INSIGNIA FINANCIAL LTD — AGM Information 2011

Nov 22, 2011

IOOF Holdings Limited

Annual General Meeting 2011

Managing Director’s address

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Good morning ladies and gentlemen

The 2010/11 financial year saw IOOF report an underlying net profit after tax of $111.5 million, a 15 per cent improvement on the prior year, and a statutory net profit after tax of $99.5 million.

Christopher Kelaher – Managing Director

As at 30 June 2011, the money we managed on behalf of our clients was $106.2 billion. Pleasingly, the growth we have experienced in flows to our flagship platforms continues to be ahead of industry growth. More recently, difficult markets have seen this figure fall back to $100.3 billion for the period ended 30 September.

One of our flagship platforms, IOOF Pursuit, recently passed $2 billion in Funds Under Advice, having launched in 2006. The last $1 billion coming in just 18 months.

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Last year I introduced the Business Simplification Program to shareholders. Under that program, the number of superannuation and investment platforms, and IT systems would be consolidated, and our overall property footprint would be reduced by the end of December 2011.

The program has allowed IOOF to reduce risk in its business as well as enhance efficiencies. This is a significant long term benefit for members and shareholders alike.

Achievements that demonstrate the excellent progress we have made to date include:

• Consolidating several floors in two different Melbourne properties into one contemporary office, spanning one floor.

• Outsourcing the management of two IT administration systems to IBM, reducing risk and freeing up resources for other IT projects.

• Reduction of IOOF’s group structure, with 10 fewer companies.

These changes have come at an opportune time. Fewer products and systems changes facilitates IOOF’s timely response to any regulatory change that we may see in future years. Now that the majority of the work is behind us, we are well positioned for future growth.

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IOOF remains well positioned for any change in the regulatory environment.

In a report on the Future of Financial Advice Reforms, an industry body, the Financial Planning Association of Australia wrote:

“ Organisations which own both platforms and dealer groups are unlikely to be affected other than marginally…”

Source: FoFA Reforms Summary of Recommendations, Financial Planning Association of Australia, 20 December 2010

IOOF is one such organisation. As a result, IOOF remains well positioned for any change in the regulatory environment.

DKN expands our distribution capabilities

We see the financial advice & distribution division as pivotal to the success of the vertically integrated model that we operate. That is why in June we announced to the Australian Securities Exchange that we would acquire the financial advice group, DKN. IOOF has had a long association with DKN, courtesy of a substantial shareholding in the group along with the fact that I have been a director of the group since 2009.

In late September, IOOF received the necessary approvals from DKN shareholders and the courts to acquire DKN. While there have been some management changes post acquisition, we have been able to promote existing DKN and Lonsdale employees – a pleasing sign of the strength and depth of that business.

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With the addition of DKN, the number of financial planners IOOF has providing advice to Australians about their financial future will increase substantially.

In addition to existing reserves, IOOF assumed a modest amount of debt post 30 June 2011 to acquire this business.

The acquisition of DKN was facilitated by the purchase of the remaining shares on issue given IOOF already held approximately 19% of DKN. Pleasingly, that original stake in DKN is required to be fair valued to acquisition price which results in a $7m - $8m book profit net of transaction costs. This will not be reflected in IOOF’s underlying result.

The integration of DKN is progressing to plan and we expect to realise synergies in excess of our initial estimates.

Further investment in IT and a reduction in costs

IOOF’s continued focus on costs has seen a four per cent fall in IOOF’s cost to income ratio to 51 per cent on an underlying basis excluding Ord Minnett and benefit funds.

This reduction in costs has been coupled with a continued investment in IOOF’s IT systems, ensuring that they allow IOOF to remain competitive in the market place.

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Solid cost control, a hallmark of the organisation, remains a priority for the business.

Outlook

Taking into consideration the challenging market conditions and the recent acquisition of DKN, I would like to provide some clarity around IOOF’s financial performance for the six months to December 2011. Accurately forecasting a result for the full financial year, however, remains difficult as long as the recent market volatility continues.

As I reminded shareholders last year, IOOF’s businesses are all closely linked to the direction of Global stock markets. With general uncertainty in both global markets and weak consumer sentiment continuing to be a factor, IOOF’s underlying net profit after tax result for the six months to 31 December 2011 is expected to be in the range of $46-$51m. This result incorporates 3 months of DKN, excluding the one-off gain noted above, whose contribution will be clearly disclosed when our interim results are released in February.

Despite volatile and uncertain markets , the underlying business continues to perform strongly. Our flagship platforms are taking market share, we have a growing advisor footprint and we continue to realise the productivity and efficiency benefits of our simplified operating model.

The long term future for IOOF remains both positive and enviable – we stand ready to benefit from an increase in superannuation

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contributions from 9-12% that has recently been proposed by Government. In the past few years, IOOF has been one of the only wealth management businesses to take advantage of the market uncertainty and has rationalised the number of legacy systems and offerings it has. This leaves IOOF in a fortunate position – a company that is already prepared for growth when these government mandated changes take place and markets normalise.

Finally, I would like to take this opportunity to thank the Leadership Group and employees of IOOF whose efforts underpinned our financial achievements again this year.

Thank you Chris Kelaher Managing Director

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