INSIGNIA FINANCIAL LTD — AGM Information 2012

Nov 26, 2012

IOOF Holdings Limited

Annual General Meeting 2012

Chairman’s address

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Good morning ladies and gentlemen,

On behalf of the Board and senior management of IOOF Holdings Limited (IOOF), I would like to welcome you to the Annual General Meeting of your company for 2012.

AM Dr Roger Sexton,

Chairman

This is my first year as Chairman of IOOF however I have served as Deputy Chairman since 2005, and have represented the interests of shareholders since 2002, before the Group demutualised in 2003.

Financial Year overview

The continuing challenging conditions in global economies, the flow on effect from stock markets and significant change in the regulatory regime for financial services has impacted both IOOF and other industry participants during the last financial year.

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Pleasingly, IOOF continued to perform solidly throughout the year, due in part to the fact that our people, products and system have over a long period of time, adapted to the constant changes taking place in the financial and regulatory environment in Australia and globally.

While at first glance IOOF’s financial result for 2011/12 appears confusing given the statutory result of $19.4 million is lower than the Underlying Net Profit After Tax and pre amortisation result of $96.4 million, it is important to note that it is this last figure of $96.4 million that is important, because it is from this amount that we pay shareholders a dividend and can assess the true health of the business.

In addition, the money we manage and administer on behalf of our clients increased this year to $107.3 billion as at 30 June 2012. The most recent quarter end saw this figure improve again to $110.7 billion.

While external conditions have not been in our favour, the Board has worked to ensure the long term sustainability of IOOF through its strategy to grow the business organically and via acquisition. The company launched a brand awareness campaign this year, and made two key acquisitions of financial services groups – DKN Financial Group and Plan B Holdings.

To date, we have seen pleasing results from these aspects of our strategy, with brand awareness in key growth areas lifting

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significantly and with the smooth integration of both DKN and Plan B into IOOF.

A 37 cps total dividend paid to shareholders this financial

year

Historically, IOOF has returned unutilised cash to its shareholders and in 2012, this practice continued.

During the financial year, your Directors declared an interim fully franked dividend of 19 cents and a final fully franked dividend of 18 cents. Combined, shareholders received 37 cents per share this year.

IOOF’s dividend policy of returning 60-90% of underlying net profit after tax and pre amortisation to shareholders also remains unchanged. The dividends declared remain at the top end of that policy range.

Corporate Governance and Regulatory Review

As an organisation, IOOF is focused on the future growth and success of the company, but not at the expense of increasing risk beyond reasonable limits. As such, risk minimisation and a control culture remains very much part of the IOOF fabric.

The group has always adopted a prudent approach to managing capital and risk on behalf of shareholders and will continue to do so.

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The Board is ultimately responsible for the oversight of the Group’s risk management and control framework. Appropriate procedures are in place to ensure the Group’s risks are identified, analysed, monitored and communicated. The Company’s corporate governance policies and practices are reviewed at least annually and are continually developed to ensure best practice is adhered to.

One way in which IOOF ensures appropriate oversight of the business is to operate a common board structure. This means that many of the Directors on IOOF’s main board also sit on each of the subsidiary boards. While this approach increases the responsibility and workload for individual Directors, it promotes a clearer understanding of the underlying activities of each aspect of the business.

The individual performance and contribution from each Director is assessed regularly by way of a Board self-assessment process. I am highly satisfied with the conduct, contribution and performance of all Board members, which has been confirmed by our most recent assessment.

The activities of IOOF are overseen by a number of regulatory bodies including APRA, ASIC, the ASX and Austrac.

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Regulatory change within the financial services industry has been a constant for many years. The recent set of changes introduced by the Federal Government should not impact upon our operations in any meaningful way. This is because, in many respects, the recommended changes have been common practice within IOOF for many years.

Where change is required, IOOF is confident that the integration of new practices will be implemented seamlessly. That said, the continuing changes in regulation and red-tape do impose costs on the business, which are borne by our customers and ultimately by our shareholders. They also create a drag on productivity within the business as staff – and the Directors – spend more and more of their time in complying with new regulations and bureaucratic red-tape.

Australia lives in a globally competitive world and it is important that our policy makers in Canberra are mindful of the need for Australian businesses to be able to operate efficiently and effectively when competing with global players in our market place.

Today’s items of business

Today there are five items of business that we would like you to consider. In order, they are: to adopt the financial statements and reports, the re-election of two directors, to consider the remuneration report as well as a grant of performance rights to the Managing Director and finally, to vote on a resolution regarding the

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provision of financial assistance in connection with the acquisitions of DKN and Plan B.

Item 2, asks shareholders to consider the re-election of two Directors, Mr George Venardos and myself.

Mr Venardos, who has been a Director since 2009 following the merger with Australian Wealth Management, is up for re-election.

Mr Venardos is an active participant of the Board, and is also a member of two sub-committees, namely, the remuneration and nominations committee, and the risk and compliance committee, which he Chairs.

I am also up for re-election. I have been a Director of IOOF since 2002, Deputy Chairman since 2005 and was appointed Chairman earlier this year, in April 2012.

Alongside my duties as Chairman of IOOF, I am Chairman of Perennial Investment Partners Limited, as well as the Chair of the IOOF remuneration and nominations committee and a member of the audit committee.

Item 3 relates to IOOF’s remuneration report that we are asking shareholders to adopt.

IOOF’s remuneration and nomination committee, which I now Chair, is constantly reviewing the most appropriate remuneration

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framework to ensure it remains contemporary, and is competitive in the marketplace in which IOOF operates. Our remuneration policies also aim to align the interests of employees, with those of our shareholders and our clients.

To this end, IOOF now offers eligible senior employees and the Managing Director performance rights instead of options as its preferred long term incentive program. The performance rights are linked to tenure, and in the case of the Managing Director, both tenure and company performance is taken in account.

This year shareholders have been asked to consider a grant to the Managing Director of 250,000 performance rights which, once exercised, will become shares.

In the resolution before you, we have introduced a ‘gateway’ hurdle as well as relative performance hurdle.

In order for any of the performance rights to be eligible to vest, the company must achieve a minimum Return on Equity (ROE) of 1.5 times the long term bond rate (10 year bond yield). Note: that is, if 1.5 times Long Term Bond Rate is achieved, 50% of the performance rights vest. If 2.0 times is met, then 75% of the performance rights vest and 100% only vests if 2.5 times the long term bond rate is achieved. Following that gateway test, the second performance hurdle will be assessed. This hurdle relates to the company’s total shareholder return (TSR) over a 3 year period from 1 July 2012 to 30 June 2015 that is measured against the TSR of a group of companies comprising the S&P ASX 200 as

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at 1 July 2012. Should the company achieve a median TSR performance or better, the performance rights which are eligible to vest will progressively vest in the schedule as set out on page 42 of the annual report. If the company fails to achieve a median performance, all remaining rights will lapse and will not be retested.

The final piece of business shareholders will be asked to consider is approval for financial assistance in connection with the acquisitions of DKN, Plan B and their respective subsidiaries. The cash necessary to fund both acquisitions was, in part, sourced by the company from the Commonwealth Bank of Australia (CBA), who provided a debt facility.

The major effect of the financial assistance is that it will guarantee all amounts payable under the facility agreement.

The resolution requires that 75% of votes cast be voted in favour. If the resolution is not passed, a review event may occur and ultimately, it may result in the CBA cancelling the company’s ability to draw down further funds from the facility agreement and declaring that any funds previously drawn down be immediately due and payable.

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IOOF Foundation

IOOF’s history is steeped in helping people regardless of race, religion or gender, so it’s fitting that the organisation created a means to continue what began over 160 years ago, through the charitable activities of our philanthropic vehicle, the IOOF Foundation. Established in 2002 as part of the demutualisation of IOOF Limited, the IOOF Foundation is dedicated to supporting those in need in the community in which we live.

The Foundation provides grants in support of Australian not-forprofit organisations that are dedicated to bettering the lives of those in aged care and disadvantaged families, youth and children.

As an organisation we are immensely proud of the fact that since 2003, the IOOF Foundation has granted more than $8 million to a number of worthy not-for-profit organisations.

This year alone has seen a large increase in requests for assistance and this increase has only made the Foundation more determined to continue building a secure future for disadvantaged children, families and the aged.

On behalf of the Board and employees of IOOF, my sincere thanks go to Ken Barry, Ron Bunton, Angelika Dickschen, Elizabeth Alexander and Susan Heron for their service to the IOOF Foundation. As the foundation’s Board of Directors, they have committed their time and individual expertise to continuing the great work of this wonderful cause.

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Outlook

IOOF has over 160 years’ experience in providing financial services and wealth management products for our customers. This track record, coupled with our vertically integrated business model, conservative risk management approach and opportunistic acquisitions places us in a strong position to capitalise on future recoveries in market growth and improving flow of funds to superannuation.

We expect to be able to undertake additional acquisition opportunities going forward as our industry sector continues to consolidate and drive for processing efficiencies and cost synergies.

Closing Remarks

In closing, I would like to take this opportunity to thank my fellow directors for their hard work, fellowship and support over the past 12 months. I would also like to thank the Leadership Group and the employees of IOOF for their commitment and dedication during another turbulent year in financial markets.

I now invite the Managing Director, Chris Kelaher to address the meeting.

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