INVESTSMART GROUP LIMITED — AGM Information 2013

Nov 27, 2013

Australasian Wealth Investments Limited A.C.N. 111 772 359

Level 4, 1 Alfred Street SYDNEY, NSW 2000

28 November 2013

PO Box R1695, Royal Exchange NSW 1225

Telephone: (612) 9080 2377 Facsimile: (612) 9080 2378

CHAIRMAN’S ADDRESS TO THE ANNUAL GENERAL MEETING OF AUSTRALASIAN WEALTH INVESTMENTS LIMITED

The past year has seen significant changes in both the management and strategic direction of your Company. It follows a review of the Company’s investment portfolio and strategy during the early part of 2013 and the implementation of a new strategic direction over the past six months.

Before turning to the future for your Company, I must acknowledge that NTA per share has declined from $0.61 at 31 October 2012 to $0.375 at 12 November 2013, the last published level. This reflects the continued decline in the old investment portfolio; in particular, Straits Resources the previous largest investment fell over the period from $0.09 to $0.01.

This is clearly unacceptable, and left the Board with little option but to pursue a new strategic direction.

As some of you may recall, the focus at the AGM last year was a discussion as to the future options for the Company in the light of the difficult year it had experienced. At the time it was identified that the winding up of the Company would not be optimal as it would waste the off-balance sheet assets of the Company. A second option of using the Company’s cash to effect a buy back was also rejected as being uneconomic. A third option considered was to replace the Manager as the previous investment strategies being pursued by the Company; a diversified portfolio tracking the ASX300, or a concentrated but diverse portfolio of stocks, given the relatively small size of the investment portfolio, were unlikely to be successful.

Mr Andrew Brown, the previous Chairman, highlighted the difficulties the Company faced in replacing the Manager in his address to shareholders last year. As he pointed out, the Management Contract had certain conditions within it that made it effectively non cancellable.

Mr Brown also identified that the Company was too small and that the impost of the fixed cost base was significantly limiting its future prospects.

Following last year’s AGM, your Board actively considered these options and this culminated in the Board agreeing to an acquisition of the Management Contract by Aurora Funds Management Limited, with a submanagement agreement appointing myself as Manager, in April of this year.

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My first action as Manager of the Company was to realise the existing portfolio. This has largely been achieved with the exception of the Company’s holding in Straits Resources Limited. This position is effectively illiquid given the current trading volumes in Straits and we have therefore determined to hold the position until conditions improve.

My second action was to focus the Company upon a single sector - one with attractive long term growth drivers and where there was the potential for opportunistic investment. Given my background, Financial Services was identified as the stand out sector where substantial opportunities exist as a consequence of recent regulation and the increasing digitisation of the offer. The Company has already made significant investments in several businesses, and has a full pipeline of opportunities under consideration. We have already created a significant footprint as a digital direct to consumer business, and further opportunities are under active consideration.

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My third action in parallel with the change in strategic direction was to take active steps to expand the capital base of the Company. As you are aware the Company has successfully completed a placement and a 2:3 rights issue in recent weeks, and has substantially increased its ability to make investments and to take advantage of opportunities as they arise.

My fourth action was to appoint a CEO with relevant expertise to execute on this strategy of investing in Financial Services and the experience to manage our evolving investment portfolio and the increasing scale of the Company. I will introduce our new CEO shortly.

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In order to effect the necessary change in strategy, your Board has proposed a change away from the current Listed Investment Company structure. It is felt by your Board that a conventional corporate structure will be more appropriate to the future strategy and will facilitate the more active management of opportunities identified. It is the intention that we will have a portfolio of “investments” across the financial services sector. In some cases, we will hold 100% of a potential opportunity and take an active role in the management. In others we will back or invest in existing managers and take smaller stakes.

The cancellation of the Management Contract (for its acquisition price) and the change of the status of the Company from a Listed Investment Company are matters being put to shareholders at the AGM today.

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Whilst performance has been less than satisfactory in recent years, I would like to take this opportunity to thank Andrew Brown, the previous Chairman, who has stepped down from the Company as a Director recently, for his leadership in the rejuvenation process of your Company.

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The Company has also announced the appointment of Mr Ben Heap as CEO and Managing Director. Ben has significant financial services and digital experience: he was previously Head of UBS Asset Management in Australia & New Zealand, a role he held from 2010 until his recent resignation to join AWI.

In his role at UBS, Ben was also a Director of the Financial Services Council, the peak representative body for the retail investment & superannuation market in Australia. He has specific knowledge as to the opportunities in the market and the implications of FOFA across the sector.

Ben also worked for UBS in the United States, as an infrastructure and private equity principal investor, from 2007 through 2010. Prior to UBS, Ben worked for Australian Wealth Management Limited (with your Chairman); TAB Limited (now part of Tabcorp) as head of its digital businesses & corporate acquisitions; and Macquarie Bank.

He brings substantial expertise – in financial services, acquisitions and in industry digitisation - and I am delighted we have been able to bring someone of his experience in to lead this Company through this crucial strategic phase. Ben will present to us immediately following the AGM.

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Finally, I would like to announce that we have concluded our due diligence on the potential acquisition of a digital service provider which was announced to the market on 21 October 2013. We expect to complete the acquisition by the end of next week. Upon completion, our digital distribution business will have circa 40,000 investors, with circa $1.6 billion FUA, and online access to circa 300,000 individuals.

Our CEO will present shortly on the future strategy for your Company.

I would like to finish by thanking you all for your ongoing support and I look forward to presenting to you again next year with your Company, significantly stronger and established as a highly regarded independent investment firm with a portfolio of compelling investments in the financial services sector.