Perpetual Limited · ASX:PPT
Perpetual — Shareholder Meeting (October 2006)
44 slides from Perpetual's shareholder meeting presentation, Oct 17, 2006
Slide 1: 2006 Annual General Meeting
2006 Annual General Meeting Chairman’s address to shareholders 17 October 2006 rerpen aap
Slide 2: 2006 is a special year for Perpetual
2006 is a special year for Perpetual # Our 120" anniversary « The 40" anniversary of two of our oldest and most successful funds: - Perpetuals Industrial Share Fund ~ Perpetuals Monthly Income Fund Perpetvaip
Slide 3: Agenda
Agenda Part | - Addresses « Chairman’s address to shareholders Mr Robert Savage # Managing Director's address to shareholders Mr David Deverall Part Il - Resolutions u Address to shareholders on the Remuneration Report Perpetvaip Mr Robert Savage
Slide 4: Profit result for 2006
Profit result for 2006 2005 ##Change $m % Operating profit after tax” 116.3 13 Net profit after tax 119.4 14 Operating revenue 351.5 12 EBITDA 177.7 20 “ Operating profit after tax excludes significant items and net establishment costs of our new global equities business in Perpetvaip Ireland
Slide 5: Capital management
Capital management Our capital management policy has two objectives: % to maintain adequate capital to operate and grow our business ™ to return any excess capital to shareholders after payment of ordinary dividends Perpetvaip
Slide 6: Shareholders rewarded in a year of continued investment in our strategy
Shareholders rewarded in a year of continued investment in our strategy a Interim ordinary dividend of $1.62 per share fully franked « Final ordinary dividend of $1.64 per share fully franked # Special dividend of $1.00 fully franked Perpetvaip
Slide 7: Perpetual's return on equity is the highest amongst its listed global peers
Perpetual’s return on equity is the highest amongst its listed global peers Perpetual ===#sesen ane New Star] Waddell & Reed Eaton Vance AMP) Alliance Bemstein Babcock & Brown) T. Rowe Price} Macquarie Bank) AXA Asia Pacific} State Street IOOF} Challenger} Schroders; Henderson AMVESCAP Australian We
Slide 8: Board
Board Our board renewal program is now complete Perpetual’s board members o w w Robert Savage (Chairman) David Deverall (Chief Executive Officer and Managing Director) Meredith Brooks Paul McClintock Sandra McPhee Elizabeth Proust Peter Scott Philip Twyman Perpetvaip
Slide 9: Forecast profit guidance for the 2007 first half
Forecast profit guidance for the 2007 first half “We forecast a 10 per cent increase in operating profit after tax (OPAT) for the first half of the current year over last year’s adjusted first half OPAT of $58.2 million. OPAT for the first half of last year was $63.5 million which excluded $5.3 mill
Slide 10: 2006 Annual General Meeting
2006 Annual General Meeting Chairman’s address to shareholders 17 October 2006 rerpen aap
Slide 11: 2006 Annual General Meeting
2006 Annual General Meeting Chief Executive Officer and Managing Director's address to shareholders 17 October 2006 rerpenayp
Slide 12: Wealth Management operating profit before tax up per cent
Wealth Management operating profit before tax up 18 per cent 2005 Change $m % Total revenues 282.9 14 Operating expenses 143.0 9 Operating profit before tax 139.9 18 Perpetual Pp
Slide 13: Perpetual Investments continued solid asset growth
Perpetual Investments continued solid asset growth $35B) 307 25) 21,7 Funds | Under 20 Management (FUM) 154 19.4 June 02 June 03 June 04 June 05 June 06 Perpewwaip
Slide 14: Perpetual Private Clients experienced strong growth
Perpetual Private Clients experienced strong growth Funds Under Advice 47] (FUA) Jun 02 Jun 03 Jun 04 Jun 05 Jun 06 Excludes externally advised do-it-yourself (DIY) and Investor Direct Portfolio Services (IDPS) funds under adrninistration of $1.4 billion in 2606 (2605: $1.5 billion) Perpewwaip
Slide 15: Corporate Trust operating profit before tax up per cent
Corporate Trust operating profit before tax up 10 per cent 2006 2005 Total revenues Operating expenses Operating profit before tax 10
Slide 16: Strong volume growth in Corporate Trust
Strong volume growth in Corporate Trust $200B Funds Under Administration (FUA) 1505 100 112.4 | 7.1 52.3 Jun 02 Jun 03 Jun 04 Jun 05 restlp
Slide 17: II. Develop new growth engines
Il. Develop new growth engines Perpetual
Slide 18: Our four sources of competitive advantage
Our four sources of competitive advantage ®@ Approach to managing philosophies and processes around funds management Strong relationships with the financial planning community ™ A trusted brand & A long history of providing fiduciary services to corporates and individuals Perpetual Pp
Slide 19: Overview of strategic initiatives
Overview of strategic initiatives » Launched credit fixed interest, global equities and direct property businesses - credit fixed interest has attracted near $4 billion in funds under management since early 2005 ~ performance of our global equities fund exceeded its benchmark by more than 3 per cent
Slide 20: Overview of strategic initiatives
Overview of strategic initiatives w= Expanded our quantitative investments, property securities and infrastructure businesses ~ Quantitative investments attracted funds of around $ 1 billion since 2005 including $500 million in new long-short fund - acquired remaining share of Perpetual James Fieldi
Slide 21: Overview of strategic initiatives
Overview of strategic initiatives « Commenced a structured product business - raised more than $1.2 billion in our enhanced cash investment funds Perpetual Pp
Slide 22: Overview of strategic initiatives
Overview of strategic initiatives w Maximised our core businesses Perpetual Investments: maintained revenue margins in Australian equities and grew book to over $20 billion Perpetual Private Clients: repositioned to focus on superior sales and service — profits now contribute around 20 per cent to d
Slide 23: Overview of strategic initiatives
Overview of strategic initiatives « Enhanced our capital management ~ Sold non-core assets: ASX Perpetual Registrars, Symetry and Hunter Street building - Used proceeds to fund revenue building strategic initiatives and to return surplus to shareholders via special dividends ($4.50 per share over la
Slide 24: People engagement
People engagement # implemented a new remuneration system - Perpetual people eligible to share in profit participation pool « Introduced performance based incentives for key asset managers - very long-term incentives aligned with customer and shareholder interests « Improved our working environment
Slide 25: Operating environment
Operating environment » Australia’s managed funds market passed the $1 trillion mark - one of the largest and fastest growing asset pools in the world « Directly fuelled by the Governments’ superannuation policies to close retirement savings gap — now standing at $450 billion « Initiatives to close
Slide 26: Opportunities and challenges
Opportunities and challenges a Globalisation ~ Increased appetite by investors for global equities « Disclosure ~ Greater transparency and disclosure around product bundling Regulatory balance ~ Risk averse environment impediment to wealth creation Perpetual Pp
Slide 27: 2006 Annual General Meeting
2006 Annual General Meeting Chief Executive Officer and Managing Director's address to shareholders 17 October 2006 rerpenayp
Slide 28: Chairman's address to shareholders on remuneration
Chairman’s address to shareholders on remuneration Agenda items ® non- binding vote on the remuneration report » allocation of shares and options to David Deverall, our Chief Executive Officer and Managing Director, under the long-term incentive plan ® proposed increase in the aggregate pool of dire
Slide 29: $50,000 invested in Perpetual in 1996 is worth over $1 million in 2006
$50,000 invested in Perpetual in 1996 is worth over $1 million in 2006 $1,200,000 5 $1,100,000 4 $1,000,000 + $900,000 4 $860,000 5 $700,000 4 —— Perpetual (total shareholder return) $600,000 4 —— S&P/ASX100 Accumutation Index $500,000 4 $400,000 4 $300,000 5 $200,000 4 $100,000 5 ri r Jun 96 Jun 97
Slide 30: Perpetual's remuneration is based on five core principles
Perpetual’s remuneration is based on five core principles « variable pay forms a significant part of overall remuneration « variable pay is linked to shareholder wealth creation « short-term incentive payments are uncapped « short-term incentive payments are made out of realised profits « Increased
Slide 31: Perpetual's remuneration comprises two key elements
Perpetual’s remuneration comprises two key elements m Fixed remuneration component - set around the median level for each employee within the market range w Variable performance based incentives - paid from profits and are not budgeted as fixed costs Perpetual Pp
Slide 32: Short-term incentives and OPAT are highly correlated
Short-term incentives and OPAT are highly correlated Index OPAT SM (2006 = 100) 40 4 lm Operating profit after tax 132 + 120 120 4 . . ; vow Short term incentive (STI) index Lt 400 100 + + 80 80 + 73 ae ~ + 60 60 + + 40 40 4 20 4 7 20 2002 2003 2004 2005 2006 rerpetual P
Slide 33: Variable pay for employees form a significant part of overall remuneration in 2006
Variable pay for employees form a significant part of overall remuneration in 2006 Key executives remuneration Source: Perpetual’s 2006 remuneration report Perpetual f >
Slide 34: Non-binding vote on the Remuneration Report
Non- binding vote on the Remuneration Report rerpenaip
Slide 35: Non-binding vote on the Remuneration Report
Non- binding vote on the Remuneration Report LT! hurdles @ @ @ very stringent employees must perform beyond expectations deliver returns to shareholders over a three year period Why re-test hurdles? @ o Not always sufficient for strategic benefits to flow through to the business Allows employees eve
Slide 36: Non-binding vote on the Remuneration Report
Non- binding vote on the Remuneration Report Questions rerpenaip
Slide 37: Allocation of shares and options to David Deverall under the long-term incentive plan
Allocation of shares and options to David Deverall under the long-term incentive plan rerpenaip
Slide 38: Allocation of shares and options to David Deverall under the long-term incentive plan
Allocation of shares and options to David Deverall under the long-term incentive plan 2003 2006 2003-2006 Annual growth rate Operating profit after tax $72.5m 22% EBITDA $117.4m 22% (1) i) EPS “ (OPAT) $1.91 19% Perpetual “) Diluted EPS calculated using operating profit after tax divided by the weig
Slide 39: Allocation of shares and options to David Deverall under the long-term incentive plan
Allocation of shares and options to David Deverall under the long-term incentive plan Proposed long-term incentive plan « Grant of shares and options to the value of $1,025,000 per annum # Onerous hurdles associated with total shareholder return (TSR) and earnings per share (EPS) # Reward for except
Slide 40: Allocation of shares and options to David Deverall under the long-term incentive plan
Allocation of shares and options to David Deverall under the long-term incentive plan Questions rerpenaip
Slide 41: Proposed increase in the aggregate pool of directors' fee cap
Proposed increase in the aggregate pool of directors’ fee cap rerpenaip
Slide 42: Proposed increase in the aggregate pool of directors' fee cap
Proposed increase in the aggregate pool of directors’ fee cap Proposal B Increase cap to $2.25 million per annum - last increase to $1.75 million per annum in 2004 Why increase the cap? B Attract and retain suitably skilled, experienced and committed individuals Accommodate additional board members
Slide 43: Proposed increase in the aggregate pool of directors' fee cap
Proposed increase in the aggregate pool of directors’ fee cap Questions rerpenaip
Slide 44: 2006 Annual General Meeting
2006 Annual General Meeting Chairman’s address to shareholders on remuneration 17 October 2006 rerpenaip