Perpetual Limited — AGM Information 2003

Oct 19, 2003

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Annual General Meeting 2003

Address to Shareholders

By Charles Curran AO - Chairman

Dear ladies and gentlemen

I am pleased to welcome you to the 2003 annual general meeting of Perpetual Trustees Australia Limited. This year marks our 40th year as a listed public company but, as shareholders will be aware. our group commenced operations almost 120 years ago.

In addition to the general welcome to shareholders. I extend a special welcome to Mr Graham Bradley, our managing director for the past eight years, from 1995 to 22 September 2003.

During this time. Graham made a significant contribution to the growth and development of Perpetual as the leading independent fund manager, personal wealth manager and corporate trustee in Australia. As managing director, Graham developed and led a team which has increased Perpetual Investments' funds under management from $2.4 billion in 1995 to more than $18.6 billion currently, with group operating profit increasing from $11.0 million in 1995 to $68.2 million in the year to June 2003.

Graham has also made an important contribution in the wider corporate field, particularly in relation to corporate governance issues, and in community organisations. The board values his significant contribution, which has been widely acknowledged, and on behalf of shareholders I thank him and wish him well in his future endeavours.

I invite shareholders to acknowledge Graham's contribution by acclamation.

The 2003 annual report, issued in August, details the group's financial performance for the year to 30 lune. I will comment on the results and the position of the company, provide an update on the significant corporate developments since this time and give an overview of our priorities going forward. I will also introduce our new managing director, David Deverall, who will address you shortly.

Strong profit performance

I am particularly pleased to report increased earnings and revenues in a year that has been a testing one, both for Perpetual and for the Australian wealth management industry, as the value of clients' assets under management was eroded by falling stock markets in the nine months leading up to the war in Iraq.

Despite these adverse conditions our revenues for the year were $265.0 million, an increase of $20.9 million over last year, which is a continuation of our consistent growth in core revenues over recent years. Our growth is also reflected in our improved EBITDA and profit after tax for the year. EBITDA improved by 12.8 percent from $100.7 million to $113.6 million. Profit after tax and before gains on

Perpetual Trustees Australia Limited

ABN 86 000 431 827

sales of investments was $68.2 million, compared to $58.7 million last year. The board views this increase of 16.2 percent over last year as a good result in view of the difficult business environment. Including gains on sale of investments, net profit after tax was $78.2 million, an increase of 3.5 percent over last year.

The increase in profit after tax contributed to our basic earnings per share rising from 199.9 cents to 207.1 cents, which continues our strong track record of consistently growing earnings per share in recent years.

As a result of our improved profitability, the board has again increased dividend payments for the year. from $1.60 per share last year to $1.80 per share fully franked, an increase of 12.5 percent. This total payment included a special dividend of 50 cents per share fully franked, paid in June. The board intends to pay a special dividend again of not less than 50 cents per share in June 2004.

The group maintains its strong financial position, with net assets of $287.4 million, which includes cash holdings of $113.2 million, an investment portfolio valued at $102.1 million, and we have accurridated franking credits of $54.8 million at 30 June. Our borrowings equate to only 16.7 percent of equity.

This strong financial position, coupled with our healthy dividend franking account, provides us with the flexibility to enhance shareholder value by exploiting growth opportunities, paying fully franked regular and special dividends, and buying back Perpetual shares when appropriate.

As part of our capital management approach, shareholders know that your board is committed to limiting growth in the number of shares on issue, so that each share will maintain its proportional entitlement to the earnings and value of the company. To achieve this, during the year the company outlaid $37 million on purchasing shares.

Since our new managing director joined us less than one month ago, I will now provide a brief report on our operations over the past year.

Business update

Perpetual Investments

Perpetual Investments had another successful year. with revenues increasing 10.3 percent to $146.5 million. During the year the business retained its very high independent research house ratings, and was recognised when Perpetual was again named 'Australian Equities Fund Manager of the Year 2002' by leading research house Morningstar and 'Personal Investor Magazine Fund Manager of the Year.'

Our disciplined investment philosophy applied by our highly experienced team of investment professionals generated strong relative returns for our investors. This is the second consecutive year when, despite declining markets, Perpetual generated positive returns for investors in our Australian equity funds. For example, in the year to 30 June, our Industrial Share Fund produced a pre-fees return of 4.9 percent compared to the S&P/ASX 300 Industrials Accumulation Index return of $-1.0$ percent. In the year to 30 September, the Industrial Share Fund has achieved returns of 4.7 percent (pre-fees) compared to the benchmark return of 3.7 percent. This fund has now earned a positive return for 21 consecutive financial years.

Our highly rated mortgage fund attracted strong inflows during the year, and at 30 lune had a total of $2.4 billion under management.

We are continuing to diversify the range of products and services we offer to investors. During the year Perpetual Investments launched a series of new retail investment funds including our SHARE-PLUS fund, our geared Australian share fund, and a wholesale property securities fund

through our joint venture company, Perpetual James Fielding, which has made a promising start.

Later this month, Perpetual Investments will launch its multi-manager retail platform 'WealthFocus' to financial advisers nationally. 'WealthFocus' provides financial advisers and their clients with over 50 single and multi-manager fund choices in three different structures for investments, personal superannuation and allocated pensions.

An area of some disappointment for investors during the year was the poor performance of our international equity funds. During the year, steps were taken in consultation with Fidelity International to turn that performance around, and since this time we have seen a pleasing improvement in performance. In the year to 30 September 2003, the Fidelity Perpetual international share fund has returned 4.8 percent. (pre-fees), compared to the MSCI World Accumulation Index $A (ex-Aust.) return of 3.9 percent.

As at 30 June 2003, Perpetual Investments total funds under management were $17.4 billion. Inflows into our retail and masterfund products were $1.8 billion during the year. As at 30 September 2003, total funds under management have further increased to $18.6 billion.

Personal Financial Services

Revenues for the year were steady at $65.6 million. While declines in market values affected revenues and earnings for the business, inflows remained solid with $760 million in gross new fund inflows in 2003. The private client business continued to receive strong investor support, with the addition of 560 new portfolio management accounts entrusting a further $315 million to our care. Assets managed by our philanthropic foundations grew by $45 million, and now total $630 million.

We successfully completed in 2003 a multi-year program of operational and technology improvements and also implemented a number of efficiency initiatives. This contributed to an improvement in earnings for this division for the year and our operations will benefit from the lower cost base in 2004 and beyond.

At 30 lune 2003, total funds managed for our private clients, estates, personal trusts, superannuation clients and philanthropic foundations were $5.1 billion.

Corporate Trust

Corporate Trust revenues increased by 14.5 percent to $41.9 million as we maintained market leadership for many of the services we provide to our capital market and funds management client base. Assets under securitisation increased by 36 percent on the previous year, to $71 billion.

The securitisation business maintained its strong market position, gaining several new clients during the year including Societe Generale, Merrill Lynch, Invested and FirstMac. The development of our value added services to the securitisation market received a major boost during the year following our appointment by Standard & Poor's to act as its sole data collection agent for its residential mortgage backed securitisation rating surveillance service in Australia.

A further development in our asset support services was our appointment as cashflow servicer of the residential mortgage portfolio of AIMS Home Loans, which complements our existing commercial mortgage servicing operations. Our Property Services business continued to expand its support. services to the property market, and new mandates won during the year include James Fielding Direct, MacLaughlins Financial Services and Macarthur Cook Investment Managers Limited.

The Fund Governance Solutions business continues to provide valuable responsible entity and trustee services to selected clients in the funds management industry.

ASX Perpetual Registrars Limited

Revenues increased by 12 percent to $48.9 million. despite a subdued share market. While ASX Perpetual's profit was adversely affected by these subdued trading conditions, cash returns as measured by EBITDA increased 42 percent from $8.5 million last year to $12.1 million in 2003, allowing ASX Perpetual to begin repaying borrowings associated with its investment in new systems.

ASX Perpetual enjoyed its first full year of technology independence and won significant new clients including Brambles Industries, John Fairfax Holdings, Investa Property Group, David Jones employee share plan and Westpac Banking Corporation. More recently, Commonwealth Bank of Australia renewed its registry contract with us for a further three years.

ASX Perpetual has laid a solid foundation for its future growth and is well positioned to take advantage of an increase in the level of corporate actions and initial public offerings.

CEO Appointment

It is with great pleasure today that on behalf of the board I introduce Perpetual's new managing director and chief executive officer, Mr David Deverail.

Mr Deverall has held senior positions in Macquarie Bank over the past seven years and has a strong background in the wealth management industry. He commenced his career in management consulting with The LEK Partnership and Bain International before moving to Macquarie Bank in the specially created role of Head of Strategy.

Analysis and Planning. Mr Deverall was next appointed Head of Institutional Business at Macquarie Funds Management, and then Group Head of Macquarie Funds Management, a position which he held for the past three years.

Highlights of Mr Deverall's funds management experience include the development of the new product concept of true indexing, and expanding Macquarie's funds management business into niche geographic products and markets, including the development of joint ventures in Malaysia, South Korea and Taiwan, together with niche asset management operations in Hong Kong and the UK. During his tenure, Macquarie's total funds under management increased from $24.1 billion in lune 2001 to more than $33.5 biffion in lufy 2003.

Mr Deverall's combination of strategic ability, funds management experience and commercial drive are ideally suited to lead Perpetual through its next growth phase. His specific experience in product innovation and management across a broad range of products and services made him an outstanding candidate for his new role. Mr Deverall's skills will also assist our executives in further growing our corporate trust services to fund managers, superannuation trustees and securitisation participants, as well as the provision of wealth management services to estates, trusts and superannuation management for individuals, families and philanthropic foundations.

I will call upon Mr Deverall to address the meeting shortly and discuss his outlook for the group and the wider financial services industry. It is the intention of the board and Mr Deverall to maintain a strategy focused on our core businesses of wealth management and corporate trust. We continue to adhere to our strict acquisition criteria, considering only those opportunities that will generate good returns for shareholders. Mr Deverall will lead the group through its next phase of growth and development, and will continue to build upon our

established operational base and strong market position. The board welcomes Mr Deverall to lead the Perpetual team and looks forward to working with him in the coming years.

Corporate Governance

Perpetual is strongly committed to meeting the highest standards of corporate governance. Your Board welcomes the adoption in March 2003 by the ASX Corporate Governance Council of the ASX Guidelines and believes that Perpetual's current policies and procedures comply in all substantial respects with the ASX Guidelines, and, in some instances go further.

Shareholders will note in the annual report the expanded Corporate Responsibility Statement, which sets out the board's approach to important governance matters. The board has made a number of changes during the past year to further reinforce our commitment to best practice, and these are described more fully in the annual report. Briefly, the changes include:

• Adoption of the definition of independence recommended by the ASX Guidelines. The board has confirmed all seven non-executive directors are independent, none having relationships or circumstances that impair their ability to exercise independent judgement in the best interests of Perpetual shareholders.
• Establishment of a separate Nominations i. Committee comprising three non-executive directors. The Committee periodically reviews the skills and experience of the board and recommends candidates to fill board vacancies.
• Discontinuance of the existing retirement 露 benefits scheme for all non-executive directors appointed after 1 July 2003.
• B Strengthening performance hurdles applying to senior executive remuneration arrangements.

Profit outlook

I am pleased to advise that profit for the first quarter of this year is ahead of the same period last year. This reflects increased fund inflows as markets continue to improve, and our continued careful cost management.

Perpetual is well positioned to continue its good performance for Australians seeking a trusted, independent wealth manager or skilled corporate trustee. Our progress will be more fully reported upon in our half-year profit announcement in February 2004.

In closing, on behalf of the board. I would like to thank our executives and all our staff for the good result achieved in a challenging year. I again express appreciation of Mr Graham Bradley's contribution and I now call upon our new managing director, Mr David Deverall, to address the meeting.

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Charles P Curran AO Chairman

Address to Shareholders

By David Deverall - Managing Director

Thank you Chairman and good morning ladies and gentlemen

It is an honour to be here today as your new managing director and I welcome the opportunity to work for you in this capacity.

Perpetual is one of Australia's leaders in the provision of wealth management and corporate trust services. I am very pleased to have the opportunity of leading its highly regarded team through the next phase of growth.

As a former competitor, I have long admired Perpetual's success and strong corporate culture. Perpetual's position as an independent wealth management and corporate trustee company with a trusted reputation and established brand offers excellent opportunities for future growth. Australians are increasingly seeking a reliable independent wealth manager to help to structure their investments in order to provide for their security and lifestyle in retirement.

Perpetual has a long history of helping Australians to secure their financial independence and grow their wealth from generation to generation. For almost 120 years Perpetual has provided trustworthy advice and services to individuals. families, institutions and finance professionals; it is this tradition and experience that forms a solid platform from which we can further build on our core strengths in wealth management and corporate trust for the future.

Our strengths

Perpetual's businesses operate in markets that are poised for continued growth. Superannuation is legislated for growth while demand for personal and DIY superannuation, financial planning, and managed funds will increase as Australia's baby boomer demographic retires. Our proven investment process has produced enviable results for investors, and our investment team is regarded as among the most talented in the industry. As a result, we are well positioned to add value for this significant and growing group of investors in the

years to come. While we already occupy strong market positions in a number of core businesses, we will continue to work toward growing and expanding our market share in these and related segments.

Continued good performance is the key to our success - for our clients, investors, staff and shareholders. While good investment performance is vital, we need to continually work at improving our performance in other areas such as client service, staff development and technology and these remain a strong focus and priority for our business.

My contribution

So what are the qualities and skills I can bring to continue the growth and leadership of the Perpetual group?

To assist in meeting the demands of running this growing and diversified business, I will be drawing upon my background in strategic management, having had responsibility at both the business unit level, and the corporate level, to develop and execute strategies.

During my years as a management consultant working with a wide variety of companies, and in my various roles at Macquarie Bank, both internally and with joint venture partners, I have developed insights into the elements that make a successful organisation. Having also been involved in growing businesses organically, as well as creating growth through joint ventures and acquisitions, I intend to draw upon these experiences to assist in growing the operations of Perpetual.

An important part of my role is to create an environment for our people which allows them to excel, to be inspired and learn from their colleagues, and to strive for continued success on behalf of their clients and shareholders.

My management style is open, interpersonal, creative and flexible. I am enjoying leading the talented and motivated team at Perpetual, and I will be working with the Group Executives to further develop an internal culture where employees are empowered to draw on their skills and initiative to provide first rate services for our clients.

Recent focus and activity

Since commencing my role, I have been actively reviewing the opportunities and priorities within the group, meeting clients, learning our processes and business models, and developing an appreciation of our internal culture.

In close consultation with each of the Group Executives and the board, I have been working to formulate our strategic vision for each of our businesses, to help identify our growth priorities. While this is an ongoing activity, it will be a particular focus for me in the coming months.

I have also spent time looking into ways we can further implement policies and practices to ensure Perpetual continues to be an employer of choice for talented professionals. As part of this program, I have started canvassing employees from all levels across the group using different forums to gain their feedback and input.

Perpetual's outlook

While it is still too early to comment on particular strategic initiatives, I would like to broadly touch on some of those considerations which I will be working towards with my team.

Firstly, I believe Perpetual should continue to diversify its businesses in the wealth management market and to continue to build on our market leadership in corporate trust.

Our diversification strategy is likely to focus mainly on organic growth and development, but may also include joint ventures and acquisitions.

Any acquisition will need to support our existing businesses, drawing on our core strengths, and must meet our strict investment criteria. We will be proactive in seeking acquisitions and organic growth opportunities which will advance the strategic vision for our businesses. We have the financial capacity to make acquisitions when we identify the right opportunity. However we will not compromise on our strategic and financial criteria for the sake of making an acquisition.

Secondly, I remain committed to Perpetual's highly regarded and outstandingly successful investment style and process, and the team will continue to seek value and strong performance for our investors.

Thirdly, I will continue to evolve the internal culture at Perpetual to reflect the dynamic environment in which we operate, and to recognise the valued contribution our people make to the success of our clients, shareholders and the group as a whole.

Finally, we will continue to provide our products and services cost effectively to ensure each of our businesses is providing superior returns for shareholders, while continuing to meet the highstandards our clients have come to expect from Perpetual.

In conclusion, it is an honour to accept the role of managing director of Perpetual. I look forward to meeting shareholders at the conclusion of the AGM, and to working for you in the years ahead.

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David Deveraft Managing Director 20 October 2003

Comparative financial performance Financial years 1998 - 2003

Performance measures	Units	1998	1999	2000	2001	2002	2003	GrowthRate 1
Revenue from trading operations.	$m	129.2	197.8	238.9	281.1	235.7	254.0	14.5%
Net investment income	$m	5.7	5.3	6.3	9.2	8.4	11.0	14.1%
Total revenue	$m	134.9	202.9	245.2	290.3	244.1	265.0	14.5%
EBITDA	$m	40.3	60.3	71.4	82.0	100.7	113.6	23.0%
Profit from trading 2 before tax	$m	27.3	39.5	43.1	48.7	75.3	85.1	25.5%
Profit margin from trading	%	21.1	20.0	18.0	17.3	31.9	33.5
Operating profit before tax andrealised gains on investment sales	$m	33.0	44.6	49.4	57.9	83.7	96.1	23.8%
Operating profit after tax andrealised gains on investment sales	$m	25.1	30.7	40.3	54.9	75.6	78.2	25.5%
Earnings per share	cents	72.5	86.9	110.1	147.4	199.9	207.1	23.4%
Return on shareholders' equity	%	21.1	20.0	20.3	23.4	29.5	27.2
Dividend paid, declared or provided for 3	$m	17.6	21.8	23.9	31.8	60.7	68.0	31.1%
Total shareholders' equity	$m	118.8	153.6	198.5	234.2	256.6	287.4	19.3%
Capital expenditure	$m	15.8	21.0	11.4	26.2	12.7	7.5
Share price at 30 June	$	14.30	24.00	25.97	40.91	42.90	30.70	16.5%
Share price range for year	$low	8.20	12.70	18.60	25.60	33.00	25.10
	$high	14.30	25.00	26.10	41.00	48.60	43.40

1. Compound annual growth rate.

2. Profit from trading excludes investment income and realised gains on investment sales.

3. Includes special dividends paid or provided for.

Australian Capital Territory

Level 4 10 Rudd Street Canberra ACT 2601 02 6248 7977

New South Wales

39 Hunter Street Sydney NSW 2000 02 9229 9000

Queensland

Level 10 Riverside Centre 123 Eagle Street Brisbane QLD 4000 07 3834 5656

South Australia

Perpetual House 89 King William Street Adelaide SA 5000 08 8239 4400

Victoria

Level 28 360 Collins Street Melbourne VIC 3000 03 8628 0400

87 High Street Kew VIC 3101 03 9853 3355

Western Australia

Level 29 Exchange Plaza 2 The Esplanade Perth WA 6000 08 9224 4400

ASX Perpetual Registrars Limited Level 8 580 George Street

Sydiney NSW 2000 02 8280 7100

Level 4 333 Collins Street Melbourne VIC 3000

03 9205 4800

Website:

www.perpetual.com.au

$10%$ P1322