PACIFIC CURRENT GROUP LIMITED — AGM Information 2012

Nov 1, 2012

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Treasury Group Limited

Annual General Meeting 2 November 2012

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Agenda

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1. Chairman’s address

2. Review of 2012 outcomes

3. Boutique case studies

4. Strategy

5. TRG Investment proposition

6. Formal items of business

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Chairman’s Address - Results Overview

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From 2012, Treasury Group has emerged more efficient , focused and in a stronger position to pursue further growth opportunities

• FUM at June 2012- $16.4bn, 2.3% down on previous year

• Underlying NPAT $8.1m, down 17.0% year on year

• Positive funds inflows

• Strong, award winning investment performance from IML and Celeste

• Decisions taken following strategic review

• Costs at Treasury Group reduced

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Chairman’s Address – a year of change and consolidation

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			TAAM	Results of
			- Additional working capital investment GVI restructured/	Strategic Review
New CEO appointed Andrew McGill			TRGNon-Exec Director appointed Melbourne - Changes in Investment team Aubrey appointed manager of GVI funds UK Distribution announced		PRV restructuring started
			Distribution Executive
			Executive recruited
			recruited
Sept 2011 Dec 2011 Jun 2012 Mar 2012					Sept 2012
Strategic review			AR Capital restructured/ Evergreen appointed manager of Ascot Fund IML- Awarded- Winner Acquisition of Evergreen Capital May 2012 Acquisition of OCTISAsset Management
commenced			Morningstar Domestic Equities,		IML – Awarded
			Winner Money Management/Lonsec Aust Broad Cap Celeste – AwardedFinalist Morningstar Australian Small Cap, Finalist Money Management/Lonsec Australia Small Cap		Winner AFMA Australian Large Celeste – Awarded Winner Zenith Australian Small Cap AFMA Winner Australian
					Small Cap

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Chairman’s Address - Dividends

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Dividend History

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50
45
40
35
30
cps
25
20
15
10
5
0
2009 2010 2011 2012
Interim Final
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• Full year dividends of 34 cps full franked

• Balance sheet liquid and ungeared

• Cash, Available for Sale Investments and Loans to Partner Boutiques totaled $21.7m at 30 June

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Chairman’s Address - Industry funds flow

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Australian Managed Funds Industry Quarterly Funds Flows

$bn

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Source: Morningstar Funds Flows ; Industry = Australia Funds ex ETF

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Agenda

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1. Chairman’s address

2. Review of 2012 outcomes

3. Boutique case studies

4. Strategy

5. TRG Investment proposition

6. Formal items of business

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Review of 2012 - re-focused strategy, tough decisions taken

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• Year of consolidation;

• Restructuring of GVI and AR Capital

• PRV issues addressed

• Improved efficiency and lower costs at Treasury Group. Headcount down 24% during year, ongoing employment costs down $1.3m pa.

• Underlying earnings down 17.0% reflecting market conditions. Statutory earnings down 32.5% reflecting abnormal costs incurred

• Performance of boutiques generally strong, particularly IML, Celeste and RARE

• Move to Alternatives - acquisition of interests in Evergreen Capital and Octis Asset Management

• Focus on developing boutiques, mature boutiques increasingly independent

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Review of 2012 - Total Shareholder Return

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Total Shareholder Return TRG vs S&P/ASX 300

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Index (Jul 11=100)

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+11.5%
-7.0%
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Source: Morningstar, Closed prices– Base 100 at close of 30/06/2011, daily data TR = Total Return – Dividend reinvested net of tax

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Review of 2012 - Financial Results

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P&L Highlights ($m)	2012	2011	% Change
Year end FUM ($bn)	16.4	16.7	-2.3	•	Funds inflows of $445m offset by market
					value declines
Aggregate Boutique Mgmt Fees ($m)	71.0	74.9	-5.2
Revenue	3.945	4.493	-12.2	•	TRG Revenues lower due to lower interest
					income and reduction in service fee income
Expenses	8.902	8.680	+2.6	•	Headcount reduction at TRG reduces
Equity Share of Associates NPAT	11.485	14.015	-18.1		employment expenses by $1.3m pa
Net Profit After Tax	6.752	10.005	-32.5	•	$1.3m of abnormal expense incurred in
Normalised NPAT	8.076	9.727	-17.0		2012 compared to $0.3m of abnormal
					gains in 2011

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Review of 2012 - Business Segment Results

Contribution to Change in NPAT (FY11 vs FY12)

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12.0
10.005
10.0
0.707
8.0
6.752
(2.545) 0.024 (0.115)
(1.324)
$m 6.0
4.0
2.0
0.0
FY11 Australian International Alternative Overhead, One off items FY12
Equities Equities Equities Outsourcing,
RE Services
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Review of 2012 - Funds Under Management

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Composition of Yr End FUM vs Average Margin

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18 80
16
70
14
60
Trilogy
12 Evergreen & AR Capital
50
Celeste
10
Avg Margin TAAM
FUM 40
(bps)
$bn 8 Aubrey & GVI
RARE Infrastructure
30
6
Orion
20 Investors Mutual
4
% incl Trilogy
10
2 % excl Trilogy
0 0
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Review of 2012 - Boutiques

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Boutiques

• Outstanding year for IML and Celeste

• Strong investment performance

• Funds inflows (institutional and retail)

• Multiple Fund Manager of the Year awards

• Ratings upgrades

• Strong initial ratings for Aubrey, Octis and Evergreen

• Funds inflows at RARE

• Issues at GVI and AR Capital addressed, businesses restructured – GVI funds outflows stabilising

• Two new boutiques added to portfolio: Evergreen and Octis

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Agenda

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1. Chairman’s address

2. Review of 2012 outcomes

3. Boutique case studies 4. Strategy

4. TRG Investment proposition

5. Formal items of business

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Boutique case studies – selected star fund performers

Investors Mutual Limited

• Positive funds flows

• Institutional inflows during 2012 and 1Q13

• Retail flows positive and improving

Australian Share fund Performance to end Q1 FY2013

• FUM in excess of $3.0bn

• Ratings upgrades

• IML awarded Large Cap Fund Manager of the Year – by Morningstar, Lonsec and Smart Investor Blue Ribbon

• Over $74m of earnings booked and $62m of dividends paid to Treasury Group since 2001 from original investment (cash and script) of $2.6m. Triple figure return on investment (%pa) for TRG shareholders.

Period	Fund Return (%pa)	S&P/ASX 300 Acc Index(%pa)
1 Year	19.8	14.5
2 Year	8.8	2.2
3 Year	6.8	1.7
5 Year	0.4	-3.6
Inception	10.9	8.1

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Boutique case studies – selected star fund performers

RARE Infrastructure

• Performance going from strength to strength

• Positive funds flows – institutional and retail inflow during 2012 and 1Q13

• FUM in excess of $5.0bn

• Strong industry rating – Highly Recommended by Lonsec

• Staff stability – no changes to the key investment team

• Over $10m of earnings booked and over $11m of cash paid (including loan repayments) to Treasury Group since 2006 from original investment (loans, seeding) of $4.8m. Triple figure return on investment

Infrastructure Value Fund Performance to end Q1 FY2013

Period Fund Return (%pa) OECD G7 Infl. Index +5.5 (%pa) MSCI World (Local)(%pa)
1 Year 16.7 7.0 20.6
3 Years 13.1 7.4 6.7
5 Years 3.4 7.3 -2.4
Inception 6.1 7.4 0.1

(%pa) for TRG shareholders.

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Agenda

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1. Chairman’s address

2. Review of 2012 outcomes

3. Boutique case studies

4. Strategy

5. TRG Investment proposition

6. Formal items of business

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Strategy – progress during 2012

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• 2 boutiques restructured: GVI, AR Capital

• 2 new boutiques added to portfolio: Evergreen, Octis

• Treasury Group cost base reduced

• headcount down 24%, ongoing employment costs down $1.3m pa

• Mature boutiques taking increased responsibility for their own administrative and support services

• Review of Treasury Group Investment Funds (Dublin UCITS structure) well advanced

• Premium Investors

• Actions taken to address structural and other issues at PRV

• Treasury Groups’ financial position protected: >$1.0m abnormal gain expected in 2013

• Significant investment in review of M&A opportunities

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Strategy – how did we perform verses opportunities nominated last year?

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2012	Opportunities
•	Expand and diversifyportfolio of boutiques	
•	Invest indistribution and marketing capability	
•	Pursueefficiency and returns from support services	 
•	Optimise investment structureswhere possible (operational, tax)	
•	Improvecapital management	
•	Pursue M&A opportunities	?

Additional 2013 Opportunities

• Seek third party clients for distribution and support services

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Agenda

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1. Chairman’s address 2. Review of 2012 outcomes 3. Boutique case studies

2. Strategy

3. TRG Investment proposition 6. Formal items of business

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TRG Investment Proposition – leverage to large, growing industry

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Australian Funds Management Industry is large and high growth

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9% pa growth
projected
2012-15
$2.6tn
$2.0tn
$500bn
$1.6tn
2000 2009 2012 2015
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• Australian industry is largest in the Asia Pacific Region and 4[th] largest in the world

• Growth underpinned by:

• Stable economic and regulatory environment

• Superannuation contributions legislated to increase from 9% to 12% of salary by 2019

• TRG profits are leveraged to industry growth

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TRG Investment Proposition - superior long term performance

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Performance Since Inception (%pa) – Net of Fees to end June 2012

Selected Funds	Net Return	Alpha	Inception Date	Sample Ratings
Aubrey Global Conviction(GBP)	+3.5%	+0.7	Jan 2007	Zenith- Recommended
Celeste Australian Small Companies	+16.5%	+11.4	May 1998	Lonsec – Highly Recommended
Evergreen AERF	+15.7%	+18.6	May 2010	Zenith- Recommended
Investors Mutual - Australian Share	+10.4%	+2.8	Jun 1998	Lonsec – Highly Recommended
OCTIS	+4.7%	+12.5	Oct 2007	Zenith – Recommended
Orion Australian Share	+7.7%	+0.0	Jun 2003	Morningstar- Neutral
RARE Infrastructure Value (AUD Hedged)	+5.5%	+3.5	Aug 2006	Lonsec-Highly Recommended
TAAM New Asia	+1.3%	-0.8	Nov 2005	Zenith- Recommended

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TRG Investment Proposition – compelling business economics

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Typical Long Only Equities
Boutique Economics
Revenue
Profit
Break even • Break even typically around
FUM level $200m FUM for long only
equities
•
$000s Profits in 10’s of $millions
when FUM exceeds $3.0bn
Costs
FUM
Start up Exponential
Losses increase in
profits
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TRG Investment Proposition

Why you should feel confident investing in TRG?

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• Australia’s premier partner for boutique fund managers

• Specialised business model attracts “best of breed managers ” and leverages their capabilities

• Risk-based approach via portfolio diversification strategy

• Strong leverage to robust long-term growth potential of the funds management industry

• High quality managers with above benchmark performance and available capacity

• Compelling commercial model with scalability

• Strong experienced Board and management team

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Summary

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• Investors remain cautious favouring low risk assets and low risk investment styles

• Long term fundamentals for funds management remain fundamentally attractive – Australian industry large and high growth

• Year of consolidation for Treasury Group, tough decisions taken

• Underlying financial performance strongly correlated with the level of Equities markets

• TRG now re-positioned for growth, both organic and via mergers and acquisitions

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Agenda

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1. Chairman’s address 2. Review of 2012 outcomes 3. Boutique case studies 4. Strategy

2. TRG Investment proposition 6. Formal items of business

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Formal Items of Business

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Item 1: Financial statements and reports

“To receive and consider the Financial Report, the Directors’ Report and the Auditor’s Report for the year ended 30 June 2012”

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Formal Items of Business

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Item 2: Re-election of Mr Reub Hayes

“ That Mr Reub Hayes, a Director retiring by rotation in accordance with the Company’s constitution and offering himself for re-election, be re-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
7,692,700	293,858	2,525	117,510

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Formal Items of Business

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Item 3: Election of Ms Melda Donnelly

• “ That Ms Melda Donnelly, who is offering herself 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
7,723,196	262,492	3,395	117,510

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Formal Items of Business

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Item 4: Adoption of Remuneration Report

“ To adopt the remuneration report forming part of the Directors’ Report for the financial year ended 30 June 2012”

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
4,534,087	484,183	27,206	106,880

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1. Chairman’s address

2. Review of 2012 outcomes

3. Boutique case studies

4. Strategy

5. TRG Investment proposition

6. Formal items of business

7. Questions and Answers

Disclaimer

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The information in this presentation is general background information about Treasury Group Limited and is current only at the date of this presentation. In particular, this presentation:

• is not an offer or recommendation to purchase or subscribe for securities in Treasury

• Group limited, nor is it an invitation to any person to acquire securities in Treasury

• Group;

• is not personal advice and does not take into account the potential and current individual investment objectives or the financial situation of investors; and

• contains information in summary form and does not purport to be complete.

Certain statements in this presentation may constitute “forward-looking” statements. Forward-looking statements are neither promises nor guarantees and involve known and unknown risks, uncertainties and other factors which may cause actual results to vary materially from any projection, future results or performance expressed or implied by such forward-looking statements.

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