PACIFIC CURRENT GROUP LIMITED — AGM Information 2009

Nov 11, 2009

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2009 Annual General Meeting 12 November 2009

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Agenda

• Chairman’s Address ‐ Mike Fitzpatrick

• Managing Director’s Address ‐ Mark Burgess

• Formal business

• Questions

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Chairman’s Address Mike Fitzpatrick

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Managing Director’s Address

Mark Burgess

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Defining the business

Treasury Group invests in, and supports the management of boutique asset management businesses.

We believe:

 Investment businesses need to be directed and driven by the investment professionals to ensure their interests are aligned with their clients

 The boutique “investment” culture is paramount

 The culture at Treasury Group is one of “partner” not a parent company

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P & L summary

	12 months to 30 June 2009	12 months to 30 June 2009	12 months to 30 June 2009
$000	2009	2008	% Change
Net profit after tax	4,953	17,050	(71%)
NORMALISED NET PROFIT	7,515	17,330	(57%)
Basic earnings per share	21.43	75.29	(72%)
Dividend per share (fully franked)	20.00	60.00	(67%)

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Summary of financial results

Results were effected by the continued deterioration in global financials markets

• Decline in equity markets reduce revenues in the second half

• Retail fund outflows earlier in the period offset by institutional growth

Normalised profit after tax was $7.515 million

• Decline of 57% over the year. Marked to market losses primarily in the first half

• Investments have since made a recovery from the market lows

Dividend

• Reduced to allow capital to be used for future investment opportunities

• Balance sheet strong – no debt

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Other key features of the financial year

Investment performance against benchmarks strong

• Performance against benchmarks was solid across managers

Net funds flow positive

• Continued growth in institutional clients

• Growth in both Australia and offshore

• Dublin UCIT III funds received commitments. First US corporate pension plans won.

• TAAM, GVI, Orion and RARE saw net inflows for the full year. Interest remains firm

Further development of local and offshore clients

• Quality of client base remains strong

• New clients gained in Europe and US

• Focus on growing Australian retail client flows

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Funds under management – by manager

• Net funds flows at RARE, TAAM, GVI and Orion

• Retail funds outflow due primarily to market conditions

• Mix of funds between managers has diversified

• Institutional share of FUM has increased

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Diversification

Funds Under Management

NOVEMBER 2007

SEPTEMBER 2009

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CANNAE
CANNAE
TRILOGY
1% TRILOGY
0%
8%
RARE 11%
5%
IML
TAAM
RARE 27%
5%
9%
IML
GVI 37%
5%
TAAM
11%
GVI
5%
Orion
Orion
39%
37%
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Treasury Group evolution continues

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US Pension Funds
Europe USA
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
New Small Cap
Boutique
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Expense management but with focus on future growth

Expense Management

• Staff reduced by 10% at Treasury

• Variable compensation at Treasury sharply lower

• No bonuses paid to senior management in light of weak markets

• Other costs reductions made across Treasury functions

• Boutiques reduced compensation

Remain focused on future growth

• Boutiques increased investment staff – taking advantage of weak markets

• Ongoing investment in Dublin fund

• Roll-out of automated compliance monitoring

• Treasury Group expanded boutique partner range

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Adding resources during market weakness

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Number of Investment Professionals within the
group
60 55
50
50
40
40
30
30
23
18
20
12
10
0
2003 2004 2005 2006 2007 2008 2009
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 Our managers took the opportunity to add key investment staff as talent became available

 Costs were controlled as variable compensation was managed

 The investment culture is central to our managers success

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Global comparison – boutique investors

Asset Management only

• Conor, Clark, Lunn • Thames River

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• Bank/Financial • NAB Invest • Ignis institution • Pinnacle • Hermes • Ascalon/BT • Sun Life Canada

Private Equity

• Hellman & Friedman

• • Fiduciary • Rosemount • Lovett Minnick • Northern Lights

Australia

International - typically home market

Australia & International

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Competitive advantages

 Treasury Group is solely focused on asset management

• No large financial institutional distractions

 Strong focus on the value of the investment culture

• Focus on the long term building of value

• Private equity looks to exit from investments

• Stability of the Treasury business model

• Treasury Group is staffed by experienced asset management professionals

 Executive and staff have depth of asset management experience

• Larger financial institutions may change staff and focus

• Treasury Group brings it skills to both Australia and offshore markets

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Partners: factors we consider

 Passionate about investing

• An outstanding track record

• Desire to build and grow an asset management business

• Wanting team support – both investment team and business support

 Client focus

• In an asset class that has future growth

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Treasury Group positioning

Value

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New Small Cap Boutique

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Possible new boutiques

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Growth

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Australian equity International equity

Specialist

Fixed income

Absolute

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Global equity

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• Value Oriented Manager

• Strong Track Record

• Outstanding retail manager

• Expanding investment team

• Targeting institutional growth

• Growth oriented manager

• Experienced team

• Ex – Stewart Ivory, Walter Scott

• Edinburgh and Melbourne based

• Outstanding track Record

• TRG support for future growth

• High demand for global funds

• Scalable business

• Suitable for Australian and international clients

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AR Capital – absolute return investing

 Outstanding four year track record

 Key principles:

• Tony Cooper – previous head of trading at Credit Suisse and GSJBW

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• Craig Connelly – previous head of research at GSJBW

• Peter Lucas – senior analysts and extensive hedge fund experience at Credit Suisse

 TRG believes that absolute return investing has an important place in both institutional and retail portfolios

• AR Capital team are very investment and client focused

• Attractive to clients in both HNW and institutional

• Great foundation for Treasury Group move into absolute return sector

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AR Capital – outstanding performance

ASCOT FUND RETURNS COMPARED TO THE ALL ORDINARIES ACCUMULATION INDEX (1 August 2005 to 30 September 2009)

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190.0
180.0
$250,000 INVESTED IN THE ASCOT FUND ON 1
AUGUST 2005 WAS WORTH APPROX. $453,000 AS AT
170.0 30 SEPTEMBER 2009. A SIMILAR INVESTMENT IN
THE MARKET (XJOAI) WOULD BE WORTH APPROX.
160.0 $326,500 AS AT 30 SEPTEMBER 2009.
150.0
140.0
130.0
120.0
110.0
100.0
90.0
80.0
XJOAI ASCOT FUND
31/07/2005 30/09/2005 30/11/2005 31/01/2006 31/03/2006 31/05/2006 31/07/2006 30/09/2006 30/11/2006 31/01/2007 31/03/2007 31/05/2007 31/07/2007 30/09/2007 30/11/2007 31/01/2008 31/03/2008 31/05/2008 31/07/2008 30/09/2008 30/11/2008 31/01/2009 31/03/2009 31/05/2009 31/07/2009 30/09/2009
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Recent addition

• Treasury Group has acquired Souls Funds Management

• Australian equity specialist – smaller companies focus

• Award winning

• Recent staff movement resulted in ratings downgrade that is now being reassessed as the key investment people have committed to continue in the business

• Significant staff equity will be allocated to the key individuals

• Quality institutional clients complimented with two pooled funds

Key people

• Frank Villante

• Scott Armstrong

• Andreas Stephens

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Recent addition

Financials

• Acquisition price: less than NTA

• Cash on the balance sheet in excess of $1m

Flagship product performance As at 31 October 2009

Australian Smaller Companies Fund

• No debt

• Funds under management in excess of $300m

• Some restructuring costs

• Capacity to triple in size

• Will benefit from the use of Treasury Group’s back office services

	The Fund %pa	Benchmark %pa
1 Year	48.7	39.6
3 Years	5.6	-4.2
5 Years	9.7	6.0
10 Years	19.0	6.5

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Distribution

 Boutiques’ clients are in both Australia and offshore

• Distribution undertaken by both Treasury Group and the managers

• Treasury Group also works to support high level client contact and relationships

• Strong retail and institutional presence in Australia

• Global client base

• Client wins in the US, Europe and Asia

• Development of European UCITS III fund, ERISA compliant US structure

 Future growth

• Australian Retail

• managers are focused on expanding their presence in Australian retail

• Institutional

• Focus on both Australian and offshore clients

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Australian distribution

	Institutional		Retail
			Platforms	Rating
	Targeted	Yes		
	Yes	Yes		
	Yes
		-	-	-
New small cap boutique	Yes	Yes		
	Targeted	Yes		
	Targeted	2010	-	-
	Yes	Yes		
	Yes	Yes		
	Yes	Yes	-	-

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Developing distribution

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European corporate, fund of funds, private
bank assets
Major corporate and
government
Corporate
and retail
Funds of funds and
corporate pension
Government
Highest quality,
corporate,
industry funds
Strong retail
Developing client base
presence
Established client base Established client base
and growing assets
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History of FUM growth

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 $300m $3.5b $0 $4.8b $0 $600m $0 $1.4b $0 $1.2b $0 $40m $130m $80m New Small Cap $300m Boutique

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Extensive and scaleable support

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SERVICE PROVIDER

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• Risk management

• Compliance

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• Human Resources

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• Operations

• Administration

• Accounting

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• Marketing

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• Joint purchasing

(including IT services)

• Responsible entity

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New Small Cap Boutique

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Providing support to our managers

 Boutique managers are important clients to TIS

 High quality services – compliance, risk management, finance & HR  Very competitive cost base whilst maintaining high quality service

• Benchmarked against best practice and cost

• Progressive use of technology

 Outsourced services where economies of scale and group buying power is achievable

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Summary

• Boutiques remain competitive with strong performance

• A difficult year for financial markets saw profits decline

• Earnings continue to diversify

 Treasury Group focused on both reducing cost and building for the future

 Capital preservation at the market peak has allowed investment at cyclical lows

• Client base continues to grow both in Australia and Offshore

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Gratitude

A special note of thanks to the talented people who contribute to the company:

The enormously talented fund managers and investment analysts

 The team that are there to protect us in risk and compliance services

• The finance and accounting team, Human resources and operations staff

• Our outsourced service providers:

Tango Technology , Arrowtech and RBC Dexia

• The amazing marketing staff across all companies

• Support staff across the group

• The Treasury Group executive team

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Treasury Group Limited

2009 Annual General Meeting Formal Items of Business

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Formal items of business

Item 1 Financial statements and reports

“To receive and consider the Financial Report, the Director’s Report and the Auditor’s Report for the year ended 30 June 2009”

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Formal items of business

Item 2 Re‐election of Reub Hayes

“That Mr Hayes, a Director retiring by rotation in accordance with the Company’s constitution and offering himself for re‐election, be re‐elected”

Proxies have been received in respect of the resolution as follows:	Proxies have been received in respect of the resolution as follows:	Proxies have been received in respect of the resolution as follows:	Proxies have been received in respect of the resolution as follows:
In favour	Against	Abstention	Proxy’s Discretion
8,125,789	629,095	6,000	173,521

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Formal items of business

Item 3 Re‐election of David Cooper

“That Mr Cooper, a Director retiring by rotation in accordance with the Company’s constitution and offering himself for re‐ election, be re‐elected”

Proxies have been received in respect of the resolution as follows:	Proxies have been received in respect of the resolution as follows:	Proxies have been received in respect of the resolution as follows:	Proxies have been received in respect of the resolution as follows:
In favour	Against	Abstention	Proxy’s Discretion
7,649,799	1,104,798	6,287	173,521

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Formal items of business

Item 4 Election of Michael de Tocqueville

“That Mr de Tocqueville, a shareholder offering himself for election, be elected as a Director of the Company”

Proxies have been received in respect of the resolution as follows:	Proxies have been received in respect of the resolution as follows:	Proxies have been received in respect of the resolution as follows:	Proxies have been received in respect of the resolution as follows:
In favour	Against	Abstention	Proxy’s Discretion
1,256,692	7,457,984	31,129	188,021

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Formal items of business

Item 5 Adoption of Remuneration Report

“To adopt the remuneration report forming part of the Directors’ Report for the financial year ended 30 June 2009”

Proxies have been received in respect of the resolution as follows: In favour Against Abstention Proxy’s Discretion 7,069,413 809,207 870,497 185,288

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Thank you for your attendance.

Please join the Board and Management for refreshments.

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