	2.1	(38.1%)
Depreciation	1.0	1.2	(16.7%)
Generaladministrative	3.7	4.6	(19.6%)
Total	41.3	59.5	(30.6%)

Doesn’t include share of associates or impairments

• Personnel costs reflect restructuring activities in response to market conditions. Second half personnel costs $11.6m, versus $19.3m in 2H08 (decrease of 40%). Staff reduced ~30% from its peak.

• Continuing focus on all other costs has resulted in significant reductions from 2008.

• Cost base now very scalable and Austock is prepared for growth as capital markets continue to improve.

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2. Financial Overview: Overview of Im airments p

Impairment Charges($m u_nless stated)_
Year ended 30 June	2009
ABC debtors (ACF, APS)	4.0
API indemnity	0.9
Agribusiness loan	0.3
Ceramic management rights	9.4
Mirvac management rights	0.9
Schooldevelopment trusts (SDTs)	5.6
Total	21.1

• Management rights’ impairments relate to intangible write-downs within the Property business.

• SDT’s relates to Austock exposure (equity and debt) in relation to supporting the SDT’s managed by Austock Property and other school related entities. Negotiations are continuing with various parties which, if successful, may result in recovery of up to $4m in the form of cash and ongoing equity / subdebt positions in the SDT’s and school related entities.

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2. Financial Overview: Cashflow Statement

Cashflow ($m u nless stated)

Year ended 30 June	2H09	2009
CASHFLOWS FROM OPERATIONS
Customer receiptsSupplier payments	14.6(20.4)	43.7(50.4)
Interest paid	(0.3)	(0.6)
Tax refund(payment)	(1.4)	0.5
Operating cashflow	(7.5)	(6.8)
Interest received	0.4	1.1
Related loans	2.4	2.1
Repay borrowings	(1.0)	(2.0)
Dividends paid	-	(1.2)
Treasury shares	(0.6)	(0.8)
Other	(0.8)	(0.1)
Total cashflow	(7.1)	(7.7)
Opening cash*	27.7	28.3
Closingcash*	20.6	20.6

• Operating cashflow improved towards the end of the 2H09 and was positive for the last quarter.

• Supplier payments include $1m for API and GET closure costs and $1.3m of bonuses provided for at 31 Dec (2[nd] tranche FY08 bonuses).

• Related loans include Agribusiness (Pinnacle) repayment.

• Other includes AAML discontinued operation.

• Excludes cash held in trust and Life benefit funds.

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2. Financial Overview: Balance Sheet

Balance Sheet ($m u nless stated)*

Year ended 30 June	2009	2008
ASSETS
Austock cash	20.6	28.3
Trust cash	4.5	5.1
Receivables	51.2	98.2
Financial assets	3.2	8.0
Intangible assets	5.3	15.9
Net tax assets	6.7	5.6
Total assets	91.5	161.1
LIABILITIES
Payables	55.0	94.7
Provisions	5.2	4.3
Borrowings	5.2	7.2
Other liabilities /(assets)	(0.4)	5.6
Total liabilities	65.0	111.8
Net assets	26.5	49.3

• Strong cash balance.

• Receivables and payables mostly represent securities T+3 settlements.

• Financial assets is predominantly investment in Newreg.

• Borrowings includes $4.9m with BankWest in relation to the Ceramic acquisition in 2007.

• Excludes Life benefit funds.

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3. Se ment Review: Or anisational Chart g g

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----- Start of picture text ----- Austock Group17%AustockAustock Austock AustockSecurities Corporate Property Life RegistriesFinanceResearch Equity Raising Austock Property Imputation Bondand Advisory ManagementInstitutional Mergers and Austock FundsSales Acquisitions ManagementTreasury RiskAdvisoryEquity Capital MarketsPrivate WealthCorporate and Securities Investment Management Other Investments----- End of picture text -----

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3. Se ment Review: Cor orate & Securities g p

1. Despite difficult conditions, Corporate Finance achieved the following transactions:

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----- Start of picture text ----- Corporate FinanceCorporate Finance----- End of picture text -----

• Equity raisings included Northern Energy, Terramin, Catalpa and EMA.

• Placements for AAB Grain and Straits Resources.

• Advised QGC’s $800m bid for Sunshine Gas.

• Advised QGC on British Gas Group’s $6.5b recommended takeover offer for QGC.

• Advised AET on sale of leaseholds interest in relation to 89 ABC2 properties.

1. Strategic alliance with State Equity Group to act as a referral vehicle for companies that don’t fit Austock’s model or core competency.

2. The Research team consistently retains high ratings, with coverage of ~130 stocks.

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• Starmine / Thomson Rankings: rated Top 3 against peers for stock recommendations and earnings predictions accuracy in 2009. Paul Jensz and Tim Gerrard ranked #1 and #3 respectively for accurate stock picking in the most recent annual survey.

• BRW / East Coles Rankings: rated #2 (of non-global banks) of all research houses in Australia in 2009.

1. Conducted 6[th] Annual Austock Agribusiness Conference, which is now a nationally recognised event with broad industry and institutional participation.

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3. Se ment Review: Cor orate & Securities g p

1. Strong account management remained in place through 2009, with some fine tuning of the business.

Institutional Sales Institutional Sales

1. Trading volumes (hence revenue) have picked up in the past 2 - 3 months, in-line with the market recovery.

2. Business well placed to benefit from the establishment of the new Equity Capital Markets (ECM) team in 2010.

Private Wealth Private Wealth

1. Continuing to grow and develop team with 6 new private client advisers in Melbourne and Sydney.

2. The Financial Planning team joined us in 2009 and have grown FUM, from start-up, to ~$130m (by year end).

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3. Segment Review: Investment Management

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----- Start of picture text ----- PropertyProperty----- End of picture text -----

1. Stabilising in a post-ABC receivership environment.

2. Restructure of AET and debt facilities being finalised.

3. Well positioned to become part of structural initiatives in property fund management industry.

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----- Start of picture text ----- LifeLife----- End of picture text -----

1. Life FUM surpassed $125m and net inflows continued to be positive through the period. – Monthly sales contribution now regularly exceeding $4m.

   • Imputation Bond awarded top “Highly Recommended” rating by Zenith.

2. BDMs solely focused on growth of FUM.

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3. Se ment Review: Other g

1. Equity Capital Markets (ECM)

• Austock has launched an Equity Capital Markets (ECM) business that will focus on identifying and transacting capital raisings that have recently recommenced in the Australian market after a 12 month hiatus. The ECM business is highly complimentary to the existing structures within the Corporate and Securities business.

2. State Equity Group

• Through the period, Austock formed a strategic alliance with State Equity Group, a boutique corporate advisory firm based in Melbourne. State Equity Group will act as a referral vehicle for predominantly unlisted companies that don’t fit Austock Corporate Finances’ model.

3. Investment in Registries

• Austock’s investment in Registries Limited continues to outperform initial expectations. Registries has transferred > 80 company share registers over the past 12 months and the pipeline remains very strong.

4. Sale of Non-Core Businesses

• Austock divested its shareholding in APX, AAM & Agribusiness. These divestments will collectively ensure Austock remains well placed to capitalise on market opportunities as they arise.

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4. Summar and Outlook y

1. Strategically well positioned for a market recovery and new cycle into 2010:

   • Extensive restructuring program completed.

   • Cost base highly scalable.

   • Conservation of cash provides a substantial war chest.

   • Human capital enhanced.

2. Depressed result, while disappointing, reflects tough market conditions across the industry.

3. Actively seeking new board members and senior executives to implement long term growth strategy.

4. Market recovery evident in last quarter of FY09.

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“2009 has been a difficult year for most financial services firms in Australia, yet Austock has survived and is a more robust firm for it.

Austock will deepen its presence in core businesses and will enter 2010 with a leaner, cleaner and simpler model.

The coming year will see Austock aggressively and selectively pursue revenue opportunities.”

– Tim Boyle, Managing Director

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Disclaimer

General Disclaimer

This presentation has been prepared by Austock Group Limited ABN 90 087 334 370 (“Austock”).

The information in this presentation is based on data obtained from recognised statistical services, company presentations or communications or other sources believed to be reliable. However, Austock has not verified this information. Austock believes that the information in this presentation is accurate and reliable, but no warranties of accuracy, reliability or completeness are given (except insofar as liability under any statute cannot be excluded). Austock does not accept responsibility for any errors, omissions or negligence. Statements that are nonfactual in nature, including projections and estimates, assume certain economic conditions and industry developments and constitute only current opinions, all of which are subject to change.

The information contained in this presentation is for information purposes only and does not constitute an offer of, or a recommendation to buy, securities.

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