THORNEY OPPORTUNITIES LTD — AGM Information 2015

Nov 23, 2015

THORNEY OPPORTUNITIES LTD ACN 080 167 264

ASX Announcement: 24 November 2015

ASX Code: TOP

2015 ANNUAL GENERAL MEETING CHAIRMAN’s ADDRESS

In accordance with ASX Listing Rule 3.13.3., please find attached a copy of the Chairman’s Address.

Please note that a live broadcast of the meeting will be available from 11:00am using the following link:

http://thorneyopportunities.com.au/agm/

Please direct enquiries to: Craig Smith Company Secretary

Level 39, 55 Collins Street, Melbourne Vic 3000 Telephone + 61 3 9921 7116 Facsimile + 61 3 9921 7100

Chairman’s address

Ladies and gentlemen we began the 2014/15 financial year expecting global markets to remain volatile and in that sense we were not disappointed. It has been a very difficult year for all investors, whether they were conservative holders of blue chip portfolios or high conviction value stock pickers such as Thorney Opportunities (TOP).

As you know our focus at TOP remains on producing absolute returns over the medium to long term through the careful selection of investments at prices that represent value and have the potential to outperform over time, especially when we can play an active role.

I'm very pleased to say that in this difficult environment, your company has performed very well. It has continued to deliver on our initial aspirations. Despite the global market volatility TOP has increased its Net Tangible Asset backing per share from 46.6 cents at June 30 last year to the most recently announced NTA figure of 57.2 cents at October 2015, an increase of 23%.

We also paid our first dividend to shareholders and intend to continue this policy in future years, as we accumulate franking credits.

The performance of TOP is particularly pleasing when compared with that of the overall sharemarket over the same period where the All Ordinaries Index decreased by 1.7%.

TOP NTA v Small Ords Index (XSO)

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30%
20% NTA
10%
0%
Small
-10%
Ords
Index
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This graph shows the performance of TOPs NTA against the Small Ordinaries Index since June 30 last year. As you can see TOPs NTA has grown steadily while the overall market has declined.

It's also pleasing to see that TOPs share price has begun to erode some of the Discount gap between it and its NTA. As I've been saying regularly I can see no reason why a listed investment company's share price should significantly lag its NTA if the investment company has a good track record of outperformance and investors have confidence in the investment manager's ability to continue delivering.

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Thorney Opportunities Ltd 2015 Annual General Meeting

Chairman’s address continued

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I remain optimistic that over time the market will continue to revalue TOP to align its share price more closely with its NTA, and even to justify trading at a premium if we continue to outperform.

Ladies and gentlemen, as I said at last year’s AGM, and have repeated subsequently, the prudent course for TOP remains continuing to hold a significant proportion of our investment portfolio in cash until such time as compelling opportunities arise.

TOP AUM / Deployment of Cash

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$120 M
$100 M
Financial
$80 M
Assets
$60 M
$40 M
$20 M Cash and
$-
cash equiv.
Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15
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Nevertheless we continue to deploy cash when our due diligence supports a potential opportunity. This chart shows how we have deployed cash since we first assumed management control with around $78 million in late 2013.

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Thorney Opportunities Ltd 2015 Annual General Meeting

Chairman’s address continued

You can see that largely due to the strong performance of our equity portfolio, the value of our gross assets under management has now grown to just over $100 million. As of today we are holding just over $27 million of that in cash.

This next chart shows the breakdown of our current portfolio. We're still holding some 27% in cash or cash equivalents. While this is a reduction in cash over the past 12 months, it still allows us plenty of scope to take advantage of opportunities as we see them.

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The major new addition to our portfolio since last year’s AGM is the Tasmanian Poppy grower TPI. We will be hearing from TPI shortly so I won't go into detail on that stock right now.

Our other major holdings remain AMA Group, Money 3 Corporation, Service Stream and Diversa. We have also bought some shares in Fairfax Media, a company which we have held for some time in the private Thorney group and which we believe still represents good long term value.

In addition to these publicly declared stocks we also hold a number of trading positions which combined make up less than 4% of our total assets under management. We have a policy of not revealing or discussing these positions in case they are simply short term trades or indeed in case we decide we want to accumulate more without alerting the wider market to our intentions.

Ladies and gentlemen we have communicated regularly with you over the last 12 months via my Chairman’s Updates so I don't propose to go into detail again about every one of our holdings. Instead I would like to highlight two of our better performers and one disappointment. Then we will hear from the CEOs of Australian Renewable Fuels, Diversa and Tasmanian Poppy Industries.

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Chairman’s address continued

Two of our standout performers over the last 12 months have been AMA the smash repair and automotive aftercare group, and Service Stream, the telecommunications and utilities infrastructure service company.

We first began buying AMA shares in March last year at a price of around 24 cents. The current price is around 99 cents which represents a return of more than 300%. In the case of Service Stream, we participated and underwrote their $20 million capital raising announced in January 2014, acquiring shares in both the Placement and the Rights issue at an average price of around 21 cents. The share price is now around 37 cents or some 60% higher. The performance of these two companies highlights that TOPs due diligence and high conviction stock selection processes can deliver significant value creation over time.

Of course not all the stocks in our portfolio have performed this well. If they had, our NTA would be much higher than it is now. I admit we have gotten one or two of our share selections wrong at least from a timing point of view. But they remain in a small minority. And as evidenced by our NTA growth the overall value of our portfolio has significantly outperformed the sharemarket.

At last year’s AGM I argued that our investment in the mining equipment provider Austin Engineering would likely be a 2016/2017 turnaround story. Austin's share price has fallen significantly further since then. We remain committed to the Austin story and in keeping with our proactive approach to the companies we invest in, we've taken steps to become more involved in Austin and we have pushed for change. We were instrumental in ensuring the company's chairman is not standing for re-election this year. We will continue to play an active role in Austin and are determined that shareholders will see value return and growth over time.

Ladies and gentlemen another company which has been an under performer since TOP inherited its stake in the restructure of the company formerly known as Wentworth Holdings is Australian Renewable Fuels. ARW was hit hard by changes to the biodiesel excise regime announced by the Abbott government two years ago. TOP supported the company's efforts to show the government why it had made a mistake and damaged the industry. ARW was successful in having the legislation overturned. We believe ARW now has the potential to live up to some of its earlier promise and we've invited CEO Andrew White along to give you a brief presentation.

Before Andrew begins can I ask you that in the interests of time to please refrain from asking any questions during or after the presentations. All three presenting company executives have agreed to remain after the meeting concludes and will be happy to answer your specific questions over morning tea.

And so now please welcome the CEO of Australian Renewable Fuels , Andrew White. Andrew...

Our next presentation is from the CEO of Diversa Limited Vincent Parrot. TOP holds an 11% interest in Diversa which is a financial services company providing services to the rapidly

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growing superannuation industry. We have high hopes for Diversa's long term prospects and I'm very pleased to invite Vincent to present to us now. Vincent....

Our third and final presentation is from Jarrod Ritchie CEO of Tasmanian Poppy Industries. TOP took shares in the recent IPO of TPI. The company's share price performance was initially disappointing to say the least. It has since started to recover but remains below the issue price. Again we think the long term prospects for the company are good even though in hindsight the IPO was overpriced. We have been buying shares at lower prices and we now hold 6% of the company. Please welcome TPIs CEO. Jarrod Ritchie

Thanks Jarrod. I hope you found those brief presentations interesting and that they gave you a deeper understanding not only of the companies themselves but also why TOP is a supporter of them for the long term.

And speaking of the long term, it's become a cliché to say that we live in a world of uncertainty and extreme shock events that can emerge in both the geopolitical and economic areas.

Nevertheless having lived through a number of cycles over my investing career, I remain more optimistic than pessimistic about the medium term outlook for TOP and our shareholders despite the prospect of continuing volatility.

As you know our investment model is one of doing extensive due diligence on many companies but taking high conviction positions in only a few where we can see real value and the opportunity to help them outperform over time. I believe this will mean that while we can never be fully isolated from the global macroeconomic and geopolitical landscape, our model will prevail over the long term and deliver real benefits to our shareholders. My personal aspiration is to see TOP shares trading at more than $1 over the next several years.

Ladies and gentlemen we will soon be moving to the formal business of the meeting. But before doing so I would like to thank my fellow board members for their support and guidance over the course of this first full year of operations under TOP’s investment management.

I also want to express my appreciation to our entire investment management team and to our support staff for all their efforts.

Thanks also to all shareholders for your support. I look forward to continuing this journey with you.

Alex Waislitz Chairman

Thorney Opportunities Ltd 24 November 2015

Thorney Opportunities Ltd 2015 Annual General Meeting

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