Perpetual Limited — Annual Report 2003

Aug 5, 2003

Perpetual Trustees Australia Limited 2003 Results Briefing

Graham Bradley — Managing Director Michael Stefanovski - Chief Financial Officer

6 August 2003

2003 Financial Results

• $\triangleright$ Eighth consecutive record operating profit : $$68.2m$ - up 16 %
• $\triangleright$ Revenue up 8.6% to $265.0m in tough market
• EBITDA up 13%, reflecting careful expense $\blacktriangleright$ management
• $\triangleright$ Net profit $78.2m, up from $75.6m

Other Highlights of 2003

• Consistent profits in a testing year for our $\triangleright$ industry
• $\triangleright$ Outstanding Australian fund performance all Australian equity funds generated positive returns
• $\triangleright$ Growth in retail/masterfunds offsetting loss of institutional FUM
• $\triangleright$ Continued strong growth in Corporate Trust
• $\triangleright$ New clients won by ASX Perpetual Registrars in a flat market
• $\triangleright$ Increased dividends for shareholders
• Strong financial position $\blacktriangleright$

The same story... Solid performance, solid financial position

• Record profit and improved profitability ➤
  • EBITDA margin
  • Revenue/FUM
• $\triangleright$ 'Healthy' financial position
• APRL improving ➤
• Cash balance and free cash flow $\blacktriangleright$
• $\triangleright$ Dividends to shareholders
• Exposure to asset values $\blacktriangleright$
• Exposure to investor sentiment $\blacktriangleright$
• Sound strategic position $\triangleright$
• $\triangleright$ = profitable growth

Growing EBITDA

	Jun'02$m	Jun'03$m	Change%
Operating revenue	235.7	254.0	8
Investment income	8.4	11.0	31
Total revenue	244.1	265.0	9
Staff related expenses	93.2	103.2	11
Occupancy expenses	6.0	6.2	3
Admin & general expenses	44.2	42.0	5
Total operating expenses	143.4	151.4	6
Earnings before interest, tax, depreciation and
amortisation (EBITDA) excluding investment sales	100.7	113.6	13
EBITDA / Revenue %	41.3%	42.9%

EBITDA Margins

	Wealth	Management		OutsourcedSupport Services	Unallocated			Consolidated
$\mathsf{Sm}$	Jun 03	Jun 02	Jun 03	Jun 02	Jun 03	Jun 02	Jun 03	Jun 02
Revenue	212.1	199.1	41.9	36.6	11.0	8.4	265.0	244.1
EBITDA	91.6	94.2	23.6	17.7	(1.6)	(11.2)	113.6	100.7
%	43.2	47.3	56.3	48.4			42.9	41.3

* Does not include the provision for final dividend of 70c per share to be paid on 3 September 2003 as per AASB 1044

* Does not include the provision for final dividend of 70c per share to be paid on 3 September 2003 as per AASB 1044

Solid performance

	Express Revenue [244.1 $\rightarrow$ 265.0]	$+8.6%$
	$\triangleright$ EBITDA [100.7 $\rightarrow$ 113.6]	$+12.8%$
	$\triangleright$ Profit before tax and realised gains [83.7 $\rightarrow$ 96.1]	$+14.8%$
➤	Net profit (excl realised gains) [58.7 $\rightarrow$ 68.2]	$+16.2%$
➤	Net gains on sale of investments/business	$10.0m
➤	Return on equity	25.1% (28.7%)
➤	Basic EPS [199.9 \rightarrow 207.1]	$+3.6%$
➤	Operating EPS [155.2 $\rightarrow$ 180.6]	$+16.4%$
➤	Dividend - Final $[60 \rightarrow 70]$	$+16.6%$
	$-$ Total [160 $\rightarrow$ 180]	$+12.5%$

Solid financial position

• $\triangleright$ Net assets: $287.4m
• $\triangleright$ Investments at cost $68.8m market value: $102.1m
• $\triangleright$ Cash holdings: $113.2m
• $\triangleright$ Cash and investments (MV) equate to $5.70 per share
• $\triangleright$ Franking credits: $54.8m
• $\triangleright$ Borrowings equate to 16.7% of equity
• Interest expense covered 37 times by EBITDA ➤
• $=$ 'Same old' conclusion
  • PROVIDES capacity and flexibility with:
• $\triangleright$ Solid return on equity
• $\triangleright$ Growing dividend $\pm$ special dividend

Perpetual Investments

• Revenues up 10.3% to $146.5m ➤
• $\triangleright$ Very strong Australian equities fund performance
• High research ratings and shelf space retained $\blacktriangleright$
• Five star mortgage fund grew strongly to $2.4b ➤
• International fund performance improving $\blacktriangleright$
• New funds launched, making progress $\blacktriangleright$
  • Share-Plus, Geared
  • Perpetual James Fielding
  • Infrastructure
• October launch planned for retail masterfund ➤

Personal Financial Services

• $\triangleright$ Revenues $65.6m in line with 2002
• $\triangleright$ Market values affected revenues and earnings
• But gross inflows were solid $760m ➤
• $\blacktriangleright$ Financial advisory model performing well
• $\blacktriangleright$ Overall cost base improved for 2004
• Total funds managed $5.1b $\blacktriangleright$

Corporate Trust

• $\triangleright$ Another strong year revenues up 14.5% to $41.9m
• $\triangleright$ Securitisation assets up 36% to $71b
• RMBS data collection agent for Standard & Poors $\blacktriangleright$
• $\triangleright$ New clients won: SG, Merrill Lynch, Investec, Firstmac, MacLaughlins, Macarthur Cook, James Fielding
• $\triangleright$ Fund governance solutions unit winning new RE mandates

ASX Perpetual Registrars

• $\triangleright$ Revenues up 12% to $48.9m, despite subdued markets
• $\triangleright$ EBITDA up 42% to $12.1m
• Net loss $0.55m (our share), but trends are ➤ positive
• Major new clients: Brambles, Fairfax, AA Co, BHP $\triangleright$ Steel, Investa, Incitec-Pivot, Westpac (Fosters lost)
• $\triangleright$ CBA mandate renewed

Priorities for 2004

• $\triangleright$ Further extend PI products, launch multi-manager retail masterfund
• Maintain strong fund performance, deliver ➤ improved international fund returns
• $\triangleright$ Manage PFS for higher profit yield, while enhancing service quality
• $\triangleright$ Consolidate market position in Corporate Trust
• Continue improvement program at APRL ➤

New Leader — Same Focussed Strategy

• $\triangleright$ No major change in strategic direction
• Investment style and process sacrosanct $\blacktriangleright$
• $\triangleright$ Organic growth the main game
• $\triangleright$ Value accretive acquisitions, at the right price
• $\blacktriangleright$ Commitment to rising shareholder returns

My Eight Year Journey - I

	1995	2003
Revenues ($m)	87	265
Expenses ($m)	72	151
EBITDA ($m)	15	114
Operating PAT ($m)	11.0	68.2
Net Profit ($m)	11.3	78.2
Net Assets ($m)	106	287
EPS $(\phi)$	33	207

My Eight Year Journey - II

	1995	2003
FUM ($b)	2.4	17.4
Staff (FTE)	726	824
Shareholders	3,922	13,000
Shares on Issues (m)	34.6	37.8
DPS $(\phi)$	39	180
Share Price ($) as at 30 June	4.30	30.70
Market Cap ($m)	150	>1,200

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