INSIGNIA FINANCIAL LTD — AGM Information 2007

Nov 12, 2007

==> picture [133 x 101] intentionally omitted <==

IOOF Holdings Ltd ABN 49 100 103 722

2007 Annual General Meeting Questions from Shareholders

The following questions were received from shareholders on the ‘Questions from shareholders’ form that was distributed to shareholders with the Notice of Annual General Meeting and Proxy form.

IOOF has sought to answer those questions.

Where questions were illegible IOOF has sought to contact the shareholder in order to clarify the question and to ensure an appropriate response is provided.

Question

Does the company intend to implement a Dividend reinvestment plan?

Answer

The company has no present intention to introduce a dividend reinvestment plan. This issue is revisited by the Board on a periodic basis.

Question

Why is it necessary to issue performance shares?

Answer

Senior staff are rewarded by a mixture of base pay, short term incentives or bonuses (STI) and some incentives which have longer vesting periods. Those longer vesting components are generally called Long Term Incentives (LTI). Each incentive component helps achieve a benefit for the shareholders with the STI component creating a focus on short term goals and the LTI component creating both a focus on long term goals and improving key staff retention. The Board believes a mix of base, STI and LTI achieves the best outcome for shareholders.

The contemporary practice of issuing performance shares as part of a LTI programme is a proven method in aligning employee interests with long term shareholder interests.

Please refer to the annual report’s remuneration section for more detail. The annual report is available on the IOOF website at www.ioof.com.au (go to the ‘Shareholder centre’ quicklink at the right of the webpage.)

Question

Why do performance shares become achievable after only attaining 50% of TSR as compared to the Group of stated companies? Doesn’t this reward average performance and shouldn’t the shares only apply in the Top quartile?

Answer

Senior staff are rewarded by a mixture of base pay, short term incentives or bonuses (STI) and some incentives which have longer vesting periods. Those longer vesting components are generally called Long Term Incentives (LTI). Each incentive component helps achieve a benefit for the shareholders with the STI component creating a focus on short term goals and the LTI component creating both a focus on long term goals and improving key staff retention. The Board believes a mix of base, STI and LTI achieves the best outcome for shareholders.

Attaining better than median performance (50% of TSR) generates sound returns for shareholders and is within the range of plans that many companies have on issue. The Board’s confident that the small cost to shareholder return drives better long term returns and achieves greater alignment with long term shareholder interest.

The Board believes that the partial allocation that occurs in the range of over 50% to 75% comparable performance ensures that an individual’s performance is appropriately aligned to shareholder interests.

The graduated vesting, triggered at 50% of TSR also assists in retention of key personnel. TSR is an inherently volatile measure of performance. TSR includes capital appreciation of the securities, and movement is a function of changes to the price earnings ratio (PER) and performance. Changes to the PER’s can be outside managements influence. The nature of the measure therefore has the capacity to cause uncertainty in the beneficiaries mind and to decrease the retention element behind the performance share plan.

Please refer to the annual report’s remuneration section for more detail. The annual report is available on the IOOF website at www.ioof.com.au (go to the ‘Shareholder centre’ quicklink at the right of the webpage.)

Question

How is the “underlying” NPAT of $29.2 million (referred to at page 7 of the Annual Report) calculated?

Answer

The consolidated net profit for the period attributable to members of IOOF Holdings Ltd and controlled entities was $22,344,000. Underlying net profit after tax (UNPAT) of $29,264,000, as detailed in our ASX release of our full year results on 28 August, differs from NPAT by $6.9m.

This difference relates to short term non-cash costs arising from the acquisition of the remaining interest in Perennial which occurred in October 2006 and costs that were associated with the revaluation of the liability to equity holders in Perennial subsidiaries and arose from accounting changes flowing from the introduction of AIFRS.

Those costs were detailed in our August Investor Presentation, also released on the ASX on 28 August.

Question

What EPS is used in assessing the options hurdle (cash EPS, basic EPS or fully diluted EPS)? What is the base 2006/2007 number from which performance will be assessed?

Answer

EPS is defined as Underlying EPS (UEPS) which is the product of Underlying NPAT (UNPAT) divided by the weighted average number of shares. UNPAT is initially set as NPAT adding back the short term PIPL acquisition related expenses and charges related to revaluations (as per the June 2007 IOOF ASX market update announcement).

The target EPS is 10% average yearly compound growth in cash EPS. The base 2006/2007 number from which performance will be assessed is 46 cents per share.

UEPS excludes extraordinary or abnormal items.

Such abnormal or extraordinary items are to be defined as revenues and expenditures which are outside the - influence of company management and are non operational.

The number of shares to be used in the UEPS calculation will be the weighted average ordinary shares on issue through the measurement period.

Question

Does the EPS hurdle require EPS to be above 10% per annum for every year in the performance periods in order for the options to vest or does it require over the performance period for EPS to be 10% per annum average annual compound?

Answer

The hurdle for the options is subject to achieving EPS compound growth of 10% for the performance periods (as outlined in the notice of annual general meeting.)

Question

Note 37 (d) to the accounts discloses interest written off of $38,445 and interest provided against of $431,219 during the year on loans to directors from IOOF Group.

Why was it necessary to write off and provide against this interest?

Answer

The IOOF Board believe that ownership in IOOF’s asset management businesses by the key funds managers and selected other staff is essential to the maintenance of performance and the retention of those individuals. PIPL on behalf of the IOOF group funds key staff to acquire shares in the PIPL Group of entities to facilitate that staff share ownership.

The smaller amount of $38,445 related to loans made to finance some of the shares acquired from minority Perennial shareholders during the last financial year. The amount was written off as part of the purchase arrangement with minority shareholders.

The larger amount of $431,219 related to other loans made to finance the acquisition of shares by executives in one of the Perennial subsidiaries. There was a misunderstanding about how the interest would be paid, and at the time the accounts were prepared, the issue was still not clear. Accordingly, a provision was raised.

Question

With regards to the total shareholder return (TSR) hurdle used to assess the proposed share grant, does the peer group include all the companies in the Financials Accumulation and Small Ordinaries indices or are the indices themselves incorporated into the peer group?

Answer

• The initial peer group set by the Board consists of eleven comparable ASX listed companies, the Small Ordinaries Accumulation Index, and the Financial Accumulation Index.

Question

On the basis of non-executive director fees as disclosed in the annual report (pages 45 and 46) and current non executive numbers, IOOF will exceed its non executive director fee cap of $850,000 in 2007/2008. Is this correct?

Answer

The Board is aware of the Non Executive Director fee cap of $850,000 and intends to operate within that cap for the financial year ending 30 June 2008.

Question

Why can’t IOOF Holdings Ltd dividends be directed to the IOOF Funeral Benefit account?

Answer

Dividends are received in your capacity as a shareholder and directed to your nominated bank account.

Funeral benefit bonds are capped by legislation and are not designed to accept ad hoc payments, such as dividend receipts (from any source).