PACIFIC CURRENT GROUP LIMITED — Annual Report 2009

Aug 25, 2009

Wednesday, 26 August 2009

TREASURY GROUP LIMITED FULL YEAR RESULTS

30 JUNE 2009

Outline:

• Overview

• Comments on Current Market Conditions

• Review of Operations

• Strategy Ahead

• Detailed financial analysis

Overview

Treasury Group (ASX:TRG) today announced a normalised profit of $7.515 million for the period ended 30 June 2009, down by 57% from $17.33 million reported from the previous year’s equivalent result.

TRG reported a consolidated net profit after tax (after market to market losses and impairment charges) of $4.953 million. Marked to market and impairment losses total $0.936 million and a transfer of prior period losses of $0.64 million due to a change in accounting for certain investments. This consolidated net profit was down by 71% on the previous corresponding period. The fall in profitability reflects the impact on the business from decline in global financial markets and the direct flow on to the profitability of our underlying businesses.

Over the year, our expenses were managed, with a 10% staff reduction at Treasury Group and a reduction in variable compensation, particularly at the senior management level. A number of our boutiques took the opportunity to attract investment talent which became available during the downturn, while remaining focused on expense management, with total compensation at the boutiques falling over the year.

A summary of the Profit and Loss is as follows (see section titled “Detailed Financial Analysis”):

	12 months to 30 June	12 months to 30 June	12 months to 30 June
$000	2009	2008	% Change
Total revenue	5,986	6,983	(14%)
Net profit after tax (TRG shareholders)	4,946	17,244	(71%)
NORMALISED NET PROFIT	7,515	17,330	(57%)
Basic earnings per share	21.43	75.29	(72%)
Dividend pershare (fullyfranked)	20.00	60.00	(67%)

Normalised – Net profit after tax but before marked to market losses, impairments (refer section “Detailed Financial Analysis”)

1

Whilst the investing environment has been difficult, we are pleased with the strong performance of our investment managers during this difficult period. Managers such as Treasury Asia Asset Management (TAAM) and RARE Infrastructure (RARE) have also enjoyed positive inflows and support from local and international investors.

Total funds under management (FUM) at 30 June 2009 amounted to $10.93 billion, a decrease of $1.56 billion on the previous corresponding year or 12.49%. This compares to a fall in the All Ordinaries index of 26% over financial year ended 30 June 2009. The following charts show funds by manager and historical growth.

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FUNDS UNDER MANAGEMENT ($M) FUNDS UNDER MANAGEMENT ($M)
March 2005 to July 2009 TAAM, RARE, GVI, CANNAE
$7,000 IML March 2005 to July 2009
$6,500 Orion
$3,500
$6,000 $3,012
$5,500 $3,000
$5,000 $2,500
$4,500 $2,000
$4,190
$4,000
$1,500
$3,500
$3,000 $3,178 $1,000
$2,500 $500
$2,000 $-
Mar-05May-05Jun-06Aug-06Oct-06Dec-06Feb-07April-07Jun-07Aug-07Oct-07Dec-07Feb-08Apr-08Jun-08Aug-08Oct-08Dec-08Feb-09Apr-09Jun-09 Mar-05May-05Jun-06Aug-06Oct-06Dec-06Feb-07April-07Jun-07Aug-07Oct-07Dec-07Feb-08Apr-08Jun-08Aug-08Oct-08Dec-08Feb-09Apr-09Jun-09
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FUNDS UNDER MANAGEMENT - BY MANAGER
July 2009
CANNAE
0%
TRILOGY
10% IML
RARE 27%
9%
TAAM
12%
GVI
5%
Orion
37%
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Treasury Group has declared a final dividend of 10 cents per share to be paid on 25 September, 2009 fully franked. This brings the total dividend paid for the year to 20 cents per share.

The balance sheet position of the company remains strong with no debt.

2

Treasury Group Chairman, Mike Fitzpatrick said:

“The past twelve months have been the toughest in financial markets for 80 years.

TRG’s earnings are driven by funds under management and the mix of retail and institutional clients, and the fall in the market has had a dramatic effect on profitability. However, with no debt and falling valuations for fund management companies, your board decided to invest in the future, engaging Mark Burgess as Managing Director who brings a depth of global funds management experience, freeing up David Cooper and the Executive of Treasury Group to work together with Mark on acquisitions and promoting our existing boutiques.

This commitment to build the business is progressing well, and your board expects to make several positive announcements prior to Christmas which will materially expand our manager line up.

We can expect to deliver earnings growth over the 2009/10 financial year. Our focus remains on strong investment talent both locally and offshore.”

Comments on Current Market Conditions

The decline in profitability reflects the deterioration in the investment climate during most of last financial year. In addition we saw an increase in our institutional business when compared with retail, therefore reducing the margins on funds under management. Our investment managers have performed well in a difficult environment and we continue to see new client monies in a number of funds. We note:

• The advantages of a boutique management structure remains strong and we expect further opportunities to develop boutiques. Our strong brand and balance sheet is attractive to new investment managers;

• Our investment teams continue to perform well albeit in difficult market conditions;

• TRG has continued to expand its client base globally and now has significant clients in both Australian and offshore markets. During the year we continued to grow our Dublin (UCITS III) fund range and gained our first US corporate (ERISA) clients;

• With the growth of TAAM and RARE and continued growth in other boutiques, our source of income continues to diversify across managers;

• The development of new boutiques in recent years now offers a well structured mix of both domestic and international product;

• We have targeted expense management in the second half, and continue to so going forward. Headcount in consolidated group, Treasury Group Limited and Treasury Group Investment services Limited, was reduced by over 10 percent. Variable compensation was sharply reduced for the financial year, particularly at the senior executive level;

• We are seeing increasing opportunities to leverage the TRG model both locally and offshore as well as initiatives that assist in organic growth.

3

Review of Operations

Treasury Group Investment Services (TIS) - (100% owned at 30 June 2009)

Treasury Group through TIS provides its managers with risk and compliance services as well as a Responsible Entity function. TIS also acts as investment manager for a listed investment company, Premium Investors Limited (PRV). Following a requisition from shareholders, PRV held a general meeting on 19[th] August 2009, for shareholders to vote on three resolutions. One resolution was to approve an off market buyback for up to 65% of shares on issue. Another resolution was to buyback up to 15% of the market capitalisation through an on-market buyback. All resolutions were approved. These resolutions will result in a reduction in the management fees but the full size will not be known until the completion of the off market buyback in October 2009.

Investors Mutual Limited (IML) - (47.50% owned at 30 June 2009)

Whilst IML suffered net outflows over the 12 months due to weakness in the retail market, IML has stayed true to its value investment philosophy which has resulted in very strong performance against benchmark for the period. IML also saw its rating by Standard and Poor’s upgraded during the year.

Orion Asset Management Limited (Orion) - (42% owned at 30 June 2009)

Orion continued to enhance its reputation during this difficult investment environment and the business continues to enjoy solid institutional support. Orion had net inflows during the year.

The distribution alliance with Trilogy Global Advisors, a New York based asset management business has remained an attractive option to investors.

Global Value Investors (GVI) - (54% owned at 30 June 2009)

GVI is now well established in the retail market and has delivered strong performance over the twelve months ending 30 June 2009. While traditionally focused on the retail market, GVI is now receiving interest from institutional investors and we expect this to be a source of growth over the medium term. TRG has a 28% direct ownership and a further indirect ownership of 26%.

Treasury Asia Asset Management (TAAM) - (40% owned at 30 June 2009)

TAAM achieved net inflows for the twelve months ending June 2009. Investment performance has been strong and has received net fund inflow over the year, particularly from offshore clients. TAAM has gained representation on a number of the leading retail platforms and is progressing on the institutional front with solid ratings from the major asset consultants.

4

RARE Infrastructure (RARE) - (40% owned at 30 June 2009)

RARE has had a successful twelve months culminating in winning mandates from large international clients as well as further establishing itself in the retail market. There is growing interest in the unique product that RARE offers clients, particularly when looking to diversify their exposure to the infrastructure asset class. RARE has also established a presence in the US market by satisfying requirements to manage mandates governed by ERISA legislation.

Cannae Capital Partners (Cannae) – (option to own up to 40%)

Cannae performed well against benchmarks during the year. Although there has been widespread interest, Cannae remains in the early stages of development.

Strategy Ahead

We are pleased with the way in which our business model managed this period of turbulence. With our boutique partners solely focused on managing funds during this volatile period, we believe that this endorses Treasury’s approach - working with only the highest quality investment teams and supporting them during both positive and more difficult periods.

Looking forward, we see the current market downturn as an opportunity to continue to pursue world class investment talent and attract them to the boutique model. In addition we have continued to build our client presence in both the Australian and offshore markets making our business model attractive to a wide range of managers. The downturn also allows us to consider a wide variety of asset classes as valuations have fallen from the excessive levels seen during the market peak.

In addition to new opportunities in the current market, the Group remains well positioned to continue to grow, with no debt, no exposure to exotic instruments and strong performance from our investment partners.

We look forward to keeping shareholders informed as new opportunities develop.

ENDS

5

Notes

Treasury Group equity accounts all the fund management businesses. The ownership interest in the asset managers is as follows:

Investors Mutual Limited (IML)1	47.50%
Orion Asset Management (OAM)	42.00%
Treasury Asia Asset Management (TAAM)	40.00%
Global Value Investors2(GVI)	54.00%
RARE Infrastructure (RARE)	40.00%
Cannae Capital Partners3

1.TRG’s ownership interest in IML changed in January 2009

2 TRG has a direct interest of 28% and an indirect interest of a further 26%

3 TRG owns a convertible note entitling it to a 35% equity stake in Cannae on conversion. TRG also holds an option to acquire a further 5%.

For further information

Investors

Mr Mark Burgess Managing Director +61 2 8243 0400

Mr Joseph Ferragina Chief Financial Officer +61 2 8243 0400

6

Detailed Financial Analysis:

Below we offer more detail on our financial results including:

• Calculation methodology of normalised earnings

• Comments on revaluation of investments

• Component of impairment of loan

• Share of net profit from equity accounted investments

• Cash Flow

• Dividend

• Detailed disclosure of business profit and loss

• Analysis of aggregated boutique earnings and Treasury Group income statement

• Consolidated profit and loss – on comparative basis to previous year release.

Normalised Earnings

The results for the year ended 30 June 2009 were impacted by marked to market losses that were taken up in companies that have available for sale investments. These investments are in funds that are managed by members of Group. The funds are seeded for commercial and strategic reasons as part of product development initiatives. The seeding assists in launching new funds as well as to create an investment track record and critical mass. The total after tax impact of the marked to market losses on net profit after tax was approximately $2.066 million. In addition to these losses, TRG recognised a loss of $0.148 million on the valuation of the convertible note held in Cannae and a further loss of $0.348 million on impairment of loans to Cannae (after tax). In addition, the level of contribution from performance fees recognised in NPAT was 0.7% compared to 2008 where they represented just over 7.0%.

The normalised result for 30 June, 2009 is 57% below the equivalent result at 30 June 2008 which was $17.33 million. This is calculated as follows:

NPAT (TRG shareholders) $4.945 million Add back: Marked to market losses $0.441 million Impairment of Cannae Convertible note $0.148 million Impairment of Cannae Loans $0.348 million Prior period losses on available for sale investments transferred to profit and loss upon impairment $0.640 million Share on marked to market losses of IML, net of tax $0.985 million

Normalised NPAT $7.51 million

7

Comments on revaluation of investments

The accounting standards require that any effects of downward impairment of financial assets are taken up in the profit and loss. Such losses on revaluations were taken up on December half year result. Further losses as at 30 June 09 were recognised again in the profit and loss. These losses were mainly attributable to movements in currency as opposed to the performance of the investment. Nevertheless, investments which have incremental upward movements from December 08 to June 09 have been taken up in the reserves.

Comments on impairment of loan

The Board has had to consider the application of specific clauses in Accounting Standard 139: Financial Instruments: Recognition and Measurement. The standard requires that financial assets be reviewed and tested for impairment if there is evidence of an impairment event. The accounts reflect an impairment charge of $497,123 in relation to the loan issued to Cannae Capital Partners (Cannae). Whilst the Board is fully supportive of Cannae during the difficult stage of early business development, the Board is cognisant of the need to apply accounting standards that may not necessarily be reflective of its commercial view. The impairment charge was based on using probability analysis as to the likely future performance of Cannae and comparing those cash flows to the existing loan.

Share of net profit from equity accounted investments

Share of net profit from equity accounted investments fell by 53% due to the fall in profits from the associated fund managers stemming from falls in global financial markets. The underlying profits from associates were adversely affected by marked to market losses of $0.985 million (after tax) .

Cash Flow

The cash flows of the group were impacted by the fall in funds under management and underlying profitability of its associates. Net cash flows from operating activities were down by 53% to $7.460 million due to falls in fund management fees in relation to the management of PRV and fall in dividends received from associates. Net cash flows from investing activities were up by 127% due to redemption and sale of available for sale investments. Treasury Group loaned $1.063 million to two of our boutique asset management businesses on commercial terms similar to the terms extended to other start up businesses in the Group. Treasury Group paid $0.47 million for shares in the buyback programme (that ceased in March 2009).

Dividend

On 26 August, 2009, the Treasury Group board declared a 10 cents per share (cps) fully franked dividend.

The final dividend will be paid on 25 September, 2009. The record date is 7 September 2009.

8

Detailed disclosure of business profit and loss

Analysis of aggregated boutique earnings and Treasury Group Income Statement

In response to requests for further information on the operations of business, we show more detail below :

.

a. Aggregated profit and loss of our boutique managers:

This table shows the aggregation of the Groups fund management businesses and the key profit and loss items. The group consists of IML, Orion, TAAM, RARE, GVI and Cannae.

	12 months to 30 June	12 months to 30 June	12 months to 30 June
$000	2009	2008	% Change
Netmanagementfees 1	54,906	85,415	(36%)
Other Income2	2,910	5,203	(44%)
Gross Profit	57,816	90,618	(36%)
Expenses
Staff related expenses3	17,051	18,855	(10%)
Other expenses4	13,465	11,339	19%
Total expenses	30,516	30,194	1%
Net Profit Before Tax	27,300	60,424	(55%)
Income Tax	8,567	16,943	(49%)
Net Profit after Tax	18,733	43,481	(57%)
TRG’s Share of after tax profit	9,103	19,404	(53%)

Notes:

• 1: Fall in management fees directly attributable to fall in global markets and FUM

• 2: IML: Marked to market losses, reduction in interest earned on cash; reduction in distribution income

• 3: Staff expenses reduction linked to variable component and performance related compensation

• 4: Other expenses increased due to a number of factors including:

• GVI: Full year of occupancy costs, increased marketing and administration

• TAAM: Compliance and audit, travel and conferences

OAM: Rent concessions in 2008

• RARE: Full year occupancy costs, increased marketing and conference expenses

Cannae: Compliance and administration, full year expenses in 2009

The boutique asset managers do not have any external borrowings. Some managers do have loans from TRG that are issued to assist with working capital requirements during the start up phase and the loans are structured to meet Australian Financial Services Licensing requirements. These loans are repaid over time once the businesses reach a critical mass.

9

b. Treasury Group Income Statement

This is the statutory income statement for Treasury Group. Note that the Equity share of associates is reflected in the table above.

	12 months to 30 June	12 months to 30 June	12 months to 30 June
$000	2009	2008	% Change
Revenue	5,986	6,983	(14%)
Gains/(losses) on investments1	(1,818)	163	(1,215%)
Employee Expenses2	(5,727)	(5,438)	5%
Fund management and admin exp3	(928)	(1,379)	(32%)
Other Expenses4	(2,834)	(3,027)	(6%)
Loan impairment charge	(497)	-	n/a
Equity share of associates profit (refer table A)	9,103	19,404	(53%)
Profit before tax	3,285	16,706	(80%)
Tax benefit5	1,668	344	385%
Profit after tax	4,953	17,050	(71%)
Minority interests	(8)	(194)	(96%)
Net profit after tax	4,945	17,244	(71%)
NORMALISED NET PROFIT	7,515	17,330	(57%)
Diluted earnings per share(cents)	21.43	75.29	(72%)
Basic earnings per share (cents)	21.43	75.02	(71%)
Dividend per share (fully franked)	20.00	60.00	(67%)

Notes

• 1: Includes the impact of marked to market losses on seed capital

• 2: Includes the addition of a new managing director but also the amortisation of employee share based payments $782k. These options are out of the money and amortised based on historical valuations. The increase in employment expenses before the share based expense amortisation charge is 2.4%

• 3: Driven by fall in FUM

• 4: Reduction in expenses still Includes the implementation of an automated compliance system in 2009

• 5: Tax losses in consolidated group, receipt of rebatable dividends

10

Consolidated profit and loss – on a comparative basis to previous year release:

The underlying philosophy of the business is that TRG is a partner as opposed to a parent entity in its dealings with the boutique asset management businesses. TRG typically holds an equity stake of between 40% and 50%.

As noted in our half year results, following a review by our auditors, it has been determined that in line with Treasury’s approach to being a partner not a parent to our boutiques, that the boutique managers (IML, TAAM and Global Value Investors) will no longer be presented in the consolidated result but will be reflected in the equity investments. No changes to shareholders agreements were made that prompted the change in accounting treatment and nature of control.

Although this does not alter our net profit, it does reduce the amount of disclosure. To provide our shareholders with further information on our business and to allow comparison with our previous year’s releases, we have produced the consolidated profit and loss as if prepared on the same basis as it was 12 months ago. This is shown in the table below :

$000 Revenues1 Other income2 Expenses3 Share in net profits of equity accounted investments4 PROFIT FROM CONTINUING OPERATIONS BEFORE INCOME TAX Income tax expense NET PROFIT FOR THE PERIOD ATTRIBUTABLE: MINORITY INTEREST TRG SHAREHOLDERS	Year ended Year ended 30 June 2009 30 June 2008 $ $ 45,327 62,914 (5,323) 1,816 (27,546) (30,561) 3,164 6,409
	15,622 40,577 (4,107) (10,975) 11,515 29,601
	6,570 12,357 4,945 17,244

Notes:

• 1: Fall in revenue as a result of fall in FUM attributable to global markets and loss of investor confidence

• 2: Impact of marked to market losses in Investors Mutual, Treasury Group and Treasury Group Investment Services seed capital investments

• 3: Cost management initiatives and reduction in employment expenses

• 4: Mainly attributable to reduction of profitability of Orion Asset Management as a result in falls in FUM

11

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Financial results and business update Year end June 2009

Global Value Investors P & L Summary

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	12 months to 30 June 2009	12 months to 30 June 2009	12 months to 30 June 2009
$000	2009	2008	% Change
Net profit after tax	4,953	17,050	(71%)
NORMALISED NET PROFIT	7,515	17,330	(57%)
Basic earnings per share	21.43	75.29	(72%)
Dividend per share (fully franked)	20.00	60.00	(69%)

Global Value Investors Summary of Financial Results

Results were effected by the continued deterioration in global financials markets

• Decline in equity markets reduce revenues in the second half

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

Normalised profit after tax was $7.515million,

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

• Investments have since made a recovery from the market lows.

Expense Management

• Staff reduced by 10% at Treasury, variable compensation sharply lower, particularly for

• senior management

• Previously granted options expense ($782k) remains, despite unlikely exercise

• Boutiques reduced compensation while continuing investment in high quality

• investment staff

Dividend

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

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Global Value Investors Other key features of the financial year

Investment performance against benchmarks strong

• Performance against benchmarks was solid across managers

Net funds flow positive

• Continued growth in institutional clients

• Growth in both Australia and offshore

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

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

Further development of local and offshore clients

• Quality of client base remains strong

• New clients gained in Europe and US

• Focus on growing Australian retail client flows

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Global Value Investors Normalised earnings

NPAT

$4.953 million

Add back:

Marked to market losses $0.441 million Impairment of Cannae Convertible note $0.148 million Impairment of Cannae Loans $0.348 million Prior period losses on available for sale investments transferred to profit and loss upon impairment $0.640 million Share on marked to market losses of IML, net of tax $0.985 million

Normalised NPAT

$7.515 million

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Adding resources during market weakness

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

 Costs were controlled as variable compensation was managed

 The investment culture is central to our managers success

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Global Value Investors Funds under management – by manager

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FUNDS UNDER MANAGEMENT ($M)
March 2005 to July 2009
$7,000 IML
$6,500 Orion
$6,000
$5,500
$5,000
$4,500
$4,190
$4,000
$3,500
$3,178
$3,000
$2,500
$2,000
Mar-05May-05Jun-06Aug-06Oct-06Dec-06Feb-07April-07Jun-07Aug-07Oct-07Dec-07Feb-08Apr-08Jun-08Aug-08Oct-08Dec-08Feb-09Apr-09Jun-09
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FUNDS UNDER MANAGEMENT ($M)
TAAM, RARE, GVI, CANNAE
March 2005 to July 2009
$3,500
$3,012
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$-
Mar-05May-05Jun-06Aug-06Oct-06Dec-06Feb-07April-07Jun-07Aug-07Oct-07Dec-07Feb-08Apr-08Jun-08Aug-08Oct-08Dec-08Feb-09Apr-09Jun-09
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 Net funds flows at RARE, TAAM, GVI and Orion

 Retail funds outflow due primarily to market conditions

 Mix of funds between managers has diversified

 Institutional share of FUM has increased

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Global Value Investors Funds under management – by manager

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FUNDS UNDER MANAGEMENT - BY MANAGER
July 2009
CANNAE
0%
TRILOGY
10% IML
27%
RARE
9%
TAAM
12%
GVI
5%
Orion
37%
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 FUM has diversified between managers

 Australian and international assets

• Significant scope of growth

• Mix between Australian and global clients

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

Products

Manufacturing		Distribution	Distribution
	Product	Aus Retail	InstitutionalOffshore clients
	Australian equities – value	95%	5%
	Global equities – value	93%	7%
	Asia pacific equities	10%	90%	
	Australian equities – growth	10%	90%	
	Global listed infrastructure	15%	85%	
	Australian equities – value	0%	100%

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Global Value Investors Business update – Australian equity managers

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 IML’s significantly outperformed benchmark over the year as IML’s focus on quality companies delivered results

• IML ratings were upgraded. Fund outflow has stabilised

 Distribution team – promoted internal leadership

• Investment staff added early in the financial year - team strengthened

• Focus on growth in retail and institutional market

• New concentrated product launched.

 Tax effective product focused on institutional market

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Global Value Investors Business update – Australian equity managers

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 Another strong year of investment performance against benchmark confirms Orion as one of Australia’s leading boutique fund managers

 Orion had net funds inflow during the year

 Orion’s distribution relationship with Trilogy Advisors has contributed to returns

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 Cannae’s investment performance against benchmark was strong over the year

 The business remains in the early stages of development. Cannae saw a small . outflow of assets late in the year due to a change in client strategy

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Global Value Investors Business update – International equity managers

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 Global Value Investors is well established in the retail market with good support during the year despite the market turmoil

 Investment returns positive against benchmark

 GVI is now focusing on growing institutional clients. Early interest positive

 Will shortly launch an un-hedged product

 Added a senior investment leader during the year. Outstanding experience

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Global Value Investors Business update – International equity managers

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 Treasury Asia Asset Management performed well against benchmark over the year  TAAM saw strong fund inflow with growth in Australian and offshore clients  TAAM gained representation on a number of leading retail platforms. They will be significantly increasing their focus on the retail market with a successful recent road show

 Institutional support remains strong with solid ratings from major asset consultants

Additional investment staff were added to the Singapore office

• Global interest in Asian assets is high

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Global Value Investors Business update – International equity managers

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 RARE had a successful 12 months, outperforming major competitors during the market downturn

A number of major mandates were won during the year including clients in Europe and two US corporate pension plans

 RARE is seeing funds inflow into the Dublin products.

A US based structure was developed to enable the growth of ERISA (US corporate pension clients)

• Additional resources were added to the investment team during the year

 The global product and emerging markets listed infrastructure funds continue to gain attention

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Outlook

Global Value Investors Outlook for the funds management industry

Clients confidence has returned

 In the last quarter of the financial year, we have begun to see confidence return as clients begin reassessing their strategic allocations

• Growth assets remain attractive, but balanced against focus on credit and debt product

• Alternative assets will become attractive with a focus on quality of investment teams, back

• office, systems. Simplicity of product will also be important

• Fee pressure remains but a focus on quality of investment teams is also important

Asset management industry requires further consolidation

• We believe that the Treasury model of boutiques partnership remains strong

• New boutiques need to choose their partnership arrangements carefully

• Our focus on being a partner, not a parent is critical

• Asset management industry has further scope for consolidation

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Global Value Investors Treasury Group’s focus

We have assessed a large number of opportunities

• We remain focused on the highest quality investment management talent

• With the market downturn, investment talent has become available

• Previously overpriced sectors are now offering better value

. We expect to add high quality boutique partners during the next half

• We will keep shareholders updated

Diversification

• Treasury will continue to focus on global distribution possibilities. Our growth in global clients is attractive to future boutiques

• We are focused on a mix of scalable and specialist opportunities

• Clients are gaining confidence to return to a wide variety of asset classes

• Only investment teams with the highest quality will gain mandates in a competitive

• environment

• Treasury’s brand and reputation is attracting interested investment teams

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Global Value Investors Conclusion

1. Normalised earnings of $7.515m , down 57% from previous corresponding period

2. Final dividend of 10 cents per share, taking full year to 20 cents

Key Themes

• Earnings were impacted by the market decline during the year. Due to revenue calculated on average FUM, recent recovery in markets not fully reflected

• Our boutique managers remain in a competitive position

• Company has no debt and increasing opportunities for growth in new boutiques

• Client demand has returned albeit cautious. We believe clients will focus on only the highest quality investment teams

• Demand for broader asset classes likely to increase

• We continue to grow our clients both in Australia and offshore

• Treasury remains focused on growth in our business.

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Global Value Investors Disclaimer

While the information contained in this presentation has been prepared with all reasonable care, Treasury Group Limited accepts no responsibility or liability for any errors, omissions or misstatements however caused. This information is not personal advice. This information has been prepared without taking account of your particular objectives, financial situation or needs. The information in this presentation should not be interpreted as a recommendation to buy, sell or hold stock in Treasury Group Limited.

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