Slide 1: Presentation Market Briefing
Abfestpac PRESENTATION MARKET BRIEFING DATE: 12" APRIL 2006 TIME: 8.30AM LOCATION: L28 THANK YOU ANDREW. TODAY IS A RATHER UNIQUE DAY — THE FIRST BY A MAJOR COMPANY THAT WE KNOW OF, TO TRY TO ENGAGE THE MARKET ON WHY CORPORATE RESPONSIBILITY AND SUSTAINABILITY REALLY MATTER FROM AN INVESTMENT PERSPE
Slide 2: We did not set out for Westpac to be a sustainability leader
Page 2 WE DID NOT SET OUT FOR WESTPAC TO BE A NATIONAL — AND INDEED INTERNATIONAL - LEADER IN THE VARIOUS CORPORATE RESPONSIBILITY, GOVERNANCE AND SUSTAINABILITY RATINGS AND AWARDS. NOR DO WE SEEK TO DO SO TODAY. WHEN | TOOK OVER THE CEO ROLE, IT WAS CLEAR TO ME THAT WE WERE STILL OPERATING OUR BUSI
Slide 3: A journey built on strong principles
Page 3 A JOURNEY BUILT ON STRONG PRINCIPLES - ONE THAT WOULD HAVE OUR REPUTATION AND SOCIAL LICENCE TO OPERATE AT CENTRE STAGE, AND ONE THAT WOULD TAKE THE RELATED RISKS OUT OF OUR BUSINESS. WE STARTED OUT BY CLEARLY LAYING DOWN THREE CENTRAL PRINCIPLES AGAINST WHICH WE WOULD LEAD AND MANAGE OUR COM
Slide 4: Corporate responsibility and sustainability: managing long, broad, core values
Page 4 SO WHEN WE TALK ABOUT CORPORATE RESPONSIBILITY AND SUSTAINABILITY, WE’RE TALKING ABOUT: MANAGING LONG - IN TERMS OF AVOIDING THE PITFALLS OF SHORT-TERMISM. AND IN TERMS OF RESISTING MARKET DEMANDS TO MAXIMISE NEAR TERM VALUE THEREBY PUTTING FUTURE VALUE AND OUR RESILIENCE AT RISK; MANAGING BR
Slide 5: Focus on shareholder value
Page & FOCUS ON SHAREHOLDER VALUE LET ME MAKE A FEW OBSERVATIONS ON THIS BEFORE COMMENTING DIRECTLY ON INTANGIBLE VALUE, OUR SUBJECT TODAY. THE FIRST IS THAT LONG TERM SHAREHOLDER VALUE IS THE ONLY SHAREHOLDER VALUE THAT MATTERS. ANYONE CAN TURN IN A GOOD QUARTER, HALF OR YEAR. THE REAL TEST IS TO T
Slide 6: Balancing long-term value with short-term results
Page 6 OBVIOUSLY ONE HAS TO STRIKE A BALANCE HERE. A BALANCE BETWEEN GIVING PRIMACY TO CREATING LONGER TERM SHAREHOLDER VALUE, WHILE CONSISTENTLY DELIVERING SHORTER-TERM PROFIT RESULTS AT LEAST BROADLY IN LINE WITH LEGITIMATE MARKET EXPECTATIONS. ON ANY MEASURE, WE’VE SUCCESSFULLY DELIVERED ON THAT
Slide 7: Medium to long term shareholder value focus
Page 7 THIS HAS TAKEN DISCIPLINE, BUT THIS MEDIUM TO LONG TERM SHAREHOLDER VALUE FOCUS HAS ALLOWED US TO: 1. RESIST GIVING VERY EXPLICIT, CAST IRON SHORT TERM EARNINGS GUIDANCE - THEREBY AVOIDING COMMITING TO DELIVER DELIVERING SHORT TERM OUTCOMES, REGARDLESS OF LONGER TERM COST; AND 2. FOCUS INVEST
Slide 8: Meeting community needs through responsible business practices
Page & IN PARTICULAR, IN A FUNCTIONING DEMOCRACY, THE LEGITIMATE NEEDS OF THE COMMUNITY ULTIMATELY GET MET. IN GENERAL, THOSE NEEDS ARE BEST MET BY CORPORATIONS TAKING AN INTELLIGENT AND ENLIGHTENED VIEW OF THEIR LONG TERM SELF INTEREST. WE ARE CERTAINLY BETTER OFF MEETING THOSE NEEDS PRO-ACTIVELY B
Slide 9: Why responsible practices are strategic
Page 9 + IT’S STRATEGIC IN TERMS OF MANAGING OUR SOCIAL CONTRACT; « STRATEGIC IN TERMS OF MANAGING REGULATORY AND REPUTATIONAL RISK; « STRATEGIC IN TERMS OF CAPTURING VALUE-CREATING OPPORTUNITIES BY UNDERSTANDING THE EMERGING SOCIOPOLITICAL ENVIRONMENT AND TRENDS BETTER THAN OTHERS; AND « STRATEGIC
Slide 10: Where values come in
Page 10 AND THIS IS WHERE VALUES COME IN. COMPANIES ARE RUNNING SIMULTANEOUSLY AN ECONOMIC MACHINE AND A SOCIAL SYSTEM. AND THE TASK OF CORPORATE LEADERSHIP IS TO HAVE THE INTER- RELATIONSHIP OPERATING SEAMLESSLY AND SMOOTHLY. THE KEY TO THIS ~ THE GLUE IF YOU LIKE ~1IS VALUES. CALL ALL OF THIS CORP
Slide 11: Commitment to management principles and remuneration
Page 11 BUT THERE IS NOTHING SOFT OR INTANGIBLE ABOUT OUR COMMITMENT TO THESE THREE MANAGEMENT PRINCIPLES AND TO SUSTAINABILITY. YOU ONLY NEED TO LOOK AT THE STRUCTURE OF MY PERFORMANCE-BASED REMUNERATION AND THAT OF MY TEAM. IN MY CASE, AROUND 40% OF MY PERFORMANCE-BASED CASH REMUNERATION DEPENDS D
Slide 12: Today's briefing
Page 12 TODAY’S BRIEFING SO TODAY WE ARE GOING TO ATTEMPT TO FOCUS THIS DISCUSSION WHERE IT NEEDS TO BE — THAT IS, IN TERMS OF THE INTANGIBLE SHAREHOLDER VALUE GENERATED BY THE APPLICATION OF THESE BROAD PRINICPLES. THIS IS PARTICULARLY IMPORTANT GIVEN THAT SOME 70% OF THE VALUE BEING ASSIGNED TO WE
Slide 13: Managing and measuring intangible value drivers
Page 13 WE’VE DONE THAT AND WE BELIEVE WE ARE NOW MANAGING AND MEASURING WHAT MATTERS — INTANGIBLE VALUE DRIVERS THAT COVER ALL ASPECTS OF OUR BUSINESS AND SPANNING: « EMPLOYEE COMMITMENT « OCCUPATIONAL HEALTH AND SAFETY « WORKPLACE DIVERSITY « GOVERNANCE AND LEADERSHIP « CUSTOMER COMPLAINTS « PRODU
Slide 14: Stakeholder impact report and extended performance accounting
Page 14 OUR ANNUAL STAKEHOLDER IMPACT REPORT, FOR EXAMPLE, CONTAINS FIVE YEARS OF DETAILED, FUTURE-FOCUSED EXTENDED PERFORMANCE ACCOUNTING. MORE FUNDAMENTALLY, OUR STRUCTURAL, RELATIONAL AND HUMAN CAPITAL CAN BE EXPANDED WITHOUT LIMIT. AND TODAY WE HOPE TO GIVE YOU AN INSIGHT INTO THE POSITIVE VALUA
Slide 15: Why these issues are becoming unavoidable
Page 15 BECAUSE OUTPERFORMANCE IN THE AREA GOES TO THE HEART OF COMPETITIVE ADVANTAGE, WE WILL CONTINUE TO WORK ON BETTER UNDERSTANDING THE VALUE LINKAGES BETWEEN THE NON-FINANCIAL PERFORMANCE DRIVERS AND THE FINANCIAL OUTCOMES. BEING SHAREHOLDER VALUE ENHANCING HAS BEEN A BASIC PRECONDITION FOR ANY
Slide 16: Global Reporting Initiative and investor interest
Page 16 2. THE GLOBAL REPORTING INITIATIVE IS BEING OVERHAULED THIS YEAR TO BETTER MEET THE INFORMATION NEEDS OF ANALYSTS AND INVESTORS. 3. INEUROPE AND THE US, THE ENHANCED ANALYTICS INITIATIVE GROUP OF ASSET MANAGERS IS NOW FUNDING SELL-SIDE EQUITY RESEARCH ON NON-FINANCIALS THROUGH OVER 30 RESEAR
Slide 17: Conclusion: re-rating on non-financial drivers
Page 17 FOR MANAGING $30 TRILLION US DOLLARS: MOST EXPECTED SOCIAL AND ENVIRONMENTAL PERFORMANCE TO BE MAINSTREAM FOR INVESTMENT MANAGEMENT WITHIN 10 YEARS. SO, IN CONCLUSION, | EXPECT THAT COMPANIES, OVER TIME, WILL BE PROGRESSIVELY RE-RATED NOT ONLY ON THE NARROW FINANCIAL AGENDA, BUT ALSO ON THEI
Slide 18: Non-financial performance as good management
Page 18 EVEN THOUGH IT WILL NEVER BE EASY TO FULLY SET OUT THE CAUSAL LINKS BETWEEN NON-FINANCIAL AND FINANCIAL PERFORMANCE ACROSS OUR BUSINESS, WHAT WE ARE DISCUSSING THIS MORNING WILL, OVER TIME, BE SIMPLY UNDERSTOOD AS GOOD MANAGEMENT. PARTICULARLY, WE NO LONGER JUST SEE THIS IN TERMS OF RISK MIN