INSIGNIA FINANCIAL LTD — M&A Activity 2011

Jun 26, 2011

IOOF and DKN Financial Group enter into Scheme Implementation Agreement

Information pack 27 June 2011

Disclaimer

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Issued by IOOF Holdings Ltd ABN 49 100 103 722. The information contained in this presentation is given in good faith and has been prepared from information believed to be accurate and reliable. The information presented does not take into account your individual financial circumstances and it is not designed to be a substitute for specific financial or investment advice or recommendations and should not be relied upon as such. You should consider talking to your financial adviser before making an investment decision. So far as the law allows, IOOF excludes all liability for any loss or damage whether direct, indirect or consequential.

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The Offer

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• IOOF Holdings Ltd (“IOOF”), IOOF’s subsidiary Austselect and DKN have entered into a Scheme Implementation Agreement

• IOOF, through Austselect, proposes to acquire all of the shares of DKN Financial Group (“DKN”) that it does not already own via a Scheme of Arrangement (“Offer”)

• All cash offer of A$0.80 per DKN share implying A$115.4m equity value[(1)] (A$94.1m for the shares IOOF does not already own[(2)] )

• In addition, DKN shareholders will receive up to a $0.025 dividend per DKN share (unfranked) in relation to DKN’s second half 2011 results, before the Offer becomes effective

• DKN’s Independent Directors unanimously recommend that DKN’s shareholders vote in favour of the transaction:

• In the absence of a superior proposal emerging; and

• Subject to the findings of an independent expert that the Offer is fair and reasonable and in the best interests of DKN shareholders

• Conditions to the Scheme include:

• Approval by DKN shareholders eligible to vote in the Scheme

• Material adverse effect and other conditions

• Court & regulatory approvals

• Other terms:

• “No talk” and “no shop” provisions subject to usual fiduciary exceptions

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(1) Excluding options (2) IOOF currently has a relevant interest in DKN of 18.49%

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Transaction rationale

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• Acquisition is consistent with IOOF’s existing strategy

• Focus on advisor driven growth

• Value accretive acquisitions

• Longstanding relationship with DKN as a business partner and long term shareholder

• Adds strength and depth to IOOF distribution network

• Lonsdale Financial Group - 100 wealth management practices

• Financial planning network of over 300 wealth management practices

• Opportunity to broaden DKN’s product offering and accelerate its growth under IOOF’s larger vertically integrated model

• Maintain current Lonsdale operating model and client proposition

• IOOF has a long history in operating multiple dealer groups with a light touch approach

• Financially attractive

• Expected to be EPS accretive in year 1

• Funded from existing cash reserves

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Offer premia analysis

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The offer price of A$0.80 represents a premium to DKN’s recent trading performance

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Premia summary
A$ per share
0.90 56.9% 64.6% 50.4%
premium premium premium
0.80
0.800
0.70
0.60
0.50 0.532
0.510
0.486
0.40
0.30
0.20
0.10
0.00
Pre-announcement close on 10 June 1 month VWAP 3 month VWAP Indicated offer price
2011
Equity value (A$m) 73.6 70.1 76.7 115.4
Price / LTM Earnings 10.1x 9.6x 10.6x 15.9x
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Note: Multiples based on normalised figures to 31 December 2010 as per 2010 DKN Annual Report and 1H2011 DKN Interim Report. Source: IRESS, 2010 DKN Annual Report, 1H2011 DKN Interim Report.

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DKN businesses

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DKN is a leading provider of financial services solutions to financial wealth management practices

DKN

Advice channels

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Lonsdale Equity Partners Boutique Wealth
Management Practices Services
Over 100 wealth Equity partnership with 7 wealth
management practices management practices Broker network of over 300 practices
DKN’s Boutique Wealth
Lonsdale Financial Group is a
DKN is a minority equity partner in a Management Practice network Platform Solutions
leading full service dealer group with
number of successful wealth provides members with group
a network of wealth management
management practices buying discounts on products and
practices
practice management solutions
Product Solutions
Licensee Solutions
Acquisition
& Succession Solutions
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Product Solutions
Licensee Solutions
Acquisition
& Succession Solutions
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Indicative timeline

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• 27 June 2011 Date of announcement

• 1 August 2011 Lodge draft Scheme Booklet with ASIC

• 18 August 2011

• First Court Date

• 25 August 2011

Last date of dispatch of Scheme Booklet

• Late August 2011 Determination, record date and payment of the Dividend

• 26 September 2011

• Scheme Meeting Date

• 3 October 2011

• Second Court Date

• 4 October 2011

• Effective Date

• 11 October 2011

• Record Date

• 17 October 2011 Implementation Date

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Conclusion

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• IOOF, via Austselect, to acquire DKN through a recommended Scheme of Arrangement for cash consideration of A$0.80 per share

• DKN shareholders will also receive up to a $0.025 dividend per DKN share (unfranked) in relation to DKN’s second half 2011 results

• Strategically and financially attractive opportunity for IOOF

• Strengthens IOOF’s distribution network

• Deep knowledge of the DKN business

• Expected to be EPS accretive in year 1

• Maintain current Lonsdale operating model and client proposition

• Opportunity for DKN shareholders to realise value at a premium

• Scheme is expected to be implemented by 17 October 2011

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