UBS Financial Services Conference Sydney 25 June 2008 Roger Burrows Chief Financial Officer Perpetual Limited
Perpetual is one of Australia s largest independent wealth managers More than 120 years of history Top performing manager in Australian equities over long-term Quality focused investment style typically favoured in challenging market - outstanding investment performance over past six months Strong and conservative balance sheet with low gearing Key revenue drivers - $32.6 billion funds under management as at 30 April 2008 - $8.0 billion in funds under advice as at 30 April 2008 - $195.6 billion funds under administration as at 30 April 2008 Market capitalisation of around $2 billion Approximately 1,200 employees 1
Perpetual operates a series of end-to-end business units which participate in three key markets Perpetual Investments Perpetual Private Wealth Perpetual Corporate Trust Australian Equities Global Equities Income & Multi-sector Structured Products & Platforms Perpetual Private Clients Trust & Fund Services Asset Management Sales and Servicing Strategy Marketing Finance Asset Management Sales and Servicing Strategy Marketing Finance Investment Administration Asset Management Sales and Servicing Strategy Marketing Finance Sales and Servicing Strategy Marketing Finance Direct Advisory Services Fiduciary Services Sales Strategy Marketing Finance Mortgage Services Trustee Services Custodial Services Mortgage Servicing Business Development Strategy Marketing Finance Adviser Distribution Analytics and Research Group Finance, Risk, Operations and People & Culture 2
3 Operating environment
Operating environment impacted by current market conditions but long-term fundamentals strong Global credit crisis heavily impacted share market volatility over past nine months - strong influence on investor sentiment Equity market continues to have sound long-term fundamentals - supported by mandated superannuation inflows - forecast superannuation growth in low double digit rates Securitisation market remains challenging Lower absolute market levels will have bearing on industry over short to medium-term Repricing of risk will generate significant opportunities 4
Current market conditions have impacted key revenue drivers Perpetual Investments FUM $B 40 39.1 36.8 37.2 35 32.8 32.6 30.3 30 25 20 15 10 5 Perpetual Private Wealth FUA (1) $B 9 8 7 6 5 4 3 2 1 6.1 6.6 7.2 8.4 8.6 8.0 Perpetual Corporate Trust FUA $B 240 210 180 150 120 90 60 30 152.8 178.6 185.0 210.1 205.7 195.6 0 Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Apr 08 0 Dec 05 Jun 06 Dec 06 (1) Excludes externally advised do-it-yourself (DIY) and Investor Directed Portfolio Service (IDPS) funds under administration Jun 07 Dec 07 Apr 08 0 Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Apr 08 5
Key financials Half Year Actual Dec 2007 $m Half Year Forecast Jun 2008 $m Full Year Forecast Jun 2008 $m Operating profit after tax 79.3 50.7-60.7 130-140 EMCF (12.8) (13.4) (26.2*) Sale of investments 21.1 Net profit after tax 87.6 * EMCF mark-to-market losses as at 30 April 2008 6
Responding to market conditions with review of cost base and strategic priorities Exited Direct Property and Infrastructure Downsized Perpetual Corporate Trust to match business volumes Focused on reducing discretionary spending Re-engineering key processes to create efficiencies across group However, strong optimism around future growth potential Continuing to invest in business - organic growth - reviewing inorganic opportunities 7
8 Perpetual Investments
Australia s wealth management industry has a high rate of underlying asset growth Over $1 trillion today A$b 7,000 6,000 5,000 Growing to $3 5 trillion in 10 years time 10-12 % CAGR 4,000 3,000 2,000 1,000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Source: Trowbridge Deloitte July 2006 superannuation projections (2003-2025) Post retirement Pre retirement 9
Investment management continues to be our engine room Australian Equities Global Equities Income & Multi-sector Highly awarded, stable and experienced team Strong track record of success Represented in shelf space on all major platforms Boutique culture in a publicly-listed company best of both worlds Growing AEQ by: - continuing investment in development of new products - maximising revenue margins through product/channel innovation Stable team - quality focus High conviction portfolio Increasing levels of awareness in target markets - focused institutional sales strategy in Australia, Europe, North America, Asia - marketing to retail investors in Australia Strong position to capitalise when performance kicks in expected September 2008 Recognition by consultants Shifting focus: - growing capabilities in credit and alternative investments - exiting infrastructure and direct property - targeting credit in retail channel 10
Enhanced packaging and administration capabilities and opportunities Manufacturing Packaging and administration Advice and direct to customer Business units Perpetual Investments Platforms WealthFocus transition from defensive platform to business development tool targeting independent advisers Structured Products Tapping into unique market opportunity - successful launch of Perpetual Protected Investments Series I & II - Perpetual Protected Investments Series III closes 27 June Perpetual Private Wealth Wealth management value chain 11
12 Perpetual Private Wealth
Australia s HNW market is large, growing and highly fragmented with opportunity for unconstrained growth HNW market size The HNW market size is estimated to be approximately $385 billion Around 355,000 households have more than $500,000 investable assets in Australia 1 HNW market growth The HNW market has historical growth (2003-05) of 10.4 per cent The HNW market has forecast growth 2 (2006-12) of 10.9 per cent 13 Note - 1. Investable assets includes financial assets only. Excludes own businesses and property Source - 1. 2006 Household Wealth and Wealth Distribution Australian Bureau of Statistics, 9 Nov 2007 2. Credit Suisse Asia Pacific overview, Australian HNW growth analysis, The Boston Consulting Group, 2 Apr 2007
Our vision is to be the adviser of choice for financially successful Australians Perpetual Private Wealth Wealth Perpetual Professional Professional investors $10 m + Family office service model Exclusive and discrete Private Clients Sophisticated investors Wealth $1 10 m Relationship/team based model Sophisticated and exclusive Perpetual Premium Retail investors Wealth < $1 m Individual advice based model Privileged and special access Our traditional Perpetual Private Clients offering is the foundation upon which we are growing the absolute potential of our Private Wealth business Scalable and integrated operational and technology support 14
Our full range of services provides us with our point of difference Business Comprehensive advice 1 Range of products/ services 2 Fiduciary services 3 Perpetual Private Wealth 3 3 4 Independent financial advisers 2 2 1 Investment banks 4 4 1 Brokers 2 2 1 Trust companies 1 1 4 Regional banks 1 2 0 National private banks ie Big Four 3 4 1 Strong capabilities / competitive advantage Weakness / no capabilities (1) Includes investment, structure, tax and risk management advice (2) Includes investments, insurance, finance, custody and DIY services (3) Covers trust management, estate administration/planning and philanthropy 15
We are accelerating growth by expanding adviser teams and improving support capabilities Adviser growth & enhance offering Organic growth Aggressively recruiting HNW advisers Developing on-boarding, training and development programs to build and retain staff in war for talent + Inorganic growth Acquiring to increase HNW advisers and clients Acquiring and partnering to access new and differentiated capabilities Productivity & business scalability Improving productivity of advisers and support staff and reducing time to positively contribute for new starters Scalable organisation and highly efficient sales and service model that supports our client value proposition Efficient dealer services and product/service delivery 16
17 Perpetual Corporate Trust
Australian RMBS driven by high quality securities Australian debt securities outstanding 1200.0 1000.0 800.0 $A billion 600.0 400.0 200.0 0.0 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Corporate Debt Issues ABS Debt Issues Govt Debt Issues Source: Reserve Bank of Australia 18
RMBS issuance has declined significantly $A billion 70 60 50 40 30 20 10 0 RMBS Issuance 2002 2003 2004 2005 2006 2007 YTD2008 Term RMBS Repo Note: YTD 2008 includes ~$30bn of repo deals Source data: S&P Ratings Direct & Perpetual; based on calendar year 19
We have adjusted our strategy and our cost base to market conditions Client Source funding Credit assessment and approval Arrears management Mortgage Services Trust & Fund Services Mortgage preparation & settlement Post settlement servicing Variations & discharge Document custody Trustee services Calculation agency & investor reporting In current environment, increased focus on outsourcing opportunities from lenders In current environment, increased focus on trustee activities 20
21 Summary
Summary Current market conditions remain challenging Repositioned cost base but continuing to invest in business Clear strategy to grow business and build shareholder value 22
Questions Roger Burrows Chief Financial Officer Perpetual Limited