PACIFIC CURRENT GROUP LIMITED — AGM Information 2012

Nov 1, 2012

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A.B.N. 39 006 708 792

CHAIRMAN’S ADDRESS Treasury Group Limited Annual General Meeting 2 November 2012

Good morning ladies and gentlemen.

I would like to welcome you all to the 2012 Treasury Group annual general meeting. 2012 was an eventful year for Treasury Group. It was a year of change and consolidation as we took actions following completion of a strategic review part way through the year. We will talk further about some of these actions later. However, I note at the outset here that Treasury Group has emerged in a stronger position to pursue growth opportunities going forward.

Let me now outline the agenda for today. To start, I will make some high level observations about Treasury Group’s performance this year in the context of overall market conditions. Next, our CEO Andrew McGill will address you and review Treasury Group’s financial and business results for 2012 in more detail. This will include commentary on strategy and observations about Treasury Group’s business model. Following that we will deal with the formal items of business and there will be an opportunity for shareholders to put questions to the board and management.

2012 saw continued volatility in global equities and investment markets. Concerns about European economic and social issues occupied investor minds for most of the year. The Australian economy performed strongly by world standards but that did not prevent investors from worrying about the impact of falling commodity prices and the eventual end to the resources boom. Whilst Equities markets worldwide experienced short periods of rising prices, most finished the year at lower levels than they started. In Australia, the S&P/ASX 300 Index was down

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15% for the year although I note that it has increased by approximately 10% since 30 June.

This environment of economic uncertainty is one that we have seen now for a number of years and it continues to push investors towards defensive asset classes and investment styles.

Treasury Group’s financial performance strongly correlates with the level of listed Equities markets. In 2012 financial results reflect the difficult market environment that prevailed as well as the abnormal impact of restructuring work undertaken during the year.

Funds under management fell by 2.3% to $16.4bn during the 2012 financial year but have since risen by 7.1% to $17.6bn as at 30 September. Our net profit after tax fell by 32.5% to $6.8m for the year. Underlying profits were $8.1m down by 17.0% from 2011.

We were very pleased with the investment performance delivered by our managers during the year. In particular, Investors Mutual, Celeste and RARE deserve special mention and delivered strong returns for their investors. The superior investment performance of Investors Mutual and Celeste was recognised by various industry bodies during the year with both winning multiple awards.

2012 saw significant change for Treasury Group. Following his appointment as CEO at the beginning of the year, Andrew McGill led a detailed review of our strategy in the context of current market conditions. Coming out of that review a number of actions were taken to address issues at portfolio and corporate levels. We did not shirk from difficult decisions in this process and have emerged as a more efficient and better positioned business at year end. I want to highlight some of these actions upfront:

1. 2 boutiques with performance issues, namely Global Value Investors and AR Capital, were restructured in the first half of the year;

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1. We continued to build and develop our portfolio of boutiques with the addition of 2 new boutiques. During the second half of the year we concluded investments into Evergreen Capital and Octis Asset Management;

2. Driven by a focus on efficiency and returns for Treasury Group shareholders, we took decisions to lower our costs and towards the end of the year, a number of staff at Treasury Group were made redundant. During the year, headcount at Treasury Group was reduced by 24% delivering annualised savings of $1.3m. I note that these savings were achieved without materially impacting Treasury Group’s core capabilities;

3. During the year we invested in our Sales and Distribution capabilities via the addition of a senior executive based in London;

4. Significant executive time and cost were incurred in the assessment of potential M&A opportunities. As yet, we have little to say publicly about this work however shareholders should be aware that significant effort is being expended in this area.

During the year, there were also some changes to our board. David Cooper resigned as a director to pursue other opportunities. David made a very significant contribution to Treasury Group during his tenure and we thank him for his efforts over the years. In March, we were delighted to appoint Melda Donnelly to the board. There will be an opportunity for Melda to introduce herself to shareholders later during this meeting. We expect that Melda’s experience and qualifications will be of great benefit to Treasury Group going forward and I take this opportunity to welcome Melda.

The final dividend for 2011 was 20 cents. This brought the total dividend for the year to 34 cents fully franked which was the same level as in 2011. The board was comfortable to maintain the dividend payment because of our confidence in the outlook for the business.

Based on current trading conditions, we believe that the current level of dividends will be sustainable. However, future dividends will necessarily reflect future market

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conditions and business performance. Our ability to maintain a high payout ratio will also be influenced by investment decisions that the board may consider in relation to growth opportunities that become available.

Treasury Group maintains a strong and liquid balance sheet which leaves the Company well positioned.

As I’ve mentioned already, Treasury Group funds under management at 30 June was $16.4bn. Although this represented a decline for the year, it was nonetheless a strong result in the context of funds flows across the Australian Funds Management Industry overall. I note that during the first quarter of the 2013 financial year, Treasury Group funds under management have grown to $17.6bn an increase of 7.1% since the 2012 year end and a 4.7% increase since July 2011.

As shown on this chart, the Industry experienced outflows in all 4 quarters of the year. By contrast, Treasury Group experienced inflows of $445m during the year which was an excellent result given the market environment.

Fund flows from retail investors in particular have been very weak as a result of volatile and uncertain economic conditions. However, we are very pleased to be able to report that by year end Investors Mutual was seeing funds net inflows from retail investors as well as institutional investors.

With the addition of 2 new boutiques this year and strong performance from most of our existing boutiques, we are confident that there is significant potential for further growth in our funds under management. I note that none of our boutiques are at capacity and all have potential to increase their earnings contribution to Treasury Group in future.

Let me conclude now by emphasising that during 2012 Treasury Group has become leaner and more focused. Going forward, our emphasis will be on growth. We will consider mergers and acquisitions that deliver additional value without exposing shareholders to excessive risk. The current market environment offers

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the potential to acquire assets at relatively attractive prices which would not be available in a more bullish market.

With the addition of two new boutiques and the restructuring of two existing boutiques, our portfolio is balanced between established successful performers and younger businesses that offer significant future growth potential. Looking forward, the outlook for the Australian funds management industry remains very positive. In the context of volatile and uncertain market conditions, it is important not to lose sight of this. I note that during the year, the Superannuation Guarantee (Administration) Amendment Act 2012 came into law and stipulates that the superannuation guarantee rate will gradually increase from 9% to 12% between July 2013 and June 2019. This will underpin increasing funds under management for our industry for some years to come.

Before finishing, I would also like to thank our staff, boutique partners and clients for their support during the year. We look forward to working closely with you again during the upcoming year.

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