PACIFIC CURRENT GROUP LIMITED - Annual Report 2012

==> picture [274 x 52] intentionally omitted <==

Wednesday 22 August 2012

TREASURY GROUP LIMITED

FULL YEAR RESULTS - 30 JUNE 2012

Overview

Treasury Group (ASX:TRG) today announced a consolidated profit after tax of $6.75 million for the year ended 30 June 2012, down by 32.5% from $10.05 million reported the previous year.

Underlying net profit after tax was $8.08 million, a decrease of 17.0% over the year.

The Company continues to maintain a conservative balance sheet and generates strong cash flows. Other than the investments in the Group’s boutique asset management businesses, the majority of the asset base is comprised of cash or liquid investments. The result reflects the diversification not only through various business ownership interests but also asset classes as highlighted in previous presentations.

Treasury Group has declared a fully franked final dividend of 20 cents per share to be paid on 26 September 2012. This brings the total dividend paid for the year to 34 cents per share.

Treasury Group Chairman, Mike Fitzpatrick said:

“The past 12 months brought significant change to the Group. Andrew McGill commenced as CEO in July 2011 and initiated a review of the Group. Since then we have seen the acquisition of interests in two new businesses in Evergreen Capital and Octis Asset Management, cost control and efficiency initiatives have been undertaken in the TRG business and there have been restructuring initiatives undertaken in underperforming boutiques. As discussed at our half year result, the 30 June 2012 result includes $1,323,511 of expenses largely relating to the action taken to restructure underperforming boutiques and redundancies.

The funds management industry continued to experience difficult conditions in the last year. However given the outstanding financial results from RARE Infrastructure and the recent institutional funds flow and performance successes by Investors Mutual, your Board has decided to maintain the dividend even though the result was down from the previous year.”

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


	12 months to 30 June
$000’s	2012	2011	% Change
Total Revenue	3,954	4,493	(12.2)
EquityShare of Associates	11,485	14,015	(17.9)
Expenses	8,902	8,680	2.6
Net Profit After Tax	6,752	10,005	(32.5)
UNDERLYING NET PROFIT	8,076	9,727	(17.0)
Basic Earnings Per Share	29.3	43.4	(32.5)
Dividend Per Share(cents)	34.00	34.00	-

(for further details on Normalised Net Profit – refer to “Detailed Financial Analysis” section)

The result reflects continued diversification across the different businesses. Investors Mutual Limited (IML) Orion Asset Management (Orion) and RARE Infrastructure (RARE) are all significant contributors to the overall result. RARE has continued to win fund inflows both locally and internationally. The investment performance of all IML’s funds during the year was strong resulting in

Treasury Group Limited ABN: 39 006 708 792 Level 14, 39 Martin Place, Sydney NSW 2000

Phone +61 2 8243 0400

Facsimile +61 2 8243 0410

www.treasurygroup.com

IML winning major institutional mandates which funded in June 2012 with further potential institutional inflows expected in the next financial year.

Celeste Funds Management continues to show positive inflows from both retail and institutional investors and achieved outstanding investment performance during the 2012 year.

Revenues at Treasury Group were down due to a reduction in service fees earned and a reduction of interest income earned as loans to businesses have been progressively repaid. Revenues from services provided to fund managers fell as management focused on profit margins at TRG resulting in rationalisation of some services and in some cases, transfer of services to individual boutiques.

Funds Under Management

Total Funds Under Management (FUM) at 30 June 2012 amounted to $16.38 billion, a decrease of $0.38 billion on the previous year or 2.25%. Excluding FUM decreases at Global Value Investors (GVI) and AR Capital Management, FUM across the rest of the Group was flat compared to the prior year. The attribution of FUM across the Group boutiques is shown below:

Composition of FUM by Boutique as at 30 June 2012

==> picture [231 x 219] intentionally omitted <==

----- Start of picture text -----

AUBREY, AR CAPITAL,
GVI, EVERGREEN, 3%
IML, 17% TRILOGY, 21%
ORION, 22%
RARE, 30%
CELESTE, 3% TAAM, 4%
----- End of picture text -----*

Trilogy Global Advisors is a New York based asset management business with whom Orion has a strategic alliance. TRG benefits from the distribution and administration fees paid to Orion on these funds. Unlike all other FUM, no fund management fees are earned on these funds.

Page 2 of 9

Fund flows were positive overall for the year. The first half saw net out flows at IML, Orion and GVI while RARE and Trilogy were the main sources of net inflows. The second half showed positive inflows, primarily at IML and RARE which were mostly offset by outflows at Orion:

==> picture [398 x 247] intentionally omitted <==

----- Start of picture text -----

TRG Net new funds flow
July 2007 to June 2012
$1,500
$1,000
$500
$0
-$500
Millions
----- End of picture text -----

The margin (revenue relative to FUM) from institutional clients is lower than for retail. As such, the increasing proportion of institutional FUM over time is an adverse trend putting pressure on margins. The graph below illustrates the relative rate of growth between retail and institutional clients:

==> picture [459 x 217] intentionally omitted <==

----- Start of picture text -----

FUM by Investor Type
18
16
14
12
10
8 Institutional
6 Retail
4
2
-
2005 2006 2007 2008 2009 2010 2011 2012
$bn
----- End of picture text -----

The growth in institutional FUM is due to a number of factors including:

New boutiques tend to attract FUM from institutional clients more easily whilst retail penetration takes significant time;
Institutional flows are large relative to retail;
Retail investors have become increasingly cautious in recent years particularly in relation to equities and riskier asset classes;

Page 3 of 9

The composition of Treasury Group FUM by product has also changed over time. There has been a shift towards Alternatives away from Domestic Equities as is illustrated in the chart below:

Composition of FUM by Product Type

==> picture [285 x 163] intentionally omitted <==

----- Start of picture text -----

100%
80%
Alternatives
60%
International
40% Equities
Australian
20% Equities
0%
2008 2012
----- End of picture text -----

Another feature of Treasury Group’s FUM over the last few years has been the increased volume sourced from International investors. This is an area that we see as strategically important and requiring sustained focus to mitigate potential business risks from increased consolidation among Australia’s superannuation funds and the financial services industry generally. The chart below illustrates the increased amount of FUM from International investors:

Composition of FUM by Investor Location

==> picture [391 x 180] intentionally omitted <==

----- Start of picture text -----

18
16
14
12
10 International Source
8 Domestic Source
6
4
2
-
2005 2006 2007 2008 2009 2010 2011 2012
$bn
----- End of picture text -----

Page 4 of 9

Market Conditions and Outlook

There has been an increased level of caution among retail investors. Businesses including IML and GVI which have a predominantly retail clientele, suffered net outflows as a result of this continued uncertainty and flight to perceived lower risk asset classes. Benefitting from this flight to lower risk assets is RARE which has been able to attract retail flows due to the defensiveness of its asset class.

The management of gatekeeper relationships is crucial especially at the institutional level of the business. Treasury Group is active in the management of such relationships whether directly or indirectly with the boutiques. Investment performance and consistent branding become important to maintain on-going interest and support.

Earlier in the year, CEO Andrew McGill led a comprehensive review of Treasury Group’s business and strategy. In some ways, 2012 was a year of consolidation and change with actions taken during the year to address various issues and opportunities:

Global Value Investors was restructured with responsibility for investment management outsourced to Aubrey Capital management and Global Value Investors became a wholly owned subsidiary;
Key man events at AR Capital were addressed with the appointment of Evergreen Capital Partners to assume responsibility for management of the Ascot Fund. Treasury Group subsequently acquired an equity stake;
We initiated discussions with Premium Investors to restructure that company including variation of the investment mandate to facilitate seed funding for Treasury Group boutique partners;
A review of Treasury Group’s Dublin-based UCITs platform is underway to reconfirm the optimal method of facilitating access for our partner boutiques to European investors;
Invested in Treasury Group’s Distribution capability with an additional 2 executives recruited during the year;
Treasury Group’s portfolio of boutiques was expanded with the acquisition of minority equity stakes in Evergreen Capital Partners and Octis Asset Management;
We pursued greater efficiency within our own business. Headcount was reduced by a net 6 (24%) which will reduce ongoing employment related costs by $1.3m per annum.

Treasury Group has finished 2012 as a leaner and more focussed business as a result of these and other decisions taken by management and the Board during the year. We expect coming years to be exciting and prosperous times for Treasury Group as we benefit from the restructuring work and investment decisions taken this year.

We look forward to meeting our shareholders at the Annual General Meeting in November where we will provide further information on the business including Treasury Group’s strategy and outlook.

The CEO and Board of Treasury Group extend their thanks to all our dedicated staff at Treasury Group and our boutique partners for their hard work and efforts during the year.

For further information

Mr Andrew McGill

Chief Executive Officer

+61 2 8243 0400

Mr Joseph Ferragina Chief Financial Officer

+61 2 8243 0400

Page 5 of 9

Detailed Financial Analysis

Underlying Earnings

The underlying performance of Treasury Group’s business can only be understood after consideration of earnings adjusting for items not considering as forming part of the underlying profit. The Company’s results in 2012 were impacted by two restructures of businesses in November and December. In the case of GVI, the impact on TRG was as a result of being a direct investor as well as its indirect exposure through its ownership in IML which owned 47.5%. The investment operations of GVI were closed and Aubrey Capital Management appointed to manage the funds going forward. The table below shows the relative like for like net profit position.

TRG reflected an impairment charge in the carrying value of its investment in AR Capital. As a result of key man issues within the business, management of the fund was outsourced to Evergreen Capital, a specialist alternatives manager. As a result of the change, there were net outflows from the Ascot fund impacting on the carrying value of the business.

Underlying NPAT for the year to 30 June 2012 was $8.08 million or 17.0% lower relative to 2011 underlying NPAT which was $9.72 million. This is calculated as follows:

2012 NPAT		$6.752 million


GVI restructuring (direct and indirect)	$0.771 million
Impairment charge – AR Capital	$0.361 million
TRG redundancy costs	$0.107 million
Loss on disposal of assets (GVI funds)	$0.085 million	$1.217 million

Underlying NPAT		$8.076 million

Share of Net Profit from Equity Accounted Investments

Share of net profit from equity accounted investments was down from $14.0m to $11.5m. On a normalised basis the share of net profits from associates, was $12.5 million. The remaining reduction was due to falls in FUM in key boutiques such as IML and Orion. GVI reflected a net loss due to the restructuring costs and closure of business operations. Share of profit from RARE and Celeste increased due to growing FUM from the previous corresponding period and performance fees earned in the case of the Celeste. The restructuring costs at GVI also had an impact on the IML result as IML was a major shareholder up until 14 December 2011.

Cash Flow

Net cash flow from operating activities was $6.7 million. A strength of the Group’s business model is an ability to generate strong cash flows relative to capital investment. During the year Treasury Group invested $2.4 million in various investment funds managed by Group boutiques, acquired $1.4m of investments in boutique asset management companies and received $1.7 million in loan repayments from associated entities.

Balance Sheet

The Company’s balance sheet is ungeared and maintains a healthy position in liquid assets. The cash balance at 30 June 2012 was $8.2 million which includes statutory liquidity requirements for the Responsible Entity licence. In addition, there was a total of $6.3 million invested as seed funding into newer funds managed by Group boutiques. Generally the intention is that these positions will be redeemed once a critical mass and investment track record have been established in the relevant

Page 6 of 9

funds. This is seen as an important step in the business development plan of the Treasury Group boutiques.

Treasury Group also has $4.0 million in loans outstanding to Group boutiques. These will be repaid according to agreed schedules over the loan periods.

Another important component of the balance sheet is the investment in the respective boutique asset management businesses. The carrying amount of $29.1 million represents the historical entry price as well as Treasury Group’s share of undistributed profits. Treasury Group does not mark to market the carrying value of its interests and as such the carrying value is not reflective of market value. However the $29.1m amount is supported by cash and other net assets at the boutique level.

Dividend

On 22 August 2012, the Treasury Group board declared a 20 cents per share (cps) fully franked dividend.

The final dividend will be paid on 26 September 2012. The record date is 5 September 2012.

Detailed Disclosure of Business Profit and Loss

a. Aggregated Profit and Loss of our Boutique Managers:

This table shows the aggregate financial result of all Group boutiques except Aubrey. The aggregation includes IML, Orion, TAAM, RARE, GVI, Celeste, Evergreen and AR Capital.


	12 months to 30		June

$000s	2012	2011	% Change
Net Management Fees	70,957	74,901	-5.3
Other Income	2,894	4,587	-36.9
Gross Profit	73,851	79,488	-7.1

Expenses
Staff Related Expenses	20,679	19,510	6.0
Other Expenses	13,839	14,776	-6.3
Total Expenses¹	34,518	34,286	0.7

Net Profit Before Tax	39,334	45,202	-13.0

Income Tax	7,808	10,851	-28.0

Net Profit After Tax	31,525	34,351	-8.2

Add back: One-off items relating to restructuring	2,882	-	-

Underlying Net Profit After Tax	34,407	34,351	0.2

TRG’s Share of After Tax Profit	11,485	14,015	-18.1

Underlying TRG’s Share of After Tax Profit	12,515	14,015	-10.7

Average FUM ($bn)	16.5	15.8	12.9

Average Net Margin (%)	0.42	0.47	-10.8

Page 7 of 9

¹ Current year expenses include the one-off effects of restructuring costs in the GVI business and the related effect of the sale of IML’s equity holding in GVI. These effects are added back to display an underlying aggregated profit.

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 and the loans are structured to meet Australian Financial Services Licensing (AFSL) requirements. These loans are repaid over time according to agreed schedules. All businesses hold minimum cash levels to meet AFSL requirements. In some cases, surplus liquid assets have been maintained in the form of cash or as investments in various funds.

b. Treasury Group Income Statement

The table below summarises the statutory income statement for Treasury Group.

	12 months to 30 June	12 months to 30 June
$000s	2012	2011	% Change
Revenue	3,945	4,493	-12.2

Gains/(Losses) on Investments	(70)	62	-212.9
Employee Expenses	(5,202)	(5,741)	-9.4
Fund Management and Admin Exp	(42)	-	-
Other Expenses~~1~~	(3,699)	(2,939)	25.9

EquityShare of Associates Profit	11,485	14,015	-18.1
Profit Before Tax	6,416	9,889	-35.1
Tax Benefit	338	115	193.9
Non-ControllingInterest	2	-	-
Net Profit After Tax	6,752	10,005	-32.5
UNDERLYING NET PROFIT	8,076	9,727	-17.0
Diluted Earnings Per Share(cents)	29.3	43.4	-32.5
Basic Earnings Per Share(cents)	29.3	43.4	-32.5
Dividend Per Share(fully franked)	34	34	-

Notes:

Includes $0.6m of costs that relate to the restructuring of GVI and AR Capital and the inclusion of expenses from these two companies in the TRG consolidated results. The changes to resourcing made late in the 2012 financial year in TRG/TIS business has resulted in a lower employment cost run rate which will reduce these running costs through the 2013 financial year.

Page 8 of 9

Funds Under Management (FUM)

The proportion of Group FUM within International Equities and Alternatives increased during the year while the proportion in Domestic Equities decreased.

Asset Class	2012	%	2011	%
Australian	6,956,401,283	42.46	8,180,996,267	48.81
Equities
International	4,385,778,604	26.77	4,269,658,640	25.47
Equities
Alternatives	5,041,821,648	30.77	4,310,833,197	25.72
TOTAL	16,384,001,534		16,761,488,104

FUM is sourced from both domestic and international clients. Due to the growth in RARE and Trilogy over the last 12 months, the relative attribution of international sourced FUM has increased relative to domestic clients as shown below:

Investor Origin	2012	%	2011	%
Domestic	14,626,217,682	89.28	15,143,624,090	90.35
International	1,757,783,852	10.72	1,617,864,014	9.65
Total	16,384,001,534		16,761,488,104

The proportion of institutional client FUM increased relative to retail client FUM as the table below shows:

Investor type	2012	%	2011	%
Institutional	13,407,191,117	81.83	13,224,858,113	78.90
Retail	2,976,810,417	18.17	3,536,629,991	21.10
Total	16,384,001,534		16,761,488,104

Page 9 of 9

Treasury Group Limited

Results Presentation 20 June 2012

Agenda

1. Overview

2. FUM & Performance

3. Financial Results

4. Strategy

5. Summary

1. Overview - re-focused strategy, tough decisions taken

Actions taken following the strategic review earlier in the year:
Restructuring of GVI and AR Capital
PRV to be restructured delivering strategic benefits for TRG (details p.17)
Acquisition of interests in Evergreen Capital and Octis Asset Management
Focus on efficiency and costs at Treasury Group. Headcount down 24% during year, ongoing employment costs reduced by $1.3m per annum
Prioritise TRG service delivery on boutique partners in development phase
Acquisition of interests in Evergreen Capital and Octis Asset Management

1. Overview – underlying earnings down in a falling market

Mixed performance from boutiques in falling equities markets
FUM down 2.3%
Strong performance from IML, RARE and Celeste
Average margin from TRG boutiques marginally higher (reversing prior 6 year trend)
TRG financial result down, dividend maintained
Underlying NPAT 17.0% down to $8.1m
$1.3m one-off restructuring costs incurred at Treasury Group
Full year dividend 34 cents, fully franked (7.7% yield)

1. Overview – underlying profit at top of recently announced range

$ % Change	• Funds inflows of $445m offset by market value declines • TRG Underlying NPAT down due primarily to lower TRG share of boutique earnings (mix effect) • Increased Payout Ratio maintains dividend level
Year end FUM ($bn) 16.4 -2.3
Aggregate Boutique Mgmt Fees ($m) 71.0 -5.2
Reported NPAT ($m) 6.8 -32.5
Underlying NPAT ($m) 8.1 -17.0

Final Dividend (cps) 20 -
Full year Dividend (cps) 34 -

1. Overview – drivers of financial performance were mixed

Drivers of Treasury Group NPAT	2012 Impact
Primary
FUM	
Investor/Product/TRG Ownership mix	
Average margin for TRG Boutiques
Secondary
Costs*	
TRG Revenue	

  - Funds flows credible in a difficult market

     - Institutional flows positive at RARE, IML and Celeste

     - Retail investor confidence remains weak

  - Average FUM higher than prior year despite lower year end FUM

  - Employment and other costs at Treasury Group lower excluding one off and restructuring costs

Excludes one off costs related to restructuring incurred during the year
 = positive impact on TRG result  = negative = neutral

2. FUM and Performance – the Australian funds management industry experienced outflows during FY12

Australian Managed Funds Industry – Quarterly Funds Flows

$bn

Source: Morningstar

2. FUM & Performance – investors continuing to prefer defensive asset classes

FUM for TRG Boutiques as at 30 June 2012

TRG continues to diversify assets across managers
Net fund outflows over the year of $244m for TRG boutiques (net fund inflows of $445m including Trilogy)
Flow primarily to institutional. Retail remains weak.

==> picture [283 x 162] intentionally omitted <==

----- Start of picture text -----

Investors Mutual
4%
22% Orion
Celeste
38%
TAAM
27% RARE Infrastructure
5%
4%
Aubrey, AR Capital, GVI
& Evergreen
----- End of picture text -----

2. FUM & Performance – average margin for TRG boutiques marginally higher

Composition of Average FUM vs Average Margin

==> picture [529 x 274] intentionally omitted <==

----- Start of picture text -----

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

2. FUM Performance – continued diversification away from Australian Equities, toward International investors and toward Institutional investors

FUM by Asset Class	2012	2011	2010	2009	2008
Australian Equities	42%	49%	56%	64%	74%
International Equities	27%	25%	26%	27%	20%
Alternatives	31%	26%	18%	9%	6%
TOTAL	100%	100%	100%	100%	100%

FUM by Investor Location	2012	2011	2010	2009	2008
Domestic	89%	90%	92%	91%	97%
International	11%	10%	8%	9%	3%
TOTAL	100%	100%	100%	100%	100%

FUM by Investor Type	2012	2011	2010	2009	2008
Institutional	82%	79%	77%	69%	63%
Retail	18%	21%	23%	31%	37%
TOTAL	100%	100%	100%	100%	100%

2. FUM & Performance – superior long term performance

Performance Relative to Comparative Indices (%pa) – Net of Fees to end June 2012

	1 Year Excess Returns	3 Year Excess Returns	5 Year Excess Returns	Since Inception	Inception Date	Sample Ratings
Aubrey Global Conviction(GBP)	-6.6	2.1	--	0.7	Jan 2007	Zenith- rating underway
Celeste Australian Small Companies	12.6	12.1	8.5	11.4	May 1998	Lonsec – Highly Recommended
Evergreen AERF		--	--	15.7	May 2010	Zenith- Recommended
Investors Mutual - Australian Share	8.3	4.0	3.2	2.8	Jun 1998	Lonsec – Recommended
OCTIS	1.8	--	--	4.6	Oct 2007	Zenith- Recommended
Orion Australian Share(Gross)				0.9	Jun 2003	Morningstar- Neutral
RARE Infrastructure Value (AUD Hedged)	-3.5	2.6	3.8	3.5	Aug 2006	Lonsec-Highly Recommended
TAAM New Asia	-1.6	-4.5	-3.6	-0.8	Nov 2005	Zenith- Recommended

3. Financial Results – net margin steady, costs controlled

Aggregate P&L of TRG Boutiques ($m) 2012 2011 % Change	• Management fees lower due to lower performance fees • Other income lower due to prior year gains on sale of investment assets at IML • Expenses controlled and 8.5% lower excluding one off restructuring costs of $2.9m. • TRG share of NPAT lower primarily due to lower participatio
Year end FUM ($bn) 16.4 16.7 -2.3
Management Fees 71.0 74.9 -5.2
Other Income 2.9 4.6 -36.7
Average Net Margin (%) 0.51% 0.51% -
Total Expenses* 34.3 34.3 -
NPBT 39.3 45.2 -13.1
Income Tax 7.8 10.9 -28.4
NPAT 31.5 34.4 -6.6
TRG’s Share of NPAT 11.5 14.0 -18.1

TRG share of NPAT lower primarily due to lower participation in performance fee income at Celeste

2012 expenses include $2.9m of restructuring costs incurred during the year

** Table excludes Trilogy

3. Financial Results – normalised net profit was lower due primarily to lower Equity Share of Associates NPAT

Treasury Group P&L ($m)	2012	2011	% Change	•	TRG Revenues lower due to
					lower interest income and
Revenue	3.945	4.493	-12.2
					reduction in service fee income
Expenses	8.902	8.680	+2.6
Equity Share of Associates NPAT	11.485	14.015	-18.1	•	Headcount reduction at TRG
Net Profit After Tax	6.752	10.005	-32.5		will reduce ongoing
Normalised NPAT	8.076	9.727	-17.0		employment expenses by
Basic Earnings Per Share (cents)	29.3	43.4	-32.5		$0.7m per annum. Associated
					redundancy costs were $0.1m

3. Financial Results – alternatives (incl.RARE ) delivered increased earnings during the year whilst Australian Equities (incl. Orion) was lower

==> picture [594 x 374] intentionally omitted <==

----- Start of picture text -----

Contribution to FY12 NPAT
by Business Segment
12.0
10.005
10.0
0.707
8.0 0.024
6.752
(0.479)
(2.545)
(1.324)
$m 6.0
4.0
2.0
0.0
FY11 Australian International Alternative Overhead, One off items FY12
Equities Equities Equities Outsourcing,
RE Services
----- End of picture text -----

3. Financial Results – an increased payout ratio this year maintains a strong dividend yield

Final fully franked dividend of 20 cps

==> picture [321 x 242] intentionally omitted <==

----- Start of picture text -----

Dividend History
70
60
50
40
cps
30
20
10
0
2006 2007 2008 2009 2010 2011 2012
Interim Final
----- End of picture text -----

Full year dividends of 34 cps fully franked
Dividend yield of 7.8% fully franked (based on 20/8/12 share price)
2012 Payout ratio at approx 100% of normalised NPAT
Payout ratio in future years will depend on capital requirements for growth opportunities

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

•	Expand and diversifyportfolio of boutiques	
•	Invest inDistribution and Marketing capability	
•	Pursueefficiency and returns from Support Services	
•	Optimise investment structureswhere possible (operational, tax)	
•	Improvecapital management	
•	Consider broad range of investment opportunities	Ongoing

4. Strategy – proposed restructure of PRV

Restructure initiated by TRG and developed together with PRV board
Off market buyback of up to 75% at price of NTA less costs (est. 78.9cents), subject to approval of PRV shareholders
Various issues with existing PRV model:
trades consistently at significant discount to NTA
carry forward losses (from 2008 buy-back and restructure) = inability to pass through dividend income in declining Equities markets
overly restrictive investment mandate frustrates TRG’s seed funding goals
Possible TRG outcomes from restructure:
revised investment mandate including focus on seeding
ongoing services and investment management contracts post restructure
lower ongoing management fees from lower FUM post buy-back
upfront compensation and fees
increased level of control

4. Strategy– address opportunities

Expand and diversify portfolio of boutiques
Invest in Distribution and Marketing capabilities
Optimise investment structures where possible
Improve capacity to provide seed funding
Pursue M&A opportunities at corporate level
Seek limited number of third party clients for Distribution and Investment Support services

5. Summary

Investor confidence remains fragile
Low risk asset classes favoured by investors
Cyclical swing away from Growth style towards Value and Alternatives
Retail investors remain very cautious globally – net outflows
Long term fundamentals for funds management are positive
Year of consolidation for Treasury Group
Hard decisions taken at portfolio and Treasury Group levels
Underlying financial performance reflective of market conditions
TRG positioned for growth, both organic and via mergers and acquisitions

Partnering with outstanding investment professionals to deliver superior investment performance to clients

Superior alignment of investment team incentives to client outcomes

Equity ownership delivers greater team stability

Treasury Group value add:

Distribution and marketing capability
Efficient provisions of support services
Provision of working capital and seed funding

==> picture [122 x 18] intentionally omitted <==

==> picture [135 x 26] intentionally omitted <==