Pacific Current Group Ltd Annual Report 2015

FY2015 Annual Report · Pacific Current Group Ltd

Loading PDF…

Annual Report 2015

Contents

About us

ifc Results at a Glance
1
2 Chairman’s Report
4 CEO’s Report
7 Review of Boutiques
13 Directors’ Report
35 Auditor’s Independence Declaration
36 Consolidated Income Statement
37 Consolidated Statement of Comprehensive Income

38 Consolidated Statement of Financial Position
39 Consolidated Statement of Changes in Equity
40 Consolidated Statement of Cash Flows
41 Notes to the Financial Statements
77 Director’s Declaration
Independent Audit Report
78
80 ASX Additional Information
81 Corporate Information

In accordance with ASX Listing Rule 4.10.3, Treasury Group’s Corporate Governance Statement can
be found on its website at www.treasurygroup.com/Aboutus/CorporateGovernanceResponsibility.

Results at a Glance

A transitional year from an operational and
strategic perspective. Geographic and income
diversification now positions the Company in
a unique position going forward.

Key Financial Highlights during the year:

Normalised net profit
after tax (NPAT)

Total funds
under management

Full year dividend
(fully franked)

$18.7m

$49.0bn

52c

Year End FUM ($bn)

Aggregate Boutique Management Fees ($m)

Reported NPAT ($m)

Underlying NPAT ($m

Final Dividend (cps)

Full Year Dividend (cps)

49.0

168.3

138.7

18.7

28.0

52.0

% change

92.9

71.2

958.7

33.6

3.7

4.0

About us

Treasury Group is a global multi-boutique asset
manager, focused on boutique fund management
companies across the world. We provide strategic
capital and structure ﬂexible partnerships, to create
exceptional alignment with our fund managers.

Our philosophy

Each partnership is
created with ﬂexibility
to create exceptional
alignment with our
boutique managers.
We apply capital,
strategic insight, and
global distribution to
support the growth and
development of our
partner boutiques. Our
goal is to help boutique
funds focus on their
core business and what
matters most – investing.

What we offer our boutiques
• Strategic and complementary capital –
we seek to complement their business,
not control

• Flexible ownership structures – our

goal is to create exceptional alignment
with our partners, so every partnership
is uniquely tailored to ﬁt the speciﬁc
manager’s needs

• Global distribution and marketing

services to help grow underlying AUM
at the boutique level – allowing portfolio
managers to remain focused on
investing

• Access to our global network and

strategic insight – there are many ways
we help support the development of
our boutiques, speciﬁcally by providing
intelligent insight and connecting them
with the right people

Annual Report 2015

Chairman’s Report

On behalf of the Board, I am delighted
to report on a transformational year at
Treasury Group.

The business has undergone signiﬁcant change since
my last report, having successfully completed the merger
with Northern Lights in November 2014. The merged
group is now a well-diversiﬁed international multi-
boutique funds management business, with $49 billion
in FUM through 19 funds management businesses.

During the year, the Company also successfully
conducted an equity capital raising through an
institutional placement and shareholder purchase
plan. The Company was extremely pleased with the
strong support received from existing shareholders.
This exercise resulted in the Company being strongly
positioned to execute our long-term strategy of retaining
balance sheet ﬂexibility and pursuing accretive future
investment opportunities.

The Company’s balance sheet position was also further
strengthened following the announcement of the partial
sell down of RARE Infrastructure to Legg Mason in July,
post year-end. The $200 million sale price represented
a spectacular return on $5 million of non-recourse
debt. Treasury Group now has the cash resources to
diversify aggressively.

Treasury Group’s enduring success has been
underpinned by its operational excellence and strong
management team. In March, Chief Executive Ofﬁcer,
Andrew McGill, gave notice of his intention to leave the
Company and he ceased employment on 28 August
2015. Tim Carver, Executive Director of Northern Lights
Capital Group will succeed Mr McGill, both having
worked closely since the merger of the two groups,
transitioning the business effectively.

At board level we saw changes with the resignation
of Reub Hayes having signiﬁcantly contributed to
the Company over his last 8 years in this leadership
position. The Board also welcomed two new non-
executive directors Gilles Guérin and Jeff Vincent, and
three executive directors Paul Greenwood, Joseph
Ferragina and Tim Carver.

Together, Treasury Group and Northern Lights have an
extremely experienced Board and management team,
and we are conﬁdent this team is well positioned to
drive growth going forward.

Against a backdrop of signiﬁcant change, the
performance of the merged Company this year
was mixed. In particular, WHV did not perform
as well as expected.

However, the Company has taken a huge step from being
domestic centric ,where new opportunities are becoming
increasingly challenging, to become a global business
undertaking research on new fund managers in the
North American and European markets. In addition, we
have further strengthened our distribution team and have
greater scale in these larger markets. This should result
in greater opportunities for growth for a number of our
investment managers.

Financial Results
Treasury Group’s underlying net proﬁt after tax increased
to $18.7 million, up 33.6% on the prior year. Statutory net
proﬁt after tax was $138.7 million, an increase of 958.7%.

Funds Under Management
Funds under management increased by 93% to
$49.0 billion at year-end. This reﬂected the addition
of the Northern Lights business to the overall group.

Dividend
The Board declared a fully franked ﬁnal dividend of
28 cents per share in August, taking the total dividends
for the year to 52 cents per share. This equates to an
increase of 4% on the total dividends for FY2014 and
a 71% payout ratio for the year, well within the targeted
range. The Board has conﬁdence in the outlook for the
business and reafﬁrms the targeted payout ratio band
of 60%–80%.

Fund Manager Performance
The ﬁnancial results were underpinned by the positive
growth in funds under management and earnings from a
number of our key boutiques including, RARE, Investors
Mutual, Seizert and Aether. Going forward and once
the partial sale of RARE is completed, the key drivers to
earnings will be IML, Seizert and Aether, reﬂecting the
diversiﬁcation that has been achieved through the merger
with Northern Lights. Another element of diversiﬁcation
will be the exposure to businesses that deviate from the
traditional long-only style of investment management
and towards a range of investment management styles.
This strategy is reﬂected in a number of our boutiques,
including Aether, which have a private equity style
investment strategy, and Raven that focuses on the
US private credit market.

IML

RARE

Trilogy

ROC Partners

Seizert

Aether

EAM

Tamro

WHV

Others

FUM at 30 June 2014

FUM at 30 June 2015

IML

RARE

Trilogy

ROC Partners

Others

Social Responsibility
The business, from the Board down, recognises its
corporate social responsibility. As such, the Company
continues to support a number of very capable and
hard working organisations in their efforts to bring about
worthwhile social change. For a number of years, we
have supported Third Link Investment Managers via
the provision of investment and support services on a
pro-bono basis, with all fees received being donated to
the not-for-proﬁt sector. We have also supported Social
Ventures Australia, which invests in social change by
increasing the impact and sustainability of a range of
charities. It provides funding and strategic support
to carefully selected non-proﬁt partners. Third Link
and Social Ventures are wonderful organisations and
I invite you to learn more about their work by visiting
www.socialventures.com.au.

Outlook
The Board and management of Treasury Group have
worked hard on behalf of shareholders over the course
of the 2015 ﬁnancial year, to transform the Company
to enable it to build the next platform for growth. The
Company was evolutionary when it started the concept
of backing and investing in boutique fund managers
in 2001, but (from an Australian perspective) it had
reached a point where the next step in its evolution
was to develop a more global footprint.

The Company now has greater diversiﬁcation, a stronger
management team and robust global distribution from
which to grow over the medium to long term.

Finally, I would like to thank all our staff, boutique partners
and clients for their continued support and I look forward
to continuing to work closely with you as Treasury Group
embarks on this next phase of growth. In particular,
I would like to thank Reub Hayes for his service and
contribution to the Board over many years. Reub provided
wonderful insight with his 40 years of experience. I would
also like to thank Andrew McGill for his four years of
service as Managing Director and CEO. Over his tenure
the business saw greater levels of efﬁciency and became
more focused on investment activities, which culminated
with the merger with Northern Lights. I extend well wishes
for both in their future endeavours.

Mike Fitzpatrick
Chairman

Annual Report 2015

CEO’s Report

Strong earnings growth, consolidation of the merger
of Treasury Group Ltd (“Treasury Group”) and
Northern Lights Capital Group (“Northern Lights”),
changes to the Board and leadership team, the
partial sale of RARE Infrastructure and other events
marked a year of fundamental change to the shape
of Treasury Group’s/Northern Lights’ business.

Business Performance
2015 was a year of fundamental change for our business.

In November 2014, Treasury Group’s merger with
Northern Lights was completed. The merger created an
international portfolio of asset management businesses
increasing portfolio diversiﬁcation and delivering
strengthened investment and distribution capabilities.
During the year, executives have adjusted to new
reporting lines and, in some cases, changed scope of
responsibility as two businesses have become one.
Sales, Finance and Compliance teams have integrated
and new reporting and management systems have been
implemented. At an executive level, we have beneﬁtted
from the outset from strong cultural compatibility and
positive attitude across the executive team.

Highlights for the year (and post year end) included:

– Completion of the merger of Treasury Group and

Northern Lights in November;

– Consolidation of operational and management
functions across 6 ofﬁces, 34 staff, 3 primary
regulatory and tax jurisdictions and a portfolio
of 19 boutiques;

– $40 million capital raising completed in December/

January; and

– Conditional partial sale of Treasury Group’s/

Northern Lights’ interest in RARE Infrastructure.

These and other events have fundamentally changed
the scope and shape of our business. We are now less
dependent on a small number of Australian-based
boutiques. We have international Sales, Investment and
other executive capabilities. For the ﬁrst time, we have
signiﬁcant amounts of capital available for investment.

Undoubtedly we have faced signiﬁcant challenges during
a period of such marked change. We are frustrated that,
as yet, we’ve not been in a position to announce new
investments to deploy capital allocated for this purpose.
It has not been for a lack of effort by our executives. Our
executives remain resolute in their focus on high quality
opportunities and conﬁdent that one of more growth
opportunities will be realised in the short term.

Operational and Financial Performance
Total funds under management increased signiﬁcantly
during the year to ﬁnish at $49.0 billion. This was primarily
due to the merger of Treasury Group and Northern
Lights, but also reﬂected favourable market conditions
for most of the year. In addition, increased FUM reﬂected
strong investment performance at key Treasury Group/
Northern Lights boutiques. Net funds inﬂows were
experienced at Investors Mutual, whilst net funds outﬂows
were experienced at RARE Infrastructure and WHV. Our
portfolio now includes an increased proportion of FUM
from closed ended investment vehicles at Alternatives
boutiques such as Aether and ROC Partners, which are
naturally less exposed to short term changes in FUM.

In FY2015, the average net margin earned by our
boutique partners on FUM was 47 basis points.
This was slightly lower than for the prior year due to
the mathematical result from merging the Treasury
Group and Northern Lights FUM ﬁgures.

Our ﬁnancial accounts this year include a signiﬁcant
amount of accounting “noise” due to the scale of
fundamental changes to the business. Therefore,
I encourage shareholders to focus on underlying net
proﬁt after tax which was $18.7 million, an increase
of 33% versus prior year.

Statutory net proﬁt after tax was $138.7 million,
signiﬁcantly higher than last year, primarily due to the
impact of large abnormal gains which were booked
at the time of the merger when the carrying value
of our boutique portfolio was marked-to-market for
accounting purposes.

Whilst the merger with Northern Lights has been positive
overall, we have been disappointed with WHV. Investment
performance at WHV has been poor and it has lost
signiﬁcant FUM. For accounting purposes, the Board
took the decision to write off the value of our position
in WHV and our statutory results for FY2015 includes
an impairment charge.

The correlation between Treasury Group’s earnings
and the level of listed equities markets was evident
again this year as illustrated in the chart below. Whilst
this relationship can be expected to endure, the
more internationally diversiﬁed nature of Treasury
Group/Northern Light’s portfolio now will mean that
international equities markets and exchange rates
will be of increased inﬂuence in future.

Financial Performance

Treasury Group Underlying Proﬁt

S&P/ASX 300

Treasury Group
ﬁnancial performance is
correlated with the level
of listed equities markets.

The S&P/ASX 300
Index increased by
1.1% during 2015.

Source:
Treasury Group,
Standard & Poor’s

2008
2008

2009
2009

2010
2010

2011
2011

2012
2012

2013
2014

2014
2015

Market Environment
With Treasury Group’s/Northern Lights’ portfolio of
boutiques and investment products weighted towards
Equities in the US and Australia, the performance of
the US and Australian economies are an important
backdrop to our business. Generally speaking, the
market backdrop was favourable for our portfolio of
Equities funds management businesses – in the US, the
Dow Jones Industrial Average increased 4.7% during the
year while the NASDAQ composite increased by 12.5%.
Having increased by over 10% through April, the S&P/ASX
200 Index ended the year only marginally higher, up 1.2%
for the year, following signiﬁcant losses in May and June.
Once again, there were marked differences between the
performance of Australian market sectors - the S&P/ASX
200 Resources Index fell by 20% during the year while
the S&P/ASX Industrial increased by 10%.

Australian March quarter GDP statistics showed that
the Australian economy grew by 2.3% year on year to
that point in time. However, commentators noted that
domestic consumption, an important economic driver,
was soft. Also, falls in commodity prices in FY2014
and FY2015 has inevitably resulted in lower business
investment in mining and resources projects. Given a
somewhat uncertain economic background, it was not
surprising that during the year the RBA twice lowered
ofﬁcial interest rates and they ﬁnished the year at 2.0%,
a record low.

During the year, the US economy continued its recovery
with GDP growth of 2.3% in the June quarter and
unemployment rates and other economic indicators
generally improving with the consequence that investors
now expect future rises in ofﬁcial US interest rates.

Annual Report 2015

CEO’s Report
continued

Volatility in ﬁnancial markets was high driven by events
such as the highly reported issues in Greece. Through
the ﬁnancial year, markets also reacted to the reality of
the slowing Chinese economy and this was reﬂected in
commodity prices, with iron ore collapsing approximately
50%. Commentators regard this as a dominant factor
inﬂuencing the Australian dollar which declined
approximately 18% during the year. Currencies were also
inﬂuenced by changing interest rate relativities as central
banks around the world engaged in actions designed
to facilitate lower currencies and assist their respective
domestic economies.

For Treasury Group’s Australian shareholders, the timing
of the merger with Northern Lights has to date been
fortunate in relation to foreign exchange exposures
as, in essence, the merger involved trading ownership
of a portfolio of boutiques which was predominantly
exposed to AUD revenues for a share of larger portfolio
of boutiques with exposure to both USD and AUD
revenues. Currency exposures are now an important
consideration for the Treasury Group board. At present,
Treasury Group’s/Northern Lights’ AUD earnings are
protected from USD currency changes due to a natural
hedge with our USD denominated external debt and
operating expenses. When this debt is repaid the
natural hedge within our business will be signiﬁcantly
unwound and thereafter currency movements will, in the
absence of any future hedging actions by the Treasury
Group board, have greater impact on Treasury Group’s/
Northern Lights’ earnings.

Funds management as an industry continues to provide
an attractive investment opportunity for investors with
mandated compulsory superannuation contributions
rising and Australia remaining one of the fastest growing
funds management sectors globally. Treasury Group/
Northern Lights remains well placed to beneﬁt from
these strong industry fundamentals.

Conclusion
FY2015 saw earnings growth for a 4th consecutive year,
signiﬁcantly greater portfolio diversiﬁcation, and improved
internal capabilities at Treasury Group/Northern Lights
including within our sales and investment teams. The
completion of the Treasury Group/Northern Lights merger
and the sale of RARE Infrastructure were signiﬁcant
events for our business. We are well capitalised with
signiﬁcant opportunities potentially available to us.

By the time that this letter is published, my tenure as
CEO and Managing Director at Treasury Group/Northern
lights will have ended. Treasury Group’s/Northern Lights’
position today is very different from Treasury Group’s in
2011 when I was hired by the board of Treasury Group
with the brief to reconsider the business model in light of
a signiﬁcantly changed market environment to that which
prevailed when the multi-boutique funds management
model was ﬁrst conceived. The events of FY2015
are milestones of a fundamental repositioning of our
business that has been accomplished by the executive
team and Board in recent years and I am proud to have
been a part of that.

Looking forward as a shareholder of Treasury Group/
Northern Lights, I am very conﬁdent in the capability
of the leadership team led by Tim Carver and with the
support of Paul Greenwood, Joe Ferragina and the
non-executive directors. I wish Tim and the team all
the very best for the continued growth and success
of our business.

Finally, I would like to thank all Treasury Group/Northern
Lights employees and also staff at our boutique partners
for their professionalism and expertise again this
year. Treasury Group’s/Northern Lights’ business is a
people-based business model and outcomes for our
shareholders are a direct result of the continued skill,
expertise and diligence of our people.

Andrew McGill
Managing Director and
Chief Executive Ofﬁcer

Review of Boutiques

AlphaShares, LLC
(“AlphaShares’)
Walnut Creek, California, USA
- based AlphaShares produces
a series of China equity indices
on which numerous exchange
traded funds (“ETFs”) are based.
Guggenheim Partners is the
advisor for all of the ETFs that utilize
AlphaShares’ indices. Asset ﬂows
into these ETFs tend to reﬂect current
market sentiment toward Chinese
equities, and signiﬁcant swings in
asset levels are common. Early in
2015, assets expanded dramatically
as Chinese equities soared. After the
correction late in the second quarter,
asset levels reverted to early 2015
levels. As of 30 June 2015, assets
in AlphaShares based ETFs were
$590 million.

While AlphaShares revenues are
modest, it has a very low cost
structure and high margins at
current revenue levels.

Aubrey Capital Management
(“Aubrey”)
Aubrey is a global equity growth
manager based in Edinburgh,
Scotland. Led by Andrew Dalrymple,
the Aubrey team members are
experienced global equity investors
focused on concentrated portfolios
of growth stocks. Aubrey is also the
appointed sub manager of the GVI
Global Growth and Income Funds.

Aubrey’s funds under management
(“FUM”) ﬁnished the year ending
30 June 2015 at $607 million. FUM
beneﬁtted from the successful launch
of the Aubrey Global Emerging
Markets Fund in the UK.

While markets over the ﬁnancial year
have been volatile, Aubrey ended the
year well ahead of the benchmark
for its ﬂagship portfolio, the Global
Conviction Fund.

Aether Investment Partners
(“Aether”)
Aether was founded in 2008 and is
located in Denver, Colorado, USA.
The ﬁrm is a private equity fund of
funds manager focused on real
assets. Examples of the real asset
sectors in which it operates include
oil and natural gas, metals and
mining, and agriculture and timber.
The two founders, Troy Schell and
Sean Goodrich, have built a ﬁrm
widely recognised as an industry
leader. Aurora’s stake in Aether was
substantially increased at the time
of the Northern Lights/Treasury
Group merger.

Aether believes that investment
returns and alignment of interests
between fund managers and
investors are generally better with
investments in smaller funds that are
managed by teams that possess
deep operational and/or technical
experience. The ﬁrm has $1.17 billion
of committed capital as of 30 June
2015. Aether has typically gone to
market to raise additional capital
every two years; its last funds being
raised late 2013.

The collapse in commodity prices
has had an impact on the short-
term performance of Aether’s
funds; however, the contractual
nature of the ﬁrm’s management
fees largely insulates Aurora (and
therefore Treasury Group) from
performance volatility.

Annual Report 2015

Review of Boutiques
continued

Celeste Funds Management
(“Celeste”)
Celeste is a long-only Australian
equities manager based in Sydney
with a focus on smaller listed
companies. The Celeste team
aims to provide above benchmark
returns for investors who possess
a conservative nature and a patient
disposition. During the year, FUM
fell from $597 million to $457 million
as of 30 June 2015. While short-
term performance has been behind
benchmark, performance relative to
the benchmark over the long term
and since inception remains positive.

Blackcrane Capital
(“Blackcrane”)
Blackcrane was founded in 2012
by Dan Kim and Aaron Bower and
is located in Bellevue, Washington,
USA. The ﬁrm manages concentrated
international and global equity
portfolios. Blackcrane’s mission is
to provide investors with substantial
excess returns through its relatively
unconstrained portfolios. The ﬁrm’s
investment process is focused on
identifying companies undergoing
signiﬁcant change, where the
ﬁrm believes that the behavioural
biases of other investors affords
Blackcrane an opportunity to
outperform its benchmark through
its opportunistic approach.

Northern Lights’ initial investment in
Blackcrane occurred in April of 2014,
when funds under management
were less than $10 million. Northern
Lights’ (and subsequently Aurora’s)
distribution team has worked closely
with the ﬁrm to grow FUM to $208
million as of 30 June 2015. Interest
in Blackcrane’s strategies has
grown dramatically, in part due to
its distinctive investment approach
and top percentile performance.

EAM Investors, LLC
(“EAM”)
In April 2014, EAM Investors, LLC
(“EAM Investors”), a US equity-
focused investment manager,
launched its international equity
management subsidiary, EAM
Global. EAM Global is jointly owned
by EAM Investors and Aurora, and
offers emerging markets small
cap, international small cap, and
international micro cap strategies
to institutional investors. EAM
Investors and EAM Global are based
in Cardiff-by-the-Sea, California,
USA, and operate under the shared
leadership of Travis Prentice, Montie
Weisenberger, and Josh Moss who
together have managed small and
micro cap portfolios for institutional
clients for well over a decade. The
combined FUM of EAM entities
as of 30 June 2015 was $1.95 billon,
of which $155 million represents
FUM of EAM Global.

Aurora’s interest in the group’s non-
US equity products is based on its
belief that the investment strategy
should work well in less efﬁcient
markets outside the US. So far, this
investment thesis has been validated,
as EAM Global continues to post
above benchmark returns in all of its
non-US equity offerings. Moreover,
the Aurora distribution team has
begun to generate signiﬁcant
interest in EAM Global’s strategies,
and Aurora believes the growth
prospects to be strong.

Freehold Investment
Management (“FIM”)
FIM is a boutique investment
management company based
in Melbourne, Australia with key
capabilities in the real estate and
infrastructure sectors. It manages a
range of strategies across Australian
and global real estate securities,
listed infrastructure securities and
direct real estate. FIM is focused on
providing investment opportunities
within core, value-add, opportunistic
and development sectors of direct
and unlisted real estate.

FIM experienced strong growth in
funds under management over the
year, increasing from $110 million to
$282 million. The manager continues
to build on positive momentum in
the retail market and now sits on a
number of product platforms.

Performance of the Absolute Return
Fund continues to be strong, while
the ﬂagship Freehold AREIT and
Listed Infrastructure Fund is ahead
of benchmark since inception and
has now passed its three-year
anniversary milestone.

Goodhart Partners
(“Goodhart”)
Goodhart was founded in 2009 as
a result of a management buyout of
the multi-manager team at WestLB
Asset Management. Initially focused
on building unique multi-manager
products employing specialist
managers, London-based Goodhart
now offers a suite of single-manager
strategies, utilizing both in-house
and select third-party managers.
Goodhart acts as investment
manager and global distributor to
the Luxembourg-based Goodhart
Partners Horizon Fund and the
Goodhart Partners Longitude
Fund, which Goodhart uses to
launch UCITS and SIF vehicles for
its in-house and partner company
investment strategies. Today,
Goodhart manages approximately
$624 million in assets across three
strategies: Japan small and all-cap
equity, emerging markets equity,
and absolute return.

Investors Mutual Limited
(“IML”)
Sydney based IML, led by the
experienced team of Anton Tagliaferro
and Hugh Giddy, employs a
conservative investment style with a
long-term focus that aims to deliver
consistent returns for clients. It
achieves this through the disciplined
application of a fundamental and
value-based approach to investing.

During the year ending 30 June 2015,
funds under management rose to
$5.7 billion, an increase of 16.3%
for the year. This was sustained by
the continued institutional support,
market growth and positive retail
ﬂows experienced over the year.

Performance continues to be solid
across all of IML’s Funds, with the
ﬂagship Australian Share Fund
performing strongly against its
benchmark and peers.

IML was awarded the Morningstar
Fund Manager of the Year Domestic
Equities, (Large Cap) for 2015. IML
was determined to be the winner after
coming out on top of a combination
of qualitative and quantitative factors
as researched by Morningstar’s
fund analysts. Additionally, IML was
nominated as a ﬁnalist in two other
categories in the 2015 Morningstar
Awards: Fund Manager of the Year,
Australia and Domestic Equities
Small Cap Category, Australia.

Annual Report 2015

Review of Boutiques
continued

Northern Lights Alternative
Advisors (“NLAA”)
NLAA is a London-based ﬁrm
founded in 2009 by Tim Morgan
and Dominic Trusted. The ﬁrm is
a strategic partner of Aurora and
provides capital formation services
across the UK on behalf of a
select group of private equity and
hedge funds.

Aurora’s investment in NLAA
occurred in March of 2014. Since
that time the ﬁrm has performed well
and continues to attract an array
of investment ﬁrms, all interested
in accessing NLAA’s fundraising
capabilities and strategic advice.
The relationship with NLAA not only
brings Aurora a reliable source of
market intelligence, it also generates
numerous leads on potential
investment opportunities.

Octis Asset Management
(“Octis”)
Led by Jerome Ferracci, Octis is
an Asian multi-strategy hedge fund
manager based in Singapore. Its
investment team aims to capture
growth from Asian markets whilst
limiting volatility and drawdowns.

Octis utilises a number of different
strategies that includes equities,
futures, options, commodities and
foreign exchange securities.

The performance of the ﬂagship
Octis Asia Paciﬁc Fund had a strong
12 months with excess returns well
ahead of the cash benchmark and
the relevant hedge fund indices.

Orion Asset Management
(“Orion”)
Sydney–based Orion is focused on
the distribution and administration
for New York City-based Trilogy
Global Advisors (“Trilogy”) following
the closure of its Australian equities
business in the prior ﬁnancial year.

The alliance between Orion and
Trilogy has been productive,
with Trilogy now managing over
$5.3 billion in FUM from investors
across Australia, New Zealand and
South East Asia. It is noted that the
aggregate FUM provides relatively
low fees to Aurora.

Nereus Holdings
(“Nereus”)
Nereus is a Mumbai-based
investment ﬁrm established to invest
in and sponsor renewable energy
infrastructure projects in India.
The ﬁrm was founded in 2010 by
Jonathan Winer, formerly director of
D. E. Shaw’s private equity practice
in India. Nereus’ initial investment
strategy was broad-based renewable
infrastructure private equity, including
minority growth equity investments
in independent alternative power
producers and acquisitions of
late-stage development projects
across biomass, wind, small hydro
waste-heat recovery, and solar. As
the dynamics of utility scale solar
have changed since 2010, Nereus
is now focused almost exclusively
on solar power generation. Solar
projects in India are economical
today on an unlevered unsubsidised
basis, and demand for electricity far
outweighs supply.

In August 2015, with the backing of
Aurora, Nereus established Nereus
Capital Investment Singapore
Ltd. (“NCI”). Aurora has made a
de minimus cash investment into
NCI, which is being launched
in partnership with Nereus and
Hareon Solar Singapore Pty Ltd
(“Hareon”), the Singapore afﬁliate
of a leading manufacturer of solar
PV panels in China. Hareon will
provide the initial ﬁnancing for NCI’s
sponsorship of utility-scale solar
projects in India. Aurora will make
a contingent commitment of no
more than $25 million, which can
be called no sooner than the sixth
anniversary of the closing of NCI. For
its commitment, Aurora will be issued
an equity interest entitling it to 50% of
the economics of NCI subsequent to
the redemption of Hareon’s preferred
shares. Aurora believes supporting
Nereus in this endeavour will not only
catalyse new institutional investments
into the Nereus strategy, but will
provide an attractive risk/return to
Treasury Group shareholders.

ROC Partners
(“ROC”)
ROC, based in Sydney, is a
specialised private equity investment
and advice ﬁrm focused primarily
on the Asia Paciﬁc markets. ROC
was established following the
management buy-out of Macquarie
Group Limited’s private equity fund
of funds business unit by its senior
executives. The management team
has now been operating as ROC
for just over a year, but the team
has been in continuous operation
since 1996 when it began offering
private equity solutions to Australian
Superannuation Funds. The business
has since grown to become one
of the most experienced private
equity investors in the Asia Paciﬁc
region, representing some of the
largest institutional investors in
the Australian market.

ROC has had a successful year
establishing itself as an autonomous
business, with Treasury Group
assisting through the provision of
capital and support services. Funds
under management were maintained
and ﬁnished the year at $5.3 billion.

ROC has continued to build on its
impressive long-term track record
with its clients beneﬁtting from
strong returns across both the fund
structures as well as their separate
accounts. ROC continues to explore
a number of new initiatives for its
existing and new clients which it plans
to launch in the coming ﬁnancial year
focusing on both Australian and Asian
private equity solutions.

Raven Capital Management
(“Raven”)
Founded in 2007 and based in New
York City, Raven is an asset-backed
lending company that specialises in
the primary origination, underwriting,
and management of direct asset
based investments. The ﬁrm’s
strategy is built upon three key tenets:
asset based, current income, and
active management. Raven believes
that middle market dislocation in
the United States, and a scarcity of
alternative funding sources, creates
an ideal environment for asset based
investments, while having an actively
managed portfolio allows them
to generate attractive yields while
protecting capital. As of 30 June
2015, Raven had committed capital
across three funds of $457 million
in FUM, with additional growth likely
throughout 2015.

RARE Infrastructure
(“RARE”)
RARE, founded in 2006 by Richard
Elmslie and Nick Langley and
based in Sydney, specialises in
the investment and management
of securities in global listed
infrastructure including airports,
toll roads, gas, electricity and water.
RARE has product offerings in
North America, Europe/UK as well
as Australia.

During the year, FUM grew from
$9.1 billion to $9.9 billion as of
30 June 2015. RARE continues to
attract strong support from Australian
institutional and retail clients as well
as offshore institutions including
sovereign wealth and pension funds,
with a number of new institutional
mandates won from both Australian
and offshore investors. RARE
continued to build on its strong
long-term track record with all three
products (RARE Infrastructure Value,
RARE Yield, and RARE Emerging
Markets) delivering positive results
well ahead of their respective
benchmarks over the 12-months
ending 30 June 2015.

Treasury Group announced in
July 2015 that Aurora entered into
a conditional sale and purchase
agreement to sell its interest in RARE
to Legg Mason for total consideration
of approximately $200 million,
including upfront cash proceeds of
$112 million, an earn-out of up to
$42 million and a 10% retained equity
interest in RARE that is subject to a
put/call arrangement after 2 years.

This exit event, when successful,
validates the business model that
Treasury Group has built over
many years in partnering with asset
managers to enhance value and
create growth. While Aurora is a
reluctant seller of boutiques, this
transaction provides Treasury Group/
Aurora exceptional value for 75% of
its holdings in RARE, as well as the
opportunity to diversify its portfolio.

Annual Report 2015

Review of Boutiques
continued

Seizert Capital Partners
(“Seizert”)
Seizert Capital was founded in
2000 and is located in Birmingham,
Michigan, USA. The ﬁrm is led
by Gerry Seizert and Ed Eberle.
Seizert manages multiple US equity
strategies across the capitalisation
spectrum. All of its products have
either a core or value style orientation.
The investment process is intended
to combine sophisticated quantitative
idea generation with rigorous
fundamental research and highly
efﬁcient decision-making.

Over the last year, four of the ﬁrm’s
ﬁve largest products underperformed
their respective benchmarks.
Longer-term results are much more
favourable, with all ﬁve of these
products surpassing benchmark
returns over the last three years.

Over the 12-months ending 30 June
2015, Seizert lost two large clients
for reasons believed to be unrelated
to performance. FUM ﬁnished the
30 June year-end at $5.8 billion.

TAMRO Capital Partners, LLC
(“TAMRO”)
TAMRO, led by Philip Tasho and
Kathleen Neumann, is an investment
manager founded in June 2000
and based in Alexandria, Virginia,
USA. Northern Lights’ involvement
with TAMRO began in 2007, when
ﬁnancing a management buyout of
TAMRO from its prior owner, ABN
AMRO Asset Management. The ﬁrm
manages three separate strategies,
but its ﬂagship offering is its US Small
Cap product. Its investment approach
incorporates quantitative idea
generation with fundamental research
targeted on identifying inexpensive
companies with improving prospects.

TAMRO has a strong long-term
record; however, underperformance
in 2013 and 2014 after seven
consecutive years of Small Cap
outperformance has led to a
decline in FUM to $1.56 billion
as of 30 June 2015.

WHV Investment Management
(“WHV”)
WHV is a San Francisco, California
- based asset management ﬁrm
that started in 1937, and has been
managing institutional client portfolios
since 1945. The ﬁrm’s ﬂagship
product is its International Equity
product. The product has a lengthy
track record that is characterised
by highly volatile performance.
Beginning in late 2014 performance
endured a signiﬁcant setback due
to the strategy’s overweighting
in energy and materials stocks.
This underperformance has been
accompanied by signiﬁcant client
redemptions, and FUM have
declined signiﬁcantly over the last
year to $8.9 billion.

Despite the FUM attrition in its
core product, WHV has made solid
progress diversifying its product set
over the last 18 months. While FUM
in these new products is still modest,
performance has generally been
strong, resulting in improving growth
prospects for these new offerings.

The economic relationship with WHV
is not a typical one for Aurora, which
does not have direct ownership in
WHV, but rather participates only
in the growth in dividends if and
when declared by WHV. Given the
contraction in the ﬁrm’s FUM, Aurora
does not expect to receive dividends
this ﬁnancial year.

Directors’ Report
Your Directors submit their report for the year ended 30 June 2015.

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

Names, qualiﬁcations, experience and special responsibilities
M. Fitzpatrick, (Chairman) B. Eng, BA (Oxon) Honours
Mr Fitzpatrick joined the Board on 5 October 2004. He has over 37 years’ experience in the ﬁnancial services sector.
After a career in investment banking in Australia and the US, Mike founded Hastings Funds Management Ltd (‘Hastings’)
one of the largest managers of infrastructure and alternative assets in Australia. Hastings was a pioneering infrastructure
asset management company where Mr Fitzpatrick was managing director until he sold his interest to Westpac Banking
Corporation. Mr Fitzpatrick is a non-executive director of Infrastructure Capital Group, a boutique manager of $1.4 billion of
energy and infrastructure assets. He also holds a number of other non-executive directorships, including the Walter & Eliza
Hall Institute of Medical Research, Latam Autos Limited and Carnegie Wave Energy Limited. Mr Fitzpatrick is the Chairman
of the Australian Football League.

Mr Fitzpatrick holds a B.Eng. (Hons) degree in electrical engineering from the University of Western Australia and a B.A.
(Honours) from the University of Oxford, where he was a Rhodes Scholar.

Mr Fitzpatrick is a member of the Board’s Audit & Risk Committee, Remuneration Committee and Nominations Committee
(now the Governance Committee).

A. McGill, (Managing Director and CEO, resigned on 28 August 2015) B. Com LLB
Mr McGill joined the Board on 30 August 2013. He has more than 25 years’ ﬁnancial markets experience, including
investment and management experience within the alternative asset sector of the funds management industry. He joined
Treasury Group as Chief Executive Ofﬁcer in July 2011 and has overall responsibility for management of the business,
including the Company’s investment and partnering activities. Prior to joining Treasury Group, Mr McGill was a founding
partner of Crescent Capital, an independent mid-market private equity ﬁrm, where he led the successful development of
that business from 2000 to 2010. Prior to establishing Crescent, he held senior roles within Macquarie Bank’s Corporate
Finance and Direct Investment teams. Previous to that, he was a strategy consultant with LEK Partnership. Mr McGill is also
the Chairman of PM Capital Global Opportunities Fund Limited and serves on the Council of Kambala Girls School.

On 26 March 2015, Mr McGill notiﬁed the Board his intention to terminate his employment contract effective 28 August 2015.

T. Carver, (Executive Director appointed 10 December 2014) BA
Mr Carver is the co-founder of Northern Lights Capital Group. Serving as managing director for 8 years prior to Northern
Lights’ merger with Treasury Group, Mr Carver led the transaction process for Northern Lights and provided overall ﬁrm
leadership. Prior to Northern Lights, he co-founded Orca Bay Partners, a private equity ﬁrm that focused on investing in
boutique asset managers. At Orca Bay, Mr Carver led the investments and served in the boards of Parametic Portfolio
Associates and Envestnet Asset Management. Mr Carver began his career at Morgan Stanley in New York.

On 26 March 2015, Mr Carver was elected to succeed Mr McGill as CEO.

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

Mr Kennedy joined the Board on 4 June 2003. He is the founding partner of commercial law ﬁrm, Madgwicks Lawyers,
and has more than 40 years’ experience in commercial law advising a broad range of clients across a variety of sectors.
He leads the ﬁrm’s Dispute Resolution practice and plays an integral role in the governance and management of the ﬁrm,
having been Madgwicks’ Managing Partner for 10 years.

Mr Kennedy also sits on the boards of a number of companies in the manufacturing, property and retail industries. His
formal qualiﬁcations include B.Ec, LL.B., LL.M (Tax), Monash University.

He is the Chairman of the Audit & Risk Committee and a member of the Remuneration Committee.

M. Donnelly, (Non-executive Director) B.C.
Ms Donnelly joined the Board on 28 March 2012. Ms Donnelly, a chartered accountant, is the founder and former
chairperson of the Centre for Investor Education, a specialist education and consultancy ﬁrm for executives in Australian
and superannuation funds, institutional investment bodies and the ﬁnancial services markets. Ms Donnelly’s previous
work experience includes CEO of the Queensland Investment Corporation, deputy managing director of ANZ Funds
Management and managing director of ANZ Trustees.

Ms Donnelly is also a director of JA Russell & Co Sdn Bhd and was formerly deputy chairperson of the Victorian Funds
Management Corporation and non-executive director of Ashmore Group plc. In addition, Ms Donnelly is a member of the
Advisory Committee of the Oxford University Centre for Ageing.

Ms Donnelly is the Chairperson of the Nomination Committee (now the Governance Committee) and a member of the Audit
& Risk Committee.

Directors’ Report
continued

A. Robinson, (Non-Executive Director appointed 28 August 2015) BComm, MBA, CFA
Mr Robinson has significant expertise and experience across a number of industries including banking, financial services,
telecommunications, and transport. He is an experienced company director and chief executive officer.

Mr Robinson is also a director of Bendigo and Adelaide Bank Limited and OnCard Limited and holds a number of
directorships of private companies, including River Capital Ltd.

Mr Robinson’s previous executive roles included managing director of IOOF Ltd and OAMPS Limited.

R. Hayes, (Non-Executive Director, resigned 31 March 2015) SF Fin, FAICD
Mr Hayes joined the Board on 22 February 2007. Mr Hayes has over 40 years’ experience in investment management
and stockbroking research, and was 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’s investment operations in Australia in 1984,
and was CEO of that business for 12 years until 1996. Prior to this, Mr Hayes held senior investment roles with AMP and
Westpac. Mr Hayes is a Senior Fellow of the Financial Services Institute of Australia and a Fellow of the Australian Institute
of Company Directors.

J. Vincent, (Non-Executive Director appointed 10 December 2014) MBA, BSBA
Mr Vincent is the CEO of the Laird Norton Company, diversified investment holding company, for the past 15 years. In this
role, he has overseen U.S. investments in real estate, building materials distribution, financial services, private equity, and
consumer services. His experience in the financial services area includes direct responsibility for the Pacific Northwest’s
largest privately held wealth management firm and board positions on investment management firms. Prior to this
position, he was a subsidiary president of a consumer durables company, Chamberlain Group, where he also previously
served as the chief financial officer. Mr Vincent has held a variety of significant board positions including a position on the
PeoBuild Board, the U.S.’ largest building distribution company, and has performed the duties of audit committee chair,
compensation committee chair, and board chairman.

Mr Vincent has demonstrated strong skills in M&A, corporate governance, executive compensation, operations and
financial management. He has also lead organisations through significant periods of change.

Mr Vincent also serves on the boards of Laird Norton Company, Laird Norton Properties, Laird Norton Wealth
Management, and Fusion Education Group.

Mr Vincent is the Chairman of the Remuneration Committee and a member of Audit & Risk Committee.

G. Guérin, (Non-Executive Director appointed 10 December 2014) MSc, BA
Mr Guérin is CEO of BNP Paribas Capital Partners, where he has worked for the past five years developing the alternative
investment capabilities of the BNP Paribas Group. Mr. Guérin served as chief executive officer and president of Natixis
Global Associates and executive of Natixis AM North America and held executive and senior leadership roles at HDF
Finance, AlphaSimplex, IXIS AM and Commerz Financial Products.

Mr Guérin has over 20 years’ experience in capital markets and investment management. This includes cross asset class
experience spanning the equities fixed income and commodities markets, with a specific focus on alternative strategies
and hedge funds.

During his career, Mr Guérin has managed relationships with investors and distributors across the world, in particular in
Europe, United States, Japan, the Middle East and Australia. Mr Guérin has operated distribution capabilities worldwide
and developed new products and investment capabilities. He has served on the board of various investment companies,
including Aurora Investment Management. Throughout his career, he liaised with regulators across various jurisdictions
and worked with thought leaders of the investment industry including Dr Andrew Lo and Dan Fuss.

Mr Guérin is also a director of Ginjer AM and of INNOCAP.

Mr Guérin is a member of Remuneration Committee and Nominations Committee (now the Governance Committee).

P. Greenwood, (Executive Director and Chief Investment Officer appointed 10 December 2014), CFA, BA
Mr Greenwood co-founded Northern Lights Capital Group in 2006. Prior to Northern Lights, he created Greenwood
Investment Consulting (GIC), a firm that worked directly with investment managers on investment process and
organisational issues.

Before GIC, Mr Greenwood served as Director of US Equity for Russell Investment Group, where he managed all of
Russell’s US equity oriented portfolio management and research activities. He also served as a Russell spokesperson
and authored many articles and research commentaries related to investment manager evaluation.

J. Ferragina, (Finance Director and COO appointed 31 March 2015) BCom, M App Fin, CA, FFin, GAICD
Mr Ferragina is a Chartered Accountant and has worked in funds management for 20 years. He has gained specialised
experience in a range of funds management companies including Colonial First State Investment Managers and AMP
Global Investors Ltd, which led him to a position as CFO and company secretary of Ronin Property Group, a separately
listed company spun out of AMP. Prior to his appointment as CFO of Treasury Group Limited in October 2005, he was
Head of Finance at DBRREEF (now Dexus).

Annual Report 201514

Company Secretaries

C. Driver, LLB(Hons), LLM, DipLP, GradDipACG, ACISA, appointed 7 July 2015

Ms Driver was appointed company secretary on 7 July 2015. Ms Driver is a chartered secretary and lawyer (admitted
in Scotland). She has a Masters in Commercial Law and graduated with a Graduate Diploma in Applied Corporate
Governance in January 2014. Ms Driver is an Associate Member of the Governance Institute of Australia. Ms Driver
previously worked at Gryphon Minerals Limited as Compliance Ofﬁcer and Company Secretary.

R. Ramswarup, BA (Justice Administration), resigned 30 June 2015

Ms Ramswarup commenced with Treasury Group Ltd in March 2008. She has worked in company secretarial roles
at Wattyl and AMP and has secretariat experience in local government and professional services. Ms Ramswarup
has completed the Graduate Diploma in Applied Corporate Governance and is a member of the Governance Institute
of Australia.

J. Ferragina, appointed 31 July 2014

Please refer to Mr Ferragina’s proﬁle under the Directors section.

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/performance rights of Treasury Group
Ltd were:

M. Fitzpatrick

A. McGill
T. Carver
P. Kennedy
M. Donnelly
A. Ronbison
R. Hayes
J. Vincent
G. Guérin
P. Greenwood
J. Ferragina

Earnings Per Share

Basic earnings per share

Diluted earnings per share

Dividends

Final dividend declared:
– on ordinary shares (fully franked)

Dividends paid in the year:
Interim for the year
– on ordinary shares (fully franked) paid on 25 March 2015

Final for 2014 shown as declared in the 2014 report
– on ordinary shares (fully franked) paid on 25 September 2014

Options/
Performance
rights over
Ordinary
Shares

–

–
–
–
–
–
–
–
–
–
–

Cents

541.5

Ordinary
Shares

2,701,285

530,541
–
214,929
20,000
–
–
–
–
–
141,400

Cents per
share

7,738,682

6,624,995

6,398,324

Annual Report 2015

Directors’ Report
continued

Corporate Information

Corporate Structure
Treasury Group Ltd is a company limited by shares and is incorporated and domiciled in Australia. Treasury Group Ltd
has prepared a consolidated ﬁnancial report incorporating the entities that it controlled and jointly controlled during
the ﬁnancial year. During the year, Treasury Group entered into a merger transaction with Northern Lights to create an
international multi-boutique business called Aurora Trust (Aurora). Both Treasury Group and Northern Lights sold their
respective businesses including their assets (except del Rey and Celeste) and liabilities to Aurora in exchange for units
in Aurora.

Aurora Investment Management Pty Ltd, the Trustee of Aurora Trust is a 100% owned and controlled by Treasury Group,
thus consolidated in the accounts of Treasury Group. Aurora, on the other hand, whilst 64% owned by Treasury Group,
is treated as an associate. The key function of the Trust and the overall business is the investment in asset managers.
The decision making process in relation to the investments requires approval by an Executive Committee consisting nine
members, the majority of whom are drawn from the former Northern Lights executives. The Executive Committee sits under
the Trust and its decisions and recommendations are submitted for board approval by the directors of Aurora board.

The Group’s corporate structure as at the date of this report is as follows:

AR Capital Management Pty Ltd (100%)

Celeste Funds Management Ltd (39.17%)

TREASURY GROUP LTD

Aurora Investment Management Pty Ltd (Trustee) (100%)

64.03%

Aurora Trust

8.78%

BNP Paribas

Northern Lights Partners LLC

27.19%

Operating and Financial Review

Review of Operations

Nature of operations and principal activities
On 25 November 2014, Treasury Group and Northern Lights completed the transaction to merge both companies into an
international multi-boutique funds management group. A new Australian trust, Aurora Trust, was established to hold the
interest in 20 boutiques and gave effect to the merger. Post completion, Treasury Group and Northern Lights sold their
respective businesses including their assets (except del Rey and Celeste) and liabilities to Aurora Trust in exchange for
units and debt in Aurora. At 30 June 2015, Treasury Group owns 64.03% of Aurora Trust and adopts the equity accounting
method in relation to Treasury Group’s interest in the Aurora Trust.

As permitted under AASB 3 “Business Combinations”, Aurora Trust has accounted for its acquisition of the businesses
on a provisional basis. As a result, the investment in Aurora Trust as at 30 June 2015 and the share of proﬁts generated
from Aurora Trust for the period from 25 November 2014 to 30 June 2015 may change on ﬁnalisation of the acquisition
accounting within Aurora Trust. AASB 3 requires Aurora Trust to ﬁnalise the acquisition accounting within twelve months
of the acquisition date.

Employees
The consolidated entity employed 17 full time equivalent employees as at 30 June 2015 (2014: 17). The consolidated
entity includes Treasury Group Ltd (parent), Aurora Investment Management Pty Ltd as the Trustee of Aurora Trust
and AR Capital Management Pty Ltd. While the Trustee employs the executives and staff, Aurora effectively bears the
employee costs via recharge mechanism from the Trustee.

Treasury Group owns 64.03% of Aurora Trust which has a 100% owned US subsidiary that employs 19 employees during
the year.

Funds management/business performance
On 1 July 2014, the FUM of Treasury Group was $25.4bn. On 25 November 2014, the FUM was $49.6bn as a result of the
merger between Treasury Group and Northern Lights.

As at 30 June 2015, the FUM of the Group was $49.0bn. The slight decrease of the FUM was due to the net impact of
outﬂows from RARE, Seizert and WHV, offset by inﬂows from IML, market performance and positive impact of the weak
Australian dollar relative to the US dollar.

Operating Results for the Year
The Group generated net proﬁts attributable to member of Treasury Group Ltd of $138,723,124 for the twelve months
ended 30 June 2015. This includes the $130,834,193 net gain on sale of business to Aurora. This compares with a net proﬁt
attributable to members of Treasury Group Ltd of $13,061,814 in prior year. The net proﬁt after tax of the group as reported
in the current year compared to the 30 June 2014 comparative result is shown in the table below reconciling the underlying
proﬁt as follows:

Consolidated
2015
$

2014
$

Net profit attributable to members of the parent

138,723,124

13,061,814

Add/(Deduct):
– Gain on sale of business to Aurora (net of transaction costs and income tax expense)¹
– TRG share on impairment of WHV by Aurora
– Impairment of goodwill
– Write off of GVI DTA
– Impairment of investment in subsidiary (AR Capital Management)
– Legal fees
Underlying profit2

(130,834,193)

10,761,277

–

252,764

520,000

41,012

159,928

18,650,208

14,035,518

This is the result of Treasury Group’s sale of business to Aurora as concluded on 25 November 2014 which is determined as the difference between
the carrying amount and fair value of such assets and liabilities transferred at the date of transfer.

It includes share in the net loss of Aurora which includes non-cash interest expense on unitholders’ debt (fair value adjustment) and amortisation
of intangibles. Treasury Group’s proportionate share in these non-cash items is $2.4m.

The results for the twelve months to 30 June 2015 reﬂect the Treasury Group’s stand alone result from 1 July to
24 November 2014 and the share of Treasury Group from the operations of the merged group from 25 November 2014
to 30 June 2015.

On 11 December 2014, Treasury Group undertook a placement to the value of $30.0m offered to institutional investors
at $10.25 per share. As a result of the placement, 2,926,830 shares were issued on 18 December 2014. The proceeds
from the placement were used to subscribe for additional units in Aurora.

On 23 January 2015, Treasury Group Ltd issued 979,816 fully paid ordinary shares at $10.25 as a result of Share Purchase
Plan (SPP). The proceeds from the placement were used to subscribe for additional units in Aurora.

Earnings Per Share
The earnings for the year reﬂect the Treasury Group’s stand alone result from 1 July to 24 November 2014 and the share
of Treasury Group from the operations of the merged group from 25 November 2014 to 30 June 2015.

Basic earnings per share (cents)

Diluted earnings per share (cents)

2015

541.5

2014

56.6

55.0

Financial Position
Treasury Group Ltd has a strong balance sheet and sound capital structure. Treasury Group has no debt, however the
Company has a 64.03% interest in Aurora Trust which has external borrowings as well as debt instruments issued to
unitholders (i.e. Northern Lights). Net assets increased by 268% which is attributable to the investment in Aurora Trust.
The Investment in Aurora is determined by the cost to acquire the units and the share in net proﬁts of Aurora reduced by
distributions received.

Treasury Group Ltd has the capacity to pay dividends to its shareholders. During the year, Treasury Group Ltd paid
51 cents per share in dividends, an increase of 11% compared to the comparative period. A ﬁnal dividend of 28 cents
per share was declared on 26 August 2015.

Cash Flow from Operations
Net cash ﬂow from operating activities decreased by $7.7m to $4.4m or by 64% over the year. This decrease is due to the
change in operations of the wider Group where the Trust receives all dividends and distributions from the managers.

Annual Report 2015

Directors’ Report
continued

Business Strategies and Prospects
Treasury Group continues to expand and diversify its portfolio by partnering with outstanding asset management
professionals worldwide through its investment in Aurora Trust. On 25 November 2014, Treasury Group and Northern
Lights announced completion of the previously announced transaction to merge both companies into an international
multi-boutique funds management group. All the required regulatory approvals and other conditions were satisﬁed and the
merger became effective on 25 November 2014. The strategy of the combined group is an extension of Treasury Group’s
existing strategies, leveraging the enhanced capabilities delivered by the merger and will include a number of elements:

Continued expansion and diversiﬁcation of portfolio via value enhancing new investments
The merger resulted in a strengthened management and investment team with executives well positioned to access deal
ﬂow within international markets. In addition to partnering with early stage asset management business, the combined
group have scale and ﬁnancial capacity to invest in established business.

Over the past 5 years, Treasury Group and Northern Lights have completed a combined 14 investments.

Leveraged distribution capabilities to increase asset base
The merged businesses have sales executives across ofﬁces in Australia, US, and the UK focused on the sale of boutique
investment products and services to institutional investors, superannuation and pension funds, family ofﬁces and other
classes of investors. This is expected to provide opportunities for increased distribution of Treasury Group’s boutiques into
the US market, as well as providing access for Northern Lights’ boutiques into the Australian market (subject to compliance
with all regulatory requirements).

Efﬁcient capital structure
The merged group will seek to drive return on equity via efﬁcient investment structures and capital structures.

Leverage northern lights strategic relationships
BNP Paribas Asset Management, Inc. and Laird Norton Company Investment Co., LLC are cornerstone shareholders
of Northern Lights. Both organisations will continue to hold equity in the merged group and are represented in Treasury
Group’s Board.

Material Business Risks
The material business risks faced by Treasury Group Ltd that are likely to have an impact on the ﬁnancial prospects of the
Company and how the Company manages these risks include:

Global market risks
The diversiﬁed global portfolio that was created as a result of merger between Treasury Group and Northern Lights
means that Treasury Group is exposed to an immensely larger scale of market volatility and higher degree of adverse
market conditions. Major international listed equity markets continue to display volatility on both upside and downside
with publicised global macro risks such as higher European growth and deﬂation, slower growth in China, and monetary
policies in the US and Japan. Treasury Group’s FUM reﬂects the investment performance of its boutique fund managers,
in addition to such other factors as funds ﬂowing into and out of the underlying funds. Market volatility and adverse market
conditions may lead to decline in FUM and performance of Treasury Group’s business which may adversely affect Treasury
Group’s earnings and proﬁtability. While these risks are external and beyond the control of the Group, a number of our
boutique partners delivered exceptional performance including Investors Mutual Ltd and RARE Infrastructure Ltd. Market
risk is however at the core of the business.

Foreign currency risks
Treasury Group is exposed to AUD/USD exchange rate through its investment in Aurora that holds the US-denominated
investments and debt and other foreign currency denominated investments via its subsidiary Northern Lights Midco LLC.
The Company has adopted hedge accounting such that the impact of foreign currency translation is taken up through
foreign currency translation reserve of Aurora. Treasury Group takes the share of the movement of Aurora’s foreign currency
translation reserve in its equity.

Regulatory environment
The business of the Group operates in a highly regulated environment that is frequently subject to review and regular
change of law, regulations and policies. Treasury Group is exposed to any changes in the regulatory conditions under
which it and its boutique fund managers operate in Australia, US and the UK. The Group’s highly experienced in-house
risk and regulatory experts are actively managing and monitoring the Group’s regulatory compliance activities. Regulatory
risk is also mitigated by the use of industry experts when the need arises. Other measure includes the establishment of risk
committee composed of executives to ensure that risk management among others, is monitored, managed and controlled.

Significant Changes in State Affairs
On 25 November 2014, Treasury Group and Northern Lights completed the transaction to merge both companies into an
international multi-boutique funds management group. A new Australian trust, Aurora Trust, was established to hold the
interest in 20 boutiques and gave effect to the merger. Post completion, Treasury Group and Northern Lights sold their
respective businesses including their assets (except del Rey and Celeste) and liabilities to Aurora Trust in exchange for units
and debt in Aurora. At 30 June 2015, Treasury Group owns 64.03% of Aurora Trust and adopts the equity accounting method
in relation to Treasury Group’s interest in the Aurora Trust.
As permitted under AASB 3 “Business Combinations”, Aurora Trust has accounted for its acquisition of the businesses on a
provisional basis. As a result, the investment in Aurora Trust as at 30 June 2015 and the share of profits generated from Aurora
Trust for the period from 25 November 2014 to 30 June 2015 may change on finalisation of the acquisition accounting within
Aurora Trust. AASB 3 requires Aurora Trust to finalise the acquisition accounting within twelve months of the acquisition date.
On 10 December 2014, the Board appointed Mr Vincent and Mr Guérin as non-executive directors of Treasury Group.
Mr Carver and Mr Greenwood were appointed as executive directors of Treasury Group.
On 11 December 2014, Treasury Group undertook a placement to the value of $30.0m offered to institutional investors at
$10.25 per share. As a result of the placement, 2,926,830 shares were issued on 18 December 2014. On 23 January 2015,
Treasury Group Ltd issued 979, 816 fully paid ordinary shares at $10.25 as a result of Share Purchase Plan (SPP). The
proceeds from the placement were used to subscribe for additional units in Aurora.
On 26 March 2015, Mr McGill gave his notice to the Board to terminate his employment contract effective 28 August 2015.
On 31 March 2015, Mr Hayes resigned as a member of the Board and Mr Ferragina was appointed as Finance Director
and Chief Operating Officer of Treasury Group.

Significant Events after the Balance Date
On 29 July 2015, the shareholders of RARE Infrastructure Ltd (RARE) including Aurora Trust have entered into a binding
agreement to sell the majority interest in RARE to Legg Mason.
Under the proposed structure, the total transaction consideration is approximately $200m, with an upfront cash proceeds
of $112m to be received on November 2015; a three-year earn-out of up to $42m and 10% retained equity interest in RARE
subject to two- year differentiated option pricing: call option by Legg Mason at a fixed multiple of RARE revenues or put option
by Aurora Trust at “fair market value”.
On 26 August 2015, the Directors of Treasury Group Ltd declared a final dividend on ordinary shares in respect of the 2015
financial year. The total amount of the dividend is $7,738,682 which represents a fully franked dividend of 28 cents per share.
The dividend has not been provided for in the 30 June 2015 financial statements.

Performance Rights
There were no performance rights issued to executives and employees during the year. The performance rights outstanding
as at 30 June 2015 represent the 139,981 performance rights issued to certain employees in prior years. The performance
rights on issue were valued based on the valuation made by RSM Bird Cameron using a hybrid monte-carlo/binomial option
pricing model. The value of each right at issue was $1.64. The value of outstanding performance rights is $164,000 amortised
over three years from the grant date.
As part of the merger between Treasury Group and Northern Lights, a commitment was made to grant Mr Carver and
Mr Greenwood with 500,000 performance rights each to be split into three tranches vesting over two, three and four years.
Following his performance review in July 2014, Treasury Group made the commitment to grant Mr Ferragina 165,000
performance rights. On his promotion to Finance Director in April 2015, Treasury Group made a commitment to grant
Mr Ferragina an additional 140,000 performance rights. As at the date of this report, these performance rights have not yet
been granted. The Remuneration Committee anticipates that these awards will be issued in the coming year. Full details of
these performance rights will be disclosed in a future Remuneration Report once granted.
The amount of performance rights amortisation expense for the period was $91,886 (2014: $427,150).

Indemnification and Insurance of Directors and Officers
The Company has entered into an agreement for the purpose of indemnifying Directors and Officers of the Company in
certain circumstances against 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.

Annual Report 2015

Directors’ Report
continued

Remuneration Report

Message from the Remuneration Committee

Dear Shareholders:

We are pleased to present our Remuneration Report for the ﬁnancial year ending 30 June 2015. We have streamlined the
format of the attached report to assist shareholders in better understanding its contents. New sections of the report have
been added to provide additional details regarding Treasury Group’s remuneration policy and structure. Also, during the
past year, as referred to in the Directors’ Report, Treasury Group entered into a merger transaction with Northern Lights
to create an international multi-boutique business called Aurora Trust (Aurora). Both Treasury Group and Northern Lights
sold their respective businesses to Aurora (except del Rey and Celeste) in exchange for units and debt in Aurora. The
operations of Aurora commenced on 25 November 2014, and the employment costs of the key management personnel
(KMP) and all other staff are borne by Aurora, effective on that date. The remuneration of KMP presented in this report
includes the remuneration paid by Treasury Group from July to November, and remuneration effectively paid by Aurora
from 25 November 2014 to June 2015. Treasury Group’s total remuneration costs are effectively the costs it paid and its
64% share of the remuneration paid by Aurora. For accounting purposes, Treasury Group treats Aurora as an associate,
and the principles of equity accounting are applied. The composition of KMP changed as a result of the merger transaction
discussed above. The KMP are made up of the TRG Board of Directors, who are also the Board of Directors of Aurora
Investment Management Pty Ltd., the Trustee of Aurora Trust and the key executive ofﬁcers of Aurora. Five KMP are based
in Australia, and the other four are based outside of Australia. The new merged group generates approximately 38% of its
revenues in Australia and 62% in North America. Aurora is domiciled in Australia, with operations in ﬁve countries and an
ongoing expansion plan to other jurisdictions.

Given the above changes in KMP, the Remuneration Committee conducted a review of the Company’s remuneration
structure and individual employment packages of Executive KMP. Changes in remuneration were based on the Company’s
new structure, increased responsibilities, job size and local market conditions. As a result, the Remuneration Committee
decided to update the Company’s approach to remuneration for Executive KMP to ensure that the above factors were
reﬂected in their remuneration packages.

Financial year 2015 is viewed as the transition year for the new management team. As such, KMP total ﬁxed remuneration
is larger than the previous year. Going forward, the size of the KMP and their corresponding ﬁxed remuneration will be
smaller as a result of Mr. McGill’s departure, effective on 28 August 2015.

There was no long term incentive (LTI) awarded to the Executive KMP during the ﬁnancial year. During the year, a
commitment was made to grant performance rights to Executive KMP. Full details are in pages 25 and 26. On 12 July 2014,
LTIs in the form of Performance Rights awarded to KMP in 12 July 2011 have vested at 96%. Accordingly, Treasury Group
shares were allocated to Executive KMP.

Finally, the short-term incentive (STI) is designed to reward Executive KMP for achievement of Treasury Group’s business
objectives. The STI is determined by the Remuneration Committee and is primarily based on the achievement of the
executives’ individual key performance indicators associated with ﬁnancial targets and other non-quantitative measures set
by the Board. However, the STI program remains fully discretionary in the hands of the Remuneration Committee, and the
Committee reserves the right to use its judgement when determining ﬁnal awards to KMP.

In view of the above summary, we believe that the employment packages we offer are attractive, competitive and represent
the core values of Treasury Group.

We welcome feedback on our remuneration philosophy and practices, or any remuneration matter included in this report.

Yours faithfully,

J. Vincent

Chairman, Remuneration Committee

Treasury Group Ltd

This letter does not form part of the audited remuneration report.

Remuneration Report (Audited)

About this report
This remuneration report, which forms part of the directors’ report, outlines the remuneration arrangements of Treasury
Group Ltd’s Key Management Personnel (KMP) for the ﬁnancial year ended 30 June 2015, in accordance with the
requirements of the Corporations Act 2001 and its Regulations. It also provides the remuneration disclosures required
by paragraphs Aus 29.4 to Aus 29.7.2 of AASB 124 Related Party Disclosures, which have been transferred to the
Remuneration Report in accordance with Corporations Regulation 2M.6.04.

Contents
1. Deﬁned terms used in this report
2. Key management personnel
3. Remuneration philosophy
4. Remuneration outcomes for 2015
5. Relationship between the remuneration philosophy and company performance
6. Remuneration of key management personnel
7. Key terms of employment contracts of KMP
8. Remuneration of non-executive directors

Deﬁned terms used in this report

EPS

Fixed
Remuneration

Earnings per share for the purpose of determining performance against LTI performance targets. When
measuring the growth in EPS to determine the vesting of the long-term incentive awards, we define EPS as
net profit after tax divided by the weighted average number of issued shares during the year.

Generally comprises cash salary, superannuation contribution and the remainder as nominated
benefits. Fixed remuneration is determined on the basis of the role of the individual employee, including
responsibility and job complexity, performance and local market conditions. It is reviewed annually based
on individual performance and market data.

KMP

KPI

LTI

STI

TSR

Key Management Personnel. Those people who have the authority and responsibility for planning, directing
and controlling the activities of Treasury Group Ltd and the Group, directly or indirectly. KMP disclosed in
this report are Non-Executive Directors, Managing Director, Executive Directors, Chief Executive Officer
(CEO), Chief Investment Officer (CIO) and Chief Operating Officer (COO).

Key performance indicators. These are based on operational targets, growth and business development
targets as well as operational management.

Long Term Incentive. It is awarded in the form of Performance Rights to executives and employees for the
purpose of retention and to align the interests of employees with shareholders.

Short-term Incentive. The purpose of the STI is to provide financial rewards to Executives in recognition of
performance aligned with business and personal objectives. The STI is a cash based incentive paid on an
annual basis and is paid at the discretion of the board.

Total Shareholder Return is defined as share price growth plus dividends paid over the measurement period.

Key Management Personnel
Below is Treasury Group’s KMP during or since the end of the ﬁnancial year were:

Non-executive Directors

M. Fitzpatrick
P. Kennedy
R. Hayes
M. Donnelly
J. Vincent
G. Guérin

Executive directors and KMP

A. McGill
T. Carver
P. Greenwood
J. Ferragina

Chairman, Non-executive Director
Non-executive Director
Non-executive Director, resigned 31 March 2015
Non-executive Director
Non-executive Director, appointed 10 December 2014
Non-executive Director, appointed 10 December 2014

Managing Director & CEO
Executive Director appointed 10 December 2014
Executive Director and CIO, appointed 10 December 2014
Finance Director, COO, appointed 31 March 2015 & Company Secretary

Except as noted, the named persons held their current position for the whole of the ﬁnancial year and since the end of the
ﬁnancial year.

Annual Report 2015

Directors’ Report
continued

Remuneration Philosophy
The performance of the Company depends upon the quality of its Directors and Executives. Treasury Group aims to
provide market competitive pay and rewards to successfully attract, motivate and retain the highest quality individuals.
Our remuneration and beneﬁts are structured to reward people for their individual and collective contribution to our
success for demonstrating our values, and for creating and enhancing value for all Treasury Group stakeholders.

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 is a Committee of the Board established by the Board.

The objective of the Committee is to assist the Board in the establishment of remuneration and incentive policies and
practices for, and in discharging the Board’s responsibilities relative to the remuneration setting and review of, the
Company’s Chief Executive Ofﬁcer and other senior executives and directors.

The list of responsibilities of the Committee is laid out in its charter available on the Treasury Group website.

Remuneration Structure
In accordance with best practice corporate governance, the remuneration structure of Non-executive director, executive
directors and ofﬁcers is separate and distinct.

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.

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 that is both appropriate to the position
and is competitive in the market.

The Remuneration Committee reviews ﬁxed remuneration annually, and considers performance, relevant comparative
remuneration in the market and advice on policies and practices.

Structure
Generally comprises cash salary, superannuation contribution/401K beneﬁts and the remainder as nominated beneﬁts.

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 CEO on executive
performance. The CEO bases his report on a number of tailored Key Performance Indicators (KPI) for each Executive and
Ofﬁcers. 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
The Board sets annual KPIs for the CEO against which performance is measured. The KPIs are based on ﬁnancial targets,
growth and business development targets as well as operational management.

The focus of the KPIs is to drive decision making in a manner that increases returns to shareholders in the short and longer
term. The ﬁnancial targets and heavily weighted in the STI calculation. The board also considers the general value add to
the business and the company’s stakeholders through areas such as investor relations, deal origination and strategy.

Following were the CEO’s KPIs for 2015:
– Achievement of EPS growth targets
– Completion of targeted deal opportunities (TRG/NL merger)
– Achievement of strategic plan milestones
– Qualitative assessment of management of staff
– Qualitative assessment of effectiveness of communications with market
– Discretionary element

While the CEO may have achieved his KPIs for the FY 2015, his STI is fully discretionary in the hands of the Remuneration
Committee and the Committee had exercised this discretion to award zero.

Variable Remuneration – Long Term Incentive (LTI)

Objective
The objective of the LTI plan is to reward Executives and Ofﬁcers in a manner that aligns this element of remuneration
with the creation of shareholder wealth. The awarding of the LTIs is fully discretionary in the hands of the Remuneration
Committee and granted under the same governance process as detailed for STI’s above.

Structure
LTI grants are delivered in the form of performance rights/options or shares and are subject to service conditions and
performance target measures over a three-year period.

Performance rights
Following the merger of Treasury Group and Northern Lights, a long term incentive plan is under review by the
Remuneration Committee for the Executive Directors. It is expected that an LTI scheme will consist of TRG performance
rights. The vesting structure and competitor group against which performance is measured will reﬂect the post transaction
structure of the group. The new competitor group will include both Australian and overseas listed companies.

On 7 July 2014, the performance rights that were granted to Executives and Ofﬁcers on 7 July 2011 vested. The
performance rights have been split into two equal tranches and each tranche is subject to different total shareholder return
(TSR) performance hurdles. TSR measures the return to a shareholder over the Performance period in terms of changes
in the market value of the shares plus the value of any dividends paid on the shares. Each TSR hurdle compares the TSR
performance of Treasury Group with the TSR performance of each of the entities in a comparator group described below:

Tranche 1 – S & P ASX 300 comparator Group
50% of the performance rights are subject to the TSR hurdle that compares the TSR performance of Treasury Group at the
end of the performance period with the growth in TSR over the same period of the S&P ASX 300 companies.

Tranche 2 – selected comparator group
50% of the performance rights will be subject to a TSR hurdle that compares the TSR performance of Treasury Group at the
end of the performance period with the growth in TSR over the same period of a selected comparator group of companies.
Each company in the comparator group is weighted equally. The comparator group comprises:
– BT Investment Management Ltd
– Perpetual Limited
– K2 Asset Management Holdings Limited
– Hunter Hall International Limited
– Platinum Asset Management Limited
– Magellan Financial Group
– IOOF Holdings Limited

The percentage of performance rights which vest (if any) will be determined by the Board in reference to the percentile
ranking achieved by the company over the performance period compared to the comparator group applying under the
relevant TSR hurdle for the tranche:

Annual Report 2015

Directors’ Report
continued

TSR growth – percentile ranking

75th percentile or above
Between 50th and 75th percentile

50th percentile
Below 50th percentile

Performance rights that vest (%)

100%
Progressive pro rata vesting from 50% at 2% for every one
percentile increase above the 50th percentile
50%
Nil

Upon vesting of the performance rights a share is allocated for each performance right. The shares will rank equally and
have the same voting rights and dividend eligibility as other ordinary shares in the company.

Lapse of Performance Rights
Performance rights lapse to the extent that performance conditions are not satisﬁed. These include:
– Cessation of employment before the end of the vesting period
– Contravention of dealing restrictions
– Acting dishonestly or fraudulently

Change of Control
Generally in the event of a change of control whether through takeover, scheme of arrangement or any other transaction that
the Board determines is likely to result in a change of control, the performance rights may vest at the Board’s discretion.

Remuneration outcomes for 2015
In consideration for the increased responsibilities as a result of the merger between Treasury Group and Northern Lights,
the Remuneration Committee had reviewed the ﬁxed remuneration of executives and ofﬁcers. Below provides a summary
of actual remuneration received by the Managing Director and Executive KMP during the year 2015:
– Short-term incentives relating to FY 2015 were awarded to Mr Greenwood and Mr Ferragina
– The deferred component of short-term incentives for the performance of Mr McGill and Mr Ferragina in FY 2014 was paid

in June 2015

– Fixed remuneration of Mr Ferragina had increased following his promotion to Finance Director effective 1 April 2015
– New compensation packages were drawn for Mr Carver and Mr Greenwood effective 25 November 2014
– Fixed remuneration of Mr McGill had increased effective 1 July 2014
– The LTIs in the form of performance rights awarded to Mr McGill and Mr Ferragina in FY 2011 vested in July 2014 at 96%.

Treasury Group shares were allocated accordingly.

LTI plan for 2015
There were no LTIs awarded to executive KMP during the ﬁnancial year. The Remuneration Committee anticipates that new
awards will be issued in the coming year.

Relationship Between The Remuneration Philosophy and Company Performance
The table below sets out summary information about the Group’s earnings and movements in shareholder wealth for
the ﬁve years to 30 June 2015. Bonuses are paid based on individual and Company performance. The Remuneration
Committee has ultimate discretion in determining the amount of bonus pool:

Revenue

Net profit before tax¹
Net profit after tax
Share price at start of year ($)
Share price at end of year ($)
Interim dividend (cps)²
Final dividend (cps)²
EPS
Diluted EPS
KMP bonuses ($)

2015
$

2014
$

2013
$

2012
$

2011
$

6,714,712

2,323,656

4,303,143

3,944,594

4,492,981

199,881,011
138,723,124
9.57
9.50
24
28
541.5
541.5
576,185³

15,187,652
13,061,814
7.07
9.57
23
27
56.6
55.0
629,500

10,803,395
10,390,514
4.09
7.07
17
23
45.0
45.3
539,200

6,415,796
6,751,757
3.96
4.09
14
20
29.3
29.3
502,166

9,889,480
10,005,104
5.06
3.96
14
20
43.4
43.4
992,443

This is driven by the gain on the sale of business to Aurora.

² Franked to 100% at 30% corporate income tax.

Awarded to Mr Greenwood and Mr Ferragina. These awards were recommended by the CEO-elect and approved by the Remuneration Committee
based on their individual performances.

Remuneration of Key Management Personnel
Details of the nature and amount of each element of the remuneration of each Director of the Group and each of the key
management personnel of the Company and the consolidated entity for the ﬁnancial year are as follows:

Short term

Salary &
fees
$

Cash
Bonus
$

Post
employment
Super-
annuation/
401K
$

Share based
payments

Options/
Performance
rights
$

Shares
$

Other

Total

Performance
related

Others
$

Non-executive Directors

M. Fitzpatrick – Chairman

2015

2014

114,417

114,679

P. Kennedy – Non-executive Director

2015

2014

120,000

–

10,870

10,608

–

R. Hayes – Non-executive director, resigned 31 March 2015

2015

2014

53,154

68,807

M. Donnelly – Non-executive Director

2015

2014

97,626

68,632

–

9,922

6,365

9,274

6,348

J. Vincent – Non-executive director, appointed 10 December 2014¹

2015

2014

–

G. Guérin – Non-executive director, appointed 10 December 2014¹

2015

2014

–

Executive Directors and Officers

A. McGill – Managing Director & Chief Executive Officer

2015

2014

631,217

425,575

–

373,500

18,783

17,775

–

8,986

273,333

T. Carver – Executive director, appointed 10 December 2014² & CEO-elect

2015

2014

479,660

–

9,884

–

P. Greenwood, Executive director, appointed 10 December 2014² & Chief Investment Officer

2015

2014

480,898

253,685

10,174

–

125,287

120,000

63,076

75,175

106,900

74,980

–

658,986

1,090,183

489,544

–

744,757

–

34%

–

34%

–

J. Ferragina – Finance Director & Chief Operating Officer, appointed 31 March 2015 (previously Chief Financial Officer)

2015

2014

379,773

302,225

322,500

256,000

18,783

17,775

Total remuneration: Key Management Personnel

2015

2014

2,356,745

1,099,918

576,185

629,500

87,690

58,871

–

2,516

76,533

11,502

349,866

–

723,572

652,533

3,032,122

2,138,155

45%

39%

–

29%

These are reported in Australian Dollars. Total compensation paid to KMP is the sum paid by Treasury Group from July to
November 2014 and the 64.03% share on remuneration effectively paid by Aurora via the recharge mechanism with Aurora
Investment Management Pty Ltd from 25 November 2014 to June 2015. No key management personnel appointed during
the period received a payment as part of his consideration for agreeing to hold the position.

¹ They will receive compensation effective 1 July 2015.

² Their compensation is USD, converted to AUD based on average FX Rate.

Annual Report 2015

Directors’ Report
continued

The relative proportions of those elements of remuneration of key management personnel that are linked to performance:

Executives

A. McGill

T. Carver

P. Greenwood

J. Ferragina

Maximum potential
of short-term incentive
based on fixed remuneration
2014

2015

Actual short-term incentive
based on fixed remuneration
linked to performance¹
2014

2015

100%

–

80%

–²

50%

100%

83%

–

80%

Each year, KMP bonuses are paid in two instalments being 50% on August and 50% on June the following year. For the current year, only the 50%
payable on August is provided for as at 30 June 2015. For the comparative period, 50% was provided in June 2014 and the remaining 50% was paid
in June 2015.

In its discretion, the Remuneration Committee decided to not award Mr McGill any STI in 2015. In his 2015 STI recommendations to the Committee,
Mr Carver volunteered to not receive a STI in 2015, and the Remuneration Committee approved his STI recommendations.

Key Terms of Employment Contracts of KMP

Key Terms of Employment Contract of Managing Director and Chief Executive Ofﬁcer

Contract Details

Andrew McGill, Managing Director & CEO

Term of Contract

Ongoing until notice is given by either party

Fixed Remuneration AUD$650,000

STI

LTI

Mr McGill is eligible for a STI based on a number of clearly defined KPIs. The STI is for up to 100% of
base salary and paid in two equal instalments over a two year period.

Mr McGill may have achieved his KPIs for FY 2015, however his STI is fully discretionary in the hands
of the Remuneration Committee and the Committee had exercised this discretion to award zero for
his performance in FY2015.

Mr McGill’s deferred component of short-term incentives for his performance in FY 2014 was paid in
June 2015.

On 12 July 2014, 96% of the 500,000 performance rights that have been awarded to Mr McGill on
12 July 2011 vested. Accordingly, Mr. McGill was allocated 480,000 Treasury Group shares on the
same date.

There were no LTIs awarded to Mr McGill for the FY 2015.

Termination of
Employment

Under the terms of the contract, Mr McGill or Treasury Group may terminate the contract giving
six months written notice with no termination benefits.

The Company may terminate the contract at any time without notice if serious misconduct has
occurred. Where termination with cause occurs, Mr McGill is only entitled to that portion of
remuneration that is fixed, and only up to the date of termination.

Where employment is terminated with notice, no further payments will be paid by the Company
except unpaid salary accrued to the date of termination and accrued annual leave. Where
employment is terminated with notice, deferred short-term incentives will also be paid. However, the
Board retains the discretion to determine that some or all unvested performance rights vest or lapse
with effect from or after the cessation date.

On 26 March 2015, Mr McGill notified the Board his intention to terminate his employment contract
effective 28 August 2015.

Key Terms of Employment Contract of Executive Director

Contract Details

Tim Carver, Executive Director

Term of Contract

Ongoing until notice is given by either party

Fixed Remuneration USD$600,000

STI

LTI

Termination of
Employment

Mr Carver is eligible for a STI based on a number of clearly defined KPIs. The STI is for up to 100% of
base salary and paid in two equal instalments over a two year period.

In his 2015 STI recommendations to the Remuneration Committee, Mr Carver volunteered to not
receive a STI in 2015, and the Committee approved his STI recommendations.

There were no LTIs awarded to Mr Carver for the FY 2015.

As part of the merger between Treasury Group and Northern Lights, a commitment was made to
grant Mr Carver with 500,000 performance rights to be split into three tranches vesting over two,
three and four years. As at the date of this report, these performance rights have not yet been
granted. Full details of these performance rights will be disclosed in a future Remuneration Report
once granted.

Termination for Cause/Resignation for other than Good Reason
Under the terms of the contract, the Company may terminate Mr Carver’s employment for “Cause”
(which includes serious misconduct) without notice and Mr Carver may resign his employment
for “Good Reason” or otherwise by giving six (6) months’ prior written notice. In either of these
situations, Mr Carver will be entitled to receive that portion of remuneration which is fixed (and only
up to the date of termination); accrued but untaken annual leave, vested but unpaid amounts owed
to Mr Carver under the Company’s retirement, non-qualified deferred compensation or incentive
compensation plans; and any other applicable bonus/incentive payments as per the terms of the
contract and grant or plan documents.

Termination upon death or permanent disability
If Mr Carver suffers a permanent disability or dies during the term of his contract, Mr Carver (or his
estate, as applicable) will be entitled to receive the same benefits as payable in a “Termination for
Cause/Resignation for other than Good Reason scenario, plus twelve (12) months’ continuation
coverage under the Company’s group health plans under which Mr Carver and his dependents
participated immediately prior to Mr Carver’s date of termination.

Termination without Cause/Resignation for Good Reason
Under the terms of the contract, the Company may terminate Mr Carver’s employment without Cause
by giving six (6) months’ prior written notice, and Mr Carver may resign his employment for Good
Reason without notice. In either of these situations, Mr Carver will be entitled to the same benefits as
payable in a “Termination upon death or permanent disability scenario, plus a lump sum severance
payment equal to twelve (12) months’ base salary.

Directors’ Report
continued

Key Terms of Employment Contract of Executive Director and Chief Investment Officer

Contract Details

Paul Greenwood, Executive Director and Chief Investment Officer

Term of Contract

Ongoing until notice is given by either party

Fixed Remuneration USD$600,000

STI

LTI

Termination of
Employment

Mr Greenwood is eligible for a STI based on a number of clearly defined KPIS. The STI is for up to
100% of base salary and paid in two equal instalments over a two year period.

Mr Greenwood was awarded 50% STI for his performance for FY 2015 as recommended by the
CEO-elect to the Remuneration Committee.

There were no LTIs awarded to Mr Greenwood for the FY 2015.

As part of the merger between Treasury Group and Northern Lights, a commitment was made to
grant Mr Greenwood with 500,000 performance rights to be split into three tranches vesting over
two, three and four years. As at the date of this report, these performance rights have not yet been
granted. Full details of these performance rights will be disclosed in a future Remuneration Report
once granted.

Termination for Cause/Resignation for other than Good Reason
Under the terms of the contract, the Company may terminate Mr Greenwood’s employment for
“Cause” (which includes serious misconduct) without notice and Mr Greenwood may resign his
employment for “Good Reason” or otherwise by giving six (6) months’ prior written notice. In either
of these situations, Mr Greenwood will be entitled to receive that portion of remuneration which
is fixed (and only up to the date of termination); accrued but untaken annual leave, vested but
unpaid amounts owed to Mr Greenwood under the Company’s retirement, non-qualified deferred
compensation or incentive compensation plans; and any other applicable bonus/incentive payments
as per the terms of the contract and grant or plan documents.

Termination upon death or permanent disability
If Mr Greenwood suffers a permanent disability or dies during the term of their respective contracts,
Mr Greenwood (or his estate, as applicable) will be entitled to receive the same benefits as payable in
a “Termination for Cause/Resignation for other than Good Reason scenario, plus twelve (12) months’
continuation coverage under the Company’s group health plans under which Mr Greenwood and his
dependents participated immediately prior to Mr Greenwood’s date of termination.

Termination without Cause/Resignation for Good Reason
Under the terms of the contract, the Company may terminate Mr Greenwood’s employment without
Cause by giving six (6) months’ prior written notice, and Mr Greenwood may resign his employment
for Good Reason without notice. In either of these situations, Mr Greeenwood will be entitled to the
same benefits as payable in a “Termination upon death or permanent disability scenario, plus a lump
sum severance payment equal to twelve (12) months’ base salary.

Annual Report 201528

Key Terms of Employment Contract of Finance Director and Chief Operating Officer

Contract Details

Joseph Ferragina, Finance Director and COO

Term of Contract

Ongoing until notice is given by either party

Fixed Remuneration AUD$450,000

STI

Mr Ferragina is eligible for a STI based on a number of clearly defined KPIs. The STI is for up to
100% of base salary and paid in two equal instalments over a two year period.

Mr Ferragina was awarded 100% STI for his performance for FY 2015 as recommended by the
CEO-elect to the Remuneration Committee.

Mr Ferragina’s deferred component of short-term incentives for his performance in FY 2014 was paid
in June 2015

LTI

There were no LTIs awarded to Mr Ferragina for the FY 2015.

Following his performance review in July 2014, Treasury Group made a commitment to grant
Mr Ferragina 165,000 performance rights. On his promotion to Finance Director in April 2015,
Treasury Group made a commitment to grant Mr Ferragina an additional 140,000 performance rights.

On 12 July 2014, 96% of the 140,000 performance rights that have been awarded to Mr Ferragina on
12 July 2011 vested. Accordingly, Mr. Ferragina was allocated 134,400 Treasury Group shares on the
same date.

Termination of
Employment

Under the terms of the contract, Mr Ferragina or Treasury Group may terminate the contract giving
three months written notice with no termination benefits.

The Company may terminate the contract at any time without notice if serious misconduct has
occurred. Where termination with cause occurs, Mr Ferragina 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 performance rights will immediately be forfeited.

Annual Report 2015

Directors’ Report
continued

Remuneration of Non-executive Directors

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 caliber, 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 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 requires shareholder approval 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 Ltd.

Following is the schedule of non-executive directors fees:

Chairman

Non- Executive Director

Audit Committee Chair

Audit Committee Member

Remuneration Committee Member
(includes Chair, no fee difference between member and chair)

Nominations Committee (now Governance Committee) Member
(includes Chair, no fee difference between member and chair)

* Effective 12 November 2014.

FY 2015
$

FY 2014
$

100,000

60,000

20,000

15,000

60,000

20,000

15,000

10,000

3,000*

Nil

The fees above are inclusive of superannuation contributions. Total fees paid to Non-Executive Directors in FY 15 were
$415,263. Refer to page 25 for details.

Bonuses and Share-Based Payments Granted As A Compensation for The Current Financial Year

Cash Bonuses
No other cash bonuses were granted to KMP during 2015.

Employee Share Option Plan
A Long Term Incentive Plan has been established where Treasury Group Ltd, at the discretion of the Board of Directors,
awards performance rights to Directors, executives and certain members of staff of the Group. Each performance right at
the time of grant represents one Treasury Group Ltd share if it vests.

Each employee performance right converts into one ordinary share of Treasury Group Ltd on vesting date. No amounts are
paid or payable by the recipient of the performance rights on vesting date. The performance rights carry neither rights to
dividends nor voting rights.

The number of performance rights granted is calculated in accordance with the performance-based formula approved by
the Remuneration Committee.

The performance rights vest after three years from grant date.

Details of share-based payments/performance rights granted as compensation to key management personnel during the
current ﬁnancial year:

During the financial year

Option series

Numbers
granted

Numbers
vested

% of grant
vested

% of grant
forfeited

% of
compensation
for the year
consisting of
performance
rights

Executive KMP

A. McGill

T. Carver

P. Greenwood

J. Ferragina

2011

–

2011

–

480,000

96%

–

134,400

96%

–

Annual Report 2015

Directors’ Report
continued

Key Management Personnel Equity Holdings

Fully paid ordinary shares of Treasury Group Ltd

30 June 2015

Non-executive Directors

M. Fitzpatrick

P. Kennedy

M. Donnelly

J. Vincent²

G. Guérin²

Executive KMP

A. McGill

T. Carver³

P. Greenwood³

J. Ferragina

30 June 2014

Non-executive Directors

M. Fitzpatrick

P. Kennedy

R. Hayes

M. Donnelly

Executive KMP

A. McGill

J. Ferragina

Balance
1 July 2014

Granted as
remuneration

Received on
vesting of
performance
rights/options1

Net change
other

Balance
held
nominally

2,701,285

213,487

20,000

–

50,000

–

7,000

–

2,701,285

1,442

214,929

–

20,000

–

480,000

541

530,541

–

134,400

–

141,400

Balance
1 July 2013

Granted as
remuneration

Received on
vesting of
performance
rights/options

Net change
other

Balance
held
nominally

2,701,285

213,487

–

50,000

22,404

–

2,701,285

213,487

–

20,000

–

(15,404)

50,000

7,000

The performance rights granted on 11 July 2011 vested on 11 July 2014. As a result, Mr McGill and Mr Ferragina received Treasury Group shares
with a market value of $4,752,000 and $1,330,560, respectively. The market value of the shares on 11 July 2014 was $9.90 per share.

Both Mr Vincent and Mr Guérin represent stakeholders who are Class B & C unitholders in Aurora. These Class B and C units are exchangeable
to fully paid ordinary shares in Treasury Group. In the event that exchange notices are delivered to convert such Class B or C unitholdings as at
the date of this report, the stakeholders whom Mr Vincent and Mr Giles represent will receive fully paid ordinary shares in Treasury Group Ltd of
2,298,266 and 2,699,691 respectively. Refer to page 70 for the conversion multiple.

Class B and B-1 unitholders in Aurora. Class B or B-1 units are exchangeable to fully paid ordinary shares in Treasury Group. In the event that
exchange notices are delivered to convert such Class B or B-1 unitholdings as at the date of this report, Mr Carver and Mr Greenwood will receive
fully paid ordinary shares in Treasury Group Ltd of 465,900 and 820,959 respectively. Refer to page 70 for the conversion multiple.

Performance rights of Treasury Group Ltd

Balance
at 1 July

Granted as
compensation

Received on
vesting of
performance
rights/options

Net change
other

Balance
At 30 June

Balance
Vested
at 30 June

Vested
but not
exercisable

Vested and
exercisable

Performance
rights vested

30 June 2015

No.

Executive
KMP

A. McGill

T. Carver

P. Greenwood

500,000

–

J. Ferragina

140,000

–

480,000

–

134,400

Balance
at 1 July

Granted as
compensation

Received on
vesting of
performance
rights/options

Net change
other

Balance
At 30 June

Balance
Vested
at 30 June

Vested
but not
exercisable

Vested and
exercisable

Performance
rights vested

30 June 2014

No.

Executive
KMP

A. McGill

500,000

J. Ferragina

140,000

–

500,000

140,000

–

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 & Risk Committee
Meetings

Remuneration Committee
Meetings

Meetings
eligible to
attend

Meetings
Attended

Meetings
eligible to
attend

Meetings
Attended

Meetings
eligible to
attend

Meetings
Attended

Nomination Committee
(now Governance
Committee) Meetings
Meetings
eligible to
attend

Meetings
Attended

M. Fitzpatrick

A. McGill

T. Carver*

P. Kennedy

M. Donnelly

R. Hayes*

J. Vincent*

G. Guérin*

P. Greenwood*

J. Ferragina*

* They were not Directors for the full year.

Annual Report 2015

Directors’ Report
continued

Committee Membership
As at the date of this report, the Company had an Audit & Risk Committee, a Remuneration Committee and a Nomination
Committee (now Governance Committee) of the Board of Directors.

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

Audit & Risk

Remuneration

Nomination (now Governance Committee)

P. Kennedy (Chairman)

J. Vincent (Chairman)

M. Donnelly (Chairperson)

M. Fitzpatrick

M. Donnelly

J. Vincent

M. Fitzpatrick

P. Kennedy

G. Guérin

M. Fitzpatrick

G. Guérin

Tax Consolidation
On 24 July 2014, Aurora Trust and Aurora Investment Management Pty Ltd as the Trustee of Aurora Trust, joined the
tax consolidated group. On 25 November 2014, Aurora Trust, Treasury Group Investment Services and Global Value
Investors exited from the tax consolidated group. As at the date of this report, Treasury Group, the Trustee and AR Capital
Management Pty Ltd are the members of the tax consolidated entity.

Environmental Regulation and Performance
The Group’s operations are not presently subject to signiﬁcant environmental regulation under the law of the
Commonwealth and State.

Non-Audit Services
The Directors are satisﬁed that the provision of non-audit services during the year by the auditor is compatible with the
general standard of independence for auditors imposed by the Corporations Act 2001.

Auditor Independence
The Directors received an independence declaration from the auditors of Treasury Group Ltd. A copy of the declaration is
set out on the next page.

Signed in accordance with a resolution of the Directors.

M. Fitzpatrick
Chairman

31 August 2015

Auditor’s Independence Declaration
To the Directors of Treasury Group Ltd

Deloitte Touche Tohmatsu
ABN 74 490 121 060
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Deloitte Touche Tohmatsu
Grosvenor Place
Sydney NSW 2000
ABN 74 490 121 060
225 George Street
PO Box N250 Grosvenor Place
Sydney NSW 2000
Sydney NSW 1220 Australia
Grosvenor Place
PO Box N250 Grosvenor Place
225 George Street
Sydney NSW 1220 Australia
Tel: +61 2 9322 7000
Sydney NSW 2000
Fax: +61 2 9322 7001
PO Box N250 Grosvenor Place
Tel: +61 2 9322 7000
www.deloitte.com.au
Sydney NSW 1220 Australia
Fax: +61 2 9322 7001
www.deloitte.com.au
Tel: +61 2 9322 7000
Fax: +61 2 9322 7001
www.deloitte.com.au

The Board of Directors
Treasury Group Ltd
The Board of Directors
Level 14, 39 Martin Place
Treasury Group Ltd
Sydney NSW 2000
The Board of Directors
Level 14, 39 Martin Place
Treasury Group Ltd
Sydney NSW 2000
Level 14, 39 Martin Place
31 August 2015
Sydney NSW 2000
31 August 2015

Dear Board Members
31 August 2015
Dear Board Members

Dear Board Members

Treasury Group Ltd
Treasury Group Ltd

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
Treasury Group Ltd
declaration of independence to the directors of Treasury Group Ltd.
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of Treasury Group Ltd.
As lead audit partner for the audit of the financial statements of Treasury Group Ltd for the financial year
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
ended 30 June 2015, I declare that to the best of my knowledge and belief, there have been no contraventions
declaration of independence to the directors of Treasury Group Ltd.
As lead audit partner for the audit of the financial statements of Treasury Group Ltd for the financial year
of:
ended 30 June 2015, I declare that to the best of my knowledge and belief, there have been no contraventions
As lead audit partner for the audit of the financial statements of Treasury Group Ltd for the financial year
of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
ended 30 June 2015, I declare that to the best of my knowledge and belief, there have been no contraventions
of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
(ii) any applicable code of professional conduct in relation to the audit.
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

Yours sincerely,
Yours sincerely,

(ii) any applicable code of professional conduct in relation to the audit.

Yours sincerely,

DELOITTE TOUCHE TOHMATSU
DELOITTE TOUCHE TOHMATSU

DELOITTE TOUCHE TOHMATSU

Declan O’Callaghan
Partner
Declan O’Callaghan
Chartered Accountants
Partner
Declan O’Callaghan
Chartered Accountants
Partner
Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited

Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited

Annual Report 2015

Consolidated Income Statement
for the year ended 30 June 2015

Continuing Operations

Revenues

Net gain on investments

Salaries and employee benefits expenses

Other expenses

Consolidated
2015
$

2014
$

6,714,712

2,323,656

195,410,403

845,156

(5,266,779)

(4,466,383)

(1,991,791)

(3,286,577)

Notes

5(a)

5(b)

5(c)

Share of net profits of equity accounted investments

5(d)

5,014,466

19,771,800

Profit before income tax

Income tax (expense)

Profit for the year

Attributable to:

Non-controlling interest

Members of the parent

199,881,011

15,187,652

6(c)

(61,157,887)

(2,109,758)

138,723,124

13,077,894

–

16,080

18(e)

138,723,124

13,061,814

Earnings per share (cents per share)
– basic for proﬁt for the year attributable to ordinary equity holders of the parent
– diluted for proﬁt for the year attributable to ordinary equity holders of the parent
Franked dividends paid per share (cents per share) for the financial year

7(b)

541.5

56.6

The above consolidated income statement should be read in conjunction with the accompanying notes.

Consolidated Statement of Comprehensive Income
for the year ended 30 June 2015

Profit for the year

Other Comprehensive Income

Items that may be reclassified to profit and loss

Net unrealised (losses) on available-for-sale investments taken to equity

Income tax relating to items reclassified

Reversal of net unrealised losses on available-for-sale sold during the year

Share of associate’s foreign currency translation reserve (after tax)

Share of associate’s gain on available-for-sale investments (after tax)

Other comprehensive (loss) for the year

Total comprehensive income for the year

Attributable to:

Non-controlling interest

Members of the parent

Consolidated
2015
$

2014
$

138,723,124

13,077,894

–

(213,894)

64,169

(213,684)

(4,458,846)

–

147,103

(13,250)

(4,525,427)

(162,975)

134,197,697

12,914,919

–

16,080

134,197,697

12,898,839

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

Annual Report 2015

Consolidated Statement of Financial Position
as at 30 June 2015

Current assets

Cash and cash equivalents

Trade and other receivables

Other assets

Total current assets

Non-current assets

Trade and other receivables

Investments accounted for using the equity method

Deferred tax

Available-for-sale investments

Loans and other receivables

Plant and equipment

Intangibles

Total non-current assets

Total assets

Current liabilities

Trade and other payables

Provisions

Total current liabilities

Non-current liabilities

Provisions

Deferred tax

Total non-current liabilities

Total liabilities

Net assets

Equity

Equity attributable to equity holders of the parent

Contributed equity

Reserves

Retained profits

Total equity

The above statement of ﬁnancial position should be read in conjunction with the accompanying notes.

Notes

9(a)

Consolidated
2015
$

2014
$

1,056,243

12,860,219

8,829,670

11,117,179

–

1,093,163

9,885,913

25,070,561

–

833,073

11(b)

275,341,759

29,242,193

6(d)

–

781,881

11,005,105

4,797,624

61,447

12,540

275,341,759

46,733,863

285,227,672

71,804,424

2,002,211

7,671,969

328,765

221,903

2,330,976

7,893,872

207,445

135,882

6(d)

58,769,498

–

58,976,943

135,882

61,307,919

8,029,754

223,919,753

63,774,670

18(a)

18(f)

18(e)

69,500,943

29,594,265

(1,373,280)

4,088,120

155,792,090

30,092,285

223,919,753

63,774,670

Consolidated Statement of Changes in Equity
for the year ended 30 June 2015

Ordinary
shares
$

Note

Consolidated

Net
unrealised
gains
reserve
$

Foreign
Currency
Translation
Reserve
$

Share
options
reserve
$

Retained
earnings
$

Total
$

29,594,265

3,874,436

213,684

–

30,092,285

63,774,670

–

(66,581)

(4,458,846) 138,723,124 134,197,697

1,027,859

(1,027,859)

38,878,819

–

7(b)

–

91,886

–

38,878,819

91,886

(13,023,319)

As at 1 July 2014

Total comprehensive
income for the year

Issuance of shares
due to vesting of
performance rights

Issuance of shares

Share-based
payments

Dividends paid

At 30 June 2015

69,500,943

2,938,463

147,103

(4,458,846) 155,792,090 223,919,753

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

Consolidated

Ordinary
shares
$

Note

Share
options
reserve
$

Net
unrealised
gains
reserve
$

Retained
earnings
$

Non-
controlling
interest
$

Total
$

29,594,265

3,447,286

376,659

27,643,019

16,196

61,077,425

–

(162,975) 13,061,814

16,080

12,914,919

–

7(b)

427,150

–

(10,612,548)

–

427,150

(32,276)

–

(10,612,548)

63,774,670

29,594,265

3,874,436

213,684

30,092,285

As at 1 July 2013

Total comprehensive
income for the year

Share-based
payments

Share bought back
for non-controlling
interest

Dividends paid

At 30 June 2014

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

Annual Report 2015

Consolidated Statement of Cash Flows
for the year ended 30 June 2015

Cash flows from operating activities

Receipts from customers

Payments to suppliers and employees

Dividends and distributions received

Interest received

Notes

Consolidated
2015
$

2014
$

19,269,533

20,675,949

(24,544,608)

(27,016,738)

7,872,346

17,885,459

1,821,573

615,407

Net cash flows from operating activities

9(b)

4,418,844

12,160,077

Cash flows from investing activities

Proceeds from disposal of available-for-sale investments

Purchase of available-for-sale investments

Repayment of loans by associates

Advances to associates

Advances to other related party

Proceeds from disposal of investment accounted for under equity method

6,900,946

3,281,492

–

(2,300,000)

2,270,505

1,889,028

(4,631,511)

(2,450,000)

–

(600,000)

235,960

Purchase of investment accounted for under the equity method

(44,828,548)

(811,420)

Purchase of plant and equipment

Purchase of intangible assets

Cash held by deconsolidated entities

Net cash flows (used in) investing activities

Cash flows from financing activities

Issue of shares, net of transaction costs

Equity dividends paid on ordinary shares

Shares bought back for non-controlling interest

Net cash flows from/(used in) financing activities

Net (decrease)/increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

–

(1,789,712)

(15,224)

(1,817)

–

(42,078,320)

(771,981)

38,878,819

–

(13,023,319)

(10,612,548)

–

(32,276)

25,855,500 (10,644,824)

(11,803,976)

743,272

12,860,219

12,116,947

9(a)

1,056,243

12,860,219

The above statement of cash ﬂows should be read in conjunction with the accompanying notes. The non-cash investing items in relation to acquisition
of units in Aurora is $248,862,193.

Notes to the Financial Statements
for the year ended 30 June 2015

1. Corporate Information
The ﬁnancial report of Treasury Group Ltd (the ‘Company’ or the ‘Group’) for the year ended 30 June 2015 was authorised
for issue in accordance with a resolution of the Directors on 31 August 2015.

Treasury Group Ltd is a company limited by shares incorporated in Australia whose shares are publicly traded on the
Australian Securities 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
The ﬁnancial report is a general-purpose ﬁnancial report, which has been prepared in accordance with the requirements
of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian
Accounting Standards Board. The ﬁnancial report has also been prepared on a historical cost basis, except for ﬁnancial
assets held at fair value through proﬁt and loss, and available-for-sale investments, which have been measured at
fair value.

The ﬁnancial report is presented in Australian dollars.

Treasury Group Ltd is a for-proﬁt entity.

b. Compliance with IFRS
The ﬁnancial report complies with Australian Accounting Standards as issued by the Australian Accounting Standards
Board and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.

Application to AASBs and the new Interpretation that are mandatorily effective for the current year
In the current year, the Group has applied a number of amendments to AASBs and a new Interpretation issued by the
Australian Accounting Standards Board (AASB) that are mandatorily effective for an accounting period that begins on
or after 1 July 2014, and therefore relevant for the current year end.

Standards affecting presentation and disclosure

Standard/Interpretation

Summary

AASB 2013-3‘Amendments
to AASB 136 – Recoverable
Amount Disclosures for Non-
Financial Assets’

AASB 2014-1 ‘Amendments
to Australian Accounting
Standards’ (Part A: Annual
Improvements 2010–2012 and
2011–2013 Cycles)

The amendments to AASB 136 remove the requirement to disclose the recoverable
amount of a cash-generating unit (CGU) to which goodwill or other intangible assets with
indefinite useful lives had been allocated when there has been no impairment or reversal
of impairment of the related CGU. Furthermore, the amendments introduce additional
disclosure requirements applicable to when the recoverable amount of an asset or a CGU
is measured at fair value less costs of disposal. These new disclosures include the fair
value hierarchy, key assumptions and valuation techniques used which are in line with the
disclosure required by AASB 13 ‘Fair Value Measurements’.

The application of these amendments does not have any material impact on the
disclosures in the Group’s consolidated financial statements.

The Annual Improvements 2010-2012 has made number of amendments to various
AASBs, which are summarised below.

– The amendments to AASB 2(i) change the deﬁnitions of ‘vesting condition’ and

‘market condition’; and (ii) add deﬁnitions for ‘performance condition’ and ‘service
condition’ which were previously included within the deﬁnition of ‘vesting condition’. The
amendments to AASB 2 are effective for share-based payment transactions for which
the grant date is on or after 1 July 2014.

– The amendments to AASB 3 clarify that contingent consideration that is classiﬁed as an
asset or a liability should be measured at fair value at each reporting date, irrespective
of whether the contingent consideration is a ﬁnancial instrument within the scope of
AASB 9 or AASB 139 or a non-ﬁnancial asset or liability. Changes in fair value (other
than measurement period adjustments) should be recognised in proﬁt and loss.
The amendments to AASB 3 are effective for business combinations for which the
acquisition date is on or after 1 July 2014.

Notes to the Financial Statements
continued

2. Summary of Significant Accounting Policies (Cont.)
Standard/Interpretation

Summary

– The amendments to AASB 8 (i) require an entity to disclose the judgements made by
management in applying the aggregation criteria to operating segments, including
a description of the operating segments aggregated and the economic indicators
assessed in determining whether the operating segments have ‘similar economic
characteristics’; and (ii) clarify that a reconciliation of the total of the reportable
segments’ assets to the entity’s assets should only be provided if the segment assets
are regularly provided to the chief operating decision-maker.

– The amendments to the basis for conclusions of AASB 13 clarify that the issue of AASB
13 and consequential amendments to AASB 139 and AASB 9 did not remove the ability
to measure short-term receivables and payables with no stated interest rate at their
invoice amounts without discounting, if the effect of discounting is immaterial.

– The amendments to AASB 116 and AASB 138 remove perceived inconsistencies in the
accounting for accumulated depreciation/amortisation when an item of property, plant
and equipment or an intangible asset is revalued. The amended standards clarify that
the gross carrying amount is adjusted in a manner consistent with the revaluation of
the carrying amount of the asset and that accumulated depreciation/amortisation is the
difference between the gross carrying amount and the carrying amount after taking into
account accumulated impairment losses.

– The amendments to AASB 124 clarify that a management entity providing key

management personnel services to a reporting entity is a related party of the reporting
entity. Consequently, the reporting entity should disclose as related party transactions
the amounts incurred for the service paid or payable to the management entity for
the provision of key management personnel services. However, disclosure of the
components of such compensation is not required

The Annual Improvements 2011-2013 has made number of amendments to various
AASBs, which are summarised below:

– The amendments to AASB 3 clarify that the standard does not apply to the accounting
for the formation of all types of joint arrangements in the financial statements of the joint
arrangement itself.

– The amendments to AASB 13 clarify that the scope of the portfolio exception for
measuring the fair value of a group of financial assets and financial liabilities on a
net basis includes all contracts that are within the scope of, and accounted for in
accordance with, AASB 139 or AASB 9, even if those contracts do not meet the
definitions of financial assets or financial liabilities within AASB 132.

– The amendments to AASB 140 clarify that AASB 140 and AASB 3 are not mutually

exclusive and application of both standards may be required. Consequently, an entity
acquiring investment property must determine whether:

– the property meets the definition of investment property in terms of AASB 140; and
the transaction meets the definition of a business combination under AASB 3.
The application of these amendments does not have any material impact on the
disclosures or on the amounts recognised in the Group’s consolidated financial
statements.

Annual Report 201542

Standards and Interpretations affecting the reported results or ﬁnancial position
There are no new and revised Standards and Interpretations adopted in these ﬁnancial statements that affected the
reporting results or ﬁnancial position.

Standards and Interpretations in issue not yet adopted
At the date of authorisation of the ﬁnancial statements, the Standards and Interpretations listed below were in issue but not
yet effective. Their adoption has not had any signiﬁcant impact on the amounts reported in these ﬁnancial statements but
may affect the accounting for future transactions or arrangements.

Standard/Interpretation

Effective for annual
reporting periods
beginning on or after

Expected to be initially
applied in the financial
year ending

AASB 9 ‘Financial Instruments’, and the relevant amending standard

1 January 2018

30 June 2019

AASB 15 ‘Revenue from Contracts with Customers’ and AASB
2014-5 ‘Amendments to Australian Accounting Standards arising
from AASB 15’

1 January 2017

30 June 2018

At the date of authorisation of the ﬁnancial statements, there have been no IASB or IFRIC Interpretations that are issued but
not effective.

c. Revenue Recognition
Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent it is
probable that the economic beneﬁts will ﬂow to the Group 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 services
are provided.

Management fees
Management fees on asset management activities are accrued as 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.

d. Recognition of Gain or Loss on Sale of Investments
Gain or loss is recognised in the Income Statement, which is determined as the difference between the carrying amount
and fair value of the assets and liabilities being transferred or deemed sold.

e. Basis of Consolidation
The consolidated ﬁnancial statements comprise Treasury Group Ltd and its subsidiaries as at 30 June each year
(the Group). Control is achieved when the Company:
– has power over the investee
– is exposed, or has rights, to variable returns from its involvement with the investee, and
– has the ability to use its power over the investee to affect the amount of the investor’s returns

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.

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.

Interests in associates are equity accounted and are not part of the consolidated Group (see notes (i) and (j) below).

Annual Report 2015

Notes to the Financial Statements
continued

2. Summary of Signiﬁcant Accounting

Policies (Cont.)

f. Cash and Cash Equivalents
Cash and short-term deposits in the Statement of
Financial Position 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 Statement of Cash Flows,
cash and cash equivalents consist of cash and cash
equivalents as deﬁned above.

g. Trade and Other Receivables
Trade receivables, which are generally on 30 day terms,
are recognised at fair value and subsequently valued at
amortised cost using the effective interest method, less
any allowance for uncollectible amounts. Cash ﬂows
relating to short term receivables are not discounted as
any discount would be immaterial.

Collectability 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. Financial
difﬁculties of the debtor or default payments are
considered objective evidence of impairment. The
amount of the impairment loss is the receivable carrying
amount compared to the present value of estimated
future cash ﬂows, discounted at the original effective
interest rate. The Group did not have any impaired trade
receivables (2014: Nil).

h. Impairment of Available-for-Sale Financial

Assets

The Group assesses at each balance 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. The Group
would consider that there was objective evidence of
impairment if there was a signiﬁcant or prolonged decline in
market value to below cost.

i. Investments in Associates
The Group’s investment in Aurora Trust is 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 Accounting Standards, signiﬁcant inﬂuence
is the power to participate in the ﬁnancial and operating
policy decisions of the investee, but is not control or joint
control of those policies.

The Group generally deems they have signiﬁcant
inﬂuence if they have the power to participate in the
ﬁnancial and operating policy decisions of the investee
but is not control or joint control over those policies.

Under the equity method, the investments in the
associates are carried in the Statement of Financial
Position at cost plus post-acquisition changes in the
Group’s share of net assets of the associates.

Goodwill acquired in a business combination represents
payment made by the acquirer in anticipation of future
economic beneﬁts from assets that are not capable of
being individually identiﬁed and separately recognised.
It is initially measured as 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. 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 post-acquisition 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 in
the consolidated ﬁnancial statements reduce the carrying
amount of the investment.

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

The requirements of AASB 139 are applied to determine
whether it is necessary to recognise any impairment loss
with respect to the Group’s investment in an associate.
When necessary, the entire carrying amount of the
investment (including goodwill) is tested for impairment
in accordance with AASB 136 ‘Impairment of Assets’ as a
single asset by comparing its recoverable amount (higher
of value in use and fair value less costs to sell) with its
carrying amount. Any impairment loss recognised forms
part of the carrying amount of the investment. Any reversal
of that impairment loss is recognised in accordance with
AASB 136 to the extent that the recoverable amount of the
investment subsequently increases.

When a group entity transacts with its associate, proﬁts
and losses resulting from the transactions with the
associate are recognised in the Group’s consolidated
ﬁnancial statements only to the extent of interests in the
associate that are not related to the Group.

j. Investments in Joint Ventures
Investments in which the Group has joint control
are accounted for under the equity method in the
consolidated ﬁnancial statements similar to investments
in associates as described in Note 2(i).

k. Goodwill
Goodwill arising on an acquisition of a business is carried
at cost as established at the date of the acquisition of the
business less accumulated impairment losses, if any. For
the purposes of impairment testing, goodwill is allocated
to each of the Group’s cash-generating units (or groups
of cash-generating units) expected to beneﬁt from the
synergies of the combination.

A cash-generating unit to which goodwill has been
allocated is tested for impairment annually, or more
frequently when there is indication that the unit may
be impaired. If the recoverable amount of the cash-
generating unit is less than its carrying amount, the
impairment loss is allocated ﬁrst to reduce the carrying
amount of any goodwill allocated to the unit and then to
the other assets of the unit pro rata based on the carrying
amount of each asset in the unit. Any impairment loss
for goodwill is recognised directly in proﬁt or loss. An
impairment loss recognised for goodwill is not reversed
in subsequent periods.

On disposal of the relevant cash-generating unit,
the amount of goodwill attributable is included in the
determination of the proﬁt or loss on disposal. The
Group’s policy for goodwill arising on the acquisition
of an associate is described at Note (i).

l. 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:

2015 & 2014

Furniture & fittings:

5 – 10 years diminishing value

Office equipment:

3 – 10 years diminishing value

Leasehold improvements: 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.

m. Intangibles
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 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.

n. Financial Assets
Financial assets are classiﬁed into the following
categories: ﬁnancial assets ‘at fair value through proﬁt or
loss’ (FVTPL), ‘held-to-maturity investments, available-for-
sale (AFS) ﬁnancial assets and ‘loans and receivables’.
The classiﬁcation depends on the nature and purpose
of the ﬁnancial assets and is determined at the time of
initial recognition. All regular way purchases or sales
of ﬁnancial assets are recognised and derecognised
on a trade date basis. Regular way purchases or sales
are purchases or sales of ﬁnancial assets that required
delivery of assets within the time frame established by
regulation or convention in the marketplace.

When ﬁnancial assets are recognised initially they are
measured at fair value, plus, in the case of assets not
at fair value through proﬁt or loss, directly attributable
transaction costs.

All regular way purchases of sales of ﬁnancial assets are
recognised on the trade date, i.e. 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. Financial assets are derecognised
when the right to receive cash ﬂows from the ﬁnancial
assets have expired or been transferred.

i. Financial assets at fair value through proﬁt or loss
Financial assets classiﬁed as held for trading are included
in the category ‘ﬁnancial assets at fair value through
proﬁt and loss’. Financial assets are classiﬁed as held for
trading if they are acquired for the purpose of selling in
the near term with the intention of making a proﬁt.

The fair value of ﬁnancial assets at fair value through proﬁt
or loss is determined by reference to quoted market bid
prices at the close of business on that balance date.

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.

For loans and receivables carried at amortised cost,
the amount of the impairment is the difference between
the asset’s carrying amount and the present value of
estimated future cash ﬂows, discounted at the original
effective interest rate.

Annual Report 2015

Notes to the Financial Statements
continued

2. Summary of Signiﬁcant Accounting

Policies (Cont.)

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 date.

o. Income Tax
The income tax expense (revenue) for the year comprises
current income tax expense (income) and deferred tax
expense (income).

Current income tax expense charged to the proﬁt or loss
is the tax payable on taxable income measured at the
amounts expected to be paid to or recovered from the
relevant taxation authority.

Deferred income tax expense reﬂects movements in
deferred tax asset and deferred tax liability balances
during the year as well as unused tax losses.

Current and deferred income tax expense (income) is
charged or credited outside proﬁt or loss when the tax
relates to items that are recognised outside proﬁt or loss.

Except for business combinations, no deferred income
tax is recognised from the initial recognition of an asset
or liability, where there is no effect on accounting or
taxable proﬁt or loss.

Deferred tax assets and liabilities are calculated at
the tax rates that are expected to apply to the period
when the asset is realised or the liability is settled and
their measurement also reﬂects the manner in which
management expects to recover or settle the carrying
amount of the related asset or liability.

Deferred tax assets relating to temporary differences and
unused tax losses are recognised only to the extent that it is
probable that future taxable proﬁt will be available against
which the beneﬁts of the deferred tax asset can be utilised.

Where temporary differences exist in relation to investments
in subsidiaries, branches, associates, and joint ventures,
deferred tax assets and liabilities are not recognised where
the timing of the reversal of the temporary difference can be
controlled and it is not probable that the reversal will occur
in the foreseeable future.

Current tax assets and liabilities are offset where a legally
enforceable right of set-off exists and it is intended that
net settlement or simultaneous realisation and settlement
of the respective asset and liability will occur. Deferred
tax assets and liabilities are offset where: (a) a legally
enforceable right of set-off exists; and (b) the deferred tax
assets and liabilities relate to income taxes levied by the
same taxation authority on either the same taxable entity
or different taxable entities where it is intended that net
settlement or simultaneous realisation and settlement of
the respective asset and liability will occur in future periods
in which signiﬁcant amounts of deferred tax assets or
liabilities are expected to be recovered or settled.

The group has applied the Stand-Alone Taxpayer
approach in determining the appropriate amount
of current taxes to allocate to members of the tax
consolidation group. The tax funding agreement provides
each member of the tax consolidated group to pay a tax
equivalent amount to or from the parent in accordance
with their current tax liability or current tax asset. Such
amounts are reﬂected in amounts receivable from or
payable to the parent company in their accounts and
are settled as soon as practicable after lodgment of the
consolidated return and payment of the tax liability.

The deferred taxes are allocated to members of the tax
consolidated group in accordance with the principles
of AASB 112.

Tax Consolidation
On 24 July 2014, Aurora Trust and Aurora Investment
Management Pty Ltd as the Trustee of Aurora Trust, joined
the tax consolidated group. On 25 November 2014, Aurora
Trust, Treasury Group Investment Services and Global
Value Investors exited from the tax consolidated group.
As at the date of this report, Treasury Group, the Trustee
and AR Capital Management Pty Ltd are the members
of the tax consolidated entity.

Members of the tax consolidated group have entered into
a tax sharing arrangement in order to allocate income tax
expense to the wholly-owned 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.

p. 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 Statement of Financial Position.

Cash ﬂows are included in the Statement of Cash Flows
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.

q. 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.

r. Trade and Other Payables
Trade payables and other payables are carried at amortised
cost and due to their short term nature they are not
discounted. They 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 the
goods and services. The amounts are unsecured and are
usually paid within 30 days of recognition.

s. Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past
event, it is probable that the Group will be required to
settle the obligation, and a reliable estimate can be made
of the amount of the obligation.

The amount recognised as a provision is the best
estimate of the consideration required to settle the
present obligation at the end of the reporting period,
taking into account the risks and uncertainties
surrounding the obligation. Where a provision is
measured using the cash ﬂows estimated to settle the
present obligation, its carrying amount is the present
value of those cash ﬂows.

When some or all of the economic beneﬁts required to
settle a provision are expected to be recovered from a
third party, a receivable is recognised as an asset if it is
virtually certain that reimbursement will be received and
the amount of the receivable can be measured reliably.

t. Employee Leave Beneﬁts

i. Short term and long term employee beneﬁts
A liability is recognised for beneﬁts accruing to
employees in respect of wages and salaries, annual
leave, long service leave, and sick leave when it is
probable that settlement will be required and they are
capable of being measure reliably.

Liabilities recognised in respect of short-term employee
beneﬁts, are measured at their nominal values using
the remuneration date expected to apply at the time of
settlement.

Liabilities recognised in respect of long term employee
beneﬁts are measured as the present value of the
estimated future cash outﬂows to be made by the Group
in respect of services provided by employees up to
reporting date.

u. 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.

v. 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.

Annual Report 2015

Notes to the Financial Statements
continued

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 cumulative expense is recognised for awards that do
not ultimately vest due to the non-fulﬁlment of a non-
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 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 and
performance rights are reﬂected as additional share
dilution in the computation of earnings per share.

2. Summary of Signiﬁcant Accounting

Policies (Cont.)

Operating leases
Operating lease payments are recognised as an expense
in the Income Statement on a straight-line basis over the
lease term. Operating lease incentives are recognised as
a liability when received and subsequently reduced by
allocating lease payments between rental expense and
reduction of the liability.

w. 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;

– other non-discretionary changes in revenues or

expenses during the period that would result from the
dilution of potential ordinary shares; and

– divided by the weighted average number of ordinary

shares and dilutive potential ordinary shares,
adjusted for any bonus element, if any.

x. 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).

During the year, there were two plans in place to provide
these beneﬁts:

ii.

The Treasury Group LTI Plan had been established
where Treasury Group Ltd, at the discretion of the
Board of Directors, awards performance rights to
Directors, executives and certain members of staff of
the Group. Each performance right at the time of grant
represents one Treasury Group Ltd share if it vests.

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. On 22 July 2015, the plan was
terminated in accordance with the Trust Deed.

The cost of the equity-settled Treasury Group LTI 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.

y. Foreign Currency Translation

i. Functional and presentation currency
Both the functional and presentation currency of Treasury Group Ltd and its subsidiaries are Australian dollars ($).

ii. Transactions & balances
Transactions in foreign currencies are initially recorded in the functional currency by applying an average spot exchange
rate for the period. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of
exchange ruling at the balance date.

Non-monetary items are measured in terms of historical cost in a foreign currency and are translated using the exchange
rate at the date the fair value was determined.

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

3. Financial Risk Management Objectives and Policies
Due to the change of business structure and operation, Treasury Group’s investments are mainly the units held in Aurora
Trust. The following risk management objectives and policies apply in the comparative period.

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.

Risk Exposures and Responses

Interest rate risk
The Group’s direct exposure to market interest rates relates primarily to the Group’s cash and short term investments.

At balance date, the Group had the following mix of ﬁnancial assets exposed to Australian variable interest rate risk:

Financial Assets

Cash at bank and on hand

Consolidated
2015
$

2014
$

1,056,243

12,860,219

1,056,243

12,860,219

The following sensitivity analysis is based on the interest rate risk exposures in existence at the balance date.

If interest rates had moved during the year as illustrated in the table below (using an average cash balance), with all other
variables held constant, post tax proﬁt and reserves would have been affected as follows:

Consolidated

+0.75% [2014:0.75%]/(75 basis points), [2014:75 basis points]

-0.75% [2014:0.75%]/(75 basis points), [2014:75 basis points]

Post Tax Profit
Higher/(Lower)
2015
$

2014
$

51,960

69,762

(51,960)

(69,762)

The movements in proﬁt are due to higher/lower interest income from cash and short term deposit balances.

Credit risk
Credit risk arises from the ﬁnancial assets of the Company, which comprise cash and cash equivalents and trade and other
receivables. The Company’s exposure to credit risk arises from potential default of the counterparty, with the maximum
exposure equal to the carrying amount of these instruments. Exposure at balance date is addressed in each applicable note.

The Group does not hold any credit derivatives to offset its credit exposure.

The Group trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the Group’s
policy to securitise its trade and other receivables.

Annual Report 2015

Notes to the Financial Statements
continued

3. Financial Risk Management Objectives and Policies (Cont.)

Liquidity risk
Treasury Group has sufﬁcient current assets to meet its current obligations. As such, management is of the opinion that it
does not face signiﬁcant liquidity risk. However, it has a 64.03% interest in Aurora which has external borrowings as well as
debt instruments issued to unitholders (i.e., Northern Lights). Aurora Trust may have liquidity risk however, management
prepares cash ﬂow forecasts of Aurora on a monthly basis to ensure that it has sufﬁcient liquid assets to meet its liabilities
and existing cash are allocated to intended purposes.

Price risk
Equity security price risk arises from investments in unlisted managed trusts, which mainly invest their funds in equities
listed on the ASX, except Aubrey Conviction Fund which invest their fund on various global stock markets. Members of
the Group made the investments for the purpose of seeding new products. Equity securities price risk also arises from
investments in equity markets made by any funds that are consolidated.

During the comparative period, a simple analysis has been conducted to provide some perspective when considering
the determination of a reasonably possible change.

As at year end, the Group had the following exposure to equity security price risks:

Available-for-sale investments

– Units in managed investment trusts
– Unlisted shares in other corporations

Consolidated
2015
$

2014
$

–

8,174,164

900

8,175,064

If the price for the Group’s investments had moved, as illustrated in the table below, with all other variables held constant,
post tax proﬁt and reserves would have been affected in the comparative year as follows:

Consolidated

MSCI World index +10%

MSCI World index -10%

Reserves
Higher/(Lower)
2015
$

2014
$

–

572,254

(572,254)

For the investments that are classiﬁed as available-for-sale, movements in market value are captured in an Unrealised
Gains Reserve and do not impact reported proﬁt unless they are deemed to be impaired at reporting date.

As at 30 June 2015, the Group has no investments at fair value through proﬁt or loss.

The Group does not have any signiﬁcant transactional currency exposures.

Foreign Currency Risk

2015 Balance Sheet
Treasury Group’s exposure to foreign currency is through its Investment in Aurora. Aurora is an international multi-boutique
business with an operation in ﬁve countries and the impact of foreign currency translations are taken up in the equity
reserves of Aurora. Treasury Group takes up its proportionate share of Aurora’s foreign currency translation reserve through
Treasury Group’s equity reserves.

2014 Balance Sheet
The Board individually approved Treasury Group’s prior year investments in foreign currency. The Group has not hedged its
foreign currency exposure.

A simple analysis has been conducted to provide some perspective when considering the determination of a reasonably
possible change.

The Group had the following exposure to foreign currency in the comparative year:

Available-for-sale investments – British Pound

Consolidated
2015
$

2014
$

–

1,393,261

For the comparative year, had the Australian Dollar moved, as illustrated in the table below, with all other variables held
constant, post tax proﬁt and equity would have been affected as follows:

Consolidated

AUD/GBP +10%

AUD/GBP -10%

Equity Higher/(Lower)

2015
$

2014
$

–

97,528

(97,528)

2014 Proﬁt and Loss
Treasury Group has an indirect exposure to foreign exchange movements that arise from the translation of proﬁts
predominantly in USD. Proﬁts are translated at an average exchange rate. A falling Australian dollar relative to the US Dollar
results in a higher net proﬁt in Aurora and correspondingly in Treasury Group. The day to day expenses in Australia and US
operations are funded within the local operations

Notes to the Financial Statements
continued

3. Financial Risk Management Objectives and Policies (Cont.)

Fair value measurements recognised in the Statement of Financial Position
Some of the Group’s available-for-sale assets are measured at fair value at the end of each reporting period. The following
table gives an information about how the fair values of these available-for-sale assets of the Group is determined (in
particular, the valuation techniques and inputs used) in the comparative period:

Fair values at

2015

2014

Fair value
Hierarchy

Valuation techniques
and key inputs

Significant
unobservable inputs

– 8,175,064

Level 2

Not required

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

– 1,436,780

Level 3 Cost

Financial
assets/financial
liabilities

1. Investments
in unlisted
unit trusts

2. Investment
in Freehold
Investment
Management
- Options

Relationship of
unobservable
input

Not required

The higher the
discount rate,
the lower the
fair value.

The higher the
growth rate,
the higher the
fair value.

Unlisted equity instrument
where value cannot be reliably
measured. Start up investment
and impairment assessment
undertaken by management
against initial acquisition
milestones. Milestones include
future FUM inflows, stability of
management team, business
costs and discount rates.

18% discount rate.

Long term revenue growth
rates, taking into account
management’s experience and
knowledge of market conditions
of the specific industries.

3. Investments
in Aubrey
Capital
Management
-convertible
preference
shares

– 1,393,261 Level 3 Discounted cash flow.
Future cash flows are
determined based on
current Funds Under
Management of the
business using various
growth rates discounted
at 18%.

The fair values of the available-for-sale assets included in the level 2 and 3 categories have been determined in
accordance with generally accepted pricing models based a discounted cash flow analysis, with the most significant
inputs being the discount rate that reflects the credit risk of counterparties.

Annual Report 2015
52

Fair value measurements recognised in the Statement of Financial Position
The available-for-sale investments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3
on the degree to which the fair value is observable.
– Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets

or liabilities.

– Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are

observable for the asset or liability, either directly (i.e. as market prices) or indirectly (i.e. derived from prices).

– Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability

that are not based on observable market data (unobservable inputs).

There were no transfers between any levels.

Signiﬁcant assumptions in determining fair value of ﬁnancial assets and liabilities in the comparative period:
The fair value of the options in the comparative period is estimated using a discounted cash ﬂow model, which includes
some assumptions that are not supportable by observable market prices or rates. In determining the fair value, a revenue
growth derived from FUM growth factors ranging from 3-10% has been used with appropriate probabilities assigned
to each. In addition, expense growth of 3-10% has been used and a discount factor of 20% has been applied. If these
revenue and expense inputs to the valuation model were 10% higher/lower while all the other variables were held constant,
the carrying amount of the options would decrease/increase by $121,765.

The fair value of the convertible preference shares in the comparative period is estimated using a discounted cash ﬂow
model, which includes some assumptions that are not supportable by observable market prices or rates. In determining
the fair value, a revenue growth derived from FUM growth factors ranging from 0-50% has been used with appropriate
probabilities assigned to each. In addition expense growth of 5% has been used and a discount factor of 18% has been
applied. If these revenue and expense inputs to the valuation model were 10% higher/lower while all the other variables
were held constant, the carrying amount of the shares would decrease/increase by $139,326.

Reconciliation of Level 3 fair value measurements of ﬁnancial assets

Opening balance

Sale of Aubrey and FIM to Aurora Trust

Total

Opening balance

Revaluation of Aubrey and acquisition of FIM

Total

30 June 2015
Available for
sale Level 3

2,830,041

(2,830,041)

–

30 June 2014
Available for
sale Level 3

1,323,955

1,506,086

2,830,041

Annual Report 2015

Notes to the Financial Statements
continued

Classiﬁcation of and valuation of investments
The Group classiﬁed investments in Aurora as investment
accounted under equity method. The investment in
Aurora is determined by the cost to acquire the units and
the share in net proﬁts of Aurora reduced by distributions
received.

Impairment of non-ﬁnancial assets
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.

ii. Signiﬁcant Accounting Estimates and

Assumptions

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 hybrid monte-
carlo/binomial option pricing model with the assumptions
detailed in Note 21. The accounting estimates and
assumptions relating to equity-settled share-based
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.

4. Signiﬁcant Accounting Judgments, Estimates

and Assumptions

The preparation of the ﬁnancial statements requires
management to make judgments, estimates and
assumptions that affect the reported amounts in the
ﬁnancial statements. Management continually evaluates
its judgments and estimates in relation to assets,
liabilities, contingent liabilities, revenue and expenses.
Management bases its judgments and estimates 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

Taxation
Judgment is also required in assessing whether
deferred tax assets and certain deferred tax liabilities are
recognised on the Statement of Financial Position.

Assumptions about the generation of future taxable
proﬁts depend on management’s estimates of future
cash ﬂows. These depend on estimates of future income,
operating costs, dividends and other capital management
transactions. Judgments are also required about the
application of income tax legislation. These judgments
and assumptions are subject to risk and uncertainty,
hence there is a possibility that changes in circumstances
will alter expectations, which may impact the amount of
deferred tax assets and deferred tax liabilities recognised
on the Statement of Financial Position and the amount
of other tax losses and temporary differences not yet
recognised.

In such circumstances, some or all of the carrying
amounts of recognised deferred tax assets and liabilities
may require adjustment, resulting in a corresponding
credit or charge to the income statement.

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

Notes

Consolidated
2015
$

2014
$

9,636

423,461

4,285,442

1,229,355

4,295,078

1,652,816

–

147,947

1,011,220

244,114

323,329

199,564

1,255,334

522,893

1,164,300

–

6,714,712

2,323,656

195,104,042

–

306,361

886,168

–

(41,012)

195,410,403

845,156

5. Revenue and Expenses

a. Revenues from continuing operations

Fee income

Fund management fees

Service fees

Total fee income

Dividends and distributions

Unit trust distributions

Total dividends and distributions

Interest

Related parties

– Associates

Other persons/corporations

Total interest

Other Income

Cost recovery from Aurora

Total other income

Total revenues

b. Gains on investments

Net gain on sale of investments to Aurora Trust¹

Net gain on disposal of available-for-sale investments

Impairment of investment in subsidiary (AR Capital Management)

Total gains on investments

This is the gain on sale of investment is the result of the sale of Treasury Group’s business to Aurora on 25 November 2014 which is determined as
the difference between the carrying amount and fair value of such assets and liabilities transferred at the time of transfer, net of transaction costs
related to the merger. The fair value of Treasury Group’s assets on 25 November 2014 was $247,697,894. The amount of income tax expense on the
net gain is $64,269,849.

Annual Report 2015

Notes to the Financial Statements
continued

5. Revenue and Expenses (Cont.)

c. Expenses

Salaries and employee benefits

Share-based payment expense arising from equity-settled share-based payment
transactions

Depreciation and amortisation

Furniture & fittings

Office equipment

Leasehold improvements

Software

Total depreciation and amortisation of non-current assets

Other expenses

Accounting & audit fees

Operating lease rental – minimum lease payments

Marketing & communication expenses

Travel & accommodation costs

Payroll tax

Legal & compliance fees

Consulting fee & IT charges

Insurance charges

Directors’ fees (non-executives)

Share registry & ASX fees

Subscriptions and training expenses

Impairment of goodwill

Other expenses

Total other expenses

d. Share of net profits of equity accounted investments

Share in net loss of Aurora (from 25 November 2014 to 30 June 2015)

Share in net profits from associates (from 1 July to 24 November 2014)

Total share in net profits of equity accounted investments

Notes

Consolidated
2015
$

2014
$

14(a)

15(a)

5,174,893

4,039,233

91,886

427,150

5,266,779

4,466,383

597

18,221

1,679

2,878

23,375

62,561

375,086

49,411

99,059

148,648

129,130

486,351

56,610

375,491

89,924

55,515

–

40,630

1,747

20,916

1,384

7,717

31,764

259,657

375,529

138,845

242,191

122,514

165,742

791,152

151,283

375,439

116,567

142,812

252,764

120,318

1,968,416

3,254,813

1,991,791

3,286,577

(4,197,027)

–

9,211,493

19,771,800

5,014,466

19,771,800

Consolidated
2015
$

2014
$

–

(304,424)

(375,936)

6. Income Tax

a. Income tax benefit

The major components of income tax benefit are:

Income Statement

Current income tax

Adjustments in respect of current income tax charge of previous years

Deferred income tax

Relating to origination and reversal of temporary differences

61,680,096

(106,134)

Relating to utilisation of tax losses

Write off deferred tax asset in subsidiary (Global Value Investors)

Benefit from previously unrecognised difference/tax loss

–

Adjustments in respect of deferred income tax charge of previous years

(217,784)

(1,169,352)

(520,000)

61,664

–

Income tax expense reported in the Income Statement

61,157,887

(2,109,758)

b. Amounts charged directly to other comprehensive income

Deferred income tax related to income charged or credited directly to other comprehensive
income

Unrealised loss on available-for-sale investments

Share of associate’s foreign currency translation reserve*

Income tax benefit reported in other comprehensive income

–

173,668

1,910,934

–

1,910,934

173,668

* To take up origination of deferred tax through equity on $6,369,781 being Treasury Group’s share of associate’s

foreign currency translation reserve.

c. Reconciliation between aggregate tax benefit recognised in the income statement and

tax expense calculated per the statutory income tax rate

A reconciliation between tax benefit and the product of accounting profit before income tax
multiplied by the Group’s applicable income tax rate is as follows:

Accounting (profit) before income tax:

At the Group’s statutory income tax rate of 30% (2014: 30%)

Share-based payments

Reversal of share in net profit of associates

Trust distributions received

Imputation credit received

Dividend difference

Expenditure not allowable for income tax purposes

Adjustments in respect of current income tax charge of previous years

Others

Aggregate income tax (expense)

(199,881,011)

(15,187,652)

(59,964,303)

(4,556,295)

(27,566)

(128,145)

1,504,340

5,931,540

(2,256,250)

–

(7,302,570)

(6,151,605)

6,245,115

3,017,876

(650)

(7,913)

522,209

(375,936)

121,788

160,720

(61,157,887)

(2,109,758)

Annual Report 2015

Notes to the Financial Statements
continued

6. Income Tax (Cont.)

d. Recognised deferred tax assets and liabilities

Deferred income tax at 30 June relates to the following:

Consolidated

Deferred tax assets

Tax losses

Tax losses of acquired subsidiaries

Revaluation of available-for-sale investments at fair value
charged to equity

Impairment of investment in ARCM

Impairment of investment accounted for under the equity method

Accruals and provisions

Deductible capital expenditures

Deferred tax liabilities

Investment in Aurora

Revaluation of convertible notes to fair value

Revaluation of available-for-sale investments at fair value
charged to equity

Receivables

Deferred tax

Statement of Financial
Position

2015
$

2014
$

Income
Statement

2015
$

2014
$

4,505,517

634,390

4,175,552

(1,127,091)

–

217,017

–

426,192

960,307

–

105,752

217,017

–

375,751

87,919

–

50,441

872,390

6,109,033

1,420,829

(64,868,741)

–

(66,779,674)

–

(9,790)

(551,230)

(76,730)

(10,988)

–

1,195

(64,878,531)

(638,948)

(562,261)

3,793

108,657

(240,000)

(29,696)

45,265

–

11,990

(6,143)

(58,769,498)

781,881 (61,680,096)

(1,795,486)

e. Tax consolidation
On 24 July 2014, Aurora Trust and Aurora Investment Management Pty Ltd as the Trustee of Aurora Trust, joined the tax
consolidated group. On 25 November 2014, Aurora Trust, Treasury Group Investment Services and Global Value Investors
exited from the tax consolidated group. As at the date of this report, Treasury Group, Trustee and AR Capital Management
Pty Ltd are the members of the tax consolidated entity.

Treasury Group Ltd 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 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 Ltd. 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.

7. Dividends Paid and Proposed

Treasury Group Ltd

2015
$

2014
$

a. Dividends proposed and not recognised as a liability*

Final fully franked dividend of 28 cents per share (2014: 27 cents per share)

7,738,682

6,398,324

b. Dividends paid during the year

Current year interim

Fully franked dividend (24 cents per share) (2014: 23 cents per share)

6,625,283

5,306,274

Previous year final

Fully franked dividend (27 cents per share) (2014: 23 cents per share)

6,398,036

5,306,274

Total paid during the year (51 cents per share) (2014:46 cents per share)

13,023,319

10,612,548

* Calculation based on the ordinary shares on issue as at 26 August 2015

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% (2014: 30%)

5,195,799

9,597,667

– franking credits that will arise from the receipt of distributions 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% (2014: 30%).

Dividends proposed will be franked at the rate of 30% (2014: 30%).

5,056,214

607,114

10,252,013

10,204,781

(3,316,578)

(2,742,139)

6,935,435

7,462,642

Annual Report 2015

Notes to the Financial Statements
continued

8. Earnings Per Share

Consolidated
2015
$

2014
$

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 Treasury Group

138,723,124

13,061,814

Weighted average
number of shares

Weighted average number of ordinary shares used in calculating basic earnings per share:

25,617,169

23,070,755

Effect of dilutive securities:

Dilutive effect of potential ordinary shares – share options and performance rights

–

Adjusted weighted average number of ordinary shares used in calculating diluted
earnings per share

25,617,169

23,070,755

Earnings per share (cents per share):

Basic for profit for the year attributable to ordinary equity holders of the parent

Diluted for profit for the year attributable to ordinary equity holders of the parent

541.5

56.6

Performance rights do not have a diluted effect on the Earnings per Share calculation as the vesting conditions of these
rights have not been met as at 30 June 2015.

On 6 August 2014, Treasury Group issued 626,743 ordinary shares on exercise of 626,743 performance rights issued under
the Treasury Group Long Term Incentive Plan for its executives. As a result of this share issue, $1,027,859 was transferred
from the equity-settled share option reserve to issued capital.

On 18 December 2014, Treasury Group Ltd issued 2,926,830 fully paid ordinary shares at $10.25 as a result of institutional
placement. Cost of share issue was $1,164,300. The proceeds from the placement were used to subscribe for additional
units in Aurora.

Consolidated
2015
$

2014
$

1,056,243

12,860,219

1,056,243

12,860,219

138,723,124

13,077,894

(5,014,466)

(19,771,800)

11,544,906

19,805,351

–

41,012

(195,104,042)

–

(306,361)

(886,168)

23,375

31,764

–

252,764

(1,164,300)

(147,946)

(158,692)

91,996

–

(2,490,487)

(28,874)

427,150

5,900

85,416

2,287,509

(3,538,493)

1,926,236

(1,027,046)

781,881

1,978,233

(5,669,758)

1,809,987

106,862

71,563

58,769,498

8,701

36,232

–

4,418,844

12,160,077

9. Cash and Cash Equivalents

a. Reconciliation of cash and cash equivalents

Cash balance comprises:

– cash at bank and on hand

Closing cash balance

b. Reconciliation

Profit for the year

Adjustments for

Share of associates’ net profits

Dividend and distribution received from associates

Impairment of investment in subsidiary

(Gain) on sale of investments to Aurora Trust

(Gain) on sale of available-for-sale investments

Depreciation and amortisation of non-current assets

Impairment of goodwill

Non-cash distributions, dividends and other income

Non-cash interest

Share-based payments

Foreign exchange loss

Others

Changes in assets and liabilities

Decrease/(increase) in trade and other receivables

Decrease/(increase)/decrease in other assets

Decrease in deferred tax assets

(Decrease)/increase in trade and other payables

Increase in current provisions

Increase in non-current provisions

Increase in deferred tax liability

Net cash flow from operating activities

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

Annual Report 2015

Notes to the Financial Statements
continued

10. Trade and Other Receivables

Current

Trade receivables

Sundry receivables

Other receivables

Related party receivables

– Associates — Dividend

— Distribution
— Other

Consolidated
2015
$

2014
$

1,035,681

6,500,907

64,828

–

3,988

161,265

1,416,600

7,729,161

2,640,000

–

394,419

8,829,670

11,117,179

a. Allowance for impairment loss
Trade receivables are non-interest bearing and generally on 30 day terms. An allowance for impairment loss is recognised
when there is objective evidence that an individual trade receivable is impaired. No allowance for impairment losses has
been made.

2015

2014

* Past due not impaired (‘PDNI’)

Total
$

0-30 days
$

31-60 days
PDNI*
$

61-90 days
PDNI*
$

+91 days
PDNI*
$

8,829,670

8,201,184

–

216,028

412,458

11,117,179

10,550,171

40,252

17,100

509,656

Receivables past due but not impaired is $628,486 (2014: $567,008). All overdue amounts as at 30 June 2014 have been
received in full. Management is satisﬁed that payment will be received in full.

b. Related party receivables
For terms and conditions of related party receivables refer to Note 25.

c. Fair value and credit risk
Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value.

Trade receivables in the comparative year represent the Group’s outstanding invoices for management fees. As the fees
are receivable from large investment and superannuation funds, management regards the credit risk as very low.

Non-current

Security deposits

Consolidated
2015
$

2014
$

–

833,073

The amount receivable is in Australian Dollars, non-interest bearing and is not considered past due or impaired.

11. Investments Accounted for Using the Equity Method

Investments in Aurora

Investments in associates¹

Note

Consolidated
2015
$

11(b)

275,341,759

2014
$

–

29,242,193

275,341,759

29,242,193

On 25 November 2014, Treasury Group and Northern Lights completed the transaction to merge both companies into an
international multi-boutique funds management group. A new Australian trust, Aurora Trust, was established to hold the
interest in 20 boutiques and gave effect to the merger. Post completion, Treasury Group and Northern Lights sold their
respective businesses including their assets (except del Rey and Celeste) and liabilities to Aurora Trust in exchange for
units and debt in Aurora. At 30 June 2015, Treasury Group owns 64.03% of Aurora Trust and adopts the equity accounting
method in relation to Treasury Group’s interest in the Aurora Trust.

Investment in Aurora is comprised of the following:

Cash Investment

Non-cash investment

Share in net loss for the period

Distribution received/receivable

Share in unrealised foreign currency translation reserve

Share in net unrealised gain reserve

Total

44,628,432

248,862,193

(4,197,027)

(7,729,161)

(6,369,781)

147,103

275,341,759

–

Annual Report 2015

Notes to the Financial Statements
continued

11. Investments Accounted for Using the Equity Method (Cont.)

a. Interests in associates

Name

Aurora Trust - units

Investors Mutual Ltd – ordinary shares

Orion Asset Management (Aust) Pty Ltd - ordinary shares

RARE IP Trust – units

RARE Infrastructure Ltd – ordinary shares

IML Investment Partners Ltd – ordinary shares

Celeste Funds Management Ltd – ordinary shares¹

Octis Asset Management Pte Ltd – ordinary shares

ROC Partners

Ownership interest held by
consolidated entity

Balance date

2015
%

30 June

64.03

30 June

–

39.17

–

2014
%

–

47.22

49.99

40.00

39.17

20.00

15.03

i. Principal activity
a. Aurora is a global investment management trust. It holds interest on 20 boutiques ranging from traditional equities

to alternatives and private equity.

b. Investors Mutual Ltd provides a funds management capability to both institutional and retail investors.

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

management company in Australia.

d. RARE IP Trust and RARE Group [RARE Infrastructure Ltd, RARE North America, RARE Infrastructure Sovereign

Enterprise, RARE Infrastructure (Europe) Ltd, RARE Infrastructure (UK) Ltd, RARE Infrastructure (USA) Inc.] are funds
management businesses specialising in listed global infrastructure assets.

e. IML Investment Partners Ltd provides investment sub advisory services to Investors Mutual Ltd.

f. Celeste Funds Management Limited is an Australian equity manager with a smaller companies focus.

g. Octis Asset Management Pte Ltd is an Asian multi strategy equity manager based in Singapore.

h. ROC Partners is an Australian and Asian private equity investment and advice business.

These entities, except Octis Asset Management Pte Ltd, are incorporated and domiciled in Australia.

While Treasury Group remains the legal owner of shares in Celeste, the investment value is zero as the economic rights in Celeste were transferred
to Aurora.

Consolidated
2015
$

2014
$

29,242,193

30,633,054

293,690,741

811,420

(34,838,057)

(2,155,480)

5,014,466

19,771,800

(10,209,213)

(10,445,762)

(1,335,693)

(9,359,589)

(6,369,781)

–

147,103

(13,250)

275,341,759

29,242,193

45,223,301

32,524,868

346,691,615

1,596,128

(19,981,005)

(16,440,196)

(95,890,107)

(1,638,890)

276,043,804

16,041,910

18,885,234

43,405,089

8,962,249

24,842,644

(3,947,783)

(5,070,844)

5,014,466

19,771,800

b. Carrying amount of investments accounted for using the equity method

Balance at the beginning of the year

– acquisition of associate
– disposal of an associates
– share of associates’ net profits for the year
–
– dividends received from associates
– share on exchange differences on translating foreign operations of an associate
– share of after-tax unrealised gains reserve of associate

trust distribution received/receivable from an associate

Balance at the end of the year

c. Share of associates’ balance sheet

Current assets

Non-current assets

Current liabilities

Non-current liabilities

Net assets

d. Share of associates’ revenues

Revenues

e. Share of associates’ net income

Profit before income tax

Income tax expense

Profit after income tax

f. Details of each of the Group’s material associates at the end of the reporting period are as follows:

Name of Associate

Principal Activity

Aurora Trust

IML

Funds management

Funds Management

IML Investment Partners Ltd

Funds Management

RARE Infrastructure Ltd

Funds Management

RARE IP Trust

Funds Management

Place of incorporation
and operation

Australia

Proportion of ownership
interest and voting power
held by the Group

2015

64.03%

–

2014

–

47.22%

40%

All of the above associates are accounted for using the equity method in the consolidated ﬁnancial statements.

Annual Report 2015

Notes to the Financial Statements
continued

11. Investments Accounted for Using the Equity Method (Cont.)
Summarised ﬁnancial information in respect of each of the Group’s material associates is set out below. The summarised
ﬁnancial information below represents amount shows in associate’s ﬁnancial statements in accordance with the
Accounting Standards.

2015

Current assets

Non-current assets

Current liabilities

Non-current liabilities

Net assets

Goodwill

Other identifiable intangibles

Carrying Amount of the Group’s interest

2014

Current assets

Non-current assets

Current liabilities

Non-current liabilities

Net assets

Goodwill

Carrying Amount of the Group’s interest

Aurora Trust

70,628,301

541,451,843

(31,205,692)

(149,758,094)

431,116,357

216,938,565

26,488,040

275,341,759

Investors
Mutual
Group

RARE
Group

–

Aurora Trust

Investors
Mutual
Group

RARE
Group

–

31,284,143

32,963,030

348,863

1,124,406

9,858,359

20,785,135

–

1,741,649

21,774,648

11,560,651

4,851,599

2,602,810

14,823,379

7,141,408

Summarised ﬁnancial information in respect of each of the Group’s material associates is set out below. The summarised
ﬁnancial information below represents amount shows in associate’s ﬁnancial statements in accordance with the
Accounting Standards.

Year ended 30 June 2015

Revenue

Loss for the period

Other comprehensive losses for the year

Total comprehensive losses for the year

Distributions received/receivable during the year

Year ended 30 June 2014

Revenue

Profit for the year

Other comprehensive income for the year

Total comprehensive income for the year

Dividends/distributions received during the year

Aurora Trust

29,494,352

(6,228,218)

(9,718,379)

(15,946,597)

7,729,161

Investors
Mutual
Group

RARE
Group

–

Aurora Trust

Investors
Mutual
Group

RARE
Group

–

34,747,017

55,184,330

13,077,054

31,847,660

(28,060)

–

13,048,994

31,847,660

5,958,461

8,777,359

g. Following is an aggregate of other associates which are not deemed material

Current assets

Non-current assets

Current liabilities

Non-current liabilities

Net assets

Revenue

Profit for the year

Dividends received during the year

12. Available-for-Sale Investments

Non-current

– Investment in Octis Asia Pacific Fund Limited*
– Investment in Octis Opportunities Fund*
– Investment in Aubrey Conviction Fund*
– Aubrey Capital Management**
– Investment in Freehold Investment Management***
– Unlisted shares in other corporations

30/06/2015

30/06/2014

–

16,632,990

4,944,506

10,405,476

5,964,806

5,207,214

Year ended
30/06/2015

Year ended
30/06/2014

–

15,632,144

3,962,866

3,149,639

Consolidated
2015
$

2014
$

–

3,035,532

3,030,546

2,108,086

1,393,261

1,436,780

900

11,005,105

All of these assets were sold during the year.

These investments represent seed capital to assist in the growth and marketing of these products.

Units in funds are readily saleable with no ﬁxed terms.

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.

While classiﬁed as an available-for-sale to satisfy the deﬁnition under the accounting standards, the Board views this as a long term holding
investment. The acquisition price of these securities was $1,314,073. The change in fair value reﬂects movements in fair value between reporting
periods, including foreign exchange rates.

*** While classiﬁed as an available-for-sale to satisfy the deﬁnition under the accounting standards, the Board views this as a long term investment.

The valuation of this investment was based on the net present value of the discounted cash ﬂows of FIM.

13. Loans and Other Receivables

Loans receivables due from:

Associates

Advances to other related party

All amounts are receivable in Australian Dollars and are not considered past due or impaired.

Consolidated
2015
$

2014
$

–

4,197,624

600,000

4,797,624

Annual Report 2015

Notes to the Financial Statements
continued

13. Loans and Other Receivables (Cont.)

a. Loans
For the comparative period, the balance of the loan receivable from associates as at 30 June 2014 represents the
subordinated loan to RARE and loan to ROC Partners.

The loan to RARE is subordinated to all other creditors as a condition of their Australian Financial Services Licence as
agreed with the Australian Securities and Investments Commission (ASIC).

Interest rates on the loans vary from 7.5% to 8%.

14. Plant and Equipment

Furniture & fittings

At cost
Accumulated depreciation

Office equipment
At cost
Accumulated depreciation

Leasehold improvements
At cost
Accumulated depreciation

Total

a. Reconciliations
Reconciliations of the carrying amounts of plant and equipment at the beginning
and end of the current financial year.
Furniture & fittings
Opening balance
Depreciation expense
Disposal
Closing balance

Office equipment
Opening balance
Additions
Depreciation expense
Disposal
Closing balance

Leasehold improvements
Opening balance
Additions
Depreciation expense
Disposal
Closing balance

Notes

14(a)

Consolidated
2015
$

2014
$

–
–
–

–
–
–
–

6,890
(597)
(6,293)
–

46,354
–
(18,221)
(28,133)
–

8,203
–
(1,679)
(6,524)
–

12,082
(5,192)
6,890

434,827
(388,473)
46,354

12,089
(3,886)
8,203
61,447

8,637
(1,747)
–
6,890

52,046
15,224
(20,916)
–
46,354

9,587
–
(1,384)
–
8,203

15. Intangibles

Software

At cost

Accumulated amortisation

a. Reconciliations

Reconciliations of the carrying amounts of intangibles at the beginning and end of
the current financial year.

Software

Opening balance

Additions

Amortisation expense

Disposal

Closing balance

16. Trade and Other Payables

Trade payables

Other payables

Related party payables:

– associates

Note

15(a)

Consolidated
2015
$

2014
$

–

114,944

(102,404)

12,540

18,440

–

(2,878)

(9,662)

–

1,642,020

1,817

(7,717)

–

12,540

643,184

937,255

360,192

6,091,530

2,002,212

7,671,969

a. Fair value
Due to the short term nature of these payables, their carrying value is assumed to approximate their fair value.

b. Related party payables
For terms and conditions relating to related party payables please refer to Note 25.

c. Interest rate and liquidity risk
Trade and other payables are non-interest bearing. Liquidity risk exposure is not regarded as signiﬁcant.

Trade, other and related party payables are all due within less than 90 days.

17. Employee Provisions

Current

Provision for annual leave, beginning balance

Provisions during the year

Annual leave taken

Provision for annual leave, closing balance

Non-Current

Provision for long service leave, beginning balance

Provisions during the year

Provision for long service leave, closing balance

Note

Consolidated
2015
$

2014
$

221,903

166,847

213,202

113,407

(59,985)

(104,706)

328,765

221,903

135,882

71,563

99,650

36,232

207,445

135,882

Annual Report 2015

Notes to the Financial Statements
continued

18. Contributed Equity and Reserves

a. Ordinary shares

Issued and fully paid

2015
$

2014
$

69,500,943

29,594,265

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

Beginning balance

Issued on 6 August 2014

Issued on 18 December 2014

Issued on 23 January 2015

Balance at end of the year

Treasury Group Ltd

2015

Number of
shares

2014

Number of
shares

23,070,755

29,594,265

23,070,755

29,594,265

626,743

1,027,859

2,926,830

28,835,705

979,816

10,043,114

–

27,604,144

69,500,943

23,070,755

29,594,265

On 6 August 2014, Treasury Group issued 626,743 ordinary shares on exercise of 626,743 performance rights issued under
the Treasury Group Performance Rights Plan for its executives. As a result of this share issue, $1,027,859 was transferred
from the equity-settled share options reserve to issued capital.

On 18 December 2014, Treasury Group Ltd issued 2,926,830 fully paid ordinary shares at $10.25 as a result of institutional
placement. The proceeds from the placement were used to subscribe for additional units in Aurora.

On 23 January 2015, Treasury Group Ltd issued 979, 816 fully paid ordinary shares at $10.25 as a result of Share Purchase
Plan (SPP). The proceeds from the placement were used to subscribe for additional units in Aurora.

c. Capital management
The Company’s capital management policies focus on ordinary share capital. When managing capital, management’s
objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and
beneﬁts to other stakeholders.

Management is constantly reviewing the capital structure to take advantage of favourable costs of capital or high returns
on assets. As the market is constantly changing, management may change the amount of dividends to be paid to
shareholders or conduct share buybacks.

During the year ended 30 June 2015, management paid dividends of $13,023,319 (2014: $10,612,548). Directors anticipate
that the payout ratio of the underlying proﬁt is 60-80%. Going forward post-merger, payout ratio is 80%-100% of Aurora’s
distribution to Treasury Group.

As part of the completion of the transaction, Aurora issued Class B & C units which are exchangeable (at the holders’
election) to Treasury Group shares at the following ﬁxed ratios:

(i) Any time from 13 April 2015 – 1 Treasury Group share for every 1 Class C unit

(ii) Any time from 24 November 2014 – 2 Treasury Group shares for every 3 Class B units or B-1 units

(iii) Any time from 24 November 2017 – 5 Treasury Group shares for every 6 Class B units or B-1 units

(iv) In the event of takeover – 1 Treasury Group share for each Class B & C units

(v) In the event of Qualiﬁed Public Offering (QPO) does not occur during QPO period, for an exchange occurring

on and from the expiration of the QPO period – 1 Treasury Group share for each Class B & C units

d. Long term incentives - performance rights
There were no performance rights issued to ofﬁcers and employees during the year. The performance rights outstanding
as at 30 June 2015 represent the 139,981 performance rights issued to certain employees in prior years. The performance
rights on issue were valued based on the valuation made by RSM Bird Cameron using a hybrid monte-carlo/binomial
option pricing model. The value of each right at issue was $1.64. The value of outstanding performance rights is $164,000
amortised over three years from the grant date.

The amount of performance rights amortisation expense for the period was $91,886 (2014:$427,150).

Total value of outstanding performance rights is $60,402. This includes unamortised performance rights that were valued
at $1.64.

There were no performance rights that lapsed during the year.

On 1 July 2015, performance rights issued to certain employees on 1 July 2012 have vested at 96% for the 8,731
performance rights issued and 82% for the 31,250 performance rights issued. Accordingly, a total of 34,007 Treasury
Group shares were issued to these employees.

e. Retained profits

Balance at the beginning of the year

Profit for the year

Dividends

Balance at end of year

f. Reserves

Net unrealised gains reserve

Balance at the beginning of the year

Net unrealised (losses) on available for sale investments taken to equity

Reversal of net unrealised losses on available-for-sale sold during the year

Income tax relating to items not reclassified

Share of after-tax gain on available for sale investments of associates

Balance at end of year

Share options reserve

Balance at end of year

Foreign currency translation reserve

Share of associate’s foreign currency translation reserve (after tax)

Total Reserves

Consolidated
2015
$

2014
$

30,092,285

27,643,019

138,723,124

13,061,814

(13,023,319)

(10,612,548)

155,792,090

30,092,285

Consolidated
2015
$

2014
$

213,684

376,659

–

(213,894)

(213,684)

–

147,103

64,169

(13,250)

213,684

2,938,463

3,874,436

(4,458,846)

–

(1,373,280)

4,088,120

Net unrealised gains reserve
The reserve records share of after-tax gain on available-for-sale investments of associates.

Share options reserve
This reserve is used to record the value of equity beneﬁts provided to employees and directors as part of their
remuneration. Refer to Note 21 for further details of these plans.

Foreign currency translation reserve
The reserve records the Company’s share of foreign exchange differences arising on translation of the foreign operations
of the associate.

Annual Report 2015

Notes to the Financial Statements
continued

19. Segment Information
Information reported to the Group’s Board of Directors for the purposes of resource allocation and assessment of
performance is speciﬁcally focused on the proﬁt after tax earned by each business within the Group. Therefore the Group’s
reportable segments under AASB 8 are included in the table below.

Information regarding these segments is presented below. The accounting policies of the reportable segments are the
same as the Group’s accounting policies.

The following is an analysis of the Group’s results by reportable operating segment:

Segment profit after tax for the year

– Australian unlisted trust¹

– Outsourcing and responsible entity services

– Australian equities

– Alternative investments

– Central administration costs

Total per Income Statement

Effective 25 November 2015, Treasury Group reports its segment as Australian unlisted trust.

Segment net assets for the year

– Australian unlisted trust

– Australian equities

– Outsourcing and responsible entity services

– Alternative investments

– Central administration

Total per Statement of Financial Position

Consolidated
2015
$

2014
$

(4,197,027)

–

341,030

338,150

3,014,911

7,478,915

6,176,823

11,841,348

5,335,737

19,658,413

133,387,387

(6,580,519)

138,723,124

13,077,894

Consolidated
2015
$

2014
$

216,698,239

–

21,233,035

5,625,758

23,362,365

50,221,158

7,221,514

13,553,512

223,919,753

63,774,670

As at 30 June 2015, the Australian unlisted trust above includes the equity accounted investment in Aurora.

20. 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 term of three years as at 30 June 2015. 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:

Future minimum rentals:

Minimum lease payments

– not later than one year

–

later than one year and not later than ﬁve years

Aggregate lease expenditure contracted for at reporting date

Amounts not provided for:

–

rental commitments

Total not provided for

Aggregate lease expenditure contracted for at reporting date

21. Employee Beneﬁts and Superannuation Commitments

Consolidated
2015
$

2014
$

342,564

234,386

329,389

576,950

906,339

576,950

906,339

576,950

906,339

576,950

906,339

The Treasury Group LTI Plan
The Treasury Group LTI Plan has been established where Treasury Group Ltd, at the discretion of the Board of Directors,
awards performance rights to Directors, executives and certain members of staff of the Group. Each performance right at
the time of grant represents one Treasury Group Ltd share if it vests.

There were no performance rights issued to ofﬁcers and employees during the year. The performance rights outstanding
as at 30 June 2015 represent the 139,981 performance rights issued to certain employees in prior years. The performance
rights on issue were valued based on the valuation made by RSM Bird Cameron using a hybrid monte-carlo/binomial
option pricing model. The value of each right at issue was $1.64. The value of outstanding performance rights is $164,000
amortised over three years from the grant date.

The amount of performance rights amortisation expense for the period was $91,886 (2014: $427,150).

There were no performance rights that lapsed during the year.

Employee Share Plan
The Employee Share Plan has been established whereby Treasury Group Ltd, at the discretion of the Board of Directors,
provides the opportunity to employees and Directors to purchase shares in Treasury Group Ltd 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
employees’ 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 17 employees eligible to participate in the plan. Shares acquired under the Employee
Share Plan vest immediately. There were no shares purchased during the year (2014: nil). The balance as at 30 June 2015
was nil (2014: 3,099). During the year, 3,099 shares were sold (2014: 43,652).

On 22 July 2015, the plan was terminated in accordance with the Trust Deed.

Annual Report 2015

Notes to the Financial Statements
continued

b. Compensation for Key Management Personnel

Consolidated
2015
$

2014
$

Short-term

Post employment

Share-based payments

2,932,930

1,729,418

87,690

11,502

58,871

349,866

Total remuneration

3,032,122

2,138,155

Each year, KMP bonuses are paid in two instalments
being 50% on August and 50% on June the following
year. For the current year, only the 50% payable on
August is provided for as at 30 June 2015. For the
comparative period, 50% was provided in June 2014 and
the remaining 50% was paid in June 2015.

c. Transactions with director-related entity
Details of the transactions with Director-related entities
are set out in Note 25. All transactions were conducted on
commercial terms.

d. Loans to key management employees
No loans have been advanced to key management
employees at any stage during the ﬁnancial year ended
30 June 2015 (2014: $Nil).

22. Subsequent Events
On 29 July 2015, the shareholders of RARE Infrastructure
Ltd (RARE) including Treasury Group and Northern Lights
have entered into a binding agreement to sell the majority
interest in RARE to Legg Mason.

Under the proposed structure, the total transaction
consideration is approximately $200m, with an upfront
cash proceeds of $112m to be received in November
2015; a three-year earn-out of up to $42m and 10%
retained equity interest in RARE subject to two- year
differentiated option pricing: call option by Legg Mason
at a ﬁxed multiple of RARE revenues and put option by
Aurora Trust at “fair market value”.

On 26 August 2015, the Directors of Treasury Group Ltd
declared a ﬁnal dividend on ordinary shares in respect of
the 2015 ﬁnancial year. The total amount of the dividend
is $7,738,682 which represents a fully franked dividend of
28 cents per share. The dividend has not been provided
for in the 30 June 2015 ﬁnancial statements.

23. Key Management Personnel Disclosures

a. Details of Key Management Personnel

(i) Non-executive Directors
M. Fitzpatrick

Chairman (Non-executive)

P. Kennedy

Director (Non-executive)

R. Hayes

Director (Non-executive),
resigned 31 March 2015

M. Donnelly

Director (Non-executive)

J. Vincent

G. Guérin

Director (Non-executive),
appointed 10 December 2014

(ii) Executives & KMP
A. McGill

Managing Director & CEO

T. Carver

P. Greenwood

J. Ferragina

Executive Director,
appointed 10 December 2014

Executive Director and CIO,
appointed 10 December 2014

Finance Director and COO,
appointed 31 March 2015

24. Auditor’s Remuneration

Auditor of Parent entity (Deloitte Touche Tohmatsu)

Amounts received or due and receivable by Deloitte Touche Tohmatsu:

–

an audit or review of the ﬁnancial report of the entity and any other entity in the
consolidated group

– other services to the entity and any other entity in the consolidated group

Total

Consolidated
2015
$

2014
$

336,000

1,407,000

224,466

641,767

1,743,000

866,233

25. Related Party Disclosures
The consolidated ﬁnancial statements include the ﬁnancial statements of Treasury Group Ltd and the controlled entities in
the following list:

Companies

Aurora Investment Management Pty Ltd

AR Capital Management Pty Ltd

Treasury Group Investment Services Ltd*

Global Value Investors Ltd*

Treasury Group Nominees Pty Ltd*

Treasury Evergreen Pty Ltd*

Treasury Capital Management Pty Ltd*

These are all incorporated in Australia.

* Sold to Aurora Trust on 25 November 2014.

Transactions with related parties

Percentage of equity interest
held by the consolidated entity

2015

2014

100

–

100

Service fees
During the year, Treasury Group Ltd and its wholly-owned entity, Aurora Investment Management Pty Ltd, the Trustee of
Aurora Trust provided management and administrative services to Aurora and its wholly owned 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 and distribution
Dividends and distributions received and receivable at reporting date are disclosed in Note 10 of the ﬁnancial report.

Annual Report 2015

Notes to the Financial Statements
continued

26. Parent Entity Disclosure
The accounting policies of the parent are the consistent with the consolidated entity.

i. Financial Performance

Profit for the year

Other comprehensive income for the year (net of tax)

Total comprehensive income

ii. Financial Position

Assets

Current assets

Non-current assets

Total assets

Liabilities

Current liabilities

Non-current liabilities

Total liabilities

Equity

Issued capital

Retained earnings

Reserves

Share options

Net unrealised gains/(losses) reserve

Total equity

2015
$

2014
$

148,065,100

14,203,006

–

(293,944)

148,165,100

13,909,062

8,480,186

13,316,626

294,099,006

37,736,719

302,579,192

51,053,345

886,438

1,224,158

64,179,505

135,882

65,065,943

1,360,040

69,500,943

29,594,265

165,134,066

16,283,472

2,878,240

3,874,436

–

(58,868)

237,513,249

49,693,305

Director’s Declaration

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

In the opinion of the Directors:

the financial statements and notes are in accordance with the Corporations Act 2001, including:

giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2015 and of its
performance for the year ended on that date;

ii.

complying with Accounting Standards and Corporations Regulations 2001; and

iii. complying with International Financial Reporting Standards, as stated in Note 2 to the financial statements

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 2015.

On behalf of the Board

M. Fitzpatrick
Chairman

31 August 2015

Annual Report 2015

Independent Audit Report

Deloitte Touche Tohmatsu
ABN 74 490 121 060

Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia

Tel: +61 2 9322 7000
Fax: +61 2 9322 7001
www.deloitte.com.au

Independent Auditor’s Report
to the Members of Treasury Group Ltd

Report on the Financial Report

We have audited the accompanying financial report of Treasury Group Ltd, which comprises the statement
of financial position as at 30 June 2015, the income statement, the statement of comprehensive income, the
statement of cash flows and the statement of changes in equity for the year ended on that date, notes
comprising a summary of significant accounting policies and other explanatory information, 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 as set out on pages 36 to 76.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 2,
the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial statements 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. Those 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 the auditor’s judgement, including the assessment of the
risks of material misstatement of the financial report, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control, relevant to the company’s preparation of the financial
report that gives a true and fair view, 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 company’s
internal control. 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.
Member of Deloitte Touche Tohmatsu Limited

Auditor’s Independence Declaration

In conducting our audit, we have complied with the independence requirements of the Corporations Act
2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of Treasury Group Ltd would be in the same terms if given to the directors as at the
time of this auditor’s report.

Opinion

In our opinion:
(a) the financial report of Treasury Group Ltd is in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2015 and of

their performance for the period 1 July 2014 to 30 June 2015; and

(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and

(b) the financial statements also comply with International Financial Reporting Standards as disclosed in

Note 2.

Report on the Remuneration Report

We have audited the Remuneration Report included in pages (cid:21)(cid:20) to (cid:22)(cid:22) of the directors’ report for the year
ended 30 June 2015. The directors of the company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to
express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.

Opinion

In our opinion the Remuneration Report of Treasury Group Ltd for the year ended 30 June 2015, complies
with section 300A of the Corporations Act 2001.

DELOITTE TOUCHE TOHMATSU

Declan O’Callaghan
Partner
Chartered Accountants
Sydney, 31 August 2015

Annual Report 2015

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 5 August 2015)
The number of shareholders by size of holding, in each class of share are:

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 5 August 2015)
The names of the twenty largest holders of quoted shares are:

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

BNP Paribas Noms Pty Ltd

RBC Investor Services Australia Nominees Pty Limited (Perpetual)
Squitchy Lane Holdings Pty Ltd
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Limited
National Nominees Limited
Citicorp Nominees Pty Ltd
Mr Timothy Gerard Ryan
Kattag Holdings Pty Ltd
Mini-Me Ventures Pty Ltd
Netwealth Investments Limited
UBS Wealth Management Australia Nominees Pty Ltd
Mr Michael Brendan Patrick De Tocqueville
Banson Nominees Pty Ltd
HFM Investments Pty Ltd
Top Pocket Pty Ltd
29th Marsupial Pty Ltd
Mardom Pty Ltd
Mrs Margaret Rose Wood
Mr David Calogero Loggia

Ordinary shares

Number of
holders

Number of
shares

1,522
1,594

279

156

186

763,883
3,821,715

1,942,876

3,533,960

17,576,717

3,036

Listed ordinary shares

Number of
shares

Percentage
of ordinary
shares

3,558,115

3,503,302
2,401,500
1,036,534
1,020,691
960,524
912,508
599,573
526,000
480,000
435,595
431,427
400,000
370,854
250,000
250,000
172,591
141,400
139,541
138,543

12.87

12.68
8.69
3.75
3.69
3.48
3.30
2.17
1.90
1.74
1.58
1.56
1.45
1.34
0.90
0.90
0.62
0.51
0.50
0.50

17,728,698

64.15

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

BNP Paribas Noms Pty Ltd

Michael Fitzpatrick

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

Number of
Shares

3,558,115
2,701,285

Corporate Information

ABN 39 006 708 792

Directors
M. Fitzpatrick (Chairman)
A. McGill (Managing Director and Chief Executive Officer, (CEO), resigned 28 August 2015)
T. Carver (Executive Director, appointed 10 December 2014)
P. Kennedy
M. Donnelly
A. Robinson (Non-Executive Director appointed 28 August 2015)
J. Vincent (Non-Executive Director appointed 10 December 2014)
G. Guérin (Non-Executive Director appointed 10 December 2014)
R. Hayes (resigned 31 March 2015)
P. Greenwood (Executive Director appointed 10 December 2014)
J. Ferragina (Finance Director and Chief Operating Officer (COO) appointed 31 March 2015)

Company Secretaries
C. Driver (appointed 7 July 2015)
R. Ramswarup (resigned 30 June 2015)
J. Ferragina (appointed 31 July 2014)

Registered Office
Level 14
39 Martin Place
Sydney, NSW, 2000
(02) 8243 - 0400
Phone
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
Deloitte Touche Tohmatsu

Internet Address
www.treasurygroup.com