Perpetual Limited — Annual Report 2004

Aug 23, 2004

Growth through Continuity

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The group's operating profit after tax attributable to members of the company for 2004 was \$88.2 million, an increase of 29 percent. This strong result was underpinned by stronger financial markets, improved investor confidence, the strength of our core businesses in Wealth Management and Corporate Trust and the improved profitability of ASX Perpetual Registrars Limited.

Perpetual Trustees Australia Limited ('Perpetual') is an independent, diversified financial services group established in Australia 118 years ago. Our origins as a trust company have created our unique status as one of the most trusted providers of financial services in Australia. Perpetual is an ASX Top 100 company (ASX: PPT) with a market capitalisation of A\$1.8 billion as at 30 June 2004 and offices located in all mainland state capitals throughout Australia.

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Perpetual's perpose is to build shareholder wealth over the long term by creating value for our clients and partners through the provision of outstanding financial products and services in our chosen markets.

We do this by focusing on our key competitive strengths, which are:

• 1. The management of funds management teams, philosophies and processes
• 1. Strong relationships with the financial planning community
• 1. A trusted brand; and
• 1. A long history as a leading provider of fiduciary services to individuals and corporates.

We are committed to attracting and retaining talented professionals to cater for the needs of our shareholders, clients and business partners. We do this by creating an environment that recognises and rewards team-based excellence and provides. clear opportunity for career progression and development.

Our corporate values act as a reference point for all employees. and form the basis of our daily approach to the way we dobusiness. They capture the essence of our historical success, our trustworthiness, consistency of performance and desire to succeed together. The theme of our 2004 annual report is the launch of our refreshed corporate values and each of thesevalues has been introduced in this report.

We do what we say, treat the assets of others as our own, are risk aware and do what is right by our stakeholders.

Wealth Management

Perpetual is one of Australia's leading independent providers of wealth management products and services.

Our Asset Management team is responsible for producing investment returns; our Wealth Management team is responsible for creating a suite of wealth management. products, providing the marketing, sales and sales support, technology solutions and customer service for these products. as well as financial planning advice.

By working as a fully integrated unit the asset management. and wealth management teams deliver wealth management. products and services to our clients through Perpetual Investments, Perpetial Private Clients and Wilson Dilworth. Throughout this report the integrated unit is referred to as-'Wealth Management'.

Perpetual Investments is one of Australia's most highly. regarded investment managers offering products and services for retail, masterfund and institutional investors.

Perpetual investments has been widely recognised as an industry leader by independent research organisations and industry peers through a number of awards as detailed onpage 32 in this report. Perpetual Investments offers its investors strong investment capabilities across a range of assetclasses including: Australian and international equities, property securities, infrastructure, mortgages, fixed interest and cash.

Perpetual Private Clients manages financial assets for over 5,000. private clients, estates, trusts and philanthropic foundations. It provides a comprehensive suite of services including financial. planning and advice, personal portfolio management, superannuation, taxation advice, estate planning, administration. and trustee services and advice on philanthropic foundations.

Perpetual Private Clients alms to be the pre-eminent provider of tailored wealth management services to the high net worth and emerging high net worth market in Australia.

Wilson Dilworth offers a range of superannuation products. through its network of referring accountants, based in Melbourne.

Corporate Trust

Perpetual's Corporate Trust business is the pre-eminent provider of trust and administration services to corporates and institutions. in the funds management and debt capital markets. Corporate Trust offers investor protection services through a range of products and services that are underpinned by our independence, business processes and proven track record. Corporate Trust clients are offered services through two main areas of operation ~ Debt Markets, which provides securitisation and corporate and structured finance services to the debt capital market and Fund Services, which provides responsible entity, property and venture capital services to the funds management market.

Corporate Trust has a strategic allance with The Bank of New York to offer integrated corporate trust solutions to Australian. debt issuers. This alliance provides our clients with access to The Bank of New York's global network and its array of services to the international capital markets.

investors recognise the importance and value of having animpartial, independent party to act in their interests. The Corporate Trust business helps ensure investor interests are protected with sound management, extensive experience incompliance and solid financial systems.

Group Finance

The Finance group performs the reporting, taxation, investor relations and financial analysis functions for Perpetual and aligns. the group's financial reporting to the overall strategic plan.

Group Risk and Compliance

Group Risk and Compliance works to promote a culture. of risk awareness and acceptance and is responsible for the development and maintenance of the group's risk management framework.

Human Resources

The Human Resources division aims to increase the engagement and alignment of our people through the provision. of consulting services across our range of businesses.

Information Technology

Our Information Technology division aims to create business advantage and value by implementing effective technology. solutions across Perpetual's range of businesses.

Legal and Secretariat

The Legal Services group provides legal services and solutions. to manage legal risk across Perpetual. The Secretariat group provides company secretarial services to the Perpetual group, as well as ensuring Perpetual's commitment to corporate governance is carried out.

ASX Perpetual Registrars Limited

(50/50 Joint Venture with the Australian Stock Exchange Limited)

ASX Perpetual Registrars Limited (ASX Perpetual) is Australia's second fargest share registrar, providing a full-range of registrymanagement services to more than 300 #sted entities. This equates to nearly 7.5 million shareholder records. The specific areas of expertise that ASX Perpetual Registrars offers to its clients are:

• Registry maintenance and dividend payments
• Strategic shareholder communications
• Capital markets activities including initial public offerings, rights issues, share purchase plans, buy-backs, takeovers, mergers and acquisitions, etc.
• General meeting and proxy voting management
• Employee share and options plans.

Perpetual's Executive Committee

1. Richard Boyer BA Group Executive - Information Technology

Richard joined Perpetual in October 1997. He manages our Information Technology division which has responsibility for providing the technology platforms and services essential to the group.

1. Jane Couchman BA, LLB General Counsel

Jane joined Perpetual in March 1998. Jane is responsible for overseeing Perpetial's legal teams and for providing legal counsel to all businesses within the Perpetual group.

3. David Deverall BE (Hons), MBA Managing Director

David joined Perpetual as Managing Director in September 2003. He is responsible for the overall profitability and development of the Perpetual group.

4. Gerard Doherty

Group Executive - Wealth Management

Gerard joined Perpetual in March 1993. He is responsible for the growth and profitability of Perpetual's wealth management. businesses -- Perpetual Investments, Perpetual Private Clients and Wilson Dilworth.

1. Emilio Gonzalez CFA, BCom (Econ.) Chief Investment Officer

Emilio has been with Perpetual since July 1990. He was appointed Chief Investment Officer in March 2001 and is responsible for the management of our asset management. team and investment processes.

1. Ivan Holyman B.Ec, LLB Chief Risk Officer

Ivan joined Perpetual in June 2004, Ivan is responsible for all risk management and compliance across the group.

1. Paul McAuley BA (Psychology) Group Executive -- Human Resources

Paul joined Perpetual in October 2001. He is responsible for our remuneration, performance management and recruitment. processes, as well as leadership development and other people related policies.

1. John Nesbitt BFA, CA, CPA Chief Financial Officer

John was appointed as Chief Financial Officer in January 2004. His responsibilities include management of the finance, administration and investor relations functions across the Perpetual group.

1. Phillip Vernon BEc, MCom, MBA, FCPA Group Executive - Corporate Trust

Phillip has been with Perpetual since 1982. He is responsible for Perpetual's Corporate Trust division which provides trust and administration services to corporates and institutions in the funds management and debt capital markets.

1. Joanne Hawkins BCom, LLB, Grad.Dip CSP, FCIS. Company Secretary

Joanne joined Perpetisal in November 2002 and was appointed. Company Secretary in June 2003. Joanne is responsible for the company secretarial function across the group.

Perpetual's Commitment to Philanthropy

Perpetual is Australia's largest manager of charitable foundations and trusts. Perpetual provides a range of professional services to the philanthropic market including the provision of trustee services, establishing and managing prescribed private funds and managing the investments of charitable foundations on behalf of the trustees. Where Perpetual acts as trustee of a philanthropic foundation, the capital funds of the foundation are held in perpetuity.

Some of the well known charitable foundations we manage are:

Ramaciotti Foundations for Biomedical Research Established by Clive and Vera-Ramaciotti, the Foundations support biomedical research throughout Australia. With capital of over \$50 million, the Foundations have gifted lover \$40 million to more than 3000 biomedical research programs across Australia in the past 30 years.

Nita B Kibble Awards for Women Writers

The Nita B Kibble awards for women writers were established in 1994 to recognise women writers of fiction. or non-fiction classified as 'life writing'. Two awards are made each year: the \$20,000 Kibble Award for best book and the \$2,500 Dobble Award for a first published work.

Helen Lempriere National Sculpture Award

Australia's richest art prize, the Helen Lempriere National Sculpture Award is an annual art scholarship valued at: \$120,000. Through the Helen Lempriere bequest, the award is designed to attract and benefit Australian artists. of the three dimensional art form.

The Perpetual Foundation

To demonstrate Perpetual's own commitment to the Australian community, we established The Perpetual Foundation in 1997. Each year, Perpetual donates a portion of its pre-tax profits to The Foundation to support charitable endeavour in five categories -- social welfare, education, medical research, the environment and the arts. The Foundation also accepts donations from individuals and organisations to support causes. selected by donors.

The Perpetual Staff Giving Program

In keeping with our corporate values of trustworthiness and succeeding together. Perpetual recently established the Perpetual Staff Giving program, to support employees who wish to give back to the community.

For every dollar donated by our team, Perpetual matches this contribution through The Perpetual Foundation. By deducting contributions directly from employees' pre-tax salary, the Perpetual Staff Giving program ensures that each charity. directly receives 100 percent of the donation. This removes the associated administrative costs for the charity for processing. contributions and ensures the donations have greatest effect.

Perpetual established the Staff Giving program in October 2003. and was one of the first organisations to implement this program in Australia. To maximise the impact of our collective efforts, six community organisations, each with a dedicated program, were selected to receive our support. These organisations are:

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The Inspire Foundation Reach Outliprogram www.inspire.org.au

The Australian Bush Heritage Fund www.bushhestage.asn.au

everyone's family

The Smith Family's Learning for Life program. www.smithfamily.com.au

The Cancer Council www.cancer.org.au

The Starlight Foundation's Starlight Express Vans www.starlight.org.au

The House with no Steps www.hwns.com.au

We set higher standards, question the status quo, generate innovative solutions, learn from our experiences and search for better ways

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Chairman's Report to Shareholders

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Dear Shareholder

On behalf of the board of Perpetual Trustees Australia Limited, I am pleased to present the group's annual report for the year ending 30 June, 2004. It has been a particularly important year for Perpetual, with the appointment of our new managing director, Mr David Deverall and several other senior executives and with action taken to restructure our operations and re-define our strategic plan.

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Bividend per share up by 11%

Mr Deverall has a strong background in the wealth management industry having held senior positions in Macquarie. Bank over the last seven years; he has an extensive overall understanding of the wealth management business and the wider financial services industry. Since his appointment, Mr. Deverall has overseen the amalgamation of our Personal Financial Services business with the operations of Perpetual Investments and he has led the management team in the development of a new strategic plan for the group.

In this report, i review our financial performance for the year, detail our final dividend, outline our revised capital management. strategy, comment on corporate governance and board matters, introduce a strategy overview and comment on our business outlook.

Profit Result

Profit after tax and before gain on sale of investments was \$88.2 million for the year, compared to \$68.2 million last year. The board views this increase of 29 percent over last year as an excellent result for the group and one that reflects the underlying strength of our core businesses in wealth. management and corporate trust.

Our net realised gain on sale of investments was \$2.2 million. compared to \$30.0 million last year. Thus, after including investment gains, our profit after tax was \$90.4 million, anincrease of 16 percent over last year's net profit of \$78.2 million.

The profit increase of 29 percent exceeded the forecast advised to shareholders in May that the 2004 operating profitafter tax for the year (excluding gains on sale of investments). would represent an increase of not less than 25 percent over. last year's result of \$68.2 million.

Revenues grew by 10 percent to \$306.0 million, based on the quality range of products we offer to our clients and investors. and the continued strong performance by investment markets. Increased revenues and careful management of expenses have combined to produce improved profitability. EBITDA as a percentage of revenue rose from 41 percent for the prior corresponding period to 47 percent.

Inflows into our Perpetual Investments managed investment. products remained strong due to continued excellent investment. performance achieved by our investment professionals. Perpetual Private Clients also had good fund inflows during the year through its advice business. Our funds under administration in Corporate Trust recorded continuing growth as we strengthened our market leadership in this business.

Developments in our chosen market segments will continue to support the attractiveness of Perpetual's businesses, in particular:

• Retirement savings in Australia continue to record attractive growth rates.
• lavestment markets have improved over the past 12 months. and this has increased the volume of funds under management.
• Investor confidence is improving following the uncertain events of recent years and this has encouraged new inflows. into managed funds.
• Our brand and investment performance remain persuasive attractions for clients
• Securitisation volumes in the corporate trust business. continue to flow at good levels

The strategy outlined in the Managing Director's Year in Review. aims to strengthen these businesses, build upon our market share, realise business synergies and position our businesses. to effectively manage industry challenges.

Dividend

Perpetual has consistently increased its dividend payments. year on year, by increasing interim and final dividend payments, in addition to the payment of special fully franked dividends. when possible.

Shareholders will receive three dividends fully franked at 30 percent in respect of the year to 30 June 2004; one interimdividend of 70 cents per share paid in March 2004, a special dividend of 50 cents per share paid in June 2004, and a thirdand final dividend of 80 cents per share which will be paid on 17 September (record date: 2 September). This will bring total dividends declared in respect of the 2004 financial year to \$2.00 per share compared to fast year's \$1.80 per share, an increase of 13 percent.

Review of capital management policy

Our financial position remains very strong with cash holdings of \$163.4 million and an investment portfolio carried at cost of \$60.1 million at year end, compared to its market value of \$109.5 million. Our cash holdings and the market value of our investment portfolio equates approximately to \$7.18 per issued. share. Our strong financial position is accompanied by anaccumulated franking credit balance of \$64.9 million at 30 June. 2004 and our borrowings equated to only 14 percent of equity.

As indicated in our half year results announcement in February, Perpetual has undertaken an extensive review of its capital management policy to ensure that, while retaining sufficient. capital to operate and expand the business, value for shareholders is maximised through a return of excess capital.

The review has identified the base line capital required to be retained by the group to provide for:

• Minimum regulatory capital requirements, current and prospective, should requlations regarding capital and solvency requirements for investment managers and trustees change in the future
• An appropriate 'contingency margin' over minimum regulatory capital requirements
• Working capital requirements; and
• Organic growth initiatives

The contingency margin included in the baseline capital to be retained in the business has been set at a level that the board. and management has determined may be required for group. operations, risk mitigation and growth components.

Gearing policy

Perpetual's objective is to target an investment grade credit rating (or equivalent) which reflects a level of financial conservatism. appropriate for a company involved in investment management. and trustee activities, and to ensure business stability.

Consistent with this objective, our current policy is to maintain. debt levels for the group at the current balance of \$45.0 million, given the capacity to increase debt by a limited amount within our targeted investment grade credit rating.

Dividend policy

The board has determined that Perpetual's dividend policy in the future should be set at a 90 percent pay-out ratio of

In accordance with this policy, the company will distribute \$76.5 million (\$2.00 per share) of surplus capital by paying a fully franked special dividend on 17 September (record date: 2 September). The board believes that this approach will provide. the greatest benefit for shareholders, whilst meeting the other objectives of the capital management policy, outlined above.

Corporate Governance and Board Matters

Perpetual's board is committed to meeting the highest standards. of corporate governance. We believe our practices have been at the forefront of best practice over recent years and we continually review our policies to ensure they serve the interests. of our shareholders, the market and the wider community.

The Corporate Responsibility Statement set out on pages 37 to 43 in this report, outlines the board's approach to important. governance matters. Shareholders who wish to know more about our policies are also invited to review our website: www.perpetual.com.au, or to contact me with comments and suggestions.

Board Charter

During the year, the board has undertaken a review of its responsibilities and adopted a Board Charter, which replaces the prior 'Role of the Board' document. The charter sets out the powers reserved to the board and the delegations made to management. The Board Charter will be reviewed annually to ensure that it appropriately reflects best market practice. Further details on the Board Charter can be found in the Corporate. Responsibility Statement of this report on page 38.

Perpetual has consistently increased its dividend payments year on year, by increasing interim and final dividend payments

Perpetual's underlying profit, which is our net profit after tax before goodwill amortisation and before gains or losses on investments. The nature of Perpetual's operations is such that this dividend pay-out ratio can be maintained, while stäl funding capital requirements for organic growth.

Current management projections indicate that Perpetual will generate sufficient franking credits to fully frank projected dividend payments for the foreseeable future.

Special dividend policy

After careful consideration in conjunction with the capital management policy, the board has resolved to return excess capital to shareholders by way of a special dividend. This is the most efficient means of distributing surplus franking credits. equally to all shareholders and provides the company with the ability to distribute up to the full amount of accumulated retained earnings and certain reserves, including capital profits reserves.

Our approach to board performance and evaluation is also detailed in the Corporate Responsibility Statement of this report, on pages 40 and 41.

Board succession

In early April, Perpetual appointed two new non-executive directors, Mr Paul McClintock and Ms Sandra McPhee.

Mr McClintock is a director of investment banking firm. McClintock Associates, a role he has held since 1985, apartfrom the period between July 2000 and March 2003 when he was Secretary to the Cabinet and Head of the Cabinet Policy. Unit in the Australian government. Mr McClintock is currently the Chairman of Affinity Health Limited and ADI Limited and a Commissioner of the Health Insurance Commission. He is a past Chairman of Ashton Mining and a past director of Homestake Mining.

Ms McPhee has extensive business experience, through company directorships and having held senior positions with Qantas for the past 10 years. Most recently, Ms McPhee was Group General Manager Alliances at Qantas, with responsibility for the strategic direction of the alliances of the airline. Ms McPhee currently serves as a non-executive director of Australia Post, Coles Myer and Primelife Corporation.

We welcome Mr McClintock and Ms McPhee to the board of Perpetual and took forward to the valuable contribution that their considerable experience and skills will provide to the group.

In accordance with the nine year rule for board service, Mr. Stephen Chapman and Mr John Curtis will retire following the Annual General Meeting in October 2004. Each of these directors has made a very significant contribution to Perpetual during their time on the board. In particular, Mr Chapman, has served on a number of committees, including the Investment Committee and the Nominations Committee and has been Deputy Chairman since 2001; Mr Curtis has also served on a number of committees and was Chairman of the Audit Risk and Compliance Committee and more recently Chairman of the Human Resource and Remuneration Committee, in which role he participated closely in the implementation of the new remuneration arrangements.

Following the retirement of Mr Chapman and with the Chairman's Committee having been dissolved in September 2003, the board has resolved that it will not appoint a deputy chairman.

incentive (LTI) of \$800,000. The actual amount of £TI is to be determined by application of the performance hurdles, as described in Note 34 to the financial statements.

Part of Mr Deverall's remuneration involves the issue of shares and options under the Executive Share and Option Plans. The notice of meeting contains notice of a resolution to authorise. such issues.

Having regard to the advice from an independent external remuneration consultant, it is proposed that the directors fees be increased to enable Perpetual to continue to attract and retain directors of the highest calibre. Details are shown in Note-34 to the financial statements and the notice of meeting contains a resolution to increase the maximum aggregate fees available to directors.

Strategy Overview

Over the past year, the board has reviewed and approved the strategy developed by the management team for the next stage. of expansion of Perpetual. We occupy strong positions in wealth. management and corporate trust and our goal is to fully realise. our potential, by building on those established businesses in areas that are a good fit with our core capabilities, our brand strength and our heritage of trust.

Perpetisal is moving to reduce exposure to market fluctuations. within our core businesses of Australian equities and securitisation, particularly as we have established a strongmarket share in these relatively mature markets.

In conjunction with the capital management policy, the board has resolved to return excess capital to shareholders

Remuneration

The Managing Director's Year in Review provides an overview of a new performance and remuneration system which is being introduced as part of Perpetual's corporate strategy. Full details of this system are set out in Note 34 to the financial statements.

Mr Deverall's service agreement which was entered into at the time of his joining Perpetual anticipated change to our remuneration arrangements, with a lower base salary and a greater at-risk component. In consequence of the implementation of the new remuneration system and the annual market review of Mr Deverall's remuneration, it is necessary for there to be some change to Mr Deverall's service. agreement to ensure that it remains consistent with the new system and in line with the market. The key elements of Mr. Deverall's remuneration arrangements for 2004-2005 involve a base salary of \$550,000, a short term incentive of \$1.1 million. in the event of certain performance hurdles being met and profit increasing by 25 percent (with adjustments in the event of higher or lower profit outcomes) and a maximum long term.

As a diversified financial services group, our competitors range from global and domestic banks through to boutique fund managers and independent financial planners. Many of our largest competitors are also our largest customers and we must. continue to provide them with the performance and service. they have come to expect from Perpetual, while also carefully maintairáng our competitive position within our chosen markets.

The strategy, which is presented in detail in the Managing Director's Year in Review, remains consistent with the approach. we have always taken to building Perpetual's businesses. We seek to create sustainable, long term growth that strengthens. our competitive position in wealth management and corporate. trust and adds significant value for clients and shareholders.

Business Outlook

During the next 32 months, we will continue to implement a range of initiatives to realise growth opportunities which position us even more strongly in our existing markets and expand the range and reach of our operations. However, our results will be influenced by investment market conditions.

Perpetual operates in favourable market sectors that are forecast. to continue attractive growth and we look forward to a very positive future. As one of the most trusted providers of financial products and services in Australia, the Perpetual team continually strives to 'raise the bar' in our chosen markets.

Perpetual operates in favourable market sectors that are forecast to continue attractive growth and we look forward to a very positive future

With our skilled investment professionals, who have achieved excellent results and with our enhanced systems and our strong brand, Perpetual is well placed to capture continued investment. inflows and to maintain our outstanding investment performance. In the corporate trust basiness, our team can expect further growth as they maintain their position of market leadership.

We remain focused on attracting and retaining talented professionals who can drive our growth going forward, by ensuring strong leadership and appropriate rewards for improved performance. We believe our refreshed corporate values (highlighted throughout this report) will not only act as a guidefor our business conduct and approach, but will also help to attract professionals of the highest calibre to Perpetual. Our new remuneration arrangements are designed to suitably align the interests of shareholders and employees.

I take this opportunity to thank my board colleagues, particularly those who are retiring after distinguished service. I also thank David Deverall and the entire Perpetual team for their contribution. to an excellent result for shareholders.

Thanks Guman

Charles Curran AO Chairman

24 August 2004

Managing Director's Year in Review

Develop a more Salánded Sontolio

Fully engage our people to deiver our strategy

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In my first annual report as managing director of Perpetual, I am pleased to report that the group has delivered a strong result for shareholders. This year has been particularly busy as we have confirmed our corporate strategy, employed new members of the executive team and commenced the implementation of our strategy.

mnqnts	Full Year Ended
	30 June 2004 1:30 June 2003 1: 10 Marcase
Key Performance Indicators	SM	\$M	(Decrease)
Operating Revenue	306.0	278.8
EBITDA	143.6	113.6
: Operating Profit before Tax
(a) Excluding profit on disposal of investments/business/building	26.0
(b) including profit on disposal of investments/business/building	128.2	106.1
Operating Profit after Tax
: (a) Excluding profit on disposal of investments/business/building	88.2
(b) including profit on disposal of investments/business/building	90.4	78.2	16

2004 Results

The group's profit after tax attributable to members of the company (before realised gains on sale of investments) for 2004 was \$88.2 million compared to \$68.2 million fast year, an increase of 29 percent. This strong result was underpinned by stronger financial markets, improved investor confidence, the strength of our core businesses in Wealth Management and Corporate Trust and the improved profitability of ASX Perpetual Registrars Limited.

Total operating revenues in 2004 were \$306.0 million, representing an increase of \$27.2 million (10 percent) over last. year. Net profit after tax and gains on sale of investments. increased by 16 percent to \$90.4 million compared to \$78.2 million in the previous year.

Earnings before interest, tax, depreciation and amortisation. (EBITDA), increased by 26 percent from \$113.6 million to \$143.6 million. EBITDA as a percentage of revenues rose from 41 percent last year to 47 percent at 30 June 2004, based on the continued strong growth in core revenues and continued careful management of operating expenses. EBITDA by major business component was as follows:

New team members

During the year we made a number of senior appointments to contribute to Perpetual's future growth and success. These appointments include Mr John Nesbltt - Chief Financial Officer, Mr Ivan Rolyman - Chief Risk Officer, Mr Eric Wang - General Manager Group Strategy, Ms Fiona Dunn - General Manager Wholesale, Wealth Management and Ms Amanda Tibbett -General Manager Marketing, Wealth Management.

Wealth Management

The Wealth Management division generated revenues of \$245.8 million and EBITDA of \$115.4 million before unallocated. corporate and support costs. This compares to revenues of \$223.6 million and EBITDA of \$91.6 million in the year ending 30 June 2003. Overall profitability has significantly improved during the year as a result of strong net inflows, favourable investment returns and cost management initiatives.

in January, we combined the operations, client service, product development, marketing and administration functions of Personal Financial Services and Perpetual investments under a single management structure to create an integrated Wealth-Management division. Mr Gerard Doherty, formerly Group-

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Wealth Management Review	Full Year Ended
	30 June 2004 30 June 2003		Increase $/$ .
	\$M	\$M	(Decrease) %
Profitability
Revenue	245.8	23.
: Expenses	$-130.4$	132.0
EBITDA	115.4	91.6	26
EBITDA Margin	47%	41%
Perpetual Investments
FUM (\$m)	21,691	17,418
Private Clients
FUA (\$m)	5,492	4,716
:Wilson Dilworth
FUA (\$m)	1,074	1,024	5

Executive - Perpetual Investments is responsible for leading this team. Perpetual Investments' asset management team was unaffected by this restructure and continues to report to Perpetual's Chief Investment Officer, Mr Emilio Gonzalez.

The integration of Perpetual Investments and Personal Financial Services has improved client service and achieved systems. efficiencies, with a reduction in operating costs. As previously

announced, the outcome of this integration has resulted in the achievement of cost efficiencies at the annual rate of \$5 million. Further efficiencies and value creating opportunities have already been identified and will be reported progressively.

The restructure is a logical progression to capture the combined strengths of the Perpetual Investments and Personal Financial Services teams and has created enhanced career opportunities

The integration of Perpetual Investments and Personal Financial Services has improved client service and achieved systems efficiencies, with a reduction in operating costs.

for our people and improved distribution of our products to the wider independent advisory market.

Perpetual Investments had another excellent year with continued top quartile investment performance and a range of new products teunched during the period. Perpetual Investments revenues for the year to 30 June 2004 were \$177.3 million. compared to \$158.0 million last year, an increase of 12 percent.

During the year total funds under management (FUM) increased from \$17.4 billion at 30 June 2003 to \$21.7 billion at 30 June. 2004. This increase of 25 percent resulted from strong net inflows. of \$1.5 billion during the period and asset growth of \$3.2 billion. Our investment team was recognised on many occasions for the returns it generated for our clients. Significantly, Perpetual was awarded the Money Management/ASSIRT Research overall Fund Manager of the Year 2004 and the overall Morningstar Fund Manager of the Year 2003 for the third time. out of the fast four years.

Wilson Dilworth revenues for the year to 30 June 2004 were \$14.0 million compared to \$13.6 million at 30 June 2003. Funds under advice increased from \$1.0 billion last year to \$1.1 billion at 30. June 2004.

Corporate Trust

The Corporate Trust business had another year of good growth, with revenues of \$49.4 million, up from \$44.2 million, an increase of 12 percent.

Profit continues to grow steadily due primarily to the very strong growth in Securitisation volumes, offset by a reduction in-Corporate and Structured Finance volumes and an investment. in the development of new services to position as for futuregrowth. The division's EBITDA before unallocated corporate. and support costs was \$25.9 million, up from \$23.6 million inthe year to 30 June 2003.

In our Debt Markets business, securitisation bonds on issue for which we act as trustee increased from \$71.2 billion at 30 June.

Our investment team was recognised on many occasions for the returns it generated for our clients.

This is the first time a fund manager has been recognised as both the Morningstar and Money Management /ASSIRT Fund Manager of the Year in the same year and is testament to the talent and professionalism of our investment team, our proveninvestment process and our strength in managing and developing funds management teams, philosophies and processes.

Perpetual Private Clients' revenues for the year to 30 June. 2004 were \$54.5 million, compared to \$51.9 million last year, anincrease of 5 percent. Disting the year funds under advice and administration increased from \$4.7 billion at 30 June 2003 to \$5.5 billion at 30 June 2004. This increase of 16 percent reflected increased activity across all parts of the Perpetual Private Clients business.

2003 to \$86.3 billion, in addition, we administer \$26.1 b@on inpreliminary funding arrangements and security trusteeships for our clients. This brings total securitisation funds under administration to \$112.4 billion at 30 June 2004, up from \$87.1 billion at 30 June 2003. Securitisation revenues, which represent approximately two thirds of the Corporate Trust. division's total revenues, increased by 18 percent.

In our Fund Services business, our responsible entity and trustee services provider to the funds management industry, Fund Governance Solutions, continues to win new clients from the increasing number of new entrants to the Australian. financial services market.

Corporate Trust Review	Full Year Ended
	30 June 2004 1:30 June 2003 1:11		i increase i
	SM
: Revenue. -Expenses
: EBITDA margin (%)		53%
1Securitisation funds under administration (FUA \$B).	112.4	87.1	29

We are reliable, anticipate needs, take
the initiative, focus on results and never give up.

ASX Perpetual Registrars

Increasing levels of corporate actions saw ASX Perpetual. Registrars' revenues rise by 10 percent to \$53.6 million, upfrom \$48.9 million in the previous year. ASX Perpetual Registrars enjoyed strong EBITDA growth during the period. EBITDA increased by 26 percent to \$15.3 million, up from \$12.1 million in 2003, while EBITDA as a percentage of revenue increased further from 25 percent to 29 percent during the same period.

On the back of strong revenue growth and improved performance, the net result after tax for the year was a profit of \$1.3 million (Perpetual's share: \$0.7 million), representing a \$2.6 million turnaround from the prior year result. Cashflow generation for this basiness remains strong and resulted in a \$6 million reduction in borrowings to \$23 million.

Perpetual's Corporate Strategy

Our team's focus is to continually deliver outstanding shareholder value and I am pleased to take this opportunity. to outline Perpetual's corporate strategy.

While Perpetual has achieved strong profitability and recognised success in its chosen markets, we face increasing competition across out range of businesses and will move to create additional long term growth opportunities to continue. to deliver attractive shareholder returns. Based on these considerations, we have agreed on three strategic priorities. which are outlined in the diagram below.

1. Fully engage our people to deliver our strategy

Our sources of competitive advantage

Perpetual is committed to approaching future growth in a measured way by ensuring that we use our strengths as the foundation for growth initiatives, to our view, there are four sources of competitive advantage that have underpinned. and will continue to underpin Perpetual's consistent, strong financial performance:

• 1. The management of funds management teams, philosophies and processes;
• 1. Streng relationships with the financial planning community;
• 1. A trusted brand; and
• 1. A long history as a leading provider of fiduciary services to individuals and corporates.

The key components of our three strategic priorities are:

1. Develop a more balanced portfolio

Perpetual has earnings that are directly influenced by fluctuations. in the Australian share market. Depending on market conditions this has the potential to create variability in our earnings profile. Therefore, a priority for Perpetual is to provide more balance to our earnings profile to provide more stable returns. To achieve this we will continue to focus on realising the full potential of all our existing businesses. There is a range of actions planned with many elready achieved.

Capture synergies in our existing businesses: In January we created the Wealth Management division by merging the Perpetual Investments and Personal Financial Services businesses. The integration substantially improved the contribution of the former Personal Financial Services business. to overall group EBITDA. Aside from the \$5 million in cost. synergies, other benefits of this integration include improved. efficiency for clients, better delivery of products and services, more effective use of our systems, and a client service team with the scale and capabilities to provide enhanced career opportunities for our people. We will continue to focus on good cost management by creating a more variable cost structure and focusing our team on a greater level of high value added tasks.

Realise the full potential of our advice business: Our aim is to be recognised as a leading provider of wealth management. services to the high net worth and emerging high net worth. market in Australia. After an extensive review in early 2004, we have restructured our advice business to deliver improvements in growth over the coming years. A series of initiatives is already being implemented and offer profitable growth moving. forward. Some of the key initiatives include:

• A review of our pricing to reflect the premium levels of service. provided:

• The modification of our business model to maximise efficiency and improve client service through the introduction of paraplanners, which will leverage the new business efforts of our financial consultants:

• An improvement in client retention by reassigning administrative responsibilities, thereby allowing our client advisers and managers to focus on delivering service to existing clients and sourcing new business from client. referrals: and

• An investment in marketing to improve brand awareness, enhance research programs and focus on client acquisition. and lovalty.

We strongly believe that we can successfully grow our advicebusiness based on the core strengths that have allowed asto develop the business to date. These strengths include: a well-respected brand that allows us to credibly offer a premium. Private Client service, a value proposition for clients throughout all stages of their lives, our ability to attract and retain high quality advisers, and the strength of our client relationships.

Deliver a more profitable range of products and services to meet. the needs of our partners and clients: We are actively broadening. the range of products and services we offer to advisers, investors and clients. For example, we will begin to offer newcredit based funds management products to meet the market's growing demand in this area. Elkewise, we will continue to close products which no longer meet market needs, are unprolitable, or have limited growth prospects. While many opportunities exist. for Perpetual to develop new products and services, our disciplined approach will ensure that we develop new products. and services that draw upon our current expertise, in order to provide the greatest return to shareholders.

Pursue growth opportunities in the trust industry. We are focused on maintaining our position as the pre-eminent trustee in-Australia, and within this chosen market segment we see good. growth opportunities for Perpetual. We will continue to pursue organic growth by extending the range of products and services. we offer and we will consider acquisitions should the right opportunities arise which create value for Perpetual shareholders. and accelerate the achievement of our strategic objectives.

2. Develop new 'growth engines'

Perpetual has a successful track record of delivering long term. growth to shareholders and we are committed to ensuring this. continues. As our existing businesses mature and competitionincreases, a critical imperative for Perpetual is to identify and develop new business 'growth engines'. We endeavour to maintain a focused pipeline of growth options and will invest. appropriately to do so. For the next 12 months our focus will be on two areas:

Build capability in new asset classes: Investor and adviser needs continue to evolve and our goal is to meet these needs. by broadening the range of asset classes that Perpetual canoffer. By building on one of our core skills, the management of funds management teams, philosophies and processes, we feet Perpetual can add significant value across a range of new asset classes.

We have recently enhanced our fixed income capability by hiring a group of highly respected and successful credit specialists. Michael Korber, Perpetual's new Head of Credit, Vivek Prabhe and Greg Stock managed over \$6 billion of funds for Macquarie Bank. Perpetual will now offer a much broader. range of high quality fixed income products to the market. This enhancement builds on our past successes of adding new capabilities in Quantitative investments (June 2001), infrastructure (February 2003) and property securities (Perpetual James Fielding JV launched in 2002).

Perpetual will continue to evaluate options to further broaden. its asset management capabilities. We will continue to provide. updates to our shareholders as we progress with this priority.

Expand our range of Corporate Trust services: Corporate Trust continues to broaden its revenue base through the development of administrative support services to the lending and securitisation market. Our vision is to offer a full end-to-endservice supporting asset administration through to bond issuance, allowing our clients to choose a package of services. depending on their capabilities, expertise and position in the market. As the lending market continues to evolve and fragment, there are many growth opportunities resulting from both new and existing players seeking support in order to access capital markets.

Refreshed corporate values: Over the past several months we have refreshed our corporate values to support our corporate. strategy. The feedback we received from our team was that the refreshed values capture the essence of what drives our success - our trustworthiness, consistency and desire to succeed together. At the same time, the value relating to traising the bar' poses a challenge for us to constantly question. the status quo and seek better outcomes for our stakeholders. The Perpetual in Profile section of this report describes our refreshed corporate values.

implementation of a new performance and remuneration. system: To unlock the entrepreneurial spirit of our people, we have redesigned our performance and remuneration system. The redesign, which represents a key 'hard' tactic, is an innovative and leading edge remuneration practice in Australia. Four key design principles underpin our new system, to actively promote employee retention and alignment with shareholder outcomes. These key design principles are:

1. Incentives will be a significant part of our people's overall remuneration, while keeping fixed remuneration competitive

Under the previous remuneration system, fixed remuneration. tended to be the major element of remuneration, while incentive payments were in many cases more modest.

Our new approach keeps our fixed remuneration practices competitive while maintaining our team's focus on achieving improved results and long term performance for shareholders

3. Fully engage our people to deliver our strategy

At Perpetual we are focused on fostering a work environment. where our people are intellectually and emotionally connected. to the corporate strategy. For this to happen our people need to:

• Fally understand what our group strategy is aiming to achieve;
• Understand how they individually contribute to the overall success of Perpetual;
• Possess a deep sense of accountab@ty for their actions as well as those of their team; and
• Be fully aligned to shareholder outcomes.

To eltimately achieve our cultural objectives, a number of 'hard' and 'soft' tactics are required. The 'hard' tactics include implementing the right remuneration policies, fostering clear decision-making processes, and attracting and retaining outstanding people; the 'soft' tactics include important items. such as a clear set of values and behaviours that define the culture of Perpetual. We have started to implement many of these tactics and the following provides you with an update on some of these:

Our new approach keeps our fixed remaneration practices. competitive while maintaining our team's focus on achieving improved results and long term performance for shareholders. This creates a direct 'line of sight' between shareholders objectives and employees' day to day work.

1. Incentive payments will be made out of the profits of the organisation, rather than budgeted as a cost element Paying incentives out of profits rather than by budgeting anamount each year creates a closer alignment of the interests of our people and shareholders. For example, if our performance next year increases by 10 percent year on year, the incentivepayments for our people will increase by 10 percent year on year. Should performance decrease by the same figure, the amount. of incentive payments available to employees will decrease by 10 percent.

We respect and value each other, resolve differences openly and quickly, compete as a team, recognise and celebrate our success.

3. Individual incentive payments will reward people appropriately when performance significantly exceeds expectations

This allows for the recognition of superior performance and for our people to share in the benefits of continued strongperformance by Perpetual. The aim is to encourage our employees to consistently 'go the extra mile' and to always. look for new ways to enhance service delivery, reduce costs. and seek innovative ways for growing our business. If a teamor an individual makes a significant contribution to the success and outcomes of the group, their innovation and performance. w@ be appropriately rewarded. Relevant performance hurdles and benchmarks have been put in place to ensure that appropriate, defined guidelines are set around the payment of employee incentives.

4. Equity participation will be increased in the organisation to encourage an ownership mindset and focus on long-term performance

This change is designed to encourage a focus on both short. and long-term issues, as well as driving an ownership mindset. among this group.

We believe the new remuneration system combines best practice principles to ensure our people are actively engaged in the group's growth strategy, are challenged to continually seek improved performance, and are focused on achieving strong results for shareholders.

Additional information on the new remuneration approach is contained in Note 34 to the financial statements.

Formation of Perpetual's Senior Leadership Team:

Perpetual's senior leadership team has been established to support Perpetual's executive committee in the execution of our business strategy and the further development of a culture that drives towards 'team-based excellence'. The Serior Leadership Team is comprised of those senior managers who have ownership of operational, communication, service and employee driven initiatives. This team equates to approximately 10 percent of Perpetual's employees. During the year, the Senior Leadership Team has been actively engaged in the development of our corporate strategy, goals and values.

New premises project: As part of our goal to make Perpetual a better place to work for our people and further develop ateam based culture, we plan to consolidate our Sydney head. office locations to a single location within the Sydney CBD. There are a number of reasons why we have decided to relocate our offices at this time. While our current heritage building head office at 39 Runter Street has served as the corporate headquarters since 1916, it is no longer sufficient to meet the needs of our business. At present, our Sydney based employees are spread over multiple floors in three buildings, making communication and interaction on a day to day basis difficult.

The new premises w resolve many of these operational issues and there will be significant productivity and cultural gains resulting from occupying contiguous floors in a single building. The commercial property market has presented us with a number of excellent options and we will be selecting the most attractive option based on financial and cultural criteria. We look forward to sharing news of this exciting change with you in the near future.

Summary

In this report, I have outlined our strategic approaches to growing Perpetual's businesses and the many specific. initiatives underway to achieve each of these goals. As these initiatives develop, you will be provided with further updates. We are committed to a disciplined growth approach and we will achieve this growth based on our identified core strengths.

(thank the board and our team for their contribution to a strong full year result and took forward to reporting progress on our growth initiatives on a regular basis.

$1/d$ / $d$

David Deverall Managing Director

24 AUGUST 2004

Review of Operations

Perpetual Investments FUM and Net Inflows
	30 June 2003 FUM According Net Inflows	[1] "Other", 30 June 2004 FUM"
Retail
·Masterfund
Institutional
All Channels	17.4
Australian Equity	10 S.
·Other	6.9
All Asset Classes	17.4	2.R

Wealth Management

Profitability improved significantly during the year as a result of strong net inflows, favourable investment returns and cost. management initiatives.

The operations, client service, product development, marketing and administration functions of Personal Financial Services and Perpetual Investments have been combined under a single management structure to create an integrated Wealth. Management division. Mr Gerard Doherty is responsible for leading this team. Perpetual investments' asset management. team was unaffected by this restructure and continues to reportto Perpetual's Chief Investment Officer, Mr Emilio Gonzalez.

The integration of these two divisions has created improved. service and systems efficiencies and has already achieved a reduction in operating costs. The restructure is a logical progression to capture the combined strengths of the Perpetual. Investments and Personal Financial Services teams.

Perpetual Investments had an excellent year with a substantial increase in funds under management to \$21.7 billion, continued strong investment performance, numerous industry awards for investment excellence and the introduction of a number of newproducts and client services.

of what I

Retail and masterfund FUM increased by \$3.1 billion to \$18.3 billion and institutional FUM increased during the period from \$2.2 billion at 30 June 2003 to \$3.4 billion at 30 June 2004. FUM increased across all our asset classes including Australian equities which increased from \$10.5 billion at 30 June 2003 to \$13.9 billion at year end. Inflows into our Australian equities funds rebounded strongly due to our excellent investment. performance and ongoing client support, while flows into our mortgage and international equities funds have eased, despitegood performance over the past year.

Our flagship Industrial Share Fund returned 21.9 percent (prefees) during the year compared to the S&P/ASX 300 industrials Accumulation Index return of 18.2 percent. This fund has now earned a positive return for investors for 22 consecutive years. Perpetual's Australian Smaller Companies Fund returned 28.4 percent (pre-fees) compared to 26.8 percent for the S&P/ASX Small Ordinaries Accumulation Index. A survey of Australian equity managers conducted by InTech, shows that Perpetual Investments achieved top quartile performance during the year. In a universe of 55 Australian equity managers, Perpetual's performance was rated 13th for the year, fitth over three years and first over five years.

Perpetual's Wholesale Geared Australian Fund, launched in March 2003, returned 46.4 percent (pre-fees) for the 32 months to 30 June 2004. In early June, Perpetual James Fielding, our joint venture property securities business became the most highly rated property securities manager by vanEyk in the Australian market. The fund was iaunched in February 2003. and at 30 June 2004, Perpetual James Fielding had \$323 million in property securities under management.

Our investment team was recognised on many occasions for the returns it generated for our clients. In May, Perpetual was awarded the Money Management/ASSIRT Research overall Fund Manager of the Year 2004 and the Australian Equities Fund Manager of the Year 2004.

Perpetual was also recognised as the overall Morningstar Fund Manager of the Year 2003 (for the third time out of the last fouryears), the Morningstar Australian Equities Fund Manager of the Year 2003 (for the fourth consecutive year), and the Morningstar Australian Multi-Sector Fund Manager of the Year 2003.

Recognitions awarded to our investment management team. during the year are shown in the following table.

Money Management/ASSIRT Awards
- Fund Manager of the Year 2004
- Australian Equities Fund Manager of the Year 2004
Morningstar Awards
-Fund Manager of the Year 2003
third time out of the last four years)
- Australian Equities Fund Manager of the Year 2003
$\Box$ (for the fourth consecutive year) $\Box$
- Australian Multi-Sector Fund Manager of the Year 2003
Personal Investor Magazine Awards
- Fund Manager of the Year 2004
(for second consecutive year)
- Australian Share Fund of the Year 2004
$\mathbb{N}$ (for second consecutive year) $\mathbb{N}$
- Balanced Superannuation Fund of the Year 2004.
Money Magazine 'Best of the Best 2004' Awards
I T Best Rated Australian Share Fund
- Best Rated Balanced Fund [ mark
Australian Fund Managers Awards
:- Golden Bull Award for Fund Manager of the Year 2003
- Australian Equity Fund Manager of the Year 2003
InvestorWeb Research
-2004 Six Star Award for Perpetual Investments'
Mortgage Funds

Perpetual Investments' mortgage funds were also recognised during the year with InvestorWeb Research awarding the funds a 2004 Six Star Award for excellence in funds management.

As part of our approach to continually develop our funds. management expertise, our team of analysts, who previously managed \$800 million, had the total funds under their management increased by a further \$3 billion to \$3.8 billion in July 2004. This not only creates additional career and training opportunities for our people, but ensures we are continually. growing our skill base within the team.

Our Perpetual Fidelity funds experienced net outflows during the year. International funds are still being impacted by poor longer term performance, despite good overall improvement in the performance of the Perpetual Fidelity funds over the past year.

During the year we established a dedicated Wholesale Client. team responsible for institutional client sales and service to asset consultants, fund trustees and research houses. This team provides a dedicated service to our wholesale clients and ensures a clear focus on our growth strategy in this market. Client service initiatives and continued strong investment. performance resulted in strong inflows from our institutional clients during the second half.

This is the first time a fund manager has been awarded both the Morningstar and Money Managment/ASSIRT Fund Manager of the Year Awards in the same year.

		Full Year Ended
		[30] June 2004. [30] June 2003. [11] Increase.
	\$M.
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"DIY/IDPS"	1.327.
: Other	116
Total	5.492	4.716	16

In October 2003, Perpetual Investments successfully launched its retail masterfund, WealthFocus. At 30 June 2004, 33 financial planning dealer groups had signed WealthFocus as an approved. platform for use by their planners. Our team continues to workclosely with dealer group clients to integrate the platform into their internal systems and processes. At 30 June 2004, WealthFocus had \$4.7 billion in funds under management. compared to \$4.2 billion at the time of its launch in October 2003.

The successful development of this platform reiterated the strength of Perpetual's relationships with independent financial. planners. As part of the development of WealthFocus, we consulted extensively with a panel of advisers to identify the features and functionality planners wanted most in the platform. This consultative approach is a consistent element in our relationship management with financial planners.

During the year we established a separate advisory board. comprising 34 financial advisers from a wide range of organisations and regions. This group works closely with our team to provide Perpetual with insights into the needs of advisers and their clients, as well as providing us with constructive feedback on product development ideas and marketing strategies.

In October, we launched our first wholesale Diversified Infrastructure Fund. The fund alms to provide wholesale investors with consistent returns comprising stable, long termcapital growth and increasing cash distributions. In November 2003 the fund secured its first investment, a 14.5 percent. equity stake in Airport Development Group Pty Ltd, which owns and operates three Northern Territory airports. In July 2004 the fund made its second investment of a 5.6 percent. equity stake in the Asia Pacific Transport Joint Venture Adelaide to Darwin railway line. Perpetual's infrastructure team is actively. assessing a number of additional investment opportunities. across a variety of asset sectors. At 30 June 2004, the fund has in excess of \$90 million in commitments and remains open to investor applications until October 2004.

Perpetual Private Clients experienced increased activity across. all parts of its business during the year. Funds under advice and administration in the financial planning, Do-It-Yourself superannuation and Investor Directed Portfolio Service businesses increased strongly during the year as a result of improved investment markets, increased investor confidenceand good conversion rates by our client development teams.

Funds managed in our continuing trust service remained relatively. stable during the year. We are actively accelerating many smaller trusts in favour of the beneficiaries, and as a result, bust. rambers have reduced from 2.330 at 30 Jane 2003 to 2.220 at 30 June 2004. Most new business for our trust services is generated through our financial advisers on behalf of compensation award recipients and protected persons.

In January 2004 we introduced a new fee scale for our estate administration service. Under the new fee scale, the size of the fee for administering a typical estate is based solely on the value of the assets that form the estate. The new fees are competitive with other trustee companies and have been introduced to provide greater clarity and simplicity for testators. and beneficiaries, in addition to improved transparency, the new fees are more efficient to administer.

During the year our Wilson Dilworth superannuation business. consolidated its development plans by working to strengthen. existing referral relationships with accountants and by establishing a number of new referral relationships. Looking forward, we are planning to expand the range of services. we offer to clients through referring accountants. Funds under advice increased from \$1.0 billion at 30 June 2003 to \$1.1 billion at 30 June 2004.

Outlook

The Wealth Management division is well positioned to capitalise on future growth opportunities. Our recognised, trusted brand, our excellent investment performance, our strong relationships. with financial planners and our long history as a leading provider of financial services to individuals and corporates has created an excellent foundation from which to further build and expand this business.

The outlook for the business is favourable as markets remain positive and Australians continue to seek proven, trustworthy and independent services as they plan for retirement. Subjectto the maintenance of satisfactory market conditions, we expect to report increased revenues and profits for this business in the 2005 financial year.

Corporate Trust

The Corporate Trust business had another year of good growth. Our long history as a leading provider of fiduciary services, our excellent relationships with the intermediaries who source both business and customers, and our strong brand recognition in the marketplace has seen Perpetual's securitisation business continue to grow in line with the market despite increased competition.

In our Debt Markets basiness, securitisation bonds on issue for which we act as trustee increased from \$71.2 billion at 30 June. 2003 to \$86.3 billion. In addition, we administer \$26.1 billion in preliminary funding arrangements and security trusteeships for our clients. This brings total securitisation funds under administration to \$112.4 billion at 30 June 2004, up from \$87.1 billion at 30 June 2003. This increase was driven by several factors including continued strong growth in residential mortgage lending, strong market penetration by non-bank lenders and increased global investor appetite for Australian mortgage backed securities.

In response to increasing offshore issuance by our securitisation clients, in December 2003 we formalised our long standing relationship with The Bank of New York to create an alliance which offers integrated global corporate trust solutions. to Australian debt issuers. This alliance has established closer ties between the two organisations and provides Perpetual's clients with access to The Bank of New York's global network. and its array of services to the international capital markets.

During the year we saw a reduction in revenues from Corporate. and Structured Finance clients as a number of bond issues for which we acted matured and one large client decided to internalise its business. In view of the risk carried by this area of our business we have tightened criteria for new business; consequently, new revenues have not replaced tost revenues.

During the year we further developed the scope of services offered to our mortgage clients. We improved our capabilities inloan servicing through the implementation of Baycorp's ARM system and through the migration of our residential and commercial loan books to that platform.

Securitisation is an information intensive market and we have continued to develop our analytics and reporting services to issuers and investors of securitised bonds, investors are increasingly demanding a range of information in order to analyse the performance of their securities. Our investor reporting service, which is delivered through various media including the web, has been an invaluable service to investors, ratings agencies and analysts seeking data on Australian. securitised bonds.

During the year we further developed the scope of services offered to our mortgage clients.

In our Fund Services business, Fund Governance Solutions, our responsible entity and trastee services provider to the funds. management industry, continues to win new clients from the increasing number of new entrants to the Australian financial services market. Boutique and international fund managers are seeking to obsource this compliance function to specialised. organisations such as Perpetual to enable them to focus on their core skills. As the trend for new competitors in the market is expected to continue, we see positive growth opportunities. for Fund Governance Solutions.

We also see continued interest from property and mortgage. fund managers and syndicators wishing to outsource their administration. While the large listed property trusts continue to consolidate, there is an increasing number of smaller players. responding to investors' appetite for investment in the direct property sector. These smaller market participants are focused on property selection and distribution and often seek to outsource the back office administration functions to service providers like Perpetual.

Outlook

Despite the anticipated softening in the residential property market, securitised housing loans are forecast for positive growth albeit down on the growth levels we have seen in recent. years. The quality of the securitisation market has led to increased demand for issuance and improved pricing for issuers. These factors have made securitisation more attractive. to all players in the market and we expect this trend to continue. The Corporate Trust business is well positioned to take advantage of future opportunities in this market and we are contaming to actively look at ways of providing new services to our clients.

ASX Perpetual Registrars

During the year, ASX Perpetual Registrars won several major new clients including Westpac Banking Corporation, Multiplex Group, ING Office Trust, ING Industrial Trust and WMC Resources.

In early April, ASX Perpetual Registrars acquired the Queensland based share registry business of Pitcher Partners. This acquisition delivered an additional 100 new clients, including Suncorp Metway and strongly enhances ASX. Perpetual Registrars' presence in the Queensland market.

Outlook

The Australian share registry market remains competitive and ASX Perpetual Registrars continues to investigate growth opportunities both by expanding its array of services to clients. and investors and through appropriate acquisitions and strategic alliances.

Corporate Responsibility Statement

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In this statement we describe Perpetual's business principles. our approach to corporate governance and board supervision, our policies for ensuring the integrity of financial accounting and reporting to shareholders and our commitment to our employees and the wider community. Information on Perpetual's approach to executive and board remuneration is set out in the separate Remuneration Report on page 91.

We believe that the practices of the board comply with the ASX Corporate Governance Council's Principles of Good Corporate Governance and Best Practice Recommendations (ASX Guidelines) and have complied throughout 2004 Details of Perpetual's compliance with the ASX Guidelines are available on our website at www.perpetual.com.au.

PERRAIDA ARTE 1988 ABRAHA DAN PERANG ITA CONTROL CO PATRIES

Our commitment to ethical business practices

Perpetual's reputation for trastworthiness is vitally important to our clients, our business partners, our employees and our shareholders; it is the cornerstone of our success. Our ethical standards are central to our business. Perpetual's code of conduct has been embodied in our Five Principles of Good. Conduct, which have recently been reviewed by the board. As a result of the review, a new Code of Conduct which applies to directors, executives and employees, has been developed to replace the Five Principles. The Code of Conduct draws from Perpetual's Values, which are referred to on page 6 of this report and set out on the Perpetual website. The new Code of Conduct is also available on the Perpetual website and is supplemented by a range of written policies dealing with our obligations to maintain confidentiality of client and company information, avoid conflicts of interest, ensure full and timely. disclosure of material, price sensitive information to shareholders and the market, provide a safe workplace for our employees which is free from discrimination and other matters.

It is the responsibility of all directors and executives to reportunethical conduct in breach of Perpetual's Code of Conduct or other relevant policies by Perpetual employees or business. partners to the chairman or to the managing director. The chairman or managing director is required to investigate such reports, and to address any breaches with appropriate corrective and disciplinary action. Employees will report any breach of Perpetual's Code of Conduct to our chief risk officer on a confidential basis, if preferred. The chief risk officer must ensure that any claims of breach are dealt with fairly and appropriately, it is Perpetual's policy that any employees who report, in good faith, îllegal or unethical conduct or a breach of the Code of Conduct will not be disadvantaged in any way.

Our commitment to good corporate governance

Your board is accountable to shareholders, clients and to the wider community for the group's performance. During the year, the board has reviewed its responsibilities and adopted a Board Charter to replace the prior Role of the Board document. The Board Charter outlines the board's specific responsibilities including:

• setting the group's values and standards;
• reviewing and approving Perpetual's strategy:
• ensuring that the performance of the board and management. is regularly assessed;
• selecting the managing director and approving senior. executive appointments:
• monitoring business performance and the group's financial position;
• overseeing the integrity of the group's financial accounts and reporting;
• monitoring that significant business risks are identified and managed effectively; and
• monitoring the group's investment activities and investment performance.

The Board Charter sets out the powers reserved to the board and delegations made to management. The board delegates day-today responsibility for management to the managing director and senior executives, but remains responsible for overseeing the performance of the management team. To ensure that responsibilities for day-to-day operations are clearly defined and operate efficiently and effectively, the Board Charter delegates a range of authorities to management. These include expenditure authority (subject to limits) and authority to enter into contracts. The Board Charter will be reviewed annually to ensure it accurately reflects current practice.

Board composition

The board currently comprises 10 directors of whom nine are non-executive directors. Directors come from a variety of business and professional backgrounds and bring to the board diverse skills and expertise relevant to the group. Details of the directors' experience, expertise, and terms of office are set out. on pages 45 to 47 of this annual report.

The board considers that all non-executive directors are independent directors. The chairman is also an independent director and the roles of chairman and managing director are separate.

In assessing the independence of each director, the boardconsiders, on a director by director basis, whether his or her shareholding in the group, relationships with suppliers, customers and competitors, or tenure as a director of Perpetual would. materially effect the director's ability to exercise unfettered and independent judgment in the interests of Perpetual's shareholders. Consistent with the emphasis on 'substance overform' advocated by the ASX Guidelines, Perpetual takes a qualitative approach to materiality rather than setting strict. numerical thresholds, and considers each director's individual circumstances on its merits.

In determining the position of individual directors, the boardhas considered the relevant elements of the definition of independence adopted by the board. Mr Kent is a director of Commonwealth Bank of Australia Limited (CBA). Unt& 12 May 2004, subsidiary companies of CBA held a substantial shareholding in Perpetual's issued share capital on behalf of investment funds administered by the CBA group. The boarddoes not consider that this has any impact on Mr Kent's independence as he does not take part in the management. of these investment funds.

Mr Cartis is the chairman of Caliburn Partnership Pty Eimited (Caliburn). Caliburn provides corporate advisory services to Perpetual from time to time. Services are provided by Caliburn. on arms length commercial terms and Mr Curtis is not involved. in the provision of advice to Perpetual. Mr Curtis plays no partin the selection of corporate advisers by Perpetual. The boardconsiders that Mr Curtis' position as a chairman of Caliburn. does not preclude him from being considered independent.

Several non-executive directors hold directorships with companies which operate in the financial services sector and whose businesses may be, in part, competitive with Perpetual. Mr Curtis and Ms Nicholls are directors of St George Bank Limited, Mr McClintock is a director of Macquarie Infrastructure Investment Management Limited and as noted previously Mr Kent is a director of CBA, in considering whether such circumstances materially affect the independence of individual directors, the board considers the extent of competition relative to each organisation's total business and the frequency with which directors may be required to absent themselves fromboard deliberations by reasons of conflicts of interest. It is the board's view that no directors currently hold other directorships. that materially affect their ability to exercise independent judgment in the interests of Perpetual shareholders.

The Nomications Committee and the board as a whole has been considering board succession, as several directors are approaching the end of their nine year term. In accordance with the provisions of the constitution, the size of the board was increased to 10 during the year to assist in achieving effective. board succession. Two new non-executive directors, Ms McPheeand Mr McC@ntock, were appointed to the board from 1 April. 2004. The new directors received detailed letters of appointment. and participated in a comprehensive induction program. designed to familiarise them with Perpetual's business and management team.

Having each served a nine year term, Mr Chapman and Mr. Curtis will retire from the board following the 2004 Annual General Meeting. The size of the board will then return to eight. Foãowing the retirement of Mr Chapman and with the Chairman's

Perpetual's reputation for trustworthiness is vitally important to our clients, our business partners, our employees and our shareholders; it is the cornerstone of our success.

The independence of each director is reviewed annually in May and at any time when a change occurs that may affect a director's independence. Non-executive directors also formally advise the chairman of any relevant information, and update the chairman if their circumstances change at any time.

The board has established a Nominations Committee responsible for reviewing the size and structure of the board to ensure that the board comprises an appropriate mix of skills and experience. As set out in Perpetual's policy on the appointment. of directors, if a board vacancy arises, the board will appoint the most suitable candidate, having regard to the recommendation. of the Nominations Committee. Perpetual's policy on the appointment of directors can be accessed on our website. External consultants may be engaged to assist the board to identify qualified candidates. A director appointed to fill a vacancy must stand for election at the next annual general meeting.

As specified by the ASX Listing Rules, directors who have been in office for three years since their last appointment must retire. and seek re-election at the Company's annual general meeting. In order to revitalise the board, directors agree not to seek reelection after three terms of three years unless the board. requests them to do so. The nine year principle does not displace shareholders' rights to vote on the appointment and removal of directors, as set out in ASX Listing Rules and the Corporations Act. The board may invite a director to seek reelection beyond nine years if this would be advantageous for reasons such as board leadership or continuity. For example, in-2001, the board invited Mr Curran to continue beyond nine. years in order to provide leadership as chairman.

Committee having been dissolved in September 2003, the board has agreed that it will not appoint a deputy chairman.

Beard operations

In 2004, the board met nine times, including a strategic planning. session held over two days. The board receives monthly performance, operations and compliance reports from the managing director and chief financial officer and the heads of each division. The board also receives reports and updates onstrategic issues and reports on ask and compliance matters.

In addition, directors spend time reading and analysing boardpapers and reports submitted by management and they engage. in regular informal discussions with management. The views of the chairman and directors are canvassed reqularly by the managing director and the executive team on a range of strategic. and operational issues. The chief financial officer and company secretary attend all board meetings except when matters concerning personnel and remuneration are considered. Othersenior executives attend board and committee meetings to report on particular issues and to engage in discussion on these issues.

If a director has disclosed a material conflict of interest in relation. to a matter being considered by the board, the director will not receive a copy of the relevant board materials and papers. The director also withdraws from the meeting while the matter is being considered.

Directors receive regular updates on changes in the regulatory regime and legislation affecting Perpetual and the financial services industry. They are also encouraged to attend relevant conferences and seminars.

The four standing committees of the board, their membership and key responsibilities are set out below:

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Members: Linda Nicholls (Chairman), Bonita Boezeman (until May 2004), Warwick Kent, Paul McClintock (from

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May 2004), Sandra McPhee (from May 2004) and Robert Savage and the second construction of the second The main functions of this committee are to oversee group accounting policies and practices, the integrity of financial ~ statements and reports, the scope, quality and independence of our external audit arrangements, the effectiveness of risk management policies and the adequacy of our insurance programs. This committee is also responsible for monitoring overall legal and regulatory compliance. All members of the committee are independent non-executive directors.

Project and the Project Investment Committee....

Members: Charles Curran (Chairman), Bonita Boezeman (from May 2004), Stephen Chapman, Warwick Kent, Nettler Paul McClintock (from May 2004), David Deverall (from September 2003) and Graham Bradley (until September 2003) This committee's main functions are to review and approve investment strategies and policies for all types of investments The managed by the group, to monitor performance of all assets managed on behalf of clients and to review the allocation of the .... group's assets from time to time. This committee does not select stocks for individual Perpetual funds; stock selection is carried out by Perpetual's asset management team. na katalon kacamatan ing Kabupatèn Indonesia.
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Human Resources and Remuneration Committee. The second

Members: John Curtis (Chairman), Bonita Boezeman, Charles Curran, Sandra McPhee (from May 2004) and Robert Savage Armaders, Nachschaft, etwentermachters, Prescher mag 1113 etwente, Nachschaften, Prescher

This committee's charter is to oversee the group's human resources policies and practices, to assist the managing director to implement fair, effective and market competitive remuneration and incentive programs and, after considering advice from external remuneration advisers, to recommend remuneration for non-executive directors, the managing director, executive committee members and senior employees and to review succession and career plans for key executives. During the year the committee oversaw the design of Perpetual's revised remuneration policy, details of which are set out in the Remuneration. Report on page 91.

Nominations Committee

Members: Charles Curran (Chairman), Stephen Chapman (from July 2003 - October 2003), Warwick Kent and Robert Savage (from October 2003) (Secretary Mathematic Construction of the Secretary Proposed State The committee's role is to recommend to the board nominees for the board (including re-election of existing board members) and to review at least annually the size and structure of the board to ensure that the board comprises appropriately qualified and experienced people. This committee is also responsible for the formal evaluation of the board's performance as a whole. Min

Non-executive directors regularly confer without management. present. The board also meets at least twice per year in the absence of the managing director, to discuss the performanceof the managing director and the senior management team.

All directors have unrestricted access to company records and information. We have a formal policy allowing the board or anindividual director to seek independent professional advice at the group's expense provided that the director has obtained the prior approval of the chairman, or if the director is the chairman, the prior approval of a majority of Perpetual's non-executive directors.

Board committees

The board reviews its governance structures, including boardcommittees, annually to assess their effectiveness and efficiency. For example, in September 2003, the board disbanded the Chairman's Committee. Certain functions of the Chairman's Committee are now undertaken by the Nominations Committee and the remaining functions are undertaken by the main board. and the Human Resources and Remuneration Committee.

The membership and a summary of the terms of reference of the board's four committees are set out above. Each committee has written terms of reference. Unless more frequent meetings are required, all committees meet quarterly, except the Nominations Committee which meets at least twice yearly.

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Board performance and remuneration

The board reviews its performance annually commencing in-May. The chairman reviews with each director their individual performance and after obtaining feedback from the other directors, a nominated director reviews the chairman's performance. This process aims to ensure that individual directors continue to contribute effectively to the board's performance. In-2004, the board has expanded its performance evaluation. process to include a formal review of the board's overall effectiveness, including its committees. The process for the review is a formal self-evaluation with assistance from external consultants. Each member of the board is interviewed using an agreed questionnaire. The results are then evaluated and presented to the board.

The performance of the managing director is reviewed twice. each year. The managing director completes a self-assessment of his performance which is reviewed by the Human Resources. and Remuneration Committee. The committee makes a recommendation to the board in respect of the managing director's remuneration which takes into account performance. against objectives and other contributions and relevant market. data. The performance of other senior executives is assessed. by the managing director and also reviewed by the Human-Resources and Remuneration Committee. Details of the managing director's and senior executives' remuneration are set out on page 98 of the Remuneration Report.

Contracts with directors

In the financial year, no director disclosed a material personal. interest in any contract entered into by any member of the Perpetual group other than the remuneration paid to the directors as outlined in this annual report, and the deeds of indemnity described below.

Indemnity of directors and officers.

The company has entered into deeds to indemnify directors. and officers of Perpetual and its subsidiaries from all liabilities. incurred as a director or officer, except liabilities to Perpetual. and its subsidiaries, and liabilities that arise out of conduct that was not in good faith, in addition, the company has directors and officers' insurance against claims the company may be liable to pay under these indemnities. This policy also insures directors and officers directly.

Perpetual's Subsidiary Boards

The boards of Perpetual's subsidiaries consist wholly of executive directors. Perpetual's corporate governance policies are applied to its subsidiaries but adapted to reflect the sizeand nature of each subsidiary's operations and to recognise the fact that the boards of these companies do not comprise. independent directors.

Our Commitment To Financial Integrity

The board has adopted policies designed to ensure that the group's financial reports are true and fair, meet high standards. of disclosure and audit integrity and, when read in conjunction. with the group's annual and periodic reports to shareholders, provide all material information necessary to understand the group's financial performance and position.

To underpin the integrity of Perpetual's financial reporting, it is Perpetual's practice for the managing director and chief financial officer to state to the board in writing that in all material respects:

• the financial statements and the accompanying notes for the financial year comply with accounting standards and the financial statements and notes for the financial year give a true and fair view of the financial position and performance of the group.

• the statements regarding the integrity of the financial reports. are founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the board.

• the group's risk management and internal compliance and control systems to the extent they relate to financial reporting. are operating efficiently and effectively based on the risk management framework adopted by the group.

The statement from the managing director and chief financial officer is supported by written statements from senior. executives, detailed financial analysis and the group's risk management, compliance and control systems. As previously noted, the chief financial officer is present when the board considers financial matters, as he attends all board meetings. except when issues concerning personnel and remuneration. are considered.

Audit process

The group's financial accounts are subject to an annual audit by an independent, professional auditor, who also reviews the group's half-yearly financial statements. The Audit Risk and Compliance Committee oversees this process on behalf of the board. The auditor attends each quarterly meeting of the Committee, and it is the Committee's policy to meet with the auditor for part of these meetings in the absence of all management executives. The Committee chairman meets face to face with our audit partner at least once every quarter also in the absence of executives. The auditor has a standing invitation to meet with the Committee, its chairman or with the group's chairman in the absence of management. The auditor attends board meetings at which the annual and half-yearly accounts. are adopted. For part of these meetings, the board has discussions with the auditor in the absence of executives. Inaddition, the auditor attends the annual general meeting for the purpose of answering shareholder questions about the audit. report and audit process.

Auditor independence

The board has in place policies for ensuring the quality and independence of the group's external auditor. Those policies include the following:

• the group's audit must be tendered at least every seven years. and after the fifth year, the board must make a positive decision each year to retain existing arrangements;
• the audit partner must be rotated at least every five years, with a two year gap before a partner may be reappointed; and
• former audit partners and audit firm employees involved in our audit cannot become directors or employees of groupcompanies for at least two years.

In addition, our policies prohibit our external audit firm being engaged to provide non-audit services that may materially. conflict with its ability to exercise objective and impartial judgment on issues that may arise within our audit, such as services related to mergers and acquisitions, tax planning and strategy, senior management recruitment, significant valuations and appraisals, design and implementation of financial information systems. In 2004, the greater part of fees paid to our external auditor for work other than audit of group accounts was for audit services in relation to investment funds. of which Perpetual companies are the responsible entity and/or manager. It is the board's view that these audit services are appropriately provided by the group's external auditor and are not services of a kind that might impair the impartial judgement. of the external auditor in relation to the group's audit.

The current external auditor is KPMG. The audit partner for the 2004 financial year was Mr Chris Hall, who first supervised our audit in 2000, in accordance with Perpetual's policy, having served as the company's audit partner for five years, Mr Hall will retire as the company's audit partner at the conclusion of the 2004 Annual General Meeting, after which Dr Andries Terblanche will be the company's audit partner.

In accordance with its policy, the board has considered whether to retain KPMG as its auditor for the 2005 financial year. As the audit performance was considered satisfactory and a new chief financial officer was appointed in March 2004, the board has decided to retain KPMG as the company's auditor for the 2005 financial year to maintain continuity.

Risk management and oversight

The board is committed to effective risk management, bearing in mind the need to appropriately balance risk and reward. All executives are accountable for managing risk within their area. of responsibility and are required to manage risk as part of their business objectives.

This year a detailed review of our risk management framework. and policy was carried out with the benefit of external consultants. The review noted Perpetual's pervasive risk culture. and good overall risk framework. A summary of Perpetual's risk management framework is available on Perpetual's internet site. Our aim is to enhance our current framework and develop a more anticipatory, cost efficient and integrated approach to risk management.

Our Commitment To Shareholders Market disclosize

The board is committed to ensuring that shareholders are fully informed of all material matters that affect the position and prospects of the group. It seeks to accomplish this through: - the annual report released in August each year;

• the chairman's and managing director's addresses to the
• annual general meeting, which are malled to shareholders;
• letters from the chairman to all shareholders in February (on the release of the half yearly financial results), in May each year, and whenever significant developments occur; and
• posting significant information on Perpetual's internet site as soon as it is disclosed to the market.

Perpetual has a market disclosure policy to ensure compliance. with its continuous disclosure obligations ander ASX Listing. Rule 3.1 and the Corporations Act 2001. The managing director, chief financial officer, general counsel and company secretary are members of the continuous disclosure committee. responsible for deciding what information is required to be disclosed to the ASX. Perpetual ensures that all senior executives give regular sign-offs as to whether there are matters that require disclosure to the ASX. The board considers its disclosure obligations at each scheduled board. meeting. Copies of major announcements lodged with the ASX in the past year and webcasts of scheduled analysts' briefings. can be found on the company's website.

Perpetual generally holds its annual general meeting in October and a copy of the notice of annual general meeting will be posted on the Perpetual website. The board encourages shareholders to attend the annual general meeting or to vote. on the motions by appointing a proxy if unable to attend.

Share dealings by directors and employees

Our overriding policy is that there should be no dealings in the company's shares by any director or employee who is inpossession of price sensitive information or where the dealing is for short-term or speculative gain. This year Perpetual has reviewed its policy in respect of share trading and consolidated the periods in which trading is permitted in the company's

Our aim is to enhance our current framework and develop a more anticipatory, cost efficient and integrated approach to risk management

Mr Ivan Holyman has been appointed as chief risk officer for the group and will create a centralised group of risk management professionals to be co-located with the business. As chief risk officer, Mr Holyman is responsible to the board through the Audit Risk and Complance Committee which oversees the effectiveness of the risk management program.

shares. Provided they do not have price sensitive information, directors and employees are permitted to deal in the company's sheres only in the one month periods commencing:

• 24 hours after announcement of the half year and full year financial results;
• 24 hours after release of the Chairman's letter to Shareholders ांत May:
• at the conclusion of the annual general meeting

The group's policy requires prior approval for any share. dealings from the chairman in the case of directors, from a nominated director in the case of the chairman and from the managing director in the case of senior executives. Prior approval is also required from the managing director or company secretary in the case of certain employees who are more likely to have access to potentially price sensitive information through their position in the company.

Our Commitment To Our Employees

Perpetual aspires to be a well regarded and progressive employer whose employees work in a non-discriminatory, safeand supportive environment where they can contribute their talents fully to the achievement of our corporate strategy. Perpetual is an equal opportunity employer and our hiring, promotion, remaneration and other people management policies. aim to respect basic human rights and avoid discrimination on the grounds of race, sex, age, religion, disability, sexual preference or political affiliation. We are also committed to provide our employees with training and development. opportunities that will advance their career prospects and with remuneration policies that reward high achievement.

Perpetual is committed to protecting the health, sefety and wellbeing of all employees and visitors to our premises. We do this by maintaining workplaces that meet contemporary safety standards designed to minimise risks to health and by providing training and supervision on health and safety issues.

Perpetual regularly surveys employees to gauge satisfaction. with the group's policies and performance. Survey results are reviewed by the board and taken into account in setting targets. for improvement in relevant areas.

Our Commitment to our Stakeholders

Perpetual aspires to do what is right by our stakeholders. through the efficient delivery of services to our clients, through the returns we provide to our shareholders, through the taxes we pay, through the employment and training we provide our employees and through our philanthropic endeavors.

This year Perpetual has introduced the Perpetual Staff Giving Program to support employees who wish to give back to the community. Through the program, Perpetual employees are able to make requiar donations to six community organisations. from their pre-tax pay. Perpetual matches employees donations through the Perpetual Foundation. Details of the Staff Giving Program, the Perpetual Foundation and Perpetual's other philanthropic activities are set out on page 10 of this report.

Perpetual has a fongstanding commitment to compliance and acting in the best interests of our clients. This includes a special interest in continually improving our own legal knowledge and having access to a wide range of legal resources. As a result, Perpetual has agreed to sponsor a new Chair in Financial Services Law at the University of Technology Sydney for the next three years to support the development of legal resources for the financial services industry.

Shareholders who wish to know more about Perpetual's corporate policies are invited to review our website. www.perpetual.com.au, or to contact us by email at the address info@perpetual.com.au. Comments and suggestions. from shareholders are welcomed.

Thanks Guman

Charles Curran AO Chairman

24 August 2004

$1/d$ / $d$

David Deverall Managing Director

24 August 2004

2004 financial report

• 45 Directors' Report
• 53 Statements of Financial Performance
• $5\,4$ Statements of Financial Position
• Statements of Cash Flows 55
• 56 Notes to the Financial Statements
• 1. Note 3. Statement of significant accounting policies.
• 62 Note 2. Revenue from ordinary activities.
• 62 Note 3. Profit from ordinary activities before income tax expense.
• 63 Note 4. Individually significant items
• Note 5. Segment information 64
• 65 Note 6. Auditors' remuneration
• 66 Note 7. Income tax expense
• 67 Note 8. Dividends
• GR Note 9. Earnings per share
• 68 Note 30. Cash assets
• 68 Note 31. Receivables
• 69 Note 32. Other financial assets
• 70 Note 33. Property, plant and equipment.
• $73$ Note 34. Intangibles
• 1. Note 35. Deferred tax assets
• 71 Note 36. Other assets

• 71 Note 17. Payables

• $71$ Note 18. Interest-bearing liabilities

• $72$ Note 19. Provisions
• $73$ Note 20. Contributed equity
• 74 Note 21. Reserves
• 74 Note 22. Retained profits
• $75 -$ Note 23. Employee benefits
• 1. Note 24. Financial arrangements
• 1. Note 25. Additional financial instrument disclosure
• 1. Note 26. Commitments
• 82 Note 27. Contingent liabilities
• 83 Note 28. Related parties
• 84 Note 29, Investments in associates
• Note 30. Particulars in relation to controlled entities. 86
• 38 Note 31. Notes to the Statements of Cash Flows
• 89 Note 32. Events subsequent to balance date
• 1. Note 33. International financial reporting standards
• $91$ Note 34. Remuneration report
• $111$ Directors' Declaration
• 112 Independent Audit Report
• 113 List of investments as at 30 June 2004
• 114 Stock Exchange and investor information
• Key dates for shareholders 116
• Five Year Performance Table 116

Dîreterey Rejeci

The directors present their report together with the financial report of Perpetual Trustees Australia Limited (the 'Company') and the consolidated financial report of the Company and its controlled entities (the 'consolidated entity'), for the year ended 30 June 2004 and the auditors' report thereon.

DRESSIDE:

The directors of the Company at any time during or since the end of the financial year are

Charles P Curan AO, a B TCPA (Age 55) Chairman and Independent Director

Appointed ás a director in May 1990, deputy chairman since January 1995 and chairman since October 2001. He is chairman of Capital Investment Group Pty Umited, a director of OBF insurance Group Limited, an International Advisor to Goldman Sachs JBWere, a member of the Financial Sector Advisory Council and a member of the Council of the National Gallery of Australia. He is chairman of Perpetual's Nominations Commutee, chairman of the investment committee and a member of the Human Resources and Remuneration Committee.

Mi Curran brings to the board over 40 years of experience as sfockbroker, birsinessman and investor, as well as over 26 years experience as a public company director and chairman.

Daniel M Deveralt, Pi (Hous) MRA (Standard (Age 38) Manading Director

Appointed managing director in September 2003. He held senior management positions at Macquarie Bank Limited for scven years including group head of the Funds Management Grup and Reader Stategy, Analyse and Partning Princip the newset getalligy consultation in Pan historicula and The EK Pathership Place a memory of Persetials In Stricht Committee a drector of Perpetual James Pielding Linited and ASX Perpetual Registrars Linited.

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Mr Déveral bracs to Perpetual a combination of strategic ability and commercial drive and skills in product innovation and experience in management across a broad range of investment products and severes, He also possesses an extensive overall understanding of the wealth management

andwider financial services industry.

PERPETUAL TRUSTEES AUSTRALIA LIMITED AND ITS CONTROLLED ENTITIES

Stephen J Chapman, BCorn, MBA, ACA (Age 48) Deputy Chairman and Independent Director

Appointed as a director in May 1995 and deputy chairman. since October 2001. He is a founder and chairman of Baron-Paraners Limited, an Australian merchant bank, He is also a director of Blackmores Limited, Hostworks Group Limited and Macquarie Radio Network Pty Limited. He is a member of Perpetual's Investment Committee.

Mr Chapman's career has given him wide experience of the strategic and financial issues affecting public companies and investment markets.

Bonita L Boezeman AO, PMD (Rarv.) (Age 55) Independent Director

Appointed as a director in August 1996. She was formerly managing director and chairman of the South Pacific Division. of Time Life, a subsidiary of Time Warner Inc. She is deputy. chairman of NSW Lotteries Corporation and a director on the board of the Defence Housing Authority and the Catholic Development Fund. She is a member of Perpetual's Investment. Committee and Human Resources and Remuneration Committee

Ms Boezeman brings to the Perpetual board over 25 years of experience as a local and international executive, together with expertise in marketing, client relationship management and business development.

Robert M Savage, FASCPAS (Age 62) Independent Director

Appointed as a director in August 2001, He was formerly. chairman and managing director of IBM Australia and New Zealand. He is chairman of Mincom Limited and David Jones. Limited, and a director of Smorgon Steel Group Limited. He is a member of Perpetual's Audit Risk and Compliance. Committee, Human Resources and Remuneration Committee. and Nominations Committee.

In addition to his particular expertise in the management of information technology and systems. Mr Savage brings to the Perpetual board his experience as a senior executive in Australia and the Asian region, including experience in peoplemanagement and organisation effectiveness issues.

John S Curtis, SA, LLB (Hons) (Age 54) Independent Director

Appointed as a director in April 1995. He is chalrman of Allianz Australia Limited and Caliburn Partnership Pty Limited. He is a director of St George Bank Limited and other companies. He is chairman of Perpetual's Human Resources. and Remuneration Committee.

in addition to his experience as a former lawyer and chief executive, Mr Curtis brings to the Perpetual board his considerable experience as a professional non-executive. director across a wide range of industries together with experience in insurance and investment markets.

Warwick G Kent AO, CIT.WA, BEC, FCPA (Age 68) Independent Director

Appointed as a director in May 1998. He is a former managing director and deputy chairman of Bank of Western Australia Limited. He is chairman of Coventry Group Limited and WA Newspapers Holdings Limited and a director of Commonwealth Bank of Australia. He is a member of Perpetual's Audit Risk and Compliance Committee, Investment Committee and Nominations Committee.

As an experienced banking executive, Mr Kent brings to the Perpetual board his background in the management of operations, finance and risk management in the financial services industry together with his experience as a non-executive chairman and director.

Sandra McPhee, Dip Ed (Age 58) Independent Director

Appointed as a director in April 2004. She has held senior executive positions with Qantas for the past 10 years and was Group General Manager A@ances, with responsibility for the strategic direction of the alliances of the airline. She is currently a director of Coles Myer, Primelife Corporation and Australia Post. She is a member of Perpetual's Audit Risk and Compliance Committee and Human Resources and Remuneration Committee.

Ms McPhee brings to the board her extensive experience in business including 20 years in the management of consumer facing organisations at a senior level.

Paul McClintock, BA, LLB (Age 55) Independent Director

Appointed as a director in April 2004. He is a director of investment banking firm McClintock Associates, a role he has held since 1985, apart from the period between July 2000 and March 2003 when he was Secretary to the Cabinet and Headof the Cabinet Policy Unit in the Australian Government. As Head of the Cabinet Policy Unit, Mr McClintock was the Prime-Minister's senior personal adviser on strategic directions in policy formulation. He is chairman of Affinity Health Limited, and of ADI Limited, and a Commissioner of the Realth Insurance Commission. He is a member of Perpetual's Audit. Risk and Compliance Committee and Investment Committee.

Mr McClintock brings to the board 30 years' experience as a legal adviser, investment banker and senior policy adviser to Government and corporations.

Linda B Nicholls, SA (Econ), MBA (Harv.) (Age 56) Independent Director

Appointed as a director in March 1996. She is chairman of Australia Post, deputy chairman of Healthscope and a director of Sigma Pharmaceutical Group and St George Bank Limited. She is chairman of Perpetual's Audit Risk and Compliance. Committee.

Ms Nicholls brings to the Perpetual board her 20 years of experience, both local and international, in financial services. and investment management, together with considerable experience in relation to the audit and risk management issues faced by public companies.

Directors who resigned during the year

Graham Bradley, 8A LEB (Hons) (Syd), LLM (Harv.) (Age 56) Former Managing Director

Appointed as managing director in September 1995 and resigned on 22 September 2003.

Alternate Directors

Jane Couchman, BA LLB, General Counsel (Age 36) Alternate Director

Joined Perpetual in April 1998. In December 2003, she commenced as General Counsel and is an alternate director for David Deverall on the board of Perpetual Trustees Australia Limited. Prior to joining Perpetual she worked at the law firm, Henry Davis York in their General Litigation and Banking and Finance departments.

Michael Stefanovski, BEc, CPA, ACS (Age 43) Former Alternate Director

Appointed as alternate director for Charles Curran AO from 20 November 2001 until 16 October 2003.

Company Secretary

Joanne Hawkins, 8Com LLB, Grad Dip CSP, FCIS (Age 38)

Joined Perpetual as Deputy Company Secretary in November 2002 and was appointed Company Secretary in June 2003. Prior to this she was Assistant Company Secretary of Macquarie Bank and Ord Minnett and was Company Secretary, National Bank of the Solomon Islands. Ms Hawkins has also worked as a solicitor and legal adviser in New Zealand.

Directors' meetings

The number of directors' meetings which directors were eligible to attend (including meetings of board committees) and the number of meetings attended by each director during the year to 30 June 2004, were:

Director	Audit Risk & Board Chairman's Investment				Nominations	Human Resources
				Compliance		Committee		Committee*		Committee	& Remuneration
				Committee								Committee
	Eligible		Etigible		Eligible		Etiqible	to attend Attended	Eligible		Eligible
C P Curran	to attend Attended 9			to aftend Altended	to aftend.	Attended	5	5	to attend Attended		to attend	Attended
		9				4				4	6	6.
S.J Chapman	9	9		$\cdots$		3	5	5			$\cdots$
B L Boezeman	9	9	3	3			$\cdots$				6	6
J S Curtis	9	9			$\cdots$						6	6.
W G Kent	9	9	5	5	4	4				4
E-P-McClintock		2			$\cdots$			$\cdots$			10.11	1.111
S McPhee		۵		2	$\cdots$			$\cdots$				2
L B Nicholls		9	5.	5	$\cdots$						10.11
R M Savage	9	9	5	5	$\cdots$			$\cdots$		3	6	6.
D M Deverall			$\cdots$	11011	3	3	$\cdots$
G.J Bradiev	2	2	$\cdots$	$\cdots$			5	4				$\cdots$

* Perpetual's Chairmax's Committee has been dissolved and held its final meeting on 12 September 2003.

The alternate directors did not attend board meetings in their capacity as alternate directors during the year. In his capacity as Chief Financial Officer, Mr Stefanovski attended meetings of the board except where matters concerning personnel and remuneration were considered. He also attended meetings of the Audit Risk and Compliance Committee in his capacity as Chief Financial Officer, except when the external auditor met privately with the committee.

The Managing Directors attended scheduled meetings of the Human Resources and Remuneration Committee throughout the year except where matters regarding their performance and remuneration were discussed. They also attended scheduled meetings of the Audit Risk and Compliance Committee throughout the year except when the external auditor met privately with the committee.

Principal activities

The principal activities of the consolidated entity during the financial year were those of funds management, retirement savings and incomes, portfolio management, financial planning, trustee, responsible entity and compliance services, executor services, investment administration and custody services. There were no significant changes in the nature of activities during the year.

Consolidated results

The consolidated net profit for the year attributable to the members of Perpetual Trustees Australia Eimited was \$90,386,000 (2003: \$78,201,000).

Dividends

Dividends paid or declared by the Company since the end of the previous financial year were:

Туре	Cents per share	Total amount \$'000	Franked/unfranked
Declared and paid during the financial year
Final 2003 ordinary	70	26,497	franked.
Interim 2004 ordinary	70	26.669	franked
Special 2004 ordinary	60	19.112	franked
Declared after end of financial year
Final 2004 ordinary	-80	30.6121	franked.
Special ordinary	200	76,5311	franked
Total amount		179,421
* Calculation based on the ordinary shares on issue as at 31 July 2004.
	Note
Dealt with in the financial report as:
-- Dividends	8	72,278
-- Noted as a subsequent event.	8	107,143
		179.421

All the franked dividends paid or declared by the Company since the end of the previous financial year were franked at 30 percent

Review of operations

A review of the operations of the consolidated entity and the results of those operations for the financial year are contained in the Chairman's Report to Shareholders and the Managing Director's Year in Review.

State of affairs

There were no significant changes in the state of affairs of the consolidated entity during the financial year.

Events subsequent to balance date

The Company is currently in discussions with Commonwealth Bank of Australia regarding the sale of its holding in Symetry Limited. A number of alternatives in relation to the purchase by Commonwealth Bank are being explored, but at this stage no agreement has been reached whether or not to proceed with the sale.

After balance date the Company has commenced discussions, preparatory to contract, to lease premises to enable the consolidated entity's activities in Sydney to operate from one location. Once these arrangements are finalised, it is likely that premises in Sydney, currently leased and owned, will be progressively vacated over the period to 30 June 2006. Various costs may be incurred in respect of current contractual arrangements, such as the remaining portion of current leases. The financial effect is unlikely to exceed \$5 million after tax, and has not been brought to account in the 2004 financial report.

The directors are not aware of any other event or circumstance since the end of the financial period not otherwise dealt with in this report or the consolidated financial report that has or may significantly affect the operations of the consolidated entity, the results of those operations or the state of affairs of the consolidated entity in subsequent financial years.

Likely developments

Further information about likely developments in the operations of the consolidated entity and the expected results of those operations in subsequent financial years has not been included in this report because the directors believe, on reasonable grounds, that to include such information would be likely to result in unreasonable prejudice to the consolidated entity.

Directors' and other officers' emoluments

Details of directors' and other officers' emoluments paid during the year ended 30 June 2004 to directors and the five most highly paid executive officers, share and option plans together with Perpetual's remuneration policies, are provided in Note 34 to the financial statements.

The five most highly paid executive officers in the year ended 30 June 2004 were: R Boyer, D C Crowley, G D Doherty, E Gonzalez and P A Vernon.

Options

The Company issues options under the Executive Share Option Plan, details of which are provided in Notes 23 and 34 to the financial statements.

Total outstanding options issued to executives and other staff as at 30 June 2004 are summarised below:

Number of options on issue	1,002,260
Weighted average exercise price	333.54
Closing share price - 30 June 2004	\$46.99
Exercise price value of options on Issue (1000).	\$33,616
	a Markato
Market price value of options on issue ('000).	\$47.096

The number of options on issue equates to 2.6 percent of issued capital.

The cost of the 29,258 options issued during 2004, valued by the Binomial Option Pricing model, was \$221,775. This cost is not reflected in the Statement of Financial Performance.

The dilutive effect of outstanding options on earnings per share is reported in Note 9 to the financial statements.

At 30 June 2004, unissued ordinary shares of the Company under option, and shares issued as a result of the exercise of options, are shown in Note 23 to the financial statements. These options do not entitie the holder to participate in any share issue of the Company or any other body corporate.

Since the end of the financial year a further 29,329 options have been exercised, at a weighted average exercise price of \$31.90, and a further 29,736 options have been issued.

As at the date of this report, there were 1,002,667 options on issue.

There were no amounts unpaid on the shares issued.

Employee share schemes

In addition to the Executive Share Plan and the Executive Option Plan described in Note 34 to the financial statements, the group makes two further equity based benefit programs generally available to staff and executives: the Employee Share Purchase Plan and Employee Share Reward Plan.

Under the Employee Share Purchase Plan, eligible employees may acquire Perpetual shares, with the cost being financed by a non-recourse, 10 year interest free loan from Perpetual which is repaid by dividends paid on shares issued under the plan. This plan has been in operation since 1995. During the 2004 financial year a total of 37,165 shares were issued to the plan trustee for a total value of \$1,566,000 for the benefit of 546 employees. Over 76 percent of eligible employees elected to acquire shares under the plan in 2003. The board believes that this plan has created significant benefits for the group by assisting employees at all levels to acquire an ownership stake in Perpetual.

Under the Employee Reward Share Plan, employees may be offered up to \$3,000 worth of Perpetual shares at no cost in recognition of their contribution to Perpetual's performance over the previous financial year. This plan was first activated in 2002 to acknowledge the contribution by staff to the financial results of the company in the 2002 financial year. No shares have been issued under this scheme since that year.

Directors' interests

The relevant interest of each director in the share capital of the Company shown in the Register of Directors' Shareholdings and the relevant interests of each director in registered schemes of the consolidated entity are set out in Note 34 to the financial statements.

Environmental regulation

The consolidated entity acts as trustee or custodian for a number of property trusts, which have significant developments throughout. Australia. These fiduciary operations are subject to environmental requlations under both Commonwealth and State legislation in relation to property developments. Approvals for commercial property developments are required by state planning authorities and environmental protection agencies. The licence requirements relate to air, noise, water and waste disposal. The responsible entity or manager of each of these property trusts is responsible for compliance and reporting under the government legislation.

The consolidated entity is not aware of any non-compliance in relation to these ficence requirements during the financial year.

Indemnification of directors and officers

The Company has resolved to indemnify the current directors and officers of the Company against all liabilities to another person (other than the Company or a related body corporate) that may arise from their position as directors of the Company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith. The resolution stipulates that the Company will meet the full amount of any such liabilities, including costs and expenses.

The Company's controlled entities have also resolved to indemnify their current directors and officers for all liabilities to another person (other than the Company or a related party) that may arise from their position, except where the liability arises out of conduct involving a lack of good faith. The resolution stipulates that each relevant controlled entity will meet the full amount of any such liabilities, including costs and expenses.

Insurance

In accordance with the provisions of the Corporations Act 2001, the Company has a Directors' and Officers' Liability policy which covers all directors and officers of the Company and its controlled entities. The terms of the policy specifically prohibit disclosure of details of the amount of the insurance cover and the premium paid.

Authorised trustee corporation

The Company is an authorised trustee corporation as defined in Section 9 of the Corporations Act 2001. In accordance with ASIC Class Order number 98/105 dated 10 July 1998 made pursuant to Subsection 341(1) of the Corporations Act 2001, the Company is relieved from compliance with paragraphs 4.1 to 7.2 of accounting standard AASB 1033 "Presentation and Disclosure of Financial Instruments" and paragraphs 4.1 to 7.2 of accounting standard AASB 1034 "Financial Report Presentation and Disclosures" insofar as those provisions require the directors of the Company to ensure that the Company's financial reports disclosed, whether in the Statements of Financial Position or any note to those financial reports: (a) #abilities incurred by the Company whilst acting:

• (i) as trustee; or
• (ii) in any representative capacity where the Company has taken in its own name a grant of probate of the will of a deceased person or of letters of administration of the estate of a deceased person in respect of which the Company has a valid and subsisting right of indemnity out of any assets which are sufficient to satisfy the right of indemnity; and
• (b) the amount and description of the assets from which the Company has a right of indemnity in respect of any liability to which paragraph (a) applies.

Rounding off

The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, amounts in this report and the financial report have been rounded off to the nearest thousand dollars, unless otherwise stated.

Signed on behalf and in accordance with a resolution of the directors:

Thanks Cuman

Charles Curran AO Chairman

Dated at Sydney: 24 August 2004

$\int d\mathbf{k}$

David Deverall Managing Director

Statements of Financial Performance for the year ended 30 June 2004

		Consolidated		The Company
	Note	2004	2003	2004	2003
		\$'000	\$'000	\$'000	\$'000
		iyo mengunu
Reverale from the provision of services		:295,179	267,808	.78,692	76,241
Investment income		10,794	10,985	62,628	51,866
	2	305,973	278,793	141,320	128,107
Expenses
Staff related expenses		(104,060)	(103, 204)	(41,252)	(39,631)
Occupancy expenses		(5,627)	(6,220)	(4,721)	(4, 915)
Administrative and general expenses		(52,709)	(55, 832)	(8,500)	(5,670)
Earnings before interest, tax, depreciation and
amortisation (EBITDA) excluding
investment/business/building sales		143,577	113,557	86,847	77,891
Interest expense		(2,497)	(3,001)	$^{-(30)}$	(212)
Depreciation and amortisation expense	3	(13, 176)	(10, 186)	. (9,339)	(6,196)
Goodwill amortisation expense	3	(3.794)	(3,868)
		(19,467)	(17.055)	(9,369)	(6, 408)
		. Personal
Proceeds from sale of investments/business/building		$-11,844$	37,477	3,956	16,320
Cost of investments/basiness/building disposed of		(9.697)	(27, 476)	(2,922)	(8,389)
Profit on disposal of investments/business/building	3	2,147	10,001	1.034	7,931
Share of net profits/(losses) of associates accounted for		Have t
using the equity method	29	1,925	(369)
		Simply store		the support of
Profit from ordinary activities before income tax expense		128,182	106,134	78,512.	79,414
Income tax expense	7	(37,796)	(27, 933)	(6,058)	(6, 772)
Net profit attributable to members of the parent entity		90,386	78.201	72,454	72,642
Non-owner transaction changes in equity	21	(715)
Decrease in asset revaluation reserve Total changes in equity other than those resulting		ti in service.		ti kekala ya
from transactions with owners as owners		89,671	78.201	72.454	72,642
Basic earnings per share - cents per share.	9	237.8	207.1
Diluted earnings per share - cents per share	9	236.3	206.4

The Statements of Financial Performance are to be read in conjunction with the notes to the financial statements.

Statements of Financial Position as at 30 June 2004

		Consolidated		The Company
	Note	2004	2003	$\degree$ 2004	2003
		\$'000	\$'000	\$'000	\$'000
				والحاجان والمنا
Current assets		saya kitib
Cash assets	10	-163,368	113,199	127,922	72,655
Receivables	11	$-47,874$	48,512	20,160	22,900
Other financial assets	12	$-485$	448	2384	348
Other	16	12,367 والمتمام أبال	13,226	10,738 Saabbooks.	10,255
Total current assets		224,094	175,385	159,204	106,158
Non-current assets				governo
Receivables	11	13,603	34,695	13,603	14,695
Investments accounted for using the equity method	29	38,776	37,351		$\sim$
Other financial assets	12	64,407	72,937	$-157,238$	160,077
Property, plant and equipment	13	34,455	42,691	$-12,510$ .	16,915
Intangibles	14	$-51,870$	55,303	Service and	$\cdots$
Deferred tax assets	15	16,367	15,176	$\scriptstyle\ldots$ 16,367 -	11,483
Other	16	11,849	17,634	11,849	17,482
		Simulation		jiya kata
Total non-current assets		231,327 tra sepas su	255,786	211,567 r thread and	220,652
Total assets		455,421	431,171	370,771	326,810
				aa jirtaan
Current liabilities				a bija tha
Payables	17.	46,679	38,424	85,914	55,256
Interest-bearing @abilities	18	o Prestaga	3,000		3,000
Current tax liab@ties		15,596	16,141	.15,569 -	5,789
Provisions	19	26,229	28,929	26,229 ka se karang	25,333
		a Prima alla Alpha
Total current liabilities		88,504	86,494	127,712	89,378
Non-current liabilities
Interest-bearing #abilities	18	$-45,000$ .	45,000
Deferred tax liabilities		$\sim$ 364	948	$-364$	273
Provisions	19	6,196	11,302	3,907	9.086
				No anno
Total non-current liabilities		51,560	57,250	4,271	9,357
				Programs
Total liabilities		140,064 a talene shi	143,744	131,983 protessed the	98,735
Net assets		315,357	287,427	238,788	228,075
Equity		page of the		$\alpha$ , and $\alpha$ , and $\alpha$ , and
Contributed equity	20	$-132,853$	122,316	132,853	122,316
Reserves Retained profits	21 22	$^{+87,633}$ 94,871	86,201 78,910	49,354 56,581	48,320 57,439
Total equity		315,357	287,427	238,788	228,075

The Statements of Financial Position are to be read in conjunction with the rotes to the financial statements.

Statements of Cash Flows for the year ended 30 June 2004

		Consolidated		The Company
	Note	$\bigcirc$ 2004 \$'000	2003 \$'000	$-2004$ \$'000	2003 \$'000
Cash flows from operating activities				to play a title
Cash receipts in the course of operations		:332,630	294,221	1198,777	85,120
Cash payments in the course of operations		$(184,747)$ $(181,555)$		$(52,656)$ .	(45,390)
Shares purchased to satisfy long term staff incentive
and retention programmes	31(c)	(1,462)		$(26, 792)$ (1,462)	(26, 792)
Dividends received		13,590		$6,303 - 56,766$	46,870
Interest received		$-4,734$		$5,657$ $\therefore$ 3,869	5,026
Borrowing costs paid		$(2,425)$ .	(2,931)	$-$ (30)	(242)
Net advances from related entities		the common	$\sim$	$-32,071$ .	2,505
Income taxes paid		(40, 118)	(36, 635)	(14, 433)	(18, 876)
Net cash provided by operating activities	31(b)	112.202	57,268	122,902	47,221
Cash flows from investing activities
Payments for property, plant and equipment.		(5,707)	(7.490)	(4,984)	(6, 371)
Payments for investments		(1,590)	(10, 298)		(4, 841)
Proceeds from sale of non-current assets		$\sim$ 32.	840	ે કે,	7
Net proceeds from the sale of Fund Services	31(d)	raa kale	9,000	sa kiril lan	9,000
Advances to associates.		$(1,940)$ .	{850}	$\mathbb{C}\left{1,940\right}$	(850)
Repayments of advances to associates		3.973	2,039	3,973	2,039
Proceeds from sale of investments		11,844	26,975	3,956	7,320
Net cash provided by investing activities		6,612	19,216	1,010	6,304
Cash flows from financing activities		Salam Salar
Proceeds from issue of shares		6,633.	4,279	6,633	4,279
Share buy back			(10, 170)		(10, 370)
Repayment of borrowings		(3,000)	(3,130)	$^{1}(3,000)$	(3,000)
Dividends paid		(72, 278)	(64, 235)	(72, 278)	(64,235)
Net cash used by financing activities		(68, 645)	(73, 236)	(68, 645)	(73, 126)
		ji sa mkoa mmu
Net increase/(decrease) in cash held		50,169	3,248	55,267	(19,601)
Cash at the beginning of the financial year		113,199	109,951	72,655	92,256
Cash at the end of the financial year	31(a)	Report Follows 163,368	113,199	127,922	72,655

The Statements of Cash Flows are to be read in conjunction with the notes to the financial statements.

Notes to the Financial Statements for the year ended 30 June 2004

Note 1. Statement of significant accounting policies

The significant policies which have been adopted in the preparation of this financial report are:

(a) Basis of preparation

The financial report is a general purpose financial report which has been prepared in accordance with Accounting Standards, Urgent Issues Group Consensus Views, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. It has been prepared on the basis of historical costs and, except where stated, does not take into account changing money values or fair values of non-current assets.

These accounting policies have been consistently applied by each entity in the consolidated entity and are consistent with those of the previous year. Where necessary, comparatives have been reclassified and repositioned for consistency with current year disclosures.

(b) Principles of consolidation

The consolidated financial statements of the economic entity include the financial statements of the Company, being the parent. entity, and its controlled entities (the consolidated entity).

Where an entity either began or ceased to be controlled during the year, the results are included only from the date control. commenced or up to the date control ceased.

Unrealised gains and losses and inter-entity balances resulting from transactions with or between controlled entities are eliminated in full on consolidation.

(c) Goodwill - Note 14

Goodwill represents the excess of the purchase consideration plus incidental costs over the fair value of the identifiable net assets acquired on the acquisition of a controlled entity. Goodwill is amortised on a straight line basis over the period during which the benefits are expected to arise. The period of amortisation is up to 20 years.

The unamortised belance of goodwill is reviewed at least at each reporting date. Where the balance exceeds the value of expected future benefits, the difference is charged to the Statement of Financial Performance.

For associates, the consolidated financial statements include the carrying amount of goodwill in the equity accounted investments' carrying amounts.

(d) Revenue recognition -- Note 2

Revenues are recognised at fair value of the consideration received net of the amount of goods and services tax (GST) payable to the taxation authority.

Revenue from fees and commissions

Revenue from fees and commissions is earned from the provision of services to customers outside the consolidated entity. Revenue is recognised when the products or services are provided, or when the fee or commission in respect of services provided is receivable.

Interest income

Interest income is recognised as it accrues taking into account the effective yield of the financial asset.

Sale of non-current assets

The gross proceeds of non-current asset sales are included as revenue of the consolidated entity. The profit or loss on disposal of assets is brought to account at the date an unconditional contract of sale is signed.

Other revenue

Revenue recognition policies for other financial assets are described in Accounting Policy Note 1@.

(e) Loans and borrowing costs - Note 18

Loans are carried on the Statement of Financial Position at their principal amounts.

Borrowing costs include interest, amortisation of discounts relating to borrowings and lease finance charges. Borrowing costs are expensed as incurred.

(f) Income tax - Note 7

The consolidated entity adopts the income statement (ability method of tax effect accounting, Income tax expense is calculated on profit from ordinary activities adjusted for permanent differences between accounting and taxable income. The tax effect of timing differences, which arise from items being brought to account in different periods for income tax and accounting purposes, is carried forward in the Statement of Financial Position as a deferred tax asset or a deferred tax liability.

Deferred tax assets are not brought to account unless realisation of the asset is assured beyond reasonable doubt. Deferred tax assets relating to entities with tax losses are only brought to account when their realisation is virtually certain. The tax effect of capital losses is not recorded unless realisation is virtually certain.

Tax consolidation

The Company is the head entity in the tax-consolidated group comprising all the Australian wholly-owned subsidiaries set out in Note 30. The implementation date for the tax-consoldated group was 1 July 2003. The head entity recognises all of the current. and deferred tax assets and liabilities of the tax-consolidated group (after elimination of intragroup transactions).

The tax-consolidated group has entered into a tax sharing and funding agreement, under which, at the implementation date, the head entity paid for the deferred tax assets of the wholly-owned subsidiaries; and the wholly-owned subsidiaries paid the head entity for assumption of their deferred tax liabilities.

From 1 July 2003, the wholly-owned subsidiaries make contributions to the head entity representing their current tax liability.

Under the tax sharing and funding agreement, the contributions are calculated on a "stand-alone basis" so that the contributions. are equivalent to the tax balances generated by external transactions entered into by wholly-owned subsidiaries. The contributions are payable as set out in the agreement and reflect the timing of the head entity's obligations to make payments for tax liabilities to the relevant tax authorities. The assets and liabilities arising under the tax sharing and funding agreement are recognised as intercompany assets and labilities with a consequential adjustment to income tax expense/revenue.

(g) Non-current assets

The carrying amounts of all non-current assets valued on the cost basis are reviewed at least annually to determine whether they are in excess of their recoverable amount. If the carrying amount of a non-current asset exceeds the recoverable amount, the asset is written down to the lower value. In assessing recoverable amounts, the relevant cash flows have not been discounted to their present value.

(h) Trade debtors - Note 11

Those debtors to be settled within 90 days are carried at amounts due. The collectability of debts is assessed at year end and specífic provision is made for any doubtful accounts.

(i) Earnings per share - Note 9

Basic earnings per share ('EPS') is calculated by dividing the net profit attributable to members of the parent entity for the reporting period, by the weighted average number of ordinary shares of the Company, adjusted for any bonus issue.

Diluted EPS is calculated by dividing the basic EPS earnings, adjusted by the after tax effect of financing costs associated with dilutive potential ordinary shares and the effect on revenues and expenses of conversion to ordinary shares associated with dilutive potential ordinary shares, by the weighted average number of ordinary shares and dilutive potential ordinary shares adjusted for any bonus issue.

(j) Other financial assets -- Note 12

Controlled entities

Investments in controlled entities are carried in the Company's financial statements at the lower of cost or recoverable amount. Dividends and distributions are brought to account in the Statement of Financial Performance when they are declared by the controlled entities.

Associates

An associate is an entity, other than a partnership, over which the consolidated entity exercises significant influence and where the investment in that entity has not been acquired with a view to disposal in the near future.

In the Company's financial statements, investments in associates are carried at the lower of cost or recoverable amount. Income from dividends is brought to account in the Statement of Financial Performance as dividends are received.

In the consolidated financial statements, investments in associates are accounted for using equity accounting principles, frivestments in associates are carried at the lower of the equity accounted amount and recoverable amount. The consolidated entity's share of the associates' net profit or loss after tax is recognised in the consolidated Statement of Financial Performance after adjustments for: revisions in depreciation of depreciable assets and amortisation of goodwill arising from notional adjustments made as at the date of acquisition; dissimilar accounting policies; and the elimination of unrealised profits and losses on transactions between the associate and any entities in the consolidated entity or another associate of the consolidated entity. Other movements in reserves are recognised directly in consolidated reserves.

Other companies and unit trusts

Investments in other fisted and unlisted companies and unit trusts are carried at the lower of cost or recoverable amount. Dividends are brought to account as they are declared. Distributions are brought to account as they are received.

Profits and losses on disposal of long term investments are transferred to a Capital Profits Reserve.

(k) Property, plant and equipment - Note 13

Acquisition

A& assets acquired, including property, plant and equipment and intangibles other than goodw®, are initially recorded at their cost of acquisition at the date of acquisition, being the fair value of the consideration provided plus incidental costs directly attributable. to the acquisition.

The cost of items of property, plant and equipment constructed by the consolidated entity includes the cost of materials and direct labour. The proportion of overheads and other incidental costs directly attributable to its construction are also capitalised to the cost of the property, plant and equipment.

Revaluation

Land and buildings are measured at fair value and are revalued with sufficient regularity to ensure the carrying value does not differ materially from its fair value at the reporting date. Independent valuations are obtained at least every three years. Revaluation increments are recognised in the asset revaluation reserve except for amounts reversing a decrement previously recognised as an expense, which are recognised as revenues. Revaluation decrements are only offset against revaluation increments relating to the same class of asset and any excess is recognised as an expense. Potential capital gains tax is only taken into account if the asset is held for sale.

Depreciation and amortisation

Items of capitalised software, property, plant and equipment, including buildings and leasehold property but excluding freehold land, are depreciated/amortised using the straight line method over their estimated useful lives.

The depreciation rates used for each class of asset for the current and previous years are as follows: $\therefore$ 2.5 percent

• Buildings
• Plant and equipment : 10-27 percent
• Capitalised software : 20-40 percent

Assets are depreciated or amortised from the date of acquisition or in respect of internally constructed assets, from the time an asset is completed and held ready for use.

Subsequent additional costs

Costs incurred on property, plant and equipment subsequent to initial acquisition are capitalised when it is probable that future economic benefits, in excess of the originally assessed performance of the asset, will flow to the consolidated entity in future years. Where these costs represent separate components, they are accounted for as separate assets and are separately depreciated over their useful lives.

Costs incurred on property, plant and equipment that do not meet the criteria for capitalisation are expensed as incurred.

Leased plant and equipment

Leases of plant and equipment under which the Company or its controlled entities assume substantially all the risks and benefits of ownership are classified as finance leases. Other leases are classified as operating leases.

Fínance leases are capitalised. A lease asset and a lease liability equal to the present value of the minimum lease payments are recorded at the inception of the lease. Capitalised lease assets are amortised on a straight line basis over the term of the relevant lease, or, where it is likely the consolidated entity will obtain ownership of the asset, the life of the asset. Lease liabilities are reduced by repayments of principal. The interest components of lease payments are charged to the Statement of Financial Performance.

Payments made under operating leases are charged against profits in equal instalments over the accounting periods covered by the lease term.

(I) Payables - Note 17

Liabilities are recognised for amounts to be paid in the future for goods or services received, whether or not billed to the Company or consolidated entity. Trade creditors are normally settled within 60 days.

(m) Employee benefits - Note 19

Wages, salaries, annual leave and sick leave

Liabilities for employee benefits for wages, salaries, annual leave and sick leave expected to be settled within 12 months of the year-end represent present obligations resulting from employees' services provided to reporting date, calculated at undiscounted amounts based on remuneration wage and salary rates that the consolidated entity expects to pay including related on-costs, such as workers compensation insurance and payroll tax.

Long service leave

The provision for employee benefits to long service leave represents the present value of the estimated future cash outflows to be made resulting from employees' services provided to reporting date.

The provision is calculated using expected future increases in wage and salary rates including related on-costs and expected settlement dates based on employee turnover history and is discounted using the rates attaching to national government bonds at reporting date which most closely match the terms of maturity of the related liabilities. The unwinding of the discount is treated as long service leave expense.

Staff share option plan and employee option plan

The Company granted options to certain employees under executive option plans. Further information is set out in Note 23 and the Directors' Report. The costs of administering the schemes are expensed as incurred.

Employee share purchase plan

The Company granted interest free loans to certain employees of the Company for the acquisition of shares in the Company under an employee share purchase plan. Further information is set out in Notes 23 and 34.

Superannuation

The Company and other controlled entities contribute to a superannuation accumulation fund for employees, and a defined benefits superannuation plan for certain non-executive directors. Contributions are charged against income as they are made. Further information is set out in Note 23.

Deferred staff incentives classified as non-current assets - Note 16

The Company grants certain employees shares under long term incentive and retention plans. Under these plans, shares vest with the employees over periods ranging from three to five years. To satisfy the long term incentives granted, the Company purchases or issues shares under the Executive Share Plan with the cost of the shares purchased or issued being amortised on a straight line basis over the applicable vesting period.

(n) Goods and services tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST'), except where the amount of GST incurred is not recoverable from the Australian Tax Office ('ATO'). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the Statement of Financial Position

Cash flows are included in the Statement of Cash Flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

(o) Provisions - Note 19

A provision is recognised when there is a legal, equitable or constructive obligation as a result of a past event and it is probable that a future sacrifice of economic benefits will be required to settle the obligation, the timing or amount of which is uncertain.

If the effect is material, a provision is determined by discounting the expected future cash flows (adjusted for expected future risks) required to settle the obligation at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability, being risk free rates on government bonds most closely matching the expected future payments, except where noted below. The unwinding of the discount is treated as part of the expense related to the particular provision.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the recovery receivable is recognised as an asset when it is probable that the recovery will be received and is measured on a basis consistent with the measurement of the related provision.

In the Statement of Financial Performance, the expense recognised in respect of a provision is presented net of the recovery. In the Statement of Financial Position, the provision is recognised net of the recovery receivable only when the entity:

• has a legally recognised right to set-off the recovery receivable and the provision; and

• intends to settle on a net basis, or to realise the asset and settle the provision simultaneously.

Restructuring and employee termination benefits

A provision for restructuring, including employee termination benefits, is only recognised when a detailed plan has been approved and the restructuring or termination benefits have either commenced or been publicly announced, or firm contracts related to the restructuring or termination benefits have been entered into. Costs related to ongoing activities are not provided for. The liabilities for termination benefits that will be paid as a result of these restructurings are included in the provision for employee benefits.

Onerous contracts

A provision for enerous contracts is recognised after impairment losses on assets dedicated to the contract have been recognised and when the expected benefits are less than the unavoidable costs of meeting the contractual obligations. A provision is recognised to the extent that the contractual obligations exceed unrecognised assets.

(p) Dividends - Note 8

A provision for dividends payable is recognised in the reporting period in which the dividends are declared.

(c) Revision in accounting treatment - Revenue

In 2003 and prior years the costs for the supply of certain outsourced services were offset against revenue. In 2004 these amounts are reclassified as expenses as these costs are incurred by the consolidated entity and not the relevant managed funds. Comparative information for 2003 has been amended to give effect to this revision.

Financial effect 2003:

There is no change to the Net profit attributable to members of the parent entity for the consolidated entity or for the Company. Revenue from the provision of services increased from \$254,025,000 to \$267,808,000 for the consolidated entity; and from \$75,225,000 to \$76,241,000 for the Company. Administrative and general expenses increased from \$42,029,000 to \$55,812,000 for the consolidated entity; and from \$4,654,000 to \$5,670,000 for the Company.

	Consolidated			The Company
	2004	2003	2004	2003
	\$'000	\$'000	\$'000	\$'000
Note 2. Revenue from ordinary activities
Revenue from operating activities
Gross revenue from fees and commissions	295,147 :	267,768.	$-11,050$	8,582
Management fees - related parties			67,637.	67,652
Investment income
Dividends:
- Related parties			56,000	44,296
- Other parties	13,229,	$4,778 -$	$1.7 - 925.$	1,723
Interest:
- Related parties	$-1,046$	1,021	and the case
- Other parties	-5,866		$4,691$ $-5,195$	4,783
Rent and other investment income	$.653 -$	495.	$-508 -$	1,066
Revenue from outside operating activities
Gross proceeds from sale of property, plant and equipment	32.	40	5	7
	305,973	278,793	141,320	128,107
Other revenue from outside operating activities Gross proceeds from sale of investments/business/building	11,844	37,477	3,956	16,320
Note 3. Profit from ordinary activities before income tax expense
Profit from ordinary activities before income tax has been
arrived at after charging/(crediting) the following items:
Depreciation of property, plant and equipment:
- Freehold fand and buildings	$-280$	239.
- Plant and equipment	6,100	4,233	6,224	3,070
- Capitalised software	6,796	5,714	4,115	3,126
	13,176	10,186	9,339	6,196
Rental charges - operating leases	4,823.	4,828	3,871	3,967
Net movements in provision for:
- Employee entitlements	2,667	5,567	(910)	9,872
- Bad and doubtful debts	(469)	50	(469)	50
Amortisation of goodwill	3,794	3,868		$\cdots$
Net loss on sale of property, plant and equipment	20	62	45.	46
Net (gain)/loss on disposal of investments/business/building:
Sale of investments.	$(2,147)$ .	(667)	(1,0.34)	1,069
Sale of land and building		(334)
Sale of Perpetual Fund Services		(9,000)		(9,000)
	(2, 147)	(30, 001)	(1,034)	(7, 933)

		Consolidated		The Company
	2004	2003	2004	2003
	\$'000	\$'000	\$'000	\$'000
Note 4. Individually significant items included in profit
from ordinary activities before income tax expense
The following significant reverue and expense items
are relevant in explaining the financial performance:
Profit applicable to lost institutional mandates.		4,298
Overprovided and forfeited employee incentives from the prior year.	$1,959 -$	3,750	1,959.	3.750
Provision for self insurance and claims no longer required	4,481		4,414
Provision for restructuring costs no longer required.	1,237.		1,237.
Restructuring costs		(2,469)		(2.469)
Consultancy and professional costs for Strategic Initiative projects	$(1,83.1)$ .		(1, 831)
Additional depreciation arising from reassessment of useful lives
of plant and equipment and software.	(3,906)		(2,991)
Wealth Management restructuring - Consulting and retrenchment costs
Retrenchment costs		(5,271)		(5.271)
Income tax expense adjustment resulting from
an over provision of income tax in a prior year	398	1,284	344	699

Note 5. Segment information

	Wealth Management		Corporate Trust		Unallocated		Consolidated
	2004	2003	2004	2003	2004	2003	2004	2003
	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000
	general requirements		and a support		पार कर		presentations.
Total revenue	245,810	223,616	49,357	44,184	10,806	10,993	305,973	278,793
							tich si
Earnings before interest, tax,
depreciation and amortisation (EBITDA).
excluding investment sales.	115,401	91,576	$-25.937$	23,558	$-2,239$	(1.577)	143.577.	313,557
Depreciation	(9,809)	(7,719)	(1,673)	(790)	(1.694)	(3,677)	(13, 176)	(10, 186)
Segment result	105,592	83,857	24,264	22,768	545	(3, 254)	130,401	103,373
Interest expense					$\mathcal{D}{\mathcal{H}{\mathcal{M}_{\mathcal{A},\mathcal{C}}}}$ .		(2,497)	(3,001)
Goodwill amortisation expense							(3,794)	(3,868)
Profit on disposal of investments/
business/building							$\sim$ 2,147	10.003
Share of net profits/(losses) of associates							$-1,925$	(369)
Income tax expense							(37,796)	(27, 933)
Net profit							90,386	78,201
			and the re-		$\alpha \rightarrow \infty$ the replace the
Assets					San Salaman (1979)		source to the seal
Segment assets	144.901 -	161,051	$\cdot$ 55,565 $\cdot$	54,382	216,179	178,387	416,645	393,820
Equity accounted investments			ww	$\cdots$	38,776	37,351	38,776	37,351
Total assets	144,901	161,051	55,565	54,382	254,955	215,738	455,421	431,171
Total liabilities	(52,790)	(44, 720)	(4, 773)	(4, 597)	(82, 501)	(94, 427)	(140.064)	(143, 744)
Net assets	92,111	116,331	50,792	49,785	172,454	121,311	315,357	287,427
Acquisitions of non-current assets	1,972	4,232	503	430	3,232	2,828	5,707	7,490

The consolidated entity operates in the financial services industry in Australia and provides wealth management and corporate trust services. The major services from which the above segments derive revenue are:

Services

Wealth Management

Management and investment of monies on behalf of private, corporate, superannuation and institutional clients.

Corporate Trust

The Corporate Trust division provides fiduciary services incorporating safe-keeping and recording of assets and transactions as custodian, trustees, registrar or agent for corporate and financial services clients.

The revenue reported for each segment is for services provided to external parties only.

Assets

The assets of the consolidated entity are managed largely on a group basis and cannot be fully attributed to an individual segment. Assets have been allocated to segments where practical on a utilisation basis.

Geographical segments

The consolidated entity operates predominantly in Australia. More than 90 percent of revenue, EBITDA and assets relate to operations in Australia.

	Consolidated		The Company
	2004	2003	2004	2003
		\$	£	s
Note 6. Auditors' remuneration
Amounts received or due and receivable by KPMG:
Audit and related services:
- Audit and review of the consolidated financial statements.	300,000	300,000	300,000	300,000
- Audit and review of managed funds for which the Group is responsible	$-624,887$	430,600
- Audit services in accordance with requlatory requirements.	151,400	110,735	$-20,000$	6,000
- Other assurance services	103,350	138,580	3,200	82,610
	1,179,637	979,915	323,200	388,610
Other services: - Taxation compliance services and review of constitutions, disclosure documents
and tax returns for the Group's managed funds.	$-193,102$	386,183
- Tax compliance services in respect of Group corporate entities	$-61.230$ .	61,193	$-61,230$	61,193
– Other		19,880
	254.332	467.256	61,230	61,193
	1,433,969	1,447,171	384,430	449,803

The other services amounts paid to KPMG are in accordance with the Company's auditor independence policy as outlined in the Corporate Responsib@ty Statement of the annual report.

	Consolidated		The Company
	2004	2003	2004	2003
	\$'000	\$'000	\$'000	\$'000
Note 7. Income tax expense
Prima facie income tax expense calculated at 30% (2003: 30%)
on the operating profit	38.455	31,840	23,554.	23.824
Increase in income tax expense due to:
Amortisation of goodwill	$-1,138$	1,160
Share of associates' net losses		111
Depreciation of buildings	- 60	41
Imputation gross-up on dividends received	383	527	ា16 1	5.877
Other expenditure	954	395	-705.	153
Income tax expense related to current and deferred tax transactions
of the wholly-owned subsidiaries in the tax-conso#dated group			31,426
Consideration paid on utilisation of capital losses
of controlled entities in tax consolidated group			164
	40.990	34,074	55.965	29,854
Decrease in income tax expense due to:
Recovery of income tax expense under a tax sharing and funding agreement. Share of associates' net profits	578
Non-assessable dividends received from controlled entities in tax consolidated group			16,800
Franking credits on dividends received.	$-1.277$	1.757	$-385.$	19.590
Recoupment of capital losses not previously brought to account	$-202$	210	-568	190
Non-assessable gain on sale of business and investments	442	2,890	108	2,603
Sundry items	297	$\cdots$	276
	2,796	4,857	49.563	22,383
Income tax expense on operating profit before individually significant income tax items	38,194	29,217	6,402	7.473.
Less: Income tax over provided in prior year	(398)	(1, 284)	(344)	(699)
Income tax expense attributable to profit from ordinary activities	37,796	27,933	6,058	6,772

At 30 June 2004, the consolidated entity had carried forward capital tax losses of \$8,371,000 (2003: \$78,000) of which the tax benefit at 30 percent of \$2,511,300 (2003: \$23,400) was not recognised in the Statement of Financial Position.

A reconciliation of the capital losses of the consolidated entity is set out below:

Consolidated
$\sim 2004$	2003
. .	\$'000
is need 78.	700
$-8,621$	State
	78.
(673)	(700)
8.371	78
	\$'000 a bagian ann $\sim$ 345

The benefit of capital tax losses carried forward would only be obtained if:

(i) the consolidated entity derives future assessable capital income of a nature and of an amount sufficient to enable the benefit from the deductions for the losses to be realised;

(ii) the consolidated entity continues to comply with the conditions for deductibility imposed by tax legislation; and

(iii) no changes in tax legislation adversely affect the consolidated entity in realising the benefit from the deductions for the capital losses.

Note 8. Dividends

(a) Dividends paid

Dividends recognised in the current financial year by the Company are:

	Cents	Total Amount	$Franked/$	Date of
	Per Share	\$'000	unfranked	Payment
2004
Final 2003 ordinary	- 70	26,497	– franked	3 Sep 03
Interim 2004 ordinary	70	26,669	$\Box$ franked	19 Mar 04
Special 2004 ordinary	50	19.132	franked	23 Jun 04
Total amount	190	72,278
2003
Final 2002 ordinary	- 60.	22,689	∵ franked	20 Sep 02
Interim 2003 ordinary	-60	22,622	franked	21 Mar 03
Special 2003 ordinary	50	18,924	franked	25 Jun 03
Total amount	170	64.235

Franked dividends declared or paid during the year were franked at the tax rate of 30 percent.

(b) Subsequent events

Since the end of the financial year, the directors declared the following dividends:

	Cents	Total Amount	Franked/	Date of
	Per Share	\$'000	unfranked	Payment
Final 2004 ordinary	$\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$	30.632"	Tranked	17 Sep 04
Special ordinary	200	76.531"	franked	17 Sep 04
	280	107.143

* Calculation based on the ordinary shares on issue as at 33 July 2004.

The financial effect of these dividends has not been brought to account in the financial statements for the year ended 30 June 2004 and will be recognised in subsequent financial reports.

	The Company
	2004 Maria Laurence	2003
	\$'000	\$'000
(c) Dividend franking account	The property of the
30% franking credits available to shareholders for subsequent financial years	64,886	54.818

The above available amounts are based on the balance of the dividend franking account, adjusted for franking credits which will arise from the payment of income tax provided for in the financial statements, and after deducting franking credits to be used in payment of dividends provided for in the Statement of Financial Position at the end of the year.

After payment of the final 2004 dividend and special dividend amounting to \$107,143,000, the balance of the dividend franking account will be \$18,968,000.

The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends.

Tax consolidation legislation

On 1 July 2003, the Company and its controlled entities adopted the Tax Consolidation legislation which requires a tax-consolidated group to keep a single franking account. The amount of franking credits available to shareholders of the Company disclosed at 30 June 2004 has been measured under the new legislation as those available from the tax-consolidated group.

no. ັບພ	OU.

Note 9. Earnings per share

	Cents per share
	a Provincia de Alexandro The contract
Basic earnings per share	237.8 207.3
Däuted earnings per share	236.3 206.4

The following reflects the income and share data used in calculating basic and diluted earnings per share:

	\$'000	\$'000
	a Cheese and a series Arrange C
Net profit, used in calculating basic and diluted earnings per share	90.386	78.201
		Number of shares
	. .
Weighted average number of ordinary shares used in the calculation of basic earnings per share	The process of the	38,005,936 37,768,834
Effect of dilutive securities:	Aug. 1
Share options	249.256	114.599
Weighted average number of potential ordinary shares used in the calculation of diluted earnings per share	38,255,192	37.883.433

Subsequent to reporting date, 29,329 ordinary shares were issued as the result of the exercise of options. These shares have not been included in the earnings per share calculation as at 30 June 2004.

Classification of securities as potential ordinary shares

Share options included in the diluted earnings per share calculation are options outstanding under the Executive Option Plan.

	Consolidated		The Company
	2004	2003	2004	2003
	\$'000	\$'000	\$'000	\$'000
Note 10. Cash assets
Cash	633	1,982	362	1,655
Deposits at call	162,735	111,217	127,560	71,000
	163,368	113,199	127,922	72,655
Deposits at call are invested in a cash management must operated by the consolidated entity.
Note 11. Receivables
Current
Trade debtors	45,418	45,634	2,504	2,332
Less: Provision for doubtful debts	(681)	(1,150)	(681)	(1, 150)
	44,737	44,484	1.823	1,182
Other debtors	3,137	4,028	ి. 7,595	1,503
Loans to controlled entities		$\cdots$	16,742	20,217
	47,874	48,512	20,160	22,900
Non-current			to a Passaul
Loans to associates*	13,603	14,695	13,603	14.695

* The majority of non-current loans to associates is compresed of a subsectinated loan to ASX Perpenual Registrars Limited to fund the development of that company's share registry system

		Consolidated		The Company
	2004	2003	2004	2003
	\$'000	\$'000	\$'000	\$'000
Note 12. Other financial assets
Current
Government, municipal and other public securities:
Listed on prescribed stock exchanges - at cost	100	100
Secured toans*	385	348	384	348
	485	448	384	348
Total market value of short term investments listed on prescribed stock exchanges:
Government securities	100	100
Non-current
Shares in controlled entities			110,072	110,032
Unlisted units in controlled entities			2,000	2,083
			112,072	112,115
Shares in associates			12,927	12,927
Shares in other corporations:
Listed on prescribed stock exchange!	1,35,917	47,846	11,750	15.044
Investments in unlisted unit trusts	24,151	20,921	16,192	15,863
	60,068	68,767	27,942	30,907
Government, municipal and other public securities:
Listed on prescribed stock exchanges - at cost	$-142$	142	$^{\circ}$ 100	100
Secured toans*	4,197	4,028	4,197	4,028
	4,339	4,170	4,297	4,128
	64,407	72,937	157,238	160,077
Total market value of investments listed on prescribed stock exchanges:
Shares	$-75,566$	77,688	$-24,862$	24,365
Government securities	142	142	100	100
	75,708	77,830	24,962	24,465
Total market value of investments in un@sted unit trusts	33,955	24.375	24,155	19,287

* Secured toans include employee share purchase loans to full time executives who are directors of the Company or its controlled entities.

1 Includes \$2,943,000 (2003: \$3,340,000) of shares with a market value of \$8,122,000 (2003: \$8,386,000) that is held in a Reserve Fund by a controlled entity.

The Trustee Companies Act 3984 (Victoria) requires that a Reserve Fund be provided, the value of which shall be not less than one half of a percentum of trust estates in Victoria. In the event of the appointment of a liquidator, a receiver, a receiver and manager or an official manager of a trustee company, monies in its Reserve Fund are available for the payment of sums due from the trustee company in accordance with Section 39(3) of the above Act. Pursuant to Section 38 of the above Act, the Company may otherwise provide for the Reserve Fund by appropriating other funds available in any manner in which trust monies may be invested by a trustee under the Trustee Act 1958 (Victoria).

	Consolidated		The Company
	2004	2003	2004	2003
	\$'000	\$'000	\$'000	\$'000
Note 13. Property, plant and equipment
Freehold land and buildings.
At directors' valuation 2004*	$-20,200$	21,500
At cost	$\sim$ 55	56
Provision for depreciation.	(55)	(489)	w.
	20,200	21,066
			$\alpha$ , $\alpha_{\rm max}$ , $\alpha$ , $\alpha_{\rm max}$
Plant and equipment - at cost.	$-49,770$	47,854	$-36,416$	34,675
Provision for depreciation.	(41, 929)	(36, 919)	(30, 306)	(25, 699)
	7,841	10,935	6,110	8,976
	king a tha 1992		an San Ting
Capitalised software - at cost	$-30.474$	28,869	$-14,972$	13,441
Accumulated amortisation	(25, 614)	(38,818)	(10, 117)	(6,003)
	4,860	10,051	4,855	7,438
	$\sim$ $\sim$ $\sim$ the car		$\sim$ 1977 $\sim 100$
Project work in progress - at cost	1,554	639	1,545	501
	34,455	42,691	12,510	16,915

* The directors' valuation (2004) was based on an independent valuation carried out as at 30 June 2004 by Jones Lang La Salle and is on the basis of the open market value of the property. The directors are of the opinion that this basis provides a reasonable estimate of the fair value.

Reconciliations

Reconciliations of the carrying amounts for each class of property, plant and equipment are set out below:

	Freehold land	Plant and	Capitalised	Project work
	and buildings	equipment	software	in progress	Total
	\$'000	\$'000	\$'000	\$'000	\$'000
Consolidated
Balance as at 1 July 2003	21,066	10.935	10.051		42.693
Additions	14	1,810 -	224	3,659.	5,707
Transfers from work in progress.	115	1,248	1,381	(2,744)
Depreciation and amortisation	(280)	(6.100)	(6,796)		(13, 176)
Recoverable amount write-down	(715)				(715)
Disposals		(52)			(52)
Balance as at 30 June 2004	20,200	7,841	4,860	1,554	34,455
Company
Balance as at 1 July 2003		.976	7,438		16,915
Additions		778 -	182	3.024	4.984
Transfers from work in progress.		630	1,350
Depreciation and amortisation		(5,224)	(4, 135)		(9, 339)
Disposals		(50)			(50)
Balance as at 30 June 2004	$\sim$	6,110	4,855	1.545	12,510

	Consolidated		The Company
	2004	2003	2004	2003
	\$'000	\$'000	\$'000	\$'000
	August 19
Note 14. Intangibles
Goodwill - at cost	$-68,687$	68,687
Accumulated amortisation	(16.817)	(13, 384)
	51,870	55,303
			e ka
Note 15. Deferred tax assets
Deferred tax assets comprise the estimated deferred asset at the
applicable rate of 30% (2003: 30%) on the following items:
Provisions and accrued employee entitlements not currently deductible	14,680.	14,052	14,680	10,807
Tax losses carried forward	Ŵ,	584	∯l≡.
Difference in depreciation and amortisation of property, plant
and equipment for accounting and income tax purposes	1,687	539	1,687	676.
	16,367	15,175	16,367	11,483
Note 16. Other assets
Current
Prepayments	6,314	7,450	$-4,685$	4,479
Deferred staff incentives	6,053	5,776	6,053	5,776
	12,367	13,226	10,738	10,255
Non-current
Deferred staff incentives long term	11,849	17,471	$-11,849$	17,471
Other		163		11
	11,849	17,634	11,849	17,482
Note 17. Payables
Trade creditors	43,978	36,131	$-10,116$	8,499
Other creditors and accruals	2,701	2,293	$\bigcirc$ 2,618	2,172
Amounts owing to controlled entities			73,180	44,585
	46,679	38,424	85,914	55,256
	and the re-		part Sera ÷., $\mu \in \mathbb{R}^n$ $\gamma_{\alpha_{1}}$ la Sal
			$\varphi$ , $\psi$ , 長沢市
Note 18. Interest-bearing liabilities			23 M. M o kaz
	1.		til en
Current	and a state
Fixed rate bill facilities		3,000		3,000
	an Ta		$\sim \gamma_{\rm g}$ to ap- and a state
Non-current	$\left(\begin{smallmatrix} 0 & 1 \ 0 & 0 \end{smallmatrix}\right) \left(\begin{smallmatrix} 0 & 1 \ 0 & 0 \end{smallmatrix}\right)$ 1999		the common the contractor of the con-
Fixed rate bill facilities	45,000	45,000

See Notes 24 and 25 for additional information.

	Consolidated		The Company
	2004	2003	2004	2003
	\$'000	\$'000	\$'000	\$'000
Note 19. Provisions
Current
Employee benefits	22,751	24,649.	22,751	21,072
Restructuring provision	(1,088)	2,468	$\bigcap_{i=1}^{n} 1,088$	2,468
Other	2,390	1,812	2,390	1,793
	26,229	28,929	26,229	25,333
Non-current
Internal insurance and claims provision	3,937	7,957	1,648.	5,743
Employee benefits	1,339	1,574	ැ.339	1,574
Other	920	1,771	920	1,771
	6,196	11,302	3,907	9,086
The number of full time equivalent employees at 30 June 2004 was 813 (2003: 824).
Reconciliations
Reconciliations of the carrying amounts of each class of provision,
except for employee benefits, are set out below:
Proposed final dividends
Carrying amount at beginning of year		22,752		22,752
Adjustment to provision due to movement in ordinary shares on issue		(63)		(63)
Payments made during the period		(22, 689)		(22, 689)
Carrying amount at end of year	$\overline{\phantom{a}}$		w.
Restructuring Provision
Carrying amount at beginning of year	2,468.		2,468
Provisions made during the year		2,468		2,468
Re-measurement adjustments	(1,237)		(1,237)
Payments made during the period	(143)	$\cdots$	(143)
Carrying amount at end of year	1,088	2,468	1,088	2,468
Internal insurance and claims - non-current
Carrying amount at beginning of year	$-7,957$	8,100	$-5,741$	5.722
Provisions made during the year	$-1,022$	598	$-387$	186
Re-measurement adjustments –	(4,481)		(4, 414)
Payments made during the period Carrying amount at end of year	(561) 3,937	(741) 7,957	(66) 1,648	(167) 5,741
Other – current
Carrying amount at beginning of year	1,812	1,916	$-1,793$	1,808
Provisions made during the year	$-578$		- 597.	$\cdots$
Payments made during the period		(104)	$\ddot{\ }$	(15)
Carrying amount at end of year	2,390	1,812	2,390	1,793
Other - non-current
Carrying amount at beginning of year	[1, 771]	2,621	(1,771)	2,623
Payments made during the period	(851)	(850)	(851)	(850)
Carrying amount at end of year	920	1,771	920	1,771

	Consolidated		The Company
	2004 Made and	2003	$\overline{2004}$	2003
	\$'000	\$'000	\$'000	\$'000
Note 20. Contributed equity	$\sim$ $\sim$ $\sim$ of the project Service $\cdots$ $\cdots$ . Contractor . . College Contractor 42,500 ang anta		计反应性 化光谱 $\mathcal{O}^{(1,0)}$ and $\mathcal{O}^{(1,0)}{\mathcal{O}^{(1,0)}{\mathcal{O}^{(1,0)}_{\mathcal{O}^{(1,0)}}}}$ and the series The Control 医皮肉皮炎 计相对 and the season of the
Share capital	Chair Concert State Print		and the property $\sim 100\, \rm{km}$ and $\sim 100\, \rm{km}$ The Corporation
38,236,160 (2003: 37,847,187) ordinary shares, fully paid-	132,853	122.316	132,853	122,316

		2004		2003
		Number		Number
Movements in shares on issue	Note	of shares	\$'000	of shares	\$'000
		rengan the alern		The Magazine Street Street Street
Balance at beginning of year		37,847,187.	122,316	37,920,533	128,207
Shares issued:
Executive share plan	23	$-145,948$	1.743
Exercise of staff options.	23	$-305,860$	7,228	202,073 $\sim$	4.279
Employee share plans.	23	2.37,165	1,566	and the property and
Share buy-back			$\cdots$	(275, 419)	${10,170}$
Balance at end of year		38,236,160	132.853	37,847,187	122.316

Note 23 provides details of shares issued on exercise of options.

Shares issued under the Executive and Employee share plans were issued at market value.

During the year ended 30 June 2003, the Company repurchased 275,419 ordinary shares at an average price of \$36.93 per share under Perpetual's on-market share buy-back program. These represented approximately 0.7 percent of the shares on issue by quantity at the time.

Terms and conditions

Rolders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholders' meetings.

In the event of winding up of the Company, ordinary shareholders rank after all other shareholders and creditors and are fully entited to any proceeds of liquidation.

			Consolidated		The Company
	Note	2004	2003	2004	2003
		\$'000	\$'000	\$'000	\$'000
Note 21. Reserves
Generał		103	103
Asset revaluation®		$-6,378$	7,093	$-3,105$	3,105
Capital profits ®		$-63,195$	61,048	46,249 -	45,215
Capital reserve (4)		17,957	17,957
		87,633	86,201	49.354	48,320
Movements during the year
Asset revaluation
Balance at beginning of year		7,093	7,093	3,105	3,105
Less: Revaluation of land and buildings		(715)
Balance at end of year		6,378	7,093	3,105	3,105
Capital profits
Balance at beginning of year		0.61,048	51,047	45,215	37,284
Add: Transfer from retained profits		2,147	10,001	1,034	7,931
Balance at end of year		63.195	61,048	46,249	45,215
Total transfer from retained profits		2,147	10,001	1,034	7,931
Total movements in reserves		1,432	10,001	1,034	7,931
(i) The Asset Revaluation Reserve represents the increment of land and buildings
and other non-current assets over cost.
(ii) The Capital Profits Reserve represents profits and losses on the disposal
of long-term equity investments.
(iii) The Capital Reserve of \$17,957,000 represents the increase in the consolidated
entity's share of the net assets of an associated entity.
Note 22. Retained profits
Retained profits at the beginning of the financial year		78,910.	52,193	$-57,439$	34,213
Net profit attributable to members of the parent entity		$-90,386$	78,201	$-72,454$	72,642
Dividends	8	(72, 278)	(41, 483)	(72,278)	(41, 483)
Transfer to capital profits reserve	21	(2, 147)	(20, 001)	(1,034)	(7, 933)
		94,871	78,910	56.581	57,439

		Consolidated		The Company
	Note	2004 \$'000	2003 \$'000	2004 \$'000	2003 \$'000
Note 23. Employee benefits
(a) Aggregate liability for employee benefits, including on-costs		e Toe Pijosy voe
Current:		a back and the
Other creditors and accruals		- 2,666	2,172	2,614	2,320
Employee beneats provision	19	$-22,751.$	24.649	$-22,751.$	21.072
Non-current:		and the state ing mi المحاملين والحالات August 1		as they Personal Sec. 20
Employee benefits provision.	19	1,339	1.574	1,339	1,574
		26.756	28.395	26,704	24,766

(b) Equity-based plans

(i) Option plans

The Company has an executive option plan which was approved at the 1998 annual general meeting. Each option is convertible to one ordinary share. The exercise price of the options, determined in accordance with the rules of the plan, is based on the weighted average price of the Company's shares traded during the five business days preceding the date of granting the option.

Options generally expire on the earlier of the expiry date or termination of the employee's employment. There are no voting or dividend rights attached to the option nor the unissued ordinary share underlying the option.

A summary of options over unissued ordinary shares is set out below:

Movement in number of options on issue

										No. of Proceeds	Fair
	Grant Exercise	Expiry	Exercise	1 July	issued		Lapsed/ Exercised ® 30 June			options received value per
date	date	date	price	2003		forfeited		2004	vested	$$'000$ (1)	share
Oct 99.	Oct 02	$:$ Oct 04 $\cdot$	\$21.84	135,650		$\sim 10^{11}$ m	(35,650)	l la creati on		$-779.$	\$38.30
Oct 99.	Oct 02 re	$\sim$ Oct 04	\$20.05	195,000		$\langle\omega_{\rm{eff}}\rangle\sim 10^{-2}$ M $\cdots$	(175,000)	$-20,000$	20,000	$-3.508$	\$42.83
Sep 99 -	Sep 02 35	-Sep 05	\$20.66	$-53,317$		(9,746)	(20, 319)	$-23,252$	10,157	- 420	\$38.94
Oct $00 -$	Oct 03 35	$+$ Oct 06 $+$	\$34.51	112,330		(16, 479)	(39,006)	16,845	20,961	$\cdot$ 1656	\$42.31
∵Ju⊟00 ⊹		Jul 03 % (1.Jul 06)	\$27.68	$-27,095$		12 They	(9,031)	$-18.064$		∵∷250	\$43.00
Dan ()1 L	Jan 04% i Jan 07.		\$31.67	$-20,392$		2000 Block of Gallery	(6,797)	13,595		$\sim$ 215	\$43.25
:Jan 01	Jan 04 th Jan 07		\$33.66	$-33,832$		m.	(11,277)	122,555		-380	\$43.49
Feb 01 -	Feb 04th + Feb 07		\$36.90	$-56,460$				- 56,460.	18,820
Mar 01 -	Mar 04 th [Mar 07]		\$37.91	$0.94,682$ .		(51,378)		143,304	14,434
Aug 01 $\cdot$	Aug 04 th : Aug 07		\$38.66	$-2,587$	$\ddotsc$			$-2.587$	$\ldots$
$Oct 01 -$	Oct 04 th + Oct 07		\$38.66	242,903	$\cdots$	(45, 358)	(13, 896)	183,649	10.778		\$43.86
Mar $02$	Oct 04 th (10ct 07)		\$44.59	$-1,874$		$\epsilon_{\rm{max}} \sim 10^{10}$ and		1.874
Dec $01$ :	Dec $04^{\circ}$ Dec $07$		\$38.66	$-2,586$		the broad comp	$\cdots$	$-2,586$	862
$Oct 02$ :	Oct 05 th : O ct 08		\$32.46	377,918		(61, 197)	(14, 884)	301,837		483	\$43.81
Dec $022$	Dec 05 8 Dec 08		\$31.03	200,000		and the main		200,000
Feb 03 :	Feb 06 9 - Feb 09		\$29.88	$-10,398$	$\ldots$	(4,004)		$-6,394$
Oct 03	Oct 06 %	Oct 09	\$37.10	$\cdots$	29,258		$\cdots$	29.258		$\cdots$
				1,467.024	29.258		(188,162) (305,860) 1,002,260		96,012	7,228

(1) Amount recognised in the financial statements of the Company in relation to executive share options exercised during the current financial year. Refer Note 20, (2) Ove that of this class of option can be exercised on this date with a further that), one year from this date and the last third, two years from this date (3) This class of options will vest in its extirety as anoounced in the Letter from the Chairman dated May 2003.

(4) In certain extraordinary circumstances, at the discretion of the Fluman Resources and Remoneration Controller, options can be exercised prior to their earliest exercise date. (5) This class of options will vest on the Britt anviversary of the clate of issue subject to the achievement of performance burdles.

The fair value of shares, issued as a result of options being exercised, is the market price of the Company's shares as quoted on the Australian Stock Exchange on the date the options are exercised.

Note 23. Employee benefits (continued)

(b) Equity-based plans (continued)

(ii) Executive Share Plan

The Executive Share Plan ('ESP') was approved by shareholders at the Company's annual general meeting in 1997 (as amended in 1999).

The ESP forms part of the structure for short and long term variable remuneration components paid to employees. Grants under the plan for short term performance are made on achievement of specific performance goals whilst long term grants vest after periods of between three and five years after the date of grant.

The issue price of grants of shares is the weighted average of the prices at which shares were traded on the Australian Stock. Exchange for the five days up to the date of issue. Shares are either purchased on-market or issued by the Company to satisfy the grants made to employees.

While shares are held by the ESP the employees receive dividends and have voting rights.

Details of the movement in employee shares under the ESP are as follows:

Grant	Opening				Closing	Grant	Vesting
date	balance	Granted	Vested	Forfeited	balance	fair value	fair value
	No.	No.	No.	No.	No.	\$	\$
Oct 00	8,204		(8, 204)	sign.		34.51	41.54
Dec 00	30,000		(2, 943)		27,057	:33.66	42.60
:Jan 01	316		(316)			-31.67	43.63
Feb 01	4,065		(3,355)		2,710	36.90.	43.49
Mar 01	5,797		(1,099)	(2,500)	2,198	37.91	44.00
Oct 01	10,941		(5, 542)	(2,204)	3,195	38.66	38.66
Dec $01$ .	2,586				2,586	38.66
Apr 02	2,964		(824)		2,140	$-44.59$	30.09
Aug 02	2,587		(647)	(1.940)		38.66	36.76
Oct 02	344,800		(60, 271)	(39, 985)	244,544	32.46	40.98
Dec 02.	516,265		(104, 027)	(1,288)	410,950	-31.03	42.23
Jan 03.	25,956		(4,326)	(4,326).	37,304	$^{\circ}$ 34.67 $^{\circ}$	41.48
Feb 03	5,385		(365)		5,020	29.88	30.05
Mar 03	12,839		(5,599)	(1, 135)	6,105	$-26.42$	36.21
May 03	7,921				7,921	31.56
: Jun 03		15,263			35,263	30.79
Jul 03		13,072		(1,307)	31,765	30.59
-Oct 03		30,898			30,898	37.10
Oct 03		20,930		(3,634)	17,296	39.22
Dec 03		19,486	(319)	(178).	9,189	42.14	41.85
Feb 04		18,428			8,428	41.51
Apr 04		10,330			10,330	$42.77 -$
May 04		1.100			1,100	40.83
Total	980,626	109,507	(195, 637)	(58, 497)	835,999

Grant fair value represents the weighted average of the prices at which the shares were traded on the Australian Stock Exchange (ASX) for the five days up to the date of issue. Vesting fair value represents the closing price on the ASX on the date of vesting.

Of all grants of shares under the ESP in the year, 38,168 shares were purchased on-market, 45,948 shares were issued at market. price, and 25,391 shares were re-issued from the forfeited shares pool at market price.

The amounts recognised in the financial statements of the consolidated entity and the Company in relation to the ESP during the year were amortisation of ESP shares totalling \$7,137,000 and deferred assets totalling \$17,902,000 split between a current deferred asset of \$6,053,000 and a non-current asset of \$11,849,000 as at 30 June 2004.

Note 23. Employee benefits (continued)

(b) Equity-based plans (continued)

(iii) Employee Share Purchase Plan

The Perpetual Employees Share Purchase Plan issued 37,165 shares during the year in order to satisfy the current year invitation. The shares were granted to the 546 employees participating at \$42.13. The invitation was open to employees who commenced permanent employment with Perpetual prior to 1 June 2003 with an offer to purchase a minimum of 25 shares and a maximum of 125 shares. The issue price was the weighted average of the prices at which shares were traded on the ASX for the five days up to the date of issue. An interest free loan, for a period not exceeding 10 years, was made available by the Company to the eligible employees to enable the purchase.

(iv) Employee Reward Share Plan

The Employee Reward Share Plan enables the Company to offer employees \$1,000 of shares at no cost in recognition of their contribution to Perpetual's performance over the previous financial year. This plan was first activated in 2002 to acknowledge the contribution by staff to the financial results of the company in the 2002 financial year. No shares have been issued under this scheme since that year.

(v) Non-Executive Directors' Share Purchase Plan

A share purchase plan for non-executive directors was approved by shareholders at the 1998 annual general meeting in October 1998, under which each non-executive director can sacrifice up to 50 percent of their directors' fees to acquire shares in the Company. The shares are purchased on a quarterly basis at market value and have a disposal restriction of 10 years, or when the director ceases to be a director of the Company.

During the year the following directors participated in this plan:

		Number of shares
	purchased at market value
Directors	Number
C P Curran	1.2,627	109,961
S J Chapman	4.1,009.17	42,476
B E Boezeman	$\sim 100$ .	4,248
J S Cartis	$\sim$ 14 203 $\lesssim$ $\lesssim$	6,526
W G Kent	$-1,009$ $-$	42,476
L B Nicholis	$\sum_{i=1}^{\infty} 1,009$	42,476
R M Savage	504	21,238
	6.462	269.401

(c) Superarmuation commitments

All employees are eligible to participate in the Select Master Superannuation Fund (an accumulation fund) operated by the consolidated entity. The consolidated entity has a legally enforceable obligation to contribute to the plan.

Note 23. Employee benefits (continued)

(d) Directors' retirement benefits

As approved by shareholders at the 1990 and 2001 annual general meetings, non-executive directors are entitled to receive a retirement benefit of up to five times their final average directors' fees (received during the three years preceding retirement) for 15 years service in accordance with the following accrual table:

Length of Service	Multiple Applicable
3 years	1.33 years' fees
6 years	2.67 years' fees
9 years	4 years' fees
12 years	4.5 years' fees
15 years	5 years' fees

This retirement scheme does not apply to new non-executive directors appointed after 1 July 2003.

The Company sets aside amounts each year to fund the accrued retirement benefits via an employer-sponsored defined benefits superannuation fund and/or direct provisioning in the Company's accounts.

Retirement benefits accrued during the year amounted to \$656,234 (2003: \$482,368).

Total benefits available to participants in the event of retirement are \$3,786,744 (2003: \$2,438,104), consisting of:

Perpetual Non-Executive Directors Superannuation Fund - net market value of plan assets 31 March 2004	2.247.043
Provided by the Company	1.539.701
	-3.786.744
Members vested benefits as at 31 March 2004	3.163.187

\$

The latest actuarial assessment of the plan was carried out by Mr S J Cheetham FIAA of Actuaries in Super on 5 March 2003 and related to the plan at 30 June 2002. The conclusion of the actuarial assessment noted that, at that time, funds were not considered adequate to satisfy all benefits payable in the event of termination of the plan and retirement of each non-executive director.

Based on discussions with the actuary and the trustees, the Company makes contributions to the plan at the maximum deductible contribution limit and, where a member exits the plan, the part of the benefit that has been funded will be paid from the plan, whilst the balance of the payment w@ be met via an ex-gratia payment by the Company. The amount of such ex-gratia payments has been fully provided by the Company.

Most recent financial report of the superannuation plan available to economic entity dated as at 30 June 2003 and most recent. financial data available based on management accounts dated 31 March 2004:

	31 March 2004 30 June 2003
Accrued benefits of the plan-	1,856,000	1.856.000
Net market value of the plan's assets	2.247,043	1.492.686
Surplus/(Deficiency)	391.043	(363.314)
Vested benefits of the plan-	3.163.187	2.370.700

	Consolidated	The Company
	2004	2003	2004	2003
	\$'000	\$'000	\$'000	\$'000
Note 24. Financial arrangements
The consolidated entity has access to the following lines of credit:
Total facilities available:	August 2019 Ford
Bank overdrafts	2,000	2,000	2,000	2,000
Fixed rate bank bill facilities	45,000	48,000		3,000
	47,000	50.000	2,000	5,000
Facilities utilised at balance date:	Permana. The Control		the company of the company the component
Fixed rate bank bill facilities	45,000	48,000	1111	3.000
Facilities not utilised at balance date:			$\sim$ $\sim$ and the bank of ta a an chi 19. L . 1
Bank overdrafts	2,000	2.000	2,000	2.000

Bank overdrafts

Interest on bank overdrafts is charged at prevailing market rates. The weighted average effective interest rate is 8.95 percent. (2003: 8.45 percent). The bank overdrafts are payable on demand and are subject to annual review.

Bill facilities

The fixed rate bank bill facility of \$45,000,000 is unsecured and has a fixed interest rate of 5.37 percent expiring in August 2004. Repayment of the existing facility is due in September 2005, however it is the Company's present intention to refinance the \$45,000,000 facility for a further period. The decision to refinance is at the Company's discretion and accordingly the liability has been classified as a non-current liability.

The Company has agreed to various debt covenants including Shareholders' Funds as a specified percentage of Total Assets, a minimum amount of Shareholders' Funds, a maximum ratio of total debt and a minimum interest cover. Should the Company not satisfy any of these covenants, the outstanding balance of the loans may become due and payable.

Note 25. Additional financial instruments disclosure

(a) interest rate risk exposure

The consolidated entity's exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets and financial liabilities is set out below:

At 30 June 2004

		Floating		Fixed interest maturing in:	Non-		Weighted
		interest	1 year	Over 1	interest		average
	Note	rate	or less	to 5 years	bearing	Total	interest rate*
		\$'000	\$'000	\$'000	\$'000	\$'000	℅
Financial assets
Cash assets	10	163,348	20			163,368	4.2
Receivables	ី 1	13.603			47,874	61,477	73
Other financial assets	12	60 - .	40		64,792	64,892	53
Investments in associates	29		$\cdots$		38,776	38,776
		177.011	60		151,442	328,513
Financial liabilities
Payables	17				46,679	46,679
Fixed rate bills	18			45,000		45,000	5.4
			ä.	45,000	46.679	91.679
At 30 June 2003
Financial assets
Cash assets	10	113,129	70			113.199.	4.5
Receivables	ាំ	14,695			48,512	$-63,207$ .	6.6
Other financial assets	$^*2$	60.	40		73,285	73,385	4.6
Investments in associates	29		$\ddotsc$		37,351	37,351
		127,884	110		159,148	287,142
Financial liabilities
Payables	37				38,424	38,424
Fixed rate bills	18		3,000	45,000		48,000	6.4
		$\sim$	3,000	45,000	38.424	86,424

* Calculation of weighted average interest rate excludes the non-interest bearing portion of the assets or liabilities.

(b) Credit risk exposure

Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted.

The credit risk on financial assets, excluding investments, of the consolidated entity which have been recognised on the Statements of Financial Position, is the carrying amount, net of any provision for doubtful debts.

The consolidated entity minimises concentrations of credit risk by undertaking transactions with a large number of customers. and counterparties.

Note 25. Additional financial instruments disclosure (continued)

(c) Net fair values of financial assets and liabilities

Valuation approach

Net fair values of financial assets and liabilities are determined by the consolidated entity on the following basis:

Marketable shares included in 'Other financial assets' are traded in an organised financial market. The net fair value of marketable shares is determined by valuing them at the current quoted market bid price for an asset, adjusted for transaction costs necessary to realise the asset. The carrying amounts of bank term deposits and accounts receivable approximate net fair value. The net fair value of investments in unlisted shares in other corporations is determined by reference to the underlying net assets and an assessment. of future maintainable earnings and cash flows of the respective corporations.

Net fair value

The consolidated entity's financial assets and liabilities included in current assets and liabilities in the Statement of Financial Position are carried at amounts in accordance with Note 1.

The carrying amounts and net fair values of financial assets and liabilities as at the reporting date are as follows:

	2004		2003
	Carrying	Net fair	Carrying	Net fair
	amount	value	amount	value
	\$'000	\$'000	\$'000	\$'000
Financial assets	Distances in terna e tracer The company		$\cdots$
Cash assets	163,368	163,368	$-113,199$	113,199
Receivables	$-61,477$	61,477	$\pm 63,207$	63,207
Shares in other corporations and unit trusts.	$-60.068$	109,521	$\therefore 68,767$	102,063
Other investments	4,824	4.824	$-4,618$	4,618
Investments in associates	38,776	38.776	37,351	37,351
Financial liabilities	a company of the		aa haa No. 642 (1979)
Payables	and the $-46.679$	46,679	38,424	38,424
Interest-bearing liabilities	45,000	44.974	48.000	48,082

	Consolidated		The Company
	2004	2003	$\sim 2004$	2003
	\$'000	\$'000	\$'000	\$'000
Note 26. Commitments	$\sim$ 100		स्त्री के सा
Capital expenditure commitments	The control
Contracted but not provided for and payable within one year	207	542	207	542
Operating lease commitments Future operating lease rentals not provided for in the financial statements and payable:
Not later than 1 year	$-4,232$ $\sim$ $\sim$	4.972	1.641	1.704
Later than 1 year and not later than 5 years	$-10,755$	9.744	6,243	3,518
Later than 5 years	721	950	286
	15.708	15,666	7.170	5.222

Operating leases are predominantly related to premises.

Other commitments

The Company has entered into a subordinated loan agreement with ASX Perpetual Registrars Limited (APRL) and has provided funding of \$11,575,000 (2003: \$14,584,000) for the development of a new share registry system. This funding is in proportion to the Company's interest in APRL and APRL has an equivalent funding arrangement with its other shareholder.

Note 27. Contingent liabilities

• (a) The uncalled capital of the controlled entities amounts to \$10,403,135 (2003: \$6,443,135).
• (b) Contingent liabilities exist in respect of certain overdrawn trust and estate accounts against which ample assets are held in the respective trusts and estates.
• (c) Controlled entities have granted bank quarantees in the favour of the Australian Securities and Investments Commission in respect of Dealer's Licence arrangements of \$120,000 (2003: \$120,000).
• (d) A controlled entity has granted a bank guarantee in the favour of the ASX Settlement and Transfer Corporation Pty Limited with respect to normal trading activities of \$500,000 (2003: \$250,000).
• (e) The Company has provided certain warranties to ASX in relation to their subscription for shares in ASX Perpetual Registrars Limited. At balance date, no additional daims have been made under these warranties.
• (f) The consolidated entity's initial layer of cover for its professional indemnity insurance program was underwritten by HIH Insurance Limited (HIH) until 15 March 2001 when HIH was placed into provisional liquidation. As a result of the asset deficiency of HIH, the consolidated entity may have financial exposure for claims notified but not settled which otherwise would have been recoverable from HIH. Based on the claims notified to date any financial exposure is not expected to be significant.
• (g) The Company has provided a guarantee to an Australian bank to secure a \$45 million fully drawn blil facility of a controlled entity.

Note 28. Related parties

Controlled entities and associates

Details of the Company's interests in associates and controlled entities are set out at Notes 29 and 30, respectively.

Transections between related parties are on normal commercial terms and conditions no more favourable then those available to other parties unless otherwise stated.

Intercompany funding is provided by the Company by interest free loans to and from the Company and controlled entities.

	The Company
	2004	2003
	\$'000	\$'000
The aggregate amounts included in the profit from ordinary activities before income tax expense
that resulted from transactions with related parties are:
Interest revenue:
Associates	$-1,046$	1,021
Dividend revenue:
Controlled entities	56,000.	44,296
Management fees:	a marketin
Controlled entities	67,637	67,652
Loan advances to:	nna neasc
Associates	1,940.	850
Loan repayments from:
Associates	$\left[13,973\right]$	2,039
Aggregate amounts receivable from, and payable to, related parties:
Receivables - current:
Controlled entities	[16/742]	20,217
	The Hall
Receivables - non-current:	Think against
Associates	$-13,603$	14,695
Creditors and other liabilities - current:	Service and
Controlled entities	73,180	44,585

Employee share purchase loans

Loans to executive directors of entities within the economic entity are made for the purposes of acquiring shares in the Company In accordance with the Perpetual Employees Share Purchase Plan and are interest free for a maximum period of 10 years. Loans are made by the Company. At balance date there were 3 loans (2003: 15) totalling \$46,762 (2003: \$234,652) with a maximum to any one executive director being \$23,198 (2003: \$23,952) made to executive directors of entities within the economic entity who are not directors or specified executives of the Company. During the year (oans made to the following executive directors totalled \$12,369 (2003: \$62,350):

• A J McKee, EPendleton and M Simons.

Diging the year loan repayments (other than by way of dividends received) made by the executive directors totalled SNil (2003: SNI).

Note 29. Investments in associates

		Consolidated
	2004	2003
	\$'000	\$'000
Results of associates
Share of associates' operating profit before income tax	ះ 3,811	783
Share of associates' income tax expense attributable to operating profit	(1.428)	(692)
Share of associates' net profit - as disclosed by associates	$-2,383$	89
Adjustments:
Amortisation of goodwill	(458)	(458)
Share of associates' net profit/(loss) - equity accounted	1,925	(369)
Share of post-acquisition accumulated losses and reserves attributable to associates
Accumulated losses
Share of associates' accumulated losses at the beginning of the financial year	(1,321)	(180)
Share of net profit/(loss) of associates	े 1,925	(369)
Dividends received from associates	(606)	(772)
Share of associates' accumulated losses at the end of the financial year	(2)	(1, 321)
	74.
Movements in carrying amount of investments
Carrying amount of investments in associates at beginning of the financial year	37,351	38,394
Provision against amounts owing from associate	106	98
Share of associates' net profit/(loss)	ા 1,925	(369)
Dividends received from associates	(606)	(772)
Carrying amount of investments in associates at the end of the financial year	38,776	37,351
Commitments
Share of associates' commitments payable:
Operating lease commitments
Not longer than 1 year	1,531.	1,201
Longer than 1 year but not longer than 5 years	789	2,969
Total commitments	2,320	4,170
Contingent liabilities
Share of associates' contingent liabilities
Guaranteed bank facilities	10	10

Note 29. Investments in associates (continued)

Details of investments in associates are as follows:

Name	Principal activities	Balance date	Ownership interest		Investment
					carrying amount
				Consolidated		Consolidated
			2004	2003	$-2004$	2003
			%	%	\$'000	\$'000
			Contractors and		DA CATAL
ASX Perpetual Registrars Ltd.	Registry Services	30 June	$\sim 50.0$ . $\sim$	50.0	$-29,767$	29,093
Symetry Limited Master	Trust Provider	30 June -	$\sim$ 33.3 $\sim$	33.3	$= 9.009 -$	8.258
Perpetual James Fielding Limited	Property Funds Management	30 June	-50.0	50.0
					38,776	37.351

Dividends received from associates for the year ended 30 June 2004 by the consolidated entity amounted to \$605,862. (2003: \$771,968).

		Consolidated
	$\sim 2004$	2003
	\$'000	\$'000
Summary performance and financial position of associates
The consolidated entity's share of aggregate assets, liabilities and profits of associates are as follows:
Net profit - as reported by associates.	$\pm 2.383$ $\pm$	-89
Adjustment - amortisation of goodwill	(458)	(458)
Net profit/(loss) - equity adjusted	1.925	(369)
	r Thurman
Current assets	$\begin{bmatrix} 9.513 \end{bmatrix}$	5,942
Non-current assets	37,381	45,960
Total assets	46,894	51,902
	n sana 1776
Current liabilities	3,427	2.759
Non-current liabilities	11,792	19,351
Total liabilities	15,219	22,110
Net assets - as reported by associates	$-31,675$ :	29.792
Adjustments arising from equity accounting:
Add: Goodwill (net of amortisation)	7,101	7.559
Net assets - equity adjusted	38.776	37.351

Note 30. Particulars in relation to controlled entities

	Beneficial interest
Name of Company	2004	2003
	%	℅
	ΝŊ, N.,
Perpetual Trustees Australia Limited	in Alba a.
Controlled Entities ®
Australian Trustees Limited	$-100$	100
Commonwealth Trustees Pty Limited*	$-100$	100
Investor Marketplace Limited	100	100
Perpetual Analysts Portfolio Fund	100	100
Perpetual Small Companies Analysts Fund	$-100$	100
Perpetual Assets Pty Limited®	100	100
Perpetual Property Services Australia Pty Limited*	-100	100
Perpetual Australia Property Services (WA) Pty Limited*	100	100
Perpetual Australia Pty Limited®	100	100
Perpetual Fund Services Limited	100	100
Perpetual Investment Management Limited	100	100
Perpetual Nominees Limited	100	100
Perpetual Services Pty Limited®	100	100
Perpetual Superannuation Limited	100	100
Perpetual Trust Services Limited	100	100
Perpetual Trustee Company (Canberra) Limited	100	100
Perpetual Trustee Company Limited	100	100
Perpetual Trustees Queensland Limited	100	100
Perpetual Trustees SA Limited	100	100
Perpetual Trustees Victoria Limited	100	100
Perpetual Trustees WA Limited	100	100
Queensland Trustees Pty Limited	100	100
Perpetual Trustees Consolidated Limited	100	100
Entities under the control of Perpetual Trustee Company Limited	in a
Perpetual Trustees Nominees Limited	100	100
Perpetual Custodians Limited	300	100
Hunter Nominees Pty Limited*	$\scriptstyle{\sim}$ 100 $\scriptstyle{\sim}$	100
Perpetual Service Network Pty Eimited*	-100	100
PT Limited	100	100
Entities under the control of PT Limited
Perpetrust Nominees Pty Limited*	100 .	100
	يونيه المتعادة and with a su
Entities under the control of Perpetual Trustees Victoria Limited
Perpetual Executors Nominees Limited	100	100
Midway Nominees Pty Łimited ÷	100.	100
AXA GESP Exempt (Aust) Pty Eimited*	$51 -$	-53
AXA GESP Deferred (Aust) Pty Limited*	51	51

Note 30. Particulars in relation to controlled entities (continued)

	Beneficial interest
Name of Company	2004	2003
	%	%
Entities under the control of Perpetual Trustee Company (Canberra) Limited.
Charleville Leasing Limited	100	100
Entities under the control of Perpetual Trustees WA Limited
Perpetual Custodians WA Pty Eimited*	- 100	100
Terrace Guardians Limited	$\pm 100$	300
Selwest Pty Limited*	$-100$	300
Entities under the control of Perpetual Assets Pty Limited
Perpetual Asset Management Limited	$-100$	300.
Entities under the control of Perpetual Superannuation Limited
Wilson Dilworth Partnership Pty Limited*	100.	300.
Entities under the control of Wilson Dilworth Partnership Pty Limited
Wilson Dilworth Limited	100	300
Wilson Dilworth Finance Pty Limited*	100.	100
Entities under the control of Perpetual Trustees Consolidated Limited
Perpetual Nominees (Canberra) Limited	100	100
Perpetual Custodian Nominees Pty Eimited*	100	100
Perpetual Victoria Nominees Pty Limited®	100	100

A small proprietary company as defined by the Corporations Act 2001 and is not required to be audited for statutory purposes.
(i) Entities in bold are directly owned by Perpetual Trustees Australia Limited.

	Consolidated		The Company
	2004	2003	2004	2003
	\$'000	\$'000	\$'000	\$'000
Note 31. Notes to the Statements of Cash Flows
(a) Reconciliation of cash
For the purposes of the Statements of Cash Flows, cash includes cash on hand
and at bank, short-term deposits at call and bank bills, net of outstanding bank.
overdrafts. Cash at the end of the financial period as shown in the Statements of
Cash Flows is reconcited to the related items in the Statements of Financial Position
as fol{ows:
Deposits at call*	:162,735	111,217	127,560	71,000
Cash	633	1,982	362	1,655
	163,368	113,199	127,922	72,655
* These funds are invested in a cash management must operated by the consolidated entity.
(b) Reconciliation of net profit to net cash provided by operating activities
Net profit	90,386.	78,201	.72,454.	72.642
Add/(less) items classified as investing/financing activities:
Profit on sale of investments	$(2,147)$ .	(10,001)	$(1,034)$ .	(7, 933)
Add/(less) non-cash items:
Loss on sale of property, plant and equipment	$\sim$ 20	62	- 45	46
Depreciation and amortisation of property, plant and equipment	$13.176 -$	30,186	9,339	6.196
Amortisation of goodwill	3,794	3,868
Share of associates' net (profits)/fosses	(1,925)	369
Net cash provided by operating activities before change in assets and fiabilities	$103,304$ .	82,685	80,804	70,953
Change in assets and liabilities net of acquisition
of controlled entities during the financial year:
Decrease in receivables	4,960	6,276	33,712	2.744
Increase/(decrease) in accounts payable	-7,938	(8, 571)	$-1,437$	(3, 363)
(Increase)/decrease in other assets	$-5,594$	(21, 898)	$-5,410$	(22, 939)
(increase)/decrease in other financial assets other than investments	$\simeq$ 35 ų,	119	$^{\circ}$ (36)	-13
Increase/(decrease) in provisions	(7,308)	7,359	(3, 414)	11,915
Increase/(decrease) in income taxes payable	(545)	(4, 161)	$-9,780$ .	(7, 932)
(Increase)/decrease in deferred tax assets	(1, 192)	(3,665)	(4,884)	(3,875)
Increase/(decrease) in deferred tax liab@ties	(584)	(876)	93.	(297)
Net cash provided by operating activities	112,202	57,268	122,902	47,221

(c) Shares purchased to satisfy long term staff incentive and retention programmes

The Company purchased Perpetual Trustees Australia Lanited shares at a cost of \$1,462,000 (2003: \$26,792,000) in the period to satisfy long term staff incentive and retention programmes. The cash outflow from these purchases is classified as an operating activity in the Statements of Cash Flows.

(d) Net proceeds from the sale of Perpetual Fund Services of \$9 million.

Additional deferred consideration of \$9 million was received from RBC Global Services Australia Pty Limited in 2003 with respect to the sale of Perpetual Fund Services ('PFS') in July 2003. The capital gains tax ('CGT') applicable to the additional consideration received was SNil as the proceeds on sale of the PFS business did not exceed the applicable CGT cost base.

(e) Financing facilities Refer to Note 24.

Note 32. Events subsequent to balance date

The Company is currently in discussions with Commonwealth Bank of Australia regarding the sale of its holding in Symetry Limited. A number of alternatives in relation to the purchase by Commonwealth Bank are being explored, but at this stage no agreement has been reached whether or not to proceed with the sale.

After balance date the Company has commenced discussions, preparatory to contract, to lease premises to enable the consolidated entity's activities in Sydney to operate from one location. Once these arrangements are finalised, it is likely that premises in Sydney, currently leased and owned, will be progressively vacated over the period to 30 June 2006. Various costs may be incurred in respect of carrent contractual arrangements, such as the remaining portion of carrent leases. The financial effect is unlikely to exceed \$5 million after tax and has not been brought to account in the 2004 financial report.

Dividends

For dividends declared after 30 June 2004 see Note 8.

Note 33. International financial reporting standards

For reporting periods beginning on or after 1 January 2005, the consolidated entity must comply with the Australian equivalents of International Financial Reporting Standards ('IFRS') as issued by the Australian Accounting Standards Board.

The board has established a formal project to ensure a smooth transition to IFRS reporting, beginning with the half-year ending 31 December 2005.

Managing the transition to the Australian equivalents to International Financial Reporting Standards

A project team, headed by the Chief Financial Officer, and reporting to the Audit Risk and Compliance Committee, has been established to manage the transition to Australian equivalents to IFRS.

The role of the project team is to advise the Board on the possible impact of the changes on the reported financial position and financial performance of the economic entity, including:

• Initial review of the financial impact, based on carrently issued IFRS;
• Revision of this review as Australian equivalents of IFRS are issued:
• Staff training;
• Consideration of changes to, and implications of, accounting disclosures and profit recognition;
• Consideration of possible changes in systems and procedures to account for the resultant changes to accounting policies and procedures; and
• Preparing a calculation of the opening IFRS-based Statement of Financial Position as at 1 July 2004 (24 months prior to the first (FRS financial year end), to facilitate first year IFRS comparatives.

The company has also set up a separate working group to review the impact of this transition on the financial statements of its retail and masterfund products.

Key differences in accounting policies that are expected to arise from adopting the Australian equivalents to International Financial Reporting Standards

The following listing identifies changes in accounting policies relevant to the current activities of the economic entity. None of these changes are expected to materially adversely impact on the financial position or the financial performance of the economic entity:

Goodwill (Business combinations)

Goodwill w & no longer be amortised but held as an asset, subject to an annual impairment test.

Share based payments and Employee benefits (employee share options)

Share-based compensation to employees will be required to be recognised as an expense over the vesting period of the equity instruments granted.

Income tax

A balance sheet liab@ty method is adopted whach focuses on the tax effects of transaction and other events that effect amounts recognised in either the Statement of Financial Position or a tax-based balance sheet. The most significant impact will be the recognition of a deferred tax liability in relation to the asset revaluation reserve. Previously, the capital gain tax effects of asset revaluations were not recognised.

Financial Instruments

Financial assets will be reclassified to reflect the IFRS definitions and treatment. As a result of this the majority of non-current financial assets (such as the investment portfolio) will be classified as available-for-sale and restated to fair value.

This summary should not be taken as an exhaustive list of all the changes that may occur to the company's accounting policies as the result of adopting IFRS. In preparing the listing, no attempt has been made to identify all disclosure, presentation or classification differences that would affect the manner in which transactions or events are presented.

Note 34. Remuneration Report

Table of Contents

Section A - Remuneration approach for Executives from 1 July 2004 onwards

• A3 Remaneration philosophy and objectives
• A2 -- Remaneration structure overview
• A3 -- Fixed remuneration
• A4 Short-term incentives
• A5 Long-term incentives

Section B - Remuneration for Executive Directors and Specified Executives for the year ended 30 June 2004

• B1 Executive directors
• B2 Specified and other executives
• B3 Previous executive remuneration philosophy and objectives
• B4 Previous fixed remuneration policy
• B5 Previous short-term incentives policy
• B6 Previous long-term incentives policy
• B7 Other employee share schemes
• B8 Related party disclosures
• B9 Remuneration table
• B10 Contract terms for executive directors
• B11 Contract terms for specified executives
• B12 Contract terms for terminated specified executives
• B13 Particípation in equity programs
• B14 Loans

Section C - Remuneration for Non-Executive Directors for the year ended 30 June 2004

• C1 Non-executive directors
• C2 Remuneration policy
• C3 Share plan and holdings
• C4 Retirement policy
• C5 Retirement allowance
• C6 Related party disclosures
• C7 Remuneration table
• C8 Contract terms

Section A - Remuneration Approach for Executives from 1 July 2004 onwards

A1. Remuneration Philosophy and Objectives

In the past year the Company undertook a comprehensive review of its approach to performance and remaneration management. The objectives of the review were to ensure that the Company's approach:

• aligned remuneration outcomes and shareholder wealth creation
• actively supported the execution of business strategy and the development of an entrepreneurial, team-based culture
• assisted in retaining executives.
• was competitive with contemporary marketplace practice.
• was easy for people to understand
• was in keeping with the Company's commitment to good corporate governance.
• was financially appropriate

The review sought input from a range of internal and external sources on how the Company's practices could achieve these goals. On the external front, an extensive study was commissioned into international and local remuneration trends in the business segments in which the Company operates. The international component of the study was conducted by remuneration consultants, Towers Perrin, whilst input on local practices was provided by Eqan Associates. The internal component of the review included extensive work on definang the type of remuneration system that would best support business strategy and target work culture.

Following the research, a revised executive remuneration policy was developed based on the following five principles:

• variable pay should form a significant part of overall remuneration, whilst keeping fixed remuneration competitive;
• variable pay should be linked to shareholder wealth creation;
• short-term incentive ('STI') payments should be uncapped to allow for recognition of performance exceeding expectations;
• STI payments should be made out of the realised profits of the organisation, rather than being budgeted as a fixed cost;
• equity participation should be increased in the organisation to encourage an ownership mindset and be tied to appropriately challenging hurdles.

The policy was reviewed at length by members of the Human Resources and Remuneration Committee (HRRC) and the Company's board, prior to its approval at the July board meeting. In considering the policy, the HRRC noted the advice of the board's remuneration consultant, Egan Associates that the "outcome reflects a new remuneration strategy that in my view incorporates some components that are leading edge in the Australian context, yet clearly aligned and relevant to Perpetual's targeted business. strategy and cultural imperatives...".

The new remuneration policy took effect on 1 July 2004. Further information on the background to the new approach to performance and remuneration management and the way it is linked to our business strategy can be found in the Managing Director's Year in Review in the Annual Report.

A2. Remuneration Structure Overview

The remuneration structure for senior executives involves three components:

• a fixed remuneration component ('Fixed Remuneration');
• a short-term incentive component ('STI'); and
• a component related to longer-term performance and retention ('LTI').

The HRRC will continue to play a pivotal role in ensuring executive remuneration is falr and reasonable, and is effectively structured to align rewards with performance (see Corporate Responsibility Statement in the Annual Report for a description of the role of the HRRC).

A3. Fixed Remuneration

Fixed remuneration will be set at a competitive level for each executive within a market range. These market ranges are developed with reference to appropriate comparator companies.

The fixed remuneration component is calculated on a 'total cost to Company' basis with the cost of employee benefits such as motor vehicles, superannuation, and car parking, together with fringe benefits tax (FBT) applicable to those benefits, being borne by the executive.

There are no guaranteed increases to fixed remuneration in any senior executive's contracts.

A4. Short-term Incentives

The largest changes to remuneration practices under the new policy will be in the area of STIs. The three principal changes being implemented are:

• ensuring incentive payments are a significant part of an executive's remuneration;
• making such payments out of realised profits rather than being budgeted thereby linking them to shareholder wealth creation; and
• the uncapping of incentive payments to allow for recognition of performance that significantly exceeds expectations, given appropriate measures and hurdles.

Funding and Payment of STI

To facilitate the second and third of these changes, a Profit Participation Pool (PPP) has been created, which will be used to fund all future short-term incentives for executives. As the PPP is uncapped, the higher the Company's performance compared to the key profitability measures included in the plan, the larger will be the pool.

The two key profitability measures used to govern the operation of the PPP are Return On Equity (ROE) and Operating Profit After Tax (OPAT1). Under the new STI plan, ROE is used as a gateway measure to govern whether any amount w@accumulate in the PPP. while OPAT determines the size of the PPP if the ROE gateway is met.

The PPP w goperate as follows:

1. The PPP does not begin to accumulate unless ROE for the current year exceeds a significant majority of the comparator group, measured on a rolling 3-year basis. The comparator group is the S&P/ASX100 excluding listed property trusts.

The purpose of this measure is to ensure that capital utilisation does not fall to unacceptable levels as the Company seeks to grow operating profits.

1. Once the ROE hurdle is met, the PPP begins to accumulate based on an increasing percentage of OPAT. It is important to note that while the rate of accumulation is ultimately capped at around a third of each incrememental dollar of OPAT, the dollar value of the pool is uncapped. This capped rate of profit sharing, at the one third level, applies only on incremental dollars of OPAT in the event of year-on-year profit growth in excess of 40 percent.

The purpose of this measure is to encourage year-on-year growth in the operating profits of the business and to ensure a high annual correlation exists between OPAT performance and incentive outcomes.

1. In the event that there is a year-on-year fail in OPAT, mechanisms have been included within the plan to limit the size of the pool until the previous OPAT 'high water mark' has been passed.

* CIPAT is Profit After Tax with the after tax amount of the profit pool added back as well as adjustments for gains/losses on the sale of investments as reported in the accounts, as well as any other items as determined by the RRRC.

Allocation of the PPP

At year end, the pool will be allocated based on the relative performance of the division or individual, as well as the incentive practices for similar roles in the marketplace. These allocations will be subject to the approval of the HRRC and, in the case of the managing director, the board, incentives will be structured in the form of cash, but may also be taken as shares granted under Perpetual's Executive Share Plan.

With the uncapping of individual incentive payments, the potential exists for an individual's remuneration mix between cash and equity to become unbalanced. To quard against this, any large incentive payments will be subject to certain deferrals to equity.

A5. Long-term Incentives

The final change in remuneration policy is that equity participation will be increased amongst key executives. The key principles which underpin this change are that:

• LTIs should take the form of equity to drive an ownership mindset
• LTI grants should be appropriate and reasonable in size
• sustained performance should be encouraged by linking the vesting of LTI awards to hurdles which reflect shareholder value creation

The vehicle chosen for the delivery of the LTI is a blend of performance shares and, in selected cases, performance options. In 2003, the HRRC reviewed the hurdles applied to such grants with new hurdles coming into effect for all grants made after 1 July, 2003. Perpetual's Executive Share Plan ('ESP') and Executive Option Plan ('EOP'), which were approved by shareholders on 21 October, 1997 and 20 October, 1998 respectively, continue to be the mechanism for the delivery of the LTI programs.

Performance Share Program and Performance Option Program

Overview of Equity Instruments

The following is an overview of the share and option instruments used in these programs.

a masa temperang kalimit ng kalawang kapaling kapangang kapangang kapangang kapangang kapangang kapangang kapang Kabupatèn Kabupatèn Kabupatèn Kabupatèn Kabupatèn Kabupatèn Kabupatèn Kabupatèn Kabupatèn Kabupatèn Kabupatèn
Performance shares Performance options were seen that the second
- Performance shares are issued or acquired on market, - Options are granted over unissued ordinary shares.
- All options are issued with an exercise price at the prevailing placed in trust and are subject to forfeiture if the performance
$\mathbb{Z}_2$ hurdles and tenure conditions are not met. $\mathbb{Z}_2$ market price for Perpetual shares at the time of issue.
- Options may vest to the executive on the third or fourth - - No consideration is required to be paid by executives for $\Box$
the anniversary of the grant, depending on when and if the the grant of performance shares.
performance hurdles have been achieved. - Performance shares may vest to the executive on the third
for fourth anniversary of the grant, depending on when and - On vesting, the executive is free to pay the exercise price
$\mathbb{Z}_2$ if the performance hurdles have been achieved. $\mathbb{Z}_2$ and receive the underlying shares. The state
- While the shares are held in trust the executive will be - Options expire after six years from the date of grant, and
the beneficial owner of the shares with full dividend and resignation by the executive prior to the option exercise
date will normally result in forfeiture. voting rights.

Overview of Hurdles

The performance hurdles for both the performance share and option programs are the same and are directly linked to the performance of the Company.

Each grant of performance shares/options is divided into two equal portions, with a different hurdle being applied to each portion as follows:

• the first portion will vest based on the growth in the Company's Total Shareholder Return (TSR), as measured against a
• comparator group. The comparator group is the S&P/ASX100 excluding listed property trusts.
• the second portion will vest based on the growth in the Company's earnings per share (EPS).

Performance shares will be held by the trustee for a maximum of 10 years from the date of grant, while any options that vest may be exercised up to the sixth anniversary of issue.

TSR Hurdle

The TSR hurdle requires that the growth in Perpetual's ('PTA's') TSR must be equal to or better than 50 percent of the comparator group, at which point the sliding vesting scale outlined below applies.

Perpetual's Growth in TSR relative to the comparator group	% of Performance shares and options that will vest
Less than Median
Median	-50.
Greater than Median but less than the 75th percentile.	-2% for every one percentile increase in PTA's relative position
> 75th percentile	100.

The TSR performance hurdle was chosen as it is widely recognised as one of the best indicators of shareholder value creation. The comparator group for TSR purposes has been chosen as it represents the group with whom the Company competes for shareholders' capital.

EPS Hurdle

The EPS hardle requires that the Company's EPS growth from the date of grant to date of vesting must be greater than the target set. by the FIRRC. This target was set by the HRRC and is currently 10 percent p.a. This target may be reviewed from time to time.

The EPS vesting schedule is as follows:

Perpetual's Growth in EPS				Percent of portion that vests
EPS Growth less than target
EPS Growth at or above target				100.
---------------------------------------

The EPS measure was chosen as it provides evidence of the Company's growth in earnings.

Hurdle Testing and Retesting Guidelines

An initial three year performance testing period will apply to the TSR and EPS portions. Three-year TSR and EPS performance is calculated and tested against the TSR and EPS targets on the third anniversary of the date of grant. If the hurdle is not met, then the hurdle will be tested on the fourth anniversary of grant, against the four year TSR and EPS targets. If the hurdle is not met after this testing, that portion is forfeited, as will any amount of the TSR portion which has not vested.

Termination of employment (both performance shares and options)

If an executive leaves the employment of the Company prior to the vesting of any portion of equity, then any unvested equity will generally be forfeited as at the date of termination, except as noted below:

• if an executive dies or resigns due to total and permanent disability, then all unvested equity will vest to the executive as at the termination date;
• if an executive is terminated due to redundancy then the executive will be entitied to that portion of equity which would have vested to them had they remained in employment until their termination date (plus notice and severance period);
• if an executive resigns having reached normal retirement age, then they will be entitled to that portion of equity which would have vested to them up to and including their termination date.

Section B - Remuneration for Executive Directors and Specified and Other Executives for the year ended 30 June 2004

B1. Executive Directors

The following persons were executive directors of Perpetual during the financial year:

Name	Position
David Deverall	Chief Executive Officer and Managing Director
	Appointed 22 September, 2003
-Graham Bradley	- Chief Executive Officer and Managing Director
	Retired 22 September 2003

B2. Specified and Other Executives

Specified executives are those persons (other than directors) with the greatest authority for the strategic direction of Perpetual. The following persons were specified executives of Perpetual during the financial year:

Name	Position
Gerard Doherty	Group Executive Wealth Management'
Emião Gonzalez	Chief Investment Officer
Phillip Vernon	Group Executive Corporate Trusti
Richard Boyer	Group Executive Information Technology'
John Nesbitt.	Chief Financial Officer (appointed 1 March 2004).
Paul McAuley	Group Executive Human Resources
Jane Couchman	General Counse?
Ivan Holyman	Chief Risk Officer (appointed 15 June 2004)
Michael Stefanovski	Chief Financial Officer (restaned as at 7 November 2003)
Rohan Mead	Group Executive Personal Financial Services (resigned as at 31 October 2003)
Other executives
Damian Crowley	Head of Retail Distribution'

1. The five highest paid officers of the group during the year ended 30 June 2004

2. Alternate Director for David Deverall, appointed 32 January, 2004

3. Alternate Director for Charles Curran AO, appointed 20 November 2001, resigned 16 October 2003

B3. Previous Executive Remuneration Philosophy and Objectives

In the past year the Company undertook a comprehensive review of its performance and remuneration approach (see Section A). The previous remuneration policy, which formed the basis of the remuneration outcomes contained in this section, is outlined below.

B4. Previous Fixed Remuneration Policy

Fixed remuneration levels were set at a competitive level for each individual executive within a market range. These market ranges are developed with reference to appropriate comparator companies.

As in the new system, fixed remuneration arrangements, were previously managed on 'total cost to Company' basis and included all compulsory superannuation contributions, FBT and packaged items.

B5. Previous STI Policy

In prior years, the Company operated the Target incentive Plan (TIP) for executives and key staff. This plan ceased operation on 30 June, 2004, with final payments under this plan to be made in September 2004. The stated aim of the plan was to reward high performance against individually agreed goals.

Under TIP, executives were assigned a maximum incentive (expressed as a percentage of their fixed remuneration) which they could earn based on the achievement of certain objectives, as approved by the HRRC.

The TIP award was delivered as either a cash incentive or a combination of cash and shares, with the weighting of shares to cash varying from executive to executive. Shares granted under this plan (TIP Share Program'), were linked to the same performance objectives outlined above. Grants were adjusted through the forfeiture of some or all of those shares at the end of the financial year if those objectives had not been fully met. Eligible executives could also sacrifice an additional portion of the cash component of their TIP bonuses to purchase shares under this plan. While the shares are held in trust, the executive is the beneficial owner of the shares with full dividend and voting rights.

Prior to the 2004 financial year, it was the Company's practice to also grant options to executives under the TIP plan ("TIP Option" Program"). Like the executive shares referred to above, these options were issued subject to achievement of individual objectives which, if not achieved, resisted in all or part of the option issue being forfeited.

The exercise price of options issued under this plan was the prevailing market price for Perpetual shares at the time of issue. Options issued under the plan could not be exercised for a minimum of three years, and were issued with exercise dates up to five years. from the date of issue. Options expired after six years from the date of grant, and resignation prior to the option exercise date would normally result in forfeiture.

Exercise of these options was conditional upon the percentage increase in total shareholder returns (broadly growth in share price plus dividends relavested) from the date of grant, to the date of first exercise exceeding the average percentage growth of the S&P/ASX 300 industrials Accumulation index, over the relevant period.

B6. Previous LTI policy

During 2003, the HRRC reviewed the hurdles used under the LTI program with new hurdles coming into effect for all issues made after 1 July, 2003. Perpetual's ESP and EOP, which were approved by shareholders on 21 October, 1997 and 20 October, 1998. respectively, continued to be the mechanism for the delivery of the LTI programs. All grants since 1 July, 2003 have been made under the programs outlined in Section A5.

In addition to these programs, the following programs have previously been used to deliver LTI rewards to executives. None of these programs is currently being used, although there are still prior years' grants under these plans which have not vested as at 30 June, 2004.

Special Share Program

Special grants of shares were made under the ESP as part of a long-term retention incentive. Entitlement to the shares vested over a period of up to five years, and shares were forfeited if the executive resigned. Under the plan, shares were granted to executives at prevailing market prices. Alternatively, the board could elect to purchase shares on-market to issue under this plan, again at prevailing market prices.

Special Option Program

The Company also made special issues of options to executives as part of long-term incentive arrangements. The exercise price of options issued under this plan was the prevailing market price for Perpetual shares at the time of issue. Options issued under the plan could not be exercised for a minimum of three years, and were issued with exercise dates up to five years from the date of issue. Options expired six years from the date of grant, and resignation or termination for misconduct prior to the option exercise date would result in their forfeiture.

Options granted under this program would become exercisable only if the percentage increase in total shareholder returns (broadly growth in share price plus dividends reinvested) from the date of grant, to the date of first exercise exceeded the average percentage. growth of the S&P/ASX 300 Industrials Accumulation Index, over the relevant period.

B7. Other Employee Share Schemes

In addition to the plans outlined above, the Company made two further equity based benefit programs generally available to staff the Employee Share Purchase Plan ('ESPP') and Employee Share Reward Plan ('ESRP'). With the introduction of the new £11 program outlined in section A5, from 1 July 2004 key senior team members of the Company will no longer be eligible to participate in future grants under either plan.

Employee Share Purchase Plan

Under the ESPP, eligible employees may acquire Perpetual shares, with the cost being financed by a non-recourse, 10 year interest free loan from the Company which is repaid by dividends paid on shares issued under the plan. All employees who commenced prior to 1 June, 2003 were eligible to participate in the plan. This plan has been in operation since 1995.

During the 2004 financial year a total of 37,165 shares were issued to the plan trustee for a total value of \$3,567,000 for the benefit of 546 employees. Over 76 percent of eligible employees elected to acquire shares under the plan in 2003. The board believes that this plan has created significant benefits for the Company by assisting employees at all levels to acquire an ownership stake in the Company. The shares granted to the current specified executives under this plan still form part of their holdings as at 30 June, 2004.

Employee Reward Share Plan

Under the ERSP, employees may be offered up to \$1,000 worth of Perpetual shares at no cost in recognition of their contribution to Perpetual's performance over the previous financial year. This plan was first used in 2002 and has not been used since. Nonetheless, the shares granted to the current specified executives under this plan still form part of their holdings as at 30 June, 2004.

B8. Related Party Disclosures for Executive Directors and Specified Executives

No executive directors or specified executives have entered into a material contract with the Company or the consolidated entity since the end of the previous financial year and there were no material contracts involving this group's interests subsisting at the year end.

Executive Directors hold the following shares and options in the Company and in registered schemes of the consolidated entity:

	Ordinary		Dividends				Registered
	shares		received		Options		Scheme interests
	2004	2003	2004	2003	2004	2003	$\overline{2004}$	2003
	No.	No.			No.	No.
D M Deverall	-30.898		- 37.078		$-29.258$	$\cdots$	$\cdots$	$\cdots$
G J Bradley	178.594*	182.592			126,396 326,576 200,000 217,477 1,459,386*			-406,660

1 As at 22 September 2003

2003/04		Primary		Post Employment		Equity Compensation		Other Benefits		Total
	Cash salary	Bonus s	dsp ↮ Non-C	$\ddot{\phantom{0}}$ Superannuation	÷۹ Shares	Options Ġ٩	Termination	Interest on loan	پ lasurance	⇔
Specified Executive Directors D M Deverall	377,914	710,000		8,251	448.052	55,444			939	1,600,600
G J Bradley 11.	652,971	2.733	Ş ç9	2.750			800,000	2.490	279	1,464,524
	1,030,885	712,733	$rac{5}{3}$ m	11,001	448.052	55,444	800.000	2.490	1,218	3,065,124
Specified Executives:
G D Doherty*	439.311	406.281	88 ģ	11,002	276,107	321,930		2.495		1,468,996
E Gonzalez*	412,991	407,956	18,688	11,002	324,300	274,673		3.004	1.214	1,453,828
P A Vernon*	294,588	168,989	215 Š,	24,293	194,103	30.121		2.224	483	737.016
R Boyer *	218,798	71,478		63,002	34,195	49,472		3.374	214	441,533
P J Nesbitt	122,629	130,000	533 m	$-5,498$ 11,002	46.279				$405$ $-294$	308.344
P T McAuley	264.005	673	88 r0		13,676	8.667		1,624		304,821
J.I. Couchman	183.085	62,582		$\sqrt{1,002}$		8,877		2.241	214	269,001
I D Holyman	14,982			2,012					\$	17,047
M J Stefanovski*	208,178	5g		$-6,810$	48,376	3.321	17,692	2.270	1,350	288,942
R W Mead*	104,071	1,788		5,468		1,363	35,769	2,365	408	151,232
	262,638 Νì	1,250,692	996 R	51,091	937,036	698.424	53,461	9.597	10.825	5,440,760
Other Executives: D C Crowley"	242,559	265,476		22.540	83,509	63,896		2.170	422	681,572
10yya majinesi pasa wakani pina yi me graan wana majini majini 1001.
- tajjanasterseed ennavarum 7 is 2003. 2003 186 tags de sesse en la				31 October 2003
1. Information for individual Specified Executives for 2003 is not shown				in the above format as this is the first financial report prepared since the issue of AASB 1046 Director and Executive Disclosures
by Disclosing Entities.
2. Cash salary is the ordinary cash salary adjusted for the movement in				leave entitlements.
3. Bonus payments equate to the best reasonable estimate of the incentive performance bonus, based on available information at year end. Some elements of the incentive bonus can not be determined until financial information is available for the Company's comparator group
4. Non-cash benefits relate to the salary sacrifice coraponent of rerauneration
5. Equity compensation has been valued using the binomial method, taking into account the performance hurdles relevant to each issue of equity instrument. The value of each equity instrument
scherae has been provided by PricewaterhouseCoopers

• 1. Termination benefits relate to those elements of remuneration provided to former executives above their entitlements under the contract of employment.
• insurance has not been allocated to specified executive directors and specified executives as the nature of this contract makes it impracticable to do so. The terms of the policy also prohibit disclosure 7. Insurance relates to Salary Continuance and Death and Totalh Total and Permanded as part of a card for partical comparising paid for Directors' and Officers' liability

Note 34. Remuneration Report (CORTINGCI)

B9. Remuneration Table

B10. Contract Terms for Executive Directors

David Deverall, CEO and Managing Director

• Term of contract 22 September 2003 to 30 June 2007.
• Fixed remuneration \$500,000 pa, subject to annual review by the board.
• Retention Shares ~ one-off issue of 23,584 shares under the ESP vesting over 3 years, equivalent in value to \$875,000. The shares are to compensate for benefits foregone as a result of ceasing his previous employment.
• STI up to \$1 million subject to the achievement of key performance measures aligned with the strategic direction of the Company and weighted toward both financial and non-financial measures. The board may increase this amount for future periods. For the period 22 September 2003 to 30 June 2004, the STI payment will be pro-rated to reflect the commencement date with
• 50 percent of the pro-rated amount being subject to achievement of performance objectives and the remaining 50 percent being quaranteed, to reflect foregone earning potential with the previous employer.
• Equity Instrument/ETI currently eligible to receive LTI grants equivalent to \$700,000 per annum (or such greater amount as may be determined by the board from year to year) over the term of the Service Agreement. The altimate vesting of these grants will be subject to the achievement of the LTI performance hisdles outlined in section A5.

-- Termination of employment.

• Immediate termination without notice in certain circumstances
• · STI entitlements forfeited
• · Equity Instrument/LTI Shares and options not vested at the termination date are forfeited
• Termination by Perpetual earlier of 12 months written notice or balance of contract or payment in lieu.
• STI pro-rated, based on prior year entitiements.
• · Equity Instrument/LTI -- retain vested shares and options or those which would have vested in lieu of notice with those shares and options not yet vested continuing to vest for 24 months after termination, subject to achievement of performance hurdles
• Termination by Perpetual due to illness earlier of 12 months written notice or balance of contract or payment in lieu
• STH pro-rated, based on prior year entitiements.
• · Equity Instrument/LTI -- retain vested shares and options or those which would have vested in lieu of notice with those shares and options not yet vested continuing to vest for 24 months after termination, subject to achievement of performance hurdles
• Termination by Perpetual due to non-performance earlier of 6 months written notice or balance of contract or payment in lieu
• · STI pro-rated, based on prior year entitiements.
• · Equity Instrument/ETI retain vested shares and options as at the date of notice, unvested shares and options lapse
• Voluntary termination earlier of 6 months written notice or shorter period as may be agreed
• · STI entitlements forfeited
• · Equity Instrument/ETI Shares and options not vested at the termination date are forfeited

Graham Bradley, CEO and Managing Director

• Contract ceased upon retirement on 22 September 2003.
• Fixed remuneration for the 3 months ended 22 September 2003 (inclusive of superannuation and bonus) \$112,000 per month.
• S ?! included in fixed remuneration for this period.
• Equity Instrument/ETI 197.477 options became exercisable at the time of his retirement and no options were forfeited.
• End of contract payment \$800,000.

B11. Contract Terms for Specified Executives

• The following points should be noted regarding the disclosures for Perpetual's specified executives:
• All the executives outlined below are on open ended contracts, with no fixed end date.
• Except as noted, the executives were employed from 1 July, 2003 to 30 June, 2004 inclusive.
• The fixed remuneration quoted generally includes employee benefits such as motor vehicles, superannuation, car parking, together with FBT applicable to those benefits.
• They are also entitled to secrifice all or a proportion of their cash STI for shares.
• Updated employment contracts are currently being negotiated with the specified executives as part of the implementation of the new remuneration system.
• STIs are subject to meeting KPIs which are allgned with the Company's strategic direction and cover both linancial and nonfinancial measures. These are set annually by the Managing Director and approved by the HRRC.

Gerard Doherty, Group Executive Wealth Management

• Fixed Remuneration \$450,000 pa-
• STI up to 100 percent of Fixed Remuneration, subject to the achievement of key performance measures.
• Equity Instrument/LTI has participated in TIP Share Program, TIP Option Program, Special Share Program, Special Option Program and Employee Reward Share Plan
• Termination by Perpetual or Voluntary 2 months written notice, or payment in lieu-

Emilio Gonzalez, Chief Investment Officer

• Fixed Remuneration \$450,000 pa-
• STI up to 100 percent of Fixed Remuneration, subject to the achievement of key performance measures.
• Equity Instrument/LTI has participated in TIP Share Program, TIP Option Program, Special Share Program, Special Option Program and Employee Reward Share Plan-
• Termination by Perpetual or Voluntary 2 months written notice, or payment in lieu.

Phillio Vernon, Group Executive Corporate Trust

• Fixed Remuneration \$350,000 pa-
• STI up to 80 percent of Fixed Remuneration, subject to the achievement of key performance measures.
• Equity Instrument/LTI -- has participated in TIP Share Program, TIP Option Program, Special Share Program and Employee Reward Share Plan
• Termination by Perpetual or Voluntary 2 months written notice, or payment in lieu-

Richard Boyer, Group Executive Information Technology

• Fixed Remuneration \$285,000 pa-
• STI up to 40 percent of Fixed Remuneration, subject to the achievement of key performance measures.
• Equity Instrument/LTI -- has participated in TIP Share Program, TIP Option Program and Employee Reward Share Plan
• Termination by Perpetual or Voluntary 2 months written notice, or payment in lieu-

John Nesbitt, Chief Financial Officer

• Commenced employment with Perpetual 1 March 2004
• Fixed Remaneration \$390,000 pa-
• STI up to 100 percent of Fixed Remuneration, subject to the achievement of key performance measures.
• For the period 1 March 2004 to 30 June 2004, the STI payment will be pro-rated to reflect the commencement date, 25 percent. will be subject to the achievement of performance objectives and the remaining 75 percent guaranteed to reflect the foregone earning potential with the previous employer.
• Retention Shares one off issue of \$130,000 worth of shares under the ESP. The shares vest 12 months after start date of contract, subject to remaining employed at the vesting date.
• Equity Instrument/LTI Maximum LTI amount of \$150,000 pa, currently participates in Performance Share Program.
• Termination provisions:
• · Immediate termination without notice for misconduct.
• · Termination for poor performance 6 months notice or payment in lieu
• · Other termination by Perpetual 12 months notice or payment in lieu
• · Voluntary termination 6 months notice or payment in lieu.

Paul McAuley, Group Executive Human Resources

• Resigned contract expected to cease on 11 August 2004
• Fixed Remuneration \$280,000 pa-
• STI -- entitlements for the year ended 30 June 2004 forfeited following voluntary resignation.
• Equity Instrument/LTI unvested entitlements forfeited, previously participated in TIP Share Program, TIP Option Program and Employee Reward Share Plan-
• Termination by Perpetual or Voluntary 2 months written notice, or payment in lieu.

Jane Couchman, General Counsel

• Fixed Remuneration \$250,000 pa
• STI up to 30 percent of Fixed Remuneration delivered as a cash bonus, subject to the achievement of key performance measures.
• Equity Instrument/LTI has participated in TIP Share Program, TIP Option Program and Employee Reward Share Plan
• Termination by Perpetual or Voluntary 2 months written notice, or payment in lieu.

Ivan Holyman, Chief Risk Officer

• Commenced employment with Perpetual 15 June 2004
• Fixed Remuneration \$350,000 pa-
• STI \$200,000, subject to the achievement of key performance measures.
• Equity Instrument/ETI Maximum LTI amount of \$150,000 pa, currently participates in Performance Share Program.
• Termination by Perpetual or Voluntary 2 months written notice, or payment in lieu

B12. Contract Terms for Terminated Specified Executives

Rohan Mead, Group Executive Personal Financial Services

• Resigned contract ceased on 31 October 2003
• Fixed Remuneration \$300,000pa, pro-rata payment of \$105,506 made during the financial year.
• -STI entitlements for the year ended 30 June 2004 forfeited following voluntary resignation
• Equity Instrument/ETI unvested entitlements forfeited, previously participated in TIP Share Program, TIP Option Program, Special Share Program, Special Option Program and Employee Reward Share Plan-
• End of contract payment \$35,769, pay in lieu of notice

Michael Stefanovski, Chief Financial Officer

• Resigned contract ceased on 7 November 2003
• Fixed Remuneration \$575,000pa, pro-rata payment of \$207,250 made during the financial year
• S71 entitlements for the year ended 30 June 2004 forfeited following voluntary resignation
• Equity Instrument/ETI unvested entitlements forfeited, previously participated in TIP Share Program, TIP Option Program, Special Share Program, Special Option Program and Employee Reward Share Plan
• End of contract payment \$17,692, pay in lieu of notice

B13. Participation in Equity Programs

Executive Option Plan (EOP) - Overview of the Plan The EOP was approved at the 3998 Annual General Meeting.

Options are gramed over unissued ordinary shares. The exercise price of the options, determined in accordance with the rules of the plan, is based on the weighted average price of Perpetual's shares traded during the five business days preceding the date of granting of the option.

No consideration is payable by the executives to acquire a grant of options.

There are no voting or dividend rights attached to the option or the unissued ordinary share underlying the option.

When exercisable, each option is convertible into one ordinary share of Perpetual Trustees Australia Limited.

Expiry of options

Options generally expire on the earlier of:

• the expiry date
• one month after the termination of the executive's employment (where the executive has resigned)
• 12 months after the occurrence of a special circumstance (such as redundancy)

Resignation prior to the option's exercise date will normally result in forfeiture.

The terms and conditions of each grant of options affecting remuneration in this or future reporting periods are set out in the following table.

Table B13.1 Options provided as Remuneration

	Number Vested during year	Number. - Granted during year	Grant Date	Vatue per Option at - Grant Date 1	Exercise Price	Date Exercisable and summary of service ∵ and performance criteria®	Expiry Date
Executive Directors
D M Deverall
(start date 22 Sep 03)	N#		21 Oct 03		\$37.10	30 Jun 06	21 Oct 09
G J Bradley
(retired on 22 Sep 03)	禂
Specified Executives
G D Doherty?	68,293	Nil
E Gonzalez 7	39,551	Nil
P A Vernon?	4,105		$\cdots$
R Boyer?	4,830		$\cdots$
P.J Nesbitt	图	Nil
P T McAuley	图	Λil
3 L Couchman	2,386	Nil
l Ð Holyman.	N#	Nil
M 3 Stefanovski®	5,727	Nil
R W Mead ®	30,034
Other Executives
D C Crowley?	25,728	Nil

1. Equity Instruments have been valued by PricewaterhouseCoopers using a Binomial Option Pricing model

2. These executives are also the five highest paid executive officers in the year ended 30 June 2004.

3. Michael Stefanovski ceased employment as at 7 November 2003, while Rohan Mead ceased employment as at 31 October 2003

4. Approval for the issue of options to David Devera® was obtained under ASX Listing Rule 10.14 at Perpetual's Annual General Meeting on 20 October 2003.

5. David Deverall was granted the following equity compensation since 30 June 2004:

6. Options: 29,736 options over shares at \$9.83 (binomial option pricing model) granted on 1 July 2004 and vesting on 1 July

2007 (Expiry date 1 July 2010) under the Long Term Incentive Plan (Vesting in equal portions based on TSR and EPS hurdles). 6. For summary of service and performance criteria refer to 810. Contract Terms for Executive Directors.

Table B13.2 Shares provided on exercise of remuneration options:

	because a control to	No. of ordinary
	Date of exercise	shares issued on	Amount paid
Name	of options	exercise of options	per share
Executive Directors:
D M Deverall		ΝìΙ
G J Bradley	5 Sep 03	17.477	\$21.84
	$-15$ Oct 03	5,000	\$21.84
	.15 Oct 03	10,000	\$20.05
	11 Nov 03	20,000	\$20.05
	13 Nov.03	20,000	\$20.05
	3 Dec 03	10,000	\$20.05
	16 Dec 03	15,000	\$20.05
	26 Feb 04	10,000	\$20.05
	27 Feb 04	10,000	\$20.05
	12 Mar 04	10,000	\$20.05
	1 Jun 04	10,000	\$20.05
	3 Jun 04	50,000	\$20.05
	23 Jun 04	10,000	\$20.05
Specified Executives:
G D Doherty		Nil
E Gonzalez		Nil
P A Vernon	$\sqrt{1}$ Apr 04 $\sqrt{2}$	538	\$20.66
	1 Apr 04	1,368	\$34.51
R Boyer	9 Oct 03 :	3,227	\$20.66
	4 Mar 04	1.610	\$34.51
P J Nesbitt		Nil
P 7 McAuley		Nil
J L Couchman		Nil
I D Holyman		Nil
M J Stefanovski	15 Sep 03 1:	9,255	\$20.66
R W Mead	13 Nov 03 13 Nov 03	1,909 1,678	\$34.51 \$34.51
Other Executives:
D C Crowley	5 Sep 03	1,188	\$20.66

No associates are unpaid on any shares issued on the exercise of options.

Table B13.3 Option holdings:

		Granted		Other		Vested and
	Balance at	during the	Exercised	changes	Balance at	exercisable
	the start	year as	during	during	the end	at the end
Name	of the year	remuneration	the year	the year	of the year	of the year
Executive Directors:
D M Deverall	图	29,258	Nil	Nil	29,258	Nil
G J Bradiey	217,477	Nil	(197, 477)	Nil	20,000	20,000
Specified Executives:
G D Doherty	192,861	Nii	Nil	Nil	392,863	.29,084
E Gonzalez	159,637	Nii	Nil	'Nil'	159,637	16,516
P A Vernon	19,628	Nii	(1,906)	(1,506)	16,216	Nil
R Boyer	35,503	Nil	(4, 837)	(2.400)	28,266	Nil
P.J Nesbitt.	報	Ыł	Nil	Nil	Νil	Nil
P T McAuley	4.337	Nii	Nil	Nil	4,337	Nil
∄ L Couchman.	7.521	МI	Nil	(2,028)	5.493	195
I D Holymani	N#	-Nii	Nil	Nil	Νil	Nil
M ∃ Stefanovski	40,219	Nii	(13, 164)	(29,055)	Nil	Nil
R W Mead	62,461		(3,678)	(60, 783)	Nil	Ni
Other Executives:
D C Crowley	38,362	Nil	(3, 188)	Nif	37,174	8,575

Executive Share Plan (ESP) ~ Overview of the Plan

The ESP was approved by shareholders at the 1997 Annual General Meeting (as amended in 1999).

The issue price of grants of share is the weighted average of the prices at which shares were traded on the Australian Stock. Exchange for the five days up to the date of issue. Shares are then either purchased on market or issued by the Company to satisfy the grants made to executives and held in trust for a maximum of 10 years. While shares are held by the trustee, the executives receive dividends and have voting rights. No consideration is actually payable by executives in order to acquire shares under the ESP, although executives can elect to take some of their STI in the form of shares under a bonus sacrifice arrangement.

Table B13.4 Share holdings of Executive Directors and Specified and Other Executives:

	Balance at	Granted during	Other changes	Balance at	Vested
	the start	the year as	during	the end	during
Name	of the year	remuneration	the year	of the year	the year
Executive Directors:
D M Deverall		30,898		30,898
G 3 Bradley				204.150
Specified Executives:
G D Doherty	$33,377$ .			33,377
E Gonzalez	37,274			37.274
P A Vernon	3.831	9,903		13,554	3,143
R Boyer	(138)	726		7.576	.406
P J Nesbitt		4.791		4.791
P T McAuley		713		2.519
J L Couchman				674
I D Holyman
M J Stefanovski	9.462		19,462)
R W Mead		$\cdots$	(12,763)
Other Executives
D C Crowley	12,501		501	13,002	1,685

1. Approval for the issue of shares to David Deverall was obtained under ASX Listing Rule 10.14 at Perpetual's Annual General Meeting held on 20 October 2003.

2. David Deverall was granted the following equity compensation since 30 June 2004:

3. Shares: 7,434 shares at \$47.08 per share granted on 1 Buly 2004 and vesting on 1 Buly 2007 (Expiry date 1 Buly 2014) under the Long Term incentive Plan (Vesting in equal portions based on TSR and EPS hurdles).

For details of equity received during the reporting period on exercise of options or rights see the option holdings table B13.3.

B14. Loans

Aggregates for directors and specified executives.

	Balance at the start of	Interest paid and payable	Interest not	Balance at the end of	Number in group at the
Group	the year	for the year	charged	the year	end of the year
Executive Directors of
Perpetual Trustees
Australia Limited	23.952	$\cdots$	2.490	11.11
Specified executives of
the consolidated entity.	149.179.	$\cdots$	21.766	140.656	9

1. There were no individuals with foars above \$100,000 during the year.

2 Interest not charged has been calculated at 13.8% on the weighted average loan balances as at 30 June 2004 and 30 June 2003 or, for terminated executives,

os the pro-rata kass balasces for the period up to 6 months from the date of leaving employment.

1. The loss site available to executive directors, but not to non-executive directors.

Section C - Remuneration of Non-Executive Directors

C1. Non-executive Directors

The following persons were specified non-executive directors of Perpetual Trustees Australia Limited during the financial year:

Name	Position
Chairman
Charles P. Curran AO	Non-executive Chairman and Independent Director
Non-executive directors
Stephen J. Chapman	Deputy Chairman and Independent Director
Bonita L. Boezeman AO	Independent Director
Warwick G. Kent AO	Independent Director
John S. Curtis	Independent Director
Linda B. Nicolls	Independent Director
Robert M. Savage	Independent Director
Sandra V. McPhee	Independent Director
	(appointed 3 April 2004).
Paul McClintock	Independent Director
	(appointed 3 April 2004).

C2. Remuneration Policy

The Company's remuneration policy for non-executive directors aims to ensure it can attract and retain suitably skilled, experienced and committed individuals to serve on the board.

Total remuneration avalable to non-executive directors is approved by shareholders, and was last increased in 2000 to \$1.2 million. Total fees paid to non-executive directors in 2004 were \$950,345. To enable the Company to attract and retain non-executive directors of the highest calibre in the period ahead and in anticipation of the need to increase base fees for new directors (who will not be entitled to receive retirement benefits - see C5), shareholder approval is to be sought to increase the maximum aggregate fees available to directors to \$1.75 million at the 2004 Annual General Meeting.

The board's Human Resources and Remuneration Committee (HRRC) is responsible for reviewing and recommending to the board any changes to board remuneration, taking into account the size and scope of Perpetual's activities, the responsib@ties and liabilities of directors and the demands placed upon them. In developing its recommendation, the HRRC takes advice from independent. remuneration consultants, including Egan Associates.

Non-executive directors do not receive any performance-related remuneration, nor are they entitled to receive performance shares or options over Perpetual shares.

With the exception of the chairman and deputy chairman, non-executive directors receive additional fees for their work on board committees. The fee schedule is shown below:

	$\overline{\phantom{000000000000000000000000000000000000$	2005 Proposed
	S	S.
Chairman	$\sim 220,000$ .	270,000
Deputy Chairman	$-135.000 +$	357.500
Directors appointed prior to 1 July, 2003.	$-85,000$	95.000
Directors appointed on or after 1 July, 2003.	$-115,000$ .	128,000
Audit Risk & Compliance Committee Chairman	$-20.000$	30,000
Audit Risk & Compíance Committee Member	$10000 \div 1000$	15,000
Human Resources & Remuneration Committee Chairman	::::::: 20.000	25.000
Human Resources & Remuneration Committee Member	$-1.10,000$	12.500
Investment Committee Chairman	$-20,000$ .	25,000
Investment Committee Member	10.000-	12.500
Nominations Committee Member		10.000

C3. Share Plan and Holdings

In accordance with the Company's constitution, non-executive directors are required to hold a minimum of 1,000 Perpetual shares.

Under a share purchase plan for non-executive directors approved on 20 October 1998, non-executive directors may sacrifice up to 50 percent of their directors' fees to acquire shares in Perpetual. Shares are purchased on a quarterly basis and disposal is restricted for 10 years or until the director retires. Non-executive directors do not receive share options.

Directors' individual shareholdings are set out below.

	Balance at the	Granted during	Other changes	Balance at the
Name	start of the year	the year	during the year	end of the year
C P Cerran	$\sim$ 70,091.	2,627		72,718
S. J. Chapman	$-5.335$ .	1,009		6,344
B E Boezeman	2,468	103		2,569
J S Cartis	$-9,018$ and the angle of	203		9.221
W G Kent	9,686	1,009		10,695
P McCantock			-1.500	1,500
S V McPhee			,000	1.000
L B Nicholis	5.779	1,009		6,788
R M Savage	1.835	504	ww	2,339

C4. Retirement Policy

As specified by the ASX Esting Rules, directors who have been in office for three years since their last appointment must retire and seek re-election at the Company's annual general meeting, in order to revitalise the board, directors agree not to seek re-election after three terms of three years unless the board requests them to do so. The nine year principle does not displace shareholders' rights to vote on the appointment and removal of directors, as set out in ASX Listing Rules and the Corporations Act. The board may invite a director to seek re-election beyond nine years if this would be advantageous for reasons such as board leadership or continuity. For example, in 2001, the board invited Mr Curran to continue beyond nine years in order to provide leadership as chairman.

C5. Retirement allowance

Non-executive directors appointed prior to 1 July 2003 are entitled to retirement benefits under a scheme approved by shareholders in 1990, and revised and approved at the AGM in 2001. Benefits are related to years of service and provisions are accrued each year for these entitlements. This scheme has been specifically designed to support the board's retirement policy (see above).

The board discontinued this retirement scheme for new non-executive directors appointed after 1 July 2003. Benefits will continue to accrue to non-executive directors appointed prior to 1 July 2003 under the existing scheme. Non-executive directors appointed after this date will receive increased board fees as well as having superannuation guarantee contributions made on their behalf but will not receive the retirement allowance.

The retirement allowance is calculated based on the years of service provided to a maximum of fifteen years, in accordance with the following accruel table:

Length of Service	Multiple Applicable
3 years	1.33 years' fees
6 years.	-2.67 years' fees
9 years.	4 years' fees
12 years	4.5 years' fees
15 years.	5 years' fees

C6. Related Party Disclosures

No non-executive directors have entered into a material contract with the Company or the consolidated entity since the end of the previous financial year and there were no material contracts involving directors' interests subsisting at the year end.

As at 30 June, 2004, directors held the following shares and options in the Company and in registered schemes of the consolidated entity:

								Registered
	Ordinary shares		Dividends received		Options		scheme interests
	$2004 -$	2003	2004	2003	2004	2003	2004	2003
	No.	No.			No.	No.
C P Curran	:72,718.	70,091	135,448	116,456		$\cdots$	-160.960.	1,004,235
S J Chapman	$-6.344$ .	5,335	$-11,008$ .	8.098		$\cdots$
8 L Boezeman	$-2,569$ .	2,468	(11.4, 777.1)	4,096			1333,675	315,323
J S Curtis	$-9.221$	9,018	$-17,378$	14,836
W G Kent	110,695 -	9,686	$19,275$ :	15.479			$1,289,407.$ .	787.574
P McClintock	$-1.500$	$\cdots$	$\sim$ -750 $\cdot$
S V McPhee	$-1,000$	$\cdots$	- 500
E. B. Nicholls	6,788	5.779	11,852	8.837		$\cdots$	317,299	294,986
R M Savage	2,339	3,835	3,922	2,630	$\cdots$	$\cdots$	1.061.948	881,153

The non-executive directors are not entitled to any remission of application fees when investing in any pooled investment funds. managed by the consolidated entity,

C7. Remuneration Table

Directors' Remuneration Disclosures

				LGUILY	Uther
2003/04	Primary	Post employment		Compensation	Benefits	Total
		Cash salary Superannuation	Retirement	Shares	Insurance
C.P. Cerran	$-109.961$		215.510	109.961	$\cdots$	1.1435,432
S.J Chapman	1.97,474		104,923	42.476	$\cdots$	1244,873
B E Boezeman	103,204		53.305	-4.248		160,757
J S Cartis	$-98,406$		85.649	$-6.526$ .		190,581
W G Kent	$-.62,476$	$\mathbf{u}$	61,206	42,476	$\cdots$	$-166.158$
P McCantock	$-31.169$	2.750			$\cdots$	133,919
S V McPhee	27,292	2.750		4.792	$\cdots$	34,834
L B Nicholis	$\binom{1}{1}$ 62,457		62,673	42,476	$\cdots$	167,606
R M Savage	83,714		72.968	21,238	$\cdots$	177.920
	676.153	5.500	656.234	274.193		1,612,080

1. Cash salary is the ordinary cash salary. Under a share purchase plan for non-executive directors approved on 20 October 1998, non-executive directors may sacrifice up to 50 percent of their directors' fees to acquire shares in the company.

2. The Directors do not receive any non-cash benefits as part of their remuneration.

3. Amounts shown under 'Retirement' represent the increase in the director's entitlement accumulating in the year ending June 30, 2004 under the Retirement Allowance scheme outlined at C5.

4. Shares issued as remuneration have been valued and recorded as remuneration as at the date of issue.

5. The premium paid for Directors' and Officers' liability insurance has not been allocated to non-executive directors as the nature of this contract makes it impracticable to do so. The terms of the policy also prohibit disclosure of details of the amount of insurance cover and the premium paid.

C8. Contract terms

				Eligible for
	Board fees	Committee fees	Appointed	retirement benefits'
	\$p.a.	\$р.з.
Charles P. Curran AO
(Chairman).		Nil		Yes
Stephen J. Chapman,
(Deputy Chairman)	135,000	Nil	May 95.	Yes
Bonita L. Boezeman AO
(Independent Director)	85.000	20,000	. Aug 96	Yes
John S. Curtis
(Independent Director)	85.000	20,000	Apr 95	Yes
Warwick G. Kent AO
(Independent Director).	85.000	20,000	May 98.	Yes.
Paul McCăntock				No -- Statutory
(Independent Director)	15,000	20,000	ADI 04	superannuation only
Sandra V. McPhee				No -- Statutory
(Independent Director).		20,000	\or 04	superannuation cnly
Linda B. Nicolls
(Independent Director)		20,000		Yes
Robert M Savage
(Independent Director)	85,000	20,000	Aug 01	Yes
1. Relixement benefits: See Section C5 for details of the operation of the retirement benefits plan and C7 for the accrued value for this year.

PÉRPETON, ÉROSTÉES AUSTRALIA LIMITÉD AND PS CONTROLLÉD ENTIRÉS

Directors' Declaration

In the opinion of the directors of Perpetual Trustees Australia Limited:

• (a) the financial statements and notes, set out on pages 53 to 110, are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the financial position of the Company and consolidated entity as at 30 June 2004 and of their
• performance, as represented by the results of their operations and their cash flows, for the year ended on that date; and (ii) complying with Accounting Standards in Australia and the Corporations Regulations 2001; and

(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of the directors:

Shoules Cuman

Charles Curran AO Chairman

Dated at Sydney, 24 August 2004

$\ddot{\psi}$

David Deverall Managing Director

Independent Audit Report to the members of Perpetual Trustees Australia Limited

Scope

We have audited the financial report of Perpetual Trustees Australia Limited (the Company) for the financial year ended 30 June 2004, consisting of the statements of financial performance, statements of financial position, statements of cash flows, accompanying notes, and the Directors' declaration set out on pages 53 to 131. The financial report includes the consolidated financial statements of the consolidated entity, comprising the Company and the entities it controlled at the end of the year or from time to time during the financial year. The Company's directors are responsible for the financial report. We have conducted an independent audit of this financial report in order to express an opinion on it to the members of the Company.

Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance whether the financial report is free of material misstatement. Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial report, and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion whether, in all material respects, the financial report is presented fairly in accordance with Accounting Standards and other mandatory professional reporting requirements and statutory requirements in Australia so as to present a view which is consistent with our understanding of the Company's and the consolidated entity's financial position and performance, as represented by the results of their operations and their cash flows.

The audit opinion expressed in this report has been formed on the above basis.

Audit Opinion

In our opinion, the financial report of Perpetual Trustees Australia Limited is in accordance with:

(a) the Corporations Act 2001, including:

• (i) giving a true and fair view of the Company's and consolidated entity's financial position as at 30 June 2004 and of their performance for the year ended on that date; and
• (ii) complying with Accounting Standards in Australia and the Corporations Regulations 2001; and

(b) other mandatory professional reporting requirements in Australia.

KPMG

Holl

Chris Hall Partner

Dated at Sydney: 24 August 2004

List of Investments as at 30 June 2004

	Market value
	\$'000
Listed company
Australia and New Zealand Banking Group	6.677
BHP Billiton Limited	3.195
Bluescope Steel Limited	67
Boral Limited	2,261
Brickworks Limited	5.755
Commonwealth Bank of Australia	3.584
CSR Limited	2.609
Fosters' Group Limited	5.980
National Australia Bank	10.193
Publishing & Broadcasting Limited	4.907
Rinker Group Limited	8,292
Rio Tinto Limited	5,950
Rural Press Limited	2.644
Rural Press Limited Preference	1.911
Westpac Banking Group	7.040
Woodside Petroleum Limited	4,501
	75,566
Unlisted investments
Perpetual Small Companies Analysts Fund	3.866
Perpetual's Investor Choice Fund	6.293
Perpetual's Wholesale Balanced Growth Fund	649
Perpetual's Wholesale Quantitative Investments Alpha TE2 Fund	6,393
Perpetual's Wholesale Geared Australian Fund	4.032
Perpetual's Wholesale SHARE-PLUS Fund	6.788
Perpetual's Wholesale Ethical SRI Fund	5.882
Investor Marketplace Pty Etd	52
	33,955
Total investments	109,521

2004 Annual General Meeting

The 2004 Annual General Meeting of the Company will be held in the James Cook Baltroom, Level 2, InterContinental Hotel, 117 Macquarie Street Sydney on Taesday 19 October 2004 commencing at 11.00am.

Stock exchange listing

The ordinary shares of Perpetual Trustees Australia Limited are listed on the Australian Stock Exchange under the ASX code PPT, with Sydney being the home exchange. Details of trading activity are published in most daily newspapers.

Substantial shareholders

Shareholders appearing on the Company's register of substantial shareholders as at 31 July 2004:

Name	Number shares ΩŤ
Barclays Eimited . slohat i ` Investors . - Australia	Albert -25 $-1$ $-1$

Statement of shareholdings

Distribution schedule of holdings as at 31 July 2004	Number of holders	Number of shares
$1 - 1,000$ shares	$\frac{1}{2}$ . $\frac{1}{2}$ . $\frac{1}{2}$ . $\frac{1}{2}$ . $\frac{1}{2}$ . $\frac{1}{2}$ . $\frac{1}{2}$ . $\frac{1}{2}$ . $\frac{1}{2}$ . $\frac{1}{2}$ . $\frac{1}{2}$	4.362.505
$1,001 - 5,000$ shares	$\sim$ $2.847$	6,473,069
5,001 - 10,000 shares	$\mathbb{R}^n$ Mathematica 415 $^{\circ}$	2.964.703
10.001 - 100.000 shares	$\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$	6.462.017
100,001 - and over shares	44	18,003.195
Total	13.770	38,265,489
Number of shareholders with less than a marketable parcel:	84	391

Top 20 shareholders as at 31 July 2004

	Number of	Percentage of
Name	shares	issued capital
National Nominees Limited	12,515,584	6.57
J P Morgan Nominees Australia Eimited	$-2,371,312$	6.20
Westpac Custodians Nominees Limited	2,144,477	5.60
Queensiand Trustees Pty Limited (*)	1,255,252	3.28
Citicorp Nominees Pty Limited	1,078,146	2.82
Cogent Nominees Pty Limited	632,153	1.65
Perpetual Trustee Company Limited (*)	$-624,340$	1.63
Queensland Investment Corporation	.616,218	1.63
Milton Corporation Limited	557.150	1.46
Bond Street Custodians Limited	-536,066	1.40
Washington H Soul Pattinson & Company Eimited	529.598	1.38
Australian Foundation Investment Company Limited	:500.000	1.31
AMP Life Limited	485,632	1.27
Caledonia Investments Limited	442.773	1.16
Argo investments Limited	1350,880	0.92
ANZ Nominees Limited	335,378	0.88
HSBC Custody Nominees (Australia) Ltd	334,487	0.87
Enbeear Pty Ltd	$\sim$ 310.678	0.83
IAG Nominees Pty Limited	298,961	0.78
UBS Private Clients Australia Nominees Pty Ltd.	285,055	0.74
Total	16,204,140	42.34
" Field in espacity as executor, trustee or seem.

Voting rights

Under the Company's Constitution, each member present at a general meeting (whether in person, by proxy, attorney or corporate representative) is entitled:

• on a show of hands to one vote; and

• on a poll to one vote for each share held.

If a member is present in person, any proxy of that member is not entitled to vote.

If more than one proxy is present for a member:

• on a show of hands none of them is entitled to vote; and
• on a poll each of them is entitled to vote the number of shares in respect of which they have been appointed.

Voting by proxy

Voting by proxy allows shareholders to express their views on the direction and management of the economic entity without attending a meeting in person.

Shareholders who are unable to attend the 2004 Annual General Meeting are encouraged to complete and return the proxy form that accompanies the notice of meeting enclosed with this report.

On-market buy-back

There is no current on-market buy-back.

Final and special dividend

The final dividend of 80 cents per share and a special dividend of 200 cents per share will be paid on 17 September 2004 to shareholders entitled to receive dividends and registered on 2 September 2004 being the record date.

Enguiries

If you have any questions about your shareholding please contact the Company's share registry office below, or visit their website at www.asxperpetual.com.au

ASX Perpetual Registrars Limited Level 8, 580 George Street. Sydney NSW 2000

Locked Bag A?4 Sydney South NSW 1235

Telephone: (02) 8280 7111 Facsimile: (02) 9287 0303 Email address: registrars@asxperpetual.com.au

Any other enquiries which you have about the Company, can be directed to the Company's registered office or visit the

Company's website. Registered Office Level 7, 39 Hunter Street Sydney NSW 2000

Tel: (02) 9229 9000 Fax: (02) 9232 8936

Company Secretary

Joanne Hawkins

Website address: www.perpetual.com.au Email address: info@perpetual.com.au

Dates of upcoming events of interest to shareholders.

Annual General Meeting - 2004	19 October 2004
Half year end	31 Dec 2004
Interàm profit and dividend announcement.	22 Feb 2005*
Payment of interim dividend	Mar 2005
Full year end.	30 Jun 2005
Final profit and dividend announcement.	23 Aug 2005*
Annual report mailed to shareholders.	Sep 2005
Final dividend payment.	Sep 2005
Annual General Meeting - 2005	18 Oct 20051
* Date subject to change.

Perpetual Trustees Australia Limited - Five Year Performance Table

GrowthPerformance measures	Units	2000	2001%	2002@	2003%	2004	Rate% ®
Revenue from trading operations.	S 31	238.9 .	290.9	$\pm 248.2$ $\geq$	267.8	295.2	5.4%
Net investment income	Sm	6.3	9.2	$-8.4$ .	11.0	$\sim$ 10.8 $\cdot$	14.4%
Total revenue	Sm	245.2	300.1	$-256.6$ .	278.8	$-306.0$	5.7%
ESITDA	Sm	171.4 1	82.0	100.7	113.6	$-143.6$	19.1%
Profit from trading" before tax	Sm	$-43.1$	48.7	$-75.3$ :	85.1	115.2	27.9%
Profit margin from trading	Ÿs	18.0	16.7	30.3	31.8	$-39.0$
Operating profit before tax excluding realised
gains on investment sales.	Sm	49.4	57.9	83.7	96.1	-126.0	26.4%
Operating profit after tax excluding realised.
gains on investment sales.	Sm	$30.7$ .	40.7	$-58.7<$	68.2	88.2	30.2%
Profit after tax	Sm	40.3	54.9	175.6 L	78.2	$-90.4$	22.4%
Earnings per share	ceats	110.1	147.4	$-199.9$	207.1	$-237.8$	21.2%
Return on average shareholders' equity	%	122.9 time	25.4	30.8	28.7	130.0
Dividend paid, declared or provided for"	S 31	$-23.9$	31.8	$\pm 60.7$ $\pm$	68.0	76.4	33.7%
Total shareholders' equity	Sm.	198.5	234.2	$-256.6$ .	287.4	-315.4	12.3%
Capital expenditure	Sm	$-11.4$	26.2	$\pm 42.7 <$	7.5	$\sim 5.7$ .
Share price at 30 June.	\$	25.97	40.91	$-42.90$	30.70	-46.99	16.0%
Share price range for year.	\$iow	18.60	25.60	$\pm 33.00\pm$	25.10	$\pm 29.90$ :
	Shiqh	26.10	41.00	48.60	43.40	48.20

(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. For 2004, the special dividend of 200 cents per share announced as part of the capital management policy has been excluded.

(4) Adjusted to reflect revenue re-classification effective in 2004.

AUSTRALIAN CAPITAL TERRITORY

Level 4 10 Rudd Street Cariberra ACT 2601 Tel (02) 6248 7977

NEW SOUTH WALES

39 Hunter Street Sydney NSW 2000 Tel (02) 9229 9000

QUEENSLAND

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

SOUTH AUSTRALIA

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

VICTORIA

Level 28 360 Collins Street Melbourne VIC 3000 Tel (03) 8628 0400

WESTERN AUSTRALIA

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

ASX PERPETUAL REGISTRARS LIMITED

Level 8 580 George Street Sydney NSW 2000 Tel (02) 8280 7100

Level 4 333 Collins Street Melbourne VIC 3000 Tel (03) 9615 9800

www.perpetual.com.au

ABN 86 000 431 827