TREASURY GROUP LTD ABN 39 006 708 792

AND CONTROLLED ENTITIES

FINANCIAL INFORMATION FOR THE YEAR ENDED 30 JUNE 2007 PROVIDED TO THE ASX UNDER LISTING RULE 4.3A

Rule 4.3A

Appendix 4E Preliminary Final Report

Name of entity Treasury Group Limited ABN : 39 006 708 792

1. Reporting period

Report for the financial year ended 30 June 2007 Previous corresponding period is the financial year ended 30 June 2006

2. Results for announcement to the market


Revenues from ordinary activities_(item 2.1) up 13% to Profit (loss) from ordinary activities after tax attributable to members (_item 2.2) up 25% to Net profit (loss) for the period attributable to members_(item 2.3)_ up 25% to			A$’000s 58,249 18,004 18,004
Dividends(item 2.4)	Amount per security	Franked amount per security
Interim dividend Final dividend	25 cents 35 cents	100% 100%
Record date for determining entitlements to the dividend_(item 2.5)_	14 September 2007
Brief explanation of any of the figures reported above necessary to enable the figures to be understood_(item 2.6)_:

Results Commentary

A copy of the financial report for the year ended 30 June 2007 is attached. Treasury Group Limited and its subsidiaries and associates (Group) reflect the consolidation of results of the following entities:

Treasury Group Limited (head company) Treasury Group Investment Services Limited (100%) Investors Mutual Limited (50%) Global Value Investors Limited (67%) Treasury Asia Asset Management Limited (41%) Armytage private Limited (sold 11 July 2006) (50%)

The results reflect the recognition of the share of profits of the following associate entities:

Orion Asset Management Limited	(42%)
Confluence Asset Management	(35%)

Revenues and expenses reflect the consolidation of the head company and its subsidiaries. Revenues were up 13% on the comparative year primarily due to the increase in average funds under management (FUM) and the performance of the Group. Net profit after tax was up by 25% from $14.399 million to $18.004 million.

The Group result reflects the revaluation of the convertible notes in RARE Infrastructure Limited. This contributed $1.15 million ($805,000 after tax) to other income and was based on an independent valuation. The 2006/07 result also reflects the profit on sale of the 50 percent interest in Armytage private Limited of $1.25 million (after tax).

The important feature of the 2006/07 result was the growth of the new asset management businesses, Global Value Investors (GVI), Treasury Asia Asset Management (TAAM) and RARE Infrastructure. Both GVI and TAAM reached profitability in 2007/08 and are receiving continued strong interest from retail and institutional clients.

Salaries and employment benefits increased from $11.562 million to $13.706 million reflecting additional resources, revised compensation schemes for investment managers as well as full year expense of executive roles appointed during 2006.

Share of profits from associates was up by $471,000 or 11.3%. This was due to the continued strong growth of Orion Asset Management Limited.

This increased profit and solid development of the business has led your directors to approve an increase in the dividend from 50 cents to 60 cents for the year ended 30 June 2007.

3. Income Statement (item 3)

Refer to the attached statement

4. Balance Sheet (item 4)

Refer to the attached statement

5. Statement of Cash Flows (item 5)

Refer to the attached statement

6. Dividends (item 6)

Interim dividend – year ended 30 June 2007 Final dividend – year ended 30 June 2007	Date of payment Total amount of dividend	Date of payment Total amount of dividend
	27 March 2007	$5,645,648
	28 September 2007	$7,903,907

Amount per security

Amount per security
	Amount per security		Franked amount per security at 30% tax	Amount per security of foreign sourced dividend
Total dividend:Current year Previous year	60 cents		100%	n/a
	50 cents		100%	n/a
Total dividend on all securities Ordinary securities (each class separately) Preference securities (each class separately) Other equity instruments (each class separately) Total
		Current period $A'000		Previous corresponding Period-$A'000
		13,550 n/a n/a		11,051 n/a n/a
		13,550		11,051

7. Details of dividend or distribution reinvestment plans in operation are described below (item 7) :

Not applicable The last date(s) for receipt of election notices for Not applicable participation in the dividend or distribution reinvestment plan

8. Statement of retained earnings (item 8)

	Consolidated Entity Parent Entity
	2007 2006 2007 2006
	$’000 $’000 $’000 $’000
Balance at the beginning of year	13,406 8,937 5,289 6,772
Net profit attributable to members of the
parententity	18,004 14,399 17,938 8,447
Total available for appropriation	31,410 23,336 23,227 15,219
Dividends paid	(12,723) (9,930) (12,723) (9,930)
Balance at end of year	18,687 13,406 10,504 5,289

9. Net tangible assets per security (item 9)

Net tangible asset backing per ordinary security	Current period	Previous corresponding period
	$2.31	$2.02

10. Details of associates and joint venture entities

Name of associate or joint venture entity	% Securities held
Orion Asset Management Limited	41.90
Confluence Funds Management Limited	35.00

Aggregate share of profits of associates and joint venture entities

Group’s share of associates and joint venture entities: Profit from ordinary activities before tax Income tax on ordinary activities Net profit from ordinary activities after tax Adjustments Share of net profit of associates and joint venture entities	2007 $’000	2006 $’000
	6,573 (1,927)	5,972 (1,797)
	4,646 -	4,175 -
	4,646	4,175

12. Significant information relating to the entity’s financial performance and financial position.

Refer note on results commentary at item 2.6 of this appendix.

13. The financial information provided in the Appendix 4E is based on the annual financial report (attached), which has been prepared in accordance with Australian accounting standards (item 13) .

14. Commentary on the results for the period.

Refer note on results commentary at item 2.6 of this appendix.

15. Audit of the financial report

The financial report has been audited and an unqualified opinion has been issued

……………………………….

Leah Watson Company Secretary

28 August, 2007

15. Audit of the financial report

The financial report has been audited and an unqualified opinion has been issued

……………………………….

Leah Watson Company Secretary

28 August, 2007

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Annual Report 2007

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Corporate Information

ABN 39 006 708 792

Directors

M. Fitzpatrick (Chairman) D. Cooper R. Green P. Kennedy R. Hayes

Chief Financial Officer

Joseph Ferragina

Company Secretary

Leah Watson

Registered Office

Level 9 470 Collins Street Melbourne, Victoria, 3000 Phone (03) 9671 - 3667 Facsimile (03) 9661 - 8499

Sydney Office – Head Office

Level 5 50 Margaret Street Sydney, NSW, 2000 Phone (02) 8243 - 0400 Facsimile (02) 8243 - 0410

Bankers

Westpac Banking Corporation

Share Register

Computershare Investor Services Pty Ltd 452 Johnston Street Abbotsford, Victoria, 3067 Phone (03) 9415 - 5000

Auditors

Ernst & Young

Internet Address

www.treasurygroup.com

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|---|---|
|Directors’ Report..........................................................................................................................................................4|
|Auditor Independence Declaration...........................................................................................................................16|
|Corporate Governance Statement.............................................................................................................................17|
|Income Statement.......................................................................................................................................................21|
|Balance Sheet..............................................................................................................................................................22|
|Statement of Changes in Equity ................................................................................................................................23|
|Cash Flow Statement..................................................................................................................................................26|
|Notes to the Financial Statements .............................................................................................................................27|
|Note 1 -|Corporate Information......................................................................................................................27|
|Note 2 -|Summary of Significant Accounting Policies...................................................................................27|
|Note 3 -|Financial Risk Management Objectives and Policies.......................................................................37|
|Note 4 -|Significant Accounting Judgments, Estimates and Assumptions .....................................................37|
|Note 5 -|Revenue and Expenses .....................................................................................................................39|
|Note 6 -|Discontinued Operations ..................................................................................................................42|
|Note 7 -|Income Tax.......................................................................................................................................44|
|Note 8 -|Dividends Paid and Proposed...........................................................................................................47|
|Note 9 -|Cash and Cash Equivalents ..............................................................................................................48|
|Note 10 - Trade and other Receivables ...........................................................................................................49|
|Note 11 - Available-for-Sale Investments ........................................................................................................49|
|Note 12 - Investments at Fair Value through Profit and Loss ..........................................................................50|
|Note 13 - Loans and Other Receivables (Non-Current) ...................................................................................50|
|Note 14 - Investments in Associates.................................................................................................................51|
|Note 15 - Plant and Equipment ........................................................................................................................52|
|Note 16 - Intangibles........................................................................................................................................53|
|Note 17 - Goodwill and Impairment Testing....................................................................................................53|
|Note 18 - Other Financial Assets......................................................................................................................54|
|Note 19 - Trade and other Payables (Current)..................................................................................................54|
|Note 20 - Provisions.........................................................................................................................................54|
|Note 21 - Contributed Equity and Reserves .....................................................................................................55|
|Note 22 - Commitments and Contingencies.....................................................................................................57|
|Note 23 - Employee Benefits and Superannuation Commitments....................................................................58|
|Note 24 - Subsequent Events............................................................................................................................60|
|Note 25 - Earnings per Share............................................................................................................................60|
|Note 26 - Key Management Personnel Disclosures .........................................................................................61|
|Note 27 - Auditors’ Remuneration ...................................................................................................................68|
|Note 28 - Related Party Disclosure ..................................................................................................................68|
|Note 29 - Segment Information........................................................................................................................70|
|Note 30 - Financial Instruments .......................................................................................................................71|
|Directors’ Declaration................................................................................................................................................74|
|Independent Audit Report.........................................................................................................................................75|
|ASX Additional Information .....................................................................................................................................77|

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T REASURY G ROUP L IMITED — A NNUAL R EPORT

Directors’ Report

Your Directors submit their report for the year ended 30 June 2007.

DIRECTORS

The names and details of the Company’s Directors in office during the financial year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated.

Names, qualifications, experience and special responsibilities

Michael Fitzpatrick, (Chairman) B. Eng, B (Oxon) Honours

Mr Fitzpatrick joined the Board on 5 October 2004. He was the founder and Managing Director of Hastings Funds Management Limited. Prior to establishing Hastings in 1994, he was a Director of Credit Suisse First Boston. He is also a Director of Rio Tinto Ltd, Rio Tinto plc, Chairman of Victorian Funds Management Corporation, Chairman of the Australian Football League and former Chairman of the Australian Sports Commission. Mr Fitzpatrick is also a member of the Audit Committee, Remuneration Committee and Nominations Committee.

During the past three years Mr M. Fitzpatrick has also served as a Director of :
Hastings High Yield Fund (current),
Hastings Diversified Utilities Fund (current),
Pacific Hydro Limited, and
Australian Infrastructure Fund Ltd.

David Cooper, (Managing Director) B. Ec. /Fin.

Mr Cooper joined the Board on 8 August 2005, having been the Chief Executive Officer (CEO) of the company since July 2004. Mr Cooper joined Treasury Group Limited in July 2002 as Strategic Investments Manager. Prior to joining the Company, he was the Head of the Institutional Division at Perpetual Investments Ltd.

Rodney Green, (Non-Executive Director) CA, ASIA

Mr Green joined the Board on 14 November 2001 and has over 30 years experience in the financial services industry. Prior to joining Treasury Group Limited Mr Green was the Chief Investment Officer and then Chief Executive Officer of Perpetual Investments Ltd with total funds under management then of $15 billion. Mr Green is also a member of the Remuneration Committee.

Mr Green was also a director of Premium Investors Limited (a listed investment company) until his resignation on 24 April 2006.

Peter Kennedy, (Non-Executive Director) B.Ec. L.L.M.

Mr Kennedy joined the Board on 4 June 2003 and is a senior partner with Madgwick lawyers and has over 30 years experience in commercial law. He is the Chairman of the Audit Committee and also sits on the Remuneration Committee.

During the past three years Mr Kennedy has also served as a Chairman of the following other listed companies:

Australian Value Funds Management Limited (now called Prime Financial Group Ltd)

Reubert Hayes, (Non-Executive Director) SF Fin, FAICD

Mr Hayes jointed the Board on 22 February 2007 having over 41 years of experience in investment management and stockbroking research. He was also a founder and CEO of Ausbil Dexia Limited a specialist wholesale boutique asset management operation. Mr Hayes was also a joint founder of Barclays Bank investment operations in Australia in 1984, and was CEO of that business for 12 years until 1996.

Donald Sharp (Non-Executive Director), B. Bus (Accounting), CPA, CFP, ICD (resigned 16 May 2007)

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Directors’ Report continued

COMPANY SECRETARY

Leah Watson B.Bus (Acc/Info Systems), Grad Dip (App Corp Gov), CA, ACIS

Mrs Watson is a Chartered Accountant, and commenced with Treasury Group Limited in November 2003. Mrs Watson has ten years commercial and professional experience, and prior to joining Treasury Group, worked with the Middle Market Advisory services of KPMG, and Corporate Services at Hall Chadwick Chartered Accountants & Business Advisors. Mrs Watson is also a member of Chartered Secretaries Australia.

Interests in the shares and options of the Company and related bodies corporate

As at the date of this report, the interests of the Directors in the shares and options of Treasury Group Limited were:

Ordinary Shares	Options over Ordinary Shares
D. Cooper 633,000 M. Fitzpatrick 2,651,500 R. Green 1,465,000 R. Hayes - P. Kennedy 60,000 EARNINGS PER SHARE Basic earnings per share Diluted earnings per share DIVIDENDS Cents Final dividend recommended: • on ordinary shares (fully franked) 35.0 Dividend paid in the year: Interim for the year • on ordinary shares (fully franked) 25.0 Final for 2006 shown as recommended in the 2006 report • on ordinary shares (fully franked) 32.0	400,000 - - - - Cents 80.79 79.44 $ 7,903,907
	5,645,648
	7,077,309

on ordinary shares (fully franked)

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Directors’ Report continued

CORPORATE INFORMATION

Corporate structure

Treasury Group Limited (Group) is a company limited by shares that is incorporated and domiciled in Australia. Treasury Group Limited has prepared a consolidated financial report incorporating the entities that it controlled during the financial year. The Group’s corporate structure as at the date of this report is as follows:

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Treasury Group Limited
Treasury Group Treasury Asia Asset Orion Asset Confluence Asset
Investors Mutual Investment Services Management Limited Management (Aust) Management Ltd
Limited (50%) Limited (41.2%) Pty Ltd (35%)
(100%) (41.9%)
Global Value
Investors Ltd RARE Infrastructure Cannae Capital
(33.3% Treasury Ltd Partners Ltd
Group Limited,
66.7% Investors (See page 7) (See page 7)
Mutual Ltd)
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(i) Orion Asset Management (Aust) Pty Ltd (“Orion”) is not a controlled entity, and is treated as an associate accordingly. Its financial result is included on an equity accounting basis during the financial year.
(ii) Global Value Investors Ltd (“GVI”) is effectively owned 66.67%, which will be diluted to an effective 50% after shares have been allocated to key staff members of the business. GVI is therefore a controlled entity. Its financial results are included within the consolidated figures.
(iii) Treasury Asia Asset Management Ltd (“TAAM”) is a controlled entity that commenced operations on 12 July 2005. TAAM is effectively owned 41.2%, which will be diluted to an effective 40% after shares have been allocated to key staff members of the business post 30 June 2007.

Nature of operations and principal activities

The principal activities of the consolidated entity during the financial year were:

Provision of funds management services to:

Institutions;
Master funds and wraps;
Retail investors; and
Private clients.

There have been no significant changes in the nature of those activities during the year.

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Employees

The consolidated entity employed 62 full time equivalent employees as at 30 June 2007 (2006: 59 employees excluding NonExecutive Directors). The consolidated group includes Treasury Group Limited, Treasury Group Investment Services Limited, Investors Mutual Limited, Treasury Asia Asset Management Limited and Global Value Investors Limited.

OPERATIONS AND FINANCIAL REVIEW

Group Overview

Funds Management

Investors Mutual Limited provides a funds management capability to both institutional and retail investors. The consolidated entity holds 50% of the issued capital of the Company.

Orion Asset Management Ltd, a wholly-owned controlled entity of Orion Asset Management (Aust) Pty Ltd, provides funds management services to a range of institutions.

Confluence Asset Management Ltd is a specialist fund manager investing in companies with smaller capitalisations. Treasury Group Limited holds 35% of the issued capital of Confluence Asset Management Ltd.

Global Value Investors Ltd commenced operation as a fund manager from February 2005. Global Value Investors Ltd invests in global industrial companies that exhibit recurring earnings, and a strong, stable and competitive business. Treasury Group Limited holds 33.3% of the issued share capital with the remainder being held by Investors Mutual Limited.

Treasury Asia Asset Management Ltd commenced operation as a fund manager on 12 July 2005. Treasury Asia Asset Management Ltd is a boutique asset manager specialising in the Asia Pacific Region.

Treasury Group Limited owns convertible notes that entitle it to convert the notes into a 40% holding of RARE Infrastructure Ltd (RARE). RARE is a boutique asset manager specialising in listed global infrastructure assets which was launched in July 2006. As Treasury Group Limited has not converted the notes at this stage the results of the company are not included in the consolidated financial statements.

Treasury Group Limited owns a convertible note that entitles it to convert the notes into a 35% holding in Cannae Capital Partners Ltd (Cannae) and an option which entitles Treasury Group Limited to purchase a further 5%. Cannae was launched in July 2007 and is a boutique asset manager specialising in Australian and New Zealand Equity.

Funds Management, Administration & Compliance Services

Treasury Group Investment Services Ltd, a wholly-owned controlled entity of Treasury Group Limited, is the manager of a listed investment company, Premium Investors Limited. This entity was listed on the Australian Stock Exchange on the 27 November 2003.

Operating Results for the Year

The consolidated net profit attributable to members of Treasury Group Limited amounted to $18,003,774 (2006: $14,399,337).

Earnings Per Share

The Group is pleased to report that the earnings is reflecting the many initiatives put in place by the Board and management. This is reflected in the significant growth experienced over the past twelve months.

	2007	2006	2005	2004	2003
Basic earnings per share (cents)	80.8	65.4	60.4	37.2	8.0
Diluted earnings per share (cents)	79.4	63.7	58.1	31.8	6.0

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Directors’ Report continued

REVIEW OF FINANCIAL CONDITIONS

Capital Structure

The Group has a sound capital structure. This is evident from the Company’s cash flow position and that no borrowing facility is required to fund the growth activities of the Group.

In addition, new capital by way of the exercise of options on ordinary shares provided an additional $3,401,866 in new capital to the Company.

The Group has established a treasury function which is managed by the finance team and operates within the policies set by the Board. Cash surpluses held by the Group are invested in high yielding commercial bills arranged with the Group’s bankers. Details pertaining to these investments are included in Note 30.

Cash Flow from Operations

Net cash flow from operating activities increased by $3.83m to $27.32m or by 16% over the year. This positive result was largely due to the increase in receipts derived from the growth in funds under management by the Group.

The exercise of options resulted in shareholder funds increasing by $3.4 m. During the year, Treasury Group Ltd paid $12.72 m in dividends. Consolidated cash as at 30 June 2007 stood at $24.62 m.

Risk Management

The Group takes a proactive approach to risk management. The Board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that the Group’s objectives and activities are aligned with the risks and opportunities identified by the Board.

The Group believes that it is crucial for all Board members to be a part of this process, and as such the Board has not established a separate risk management committee. Instead all Board members are involved in the risk management process.

The Board has a number of mechanisms in place to ensure that management’s objectives and activities are aligned with the risks identified by the Board. These include the following:

Implementation of Board approved operating plans and budgets and Board monitoring of progress against these budgets, including the monitoring of key performance indicators of both a financial and non-financial nature; and
The establishment of an investment review panel with the express purpose of examining new asset management opportunities for the Group.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

There have been no other significant changes in the state of affairs of the Company during the financial year.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

On 13 July 2007 Treasury Group Limited issued 150,000 options to a key employee. The options vest on 1 July 2010 and have an exercise price of $20.
On 13 July 2007 Treasury Group Limited announced a proposal to issue the Managing Director, David Cooper, 500,000 options with an exercise price of $20. This will require the approval of shareholders at the Annual General Meeting.
On 16 July 2007 Treasury Group Limited provided a convertible loan, converting into 35% of Cannae Capital Partners Ltd’s ordinary share capital. Treasury Group Limited also has an option entitling it to purchase an additional 5% of the share capital at a multiple of NPAT in five years time. Cannae Capital Partners Ltd is a boutique asset manager specialising in Australian and New Zealand equities which was launched in July 2007.
On 27 July 2007 the Board of Directors of Confluence Asset Management Limited passed a resolution to close the company’s activities. The expected loss on the investment is $130,000.

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Directors’ Report continued

SIGNIFICANT EVENTS AFTER THE BALANCE DATE (Cont.)

On 28 August 2007, the Directors of Treasury Group Limited declared a final dividend on ordinary shares in respect of the 2007 financial year. The total amount of the dividend is $7,903,907, which represents a fully franked dividend of 35 cents per share. The dividend has not been provided for in the 30 June 2007 financial statements.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

In the opinion of the Directors, disclosure of information regarding likely developments in the operations of the consolidated entity and the expected results of those operations other than matters referred in the Chairman’s address would prejudice the consolidated entity’s interests. Accordingly no further information is included in this report.

SHARE OPTIONS

Unissued shares

As at the date of this report, there were 1,954,001 unissued ordinary shares under options (1,994,001 at reporting date). Further details of the options outstanding to employees are included in Note 23 to the financial report.

Shares issued as a result of the exercise of options

During the financial year, employees and Directors have exercised their options to acquire 400,000 fully paid ordinary shares of Treasury Group Limited at a weighted average exercise price of $7.50. Since the end of the financial year, 190,000 further options have been exercised.

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

The Group has entered into an agreement for the purpose of indemnifying Directors and officers of the Company against all losses and liabilities incurred by the Directors or officers on behalf of the Company.

The following liabilities, except for a liability for legal costs, are excluded from the above indemnity:

(a) A liability owed to the Company or related body corporate;
(b) A liability for pecuniary penalty order under section 1317G or a compensation order under section 1317H of the Corporations Act 2001;
(c) A liability owed to someone other than the Company or a related body corporate and did not arise out of conduct in good faith;
(d) Any other liability against which the Company is precluded by law from indemnifying the Director.

The insurance contract prohibits the disclosure of the insurance premium for insuring officers of the company against a liability which may be incurred in that person’s capacity as an officer of the Company.

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DIRECTORS’ AND OTHER OFFICERS’ EMOLUMENTS

Remuneration Report

This report outlines the remuneration arrangements for Directors and Executives of Treasury Group Limited.

Remuneration Philosophy

The performance of the Company depends upon the quality of its Directors and Executives. To prosper, the Company must attract, motivate and retain highly skilled Directors and Executives.

To this end, the Company embodies the following principles in its remuneration framework:

Provide competitive rewards to attract high calibre executives;
Link executive rewards to shareholder value; and
Significant portion of Executive remuneration ‘at risk’, dependent upon meeting pre-determined performance benchmarks.

Remuneration Committee

The Remuneration Committee of the Board of Directors of the Company is responsible for determining and reviewing compensation arrangements for the Directors, the Managing Director and the Executive Team. The Remuneration Committee assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality board and executive team.

Remuneration Structure

In accordance with best practice corporate governance, the structure of Non-Executive Director and Executive remuneration is separate and distinct.

Non-Executive Director Remuneration

Objective

The Board seeks to set aggregate remuneration at a level which provides the Company with the ability to attract and retain Directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.

Structure

In accordance with the ASX Listing Rules the aggregate remuneration of Non-Executive Directors is determined from time to time by a general meeting. An amount not exceeding the amount determined is then divided between the Directors as agreed. The latest determination was at the Annual General Meeting held on 15 November 2006 when shareholders approved an aggregate remuneration of $650,000 per year for services of Directors as directors of the Company and its subsidiaries.

The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst Directors is reviewed annually. Non-Executive Directors do not receive performance based bonuses from Treasury Group Limited.

Executive Remuneration

Objective

The Company aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within the company and so as to:

Reward executives for company, business unit and individual performance targets set by reference to appropriate benchmarks;
Align the interests of executives with those of shareholders;
Link reward with the strategic goals and performance of the Company; and
Ensure total remuneration is competitive by market standards.

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DIRECTORS’ AND OTHER OFFICERS’ EMOLUMENTS (Cont.)

Executive Remuneration (Cont.)

Structure

Remuneration consists of the following key elements:

Fixed Remuneration
Variable Remuneration
Short Term Incentive (STI); and
Long Term Incentive (LTI)

The proportion of fixed remuneration and variable remuneration is established by the Remuneration Committee.

Fixed Remuneration

Objective

The level of fixed remuneration is set so as to provide a base level of remuneration which is both appropriate to the position and is competitive in the market.

Fixed remuneration is reviewed annually by the Remuneration Committee and the process consists of a review of performance, relevant comparative remuneration in the market and advice on policies and practices.

Variable Remuneration – Short Term Incentive (STI)

Objective

The objective of the STI plan is to link the achievement of the Company’s operational targets with the remuneration received by the Executives charged with meeting those targets. The STI is fully discretionary in the hands of the Remuneration Committee. The Remuneration Committee receives a recommendation from the Managing Director on executive performance. The Managing Director bases his report on a number of tailored KPIs for each Executive. The total potential STI available is set at a level so as to provide sufficient incentive to the Executive to achieve the operational targets such that the cost to the Company is reasonable.

Structure

Actual STI payments granted to each Executive depend on the achievement of annual corporate profitability measures and each Executive exceeding expectations on their KPIs. Secondary consideration is given to their general value add to the business.

The aggregate of annual STI payments available for Executives across the Company is subject to the approval of the Remuneration Committee. Payments are usually delivered as a cash bonus.

Variable Remuneration – Long Term Incentive (LTI)

Objective

The objective of the LTI plan is to reward Executives in a manner which aligns this element of remuneration with the creation of shareholder wealth.

Structure

LTI grants are delivered in the form of options.

The Company uses the share price as the performance hurdle for the long term incentive plan to ensure alignment between shareholder return and reward for Executives.

Details of the nature and amount of each element of the emolument of each Director of the Company and each of the Key Management Personnel of the Company and the consolidated entity for the financial year are as follows:

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DIRECTORS’ AND OTHER OFFICERS’ EMOLUMENTS (Cont.)

Emoluments[*] of Directors of Treasury Group Limited

*Emoluments of Directors of Treasury Group Limited**
Directors	Annual Emoluments Salary and fees Bonus $ $	Long Term Emoluments Super- annuation Share based payments $ $	Total $
M Fitzpatrick Chairman D Cooper Managing Director P. Kennedy Non-Executive Director R. Green Non-Executive Director R. Hayes Non-Executive Director D. Sharp Non-Executive Director (resigned 16 May 2007)	97,248 - 389,908 212,500 83,500 - 60,550 - 22,361 - 139,518 -	8,752 - 35,092 193,945 - - 5,450 - 2,013 - - -	106,000 831,445 83,500 66,000 24,374 139,518

**Emoluments* of the Key Management Personnel of the Company and the Consolidated Entity**

Executives – Name and Position			Total $

	Base Fee Bonus Other $ $ $	Granted@ Amortised Cost Super- annuation Number $ $
J. Ferragina Treasury Group Ltd C.F.O T. Hyett Investors Mutual Ltd C.E.O. C. Byrne Investors Mutual Ltd C.O.O. E. Jurgeleit Treasury Group Ltd Group Manager – Risk and New Developments C. Feldmanis Treasury Group Investment Services Ltd ManagingDirector	217,314 80,500 - 277,091 295,976 - 232,314 192,755 - 203,327 64,804 - 227,314 84,000 -	150,000 93,911 12,686 - - 41,886 - - 12,686 90,000 56,167 12,686 90,000 56,167 12,686	404,111 614,953 437,755 336,984 380,167

Notes

* The elements of emoluments have been determined on the basis of the cost to the Company and the Consolidated Entity, except for options issued.

@ Options granted as part of remuneration have been valued using a Binomial option pricing model, which takes account of factors such as the option exercise price, volatility of the underlying share price and the time to maturity of the option.

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DIRECTORS’ AND OTHER OFFICERS’ EMOLUMENT (Cont.)

The Company uses the fair value measurement provisions of AASB 124 “Related Party Disclosures” and the AASB 2 “Sharebased Payment” prospectively for all options granted to Directors and relevant Executives which have not vested as at 1 July 2004. The fair value of such grants is being amortised and disclosed as part of Director and Executive emoluments on a straight-line basis over the vesting period.

From 1 July 2003, options granted as part of Director and Executive emoluments have been valued using a Binomial option pricing model, which takes account of factors including the option exercise price, the current level and volatility of the underlying share price, the risk-free interest rate, expected dividends on the underlying share, current market price of the underlying share and the expected life of the option. Further details in relation to the issuance and value of options are contained in Note 23 to the financial report.

EMPLOYMENT CONTRACTS

The Managing Director, Mr Cooper, is employed under contract. The current employment contract commenced on 15 July 2006 and terminated on 14 July 2007. The Company has entered into a new employment contract with Mr Cooper. The current contract commenced on 15 July 2007 and has no predetermined termination date. Under the terms of the present contract, a base salary of $500,000 (gross) will be paid effective from 1 July 2007.

As long term incentive, Mr Cooper will be awarded 500,000 $20 options on terms to be approved at the AGM.

Mr Cooper is also eligible for a bonus based on a number of clearly defined KPI’s. Any bonus payment is at the sole discretion of the Remuneration Committee.

Additional terms in the contract include:

The Company may terminate the contract at any time without notice if serious misconduct has occurred. Where termination with cause occurs Mr Cooper is only entitled to that portion of remuneration which is fixed, and only up to the date of termination. On termination with cause any unvested options will immediately be forfeited.
The Company may terminate the contract without notice if Mr Cooper becomes incapacitated by accident or an illness such that he is unable to perform his duties for 90 consecutive days or for an aggregate period of 90 days in any period of 12 months.

Where employment is terminated no further payments will be paid by the company except unpaid salary accrued to the date of termination and accrued annual leave.

Where the employment is terminated due to a decision by the Company to make the position redundant, the Company will pay Mr Cooper an amount the equivalent to 1 year’s salary in addition to any payment to which Mr Cooper is entitled in relation to a notice period.

The Chief Financial Officer, Mr Ferragina, is employed under contract. The current employment contract commenced on 4 October 2005 and has no predetermined termination date. Under the terms of the contract Mr Ferragina may terminate the contract by giving three months written notice.

The Managing Director of Treasury Group Investment Services Ltd, Ms Feldmanis is employed under contract. Ms Feldmanis’ current contract commenced on 17 October 2005 and has no predetermined termination date. Under the terms of the contract Ms Feldmanis may terminate the contract by giving three months written notice.

The General Manager of Risk and New Developments, Ms Jurgeleit is employed under contract and has no predetermined termination date. Under the terms of the contract Ms Jurgeleit may terminate the contract by giving one month written notice.

The Head of Distribution, Rob Sullivan, is employed under contract. The current employment commenced on 1 May 2006 and has no predetermined termination date. Under the terms of the contract Mr Sullivan may terminate the contract by giving one month written notice.

Mr Tagliaferro’s current contract has no predetermined termination date. Under the terms of the contract Mr Tagliaferro and the company concerned may terminate the contract by giving a nine month notice period.

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Directors’ Report continued

DIRECTORS’ MEETINGS

The number of meetings of Directors (including meetings of Committees of Directors) held during the year and the number of meetings attended by each Director were as follows:


	Directors Meetings Audit Committee Meetings Remuneration Committee Meetings Nomination Committee Meetings
	Meetings eligible to attend Meetings Attended Meetings eligible to attend Meetings Attended Meetings eligible to attend Meetings Attended Meetings eligible to attend Meetings Attended
D. Cooper M. Fitzpatrick R. Green P. Kennedy R. Hayes D. Sharp	13 12 - - - - - - 13 13 4 3 2 2 2 2 13 10 - - 2 1 - - 13 13 4 4 2 2 - - 4 4 1 1 - - - - 12 11 3 3 - - 2 2

Committee membership

As at the date of this report, the Company had an Audit Committee, a Remuneration Committee and a Nomination Committee of the Board of Directors.

Members acting on the Committees of the Board during the year were:

Audit	Remuneration	Nomination
P. Kennedy (c)	P. Kennedy (c)	R Hayes (c) (appointed 26 June 2007)
M. Fitzpatrick	R. Green	M. Fitzpatrick
R. Hayes (appointed 6 March 2007)	M. Fitzpatrick	D. Sharp (resigned 16 May 2007)
D. Sharp (resigned 16 May 2007)
Notes

TAX CONSOLIDATION

Effective 1 July 2003, for the purposes of income taxation, Treasury Group Limited and its 100% owned controlled entities have formed a tax consolidated group.

CORPORATE GOVERNANCE

In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Treasury Group Limited support the Principles of Corporate Governance. The Company’s Corporate Governance Statement is contained in the following section of this annual report.

ENVIRONMENTAL REGULATION AND PERFORMANCE

The Consolidated Entity’s operations are not presently subject to significant environmental regulation under the law of the Commonwealth and State.

NON-AUDIT SERVICES

The following non-audit services were provided by the entity’s auditor, Ernst & Young. The Directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The nature and scope of each type of non-audit service provided means that auditor independence was not compromised.

Ernst & Young received $59,077 in respect of tax compliance services during the year.

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Directors’ Report continued

AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES

The Directors received the independence declaration from the auditors of Treasury Group Limited. A copy of the declaration is set out on page 16.

Signed in accordance with a resolution of the Directors.

==> picture [123 x 38] intentionally omitted <==

M Fitzpatrick Chairman

Melbourne, 28 August 2007

==> picture [560 x 52] intentionally omitted <==

Auditor’s Independence Declaration to the Directors of Treasury Group Limited

In relation to our audit of the financial report of Treasury Group Limited for the financial year ended 30 June 2007, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

==> picture [169 x 59] intentionally omitted <==

Ernst & Young

==> picture [127 x 47] intentionally omitted <==

Sean Balding Partner 28 August 2007

Liability limited by a scheme approved under Professional Standards Legislation.

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Corporate Governance Statement

The Company is committed to maintaining the highest standards of Corporate Governance. In determining what those high standards should involve the Company has turned to the ASX Corporate Governance Council’s Principles of Good Corporate Governance and Best Practice Recommendations (“ASX Principles”). The Company is pleased to advise that the Company’s practices are largely consistent with those ASX guidelines.

As at 30 June 2007, the position of Treasury Group Ltd is as follows:

Principle 1: Lay solid foundations for management and oversight

The Board’s role is to govern the Company rather than to manage it. The Board recognises the importance of clearly delineating between its roles and the roles of management, and has adopted a formal statement matters reserved to itself and a list of delegations to management. It is the responsibility of the Board to oversee the activities of management in carrying out these delegated duties.

In carrying out its governance role, the main task of the Board is to drive the performance of the Company. The Board must also ensure that the Company complies with all of its contractual, statutory and any other legal obligations, including the requirements of any regulatory body. The Board is accountable to shareholders for the successful operations of the Company.

Full details of the Board’s role and responsibilities are contained in the Board Charter, a copy of which is contained in the Corporate Governance section on the Company’s website.

Principle 2: Structure the Board to add value

The Board considers independent decision-making as critical to effective governance, and the Company recognises the importance of independent directors and the external perspective and advice that they can offer. The names of the Directors and their qualifications and experience are included in the profiles in the Directors Report, along with the term of office held by each of the Directors.

The Company does not have a majority of independent Directors as recommended by the ASX Principles but rather a balance of executive and non-executive. The Board size is considered appropriate for the size of the Company’s operations.

Mr Kennedy and Mr Hayes are Non-Executive Directors, and also meet the ASX Principles criteria for independence adopted by the Company.

Mr Fitzpatrick is a Non-Executive Director & Chairman of the Company, but is also a major shareholder of the Company and as such he does not meet the Company’s criteria for independence, however, his experience and knowledge of the Company makes his contribution to the Board such that it is appropriate for him to remain on the Board.

The Company’s Chairman and Managing Director have separate roles. The division of responsibilities between the chairman and the Managing Directors are set out in the Board charter.

Mr Green is a Non-Executive Director of the Company, and is also a major shareholder. However, as one of the founders of the Company, his experience and knowledge of the Company makes his contribution to the Board invaluable and as such it is appropriate for him to be part of the Board.

In response to the ASX Principles, the Board established a Nominations Committee on the 4[th] May 2004, to help achieve a structured Board that adds value to the Company by ensuring an appropriate mix of skills are present in Directors on the Board at all times.

Whilst the ASX Principles suggest a minimum of three members, the Company believes that the present committee structure is adequate to perform its duties. The members of the Nomination Committee are Mr Hayes (Chairman) and Mr Fitzpatrick. The Nomination Committee held two meetings throughout the year and details of attendance of the members of the Committee are contained in the Directors Report.

The Nomination Committee’s charter and a description for the selection and appointment of new directors are available on the Company’s website.

The Board collectively and each Director has the right to seek independent professional advice at the Company’s expense, up to specified limits, to assist them to carry out their responsibilities.

Principle 3: Promote ethical and responsible decision-making

To assist the Board carrying out its functions, it has developed a Directors Code of Conduct to guide the Directors, the Managing Director, the Chief Financial Officer and other key executives with respect to the practices necessary to maintain confidence in the Company’s integrity and the responsibility and accountability of individuals for reporting and investigating reports of unethical practices. The Directors Code of Conduct can be viewed in the Corporate Governance section on the Company’s website.

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Corporate Governance Statement

Principle 3: Promote ethical and responsible decision-making (Cont.)

The Company has a Securities Trading Policy under which Directors and employees and their associates may only trade in the Company’s securities during specific period trading windows. This policy can be viewed in the Corporate Governance section of the Company’s website.

Principle 4: Safeguard integrity in financial reporting

In accordance with the Board’s policy, the Managing Director and the Chief Financial Officer have provided to the Board a statement that the company’s financial reports present a true and fair view, in all material aspects, of the company’s financial condition and operational results are in accordance with relevant accounting standards, prior to the Board signing this Annual Report.

The Board established an Audit Committee on 4 May 2004. The Audit Committee has adopted a formal charter, which can be found in the Corporate Governance section of the Company’s website.

During the year the Audit Committee consisted of three members and is in accordance with the minimum suggested by the ASX Principles. Members are appointed by the Board from amongst the Non-Executive Directors, which must also be independent. The members of the Audit Committee during the year were Mr Kennedy, Mr Fitzpatrick and Mr Sharp (resigned 17 May 2007) and Mr R Hayes (appointed 6 March 2007). Whilst Mr Fitzpatrick is not independent, the Company believes that the committee structure was adequate to perform its duties independently. All members can read and understand financial statements and are otherwise financially literate and Mr Kennedy the Chairman, has a commerce background with experience in financial and accounting matters. Details of members qualifications may be found in the director profiles in the Directors’ Report.

The Audit Committee held four meetings for the year and details of attendance of the members of the Audit Committee are contained in the Directors’ Report.

Information on procedures for the selection and appointment of the external auditor and for the rotation of external audit engagement partners may be found in the Corporate Governance section of the Company’s website.

Principle 5: Make timely and balanced disclosure

The Board has designated the Company Secretary as the person responsible for overseeing and coordinating disclosure of information to the ASX as well as communicating with the ASX. In accordance with the ASX Listing Rules the Company immediately notifies the ASX of information:

1 concerning the Company that a reasonable person would expect to have a material effect on the price or value of the Company’s securities; and
2 that would, or would be likely to, influence persons who commonly invest in securities in deciding whether to acquire or dispose of the Company’s securities.

Upon confirmation of receipt from the ASX, the Company posts all information disclosed in accordance with this policy on the Company’s website in an area accessible by the public. A copy of the Continuous Disclosure Policy is located in the Corporate Governance section of the Company’s website.

Principle 6: Respect the rights of shareholders

The Company respects the rights of its shareholders and to facilitate the effective exercise of those rights the Company is committed to:

communicating effectively with shareholders through releases to the market via ASX, the Company’s website, information mailed to shareholders and the general meetings of the Company;
giving shareholders ready access to balanced and understandable information about the Company and corporate proposals;
making it easy for shareholders to participate in general meetings of the Company; and
requesting the external auditor to attend the annual general meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the auditor’s report.

The Company also makes available a telephone number for shareholders to make enquiries of the Company.

The communications strategy is published on the Company’s website in its corporate governance section.

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Corporate Governance Statement

Principle 7: Recognise and manage risk

The Board’s Charter clearly establishes that it is responsible for ensuring that there is a sound system for overseeing and managing risk. The Audit Committee is also responsible for establishing policies on risk oversight and management.

On 28 August 2007 the Managing Director and the Chief Financial Officer provided the Board a written assurance that the financial statements are founded on a sound system of risk management and internal compliance. Their statement also assured the Board that the risk management and internal compliance and control system is operating efficiently and effectively in all material aspects.

Principle 8: Encourage enhanced performance

The Board Charter provides for the undertaking of annual board and committee performance evaluation. The Board’s performance is measured against both qualitative and quantitative indicators. The objective of this evaluation is to provide best practice Corporate Governance to the Company.

The Nomination Committee oversees management succession plans including the managing director and his direct reports and evaluates the Board, Committee and Executive’s performance and makes recommendations for the appointment and removal of Directors.

In order to achieve continuing improvement in Board performance, all Directors are encouraged to undergo continual professional development. Specifically, Directors are provided with the resources and training to address skills gaps where they are identified.

In order to provide a specific opportunity for performance matters to be discussed with each Director, each year the Board Chairman conducts a formal Director review process. Self and peer evaluations are completed and the Chairman meets with each Director individually to discuss issues including performance and discusses with the Board as a whole the effectiveness of the Board and its Committees. The last evaluation was carried out in November 2006. Given the nature of the Company’s activities, the Board believes that there is sufficient formality in the process of evaluation of the Board, individual Directors and the Chairman.

New Directors undergo an induction process in which they are given a full briefing on the Company. This includes meetings with key executives, tours of the premises, an induction package and presentations.

Principle 9: Remunerate fairly and responsibly

The Board has established a Remuneration Committee to assist the Board in making appropriate decisions about incentive schemes and superannuation arrangements.

The role of the Remuneration Committee is to assist the Board in fulfilling its responsibilities in respect of establishing appropriate remuneration levels and incentive policies for employees.

Mr Kennedy, Mr Fitzpatrick and Mr Green are the current members of the Remuneration Committee. Mr Kennedy, the Chairman of the Remuneration Committee is an Independent Director.

The Remuneration Committee held two meetings throughout the year and details of attendance of the members of the Committee are contained in the Directors’ Report.

The Board have endorsed the following Senior Executive Remuneration Policy and the Non-Executive Director Remuneration Policy.

Senior Executive Remuneration Policy

The Company is committed to remunerating its senior executives in a manner that is market-competitive and consistent with best practice as well as supporting the interests of shareholders. Consequently, under the Senior Executive Remuneration Policy the remuneration of senior executive may be comprised of the following:

fixed salary that is determined from a review of the market and reflects core performance requirements and expectations;
a performance bonus designed to reward actual achievement by the individual of performance objectives and for materially improved Company performance;
participation in the Officer and Employee Option Plan and Share Purchase Plan;
statutory superannuation.

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Corporate Governance Statement

Principle 9: Remunerate fairly and responsibly (Cont.)

By remunerating Senior Executives through performance and long-term incentive plans in addition to their fixed remuneration the Company aims to align the interests of senior executives with those of shareholders and increase Company performance. The amount of remuneration, including both monetary and non-monetary components, for each of the Key Management Personnel during the year (discounting accumulated entitlements) is detailed in the Directors’ Report.

The value of shares and options granted to Senior Executives has been calculated using the Binomial method.

The objective behind using this remuneration structure is to drive improved Company performance and thereby increase shareholder value as well as aligning the interests of executives and shareholders.

The Board may use its discretion with respect to the payment of bonuses, stock options and other incentive payments. This discretion is exercised on the following basis:

Retentions and motivation of key executives;
Attraction of quality management to the Company;
Performance incentives which allow executives to share the rewards of the success of Treasury Group Limited.

The Company has a Share Purchase Plan and an Officer and Employee Option Plan that have been approved by shareholders in which executives may participate. The number of shares and options issued under the plans is reasonable in relation to the existing capitalisation of the Company and all payments under the plans are made in accordance with thresholds set in plans approved by shareholders.

Non-Executive Director Remuneration Policy

Non-Executive Directors are paid their fees out of the maximum aggregate amount approved by shareholders for the remuneration of Non-Executive Directors. Non-Executive Directors do not receive performance based bonuses and do not participate in the option scheme of the Company. Non-Executive Directors are entitled to statutory superannuation.

The payment to Directors is based on a workload criterion. Consequently, all non-executive Directors except the Chairman receive a fixed amount plus a load for Committee Membership and Committee chairing. The Chairman received an extra loading given the duties and extra time associated with that position.

Current Director Remuneration

The aggregate amount of remuneration paid to Non-Executive Directors is approved by shareholders and is currently $650,000. The remuneration received by all of the Company’s Non Executive Directors is detailed in the Directors Report and totals $387,186 (including superannuation) paid directly by Treasury Group Limited.

Further information in relation to the remuneration of Directors can be found in the Directors’ Report.

Principle 10: Recognise the legitimate interests of stakeholders

The Company has established a Code of Conduct to guide compliance with legal and other obligations to legitimate stakeholders. A copy of this Code of Conduct is located on the Company’s website in the corporate governance section.

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Income Statement

FOR THE YEAR ENDED 30 JUNE 2007 Notes	CONSOLIDATED TREASURY GROUP LIMITED 2007 2006 2007 2006 $ $ $ $
CONTINUING OPERATIONS REVENUES 5 (a) Other income 5 (b) Salaries and employee benefits expenses 5 (c) Fund management and administration fees Other expenses 5 (c) Share of net profits of associates 14 (a) (iii) PROFIT BEFORE INCOME TAX EXPENSE Income tax (expense) / income 7 (c) PROFIT AFTER TAX FROM CONTINUING OPERATIONS DISCONTINUED OPERATIONS Profit after tax from discontinued operations 6 Profit after tax on disposal of discontinued operations 6 TOTAL PROFIT AFTER TAX FROM DISCONTINUED OPERATIONS NET PROFIT FOR THE YEAR Attributable to: Minority interest Members of the parent 21 (d) Earnings per share (cents per share) • basic for profit for the year attributable to ordinary equity holders of the parent 25 • basic for profit from continuing operations attributable to ordinary equity holders of the parent 25 • diluted for profit for the year attributable to ordinary equity holders of the parent 25 • diluted for profit from continuing operations for the year attributable to ordinary equity holders of the parent 25 Franked dividends paid per share (cents per share) 8	58,248,506 51,613,671 18,613,186 11,579,002 1,719,504 16,350 1,152,199 9,441 (13,705,973) (11,561,768) (2,422,521) (2,414,512) (3,952,982) (3,431,223) - - (6,948,589) (5,955,806) (1,496,540) (1,273,573) 4,645,846 4,174,762 - -
	40,006,312 34,855,986 15,846,324 7,900,358 (10,850,716) (9,239,536) 311,392 546,335
	29,155,596 25,616,450 16,157,716 8,446,693 - 534,788 - - 1,250,418 - 1,780,927 -
	1,250,418 534,788 1,780,927 -
	30,406,014 26,151,238 17,938,643 8,446,693
	12,402,240 11,751,901 - - 18,003,774 14,399,337 17,938,643 8,446,693
	80.79 65.39 75.18 64.17 79.44 63.66 73.92 62.48 57.00 45.00

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Balance Sheet

Balance Sheet
AS AT 30 JUNE 2007 Notes	CONSOLIDATED TREASURY GROUP LIMITED 2007 2006 2007 2006 $ $ $ $
CURRENT ASSETS Cash and cash equivalents 9 (a) Trade and other receivables 10 Available-for-sale investments 11 Other assets Assets classified as held for sale 6 TOTAL CURRENT ASSETS NON-CURRENT ASSETS Trade and other receivables 10 Available-for-sale investments 11 Investments at fair value through profit and loss 12 Loans and receivables 13 Deferred tax assets 7 (d) Investments in associates 14 Plant and equipment 15 Intangibles 16 Goodwill 17 Other financial assets 18 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 19 Income tax payable Liabilities directly associated with assets classified as held for sale 6 TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Other payables Provisions 20 Deferred tax liabilities 7 (d) TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Equity attributable to equity holders of the parent Contributed equity 21 (a) Reserves 21 (e) Retained profits 21 (d) Parent interests Minority interests 21 (f) TOTAL EQUITY	24,622,018 19,437,188 11,036,366 9,287,866 17,441,812 14,559,245 5,287,345 2,594,209 11,245,755 8,938,324 - - 324,354 322,648 57,041 175,073 - 2,152,419 - 299,591
	53,633,939 45,409,824 16,380,752 12,356,739
	1,000,000 - 1,000,000 - 1,000,424 500,284 453,125 351,535 1,200,000 50,000 1,200,000 50,000 2,693,135 - 5,505,640 1,750,227 2,327,453 2,048,238 400,249 776,279 8,686,531 7,868,862 - - 532,044 858,948 99,586 219,016 4,722 - 4,213 - 2,271,268 2,271,268 - - - - 15,422,813 15,422,813
	19,715,577 13,597,600 24,085,626 18,569,870
	73,349,516 59,007,424 40,466,378 30,926,609
	14,233,304 8,090,348 782,873 641,208 3,563,176 3,178,033 - - - 561,861 - -
	17,796,480 11,830,242 782,873 641,208
	- 44,582 - 44,582 214,400 - - - 885,036 361,290 345,000 -
	1,099,436 405,872 345,000 44,582
	18,895,916 12,236,114 1,127,873 685,790
	54,453,600 46,771,310 39,338,505 30,240,819
	26,805,890 23,404,024 26,805,890 23,404,024 3,482,993 2,412,370 2,028,508 1,548,374 18,686,710 13,405,893 10,504,107 5,288,421
	48,975,593 39,222,287 39,338,505 30,240,819 5,478,007 7,549,023 - -
	54,453,600 46,771,310 39,338,505 30,240,819

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Statement of Changes in Equity FOR THE YEAR ENDED 30 JUNE 2007

AT 1 JULY 2006 Net gains on remeasurement available-for-sale investments Total income and expense for the period recognised directly in equity Profit for the period Total income and expense for the period Shares issued Share-based payments Disposal of partly owned subsidiary Dividends paid AT 30 JUNE 2007	CONSOLIDATED Ordinary shares Share options Net unrealised gains reserve Retained earnings Minority Interest Total $ $ $ $ $ $ 23,404,024 1,548,374 863,996 13,405,893 7,549,023 46,771,310
	- - 396,083 - - 396,083
	- - 396,083 - - 396,083
	- - - 18,003,774 12,402,240 30,406,014
	- - 396,083 18,003,774 12,402,240 30,802,097 3,401,866 - - - - 3,401,866 - 674,540 - - - 674,540 - - - - (782,446) (782,446) - - (12,722,957) (13,690,810) (26,413,767)
	26,805,890 2,222,914 1,260,079 18,686,710 5,478,007 54,453,600

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Statement of Changes in Equity

FOR THE YEAR ENDED 30 JUNE 2007

AT 1 JULY 2005 Prior year adjustment RESTATED EQUITY BALANCE AT 1 JULY 2005 Net gains on remeasurement available-for-sale investments Total income and expense for the period Profit for the period Total income and expense for the period Shares issued Share-based payments Minority Interest on acquisition of subsidiary Dividends paid AT 30 JUNE 2006	CONSOLIDATED Ordinary Shares Share options Net unrealised gains reserve Retained earnings Minority Interest Total $ $ $ $ $ $ 22,012,557 159,021 - 9,226,364 3,296,585 34,694,527 - - - (289,452) - (289,452)
	22,012,557 159,021 - 8,936,912 3,296,585 34,405,075
	- - 863,996 - - 863,996
	- - 863,996 - - 863,996
	- - - 14,399,337 11,751,901 26,151,238
	- - 863,996 14,399,337 11,751,901 27,015,234 1,391,467 - - - - 1,391,467 - 1,389,353 - - - 1,389,353 - - - - 450 450 - - - (9,930,356) (7,499,913) (17,430,269)
	23,404,024 1,548,374 863,996 13,405,893 7,549,023 46,771,310

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Statement of Changes in Equity

FOR THE YEAR ENDED 30 JUNE 2007

AT 1 JULY 2006 Profit for the period Total income and expense for the period Shares issued Share-based payments Dividends paid AT 30 JUNE 2007	TREASURY GROUP LIMITED Ordinary Shares Share options Retained earnings Total $ $ $ $ 23,404,024 1,548,374 5,288,421 30,240,819
	- - 17,938,643 17,938,643
	- - 17,938,643 17,938,643 3,401,866 - - 3,401,866 - 480,134 - 480,134 - - (12,722,957) (12,722,957)
	26,805,890 2,028,508 10,504,107 39,338,505

AT 1 JULY 2005 Profit for the period Total income and expense for the period Shares issued Share-based payments Dividends paid AT 30 JUNE 2006	TREASURY GROUP LIMITED Ordinary Shares Share options Retained earnings Total $ $ $ $ 22,012,557 159,021 6,772,084 28,943,662
	- - 8,446,693 8,446,693
	- - 8,446,693 8,446,693 1,391,467 - - 1,391,467 - 1,389,353 - 1,389,353 - - (9,930,356) (9,930,356)
	23,404,024 1,548,374 5,288,421 30,240,819

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Cash Flow Statement

FOR THE YEAR ENDED 30 JUNE 2007 Notes CONSOLIDATED TREASURY GROUP LIMITED 2007 2006 2007 2006 $ $ $ $	FOR THE YEAR ENDED 30 JUNE 2007 Notes CONSOLIDATED TREASURY GROUP LIMITED 2007 2006 2007 2006 $ $ $ $
CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Dividends received Interest received Income tax (paid) / received NET CASH FLOWS FROM OPERATING ACTIVITIES 9(b) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds on disposal of subsidiary, net of cash disposed 6 Purchase of plant and equipment Purchase of intangible assets Proceeds from disposal of plant and equipment Proceeds from disposal of investments Purchase of available-for-sale investments Purchase of other investments Payment for security deposits Repayment of loans made Advances to controlled entities Advances to other entities Payment for capital in controlled entity Payment for investment in associated entities NET CASH FLOWS (USED IN) INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issues of equity Equity dividends paid NET CASH FLOWS (USED IN) FINANCING ACTIVITIES NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of year CASH AND CASH EQUIVALENTS AT END OF YEAR 9(a)	57,609,396 56,059,166 78,847 1,218,165 (26,393,777) (25,425,533) (3,454,467) (3,112,313) 5,509,452 3,525,308 15,509,572 13,841,752 1,472,178 1,220,020 801,328 848,663 (10,880,117) (11,890,276) 197,417 5,723
	27,317,132 23,488,685 13,132,697 12,801,990
	(26,203) - - - (85,487) (371,960) (34,211) (21,336) (6,683) - (6,018) - 27,743 40,515 24,429 - 3,014,819 39,106 1,040,898 39,106 (3,895,238) (2,000,000) - - (119,337) (137,470) (119,337) (202,020) - (154,750) - (154,750) - 2,043,730 519,420 2,043,730 - - (965,000) (1,313,707) (2,596,503) - (2,596,503) - - - - (4,900,393) - (4,200,000) - (4,200,000)
	(3,686,889) (4,740,829) (2,136,322) (8,709,370)
	3,401,986 1,391,467 3,475,082 1,567,139 (22,873,602) (21,930,137) (12,722,957) (9,930,356)
	(19,471,616) (20,538,670) (9,247,875) (8,363,217)
	4,158,627 (1,790,814) 1,748,500 (4,270,597) 20,463,391 22,254,205 9,287,866 13,558,463
	24,622,018 20,463,391 11,036,366 9,287,866

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2007

1. CORPORATE INFORMATION

The financial report of Treasury Group Limited (the ‘Company’ or the ‘Group’) for the year ended 30 June 2007 was authorised for issue in accordance with a resolution of the Directors on 28 August 2007.

Treasury Group Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Stock Exchange (ASX).

The nature of operations and principal activities of the Group are disclosed in the Directors’ Report.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation
(b) Statement of compliance
(c) Revenue recognition
(d) Basis of consolidation
(e) Cash and cash equivalents

(f) Trade and other receivables

(g) Derecognition of financial assets and financial liabilities

(h) Impairment of available-for-sale financial assets

(i) Investments in associates

(j) Plant and equipment

(k) Goodwill

(l) Investments and other financial assets

(m) Income tax

(n) Other taxes

(o) Impairment of non-financial assets other than goodwill

(p) Trade and other payables

(q) Employee leave benefits

(r) Contributed equity

(s) Leases

(t) Earnings per share

(u) Share-based payments

(v) Segment reporting
(w) Comparatives

(a) Basis of preparation

The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standards. The financial report has also been prepared on a historical cost basis, except for available-for-sale investments, which have been measured at fair value.

The financial report is presented in Australian dollars.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2007

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

(b) Statement of compliance

The financial report complies with Australian Accounting standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). The financial report also complies with International Financial Reporting Standards (IFRS).

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Group for the annual reporting period ended 30 June 2007.

These are outlined in the table below:

AASB Amendment	Affected Standard(s)	Nature of change to accounting policy	Application date of standard*	Application date for Group
New Standard	AASB 7:Financial Instruments: Disclosures	AASB 7 is a disclosure standard and will have no direct impact on the amounts included in the Group’s financial statements. However, the amendments will result in changes to the financial instrument disclosures included in the Group’s financial report.	1 January 2007	1 July 2007
2005-10	AASB 132:Financial Instruments Disclosure and Presentation,_AASB 101: _Presentation of Financial Statements, AASB 114:Segment Reporting,_AASB 117:_Leases, AASB 133:Earnings per Share, AASB 139:Financial Instruments: Recognition and Measurement,_AASB 1:_First- time adoption of AIFRS,_AASB 4: _Insurance Contracts,_AASB 1023:_General Insurance Contracts,_and AASB 1038:_Life Insurance Contracts	Refer to AASB 2007 above.	1 January 2007	1 July 2007
2007-1	Amendments to Australian Accounting Standards arising from AASB Interpretation 11 [AASB 2]	The impact of the standard on the accounting policies has not been assessed at reporting date.	1 March 2007	1 July 2007
2007-2	Amendments to Australian Accounting Standards arising from AASB Interpretation 12 [AASB 1, AASB 117, AASB 118, AASB 120, AASB 121, AASB 127, AASB 131 & AASB 139]	The Group currently has no service concession arrangements or public- private-partnerships (PPP), so the amendments are not expected to have any impact on the Group'sfinancial report.	1 January 2008	1 July 2008

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2007

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

(b) Statement of compliance (Cont.)	(b) Statement of compliance (Cont.)
AASB Amendment	Affected Standard(s)	Nature of change to accounting policy	Application date of standard*	Application date for Group
2007-3	Amendments to Australian Accounting Standards arising from AASB 8 [AASB 5, AASB 6, AASB 102, AASB 107, AASB 119, AASB 127, AASB 134, AASB 136, AASB 1023 & AASB 1038]	The impact of the standard on the accounting policies has not been assessed at reporting date.	1 January 2009	1 July 2009
2007-4	Amendments to Australian Accounting Standards arising from ED 151 and Other Amendments [AASB 1, 2, 3, 4, 5, 6, 7, 102, 107, 108, 110, 112, 114, 116, 117, 118, 119, 120, 121, 127, 128, 129, 130, 131, 132, 133, 134, 136, 137, 138, 139,141,1023 & 1038]	These amendments are expected to reduce the extent of some disclosures in the Group's financial report.	1 July 2007	1 July 2007
2007-5	Amendments to Australian Accounting Standard – Inventories Held for Distribution by Not-for-Profit Entities [AASB 102]	This amendment only relates to Not-for-Profit Entities and as such is not expected to have any impact on the Group's financial report.	1 July 2007	1 July 2007
2007-6	Amendments to Australian Accounting Standards arising from AASB 123 [AASB 1, AASB 101, AASB 107, AASB 111, AASB 116 & AASB 138 and Interpretations 1 & 12]	The amendments to AASB 123 require that all borrowing costs associated with a qualifying asset be capitalised. The Group has no borrowing costs associated with qualifying assets and as such the amendments are not expected to have any impact on the Group's financial report.	1 January 2009	1 July 2009
2007-7	Amendments to Australian Accounting Standards [AASB 1, AASB 2, AASB 4, AASB 5, AASB 107 & AASB 128]	The amendments are minor and do not affect the recognition, measurement or disclosure requirements of the standards. Therefore the amendments are not expected to have any impact on the Group's financial report	1 July 2007	1 July 2007
New Standard	AASB 8:Operating Segments	Refer to AASB 2007-3 above	1 January2009	1 July2009
AASB 123 (amended)	Borrowing Costs	Refer to AASB 2007-6 above	1 January 2009	1 July 2009

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2007

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

(b) Statement of compliance (Cont.)

(b) Statement of	compliance (Cont.)
AASB Amendment	Affected Standard(s)	Nature of change to accounting policy	Application date of standard*	Application date for Group
AASB Interpretation 10	Interim Financial Reporting and Impairment	The prohibitions on reversing impairment losses in AASB 136 and AASB 139, which are to take precedence over the more general statement in AASB 134, are not expected to have any impact on the Group’s financial report as the Group does not have any impairment losses.	1 November 2006	1 July 2007
AASB Interpretation 11	Group and Treasury Share Transactions	Refer to AASB 2007-1 above.	1 March 2007	1 July 2007
AASB Interpretation 12	Service Concession Arrangements	Refer to AASB 2007-2 above.	1 January 2008	1 July 2008
IFRIC Interpretation 13	Customer Loyalty Programmes	The Group does not have any customer loyalty programmes and as such this interpretation is not expected to have any impact on the Group's financial report	1 July 2008	1 July 2008
IFRIC Interpretation 14	IAS 19 - The Asset Ceiling: Availability of Economic Benefits and Minimum Funding Requirements	The Group does not have a defined benefit pension plan and as such this interpretation is not expected to have an impact on the Group's financial report.	1 January 2008	1 July 2008

Application date is for the annual reporting periods beginning on or after the date shown in the above table.

(c) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

Service fees

Fees charged for providing administrative services to related companies are recognised as revenue as the services are provided.

Management fees

Fees charged for managing investments are recognised as revenue as the services are provided.

Interest income

Revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

Dividends and distributions

Revenue is recognised when the Group’s right to receive the payment is established.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2007

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

(d) Basis of consolidation

The consolidated financial statements comprise Treasury Group Limited and its subsidiaries as at 30 June each year (the Group).

Subsidiaries are all those entities over which the Group has the power to govern the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether a group controls another entity.

The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.

In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intra-group transactions have been eliminated in full.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group.

Minority interests not held by the Group are allocated their share of net profit after tax in the Income Statement and are presented within equity in the Consolidated Balance Sheet, separately from parent shareholders’ equity.

Subsidiaries are carried at cost in the parent company’s separate financial statements.

(e) Cash and cash equivalents

Cash and short-term deposits in the Balance Sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.

For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above.

(f) Trade and other receivables

Trade receivables, which are generally 30 day terms, are recognised and at fair value and subsequently valued at amortised cost using the effective interest method, less any allowance for uncollectible amounts.

Collectibility of trade receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible are written off when identified. An allowance for doubtful debts is raised when there is objective evidence that the Group will not be able to collect the debt.

(g) Derecognition of financial assets and financial liabilities

(i) Financial assets

A financial asset (or, where applicable, a part of the financial asset or part of a group of similar financial assets) is derecognised when:

the rights to receive cash flows from the asset have expired; or
the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset.

(ii) Financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2007

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

(h) Impairment of available-for-sale financial assets

The Group assesses at each balance sheet date whether a financial asset or group of financial assets is impaired.

If there is objective evidence that an available-for-sale investment is impaired, an amount comprising the difference between its cost (net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in the Income Statement, is transferred from equity to the Income Statement. Reversals of impairment losses for equity instruments classified as available-for-sale are not recognised in profit. Reversals of impairment losses for debt instruments are reversed through the Income Statement if the increase in an instrument’s fair value can be objectively related to an event occurring after the impairment loss was recognised in the Income Statement.

(i) Investments in associates

The Group’s investments in its associates are accounted for using the equity method of accounting in the consolidated financial statements. The associates are entities in which the Group has significant influence and which are neither a subsidiary nor a joint venture.

Under the equity method, the investments in the associates are carried in the Consolidated Balance Sheet at cost plus postacquisition changes in the Group’s share of net assets of the associates. Goodwill relating to the associates is included in the carrying amount of the investments and is not amortised. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group’s net investment in the associates.

The Group’s share of its associates’ post-acquisition profits or losses is recognised in the Income Statement, and its share of postacquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Dividends receivable from associates are recognised in the parent entity’s Income Statement, while in the consolidated financial statements they reduce the carrying amount of the investment.

Investments in associates are carried at cost in the parent company’s separate financial statements.

(j) Plant and equipment

Plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses. Major depreciation methods and periods are:

Furniture & fittings: Office equipment: Leasehold improvements:	2007 & 2006 8 – 13 years diminishing value 4 – 10 years diminishing value 1 – 6 years Straight line

The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year end.

Disposal

An item of plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.

The reporting dates of the associates and the Group are identical and the associates’ accounting policies conform with those used by the Group for like transactions and events in similar circumstances.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2007

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

(k) Goodwill and intangibles

Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business combination over the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities.

Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.

Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. Each unit or group of units to which the goodwill is so allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purposes.

Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating units), to which the goodwill relates. When the recoverable amount of the cash-generating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is recognised. When goodwill forms part of a cash-generating unit (group of cashgenerating units) and an operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this manner is measured based on the relative values of the operation disposed of and the portion of the cashgenerating unit retained.

Impairment losses recognised for goodwill are not subsequently reversed.

Intangible assets acquired separately are initially measured at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is recognised in profit or loss in the year in which the expenditure is incurred.

Intangible assets with finite lives are amortised over the useful life and tested for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at each financial year end.

(l) Investments and other financial assets

Financial assets in the scope of AASB 139: Financial Instruments: Recognition and Measurement, are classified as either financial assets at fair value through profit and loss, loans and receivables, held-to-maturity investments, or available-for-sale investments, as appropriate. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. The Group determines the classification of its financial assets after initial recognition and, when allowed and appropriate, re-evaluates this designation at each year-end.

All regular way purchases and sales of financial assets are recognised on the trade date that is, the date that the Group commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets within the period established generally by regulation or convention in the market place.

(i) Financial assets at fair value through profit or loss

The Group has designated its investment in convertible notes as at fair value through profit and loss.

(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Gains or losses are recognised in profit or loss when the loan and receivables are derecognised or impaired, as well as through the amortisation process.

(iii) Available-for-sale investments

Available-for-sale investments are those non-derivative financial assets that are designated as available-for-sale or are not classified as any of the three other categories. After initial recognition, available-for-sale investments are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is recognised in profit or loss.

The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on that balance sheet date. For investments with no active market, fair value is determined using valuation techniques. Such techniques include recent arm’s length transactions; references to the current market value of another instrument that is substantially the same; discounted cash flow analysis and option pricing models.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2007

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

(m) Income tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.

Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences except:

when the deferred income tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
when the taxable temporary difference is associated with investments in subsidiaries or associates, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except:

when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit or taxable profit or loss; or
when the deductible temporary difference is associated with investments in subsidiaries or associates, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are assessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

(n) Other taxes

Revenues, expenses and assets are recognised net of the amount of GST except:

when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable; and
receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Balance Sheet.

Cash flows are included in the Cash Flow Statement on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2007

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

(o) Impairment of non-financial assets other than goodwill

Amortising intangible assets and property, plant and equipment are tested for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are tested for possible reversal of the impairment whenever events or changes in circumstances indicate that the impairment may have reversed.

(p) Trade and other payables

Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition.

(q) Employee leave benefits

(i) Wages, salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulated sick leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for nonaccumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable.

(ii) Long service leave

The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments, including on-costs, to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.

(r) Contributed equity

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(s) Leases

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

Operating leases

Operating lease payments are recognised as an expense in the Income Statement on a straight-line basis over the lease term. Lease incentives are recognised in the Income Statement as an integral part of the total lease expense.

(t) Earnings per share

Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude costs of servicing equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for:

costs of servicing equity (other than dividends), if any;
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares;

divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element, if any.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2007

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

(u) Share-based payments

Equity-settled transactions:

The Group provides benefits to employees (including Senior Executives and Directors) of the Group in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions).

There are currently three plans in place to provide these benefits:

(i) The Employee Share Option Plan, which provides benefits to Directors, Senior Executives and employees.
(ii) The Employee Share Plan, which provides the opportunity to the employees (including Directors) of the Group to purchase shares in the parent company at a discount.

(iii) Converting Preference Share Plan issued by a Group company, which provides benefits to senior employees of that company.

The cost of the equity-settled employee share option plan is measured by reference to the fair value at the date at which they are granted. The fair value is determined using a Binomial model.

In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Treasury Group Ltd (market conditions), if applicable.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting period).

The cumulative expense recognised for equity-based transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the Group’s best estimate of the number of equity instruments that will ultimately vest. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The Income Statement charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition.

If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition an expense is recognised for any modification that increases the total fair value of the of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.

If an equity-settled award is cancelled, it is treated as if it has vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award as described in the previous paragraph.

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share.

Converting Preference Shares (CPS) issued in conjunction with non recourse loans are accounted for in accordance with AASB 2 Share Based Payments and has been treated as the equivalent of a grant of options. As a result, the amounts receivable from employees in relation to these loans and the share capital issued under the scheme is not recognised. The CPS are non-voting securities that receive a fixed coupon. The CPS convert to non-voting B-Class shares in the subsidiary on 1 January 2009. Participants in that plan can deal with 50% of the shares on this date and may deal with the remaining 50% on or after 1 January 2011. The non-recourse loans have been issued for a term of 10 years. An increase in share capital is only recognised as the employees repay the loans.

(v) Segment reporting

A business segment is a distinguishable component of the entity that is engaged in providing products or services that are subject to risks and returns that are different to those of other business segments. A geographical segment is a distinguishable component of the entity that is engaged in providing products or services within a particular economic environment and is subject to risks and returns that are different than those of segments operating in other economic environments.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2007

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

(w) Comparatives

Where necessary, comparative information has been reclassified and repositioned for consistency with current year disclosures.

3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s principal financial instruments comprise of cash and short-term deposits. The main purpose of these financial instruments is to finance the Group’s operations. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.

Speculative trading in derivatives is not undertaken.

Details of significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument is disclosed in Note 2 to the financial statements.

Credit risk

The Group trades only with recognised, creditworthy third parties. Receivables are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.

With respect to credit risk arising from the other financial assets of the Group, which comprise cash and cash equivalents and available-for-sale financial assets, the Group’s exposure to credit risk arises from default of the counter party, with a maximum exposure equal to the carrying amount of these instruments.

The Group does not require collateral.

Liquidity risk

The Group’s objective is to maintain financial flexibility and only invests surplus funds in cash and short-term deposits.

4. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

In applying the Group’s accounting policies management continually evaluates judgments, estimates and assumptions based on experience and other factors, including expectations of future events that may have an impact on the Group. All judgments, estimates and assumptions made are believed to be reasonable based on the most current set of circumstances available to management. Actual results may differ from the judgments, estimates and assumptions. Significant judgments, estimates and assumptions made by management in the preparation of these financial statements are outlined below:

(i) Significant accounting judgments

Recovery of deferred tax assets

Deferred tax assets are recognised for taxable losses and deductible temporary differences as management considers that it is probable that future taxable profits will be available to utilise those temporary differences.

Classification of and valuation of investments

The Group has decided to classify investments in unit trusts as ‘available-for-sale’ investments and movements in fair value are recognised directly in equity. The fair value of the investments has been determined by reference to the published unit price in an active market.

The Group has classified an investment in a convertible note as ‘at fair value through profit and loss’. The fair value has been determined based on an independent valuation report prepared by RSM Bird Cameron.

Impairment of non-financial assets other than goodwill

The Group assesses impairment of all assets at each reporting date by evaluating conditions specific to the Group and to the particular asset that may lead to impairment. These include performance, technological, economic and political environments and future product expectations. If an impairment trigger exists the recoverable amount of the asset is determined. This involves value in use calculations, which incorporate a number of key estimates and assumptions.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2007

4. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS (Cont.)

(ii) Significant accounting estimates and assumptions

Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the recoverable amount of the cash generating units to which the goodwill is allocated. The assumptions used in this estimation of recoverable amount and the carrying amount of goodwill are discussed in Note 17.

Share-based payment transactions

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using either a Binomial model or a Black-Scholes model, with the assumptions detailed in Note 23. The accounting estimates and assumptions relating to equity-settled sharebased payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact expenses and equity.

Long service leave provision

The liability for long service leave is recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at balance date. In determining the present value of the liability, attrition rates and pay increases through promotion and inflation have been taken into account.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2007

	CONSOLIDATED TREASURY GROUP LIMITED 2007 2006 2007 2006 $ $ $ $
5. REVENUE AND EXPENSES (a) Revenues from continuing operations Fee income Fund management fees Fund performance fees Service fees - wholly-owned subsidiaries - partly-owned subsidiaries - associates - other related entities Total fee income Dividends and distributions - subsidiaries - associates Unit trust distribution Total dividends and distributions Interest Related parties - wholly-owned subsidiaries - subsidiaries - associates - other Other persons/corporations Total interest Total revenues (b) Other income Fair value gain on revaluation of convertible note Net gain on disposal of available-for-sale investments Other Total other income	51,919,489 47,447,543 - - 2,806,955 2,236,582 - - - - 69,480 305,538 - - 49,115 40,000 494,548 226,348 - - 633,498 296,826 - -
	55,854,490 50,207,299 118,595 345,538
	- - 13,500,162 7,500,088 - - 3,828,177 2,801,692 647,023 114,646 - -
	647,023 114,646 17,328,339 10,301,780
	- - 27,839 41,601 - - 190,320 92,664 20,896 81,485 20,896 81,485 114,441 - 114,441 - 1,611,656 1,210,241 812,756 715,934
	1,746,993 1,291,726 1,166,252 931,684

	58,248,506 51,613,671 18,613,186 11,579,002
	1,150,000 - 1,150,000 - 564,517 - - - 4,987 16,350 2,199 9,441
	1,719,504 16,350 1,152,199 9,441

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements For the Year ended 30 June 2007

	CONSOLIDATED TREASURY GROUP LIMITED 2007 2006 2007 2006 $ $ $ $
5. REVENUE AND EXPENSES (Cont.) (c) Expenses from continuing operations Salaries and employee benefits Salaries and employee benefits Share-based payment expense arising from equity-settled share-based payment transactions Depreciation and amortisation Software Furniture & fittings Office equipment Leasehold improvements Total depreciation of non-current assets Other expenses Accounting & audit fees Operating lease rental – minimum lease payments Marketing & stationery expenses Travel & accommodation costs Communication costs Payroll tax Legal & compliance fees Consulting fee Insurance charges Directors’ fees (non-executives) IT servicing & consulting charges Training expenses Share registry expenses ASX fees Subscriptions Loss on disposal of plant and equipment Net loss on disposal of available-for-sale investment Donations Other expenses Total other expenses	13,094,568 10,935,515 2,078,748 1,908,736 611,405 626,253 343,773 505,776
	13,705,973 11,561,768 2,422,521 2,414,512
	1,961 - 1,805 - 13,939 13,424 2,522 3,608 185,014 194,139 46,657 69,745 105,390 141,734 964 19,864
	306,304 349,297 51,948 93,217
	288,039 352,605 93,885 98,900 509,916 355,036 90,466 67,625 1,255,958 1,118,557 46,613 41,323 1,029,378 802,414 134,044 94,908 243,070 192,542 43,083 28,242 705,625 599,184 129,322 128,447 325,760 301,960 10,178 17,753 483,448 227,999 207,484 72,562 352,289 325,009 55,790 65,217 423,747 315,270 366,396 255,617 230,289 163,142 30,691 29,055 84,682 69,218 13,129 18,991 53,302 50,772 53,302 50,771 49,064 41,628 48,651 41,627 388,949 398,003 26,431 13,666 6,338 41,369 3,042 - - 61,495 - 61,495 33,862 22,193 11,000 - 178,569 168,113 81,085 94,157
	6,642,285 5,606,509 1,444,592 1,180,356
	6,948,589 5,955,806 1,496,540 1,273,573

Total other expenses

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

For the Year ended 30 June 2007

Note	CONSOLIDATED 2007 2006 $ $
5. REVENUE AND EXPENSES (Cont.) (d)Revenues from discontinued operations Fee income Fund management fees Performance fees Management fees Total fee income Interest Other persons/corporations Total interest Other income Realised gain on disposal of investment Other income Total other income Total income 6 (e) Expenses from discontinued operations Salaries and employee benefit expenses Fund management and administration fees Depreciation of non-current assets - Furniture & fittings - Office equipment - Leasehold improvements Total depreciation of non-current assets Other expenses Accounting & audit fees Operating lease rental – minimum lease payments Marketing & stationery expenses Travel & accommodation costs Communication costs Payroll tax Legal & compliance fees Insurance charges Subscriptions Other expenses Total other expenses Total expenses 6	- 314,432 - 1,318,093
	- 1,632,525
	- 62,133
	- 62,133
	- 155,000 - 7,495
	- 162,495
	- 1,857,153
	- 655,577
	- 82,346
	- 629 - 6,434 - 3,212
	- 10,275
	- 20,289 - 40,274 - 11,688 - 8,821 - 13,880 - 49,975 - 41,023 - 42,695 - 13,147 - 59,599
	- 301,391
	- 1,049,589

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

For the Year ended 30 June 2007

6. DISCONTINUED OPERATIONS

The Board of Directors entered into a sale agreement to dispose of the Company’s 50 percent interest in Armytage private Limited (Armytage), a company that predominantly focused on funds management for private clients. The disposal was completed on 11 July 2006, on which date control of the business passed to the acquirer.

As at 30 June 2006, Treasury Group Ltd carried the investment in Armytage at a cost of $299,591 as disclosed in Note 28.

The results of the discontinued operations for the year are presented below:

Notes Revenue 5 (d) Expenses 5 (e) Profit before tax from discontinued operations Income tax expense Profit from discontinued operations The major classes of assets and liabilities attributable to Armytage private Limited at 30 June 2006 are as follows: Assets Cash and cash equivalents Receivables and other receivables Deferred tax asset Available for sale investments Plant and Equipment Goodwill Assets classified as held for sale Liabilities Trade creditors and payables Tax liabilities Liabilities directly associated with assets classified for sale Net assets attributable to discontinued operations The net cash flows of Armytage private Limited are as follows: Operating activities Investing activities Financing activities Net cash inflow	CONSOLIDATED 2007 2006 $ $ - 1,857,153 - (1,049,589)
	- 807,564 - (272,776)
	- 534,788
	- 1,026,203 - 656,881 - 20,957 - 282,573 - 27,834 137,971
	- 2,152,419
	- 488,676 - 73,185
	- 561,861
	- 1,590,558
	- 1,032,271 - (257,749) - (500,000)
	- 274,522

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

For the Year ended 30 June 2007

Notes	CONSOLIDATED 11 JULY 2006 $
6. DISCONTINUED OPERATIONS (Cont.) Details of the disposal of Armytage are as follows: The major classes of assets and liabilities attributable to Armytage are as follows: Assets Cash and cash equivalents Trade and other receivables Deferred tax asset Available for sale investments Plant and Equipment Goodwill Assets classified as held for sale Liabilities Trade and other payables Tax liabilities Liabilities directly associated with assets classified for sale Net assets attributable to discontinued operations Consideration received or receivable Cash and short term deposits Present value of deferred sales proceeds Total disposal consideration Net assets disposed Less: Minority interest in net assets Divestment costs associated with disposal Gain on disposal before income tax Income tax expense Gain on disposal after income tax The proceeds on the sale exceeded the book value of the related net assets and accordingly no impairment losses were recognised on the reclassification of these operations as held for sale Net cash inflow on disposal Cash and cash equivalents balance disposed of 9 (a) Reflected in the cash flow statement Earnings per share (cents per share): - Basic from discontinued operations - Diluted from discontinued operations	1,026,203 656,881 20,957 282,573 27,834 137,971 2,152,419 488,676 73,185 561,861 1,590,558 1,000,000 1,775,047 2,775,047 (1,590,558) 760,456 (35,452) 1,909,493 (659,075) 1,250,418 1,000,000 (1,026,203) (26,203) 30 JUNE 2007 30 JUNE 2006 5.61 1.22
	5.52 1.18

Notes

CONSOLIDATED
11 JULY 2006
$

6. DISCONTINUED OPERATIONS (Cont.)
Details of the disposal of Armytage are as follows:
The major classes of assets and liabilities attributable to Armytage are as follows:
Assets
Cash and cash equivalents
Trade and other receivables
Deferred tax asset
Available for sale investments
Plant and Equipment
Goodwill
Assets classified as held for sale
Liabilities
Trade and other payables
Tax liabilities
Liabilities directly associated with assets classified for sale
Net assets attributable to discontinued operations
Consideration received or receivable
Cash and short term deposits
Present value of deferred sales proceeds
Total disposal consideration
Net assets disposed
Less: Minority interest in net assets
Divestment costs associated with disposal
Gain on disposal before income tax
Income tax expense
Gain on disposal after income tax
The proceeds on the sale exceeded the book value of the related net assets and
accordingly no impairment losses were recognised on the reclassification of these
operations as held for sale
Net cash inflow on disposal
Cash and cash equivalents balance disposed of
9 (a)
Reflected in the cash flow statement
Earnings per share (cents per share):
- Basic from discontinued operations
- Diluted from discontinued operations

1,026,203
656,881
20,957
282,573
27,834
137,971
2,152,419
488,676
73,185
561,861
1,590,558
1,000,000
1,775,047
2,775,047
(1,590,558)
760,456
(35,452)
1,909,493
(659,075)
1,250,418
1,000,000
(1,026,203)
(26,203)
30 JUNE 2007
30 JUNE 2006
5.61
1.22

5.52
1.18

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

For the Year ended 30 June 2007

		TREASURY GROUP LIMITED 11 JULY 2006 $
6. DISCONTINUED OPERATIONS (Cont.) Proceeds Investment disposed Divestment costs associated with disposal Gain on disposal before income tax Income tax expense Gain on disposal after income tax 7. INCOME TAX (a) Income tax expense The major components of income tax expense are: Income Statement Current income tax Current income tax (charge) / benefit Adjustments in respect of current income tax charge of previous years Deferred income tax Relating to origination and reversal of temporary differences Income tax expenses reported in the Income Statement (b) Amounts charged directly to equity Deferred income tax related to income charged or credited directly to equity Unrealised gain on available-for-sale investments Income tax expense reported in equity	CONSOLIDATED 2007 2006 $ $	2,775,045 (299,591) (35,452) 2,440,002 (659,075) 1,780,927 TREASURY GROUP LIMITED 2007 2006 $ $
	(9,775,759) (9,195,266) (107,261) (18,144) (1,626,771) (26,126)	(81,935) 458,819 43,687 9,072 (309,435) 78,444
	(11,509,791) (9,239,536)	(347,683) 546,335
	169,355 361,290	- -
	169,355 361,290	- -

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

For the Year ended 30 June 2007

	CONSOLIDATED TREASURY GROUP LIMITED 2007 2006 2007 2006 $ $ $ $
7. INCOME TAX (Cont.) (c) Numerical reconciliation between aggregate tax expense recognised in the income statement and tax expense calculated per the statutory income tax rate A reconciliation between tax expense and the product of accounting profit before income tax multiplied by the Group’s applicable income tax rate is as follows: Accounting profit before tax from continuing operations Accounting profit before tax from discontinued operations Accounting profit before income tax: At the Group’s statutory income tax rate of 30% (2006: 30%) Share of net profit of associates Share-based payments Tax offset for franked distribution Recoupment of losses not previously recognised Expenditure not allowable for income tax purposes Other Aggregate income tax expense Aggregate income tax expense is attributable to: Continuing operations Discontinued operations (d) Recognised deferred tax assets and liabilities Deferred income tax at 30 June relates to the following: Consolidated Deferred tax assets Tax losses Provisions Other Deferred tax liabilities Revaluations of available-for-sale investments to fair value Revaluation of convertible notes to fair value Application of AASB 132 and 139	40,006,312 34,855,986 18,286,325 7,900,358 1,909,493 807,564 - -
	41,915,805 35,663,550 18,286,325 7,900,358
	12,574,741 10,699,065 5,485,898 2,370,107 (1,393,754) (1,252,429) - - 161,454 151,733 103,132 151,733 (39,554) - (5,198,502) (3,090,534) (72,926) (116,492) (72,926) - 24,325 8,244 4,881 4,216 255,505 22,191 25,200 18,143
	11,509,791 9,512,312 347,683 (546,335)
	10,850,716 9,239,536 (311,392) (546,335) 659,075 272,776 659,075 -
	11,509,791 9,512,312 347,683 (546,335)
	Balance Sheet Income Statement 587,951 1,232,593 - - 1,499,481 645,214 (821,791) (48,505) 240,021 170,431 (459,980) 22,379 2,327,453 2,048,238 (540,036) - - - (345,000) - (345,000) - - (361,290) - -
	(885,036) (361,290) (1,626,771) (26,126)

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

For the Year ended 30 June 2007

		BALANCE SHEET INCOME STATEMENT 2007 2006 2007 2006 $ $ $ $
7. (d) (e)	INCOME TAX (Cont.) Recognised deferred tax assets and liabilities (Cont.) Parent Deferred tax assets Tax losses Provisions Other Deferred tax liabilities Revaluation of convertible notes to fair value Tax losses Unused tax losses for which no deferred tax asset has been recognised Potential tax benefit at 30% All unused tax losses were incurred by Australian entities.	362,951 721,195 23,568 12,762 10,806 59,421 13,730 42,322 24,759 19,023 400,249 776,279 (345,000) - (345,000) -
		(345,000) - (309,435) 78,444
		- 388,307 - -
		- 116,492 - -

The Group has tax losses arising in Australia of $1,959,837 (2006: $2,176,122) that are available indefinitely for offset against future taxable profits of the companies in which the losses arose.

(f) Unrecognised temporary differences

At 30 June 2007, the Group has unrecognised deferred income tax liability of $999,019 (2006: $1,944,728) for taxes that would be payable on the unremitted earnings of certain of the Group’s subsidiaries or associates should the companies remit all of their retained earnings at that date.

(g) Tax consolidation

Effective 1 July 2003, for the purposes of income taxation, Treasury Group Limited and its 100% owned controlled entities have formed a tax consolidated group. Treasury Group Limited is the head entity of the tax consolidated group. Members of the tax consolidated group have entered into a tax sharing arrangement in order to allocate income tax expense to the wholly-owned controlled entities on a pro-rata basis. Under a tax funding agreement, each member of the tax consolidated group is responsible for funding their share of any tax liability. In addition, the agreement provides for the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. At the balance date, the possibility of default is remote.

Tax effect accounting by members of the tax consolidated group

Members of the tax consolidated group allocate current taxes to members of the tax consolidated group in accordance with their accounting profit for the period, while deferred taxes are allocated to members of the tax consolidated group in accordance with the principles of AASB 112 Income Taxes. Allocations are made at the end of each half year.

The allocation of taxes is recognised as an increase / decrease in the subsidiaries’ inter-company accounts with the tax consolidated group head company, Treasury Group Limited. The Group has applied the group allocation approach in determining the appropriate amount of current taxes to allocate to members of the tax consolidated group.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

For the Year ended 30 June 2007

7. INCOME TAX (Cont.)

In preparing the accounts for Treasury Group Limited for the current year, the following amounts have been recognised as tax-consolidation contribution adjustments:

Total decrease to tax expense of Treasury Group Limited

Total increase to inter-company assets of Treasury Group Limited

	TREASURY	GROUP LIMITED
	2007	2006
	$	$
	(380,760)	(546,335)
	380,760	546,335

8. DIVIDENDS PAID AND PROPOSED

(a) Dividends proposed and not recognised as a liability * Final fully franked dividend 35 cents per share (2006: 32 cents per share)

7,903,907	7,077,309
5,645,648	3,973,546
7,077,309	5,956,810
12,722,957	9,930,356

(b) Dividends paid during the year Current year interim

Fully franked dividend (25 cents per share) (2006: 18 cents per share) Previous year final

	7,903,907 7,077,309	7,903,907 7,077,309
	5,645,648 3,973,546
Fully franked dividend (32 cents per share) (2006: 27 cents per share) Total paid during the year (57 cents per share) (2006: 45 cents per share) Calculation based on the ordinary shares on issue as at 30 June 2007 (c) Franking credit balance* The amount of franking credits available for the subsequent financial year are: - franking account balance as at the end of the financial year at 30% (2006: 30%) - franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date The amounts of franking credits available for future reporting periods: - impact on the franking account of dividends proposed or declared before the financial report was authorised for issue but not recognised as a distribution to equity holders during the year Franking credits carried forward after payment of final dividend The tax rate at which paid dividends have been franked is 30% (2006: 30%).		7,077,309 5,956,810
		12,722,957 9,930,356

		5,722,007 5,045,069 (3,387,389) (3,033,132)
		2,334,618 2,011,937

Dividends proposed will be franked at the rate of 30% (2006: 30%).

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

For the Year ended 30 June 2007

	CONSOLIDATED TREASURY GROUP LIMITED 2007 2006 2007 2006 $ $ $ $
9. CASH AND CASH EQUIVALENTS (a) Reconciliation of cash and cash equivalents Cash balance comprises: – cash at bank and in hand – commercial bills Closing cash balance for Balance Sheet Cash at bank and in hand attributable to discontinued operations 6 (a) Closing cash balance for Cash Flow Statement (b) Reconciliation Net profit *Adjustments for* Depreciation and amortisation of non-current assets Amortisation of lease incentive Amortisation of deferred interest Net loss on disposal of plant and equipment Share of associates’ net profits Dividend received from associates Non-cash distribution on investment Gain on investments Write off of plant and equipment Foreign exchange loss Non-cash interest from related companies Share-based payments Gain on disposal of subsidiary Fair value gain on convertible note Changes in assets and liabilities (Increase)/decrease in trade and other receivables (Increase)/decrease in dividends receivable (Increase)/decrease in deferred tax assets (Increase)/decrease in prepayments and other current assets (Decrease)/increase in trade creditors (Decrease)/increase in other creditors and accruals (Decrease)/increase in tax provision (Decrease)/increase in deferred tax liability (Decrease)/increase in employee benefits (Decrease)/increase in long service leave Net cash flow from operating activities	6,189,634 2,482,009 1,079,338 1,022,619 18,432,384 16,955,179 9,957,028 8,265,247
	24,622,018 19,437,188 11,036,366 9,287,866
	- 1,026,203 - -
	24,622,018 20,463,391 11,036,366 9,287,866
	30,406,014 26,151,238 17,938,643 8,446,693 306,304 359,572 51,948 93,217 - 16,490 - 16,490 (146,626) - (146,625) - 6,338 61,495 3,042 61,494 (4,645,846) (4,174,762) - - 3,828,177 2,801,693 - - (647,023) (116,392) - - (564,517) - - - - 43,413 - 2,755 27,992 - 5,021 - (117,528) (19,193) (209,163) (94,672) 611,405 626,253 343,773 505,776 (1,909,493) - (2,440,002) - (1,150,000) - (1,150,000) - (3,564,744) (1,151,947) (364,050) 633,081 1,681,275 721,116 (1,818,767) 3,539,972 (279,215) (1,639,451) 376,030 (459,833) (1,706) (358,586) 118,032 18,928 1,326,620 (51,490) 42,682 (45,765) 1,172,102 723,046 - 65,424 385,143 (738,513) - - 345,000 - 345,000 - 33,060 234,703 37,133 18,430 214,400 - - - 27,317,132 23,488,685 13,132,697 12,801,990

(c) Financing facilities available

At reporting date, Treasury Group Limited did not have any financing facilities available.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

For the Year ended 30 June 2007

Notes	CONSOLIDATED TREASURY GROUP LIMITED 2007 2006 2007 2006 $ $ $ $
10. TRADE AND OTHER RECEIVABLES Current Trade receivables (i) Sundry receivables (ii) Receivable from disposal of subsidiary (iii) Other receivables (ii) Related party receivables (iv) - Subsidiaries - Dividend - Other - Associates - Dividend - Other - Other related parties Terms and conditions	11,980,183 9,498,923 - - 338,983 235,444 21,448 20,237 1,000,000 - 1,000,000 - 43,327 19,914 - - - - 3,500,042 - - - 459,326 639,746 - 1,681,275 - 1,681,275 753,367 625,675 274,629 252,951 3,325,952 2,498,014 31,900 -
	17,441,812 14,559,245 5,287,345 2,594,209

(i) Trade receivables are non-interest bearing and generally on 30 day terms.

(ii) Sundry receivables and other receivables are non-interest bearing and have repayment terms between 30 and 90 days.

(iii) The instalment is non-interest bearing and has a payment date of 11 July 2007.

(iv) Details of the terms and conditions of related party receivables are set out in Note 28.

Non-current Receivable from disposal of subsidiary (i)	1,000,000 - 1,000,000 -
	1,000,000 - 1,000,000 -

Terms and conditions

(i) The instalment is non-interest bearing and has a payment date of 11 July 2008.

11. AVAILABLE-FOR-SALE INVESTMENTS

Current

Current
Units in unlisted managed investment trust - Investors Mutual Small Caps Fund - Investors Mutual Value and Income Fund - Global Value Investors Industrial Share Fund - Sandhurst Professional Series Non-current Unlisted shares in other corporations Security deposits	3,926,413 - - - 3,839,831 3,262,490 - - 907,618 3,675,834 - - 2,571,893 2,000,000 - -
	11,245,755 8,938,324 - -
	591,038 14,650 192,479 14,550 409,386 485,634 260,646 336,985
	1,000,424 500,284 453,125 351,535

Units are readily saleable with no fixed terms. Had the investments been sold on 30 June 2007 a capital gains tax of $540,000 (2006: $361,290) would have arisen.

The fair value of the unlisted available for sale investments is based on the current unit price of the investments which is determined by the value of the underlying investments of the unit trust.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

For the Year ended 30 June 2007

Notes	CONSOLIDATED TREASURY GROUP LIMITED 2007 2006 2007 2006 $ $ $ $
	1,200,000 50,000 1,200,000 50,000

(a) The convertible notes convert at the option of Treasury Group Limited to 40% of the equity of RARE Infrastructure Ltd (RARE). An increment of $1,150,000 was recognised as a fair value gain. The fair value has been based on an independent valuers report from RSM Bird Cameron. The valuation was based on a percentage of FUM and assumed that a 60% chance of RARE becoming profitable, at which point the conversion right would be exercised.

13. LOANS AND OTHER RECEIVABLES (NON- CURRENT) Loans receivables due from: Subsidiaries 13(a), (b), 28 Other related parties 13(a), (b), 28	- - 2,812,505 1,750,227 2,693,135 - 2,693,135 -
	2,693,135 - 5,505,640 1,750,227

(a) Other receivables are interest bearing at commercial rates with no fixed repayment dates.

(b) The majority of non-current loans to associates and a controlled entity are subordinated to Australian Securities and Investments Commission (ASIC).

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements For the Year ended 30 June 2007

Notes	CONSOLIDATED 2007 2006 $ $
14. INVESTMENTS IN ASSOCIATES Investment in associates 14 (a) (a) Interests in associates Name Balance date Orion Asset Management (Aust) Pty Ltd - ordinary shares 30 June Confluence Asset Management Ltd – ordinary shares 30 June	8,686,531 7,868,862
	Ownership interest held by consolidated entity 2007 2006 % % 41.9 41.9 35 35

(i) Principal activity

(a) Orion Asset Management (Aust) Pty Ltd is the parent company of Orion Asset Management Ltd, a wholesale fund management company in Australia.

(b) Confluence Asset Management Ltd is a funds management company which specialises in investing in companies with a small business capitalisation in Australia.

(ii) Share of associates’ balance sheets: Current assets Non-current assets Current liabilities Net assets (iii) Share of associates’ profits Share of associates’: - profits before income tax - income tax expense - profit after income tax (iv) Carrying amount of investment in associates Balance at the beginning of the year - new investment during financial year - share of associates’ net profits for the financial year - dividends received from associates Balance at the end of the year	CONSOLIDATED 2007 2006 $ $ 6,518,699 8,011,737 67,745 53,437 (3,263,928) (5,581,160)
	3,322,516 2,484,014
	6,572,784 5,971,301 (1,926,938) (1,796,539)
	4,645,846 4,174,762
	7,868,862 2,295,792 - 4,200,000 4,645,846 4,174,762 (3,828,177) (2,801,692)
	8,686,531 7,868,862

There were no impairment losses relating to the investment in associates and no capital commitments or other commitments relating to the associate. The investments in associates are carried at cost on the Balance Sheet of Treasury Group Limited, as disclosed in Note 18.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

For the Year ended 30 June 2007

Notes	CONSOLIDATED TREASURY GROUP LIMITED 2007 2006 2007 2006 $ $ $ $
15. PLANT AND EQUIPMENT Furniture & fittings At cost Accumulated depreciation 15(a) Office equipment At cost Accumulated depreciation 15(a) Leasehold improvements At cost Accumulated depreciation 15(a) Total written down amount (a) Reconciliations Reconciliations of the carrying amounts of plant and equipment at the beginning and end of the current financial year. Furniture & fittings Carrying amount at beginning Relating to discontinued operations Carrying amount relating to continuing operations Additions Disposals Depreciation expense Office equipment Carrying amount at beginning Relating to discontinued operations Carrying amount relating to continuing operations Additions Disposals Depreciation expense Leasehold improvements Carrying amount at beginning Relating to discontinued operations Carrying amount relating to continuing operations Additions Disposals Depreciation expense	162,743 183,506 38,026 44,070 (46,529) (39,354) (14,094) (14,951)
	116,214 144,152 23,932 29,119
	929,058 898,463 247,241 265,725 (676,489) (524,214) (175,442) (152,585)
	252,569 374,249 71,799 113,140
	434,652 551,087 4,819 121,254 (271,391) (210,540) (964) (44,497)
	163,261 340,547 3,855 76,757
	532,044 858,948 99,586 219,016
	144,152 101,552 29,119 34,168 - (5,590) - -
	144,152 95,962 29,119 34,168 5,742 63,509 5,742 - (19,741) (1,895) (8,406) (1,441) (13,939) (13,424) (2,523) (3,608)
	116,214 144,152 23,932 29,119
	374,249 355,365 113,140 165,905 - (11,563) - -
	374,249 343,802 113,140 165,905 74,927 230,274 14,806 18,295 (11,593) (5,688) (9,310) (1,315) (185,014) (194,139) (46,657) (69,745)
	252,569 374,249 71,799 113,140
	340,547 501,407 76,757 93,580 - (15,251) - -
	340,547 486,156 76,757 93,580 4,819 70,428 4,819 41,545 (76,715) (74,303) (76,757) (38,504) (105,390) (141,734) (964) (19,864)
	163,261 340,547 3,855 76,757

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

For the Year ended 30 June 2007

	CONSOLIDATED TREASURY GROUP LIMITED 2007 2006 2007 2006 $ $ $ $
16. INTANGIBLES Software At cost Accumulated amortisation 16(a) (a) Reconciliations Reconciliations of the carrying amounts of intangibles at the beginning and end of the current financial year. Software Carrying amount at beginning Additions Amortisation expense 17. GOODWILL AND IMPAIRMENT TESTING Carrying amount at the beginning of the financial year Additions Reclassified as held-for-sale Carrying amount at the end of the financial year	6,683 - 6,018 - (1,961) - (1,805) -
	4,722 - 4,213 -
	- - - - 6,683 - 6,018 - (1,961) - (1,805) -
	4,722 - 4,213 -
	2,271,268 1,646,139 - 763,100 - (137,971) 2,271,268 2,271,268

After initial recognition, goodwill acquired in a business combination is measured at cost less any accumulated impairment losses. Goodwill is not amortised but is subject to impairment testing on an annual basis or whenever there is an indicator of impairment.

Goodwill acquired through business combinations have been allocated to the individual cash generating units, which are the individual subsidiaries, for impairment testing as follows:

Investors Mutual Ltd; and
Treasury Asia Asset Management Ltd.

Key assumptions used in value in use calculations:

Discount rates – 8.5% before tax;

Growth rate estimates – Based on current year budgets, after which a growth rate of 5% has been assumed.

Sensitive to changes in assumptions

Management believes that no reasonably possible changes in any of the above key assumptions would cause the carrying value of the cashgenerating units to materially exceed their recoverable amounts.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

For the Year ended 30 June 2007

		Notes	CONSOLIDATED	CONSOLIDATED	TREASURY GROUP LIMITED	TREASURY GROUP LIMITED
			2007	2006	2007	2006
			$	$	$	$
17.	GOODWILL AND IMPAIRMENT TESTING (Cont.)
	Carrying amount of goodwill allocated to each of	the cash generating units
	Investors Mutual Ltd		1,508,168	1,508,168	-	-
	Treasury Asia Asset Management Ltd		763,100	763,100	-	-
			2,271,268	2,271,268	-	-
18.	OTHER FINANCIAL ASSETS (NON-CURRENT)
	Investment in controlled entities – unlisted	28	-	-	9,633,877	9,633,877
	Investment in associates – unlisted	14	-	-	5,788,936	5,788,936
			-	-	15,422,813	15,422,813
	Units are readily saleable with no fixed terms. There would be no material capital gains tax payable if these assets were sold at the reporting date.
19.	TRADE AND OTHER PAYABLES (CURRENT)
	Trade payables	(a)	2,043,782	717,162	37,005	10,429
	Employee entitlements		490,079	457,019	79,673	42,540
	Other payables	(a)	10,394,475	6,590,632	666,195	579,332
	Related party payables:
	- subsidiaries	(b)	-	-	-	8,907
	- associates	(b)	1,304,968	325,535	-	-
			14,233,304	8,090,348	782,873	641,208

Terms and conditions

Terms and conditions relating to the above financial instruments:

(a) Trade payables and other payables are non-interest bearing and are normally settled on 30 day terms.

(b) Details of the terms and conditions of related party payables are set out in Note 28.

20. PROVISIONS (NON - CURRENT)

Provision for long service leave

	214,400	-	-	-
	214,400	-	-	-

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

For the Year ended 30 June 2007

	CONSOLIDATED		TREASURY	GROUP LIMITED
2007		2006	2007	2006
$		$	$	$

21. CONTRIBUTED EQUITY AND RESERVES

(a)	Ordinary shares
	Issued and fully paid	26,805,890	23,404,024	26,805,890	23,404,024

Effective 1 July 1998, the Corporations legislation in place abolished the concepts of authorised capital and par value shares. Accordingly the Company does not have authorised capital nor par value in respect of its issued shares.

Fully paid ordinary shares carry one vote per share and carry the right to dividends.

(b) Movements in ordinary shares on issue Balance at beginning of the financial year Issued during the year - exercise of options Balance at end of the financial year	TREASURY GROUP LIMITED 2007 2006 Number of shares $ Number of shares $
	22,075,258 23,404,024 21,699,925 22,012,557 507,333 3,401,866 375,333 1,391,467
	22,582,591 26,805,890 22,075,258 23,404,024

(c) Share Options

Options over ordinary shares:

During the financial year 150,000 options were issued over ordinary shares (2006: 930,000). The options had a weighted average exercise price of $16.00 (2006: $16.14).

At the end of the year there were 2,129,001 (2006: 2,426,334) unissued ordinary shares in respect of which 2,129,001 options (2006: 2,385,001) were outstanding (41,333 options were exercised on 30 June 2006, in respect of which shares were issued after 30 June 2006).

(d) Retained profits Balance at the beginning of the year Net profit for the year Dividends Balance at end of year	CONSOLIDATED TREASURY GROUP LIMITED 2007 2006 2007 2006 $ $ $ $
	13,405,893 8,936,912 5,288,421 6,772,084 18,003,774 14,399,337 17,938,643 8,446,693 (12,722,957) (9,930,356) (12,722,957) (9,930,356)
	18,686,710 13,405,893 10,504,107 5,288,421

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

For the Year ended 30 June 2007

	CONSOLIDATED TREASURY GROUP LIMITED 2007 2006 2007 2006 $ $ $ $
21. CONTRIBUTED EQUITY AND RESERVES (Cont.) (e) Reserves Net unrealised gains reserve Balance at the beginning of year Application of AASB 132 and AASB 139 Net unrealised gains on available-for-sale investments Tax effect of gains on available-for-sale investments Balance at end of year Options reserve Balance at the beginning of year Share-based payments Investment Share-based payments recharged to related parties Balance at end of year Total reserves	863,996 - - - - 305,241 - - 574,829 929,787 - - (178,746) (371,032) - -
	1,260,079 863,996 - -
	1,548,374 159,021 1,548,374 159,021 611,405 626,253 343,773 505,776 63,135 763,100 63,135 763,100 - - 73,226 120,477
	2,222,914 1,548,374 2,028,508 1,548,374
	3,482,993 2,412,370 2,028,508 1,548,374

Nature and purpose of reserves

Net unrealised gains reserve

The reserve records after tax fair value changes on available-for-sale investments.

Options reserve

This reserve is used to record the value of equity benefits provided to employees and Directors as part of their remuneration as well as recording the value of the Company’s investments in related companies. Refer to Note 23 for further details of these plans.

(f) Minority Interests Interest in retained earnings	CONSOLIDATED 2007 2006 $ $ 5,478,007 7,549,023
	5,478,007 7,549,023

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

For the Year ended 30 June 2007

22. COMMITMENTS AND CONTINGENCIES

Operating lease commitments

The Group has entered into commercial property leases to meet its office accommodation requirements. These non-cancellable leases have remaining terms of between 1 and 5 years. All leases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions.

Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows:

Notes Future minimum rentals: Minimum lease payments 22(a) - not later than one year - later than one year and not later than five years Aggregate lease expenditure contracted for at reporting date Aggregate expenditure commitments comprise: Amounts provided for: - lease incentive liability - current 22(b) - non-current 22(b) Amounts not provided for: - rental commitments Total not provided for Aggregate lease expenditure contracted for at reporting date	CONSOLIDATED TREASURY GROUP LIMITED 2007 2006 2007 2006 $ $ $ $
	524,706 652,454 153,987 337,327 1,168,579 1,748,487 543,875 1,327,123
	1,693,285 2,400,941 697,862 1,664,450
	- 16,490 - 16,490 - 44,582 - 44,582
	- 61,072 - 61,072
	1,693,285 2,339,869 697,862 1,603,378
	1,693,285 2,339,869 697,862 1,603,378
	1,693,285 2,400,941 697,862 1,664,450

Note:

(a) Properties under non-cancellable operating leases have been sub-let to controlled entities and an associate. The total of future minimum lease payments expected to be received from controlled entities and associates at the reporting date are $0 (2006: $48,035) and $149,454 (2006: $149,454) respectively.

(b) These commitments reflect the non-cash incentive received by the consolidated entity for entering into a non-cancellable operating lease for premises occupied by Treasury Group Limited, entered into in March 2004. The lease term was six years and the incentive liability was reduced on an imputed interest basis at the rate implicit in the lease. Treasury Group Limited re-assigned the lease and vacated the premises during the year.

The consolidated entity’s share of the associates’ lease commitment at the reporting date is $0 (2006: $99,949).

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements For the Year ended 30 June 2007

23. EMPLOYEE BENEFITS AND SUPERANNUATION COMMITMENTS

Officer and Executive Option Plan

An Officer and Executive Option Plan has been established where Treasury Group Limited may, at the discretion of the Board of Directors, grant options over the ordinary shares of Treasury Group Limited to Directors, executives and certain members of staff of the consolidated entity. The options are granted in accordance with performance guidelines established by the Board of Directors of Treasury Group Limited, although the Board of Treasury Group Limited retains the final discretion on the issue of the options. Options are granted under the plan for no consideration and carry no dividend or voting rights. When exercisable, each option is convertible into one ordinary share. The options are not quoted on the ASX. There are no cash settlement alternatives. Employees have to be employed by the consolidated group during the vesting period, otherwise the options are forfeited.

The expense recognised in the Income Statement in relation to this share-based payments plan is $416,999 for the Consolidated Entities (2006: $626,253) and $343,773 (2006: $505,776) for the Parent.

No additional options were issued during the financial year. The weighted average fair value of options granted during the prior year was $1.76.

The following table illustrates the number and weighted average exercise prices of and movements in share options outstanding during the year:

Outstanding at beginning of year - forfeited during the year - granted during the year - exercised during the year - reduction on termination * Outstanding at the end of the year Exercisable at the end of the year	2007 2006 Number of options Weighted average exercise price Number of options Weighted average exercise price
	1,362,000 $13.01 1,076,666 $7.48 (55,000) $10.00 - - - - 730,000 $16.14 (400,000) $7.50 (191,666) $0.65 - - (253,000) $10.33
	907,000 $15.68 1,362,000 $13.01
	2,000 $7.16 402,000 $7.50

*Some employees left the employment of the Group during 2006, but were entitled to retain their options.

The outstanding balance as at 30 June 2007 is represented by:

2,000 options over ordinary shares with an exercise price of $7.16, exercisable until 1 March 2009;
175,000 options over ordinary shares with an exercise price of $10.00, exercisable between 5 July 2007 and 5 August 2007;
250,000 options over ordinary shares with an exercise price of $16.00, exercisable between 30 June 2008 and 1 January 2009;
220,000 options over ordinary shares with an exercise price of $16.00, exercisable between 1 July 2008 and 31 December 2008;
150,000 options over ordinary shares with an exercise price of $19.00, exercisable between 30 June 2010 and 1 January 2011; and
110,000 options over ordinary shares with an exercise price of $19.00, exercisable between 1 July 2010 and 31 December 2010.

The fair value of options granted is estimated on the date of granting using a Binomial option-pricing model applying the following assumptions:

		2007	2006
•	Historical volatility for the financial year	N/A	28%
•	Risk free rate	N/A	5.7%
•	Dividend yield	N/A	4.0%
•	Expected life	N/A	3-5 years
•	Other variables as contained in the notes to the financial report.

The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumptions that the historical volatility is indicative of future trends, which may not necessarily be the actual outcome. No other features of options granted were incorporated the measurement of fair value.

Employee Share Plan

The Employee Share Plan has been established whereby Treasury Group Limited, at the discretion of the Board of Directors, provides the opportunity to employees and Directors to purchase shares in Treasury Group Limited at market value less a discount of 5% to 20%. These shares are purchased via a salary sacrifice arrangement. The shares are held in trust at the employee’s request for a period between 2 and 10 years. Employees have to be employed by the consolidated group while taking part in the plan. There are 62 employees eligible to participate in the plan. Shares acquired under the Employee Share Plan vest immediately. During the year 119,276 shares were purchased under the plan at a weighted average cost of $11.36.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

For the Year ended 30 June 2007

23. EMPLOYEE BENEFITS AND SUPERANNUATION COMMITMENTS (Cont.)

Converting Preference Share Plan

IML has introduced share based payment plans for certain of their staff. The board of IML has ultimate discretion over the granting of share based payments.

Converting Preference Shares (CPS) issued in conjunction with non recourse loans are accounted for in accordance with AASB 2 Share Based Payments. As a result, the amounts receivable from employees in relation to these loans and the share capital issued under the scheme is not recognised. The CPS are non-voting securities that receive a fixed coupon. The CPS convert to non-voting B-Class shares in the subsidiary on 1 January 2009. Participants in that plan can deal with 50% of the shares on this date and may deal with the remaining 50% on or after 1 January 2011. The non-recourse loans have been issued for a term of 10 years.

The plan has been valued using the Black-Scholes valuation method under the following assumptions:

•	Exercise price	$41
•	After tax interest rate	5.11%
•	Expected life	4-5 years

The expense recognised in the Income Statement in relation to this share-based payments plan is $133,875 for the consolidated statements (2006: $0) and $0 (2006: $0) for the Parent.

Other Employee Share Based Payments

During the year Treasury Asia Asset Management Limited (TAAM), a subsidiary of Treasury Group Limited issued shares in TAAM to a number of key employees.

The shares vested immediately and were valued based on an independent valuer’s report obtained from RSM Bird Cameron at the time of issuing the shares.

The expense recognised in the Income Statement in relation to this share-based payments plan is $60,531 for the consolidated statements (2006: $0) and $0 (2006: $0) for the Parent.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements For the Year ended 30 June 2007

24. SUBSEQUENT EVENTS

2007

On 13 July 2007 Treasury Group Limited issued 150,000 options to a key employee. The options vest on 1 July 2010 and have an exercise price of $20.
On 13 July 2007 Treasury Group Limited announced a proposal to issue the Managing Director, David Cooper, 500,000 options with a exercise price of $20. This will require the approval of shareholders at the Annual General Meeting.
On 16 July 2007 Treasury Group Limited provided a convertible loan, converting into 35% of Cannae Capital Partners Ltd’s ordinary share capital. Treasury Group Limited also has an option entitling it to purchase an additional 5% of the share capital at a multiple of NPAT after five years time. Cannae Capital Partners is a boutique asset manager specialising in Australian and New Zealand equites which was launched in July 2007.
On 27 July 2007 the Board of Directors of Confluence Asset Management Limited passed a resolution to close the company’s activities. The expected loss on the investment is $130,000.
On 28 August 2007 the Directors of Treasury Group Limited declared a final dividend on ordinary shares in respect of the 2007 financial year. The total amount of the dividend is $7,903,907, which represents a fully franked dividend of 35 cents per share.

The financial effect of each of the above events has not been recognised.

25. EARNINGS PER SHARE

EARNINGS PER SHARE
The following reflects the income and share data used in the calculations of basic and diluted earnings per share: Net profit attributable to ordinary equity holders of the parent from continuing operations Profit attributable to ordinary equity holders of the parent from discontinued operations Net profit attributable to ordinary equity holders Weighted average number of ordinary shares used in calculating basic earnings per share: Effect of dilutive securities: Dilutive effect of potential ordinary shares – share options Adjusted weighted average number of ordinary shares used in calculating diluted earnings per share Shares issued between reporting date and date of issue of the financial report To calculate earnings per share amounts for the discontinued operations, the weighed average number of ordinary shares for both basic and diluted amounts is as per the table above. The following table provides the profit figure used as the numerator: Net profit attributable to ordinary equity holders of the parent from discontinued operations: - for basic earnings per share - for diluted earnings per share	CONSOLIDATED 2007 2006 $ $
	16,753,356 14,131,943 1,250,418 267,394
	18,003,774 14,399,337
	Number of shares
	22,285,024 22,021,995 377,664 596,564
	22,662,688 22,618,559
	190,000 -
	1,250,418 267,394
	1,250,418 267,394

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

For the Year ended 30 June 2007

26. KEY MANAGEMENT PERSONNEL DISCLOSURES

26. KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Details of Key Management Personnel
(i) Directors
M. Fitzpatrick	Chairman (non-executive)
D. Cooper	Managing Director
R. Green	Director (non-executive)
P. Kennedy	Director (non-executive)
D. Sharp	Director (non-executive), resigned 16 May 2007
R. Hayes	Director (non-executive), appointed 22 February 2007
(ii) Executives
J. Ferragina	Chief Financial Officer
E. Jurgeleit	Group Manager – Risk and New Business
C. Feldmanis	Managing Director – Treasury Group Investment Services Ltd
R. Sullivan	Head of Distribution
A. Tagliaferro	Investment Director – Investment Mutual Ltd
There were no changes to key management personnel	between reporting date and the date the financial report was authorised for issue.

(b) Compensation of Key Management Personnel

AASB 124 Related Party Disclosures defines Key Management Personnel as those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (executive or otherwise) of that entity. In accordance with the definition, the Company believes that Key Management Personnel include all Directors and those Executives that report directly to the Managing Director.

Remuneration philosophy

The performance of the company depends upon the quality of its Directors and Executives. To prosper, the Company must attract, motivate and retain highly skilled Directors and Executives.

To this end, the Company embodies the following principles in its remuneration framework:

Provide competitive rewards to attract high calibre executives;
Link executive rewards to shareholder value;
Significant portion of executive remuneration ‘at risk’, dependent upon meeting pre-determined performance benchmarks.

Remuneration committee

The Remuneration Committee of the Board of Directors of the Company is responsible for determining and reviewing compensation arrangements for the Directors, the Managing Director and the executive team. The Remuneration Committee assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and Executive team.

Remuneration structure

In accordance with best practice corporate governance, the structure of Non-Executive Director and Executive remuneration is separate and distinct.

Non-executive director remuneration

Objective

Structure

In accordance with the ASX Listing Rules the aggregate remuneration of Non-Executive Directors is determined from time to time by a general meeting. An amount not exceeding the amount determined is then divided between the Directors as agreed. The latest determination was at the Annual General Meeting held on 15 November 2006 when shareholders approved an aggregate remuneration of $650,000 per year. The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst Directors is reviewed annually. Non-Executive Directors do not receive performance based bonuses from Treasury Group Limited.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

For the Year ended 30 June 2007

26. KEY MANAGEMENT PERSONNEL DISCLOSURES (Cont.)

Executive remuneration

Objective

The Company aims to reward Executives with a level and mix of remuneration commensurate with their position and responsibilities within the Company and so as to:
Reward Executives of the Company, business unit and individual performance targets set by reference to appropriate benchmarks;
Align the interests of Executives with those of shareholders;
Link reward with the strategic goals and performance of the Company; and
Ensure total remuneration is competitive by market standards.

Structure

Remuneration consists of the following key elements:

Fixed remuneration
Variable remuneration
Short Term Incentive (‘STI’); and
Long Term Incentive (‘LTI’)

The proportion of fixed remuneration and variable remuneration is established by the Remuneration Committee.

Fixed remuneration

Objective

The level of fixed remuneration is set so as to provide a base level of remuneration which is both appropriate to the position and is competitive in the market.

Variable remuneration – Short Term Incentive (STI)

Objective

The objective of the STI plan is to link the achievement of the Company’s operational targets with the remuneration received by the Executives charged with meeting those targets. The total potential STI available is set at a level so as to provide sufficient incentive to the Executive to achieve the operational targets and such that the cost to the Company is reasonable in the circumstances.

Structure

Actual STI payments granted to each Executive depend on the achievement of annual corporate profitability measures, the most important being profit before bonus and tax, as well as the achievement of individual key performance indicators and other performance criteria.

The aggregate of annual STI payments available for executives across the Company is subject to the approval of the Remuneration Committee. Payments are usually delivered as a cash bonus.

Variable remuneration – Long Term Incentive (LTI)

Objective

The objective of the LTI plan is to reward Executives in a manner which aligns this element of remuneration with the creation of shareholder wealth.

Structure

LTI grants are delivered in the form of options.

Details of the nature and amount of each element of the emolument of each director of the Company and each of the Key Management Personnel of the Company and the consolidated entity receiving the highest emolument for the financial year are as follows:

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

For the Year ended 30 June 2007

26. KEY MANAGEMENT PERSONNEL DISCLOSURES (Cont.)

Short term Salary & fees Cash bonus $ $	Post employment Superan- nuation $	Share based payments Other Total Shares Options Termination benefits $ $ $ $	Performance related

Directors M. Fitzpatrick 2007 97,248 -	8,752	106,000	-
2006 60,206 -	4,903	- - - 65,109	-
D. Cooper 2007 389,908 212,500	35,092	193,945 831,445	26%
2006 344,037 200,000	30,963	- 121,180 - 696,180	29%
L. IaFrate (resigned 2 June 2006)
2006 114,472 60,000	24,339	88,000^ - - 286,811	14%
R. Green 2007 60,550	5,450	- - - 66,000	-
2006 144,160 -	8,340	- - - 152,500	-
P. Kennedy 2007 83,500 -	-	- - - 83,500	-
2006 65,000 -	-	- - - 65,000	-
D. Sharp (resigned 16 May 2007) 2007 139,518 -	-	- - - 139,518	-
2006 94,731 62,504*	-	- - - 157,235	-
R. Hayes (appointed 22 February 2007) 2007 22,361 - Executives J. Ferragina (appointed 4 October 2005) 2007 217,314 80,500	2,013 12,686	- - - 24,374 - 93,611 404,111	- 20%
2006 154,563 66,000	9,027	- 74,733 - 304,323	22%
E. Jurgeleit 2007 203,327 64,804	12,686	- 56,167 - 336,984	19%
2006 193,063 63,642	12,139	- 44,780 - 313,624	20%
C. Feldmanis (appointed 17 October 2005) 2007 227,314 84,000	12,686	- 56,167 - 380,167	22%
2006 132,466 60,000	8,560	- 44,780 - 245,806	24%
R. Sullivan (appointed 1 May 2006) 2007 162,314 99,115	12,686	- - - 274,115	36%
2006 27,143 -	2,023	- - - 29,166	-
A. Tagliaferro 2007 165,115 -	42,385	- - - 207,500	-
2006 204,750 -	16,900	- - - 221,650	-
R. Kipp (resigned 1 October 2005)
2006 59,465 -	5,352	- 34,349 331,981 431,147	-
Total remuneration: Key Management Personnel 2007 1,768,470 540,919	144,435	- 399,890 - 2,853,714	19%
2006 1,594,056 512,146	122,546	88,000 319,822 331,981 2,968,551	17%

^ This bonus was not paid in shares of Treasury Group Limited

Relates to 2004/05

Compensation by category: Key Management Personnel Short-term Post employment Share-based payments Termination benefits Total remuneration	CONSOLIDATED PARENT 2007 2006 2007 2006 $ $ $ $
	2,309,389 2,106,202 1,756,785 1,708,986 144,435 122,546 89,364 97,086 399,890 407,822 343,723 363,042 - 331,981 - 331,981
	2,853,714 2,968,551 2,189,872 2,501,095

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements For the Year ended 30 June 2007

26. KEY MANAGEMENT PERSONNEL DISCLOSURES (Cont.)

(c) Remuneration options: Granted and vested during the year

2007

No options were granted as equity compensation to Key Management Personnel or Directors during the year.

2006

Terms and Conditions for Each Grant
Vested
number
Granted
number
Grant
date
Value per
option at
grant date
Exercise price
per option
First
exercise
date
Last
exercise date

Directors
D. Cooper
D. Cooper
Executives
J. Ferragina
J. Ferragina
E. Jurgeleit
E. Jurgeleit
C. Feldmanis
C. Feldmanis
Total

-
250,000
14/11/2005
$1.49
$16.00
30/06/2008
01/01/2009
-
150,000
14/11/2005
$1.61
$19.00
30/06/2010
01/01/2011
-
100,000
12/09/2005
$2.04
$16.00
01/07/2008
31/12/2008
-
50,000
12/09/2005
$2.01
$19.00
01/07/2010
31/12/2010
-
60,000
12/09/2005
$2.04
$16.00
01/07/2008
31/12/2008
-
30,000
12/09/2005
$2.01
$19.00
01/07/2010
31/12/2010
-
60,000
12/09/2005
$2.04
$16.00
01/07/2008
31/12/2008
-
30,000
12/09/2005
$2.01
$19.00
01/07/2010
31/12/2010
-
730,000*

During 2006 options were granted as equity compensation benefits to certain key management personnel as disclosed above. No options were issued to the non-executive members of the Board of Directors under this scheme. The options were issued free of charge. Each option entitles the holder to subscribe for one fully paid ordinary share in the entity at various exercise prices.

The fair value of options granted is estimated on the day of grant using a Binomial option-pricing model with the following assumptions used; Historical volatility for the financial year of 28% (2006: 28%), Risk Free rate of 5.5%, a dividend consistent with the current policy of the Company and other variables as contained in the Notes to the financial report.

All options have a vesting condition of continuous service between grant date and first exercise date.

(d) Shares issued on exercise of remuneration options (Consolidated)

2007 Directors D. Cooper D. Cooper Total All shares were fully paid.	Shares issued Number Paid $ per share
	200,000 $7.00 200,000 $8.00 400,000

2006

During the financial year ended 30 June 2006 the Company did not issue any shares to Key Management Personnel on exercise of remuneration options.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements For the Year ended 30 June 2007

26. KEY MANAGEMENT PERSONNEL DISCLOSURES (Cont.)

(e) Option and Share Holdings of Key Management Personnel

Option holdings of Key Management Personnel

30 June 2007	Options transferred on resignation Balance at 30 June 2007 Total vested and exercisable at 30 June 2007 Balance at 1 July 2006 Granted as remuneration Options exercised*
Directors M. Fitzpatrick D. Cooper R. Green P. Kennedy D Sharp # R. Hayes^ Executives J. Ferragina E. Jurgeleit C. Feldmanis R. Sullivan A. Tagliaferro Total	- - - - - - 800,000 - (400,000) - 400,000 - - - - - - - - - - - - - - - - - - - - - - - - - 150,000 - - - 150,000 - 90,000 - - - 90,000 - 90,000 - - - 90,000 - - - - - - - - - - - - -
	1,130,000 - (400,000) - 730,000 -

Options are exercisable once vested

Resigned during the year

^ Appointed during the year

30 June 2006	Options transferred on resignation Balance at 30 June 2006 Total vested and exercisable at 30 June 2006 Balance at 1 July 2005 Granted as remuneration Options exercised*
Directors D. Cooper Executives J. Ferragina E. Jurgeleit C. Feldmanis R. Sullivan A. Tagliaferro R. Kipp Total	400,000 400,000 - - 800,000 - - 150,000 - - 150,000 - - 90,000 - - 90,000 - - 90,000 - - 90,000 - - - - - - - - - - - - - 215,000 - - (215,000) - -
	615,000 730,000 - (215,000) 1,130,000 -

*Options are exercisable once vested.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements For the Year ended 30 June 2007

26. KEY MANAGEMENT PERSONNEL DISCLOSURES (Cont.)

(e) Option and Share Holdings of Key Management Personnel (Cont.) Shareholdings of Key Management Personnel

30 June 2007

*Ordinary shares held in* *Treasury Group Ltd* *(number)* Directors M. Fitzpatrick R. Green D. Cooper P. Kennedy D Sharp R. Hayes^ Executives J. Ferragina E. Jurgeleit C. Feldmanis R. Sullivan A. Tagliaferro Total*	Balance 1 July 2006 Granted as remuneration On exercise of options Net change other Balance 30 June 2007 2,651,500 - - - 2,651,500 1,465,000 - - - 1,465,000 433,000 - 400,000 (200,000) 633,000 - - - 60,000 60,000 14,325 - - (14,325) - - - - - - - - - 19,588 19,588 - - - - - - - - 12,989 12,989 - - - - - 3,345,000 - - (2,000) 3,343,000
	7,908,825 - 400,000 (123,748) 8,185,077

Resigned during the year.

^ Appointed during the year.

30 June 2006

*Ordinary shares held in* *Treasury Group Ltd* *(number)* Directors M. Fitzpatrick R. Green D. Cooper P. Kennedy D Sharp L.D.P. IaFrate Executives J. Ferragina E. Jurgeleit C. Feldmanis R. Sullivan A. Tagliaferro R. Kipp Total	Balance 1 July 2005 Granted as remuneration On exercise of options Net change other Balance 30 June 2006 2,651,500 - - - 2,651,500 2,665,000 - - (1,200,000) 1,465,000 533,000 - - (100,000) 433,000 - - - - - - - - 14,325 14,325 1,868,000 - - (1,868,000) - - - - - - - - - - - - - - - - - - - - - 3,467,000 - - (122,000) 3,345,000 102,000 - - (102,000) -
	11,286,500 - - (3,377,675) 7,908,825

Resigned during the year

All equity transactions with Key Management Personnel other than those arising from the exercise of remuneration options have been entered into under terms and conditions no more favourable than those the entity would have adopted if dealing at arm’s length.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

For the Year ended 30 June 2007

26. KEY MANAGEMENT PERSONNEL DISCLOSURES (Cont.)

(f) Contracts for Key Management Personnel

As long term incentive, Mr Cooper will be awarded 500,000 $20 options on terms to be approved at the AGM.

Mr Cooper is also eligible for a bonus based on a number of clearly defined KPI’s. Any bonus payment is at the sole discretion of the Remuneration Committee.

Additional terms in the contract include:

The Company may terminate the contract at any time without notice if serious misconduct has occurred. Where termination with cause occurs Mr Cooper is only entitled to that portion of remuneration which is fixed, and only up to the date of termination. On termination with cause any unvested options will immediately be forfeited.
The Company may terminate the contract without notice if Mr Cooper becomes incapacitated by accident or an illness such that he is unable to perform his duties for 90 consecutive days or for an aggregate period of 90 days in any period of 12 months.

Where employment is terminated no further payments will be paid by the Company except unpaid salary accrued to the date of termination and accrued annual leave.

The Investment Director of IML, Mr Tagliaferro has a contract with no predetermined termination date. Under the terms of the contract Mr Tagliaferro and the company concerned may terminate the contract by giving a nine month notice period.

(g) Transactions with director-related entity

Details of the transactions with Director-related entities are set out in Note 28. All transactions were conducted on commercial terms.

(h) Loans to Directors

No loans have been advanced to Directors at any stage during the financial year ended 30 June 2007 (2006: $Nil).

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements For the Year ended 30 June 2007

	CONSOLIDATED TREASURY GROUP LIMITED 2007 2006 2007 2006 $ $ $ $
27. AUDITORS’ REMUNERATION The auditor of Treasury Group Limited is Ernst & Young. Amounts received or due and receivable by Ernst & Young Australia in respect of continuing operations for: - an audit or review of the financial report of the entity and any other entity in the consolidated entity - tax compliance Amounts received or due and receivable by Ernst & Young Australia in respect of discontinued operations for: - an audit or review of the financial report of the entity and any other entity in the consolidated entity - tax compliance	211,570 205,831 82,500 85,150 59,077 141,074 11,385 9,050
	270,647 347,905 93,885 94,200
	- 19,689 - - - 600 - -
	- 20,289 - -

28. RELATED PARTY DISCLOSURES

The consolidated financial statements include the financial statements of Treasury Group Limited and the subsidiaries in the following list:

	Name Percentage of equity interest held by the consolidated entity 2007 2006 % %	Treasury Group Limited Investments 2007 2006 $ $
	Investors Mutual Ltd 50 50 Treasury Capital Management Pty Ltd 100 100 Treasury Group Investment Services Ltd 100 100 Treasury Group Nominees Pty Ltd 100 100 Global Value Investors Ltd 67 67 Treasury Asia Asset Management Ltd 41 47 Discontinued operations : Armytage private Ltd - 50	3,869,925 3,869,925 2 2 5,000,000 5,000,000 200 200 250 250 763,500 763,500
		9,633,877 9,633,877
		- 299,591

All subsidiaries are incorporated in Australia.
The Company sold its 50 percent interest in Armytage private Ltd on 11 July 2006, as disclosed in Note 6.
Treasury Asia Asset Management Ltd is classified as a subsidiary company as Treasury Group Limited is able to exercise control over the company at Board level.
Treasury Group Limited owns a majority of the ordinary shares capital of Investors Mutual Ltd and indirectly in Global Value Investors Ltd.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements For the Year ended 30 June 2007

28. RELATED PARTY DISCLOSURES (Cont.)

Transactions with wholly-owned controlled entities

Service fees

During the year, Treasury Group Limited provided administrative services to a wholly-owned controlled entity. Dealings were on commercial terms and conditions. Details of service fees and receivables at reporting date are disclosed in Note 5 and Note 10 to the financial report respectively.

Loans

Loans advanced by Treasury Group Limited to wholly-owned controlled entities are with no fixed repayment dates. Interests on the loans are capitalised at commercial fixed rates.

No additional amount (2006: $Nil) was advanced to a wholly-owned subsidiary, and repayment of $538,415 was received (2006: $Nil) during the year, repaying the outstanding loan. Details of interest income are disclosed in Note 5 to the financial report.

Transactions with partly-owned controlled entities

Service fees

During the year, Treasury Group Limited provided administrative services to partly-owned controlled entities. Dealings were on commercial terms and conditions. Details of service fees and receivables at reporting date are disclosed in Note 5 and Note 10 to the financial report respectively.

Dividend

Any dividend received and receivable at reporting date are disclosed in Note 5 and Note 10 to the financial report respectively.

Loans

Loans advanced by Treasury Group Limited to partly owned entities are with no fixed repayment dates. Interest on the loans is capitalised at commercial rates.

During the year, $965,000 (2006: $1,313,628) was advanced to a partly owned subsidiary and no repayments were received. Details of interest income and the entire amount remained outstanding at year-end are disclosed in Note 5 and Note 13 to the financial report respectively.

Sub-let of operating lease

Property under operating lease has been sub-let to partly-owned controlled entities. Details of the sub-let transaction are disclosed in Note 22 to the financial report.

Other

Mr D. Sharp has invested in investment schemes of the Group and received rebates on management fees totalling $7,894 (2006: $2,415) during the year.

Transactions with associates

Service fees

During the year, a controlled entity provided administrative services to associates. Dealings were on commercial terms and conditions. Details of service fees and receivables at reporting date are disclosed in Note 5 and Note 10 to the financial report respectively.

Loans

During the year, Treasury Group Limited did not provide additional loans to associates (2006: $Nil). The existing loans have been in accordance with a working capital loan facility and are on a long-term basis. No repayments were received from associates during the year (2006: $2,106,022).

In accordance with the loan agreements, interest on the loans was capitalised at commercial fixed rates. Details of interest income are disclosed in Note 5 to the financial report.

Fund management and performance fees

During the year, a controlled entity entered into investment management agreements with associates to acquire fund management services. Dealings were on commercial terms and conditions. Fund management and performances fees paid amounting to $1,513,561 (2006: $1,646,577) is included in the Fund Management and Administration Fees on the Income Statement. Payables at the reporting date are disclosed in Note 19 to the financial report.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

For the Year ended 30 June 2007

28. RELATED PARTY DISCLOSURES (Cont.)

Transactions with director-related entity

Dividend and dividend receivable

Any dividend received and receivable at reporting date are disclosed in Note 5 and Note 10 to the financial report respectively.

Sub-let of operating lease

Property under operating lease has been sub-let to an associate. Details of the sub-let transaction are disclosed in Note 22 to the financial report.

Service fees

During the year a controlled entity of Treasury Group Limited provided management and administrative services to a listed investment company, a company of which Mr D. Sharp was a Director. Dealings were on commercial terms and conditions. Details of management fees amounting to $394,012 (2006: $296,826) are included in Note 5 to the financial report.

Fund management and performance fees

During the year the controlled entity also provided fund management services to the listed investment company. Dealings were on commercial terms and conditions. For the financial year, the controlled entity received a fund management fee and a performance fee of $2,660,719 (2006: $2,352,584) and $2,660,719 (2006: $2,236,582) respectively. The receivable at the reporting date is disclosed in Note 10 to the financial report.

Disposal of a subsidiary

During the year Treasury Group Limited disposed of a subsidiary to Australian Value Funds Management Limited of which Mr P. Kennedy was a Director and Chairman until he resigned from their Board on 2 January 2007. The transaction was on commercial terms and conditions. Details are included in Note 6 to the financial report.

Loans

Loans advanced by Treasury Group Limited to other related parties are with no fixed repayment dates. Interest on the loans is capitalised at commercial rates. The existing loans have been in accordance with a working capital loan facility and are on a long-term basis. No repayments were received from associates during the year (2006: $0)

During the year Treasury Group Limited provided loans of $2,509,503 to a company of which Treasury Group Limited is entitled to nominate a Director (2006: $0).

Details of interest income and the entire amount remained outstanding at year-end are disclosed in Note 5 and note 13 to the financial report respectively

29 SEGMENT INFORMATION

The consolidated entity operates in one business segment, being fund management services, solely in Australia.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements For the Year ended 30 June 2007

30. FINANCIAL INSTRUMENTS

(a) Interest rate risk

The consolidated entity’s exposures to interest rate risk and the effective weighted average interest rate for classes of financial assets and financial liabilities are set out below:

	Floating Fixed interest Fixed interest Fixed interest Non interest Total carrying Weighted interest maturing 1 yr maturing 1 to maturing in more bearing amount as per average rate or less 5 years than 5 years or Balance Sheet interest rate without fixed repayment terms $ $ $ $ $ $
2007 Financial assets Cash Receivables Convertible notes Available-for-sale investments Loans TOTAL Financial liabilities Accounts payable TOTAL	6,189,634 18,432,384 - - - 24,622,018 6.18% - - - 256,566 18,185,246 18,441,812 8.50% - - - - 1,200,000 1,200,000 N/A - - 409,386 - 11,836,794 12,246,180 5.97% - - - 2,693,135 - 2,693,135 8.50% 6,189,634 18,432,384 409,386 2,949,701 31,222,040 59,203,145 - - - - 14,233,304 14,233,304 N/A - - - - 14,233,304 14,233,304

N/A – not applicable for non-interest bearing financial instruments.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements For the Year ended 30 June 2007

30. FINANCIAL INSTRUMENTS (Cont.)

(a) Interest rate risk (Cont.)

Interest rate risk (Cont.)
	Floating Fixed interest Fixed interest Fixed interest Non-interest Total carrying Weighted interest maturing 1 yr maturing 1 to maturing in more bearing amount as per average rate or less 5 years than 5 years or Balance Sheet interest rate without fixed repayment terms $ $ $ $ $ $
2006 Financial assets Cash Receivables Convertible notes Available-for-sale investments TOTAL Financial liabilities Accounts payable TOTAL	2,482,009 16,955,179 - - - 19,437,188 5.60% - - - 235,559 14,323,686 14,559,245 8.50% - - - - 50,000 50,000 N/A - - 485,635 - 8,952,973 9,438,608 5.70% 2,482,009 16,955,179 485,635 235,559 23,326,659 43,485,041 - - - - 8,090,348 8,090,348 N/A - - - - 8,090,348 8,090,348

N/A – not applicable for non-interest bearing financial instruments.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Notes to the Financial Statements

For the Year ended 30 June 2007

30. FINANCIAL INSTRUMENTS (Cont.)

(b) Net fair values

2007

Cash has been recognised at the reporting date at its historical value, which is also at its fair value.
Trade and other receivables, with the exception of deferred receivables in respect of the disposal of Armytage, have been recognised at the reporting date at their historical value, which is also at their fair value.
Deferred receivables in respect of the disposal of Armytage have been recognised at their discounted value.
Available for sale investments are carried at their fair value.
Convertible notes are carried at their fair value.
Payables have been recognised at the reporting date at their historical value, which is also at their fair value.

2006

Cash has been recognised at the reporting date at its historical value, which is also at its fair value.
Trade and other receivables have been recognised at the reporting date at their historical value, which is also at their fair value.
• Available for sale investments are carried at their fair value.
Payables have been recognised at the reporting date at their historical value, which is also at their fair value.

T REASURY G ROUP L IMITED — A NNUAL R EPORT

Directors’ Declaration

In accordance with a resolution of the Directors of Treasury Group Limited, I state that:

In the opinion of the Directors:
(a) the financial statements and notes of the Company and of the consolidated entity are in accordance with the Corporations Act 2001, including:
- (i) giving a true and fair view of the Company’s and Consolidated Entity’s financial position as at 30 June 2007 and of their performance for the year ended on that date; and
- (ii) complying with Accounting Standards and Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
This declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of the Corporations Act 2001 for the year ended 30 June 2007.

On behalf of the Board

==> picture [123 x 37] intentionally omitted <==

M Fitzpatrick Chairman

Melbourne, 28 August 2007

==> picture [560 x 52] intentionally omitted <==

Independent auditor’s report to the members of Treasury Group Limited

We have audited the accompanying financial report of Treasury Group Limited (the Company), which comprises the balance sheet as at 30 June 2007, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with the Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 . This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 2(b), the directors also state that the financial report, comprising the consolidated/parent financial statements and notes, comply with International Financial Reporting Standards.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, we consider internal controls relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Liability limited by a scheme approved under Professional Standards Legislation.

==> picture [151 x 46] intentionally omitted <==

Independence

In conducting our audit we have met the independence requirements of the Corporations Act 2001 . We have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the directors’ report. In addition to our audit of the financial report, we were engaged to undertake the services disclosed in the notes to the financial statements. The provision of these services has not impaired our independence.

Auditor’s Opinion

In our opinion:

the financial report of Treasury Group Limited is in accordance with:
(a) the Corporations Act 2001 , including:
(i) giving a true and fair view of the financial position of Treasury Group Limited and the consolidated entity at 30 June 2007 and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations); and
(b) other mandatory financial reporting requirements in Australia.
the consolidated/parent financial statements and notes or financial report also comply with International Financial Reporting Standards as disclosed in Note 2(b).

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Ernst & Young

==> picture [127 x 47] intentionally omitted <==

Sean Balding Partner Melbourne 28 August 2007

T REASURY G ROUP L IMITED — A NNUAL R EPORT

ASX Additional Information

Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows.

(a) Distribution of equity securities (as at 31 July 2007).

The number of shareholders by size of holding, in each class of share are:

The number of shareholders by size of holding, in each class of share are:
	Ordinary shares Number of holders Number of shares
1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over The number of shareholders holding less than a marketable parcel of shares are: (b) Twenty largest shareholders (as at 15 August 2007) The names of the twenty largest holders of quoted shares are:	1,384 866,155 1,192 2,671,335 118 867,957 99 3,257,922 25 14,954,222
	2,818 22,617,591
	8 84
	Listed ordinary shares Number of shares Percentage of ordinary shares
1 AKAT Investments Pty Ltd 2 Squitchy Lane Holdings Pty Ltd 3 Mini Investments Pty Ltd 4 ANZ Nominees Limited 5 Aust Executor Trustees NSW Ltd 6 Mr David Cooper 7 Top Pocket Pty Ltd 8 UBS Nominees Pty Ltd 9 JP Morgan Nominees Australia Limited 10 HSBC Custody Nominees (Australia) Limited 11 Cogent Nominees Pty Limited 12 Perpetual Trustees Consolidated Limited 13 Banson Nominees Pty Ltd 14 Leyland Limited c/- Equity Trustees Limited 15 HFM Investments Pty Ltd 16 Harkosi Securities Pty Ltd 17 Queensland Investment Corporation 18 Treasury Group Nominees Pty Ltd 19 RBC Dexia Investor Services Australia Nominees Pty Limited 20 Mr Hugh Lauder Wallace	3,343,000 14.68% 2,401,500 10.55% 1,460,000 6.41% 1,396,313 6.13% 803,466 3.53% 633,000 2.78% 611,390 2.77% 583,411 2.56% 531,262 2.33% 511,370 2.25% 458,715 2.01% 383,136 1.68% 370,313 1.63% 285,000 1.25% 250,000 1.10% 210,000 0.92% 175,304 0.77% 172,889 0.76% 154,709 0.68% 150,000 0.66%
	14,884,778 65.45%

T REASURY G ROUP L IMITED — A NNUAL R EPORT

ASX Additional Information

(c) Substantial shareholders

The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are:

2001 are:
	Number of Shares
Michael Fitzpatrick	2,651,500
Anton Tagliaferro and AKAT Investments Pty Ltd	2,500,000
Mini Investment Pty Ltd	1,465,000

(d) Voting rights

All ordinary shares (whether fully paid or not) carry one vote per share without restriction.

AI assistant

PACIFIC CURRENT GROUP LIMITED — Annual Report 2007

65526_rns_2007-08-27_0a64207d-0a5f-4a8b-9727-4393b5f9894d.pdf

TREASURY GROUP LTD ABN 39 006 708 792

AND CONTROLLED ENTITIES

Appendix 4E Preliminary Final Report

1. Reporting period

2. Results for announcement to the market

Results Commentary

3. Income Statement (item 3)

4. Balance Sheet (item 4)

5. Statement of Cash Flows (item 5)

6. Dividends (item 6)

Amount per security

7. Details of dividend or distribution reinvestment plans in operation are described below (item 7) :

8. Statement of retained earnings (item 8)

9. Net tangible assets per security (item 9)

10. Details of associates and joint venture entities

12. Significant information relating to the entity’s financial performance and financial position.

14. Commentary on the results for the period.

15. Audit of the financial report

15. Audit of the financial report

Annual Report 2007

Corporate Information

Registered Office

Sydney Office – Head Office

Contents

Directors’ Report

DIRECTORS

Names, qualifications, experience and special responsibilities

Michael Fitzpatrick, (Chairman) B. Eng, B (Oxon) Honours

David Cooper, (Managing Director) B. Ec. /Fin.

Rodney Green, (Non-Executive Director) CA, ASIA

Peter Kennedy, (Non-Executive Director) B.Ec. L.L.M.

Reubert Hayes, (Non-Executive Director) SF Fin, FAICD

Directors’ Report continued

COMPANY SECRETARY

Interests in the shares and options of the Company and related bodies corporate

Directors’ Report continued

CORPORATE INFORMATION

Corporate structure

Nature of operations and principal activities

Directors’ Report continued

Employees

OPERATIONS AND FINANCIAL REVIEW

Group Overview

Funds Management

Funds Management, Administration & Compliance Services

Operating Results for the Year

Earnings Per Share

Directors’ Report continued

REVIEW OF FINANCIAL CONDITIONS

Capital Structure

Cash Flow from Operations

Risk Management

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

Directors’ Report continued

SIGNIFICANT EVENTS AFTER THE BALANCE DATE (Cont.)

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

SHARE OPTIONS

Unissued shares

Shares issued as a result of the exercise of options

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

Directors’ Report continued

DIRECTORS’ AND OTHER OFFICERS’ EMOLUMENTS

Remuneration Report

Remuneration Philosophy

Remuneration Committee

Remuneration Structure

Non-Executive Director Remuneration

Objective

Structure

Executive Remuneration

Objective

Directors’ Report continued

DIRECTORS’ AND OTHER OFFICERS’ EMOLUMENTS (Cont.)

Executive Remuneration (Cont.)

Structure

Fixed Remuneration

PACIFIC CURRENT GROUP LIMITED Annual Report 2007

**Emoluments* of the Key Management Personnel of the Company and the Consolidated Entity**