Directors' Report For The Year Ended 30 June 2011

The directors present their report together with the consolidated financial report of Perpetual Limited, ("Perpetual" or the "Company") and its controlled entities (the "consolidated entity"), for the year ended 30 June 2011 and the auditor's report thereon.

Contents of the Directors' Report	Page No.
Directors		2
Company secretaries		4
Directors' meetings		5
Principal activities		5
Review of operations		5
Dividends		6
State of affairs		6
Events subsequent to reporting date		6
Likely developments		6
Environmental regulation		7
Indemnification of directors and officers		7
Insurance		7
Corporate responsibility statement		8
Remuneration report		25
Remuneration snapshot		28
The role of the People and Remuneration Committee		31
Our remuneration philosophy and structure		33
Short-term incentives		37
Long-term incentives		39
Summary of company performance		45
Details of remuneration		48
Contract terms of executives		57
Remuneration of non-executive directors		63
Chief Executive Officer's and Chief Financial Officer's declaration		67
Non-audit services		67
Rounding off		67
Lead Auditor's independence declaration		68

Directors' Report For The Year Ended 30 June 2011 (continued)

Directors

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

Peter B Scott, Chairman and Independent Director

BE (Hons), M.Eng.Sc (Age 57)

Appointed as a Director in July 2005 and Chairman on 26 October 2010. He was formerly the Chief Executive Officer of MLC, an Executive General Manager of National Australia Bank and held a number of senior positions with Lend Lease. He is Chairman of Sinclair Knight Merz Pty Limited and a director of Stockland Corporation Limited. Mr Scott is an advisory board member of Pilotlight Australia. He is Chairman of Perpetual's Nominations Committee.

Mr Scott has more than 20 years of senior business experience in publicly listed companies and extensive knowledge of the wealth management industry.

Listed company directorships held during the past three financial years:

Stockland Corporation Limited from August 2005 to the present

Paul V Brasher, Independent Director

BEc (Hons), FCA (Age 61)

Appointed Director in November 2009. Mr Brasher was formerly Chairman of the Global Board of PricewaterhouseCoopers International. He previously chaired the Board of PricewaterhouseCoopers' Australian firm and held a number of other senior management and client services roles during his career with the firm. Mr Brasher was Client Service Partner and /or Lead Engagement Partner for some of the firm's most significant clients. He also spent significant periods working with PricewaterhouseCoopers in the US and UK. Mr Brasher is currently a director of Incitec Pivot Limited and a Board member of the Victorian Arts Centre Trust. He is a member of Perpetual's Audit Risk and Compliance Committee and People and Remuneration Committee.

Mr Brasher brings to the Board his local and global experience as a senior executive and director, particularly in the areas of strategy, audit and risk management and public company governance.

Listed company directorships held during the past three financial years:

Incitec Pivot Limited from September 2010 to the present

Meredith J Brooks, Independent Director

BA, FIAA (Age 49)

Appointed as a Director in November 2004. She was formerly Managing Director, US Institutional Investment Services for Russell Investment Group based in New York. Prior to that she held the position of Managing Director of Russell Australasia for five years and was previously Director, European Funds based in London. Ms Brooks is Chair of Synergy & TaikOz Limited, Critical Path Incorporated and has been appointed to the industry advisory board of Macquarie University Faculty of Business and Economics. She is a member of Perpetual's Audit Risk and Compliance Committee and Investment Committee.

Ms Brooks brings to the Board over 20 years of senior funds management experience both in Australia and internationally.

Philip Bullock, Independent Director

BA, MBA, GAICD, Dip. Ed. (Age 58)

Appointed Director in June 2010. Mr Bullock was formerly Vice President, Systems and Technology Group, IBM Asia Pacific, Shanghai, China. Prior to that he was CEO and Managing Director of IBM Australia and New Zealand. His career with IBM spanned almost 30 years in the Asia Pacific region. Mr Bullock is a director of CSG Limited. He also provides advice to the Federal Government, through his role as Chair of Skills Australia, as a member of the Education Investment Fund and a member of the recently concluded, National Resources Sector Employment Taskforce. He is a member of Perpetual's Investment Committee and People and Remuneration Committee.

Mr Bullock brings to the Board broad management experience in Australia and Asia in technology, sales and client management, product and brand management, industry solutions and equity joint ventures.

Listed company directorships held during the past three financial years:

Healthscope Limited from September 2007 to October 2010
CSG Limited from August 2009 to the present

Directors' Report For The Year Ended 30 June 2011 (continued)

Directors (continued)

E Paul McClintock AO, Independent Director

BA, LLB (Age 62)

Appointed as a Director in April 2004. He is Chairman of Thales Australia, Medibank Private Limited and the COAG Reform Council and has served as Secretary to Cabinet and Head of the Cabinet Policy Unit in the Australian Government. He is Chairman of Perpetual’s Investment Committee and a member of the Nominations Committee and People and Remuneration Committee.

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

Listed company directorships held during the past three financial years: - Symbion Health Limited (Chairman) from June 2005 to February 2008
Intoll Management Limited (formerly Macquarie Infrastructure Investment Management Limited)
from May 2003 to December 2010

Elizabeth M Proust AO, Independent Director BA (Hons), LLB, FAICD (Age 60)

Appointed as a Director in January 2006. She was formerly Managing Director of Esanda, part of the ANZ Group. Prior to joining ANZ she was Secretary (CEO) of the Victorian Department of Premier and Cabinet and Chief Executive Officer of the City of Melbourne. She is currently Chairman of Nestlé Australia Ltd and Bank of Melbourne Board, a director of Spotless Group Limited, Insurance Manufacturers of Australia Pty Ltd and Sinclair Knight Merz Pty Ltd. She is Chairman of Perpetual's People and Remuneration Committee and a member of Perpetual's Audit Risk and Compliance Committee and Nominations Committee.

In addition to her skills from her leadership roles in significant change management programs, Ms Proust brings to the Board her strengths in human resources, public affairs and strategy development, and her strong knowledge of board processes and governance through her many senior executive and board roles.

Listed company directorships held during the past three financial years: - Spotless Group Limited from June 2008 to the present

Philip J Twyman, Independent Director

BSc, MBA, FAICD (Age 67)

Appointed as a Director in November 2004. He was formerly Group Executive Director of the London-based Aviva plc, one of the world’s largest insurance groups with extensive fund management and wealth management businesses. Mr Twyman was also formerly Chairman of Morley Fund Management, a director of the Quilter Group, a UK private client stockbroker, and a senior executive of AMP in Australia. He has also been Chief Financial Officer of General Accident plc, Aviva plc and the AMP Group. Since returning to Australia, Mr Twyman has joined the Board of IAG Limited, Medibank Private Limited and the local Boards of the Swiss Re Group. He is also Chairman of ANZ Lenders Mortgage Insurance Pty Ltd and Overseas Council Australia. He is Chairman of Perpetual's Audit Risk and Compliance Committee and a member of the Investment Committee and Nominations Committee.

As an experienced international executive and director, Mr Twyman brings to the Perpetual Board his background in financial services, investment and wealth management together with considerable practical experience in relation to the audit and risk management issues faced by public companies in Australia and overseas.

Listed company directorships held during the past three financial years: - IAG Limited from July 2008 to the present

Directors' Report For The Year Ended 30 June 2011 (continued)

Directors (continued)

Chris Ryan, Managing Director

B. Bus. (Age 51)

Commenced employment with Perpetual Limited on 14 February 2011 as Chief Executive Officer and appointed as Managing Director on 23 February 2011. Prior to his appointment as Managing Director and CEO of Perpetual, Mr Ryan's career included over 30 years of financial services experience in the Asia Pacific region. He led regional asset management businesses of three of the industry's major international players: HSBC, ING Investment Management, and Fidelity International. While CEO of ING Investment Management Asia Pacific, Mr Ryan was responsible for the firm's operations in 13 locations across Asia. This included ING Investment Management Australia, with over US$30 billion in assets under management. Most recently, Mr Ryan held an advisory role with Citibank's global transaction services business.

Mr Ryan brings to Perpetual extensive international and domestic experience in the financial services industry together with demonstrated leadership skills as a chief executive officer.

Directors who resigned during the period

Robert M Savage AM, Chairman and Independent Director FASCPAS, FAICD, FAIM (Age 69)

Appointed as a Director in 2001 and as Chairman in October 2005. At the conclusion of the Annual General Meeting on 26 October 2010, Mr Savage retired as Chairman and Director of Perpetual Limited and as a member of the Nominations Committee and People and Remuneration Committee.

David M Deverall, Managing Director

BE (Hons), MBA (Stanford) (Age 45)

Appointed Managing Director and Chief Executive Officer in September 2003. Mr Deverall gave notice of his resignation on 23 June 2010 and retired as a Director of the Perpetual Limited board on 23 February 2011.

Alternate Directors

Roger L Burrows, Alternate Director

BCom, CPA, MAICD (Age 47)

Alternate Director for Mr Savage from December 2008 until Mr Savage's retirement at the conclusion of the AGM on 26 October 2010 and appointed as Alternate director for Peter Scott on 27 October 2010. He joined Perpetual as Chief Financial Officer in March 2008. Mr Burrows has over 25 years of experience as a senior finance executive in a diverse range of industries, including property, financial services, IT services, professional services and manufacturing. Prior to working at Perpetual, Mr Burrows was with Lend Lease for 20 years, including 3 years as Group Chief Financial Officer.

Ivan D Holyman, Alternate Director

BEc, LLB (Age 55)

Alternate Director for Mr Deverall from May 2006 until his resignation on 23 February 2011 and appointed as Alternate director for Chris Ryan on 8 April 2011. He joined Perpetual in June 2004 as Chief Risk Officer. Prior to joining Perpetual he held the position of Chief Operating Officer Asia Pacific for UBS Warburg and spent 19 years with UBS AG (and its predecessor organisations) in various positions. Prior to UBS AG he spent two years with Samuel Montagu & Co Limited (a UK merchant bank) and four years with Blake Dawson Waldron, solicitors.

Company Secretaries

Joanne Hawkins

BCom, LLB, Grad Dip CSP FCIS

Appointed Company Secretary in June 2003. Prior to this, Ms Hawkins 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. Ms Hawkins is also head of Perpetual's legal team.

Directors' Report For The Year Ended 30 June 2011 (continued)

Company Secretaries (continued)

Glenda Charles

Grad. Dip. Corp. Gov. ASX Listed Entities, CSA (Cert)

Joined Perpetual in August 1994. She was appointed Assistant Company Secretary of Perpetual in 1999 and Deputy Company Secretary in 2009. Ms Charles has over 15 years experience in company secretarial practice and administration and has worked in the financial services industry for over 25 years.

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 financial year to 30 June 2011 were:

Director	Board	Board	Audit Risk and Compliance Committee	Audit Risk and Compliance Committee	Investment Committee	Investment Committee	Nominations Committee	Nominations Committee	People & Remuneration Committee	People & Remuneration Committee
	Eligible to attend	Attended	Eligible to attend	Attended	Eligible to attend	Attended	Eligible to attend	Attended	Eligible to attend	Attended
P B Scott	20	20	-	-	2	2	3	3	2	2
P V Brasher	20	20	7	7	-	-	-	-	8	8
M J Brooks	20	20	7	7	6	6	-	-	-	-
P Bullock	20	20	-	-	6	6	-	-	8	8
E P McClintock	20	19	-	-	6	6	3	3	8	8
E M Proust	20	20	7	7	-	-	3	3	8	8
R M Savage	6	6	-	-	-	-	2	2	2	1
P J Twyman	20	19	7	7	6	6	3	3	-	-
C Ryan	4	4	-	-	-	-	-	-	-	-
D M Deverall	16	15	-	-	-	-	-	-	-	-

Principal activities

The principal activities of the consolidated entity during the financial year were funds management, portfolio management, financial planning, trustee, responsible entity and compliance services, executor services, investment administration and custody services and mortgage processing services.

Review of operations

A review of operations is included in Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) section of the Annual Report.

For the financial year to 30 June 2011, Perpetual reported a net profit after tax of $62.0 million compared to the net profit after tax for the financial year to 30 June 2010 of $90.5 million.

The reconciliation of net profit after tax to underlying profit after tax for the 2011 financial year is as follows:

Reconciliation of underlying profit after tax	$'000 30 June 2011	$'000 30 June 2010
Net profit after tax attributable to equity holders of Perpetual Limited Add: Profit after tax attributable to non-controlling interests1 Net profit after tax Add: Impairment of assets (after tax) Add: Private equity proposal response costs (after tax) Add: Restructuring costs (after tax) (Less)/Add: (Profit)/loss on sale of investments (after tax) Less: Exact Market Cash Fundgains(after tax)	337 62,031	90,506 216
	62,368 14,694 3,086 6,388 (9,752) (3,905)	90,722 - - - 2,388 (20,317)
Underlying profit after tax	72,879	72,793

1 Profit after tax attributable to non-controlling interests arising from the sale of underlying investments within a seed fund.

Directors' Report For The Year Ended 30 June 2011 (continued)

Dividends

Dividends paid or provided by the Company to members since the end of the previous financial year were:

*Declared and paid during the financial year 2011* Final 2010 ordinary Interim 2011 ordinary Total *Declared after end of year* Final 2011 ordinary Total 105 95 After balance date, the directors declared the following dividend: 90 Cents per share	Date of payment 28 Sep 2010 30 Mar 2011 27 Sep 2011 87,818 Franked Franked 45,602 42,216 Franked 40,204 40,204 Total amount $'000 Franked# / unfranked

All franked dividends declared or paid during the year were franked at a tax rate of 30 per cent and paid out of retained earnings.

The financial effect of dividends declared after year end are not reflected in the 30 June 2011 financial statements and will be recognised in subsequent financial reports.

State of affairs

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

Events subsequent to reporting date

On 15 August 2011 the Company announced the events to the market:

(i) the closure of its Dublin-based in-house manufacturing capability for the international equity asset class and (ii) the sale of the smartsuper business.

(i) International Share funds

Effective 15 August 2011, the Dublin-based in-house manufacturing capability of Perpetual’s International Share funds product was closed. The closure is expected to generate around $7 million in after tax annualised savings based on the current level of funds under management. Net savings in 2012 are estimated to be $4 million after tax due to the timing of the closure of the Dublin office. The closure will result in a $10 million after tax restructuring charge in the current 2012 financial year.

(ii) Sale of smartsuper

On 12 August 2011 the smartsuper business was sold on terms in line with its revised carrying value. Proceeds from the sale were not material.

Off-market Buy-back

On 26 August 2011 the Company announced its intention to return up to approximately $70 million of surplus capital to shareholders through an off-market buy-back tender process.

The Directors are not aware of any other event or circumstance since the end of the financial year not otherwise dealt with in this 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. Events subsequent to balance sheet date are set out in Note 37 to the consolidated Financial Statements.

Likely developments

Further information about likely developments in the operations of the consolidated entity and the expected results of those operations in future financial years has not been included in this report because disclosure of the information would be likely to result in unreasonable prejudice to the consolidated entity.

Directors' Report For The Year Ended 30 June 2011 (continued)

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 regulations 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 material non-compliance in relation to these licence requirements during the financial year.

The consolidated entity has determined that it is not required to register to report under the National Greenhouse and Energy Reporting Act 2007, which is Commonwealth environmental legislation that imposes reporting obligations on entities that reach reporting thresholds during the financial year.

Indemnification of directors and officers

The company and its controlled entities have resolved to indemnify the current directors and officers of the companies 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 consolidated entity, except where the liabilities arise out of conduct involving a lack of good faith. The resolution stipulates that the company and its controlled entities 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 consolidated entity. The terms of the policy specifically prohibit disclosure of details of the amount of the insurance cover and the premium paid.

Corporate Responsibility Statement

Perpetual’s Board and management have a long-standing commitment to good corporate governance. The success of Perpetual’s core businesses – the management of other people’s money and the safekeeping of assets and securities – relies on a reputation of absolute trustworthiness. This statement sets out our approach to corporate governance. Copies of or summaries of documents that are underlined like this in this Corporate Responsibility Statement are available on our website at www.perpetual.com.au

ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations

At Perpetual, good corporate governance includes a genuine commitment to the ASX Corporate Governance Council’s Principles and Recommendations (ASX Principles). Perpetual acknowledges and is supportive of amendments to the ASX Principles that Perpetual must report on for the financial year ending 30 June 2012. The ASX Corporate Governance Council has encouraged the ‘early’ transitioning to these requirements and, accordingly, Perpetual has made voluntary disclosure in relation to diversity in section 14 of this Corporate Governance Statement. Full reporting in relation to diversity in accordance with the ASX Principles will appear in the 2012 Annual Report.

The Board considers that it complies with all the ASX Principles, and has done so throughout the reporting period. A table setting out each Principle and the location of Perpetual’s associated disclosure in this Corporate Responsibility Statement is located on pages 22 to 23.

1. Role of the Board

The Board has its own Board Charter which sets out the functions and responsibilities reserved to the Board and delegations made to management. The Board delegates day-today responsibility for the management and operation of the company to the Managing Director but remains responsible for overseeing management’s performance.

The Board’s specific responsibilities include:

reviewing and approving Perpetual’s strategy
selecting the Managing Director and approving the appointment and removal of Group Executives
setting the remuneration of the Managing Director
aligning remuneration outcomes to Perpetual’s financial soundness and risk management framework
setting the non-executive director remuneration within shareholder approved limits
setting Perpetual’s values and standards
monitoring business performance and the Perpetual Group’s financial position
overseeing the integrity of the Perpetual Group’s financial accounts and reporting
monitoring the Perpetual Group’s investment activities and investment performance

monitoring that significant business risks are identified and managed effectively
ensuring that the performance of the Board, Managing Director and senior management are regularly assessed.

The Board Charter is reviewed annually to ensure the balance of responsibilities remains appropriate to Perpetual. The roles and responsibilities of Perpetual’s Board and management are established in accordance with ASX Principle 1.

Each year, the Board’s People and Remuneration Committee oversees the performance review process for the Managing Director and Group Executives. The Group Executives report directly to the Managing Director.

The Managing Director’s performance objectives are set by the Board at the beginning of each financial year.

At the end of the financial year, the Chairman of the Board reviews the Managing Director’s performance against his/her goals with input from all Board members.

The Managing Director sets performance objectives for each Group Executive at the beginning of each financial year. The Board’s People and Remuneration Committee reviews the performance objectives set for the Group Executives. The Managing Director carries out the performance review of each Group Executive against their objectives with input from appropriate stakeholders including board members. In 2011, performance reviews were conducted in accordance with this process.

Group Executives and Directors who are new to Perpetual participate in Perpetual’s orientation program and an additional induction process tailored to their own responsibilities. Perpetual also has an orientation program for all new employees covering Perpetual’s history, business strategy, values, risk and compliance obligations and performance management.

2. Board structure

The Board currently comprises eight directors: seven non-executive directors and the Managing Director. The roles of Chairman and Managing Director are separate.

The Chairman is responsible for leadership of the Board and ensuring it performs its role and functions. He is also responsible for facilitating the effective contribution of directors by ensuring that each director fully participates in the Board’s activities.

Details of the background, experience, professional skills and period in office of each director are set out on pages 2 to 4 of the Directors’ Report.

The structure of the Board accords with ASX Principle 2.

3. Director independence

The Board considers all non-executive directors to be independent directors, including the Chairman.

In assessing the independence of each director, the Board considers, on a director-bydirector basis, whether the director has any relationships that would materially affect his or her ability to exercise unfettered and independent judgment in the interests of Perpetual’s shareholders. Consistent with the emphasis on ‘substance over form’ advocated by the ASX Principles, Perpetual takes a qualitative approach to materiality rather than setting strict quantitative thresholds, and considers each director’s individual circumstances on its merits.

The independence of each Director is formally reviewed each 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.

In determining the independence of individual Directors, the Board has considered the relevant elements of the definition of independence adopted by the Board. These elements include whether the Director:

has a substantial shareholding in Perpetual or is an officer of a company which has a substantial shareholding in Perpetual (or is otherwise associated with a substantial shareholder of Perpetual)
has been employed by the Perpetual Group at any stage and in any capacity within the previous three years
has been involved with the Perpetual Group in a material advising or consulting role at any time within the previous three years
is (or is associated with) a material supplier or customer of the Perpetual Group
is in a material contractual relationship with the Perpetual Group (other than as a director)

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 from board deliberations by reason of conflicts of interest.

Paul Brasher receives post-termination benefits from his former employer, PricewaterhouseCoopers (PwC). PwC has been appointed as Perpetual’s remuneration consultant and occasionally provides consulting services to Perpetual, which are not considered material in nature or quantity. The Board does not believe that this appointment of PwC affects the independence of Paul Brasher.

From time to time, funds managed by the Perpetual Group may take holdings, including substantial holdings in securities of listed entities. Perpetual Directors may also serve as nonexecutive directors on the boards of these entities. This factor alone is not considered to impact Director independence as decisions as to stock selection are not made by the Board of Perpetual but by Perpetual’s asset management team in accordance with client or fund investment mandates.

It is the Board’s view that no Directors currently hold other positions that materially affect their ability to exercise independent judgement in the interests of Perpetual shareholders.

4. Contracts with Directors

In the 2011 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.

5. Indemnity of directors and officers

Perpetual has entered into deeds to indemnify directors and officers of the Perpetual Group, to the extent permissible by law, from all liabilities incurred as directors or officers. Liabilities to the Perpetual Group, and liabilities that arise out of conduct that was not in good faith, are not covered in the indemnities. In addition, Perpetual has directors and officers’ insurance against claims Perpetual may be liable to pay under these indemnities. This policy insures

directors and officers directly.

6. Board access to information and independent advice

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

Non-executive Directors regularly confer without management present and the Chairman presides over these sessions. All Directors have unrestricted access to company records and information. Perpetual has a formal policy allowing the Board or an individual Director to seek independent professional advice at the Perpetual Group’s expense, provided that the Director has obtained the prior approval of the Chairman, or if the relevant director is the Chairman, the prior approval of a majority of Perpetual’s non-executive Directors. In the 2011 financial year, no Director sought professional advice under this policy.

7. Nomination, appointment, re-election and retirement of directors

Consistent with ASX Principle 2, the Board has a Nominations Committee with its own Terms of Reference.

The Nominations Committee is responsible for reviewing the size and structure of the Board. The aim is to ensure that the Board comprises an appropriate balance of skills, diversity, experience and independence in order to enhance board performance and maximise value for shareholders. The Nominations Committee is responsible for administering Perpetual’s Policy on the Appointment of Directors, which sets out the selection process and selection criteria for identifying candidates to fill board vacancies. Consistent with recent amendments to the ASX Principles regarding disclosure of board selection processes, the Policy is disclosed in full on our website. If a board vacancy arises, the Nominations Committee will conduct a search in accordance with the Policy and the Board will appoint the most suitable candidate, having regard to the recommendation of the Nominations Committee. External consultants may be engaged to assist with the identification of appropriate candidates. A director appointed to fill a casual vacancy must stand for election at the next Annual General Meeting.

Upon appointment, new directors receive a detailed letter of appointment and participate in a comprehensive induction program designed to familiarise them with Perpetual’s business, strategy, operations, Group Executives and senior management team.

Directors who have been in office without re-election for three years since their last appointment must retire and seek re-election at the company’s Annual General Meeting. In order to continue to refresh the composition of 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 the ASX Listing Rules and the Corporations Act 2001 (Cth) (Corporations Act).

8. Meetings of the Board

In the 2011 financial year, the Board met 20 times, including a strategic planning session. In addition to its usual business, the number of Board meetings during the year reflected the Board’s consideration of the response to the private equity proposal of Kohlberg Kravis Roberts & Co., as well as the appointment of Chris Ryan, Chief Executive Officer and Managing Director. The Board receives performance, operations and risk reports from the Managing Director, the Chief Financial Officer, the Chief Risk Officer and the heads of each business division. The Board also receives reports and updates on strategic issues. In addition, Directors spend time reading and analysing board papers and reports submitted by management and they engage in regular informal discussions with management. The

views of the Chairman and the non-executive directors are canvassed regularly by the Managing Director and the Group Executive on a range of strategic and operational issues.

The Chief Financial Officer and Company Secretary attend all board meetings. Other Group Executives and senior management attend board and committee meetings to report on particular issues and to engage in discussion on these issues. Senior executive attendance at board and committee meetings is subject to the overriding requirement that no senior executive will be directly involved in deciding their own remuneration.

Attendance of Directors at board and committee meetings is set out in the Directors’ Report on page 5.

9. Board committees

A key component of the Board’s governance structure is its four board committees. Each committee has a written charter known as its Terms of Reference which is accessible on the company’s website under the ‘Corporate Responsibility’ heading.

All committees except the Nominations Committee generally meet at least quarterly, and more frequently if required. The Nominations Committee meets at least twice a year. Aside from the Nominations Committee, the Managing Director attends all committee meetings except where matters relating to his own remuneration and performance are discussed.

The qualifications and skills of the members of each committee are set out on pages 2 to 4 of the Directors’ Report.

The membership and key responsibilities of each of the board committees (as at the date of this report) are set out below.

Audit, Risk and Compliance Committee

Members: Philip Twyman (Chairman), Meredith Brooks, Elizabeth Proust and Paul Brasher.

Changes to the committee since last Report: Nil.

The committee’s role is to oversee the Perpetual Group’s accounting policies and practices, the integrity of financial statements and reports, the scope, quality and independence of Perpetual’s external audit arrangements, the monitoring of the internal audit function, the effectiveness of the risk management framework and the adequacy of insurance programs, and to report on these matters to the Board. This committee is also responsible for monitoring overall legal and regulatory compliance.

All members of the committee are independent non-executive directors and are required to be financially literate. At least one member must have accounting or finance related expertise. Members are also required to have an understanding of the financial services industry in which Perpetual operates.

Investment Committee

Members: Paul McClintock (Chairman), Meredith Brooks, Philip Bullock, and Philip Twyman

Changes to the committee since last Report: Peter Scott ceased to be a member in October 2010.

The committee’s role is to monitor management to ensure that it has in place, and carries out, appropriate investment strategies and processes for the investment activities conducted both for third parties and on the Group’s own behalf. This committee does not select stocks for

individual Perpetual funds as stock selection is carried out by Perpetual’s asset management team. All members of the committee are independent non-executive directors.

People and Remuneration Committee

Members: Elizabeth Proust (Chairman), Paul McClintock, Paul Brasher and Philip Bullock

Changes to the committee since last Report: Robert Savage retired and Peter Scott ceased to be a member in October 2010.

The committee’s role is to monitor the Perpetual Group’s people and culture policies and practices, including the diversity of Perpetual’s workforce, and to assist the Managing Director to implement fair, effective and market competitive remuneration and incentive programs designed to retain high calibre employees and which demonstrate a clear relationship between performance and remuneration. The committee is authorised to directly engage external remuneration advisers and, after obtaining their advice as and when appropriate, the committee recommends remuneration for non-executive directors, the Managing Director, the Group Executive and other senior managers, to the Board. The committee also reviews succession and career plans for key executives.

All members of the committee are independent non-executive directors. New committee composition requirements to promote greater independence are proposed for introduction into the ASX Listing Rules. Perpetual’s committee already complies with these requirements even though they have not yet formally come into effect.

Nominations Committee

Members: Peter Scott (Chairman), Paul McClintock, Elizabeth Proust and Philip Twyman.

Changes to the committee since last Report: Robert Savage retired in October 2010.

The committee’s role is to recommend to the Board nominees for appointment/election (including re-election of existing board members) and to review board succession plans. At least annually, the committee reviews the size and structure of the Board to ensure that it comprises appropriately qualified and experienced people. This committee is also responsible for the formal evaluation of the Board’s performance as a whole. All members of the committee are independent non-executive directors.

10. Board performance

The Board undertakes ongoing self-assessment as well as a formal annual review of the performance of the Board, its committees and individual Directors. In 2011, the Board undertook a review of board and committee performance which is due to conclude shortly. The Chairman reviewed with each Director their individual performance and, after obtaining feedback from the other Directors, a nominated Director reviewed the Chairman’s performance. The Board review process aims to ensure that individual Directors continue to contribute effectively to the Board’s performance and that the Board as a whole and its committees continue to function effectively.

11. Company Secretaries

The Board has access to the services and advice of Joanne Hawkins, the Company Secretary, and Glenda Charles, Deputy Company Secretary. The Company Secretary is accountable to the Board on governance matters. Details of the experience and qualifications

of Joanne Hawkins and Glenda Charles are set out in the Directors’ Report on pages 4 to 5.

12. Perpetual’s subsidiary Boards

The boards of Perpetual’s subsidiaries are generally made up of executive directors. The exceptions are Perpetual Superannuation Limited, which carries out Perpetual’s superannuation activities, Queensland Trustees Pty Limited, which acts as trustee for Perpetual’s share plans, and PI Investment Management Limited which, until recently, operated Perpetual’s global equities business. The boards of these companies include nonexecutive directors. Perpetual’s corporate governance policies are applied to its subsidiaries but adapted to reflect the size and nature of each subsidiary’s operations and to recognise that the boards of most subsidiaries do not comprise non-executive directors. The subsidiary ’ boards are a key component of Perpetual s Risk Management Framework.

13. Ethical conduct

Perpetual has a Code of Conduct which draws from and expands on Perpetual’s Values. The Code of Conduct applies to all directors, executives and employees and is designed to assist them in making ethical business decisions. It is based on the following principles:

acting with integrity
managing conflicts of interests appropriately
upholding the spirit as well as the letter of the law
commitment to our clients and consistently delivering shareholder value
respecting privacy and confidentiality
maintaining a fair and safe work environment
• protecting those who report wrongdoing.

Additional policies deal with a range of ethical issues such as the obligation to maintain client confidentiality and to protect company information, the need to make full and timely disclosure of any price sensitive information and to provide a safe workplace for employees, which is free from discrimination. The Code of Conduct and associated policies are in keeping with ASX Principle 3.

Perpetual’s Chief Risk Officer is Perpetual’s Code of Conduct ombudsman and is available to all staff for a confidential discussion in relation to Code of Conduct matters. All new Perpetual employees are required to familiarise themselves with the Code of Conduct as part of their induction training requirements.

Perpetual has a Whistleblowing Policy to protect employees who make reports in good faith of wrongdoing, prejudice or disadvantage. As part of Perpetual’s Whistleblowing Policy, a third party has been engaged to provide an independent and confidential hotline for Perpetual employees who prefer to raise their concern with an external organisation.

14. Diversity

Perpetual has a strong commitment to diversity and recognises the value of attracting and retaining employees with different backgrounds, knowledge, experiences and abilities.

Perpetual has implemented a number of initiatives to promote an inclusive culture and an environment that values individual differences, including the creation of a Diversity Policy and Diversity Strategy. Our diversity strategy focuses on embedding initiatives that align to the following four strategic priorities:

Representation of women in senior management roles

Meeting the needs of the generations – Baby Boomer, Generation X and Generation Y
Flexibility for employees
Ethnicity and cultural diversity

Gender equality at all levels of the organisation is a key component of our Diversity Strategy. To encourage greater representation of women at senior levels of the organisation, Perpetual has undertaken and continues to develop initiatives targeting an improvement in gender diversity, including the refinement and improvement of its recruitment processes and expansion of career and leadership development, mentoring, networking forums and knowledge sharing opportunities available to female employees.

Perpetual is supportive of the Australian Stock Exchange’s amendments to the Corporate Governance Principles and Recommendations related to gender diversity. In response, Perpetual has established the measurable objective of achieving 38% representation of women in senior management by 2015. This measurable objective will be reviewed periodically to ensure it remains relevant to any future changes to the business.

As a commitment to ensuring that diversity remains a strategic priority for Perpetual on an ongoing basis, in 2011 Perpetual is establishing a Diversity Council to be chaired by the Chief Executive Officer with representation by all Group Executives as council members.

15. Trading in securities by Directors and employees

Perpetual has a Trading Policy that complies with the requirements of ASX Listing Rule 12.12. This was lodged with the ASX in 2010 and is available on the company’s website.

Perpetual’s overriding policy in respect of personal trading is that there should be no dealings in the company’s shares by any director or employee who is in possession of price sensitive information or where the dealing is for short-term or speculative gain. Provided they do not have price sensitive information, directors and employees are permitted to deal in the company’s shares only in specified one month trading windows commencing on the trading day after:

announcement of the half-year and full-year financial results
release of the May ASX update to shareholders
the conclusion of the Annual General Meeting

The Trading 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 information that is potentially price sensitive due to their role with the company.

The policy also prohibits employees from entering into ‘hedging arrangements’ in relation to Perpetual securities. Perpetual employees cannot trade in financial products issued over Perpetual securities by third parties or trade in any associated products which limit the economic risk of holding Perpetual securities. Perpetual employees and directors are prohibited from margin lending in relation to Perpetual securities.

A vendor of an entity, acquired by Perpetual during the previous financial year, has been permitted to continue a margin loan over Perpetual securities. The loan was entered into prior to commencing employment with Perpetual. The Perpetual securities were part of the consideration for the acquisition and the vendor became an employee following the acquisition.

16. Risk Management

The Board is committed to effective risk management and all Group Executives are accountable for managing risk within their area of responsibility. They are also required to manage risk as part of their business objectives with risk management integrated across business processes.

The Chief Risk Officer leads a group of risk management professionals, including lawyers, who provide the framework, tools, advice and assistance to enable management to effectively identify, assess and manage risk.

Consistent with ASX Principle 7, Perpetual’s Risk Management Framework is designed to manage the company’s material business risks. One component of the Risk Management Framework includes policies which are designed to address key areas of risk including strategic, financial and compliance risk. Perpetual’s key group policies are outlined in the Risk Management Framework.

Through monitoring, the Board and its committees are provided with assurance of the effectiveness of Perpetual’s management of its material business risks. In addition, the Board reviews the company’s key risks regularly through the Key Risk Assessment process, further detailed in the Risk Management Framework.

Perpetual also has an internal audit function. The General Manager Internal Audit reports to the Audit Risk and Compliance Committee as well as to the Chief Risk Officer and is independent from the external auditor. Internal Audit provides independent assurance over the effectiveness of Perpetual’s risk management, internal control, and governance processes. The Internal Audit team do not make management decisions or engage in other activities which could be perceived as compromising their independence.

Each of the Chief Risk Officer, Chief Financial Officer and the Head of Internal Audit has the right to, and do meet with, the Audit Risk and Compliance Committee, or its Chairman, without other management present.

Together with the Managing Director and Chief Financial Officer, Perpetual’s Chief Risk Officer reports to the Board on the effectiveness of Perpetual’s management of its material business risks in accordance with ASX Principle 7. The Board received this report in 2011 together with the statements outlined in section 17 below.

17. Financial Reporting

The Board has adopted policies designed to ensure that Perpetual’s financial reports:

are true and fair
meet high standards of disclosure and audit integrity
when read with Perpetual’s other reports to shareholders, provide all material information necessary to understand Perpetual’s financial performance and position.

In accordance with section 295A of the Corporations Act, the Board requires that, in respect of each financial year, the Managing Director and Chief Financial Officer provide a written declaration that, in their respective opinions:

the financial records of the Company have been properly maintained in accordance with section 286 of the Corporations Act and
the financial statements and notes comply with the accounting standards and give a true

and fair view of the financial position and performance of the Company and consolidated entity

To underpin the integrity of Perpetual’s financial reporting and risk management framework, it is also Perpetual’s practice for the Managing Director, Chief Financial Officer and Chief Risk Officer to state to the Board in writing that, in their respective opinions:

the statements made regarding the integrity of the financial statements are founded on a sound system of risk management and internal compliance and control systems which implement the policies adopted by the Board of Directors
the risk management and internal compliance and control systems, to the extent they relate to financial reporting, are operating effectively and efficiently, in all material respects, based on the risk management framework adopted by the Company
the Company’s material business risks (including non-financial risks) are being managed effectively

The statements referred to above are supported by written statements from senior management, detailed financial analysis and Perpetual’s Risk Management Framework. As previously noted, the Chief Financial Officer is present when the Board considers financial matters, as he or she attends all board meetings.

The statements made by the Managing Director, Chief Financial Officer and Chief Risk Officer are consistent with ASX Principle 7.3. In 2011, the Board received the statements referred to above.

18. Audit process

The Perpetual Group’s financial reports 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, in accordance with its Terms of Reference.

The external auditor attends each meeting of the committee, and it is the committee’s policy to meet with the auditor for part of these meetings without management present. The committee chairman meets with the audit partner at least once every quarter, also in the absence of management. The auditor has a standing invitation to meet with the committee, its Chairman or with the Board’s Chairman in the absence of management. The auditor attends the Board meetings at which the annual and half yearly financial reports are adopted.

The current external auditor is KPMG. The lead audit partner for 2011 was Andrew Yates and the engagement partner was Brendan Twining. This is the second year that Mr Yates has been acting as lead audit partner, and Mr Twining has acted as engagement partner for four years.

19. Auditor independence

The Board has policies in place relating to the quality and independence of Perpetual’s external auditor. These policies have been reviewed in 2011 and include:

a formal review of the appointed auditor every 5 years, to be timed during the middle of the lead partner’s tenure. The results of the review are reported to the Audit Risk and Compliance Committee and the Board
an annual review of the external audit firm’s fees and performance, the results of which are reported to the Audit Risk and Compliance Committee and the Board

the lead audit partner on each Perpetual audit must be rotated at least every five years, with a two year gap before a partner may be reappointed
former audit partners and audit firm employees involved in our audit cannot become directors or employees of Perpetual Group companies for at least two years
the external audit firm is prohibited from providing non-audit services that may materially conflict with its ability to exercise objective and impartial judgment on issues that may arise within Perpetual’s audit, such as:
advisory 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 2011, the greater part of fees paid to KPMG for work other than audit of Perpetual Group accounts was for audit services in relation to investment funds of which Perpetual companies are the responsible entity, manager or trustee. It is the Board’s view that these services are consistent with KPMG’s appointment as auditor and are not services of a kind that might impair their impartial judgement in relation to the Perpetual Group’s audit.

20. Market Disclosure

Perpetual has a Market Disclosure Policy to ensure compliance with its continuous disclosure obligations under ASX Listing Rule 3.1 and the Corporations Act. The Managing Director, Chief Financial Officer, Chief Risk Officer and Company Secretary are members of the Continuous Disclosure Committee responsible for deciding information that is required to be disclosed to the ASX. Perpetual ensures that all senior management 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. Perpetual’s Market Disclosure Policy contains the matters recommended by ASX Principle 5.

Perpetual’s website includes copies of announcements lodged with the ASX by Perpetual. Consistent with recent amendments to the ASX Principles, advance notification of scheduled analyst briefings are provided to shareholders and the briefings are webcast. These can be found on the company’s website along with media releases, briefings and annual reports for the last five years.

21. Shareholders

The Board is committed to ensuring that shareholders are fully informed of material matters that affect Perpetual’s position and prospects. It seeks to accomplish this through a strategy which includes:

the Half Year Results released in February each year
the May ASX update to shareholders each year
the Full Year Results released in August each year
the Annual Report released in September each year
the Chairman’s and Managing Director’s addresses to the Annual General Meeting
• market briefings and other significant information (which are posted on Perpetual’s website as soon as it is disclosed to the market)

Perpetual will hold its Annual General Meeting in November and a copy of the notice of Annual General Meeting is posted on the Perpetual website as well as being provided directly to shareholders via their nominated means of communication. The Board encourages

shareholders to attend the Annual General Meeting or to appoint a proxy to vote on their behalf if they are unable to attend. The formal addresses at the Annual General Meeting are webcast for those shareholders who are unable to be present. In accordance with the Corporations Act, a representative of the external auditor, KPMG, attends the Annual General Meeting for the purpose of answering shareholder questions about the audit report and audit process.

22. Remuneration

Perpetual has formed a People and Remuneration Committee consistent with ASX Principle 8.1. Its role is set out on page 13 of this report. Details of board and executive remuneration are set out in the remuneration report which commences on page 25. In accordance with the ASX Principles, the structure of non-executive director remuneration is clearly distinguished from that of executive Directors and senior management.

Non-executive Directors are not entitled to receive any retirement benefits, other than superannuation in accordance with Perpetual’s statutory superannuation obligations.

23. Stakeholders

At Perpetual, we take advantage of opportunities to build our social, environmental and financial performance in ways that enhance our core values and business sustainability. We draw on our people’s experience, knowledge and expertise in investing, governance, financial advice and trusteeship to contribute positively to the community. We focus on activities where we can add the most value to society while minimising our environmental impact – doing the greatest good while leaving the smallest footprint. We are committed to doing our part to enrich our community by:

having the highest standards of corporate governance and business probity
investing responsibly and encouraging sustainable business practices
contributing time and money to charities which we know have a track record of delivering on their promises and
reducing the environmental impact of our operations

Some examples of how we are achieving these goals include:

Investment

Long-Term Investment Approach

Perpetual’s asset managers are ‘value’ managers who focus on quality. Their initial investment criteria include:

the strength of the company’s balance sheet
whether the company can demonstrate a recurring earnings stream
the quality of the business and
the soundness of management running the company

We believe this approach holds corporate Australia to high standards and encourages behaviour in the long term interests of shareholders.

Signatory to the United Nations Principles for Responsible Investment

In October 2009, Perpetual became a signatory to the United Nations Principles for Responsible Investment (PRI) representing a commitment to take environmental, social and governance factors into account in our investment decision-making and ownership practices.

PRI is about institutional investors encouraging sustainable business practices, which is aligned to Perpetual’s long term view.

Member of the Responsible Investment Association

The Responsible Investment Association is the peak industry body for professionals working in responsible investment in Australasia. The Responsible Investment Association’s purpose is to provide training, professional development, events, research and policy initiatives that will promote stable markets, maximise financial returns and create positive environmental, social and governance outcomes.

Member of the Investor Group on Climate Change

The Investor Group on Climate Change (IGCC) was established in 2005 and represents institutional investors, with funds under management of approximately $600 billion, and others in the investment community interested in the impact of climate change on investments. The IGCC aims to ensure that the risks and opportunities associated with climate change are incorporated into investment decisions for the ultimate benefit of individual investors.

Social

Philanthropy and the Perpetual Foundation

Perpetual has been managing charitable money for over 120 years with more than 450 individual trusts with a total of $1.2 billion in funds under management. In 1998, we established the Perpetual Foundation, which brings the generosity of individuals and organisations together with our resources and expertise in managing charitable funds.

The Philanthropy team provides support to the non-profit sector via thought leadership forums, regular IMPACT philanthropy newsletters, and facilitating a number of knowledge sharing opportunities. The Perpetual Foundation has also sponsored sector research including research at the Australian Centre for Philanthropy and Non-Profit Studies.

Staff Giving

Perpetual’s Staff Giving program encourages staff to donate to charities in a tax-effective way, with all donations being matched dollar-for-dollar by Perpetual. In addition to monetary donations, Perpetual’s Staff Giving program also encourages employees to volunteer their time to charitable causes.

Pro Bono Legal Assistance

In late 2010, Perpetual’s legal team agreed to partner with the Cancer Council NSW to provide pro bono legal assistance to people with cancer who are unable to afford legal assistance themselves. This initiative aims to alleviate some of the difficulties faced by people through this difficult time, and it has also fostered a great sense of achievement and pride within Perpetual’s legal team.

Political Donations

Perpetual does not make political donations.

Environmental

Carbon Disclosure Project

Perpetual has responded to the Carbon Disclosure Project (CDP) surveys on five occasions and has been included in the Climate Disclosure Leadership Index (Australia and New Zealand) on three occasions.

Our People

Perpetual is committed to attracting, developing and engaging employees in a culture that is underpinned by Perpetual’s Values.

Perpetual’s inclusive culture is based on team work and collaboration and allows high performing employees to excel and be rewarded for their success. There is a focus on developing leaders from within Perpetual and on employee engagement. Employee engagement is assessed annually and results are used to develop future people initiatives.

The wellbeing of employees is supported by financial, insurance, health, fitness and work / life balance employee benefits. Some of the policies that support employee work / life balance include:

Contribution Leave policy which provides an additional week of ‘Contribution Leave’ to allow employees to make a difference to their community, family or personal wellbeing
Purchased Leave policy which enables employees to apply for up to 3 weeks of additional leave to spend more time with family, for holidays or greater work / life balance
Sabbatical Leave and Leave Without Pay policies which allow employees to take an extended period of unpaid leave where they may choose to take time out to be with their family, travel overseas or undertake further study
Working From Home policy which allows employees to work from home for greater work / life balance
Flexibility Policy which enables employees to achieve work / life balance and meet parental or carer responsibilities. In 2010, Perpetual launched a tailored flexible working program to support managers and employees in managing requests for flexibility which included training all managers in managing flexibility.

Perpetual aims to meet the needs of employees at different stages of their lives and parental leave benefits are available for both men and women. This not only includes greater access to flexible working options but also 12 weeks paid maternity leave and a return to work bonus payable to the Primary Care Giver. A Proud Parents Program has also been introduced to support new parents as they transition back to work. All of the parental leave benefits have been added to a dedicated page on the Perpetual intranet and employees are also provided with a Parental Leave pack which contains this information as well as comprehensive checklists to help assist with their planning.

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 [email protected]. Comments and suggestions from shareholders are welcome.

24. ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations.

Principle/Recommendation	Principle/Recommendation	Relevant section(s)	Comply?
Principle1 – Lay solidfoundationsfor management and oversight
1.1	Establish and disclose the functions reserved to the Board and those delegated to seniorexecutives.	1	Yes
1.2	Disclose the process for evaluating the performance of senior executives.	1	Yes
1.3	Provide the information indicated in the guide to reporting on Principle 1.	1	Yes
Principle2 –Structure theBoard to addvalue
2.1	A majority of the Board should be independent Directors.	3	Yes
2.2	The Chair should be an independent Director.	3	Yes
2.3	The roles of Chair and chief executive officer should not be exercised by the same individual.	2	Yes
2.4	TheBoard should establishanominationcommittee	9	Yes
2.5	Disclose the process for evaluating the performance of the Board,its committees andindividual Directors.	10	Yes
2.6	Provide the information indicated in the guide to reporting on Principle2.	2 – 7, 9, 10	Yes
Principle 3–Promote ethical and responsible decision-making
3.1	Establish and disclose a code of conduct outlining •the practices necessary to maintain confidence in the Company’s integrity •the practices necessary to take into account legal obligations and the reasonable expectations of stakeholders •the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.	13	Yes
3.2	Establish a policy concerning diversity and disclose the policy or a summary of that policy. The policy should include requirements for the board to establish measurable objectives for achieving gender diversity and for the Board to assess annually both the objectives and progress in achieving them.	14	Yes
3.3	Disclose in each annual report the measurable objectives for achieving gender diversity set by the Board in accordance with the diversity policy and progress toward achieving them.	14	#
3.4	Disclose in each annual report the proportion of women in the whole organisation, women in senior executive positions and women on the Board.	-	#
3.5	Provide the information indicated in the guide to reporting on Principle 3.	13, 14	#
Principle 4–Safeguard integrity in financial reporting
4.1	Establishan Audit Committee.	9	Yes
4.2	Structure the Audit Committee so that it: • consists only of non-executive Directors • consists of a majority of independent Directors • is chaired by an independent chair, who is not the Chair of the Board and • has at least three members.	9	Yes
4.3	The Audit Committee should have a formal charter.	9	Yes
4.4	Provide theinformation indicatedinthe guide toreporting	9	Yes

Principle/Recommendation	Principle/Recommendation	Relevant section(s)	Comply?
	on Principle 4.
Principle 5– Make timely and balanced disclosure
5.1	Establish and disclose written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior management level for that compliance.	20	Yes
5.2	Provide the information indicated in the guide to reporting on Principle 5.	20	Yes
Principle 6–Respect the rights of shareholders
6.1	Design and disclose a communications policy for promoting effective communication with shareholders and encouraging their effective participation at general meetings and disclose the policy or a summary of the policy.	21	Yes
6.2	Provide the information indicated in the guide to reporting on Principle 6.	21	Yes
Principle 7–Recognise and manage risk
7.1	Establish and disclose policies for the oversight and management of material business risks.	16	Yes
7.2	Require management to design and implement the risk management and internal control system to manage the company’s material business risks and report to the Board on whether those risks are being managed effectively. The Board should disclose whether management has reported to it as to the effectiveness of the Company’s management of its material business risks.	16, 17	Yes
7.3	Disclose whether the Board has received assurance from the Managing Director and the Chief Financial Officer that the declaration provided under s295A of the Act is founded on a sound system of risk management and internal control that is operating effectively in all material respects in relation to financial reporting risks.	17	Yes
7.4	Provide the information indicated in the guide to reporting on Principle 7.	16,17	Yes
Principle 8–Remunerate fairly and responsibly
8.1	TheBoard should establisharemunerationcommittee.	9	Yes
8.2	The remuneration committee should be structured so that it consists of a majority of independent Directors, is chaired by an independent chair and has at least three members.	9
8.3	Clearly distinguish the structure of non-executive Directors’ remuneration from that of executive Directors and senior management	22*	Yes
8.4	Provide the information indicated in the guide to reporting on Principle 8.	21, 22	Yes

Perpetual acknowledges and is supportive of amendments to the ASX Principles that Perpetual must report on for the financial year ending 30 June 2012. The ASX Corporate Governance Council has encouraged the ‘early’ transitioning to these requirements and accordingly, Perpetual has made voluntary disclosure in relation to diversity in section 14 of this Corporate Governance Statement. Full reporting in relation to diversity in accordance with the ASX Principles will appear in the 2012 Annual Report.

*Full details of the remuneration policies and structures of Perpetual Limited and its controlled entities (Perpetual Group) are set out in the Remuneration Report section of the Directors’ Report on pages 25 to 66 of this Report.

Remuneration Report

Dear Shareholder

We are pleased to present our Remuneration Report for 2011.

2010/11 saw a renewal of the leadership of Perpetual, including the appointments of a new Chairman and Chief Executive Officer. During this time your Board has continued to assess our remuneration practices to ensure they drive achievement of the business strategy, incorporate high standards of governance and remain market competitive.

As announced in our Remuneration Report last year, we introduced a number of changes to our executive remuneration framework during the year, which are designed to strengthen the alignment of performancebased remuneration to shareholder outcomes and to our Risk Management Framework. These changes are summarised in section 1.1 and explained in more detail throughout this Remuneration Report.

During the year, we also completed a review of our governance framework, resulting in:

the refinement of our remuneration guiding principles as described in section 3.1 of this Remuneration Report;
the amendment of the People and Remuneration Committee’s Terms of Reference to better reflect the remuneration principles of the APRA remuneration prudential standards; and
the appointment of PricewaterhouseCoopers as the principal remuneration advisor to the Board.

We believe our remuneration practices are sound and demonstrate a clear link between executive and shareholder outcomes. Nevertheless, we have continued to refine our remuneration practices in light of new legislation and market practice. In the next year, we plan to make some changes to our short-term incentive arrangements (STI) to further improve the link between the successful execution of our business strategy and staff rewards. In doing so, the new STI plan will ensure the contribution of our staff to the company’s performance closely aligns with the interests of our shareholders.

Thank you for taking the time to read this report. As always, we welcome your feedback.

Elizabeth M Proust AO

Chairman, People and Remuneration Committee

We have structured the report into nine sections:

1.	Remuneration snapshot	28
2.	The role of the People and Remuneration Committee	31
3.	Our remuneration philosophy and structure	33
4.	Short-term incentives	37
5.	Long-term incentives	39
6.	Summary of company performance	45
7.	Details of remuneration	48
8.	Contract terms of executives	57
9.	Remuneration of Non-executive Directors	63

Key terms used in this report	Key terms used in this report
EPS	Earnings per share. When measuring the growth in EPS to determine the vesting of long-term incentive awards, Perpetual defines EPS as basic earnings per share after tax and any adjustments determined by the People and Remuneration Committee (for example, capital items that do not reflect management performance or day-to-day business operations and activities).
KMP	Key management personnel. Those people who have the authority and responsibility for planning, directing and controlling the company’s activities, either directly or indirectly. This includes directors,whetherexecutive orotherwise, ofthePerpetualconsolidated group.
LTI	Long-term incentive. LTI is a key feature of Perpetual’s remuneration strategy and seeks to align executive remuneration with sustainable shareholder wealth creation. For the Managing Director, LTI may be granted in the form of shares and/or options in such proportions as determined by the Board. For all other eligible employees, LTI is granted in the form of shares. More details are onpage 39.
NPAT	Net profit after tax. When calculating PPP (see below), Perpetual defines NPAT as net profit after tax with the post-tax amount of the PPP added back, and adjusted for any other items determined by the Board’s Audit Risk and Compliance Committee and People and Remuneration Committee (for example, capital items that do not reflect management performance orday-to-day business operations and activities).
PPP	Profit Participation Pool. A funding pool created to fund STI payments for the majority of employees based on the company’s net profit after tax. No pool is created unless the company’s return on equity (ROE) performance measure is met. This is explained in more detailonpage 37.
ROE	Return on equity. ROE is a measure of how well a company has used shareholders' funds and reinvested earnings to generate additional earnings. ROE is equal to Perpetual's NPAT (as defined above) divided byweighted average shareholders'equity, expressed as a percentage.
STI	Short-term incentive. An incentive paid for meeting annual targets aimed at delivering our longer-term strategic plan. Under the STI Plan employees may be paid a discretionary incentive (less applicable taxes and superannuation) based on their individual performance as well as on the performance of their team, their division and Perpetual as a whole. More details about the STI Planare onpage 37.
TSR	Total shareholder return. TSR is defined as share price growth plus dividends paid over the measurement period. Dividends are assumed to be reinvested on the ex-dividend date. Where applicable, adjustments may be made for any capital reconstructions or rights or bonus issues at theBoard’s discretion.

About this report

This report sets out the remuneration arrangements for all key management personnel (KMP). KMP are those people who have the authority and responsibility for planning, directing and controlling the company’s activities, either directly or indirectly. This includes directors, whether executive or otherwise, of the consolidated entity. At Perpetual, we have assessed the KMP to be the former and current Managing Directors, the Group Executives, and the non-executive directors of Perpetual Limited. The information in this Remuneration Report has been audited as required by section 308(3C) of the Corporations Act 2001.

Key Management Personnel

Below are Perpetual’s KMP this year:

Name	Position	Term
Non-executive Directors
Robert Savage	Former Chairman (until 26 October 2010)	Retired 26 October 2010)
Peter Scott	Chairman (from 26 October 2010)	Full year
Paul Brasher	Independent Director	Full year
Meredith Brooks	Independent Director	Full year
Philip Bullock	Independent Director	Full year
Paul McClintock	Independent Director	Full year
Elizabeth Proust	Independent Director	Full year
Philip Twyman	Independent Director	Full year
Managing Director
Chris Ryan	Chief Executive Officer (from 14 February 2011)	From 14 February 2011
	and Managing Director (from 23 February 2011)
Former Managing Director
David Deverall	Chief Executive Officer (until 14 February 2011)	Until 23 June 2011
	and Managing Director (until 23 February 2011)
Current Group Executives
Richard Brandweiner*	Group Executive Income and Multi Sector	Full year
Roger Burrows*	Chief Financial Officer	Full year
Cathy Doyle*	Group Executive Equities	Full year
Christopher Green	Group Executive Corporate Trust	Full year
Brian Henderson	Group Executive Marketing and Communications	From 27 June 2011
Ivan Holyman*	Chief Risk Officer	Full year
Geoff Lloyd*	Group Executive Private Wealth	From 10 August 2010
Janine Stewart	Group Executive People and Culture	Full year
Richard Vahtrick	Group Executive Operations	From 16 June 2011
Current executives who were in Acting Group Executive roles during the year
Paul Ryan	Co-acting Group Executive Private Wealth	Until 10 August 2010
Shailendra Singh	Co-acting Group Executive Private Wealth	Until 10 August 2010
Group Executives who departed during the year
Michael Miller	Group Executive Superannuation and Operations	Until 28 April 2011
Matt Pancino	Group Executive Operations	Until 15 October 2010
Rory MacIntyre	Acting Group Executive Global Equities	Until 30 September 2010

The five highest paid officers of the group or company during the year ended 30 June 2011.

1. Remuneration snapshot

1.1 Key changes made to the executive remuneration framework in 2010/11

Following a review of our executive Remuneration Policy and arrangements, changes were made to the executive remuneration framework for 2010/11. Actual remuneration received by our executives during the year is provided on page 30.

To be eligible to receive an STI payment, individuals must satisfy certain Risk and Behaviour measures as assessed by the Board.
The threshold at which STI payments must be deferred into shares was lowered from 2 x Target STI to 1 x Target STI.
The vesting schedule for the EPS performance hurdle was amended for all new LTI grants so that vesting begins (from 0%) when Perpetual’s EPS growth is 5% p.a. Previously, a cliff-edge approach to vesting applied whereby no vesting applied until EPS growth was at least 10% p.a. at which point the award vested in full.
Re-testing of LTI performance measures was removed for all new LTI grants.
Accelerated vesting of LTIs on termination under certain circumstances was removed for all new LTI grants.
A minimum shareholding guideline for executives has been introduced.

These changes are described in more detail throughout this report. We believe that the changes strengthen the alignment of performance-based remuneration to shareholders’ interests and to Perpetual’s Risk Management Framework.

1.2 Remuneration outcomes in 2010/11

A summary of the remuneration outcomes at Perpetual for 2010/11 is set out below.

Fixed remuneration

Managing Director and CEO

The fixed remuneration for the former Managing Director and CEO, David Deverall, remained unchanged from 1 July 2007 to his resignation on 23 June 2011.

The fixed remuneration for the new Managing Director and CEO, Chris Ryan (effective 14 February 2011), was determined by the Board using market data provided by an external independent adviser, which was benchmarked against CEOs of leading listed companies in the diversified financial services industry (excluding CEOs of the major banks and other financial services companies in the S&P/ASX 20).

Group Executives

For 2010/11, increases of 8.3% on average were granted to Group Executives. This reflected the increase in experience and expertise of those executives who last year were still relatively new to their positions and had been promoted internally, starting on a lower fixed pay than their predecessor with a view to transitioning to market levels as they developed in their new role.

These increases followed 2009/10 where there were no increases in fixed remuneration for the Group Executives, except in the case of promotion or significant increases in roles and responsibilities.

Other employees

For the first time in three years, a budget was available for broad-based fixed remuneration increases. It ranged between 3% and 5% depending on the division. Increases were typically higher for employees

whose fixed remuneration was below market, and more modest for those already pitched near or above the market median.

Short-term incentive payments

Although NPAT for 2010/11 was lower than last year, the STI pool available to employees was broadly the same as last year. This was due to the following factors:

Adjustment of NPAT for the following items:
the net gains on disposal (both realised and unrealised) and impairment of investments were deducted; these were of a capital nature and did not reflect management and employee performance and day-to-day business operations and activities,
costs incurred in responding to the indicative, conditional and non-binding proposal from KKR to acquire all of Perpetual’s shares were added back, and
the impairment of intangible assets was added back, as this was of a capital nature.
Decision by the Board to make a discretionary allocation to the PPP, primarily to supplement the STI of high performing lower level employees who would otherwise be receiving STI awards significantly below their target levels for the third consecutive year.

Long-term incentive vesting outcomes

All unvested long-term incentives held by the former Managing Director and CEO, David Deverall, were forfeited on his resignation. Additionally, vested but unexercised options held by Mr Deverall lapsed without value on resignation.

All LTI grants made to Group Executives in 2006 were forfeited during the year as the stretch TSR and EPS growth targets were not met when re-tested on 1 October 2010. No LTI grants made to Group Executives in 2007 vested as a result of the initial test of the performance targets on 1 October 2010. These will be re-tested in October 2011 but are very unlikely to vest.

A business-based LTI grant made to Cathy Doyle, Group Executive Equities, in February 2008 was tested during the year. 50% of the grant was subject to succession planning performance targets and 50% to a profit target. 83% of the succession-based portion vested, with the balance of the succession-based portion forfeited. No part of the grant subject to a profit target was met and this component will be retested on 31 December 2011.

Sign-on payments

In recognition of the remuneration foregone by Chris Ryan as a consequence of joining Perpetual, a signon payment of $500,000 gross (less tax) was paid three months after his commencement date.

In addition, subject to shareholder approval, Mr Ryan will be granted a one-off incentive to the value of $600,000 in the form of performance shares with effect from 1 April 2011. Vesting of these shares is subject to performance hurdles (50% TSR and 50% EPS growth) measured over two years.

Sign-on payments of $700,000 cash and $400,000 in shares were made to Geoff Lloyd, Group Executive Private Wealth, to compensate him for remuneration foregone as a consequence of joining Perpetual. The sign-on shares granted to Mr Lloyd vested on 10 August 2011.

Non-executive director fees

An increase in fees of approximately 3% for the Board and Committees, applied for 2010/11. This was the first increase in non-executive director fees since 1 July 2007. There will be no increase to non-executive director fees in 2011/12. Further, from 2011/12 there will be no fees paid to members for serving on the Nominations Committee. More details on the remuneration structure for non-executive directors and the amounts received in 2010/11 are provided on page 63.

1.3 Actual remuneration received

The following table summarises the actual remuneration executives at Perpetual received, including cash paid and the value of equity that vested.

Name	Total	Total fixed remuneration	STI	Equity vested during year 1	Equity vested during year 1	Sign-on & relocation benefits 2	Sign-on & relocation benefits 2	Termination benefits 3	Termination benefits 3
	$	$	$	$		$		$
Managing Director
C Ryan	1,247,244	460,844	150,000		-	636,400			-
Former Managing Director
D Deverall	1,853,806	982,641	-		-		-	871,166
Current Group	Executives
R Brandweiner	567,042	362,242	204,800		-		-		-
R Burrows	875,692	568,492	307,200		-		-		-
C Doyle	1,070,215	548,807	281,600	239,808			-		-
C Green	575,215	370,415	204,800		-		-		-
B Henderson	79,508	-	-		-	79,508			-
I Holyman	589,040	413,940	175,100		-		-		-
G Lloyd	1,613,363	605,663	307,700		-	700,000			-
J Stewart	437,558	335,158	102,400		-		-		-
R Vahtrick	16,946	16,946	-		-		-		-
Current executives who were in Acting Group Executive roles during the year 4
P Ryan	49,526	31,444	18,082		-		-		-
S Singh	50,614	30,888	19,726		-		-		-
Group Executives who departed during the year
M Miller	290,563	288,036	-		-		-	2,527
M Pancino	107,148	102,483	-		-		-	4,665
R MacIntyre	650,827	76,636	-	144,079			-	430,112

Equity vested during the year has been valued at the market value on the date the equity vested.
Cash sign-on benefits and relocation benefits in respect of executives who relocated to join Perpetual. Cash sign-on benefits include $500,000 to C Ryan and $700,000 to G Lloyd. Relocation benefits include reasonable cost of flights, accommodation, removal and freight of personal belongs, and financial advice (includes $136,400 of relocation benefits to C Ryan and $79,508 of relocation benefits to B Henderson).
Consists of payments for unused accrued leave (for D Deverall, M Miller, M Pancino and R MacIntyre), contractual entitlements (D Deverall), and severance entitlements (R MacIntyre). In all cases, the entitlements paid on termination were less than the relevant caps required by legislation and as a result shareholder approval for these payments was not sought.
Represents amounts received while in Acting Group Executive roles (ie 1 July 2010 to 10 August 2010).

1.4 Key changes to the executive remuneration framework for 2011/12

From 1 July 2011, changes will be made to the Group-wide STI plan. This is being done to better align STI outcomes with the business strategy.

In this respect, for the purpose of determining the STI pool, company performance will be measured against a balanced scorecard consisting of short-term financial metrics and longer-term value creation metrics. Company performance will also be measured against stretch targets, allowing it to be assessed in the context of the economic environment. NPAT will remain a key performance measure to ensure STI outcomes under the new STI plan are closely correlated to those under the previous plan, and that remuneration for employees continues to be aligned to shareholder interests.

The changes are also designed to give employees greater clarity over how their individual performance and that of the business contributes to their STI outcome. Individual STI awards will be capped at 2 x Target and the STI deferral arrangements introduced to the Managing Director and Group Executives in 2010/11 will extend to all senior leaders.

The changes will be phased in from 1 July 2011, with full implementation expected for the 2012/13 financial year.

2 The role of the People and Remuneration Committee

The People and Remuneration Committee (PARC)’s role is to help the Board fulfil its responsibilities to shareholders through a strong focus on good governance, and in particular, the principles of accountability and transparency.

The PARC operates under delegated authority from the Board. During the year, the PARC increased its oversight of remuneration, with the result that the Board approved a Remuneration Policy to ensure that Perpetual’s remuneration approach is aligned to its guiding principles and to the APRA Prudential Standards for executive remuneration. The PARC’s Terms of Reference are available on our website (http://www.perpetual.com.au) and are shown graphically below:

==> picture [441 x 309] intentionally omitted <==

----- Start of picture text -----

Oversee HR
management policy and
Review succession and
practices, including
Oversee Equal overall Remuneration career planning for the
Employment Managing Director, Group
Policy
Opportunity and Executives and other critical
cultural diversity roles
policies at all levels
Establish and maintain a
process for executive
Oversee employee
performance planning and
engagement at all levels
PARC review to encourage
superior performance
Oversee compliance with
Ensure remuneration occupational health and
disclosure requirements safety regulations
are met
Review and recommend
Review and recommend Board remuneration as well
Managing Director’s as Managing Director and
performance, remuneration Group Executive
and contractual remuneration
arrangements to the Board
----- End of picture text -----

The terms of reference are broad, encompassing remuneration as well as executive development, talent management and succession planning. This enables the PARC to focus on ensuring a high quality of succession planning and executive development at all levels of Perpetual.

The PARC members for 2010/11 were:

Elizabeth Proust (Chairman)
Paul Brasher
Philip Bullock (from 9 August 2010)
Paul McClintock
Robert Savage (until 26 October 2010)
Peter Scott (until 26 October 2010)

The PARC met eight times during the year. Attendance at these meetings is set out on page 5 of the Directors’ Report.

At the PARC’s invitation, the Managing Director and Group Executive People and Culture attended meetings except where matters associated with their own performance evaluation, development and remuneration were to be considered.

The PARC considers advice and views from those invited to attend meetings and draws on services from a range of external sources, including remuneration consultants.

In March 2011, the PARC appointed PwC as its principal remuneration consultant to provide specialist advice on executive remuneration and other Group-wide remuneration matters. This advice is commissioned by the PARC and is independent of management.

Share dealing approval

Any share dealings, whether these shares are held personally or were acquired as part of remuneration, require prior approval. The table below shows the approval required:

Person wishing to deal in shares	Approval required from
Managing Director	Chairman
Director	Chairman
Chairman	Nominated Director
Group Executive	Managing Director
An employee likely to have price- sensitiveinformation	Managing Director / Company Secretary

3 Our remuneration philosophy and structure

Perpetual’s remuneration philosophy is that the remuneration strategy should align with and support the achievement of our business strategy, while ensuring remuneration outcomes are aligned with shareholder interests and are market competitive. To that end we have created six guiding principles that direct our remuneration approach.

3.1 Remuneration principles

Our Remuneration Policy is designed around the following six guiding principles:

The remuneration structure should attract, motivate and retain the desired talent within Perpetual.
The remuneration structure should align value creation for shareholders, clients and employees.
The remuneration structure should embed sound risk management.
Incentive arrangements should motivate performance.
Remuneration should be delivered efficiently and effectively considering the level of administration required.
The remuneration structure should be supported by a governance framework that avoids conflict of interest and ensures proper controls are in place.

The PARC has also adopted a number of practices that collectively contribute to each remuneration principle.

3.2 Alignment with sound risk management

When determining the variable (or “at risk’) elements of remuneration, we ensure that risk management is a key performance metric using specific performance goals and targets. Sound risk management practices include:

incorporating in employee incentive plans goals that are specifically related to risk management performance measures. These goals are approved annually by the Board and cascade down to all employees
performing scenario testing on potential outcomes under any new incentive plans
regularly reviewing the alignment between remuneration outcomes and performance achievement for existing incentive plans
deeming employees to be ineligible for the payment of STI in the event they exhibit poor risk behaviours
deferring STI above a certain threshold into Perpetual shares to align remuneration outcomes with longer-term company performance
including provisions in incentive plans for the Board or the PARC to adjust incentive payments downwards, if required, to protect Perpetual’s financial soundness, or to respond to significant unexpected or unintended consequences
continuous monitoring of remuneration outcomes by the Board, the PARC and management, to ensure that results are promoting behaviours that support Perpetual’s long-term financial soundness and the desired culture.

3.3 Alignment with shareholders

Link to business strategy

A key tenet of our remuneration philosophy is that the remuneration strategy should support the achievement of our business strategy and desired culture while ensuring that remuneration outcomes are aligned with shareholder outcomes. The link between our remuneration strategy and our business strategy is shown below:

Remuneration component	Link to business strategy
Fixed remuneration	Targeted at market median in order to attract and retain talented employees and to not encourage excessive risk-

	taking.
Short-term incentives	Rewards short-term financial performance and capital management. Awards are based on performance against stretch targets using key performance indicators linked to financial metrics and longer-term value metrics.
Long-term incentives	Awards are in fully paid ordinary Perpetual shares and are subject to service conditions and performance hurdles over a three-year period. Executives only receive value from this component if performance hurdles are met. Performance hurdles are aligned to our business strategy and shareholder interests through TSR and EPS growth targets.

Minimum shareholding guideline

A minimum shareholding guideline was introduced in 2010 to strengthen the alignment between executives’ and shareholders’ interests in the long-term performance of Perpetual. Under this guideline, executives are expected to establish and hold a minimum shareholding to the value of:

Managing Director: 1.5 times fixed remuneration
� Group Executives: 0.5 times fixed remuneration

The value of each vested option or share held in tax deferral by the executive is treated as being equal to 50% of that share or option. Unvested shares or options do not count towards the target holding.

A five-year transition period, from the later of 1 July 2010 or the start of employment, gives executives reasonable time to meet their shareholding guideline. Where the guideline is not met after the required time period, executives may be restricted from trading vested shares held in the trust.

As at 30 June 2011, progress towards the minimum guideline for each executive was as follows:

	Value of eligible shareholdings as at 30 June 2011 ($)	Value of minimum shareholding guideline ($)
Managing Director
Chris Ryan	-	1,837,500
Group Executives
Richard Brandweiner	23,334	183,750
Roger Burrows	-	285,000
Cathy Doyle	10,284	275,000
Chris Green	59,782	200,000
Brian Henderson	-	187,500
Ivan Holyman	34,104	220,000
Geoff Lloyd	-	337,500
Janine Stewart	-	170,000
Richard Vahtrick	-	200,000

Hedging and Share Trading Policy

Perpetual’s Share Trading Policy prohibits employees and directors from entering into hedging arrangements in relation to Perpetual securities. Perpetual employees and directors cannot trade in financial products issued over Perpetual securities by third parties or trade in any associated products which limit the economic risk of holding Perpetual securities. Share-dealing can only take place during agreed trading windows throughout the year and is subject to certain approvals (as set out on page 32 of this report).

3.4 Executive remuneration structure

The executive remuneration structure for 2010/11 was as follows:

Fixed	Fixed remuneration	Typically set around the market median for each employee. By participating in remuneration surveys and closely monitoring the market, we can compare our company to other Australian-based financial institutions. In some circumstances, such as for specialist technical positions, we may compare the position to a more targeted group of companies. Calculated on a ‘total cost to company’ basis, consisting of base salary, superannuation, packaged employee benefits and associated fringe benefits tax(FBT).	Paid as cash
Variable ‘at risk’	STI	Paid for meeting annual targets aimed at delivering our longer-term strategic plan. Awards depend on individual, division and company performance and are funded through the Profit Participation Pool.
	Deferred STI	STI awarded in excess of target STI are deferred into Perpetual shares for two years subject to service conditions.	Awarded as deferred equity
	LTI	Granted in the form of fully paid ordinary Perpetual shares (and in the case of the former Managing Director, options). Vesting is typically subject to service conditions and TSR and EPS growth performance hurdles measured over a three-year performance period.

3.5 Remuneration mix

All executives have a significant portion of their remuneration linked to performance. The table below shows the target remuneration for the new Managing Director and the average target remuneration mix for Group Executives:

==> picture [420 x 143] intentionally omitted <==

----- Start of picture text -----

Target remuneration mix
Managing Director Fixed, 34% STI, 33% LTI, 33%
Group Executives Fixed, 38% STI, 31% LTI, 31%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
----- End of picture text -----

3.6 Asset managers

The remuneration arrangements for asset managers are structured to ensure that we remunerate them appropriately within a highly competitive market, as well as ensuring reward for adding value to client portfolios.

Their remuneration therefore consists of both fixed and variable components, with the variable components primarily driven by investment performance outcomes over short- and long-term horizons. In many cases incentives are paid outside the Profit Participation Pool and are linked to outperforming benchmark indices which are aligned with client objectives. Incentives are paid as a mixture of cash and shares and expensed as part of Perpetual’s net profit after tax. Where paid as shares, these shares vest progressively over many years. This ensures reward for sustainable long-term performance and supports our employee retention objectives.

4 Short-term incentives

Short-term incentives are incentives paid in the form of cash and deferred shares for meeting annual targets aimed at delivering our longer-term strategic plan.

From 1 July 2011, changes will be made to the Group-wide STI plan as summarised in Section 1.4 of this remuneration report. Sections 4.1 to 4.3 below describe the STI arrangements that applied for 2010/11.

4.1 How STI is funded

A Profit Participation Pool (PPP) is created each year to fund STI for the majority of employees (including KMP). The size of the PPP is determined by the company’s net profit after tax.

Some asset managers, whose STI is linked explicitly to investment performance, are excluded from the PPP. In addition, participants in the Private Wealth and Corporate Trust Sales Incentive Plans also have a proportion of their STI funded outside the PPP. The STI for the new Managing Director, Chris Ryan, was also funded from outside the PPP this year. Mr Ryan will participate in the Group-wide STI plan from 2011/12 and beyond.

The PPP is linked to profit performance, where increased profits create a larger pool and decreased profits result in a smaller pool. We use return on equity (ROE) and net profit after tax (NPAT) as measures to govern the operation of the PPP.

The PPP operates as follows:

The profit pool begins to accumulate only when Perpetual’s ROE for the current year exceeds 65% of companies listed on the S&P/ASX100 (excluding listed property trusts), measured on a rolling threeyear basis.

This measure was chosen to ensure that Perpetual’s capital utilisation does not fall to unacceptable levels as the company seeks to increase net profits.

Once the ROE target is met, the profit pool accumulates based on a percentage of NPAT. Although the value of the pool is uncapped, the accumulation rate is ultimately capped at one-third of incremental NPAT where year-on-year NPAT growth is over 40%.

This measure was chosen to encourage year-on-year growth in net profit and to ensure a high correlation exists between NPAT performance and incentive outcomes.

If there is a year-on-year fall in NPAT, mechanisms are included within the plan to limit the pool size in future years until the previous NPAT ‘high water mark’ is passed.

NPAT is defined as net profit after tax with the post-tax amount of the profit pool added back, and adjusted for items determined by the Audit Risk and Compliance Committee and People and Remuneration Committee (for example, capital items such as realised gains on the sale of an investment that do not reflect management performance or day-to-day business operations and activities).

Underlying profit after tax (UPAT) was replaced by NPAT in 2009/10 because it more closely aligns PPP funding with shareholder returns. Previously, UPAT was used to determine the PPP.

4.2 How the PPP is allocated

Each year performance targets and goals are set for all employees, in line with division and company targets. These performance objectives are classified into the following six categories, including example metrics:

Financial: Profit before tax, funds under management growth.
Strategic: project milestones and execution objectives.
Operational: operational efficiency, product ratings, process improvements.
People: engagement survey scores, succession planning, team development.
Risk: demonstration of risk competencies.
Values: demonstration of Perpetual’s core values.

Performance objectives are assessed throughout the year as part of the performance management process. At year end, an annual assessment of each executive and employee’s performance is made and the PPP is then allocated based on relative divisional and individual performance.

Allocations to the Managing Director and Group Executives are subject to Board approval. The Managing Director and Group Executives must meet certain risk and behaviour standards to be eligible to receive an STI payment, as assessed by the Board.

4.3 How STI is delivered

STI payments are delivered in cash except where the STI outcome is more than 1 x Target STI, in which case the excess amount must be taken as Perpetual shares. Before this year, the threshold was 2 x Target STI.

Deferred STI shares are subject to a two-year vesting period. Dividends on shares are paid during the restriction period. Some or all shares held in deferral may also be forfeited if the Board subsequently determines that the STI was awarded on unrealised profits that did not eventuate, on inaccurate information (for example, that requires the Financial Statements to be restated), or from unacceptable risk-taking.

Leaver provisions apply for deferred STI shares. This mean that if an executive resigns from Perpetual during the deferral period, or their employment is terminated without notice or due to poor performance, the shares are forfeited.

5 Long-term incentives

Long-term incentives are paid as shares and, in the case of the former Managing Director David Deverall, options. This section explains the plans in place and how they work.

5.1 Executive share program and executive options program

These programs are the LTI plans in which the Managing Director and Group Executives participate.

New long-term incentive plan

In February 2011, the Board approved the introduction of a new plan, the Perpetual Limited Long-term Incentive Plan. This plan has replaced the Executive Share Plan for the purpose of making future longterm incentive grants to executives, including the sign-on grant of shares to the new Managing Director if approved by shareholders.

The new plan was introduced to modernise terms and conditions in light of significant changes to market practice and regulation of employee equity plans over the past decade. A single set of rules has been developed to enable grants of performance shares or options. Having these included under a single plan ensures consistency and provides additional flexibility.

This year, long-term incentives awarded to KMP were made under the old plans: the Perpetual Limited Executive Share Plan (ESP) and in the case of the former Managing Director, the Perpetual Limited Executive Option Plan (EOP).

Performance targets

Vesting of LTI grants is subject to service conditions and the achievement of performance targets. LTI performance targets are directly linked to company performance.

Each share or option grant is divided into two equal tranches, with the following performance targets being applied to each tranche:

The first tranche vests based on Perpetual’s total shareholder return (TSR) measured against companies listed on the S&P/ASX100 (excluding listed property trusts) determined at the date the LTI is granted. TSR is measured independently by Link Market Services and reported to the PARC.
The second tranche vests based on growth in Perpetual’s earnings per share (EPS).

Shares are held in trust for a maximum of 7 years from the grant date (10 years for grants made before 1 July 2009), while vested options may be exercised up to the sixth anniversary of the grant date.

TSR performance target

TSR is defined as share price growth plus dividends paid over the performance period from the initial TSR measurement date. Dividends are assumed to be reinvested on the ex-dividend date. Where applicable, adjustments may be made for any capital reconstructions or rights or bonus issues to ensure participants are neither advantaged nor disadvantaged by such capital events.

The TSR performance target requires Perpetual’s TSR over the performance period to be equal to or better than the TSR of half of the comparator group, which consists of companies listed on the S&P/ASX100 (excluding listed property trusts). This comparator group was chosen in the absence of a suitable peer group of direct competitors, and as it best represents Perpetual’s performance which is influenced by equity market movements (given that Perpetual's revenue is significantly dependent on Funds Under Management and Funds Under Advice). For TSR performance greater than median, a sliding scale applies to determine the vesting percentage.

TSR vesting schedule

Perpetual’s TSR ranking relative to the comparator group	Percentage of shares and options that will vest
Less than median	0%
Median	50%
Greater than median but less than 75~~th~~ percentile	2% for every one percentile increase in Perpetual’s relative position
Greaterthan 75~~th~~ percentile	100%

EPS performance target

The EPS performance target requires Perpetual’s EPS growth during the performance period to be equal to or greater than the target set by the Board. This target, which is currently 10% p.a., may be reviewed by the Board from time to time.

The achievement of this performance target links the individual’s remuneration to the company’s growth in earnings.

EPS vesting schedule

For LTI awarded to Group Executives in 2010/11:

Perpetual’s growth in EPS	Percentage of shares and options that will vest
EPS growth less than or equal to 5% p.a.	0%
EPS growth between 5% p.a. and 10% p.a.	2% for every 0.1% of EPS growth above 5% p.a.
EPS growth at or above 10% p.a.	100%

For LTI awarded to the former Managing Director and to Group Executives prior to 2010/11:

Perpetual’s growth in EPS	Percentage of shares and options that will vest
EPS growth less than 10% p.a.	0%
EPS growth at or above 10% p.a.	100%

This change was made to reduce the ‘cliff-edge’ effect of the vesting schedule and make the LTI award more meaningful to executives.

Business performance targets

No LTI with business performance targets was granted to the Managing Director or Group Executives this year.

One Group Executive (Cathy Doyle) and the former Managing Director (David Deverall) have previously received LTI allocations which are linked to the achievement of stretch business targets. These targets include the achievement of specific objectives related to profit growth, funds under management, and succession planning. The shares may vest in accordance with a scale of target, threshold and stretch performance specific to each business target. Shares with business performance targets held by Cathy Doyle are due to be re-tested at 31 December 2011. After this date, no KMP will have LTI with business performance targets.

Dividends for unvested grants subject to business targets are reinvested into further Perpetual shares or are held as cash, and are also subject to the same performance targets as the original grant.

Performance target testing and re-testing guidelines

A three-year performance testing period applies to TSR and EPS targets. TSR and EPS performance is calculated and tested against the respective target on the third anniversary of the grant date.

For grants made before 1 July 2010, if the target is not met after the initial three-year period, it is re-tested on the fourth anniversary of the grant date, against four-year TSR and EPS targets. If the performance target is not met after this re-test, the portion of the LTI that has not vested is forfeited.

Following feedback from shareholders, no re-testing applies to grants made after 2009/10, with the exception of the 2010/11 LTI grant made to the former Managing Director David Deverall, which was made in accordance with his contract and lapsed on his resignation.

Executive Share Plan (ESP)

Grants of shares to KMP were made under this plan during 2010/11. This plan has since been replaced by the Perpetual Limited Long-term Incentive Plan meaning that no new grants will be made in this plan after February 2011.

The ESP was first approved by shareholders at the 1997 annual general meeting.

The issue price of shares under this plan is the weighted average price of Perpetual’s shares traded on the ASX during the five business days preceding the grant date.

Shares are either purchased on-market or issued by the company, and are held in trust for a maximum of 10 years (7 years for grants made after 1 July 2009). They are subject to forfeiture if performance targets and service conditions are not met.

The Managing Director and Group Executives receive dividends and have voting rights while the shares are held in trust. Executives may not buy, or obtain loans to buy, shares under the ESP. Pages 54 to 56 show details of the unvested share holdings for the Managing Director and Group Executives.

Executive Option Plan (EOP)

Grants of options were made to the former Managing Director under this plan during 2010/11. Following the resignation of the former Managing Director, no participants remained in this plan and it has subsequently been terminated.

The EOP was approved by shareholders at the 1998 annual general meeting.

Options are granted over ordinary shares. The exercise price is based on the weighted average price of Perpetual’s shares traded on the ASX during the five business days preceding the date of option grant.

Executives may not buy these options, and no voting or dividend rights are attached to the option or its underlying un-issued ordinary share.

When exercisable, each option is converted into one ordinary share of Perpetual Limited. Options vest over three or four years, depending on when performance targets are met. All vested options may be exercised on or after the vesting date. Options expire at the end of the exercise period, which is six years after the grant date. Page 52 shows details of options granted to the former Managing Director.

Other than a grant in accordance with the former Managing Director’s contract, no options were granted this year.

Termination of employment

If an executive leaves the company, any unvested shares and/or options will be forfeited at the termination date, except as noted below.

For LTI grants made in 2010/11:

If an executive dies, all unvested shares and options are retained by the their estate, with vesting subject to the same performance conditions as if they had remained employed by Perpetual.
If an executive is made redundant or retires, or retires due to total and permanent disablement, unvested shares or options granted within the past 12 months lapse immediately. Remaining shares or options are retained by the executive, with vesting subject to the same performance conditions as if they had remained employed by Perpetual.

This approach strengthens the alignment between executives’ and shareholders’ interest in the long-term performance of Perpetual, extending beyond the executives’ tenure.

For LTI grants made before 2009/10:

If an executive dies or resigns due to total and permanent disability, all unvested shares and options vest to the executive at the date of death or on termination.
If an executive is made redundant or retires, the executive will be entitled to a pro rata portion of the grant based on the length of their employment (including any notice period actually given and any nominal notice period in respect of which any payment in lieu of notice is made). The pro rata amount will be based on the most recent performance targets to determine the number of shares and options that will vest.

Treatment of LTI on change in control

If Perpetual were to be taken over or there were a partial or full change in control, LTIs may vest in part or in full at the discretion of the Board. Guiding principles have been developed to help the Board determine vesting outcomes that are consistent, fair and reasonable, and balance multiple stakeholder interests.

5.2 Employee Share Plans

Perpetual offers all employees (including KMP) the opportunity to participate in share plans. These are described below.

OPEN PLANS	DESCRIPTION
Perpetual Limited Long-term Incentive Plan 2 members	•From February 2011, this is the main plan to be used for LTI grants to eligible employees, including the Managing Director and Group Executives.
Deferred Share Plan (DSP) 8 members	•This plan is used for a small number of employees within the asset management team based in Australia, as part of their incentive arrangements. No KMP participate in this plan. •Shares held in the plan vest over the long-term subject to achievement of investment performance and succession targets. •The plan ensures the interests of these key employees are aligned with those of shareholders and clients over the longer-term and provides a strong retention element as employees who cease employment with Perpetual during thevesting periodforfeit any unvested shares.

OPEN PLANS

DESCRIPTION

Perpetual Limited Long-term
Incentive Plan
2 members

•From February 2011, this is the main plan to be used for LTI
grants to eligible employees, including the Managing
Director and Group Executives.

Deferred Share Plan (DSP)
8 members

•This plan is used for a small number of employees within the
asset management team based in Australia, as part of their
incentive arrangements. No KMP participate in this plan.
•Shares held in the plan vest over the long-term subject to
achievement of investment performance and succession
targets.
•The plan ensures the interests of these key employees are
aligned with those of shareholders and clients over the
longer-term and provides a strong retention element as
employees who cease employment with Perpetual during
thevesting periodforfeit any unvested shares.

OPEN PLANS	DESCRIPTION
Tax Exempt Employee Share Purchase Plan (TESP) 170 members	•This plan allows all employees, including the Managing Director and Group Executives, to purchase shares using a salary-sacrifice arrangement. •Following the introduction of the new tax rules that apply to employee share schemes from July 2009, it was decided to only offer the TESP to employees wishing to purchase shares through salary-sacrifice arrangements going forward. •Employees may elect to sacrifice up to $1,000 of their cash STI payment into shares under the TESP. Shares acquired via this sacrifice are not subject to performance targets as they are acquired in lieu of a cash payment by the company; however the plan’s trading restrictions continue to apply until the earlier of three years from the date of grant or on termination of employment, before the shares can be released.
Tax Deferred Share Purchase Plan (TDSP) 72 members	•This plan is used for awards made under the annual sales incentive plans for eligible employees within the Private Wealth and Corporate Trust teams. •The plan was previously used by employees, including the Managing Director and Group Executives, to buy shares using a salary-sacrifice arrangement. The Plan was closed to any new salary-sacrifice purchases during 2009/10.

OPEN PLANS

DESCRIPTION

Tax Exempt Employee Share
Purchase Plan (TESP)
170 members

•This plan allows all employees, including the Managing
Director and Group Executives, to purchase shares using a
salary-sacrifice arrangement.
•Following the introduction of the new tax rules that apply to
employee share schemes from July 2009, it was decided to
only offer the TESP to employees wishing to purchase
shares through salary-sacrifice arrangements going forward.
•Employees may elect to sacrifice up to $1,000 of their cash
STI payment into shares under the TESP. Shares acquired
via this sacrifice are not subject to performance targets as
they are acquired in lieu of a cash payment by the company;
however the plan’s trading restrictions continue to apply until
the earlier of three years from the date of grant or on
termination of employment, before the shares can be
released.

Tax Deferred Share Purchase
Plan (TDSP)
72 members

•This plan is used for awards made under the annual sales
incentive plans for eligible employees within the Private
Wealth and Corporate Trust teams.
•The plan was previously used by employees, including the
Managing Director and Group Executives, to buy shares
using a salary-sacrifice arrangement. The Plan was closed
to any new salary-sacrifice purchases during 2009/10.

PLANS CLOSED TO NEW ISSUE	DESCRIPTION
Executive Share Plan (ESP) 237 members	•Until February 2011, this was the main plan used for LTI grants to eligible employees, including the Managing Director and Group Executives.
Global Employee Share Trust (GEST) 10 members	•This plan was used for a small number of employees within the asset management team based in Ireland and United Kingdom (mainly those who were pivotal to the long-term success of Perpetual’s global asset management performance) as part of their incentive arrangements. No KMP participated in this plan. •Shares held in the plan vest over a number of years subject to achievement of agreed performance targets. • All shares are forfeited if the employee resigns or is terminated by Perpetual for poor performance or misconduct prior to vesting. • This plan was closed tonew issues on 15August2011.
Employee Share Purchase Plan (ESPP) 183 members	•This plan was used for granting shares under a non- recourse loan arrangement. It has been closed to new issues since 2003/2004. •The ESPP and another inactive plan, the Employee Reward Share Plan, are discussed in Note 26 to the Financial Statements.
Executive Option Plan (EOP) 0 members	•This plan is used for options granted as part of the LTI arrangements for the former Managing Director (and previously some Group Executives). •Following the resignation of the former Managing Director, David Deverall, no options remain in this plan. •This plan was terminated on 15 August 2011.
Non-Executive Director Share Purchase Plan (NEDSPP) 4 members	•This plan was used only by non-executive directors and was closed to new purchases on 1 July 2009, following changes to taxation rules.

Dilution limits for share plans

Shares awarded under Perpetual’s employee share plans may be purchased on market or issued subject to Board discretion and the requirements of the Corporations Act 2001 and the ASX Listing Rules.

The Board will manage the issue of shares under employee incentive plans to balance remuneration needs of employees with shareholder returns, subject to the relevant regulatory requirements. Refer to page 32 for detail on the share dealing approval process.

6 Summary of company performance

The company’s five-year performance determines how much STI and LTI is paid to employees.

	Five-year	company performance	company performance
			Year ended
Perpetual’s five-year performance	30 June 2007	30 June 2008	30 June 2009	30 June 2010	30 June 2011
Net profit after tax reported ($’000’s)	182,108	128,813	37,749	90,505	62,031
UPAT reported ($’000’s)	145,336	133,464	65,697	72,793	72,879
Ordinary dividend per share declared with respect to the year ($)	3.60	3.30	1.00	2.10	1.85
Special dividend per share declared
with respect to the year $)	-	-	-	-	-
Total dividends	3.60	3.30	1.00	2.10	1.85
Basic earnings per share – UPAT ($)	3.76	3.42	1.67	1.83	1.79
Closing share price ($)	78.51	42.77	28.55	28.26	24.93

6.1 Profit Participation Pool payments for 2010/11

As described earlier in the report, one of the six guiding principles of our Remuneration Policy is that incentives should be aligned with shareholder value creation (that is, with growth in the share price and dividends payments). The chart below demonstrates this alignment.

Short-term incentives and NPAT are highly correlated

==> picture [419 x 253] intentionally omitted <==

----- Start of picture text -----

NPAT STI
200
182.1
180 250
160
140 128.8 200
120
150
100 90.5 STI Index
2011 = 100
80
62.0 100
60
37.7
40
50
20
- -
2007 2008 2009 2010 2011
Year
NPAT ($)
STI Index (%)
----- End of picture text -----

6.2 LTI issued to KMP

The following charts show the vesting outcomes of all LTI issued to KMP in 2006, 2007 and 2008. Only minimal vesting for grants made in 2006, 2007 and 2008 has applied, illustrating the clear link between company performance and remuneration at Perpetual.

==> picture [67 x 10] intentionally omitted <==

----- Start of picture text -----

2006 Grants
----- End of picture text -----

==> picture [138 x 148] intentionally omitted <==

----- Start of picture text -----

10%
90%
----- End of picture text -----

2007 Grants

==> picture [137 x 152] intentionally omitted <==

----- Start of picture text -----

5%
95%
----- End of picture text -----

2008 Grants

==> picture [220 x 144] intentionally omitted <==

----- Start of picture text -----

9%
LTI that has vested
LTI that remains unvested or has
91% forfeited
----- End of picture text -----

The performance hurdles for the 2007 allocation were initially tested in October 2010, with no shares vesting due to performance targets not being met. These shares will be re-tested in October 2011. Based on current performance against targets, it is unlikely that any shares will vest as a result of the re-test.

7 Details of remuneration

Index to tables

Table	Page Number
Remuneration of Managing Director and Group Executives	49
Remuneration components as a proportion of total remuneration	51
Loans to Group Executives under the ESPP	51
Option holdings of the former Managing Director	52
Value of unvested remuneration that may vest in future years	53
Unvested shareholdings of Managing Director and Group Executives	54

Remuneration of the Managing Director and Group Executives (accounting treatment)

Name	Total	Fixed remuneration	Fixed remuneration	Fixed remuneration	LTI	LTI
		Short-term	Post employment	Total fixed remuneration	Share based6	Total LTI
		Cash salary, fees and short-term compensated absences1 Non- monetary benefits2 Other3 Pension and super Cash profit sharing and other bonuses4			Shares5 Options5
	$	$ $ $ $ $ $ $			$ $ $
Managing Director
C Ryan7 2011 1,307,244		407,732 4,828 637,084 47,600 1,097,244 150,000 1,247,244			60,000 - 60,000
Former Managing Director
D Deverall 2011 1,846,547 2010 1,371,412		958,352 - 871,755 23,699 1,853,806 - 1,853,806 976,539 - 1,825 23,461 1,001,825 800,000 1,801,825			- (7,259) (7,259) (189,956) (240,457) (430,413)
Current Group Executives
R Brandweiner 2011* 701,873 2010 680,534		345,218 - 1,825 15,199 362,242 204,800 567,042 310,539 - 2,149 14,461 327,149 290,000 617,149			134,831 - 134,831 63,385 - 63,385
R Burrows 2011* 1,247,282 2010 1,004,296		528,566 14,402 1,825 23,699 568,492 307,200 875,692 512,137 14,402 1,825 23,461 551,825 220,000 771,825			371,590 - 371,590 232,471 - 232,471
C Doyle 2011* 1,044,417 2010 1,129,727		486,248 45,535 1,825 15,199 548,807 281,600 830,407 441,950 44,596 1,825 14,461 502,833 300,000 802,833			214,010 - 214,010 326,894 - 326,894
C Green 2011 700,197 2010 690,528		353,391 - 1,825 15,199 370,415 204,800 575,215 335,539 - 1,825 14,461 351,825 280,000 631,825			124,982 - 124,982 58,703 - 58,703
B Henderson 2011 79,508		- - 79,508 - 79,508 - 79,508			- - -
I Holyman 2011* 837,085 2010 866,781		363,377 - 1,825 48,738 413,940 175,100 589,040 362,500 - 1,825 46,710 411,035 240,000 651,035			248,045 - 248,045 215,746 - 215,746
G Lloyd 2011* 2,034,017		528,857 59,982 701,625 15,199 1,305,663 307,700 1,613,363			420,654 - 420,654
J Stewart 2011 523,468 2010 475,568		318,134 - 1,825 15,199 335,158 102,400 437,558 285,539 - 1,825 14,461 301,825 135,000 436,825			85,910 - 85,910 38,743 - 38,743
R Vahtrick 2011 16,946		14,206 - 23 2,717 16,946 - 16,946			- - -

Current executives who were in Acting Group Executive roles during the year8	Current executives who were in Acting Group Executive roles during the year8	Current executives who were in Acting Group Executive roles during the year8	Current executives who were in Acting Group Executive roles during the year8	Current executives who were in Acting Group Executive roles during the year8
P Ryan
2011	55,258	28,723	-	200	2,521	31,444	18,082	49,526	5,732	-	5,732
2010	426,722	253,978	-	1,825	24,122	279,925	130,000	409,925	16,797	-	16,797
S Singh
2011	56,346	29,156	-	66	1,666	30,888	19,726	50,614	5,732	-	5,732
2010	442,398	255,539	-	601	14,461	270,601	155,000	425,601	16,797	-	16,797
Group Executives who departed during the year
M Miller
2011	244,804	266,417	-	3,298	20,848	290,563	-	290,563	(45,759)	-	(45,759)
2010	494,401	287,720	-	2,126	19,050	308,895	155,000	463,895	30,506	-	30,506
M Pancino
2011	13,525	87,264	10,226	4,840	4,818	107,148	-	107,148	(93,623)	-	(93,623)
2010	416,644	305,054	30,485	1,825	14,461	351,825	-	351,825	64,819	-	64,819
R MacIntyre
2011	534,604	66,426	-	430,522	9,800	506,748	-	506,748	27,856	-	27,856
2010	419,819	277,539	-	2,447	38,461	318,447	90,000	408,447	11,372	-	11,372
Total 2011	11,243,121	4,782,067	134,973	2,739,872	262,101	7,919,012	1,771,408	9,690,420	1,559,960	(7,259)	1,552,701
Total 2010	8,418,830	4,604,571	89,484	21,923	262,032	4,978,010	2,795,000	7,773,010	886,277	(240,457)	645,820
Total 2010
for CEO
and Group
Executives
disclosed
in 20108	8,943,607	5,391,512	98,348	766,544	336,371	6,592,775	2,795,000	9,387,775	251,945	(696,113)	(444,168)

Five highest paid officers of the group and company during the year ended 30 June 2011.
Cash salary is the ordinary cash salary received in the year
Non-monetary benefits relate to the salary sacrifice component of remuneration and represents benefits such as motor vehicles and car parking
Other short-term benefits relate to:
Salary Continuance and Death and Total and Permanent Disability insurance provided as part of the remuneration package,
interest on loans arising from shares issued under the ESPP (refer to page 51 'Loans to Group Executives under the ESPP'),
final payments in respect of executives who departed during or since the end of the year (including payout of accrued leave and termination benefits of $871,166 paid to D Deverall, $2,527 paid to M Miller, $4,665 paid to M Pancino and $430,112 paid to R MacIntyre),
sign-on payments in respect of executives who joined during the year (including cash sign-on payments of $500,000 to C Ryan and $700,000 to G Lloyd), and
payments in respect of relocation expenses to C Ryan ($136,400) and B Henderson ($79,508).
Cash profit sharing and other bonuses equate to the best estimate of the incentive performance bonus, based on available information at year end
Share-based remuneration has been valued using the binomial method which takes into account the performance hurdles relevant to each issue of equity instruments. The value of each equity instrument has been provided by PricewaterhouseCoopers.
Share-based remuneration is the amount expensed in the financial statements for the year and includes adjustments to reflect the most current expectation of vesting of LTI grants with non-market condition hurdles. For grants with non-market conditions including earnings per share hurdles, the number of shares expected to vest is estimated at the end of each reporting period and the amount to be expensed in the financial statements is adjusted accordingly. For grants with market conditions such as Total Shareholder Return hurdles, the number of grants expected to vest is not adjusted during the life of the grant and no adjustment is made to the amount expensed in the financial statements (except if service conditions are not met). The accounting treatment of non-market and market conditions are in accordance with Accounting Standards.
Share-based remuneration amount for C Ryan represents the accounting value of his sign-on grant of shares (or cash if shareholder approval is not obtained) to be expensed in the financial statements for the reporting period to 30 June 2011.
Represents accounting value of remuneration while in Acting Group Executive roles (ie 1 July 2010 to 10 August 2010).
The totals shown relate to executives disclosed in the 2010 Annual Report and so do not equal the 2010 totals for executives disclosed in this table.

Remuneration components as a proportion of total remuneration[1]

		Performance linked benefits	Performance linked benefits				2011 STI
Name	Fixed benefits %	STI %	LTI %		Total %		(as % of Target)
Managing Director
C Ryan	84%		11%	5%		100%	33%
Former Managing Director
D Deverall	100%		0%	0%		100%	0%
Current Group Executives
R Brandweiner	52%		29%	19%		100%	51%
R Burrows	45%		25%	30%		100%	51%
C Doyle	53%		27%	20%		100%	51%
C Green	53%		29%	18%		100%	51%
B Henderson	100%		0%	0%		0%	N/A
I Holyman	49%		21%	30%		100%	51%
G Lloyd	64%		15%	21%		100%	51%
J Stewart	64%		20%	16%		100%	51%
R Vahtrick	100%		0%	0%		100%	N/A
Current executives who were in Acting Group Executive			roles during the year
P Ryan	57%		33%	10%		100%	51%
S Singh	55%		35%	10%		100%	65%
Group Executives who departed during the year
M Miller	100%		0%	0%		100%	0%
M Pancino	100%		0%	0%		100%	0%
R MacIntyre	95%		0%	5%		100%	0%

The remuneration components are determined based on the 'Remuneration of Managing Director and Group Executives (accounting treatment)' table on page 49.

Loans to Group Executives under the ESPP

Name	Balance at the start of the year	Balance at the start of the year	Repayment of loan	Interest paid and payable for the year		Balance at the end of the year	Interest not charged1	Highest balance in period
	$		$	$		$	$	$
Departed Group Executives
M Miller		2,889	(2,889)		-	-	164	2,889
R MacIntyre		5,932	(5,932)		-	-	260	5,932

1 Interest not charged has been calculated at 10% on the weighted average loan balance as at 30 June 2011 and 30 June 2010, or for terminated specified executives, on the pro-rata loan balances for the period up to six months from the date of leaving employment. The terms of these loans are discussed in more detail in Note 26 of the Financial Statements. The loans were available to all executives except for the current Managing Director and former Managing Director. They were also not available to the non-executive directors.

No other Group Executives have loans.

There are now no KMP with loans under the ESPP.

Option holdings of the former Managing Director

					Movement during	Movement during	the year
Name	Grant	Exercise	Exercise	Held at 1	Granted	Forfeited	Exercised		Held at 30	Vested &		Fair value		Proceeds
	date	period	price	July 2010					June 2011	exercisable at		per option		received
										30 June 2011		at grant date1		on exercise
			$	No. of		No. of options			No. of	No. of options		$		$
				options					options
Former Managing Director D Deverall2 Options granted prior to 1 July 20083
				267,364	-	267,364		-	-		-
	1 Jul 08	1 Jul 11 -
		1 Jul 14	42.73	57,390	-	57,390		-	-		-		8.97	-
	29 Jun 09	1 Jul 12 -
		29 Jun 19	28.34	47,585	-	47,585		-	-		-		9.58	-
	3 Jul 09	1 Jul 12 -
		29 Jun 15	28.34	5,911	-	5,911		-	-		-		9.58	-
	1 Jul 10	1 Jul 13 -
		29 Jun 16	28.74	-	76,606	76,606		-	-		-		5.47	-
		Aggregate	Value4		$419,035	$27,087,496

Options granted to the former Managing Director were granted from the Executive Option Plan. No other Group Executives hold options over Perpetual shares.

1 Equity instruments issued have been valued by PricewaterhouseCoopers (PwC) using a Binomial Option Pricing model at grant date.

3 These options were granted on 19 October 2004 (978; 100% forfeited in the current year), 1 July 2006 (29,950; 100% forfeited in the current year), 1 July 2007 (236,436; 100% forfeited in the current year).

4 The aggregate value is calculated as the number of options at the exercise price.

5 Percentage of total remuneration received as options for the former Managing Director (D Deverall) was 0%.

Value of unvested remuneration that may vest in future years

Estimates of the maximum and minimum cost in future years relating to equity based remuneration granted by the Company	Estimates of the maximum and minimum cost in future years relating to equity based remuneration granted by the Company	Estimates of the maximum and minimum cost in future years relating to equity based remuneration granted by the Company

30 June 2012 30 June 2013 30 June 2014 Minimum Maximum Minimum Maximum Minimum Maximum Managing Director C Ryan - - - - - - Former Managing Director D Deverall - - - - - -
Group Executives
R Brandweiner - 167,294 - 107,232 - 21,434 R Burrows - 343,081 - 190,596 - 34,999 C Doyle - 251,455 - 186,424 - 40,831 C Green - 151,606 - 95,529 - 18,955 B Henderson - - - - - - I Holyman - 257,304 - 142,946 - 26,249 G Lloyd 132,325 145,115 39,372 J Stewart - 102,917 - 72,797 - 15,574 R Vahtrick - - -
Current executives who were in Acting Group Executive roles during the year
P Ryan - 80,039 - 47,996 - 8,750 S Singh - 80,039 - 47,996 - 8,750 Group Executives who departed during the year M Miller - - - - - - M Pancino - - - - - - R MacIntyre - - - - - -

Unvested shareholdings of the Managing Director and Group Executives

					Movement during the year	Movement during the year	Movement during the year
Name	Grant date	Issue	Vesting date	Held at 1	Granted	Forfeited	Vested	Held at 30	Fair value per	Fair value
		price		July 2010				June	share ($) TSR	per share
								2011	Hurdle	($) non-
										TSR
										hurdle
				No of				No of
				shares		No of shares		shares
Managing Director
C Ryan	-	-	-	-	-	-	-	-	-	-
	Aggregate Value				$0	$0	$0
Former Managing Director
D Deverall1	Shares granted prior to 1 July		20082	51,496	-	51,496	-	-
	1 July 2008	42.73	1 July 2011	11,993	-	11,993	-	-	38.97	50.80
	29 June 2009	28.34	1 July 2012	18,083	-	18,083	-	-	21.30	28.01
	1 July 2010	28.74	1 July 2013	-	17,832	17,832	-	-	18.97	27.65
	Aggregate Value				$512,492	$5,562,385	$0	-
Group executives
R Brandweiner	Shares granted prior to 1 July		20083	1,359	-	1,359	-	-
	1 October 2008	48.63	1 October 2011	4,112	-	-	-	4,112	38.97	50.80
	1 October 2009	38.15	1 October 2012	7,208	-	-	-	7,208	29.02	37.93
	1 October 2010	30.80	1 October 2013	-	11,931	-	-	11,931	20.59	30.80
	Aggregate Value				$367,475	$99,941	$0
R Burrows	Shares granted prior to 1 July		20084	11,383	-	-	-	11,383
	1 October 2008	48.63	1 October 2011	12,338	-	-	-	12,338	38.97	50.80
	1 October 2009	38.15	1 October 2012	15,727	-	-	-	15,727	29.02	37.93
	1 October 2010	30.80	1 October 2013	-	19,480	-	-	19,480	20.59	30.80
	Aggregate value				$599,984	$0	$0
C Doyle	Shares granted prior to 1 July		20085	25,531	-	8,030	7,938	9,563
	1 October 2008	48.63	1 October 2011	7,197	-	-	-	7,197	38.97	50.80
	1 October 2009	38.15	1 October 2012	9,174	-	-	-	9,174	29.02	37.93
	1 October 2010	30.80	1 October 2013	-	22,727	-	-	22,727	20.59	30.80
	Aggregate Value				$699,992	$554,938	$415,005
C Green	Shares granted prior to 1 July		20086	2,291	-	2,291	-	-
	1 October 2008	48.63	1 October 2011	4,112	-	-	-	4,112	38.97	50.80
	1 October 2009	38.15	1 October 2012	6,553	-	-	-	6,553	29.02	37.93
	1 October 2010	30.80	1 October 2013	-	10,551	-	-	10,551	20.59	30.80
	Aggregate Value				$324,971	$168,480	$0
B Henderson	-	-	-	-	-	-	-	-	-	-
	Aggregate Value				$0	$0	$0
I Holyman	Shares granted prior to 1 July		20087	11,992	-	5,873	-	6,119
	1 October 2008	48.63	1 October 2011	9,253	-	-	-	9,253	38.97	50.80
	1 October 2009	38.15	1 October 2012	11,795	-	-	-	11,795	29.02	37.93
	1 October 2010	30.80	1 October 2013	-	14,610	-	-	14,610	20.59	30.80
	Aggregate Value				$449,988	$424,970	$0

					Movement during the year	Movement during the year	Movement during the year
Name	Grant date	Issue	Vesting date	Held at 1	Granted	Forfeited	Vested	Held at 30		Fair value per	Fair value
		price		July 2010				June		share ($) TSR	per share
								2011		Hurdle	($) non-
											TSR
											hurdle
				No of				No of
				shares		No of shares		shares
G Lloyd	10 August 2010	31.33	10 August 2011	-	12,767	-	-	12,767		N/A	27.65
	1 October 2010	30.80	1 October 2013	-	21,915	-	-	21,915		20.59	30.80
	Aggregate Value				$1,074,972	$0	$0
J Stewart	Shares granted prior to 1 July		20088	584	-	584	-		-
	1 October 2008	48.63	1 October 2011	3,084	-	-	-	3,084		38.97	50.80
	1 October 2009	38.15	1 October 2012	3,931	-	-	-	3,931		29.02	37.93
	1 October 2010	30.80	1 October 2013	-	8,668	-	-	8,668		20.59	30.80
	Aggregate Value				$266,974	$43,940	$0
R Vahtrick	-	-	-	-	-	-	-		-	-	-
	Aggregate Value				$0	$0	$0
Current executives who were in Acting Group			Executive roles during the year
P Ryan	Shares granted prior to 1 July		20089	1,495	-	1,495	-		-
	1 October 2008	48.63	1 October 2011	2,287	-	-	-	2,287		38.97	50.80
	1 October 2009	38.15	1 October 2012	3,538	-	-	-	3,538		29.02	37.93
	1 October 2010	30.80	1 October 2013	-	4,870	-	-	4,870		20.59	30.80
	Aggregate Value				$149,996	$109,942	$0
S Singh	Shares granted prior to 1 July		200810	1,365	-	1,365	-		-
	1 October 2008	48.63	1 October 2011	2,261	-	-	-	2,261		38.97	50.80
	1 October 2009	38.15	1 October 2012	3,538	-	-	-	3,538		29.02	37.93
	1 October 2010	30.80	1 October 2013	-	4,870	-	-	4,870		20.59	30.80
	Aggregate Value				$149,996	$100,232	$0
Departed Executives
M Miller	Shares granted prior to 1 July		200811	1,631	-	1,631	-		-
	1 October 2008	48.63	1 October 2011	2,467	-	2,467	-		-	38.97	50.80
	1 October 2009	38.15	1 October 2012	8,519	-	8,519	-		-	29.02	37.93
	1 October 2010	30.80	1 October 2013	-	10,551	10,551	-		-	20.59	30.80
	Aggregate Value				$324,971	$889,885	$0
M Pancino	Shares granted prior to 1 July		200812	2,294	-	2,294	-		-
	1 October 2008	48.63	1 October 2011	5,140	-	5,140	-		-	38.97	50.80
	1 October 2009	38.15	1 October 2012	6,553	-	6,553	-		-	29.02	37.93
	Aggregate Value				$0	$667,656	$0
R MacIntyre	Shares granted prior to 1 July		200813	7,241	-	2,283	4,958		-
	1 October 2008	48.63	1 October 2011	1,028	-	1,028	-		-	38.97	50.80
	1 October 2009	38.15	1 October 2012	2,096	-	2,096	-		-	29.02	37.93
	Aggregate Value				$0	$292,718	$337,094

1 Approval for the issue of shares to D Deverall was obtained under ASX Listing Rule 10.14 at Perpetual's AGM held on 19 October 2004, 17 October 2006, 30 October 2007, 28 October 2008 and October 2009.

2 These shares were granted on 1 July 2006 (7,130; 100% forfeited in the current year) and 1 July 2007 (44,366; 100% forfeited in the current year).

3 These shares were granted on 1 October 2007 (1,359; 100% forfeited in the current year). 4 These shares were granted on 31 March 2008 (11,383).

5 These shares were granted on 4 December 2006 (1,645; 100% forfeited in the current year), 1 October 2007 (4,759; 100% forfeited in the current year) and 20 February 2008 (19,127; 9% forfeited in the current year and 41% vested in the current year).
6 These shares were granted on 1 October 2007 (2,291; 100% forfeited in the current year).
7 These shares were granted on 2 October 2006 (5,873; 100% forfeited in the current year) and 1 October 2007 (6,119).
8 These shares were granted on 10 September 2007 (584; 100% forfeited in the current year).
9 These shares were granted on 1 October 2007 (1,495; 100% forfeited in the current year).
10 These shares were granted on 3 July 2006 (139; 100% forfeited in the current year) and 1 October 2007 (1,226; 100% forfeited in the current year).
11 These shares were granted on 1 October 2007 (1,631; 100% forfeited in the current year).
12 These shares were granted on 14 August 2006 (255; 100% forfeited in the current year) and 1 October 2007 (2,039; 100% forfeited in the current year).

13 These shares were granted on 1 October 2007 (1,359; 100% forfeited in the current year), 3 December 2007 (2,941: 4% forfeited in the current year and 96% vested in the current year), 3 December 2007 (2,941: 28% forfeited in the current year and 72% vested in the current year).

14 The aggregate value is calculated as the number of shares at the issue price.

8. Contract terms of executives

Contract terms for the current Managing Director

Contract Details	Chris Ryan, Managing Director and Chief Executive Officer from 14 February 2011
Term of contract	Open-ended
Fixed Remuneration	$1,225,000 per annum, reviewable in accordance with Perpetual’s policies.
STI	• Target STI of 100% of fixed remuneration
	• Subject to the Board’s assessment of criteria, including threshold risk measures and
	behaviour objectives which must be met by the Executive for any STI to be awarded.
	• Subject to the Board’s direction, the Executive may be required to apply the proportion of
	his actual STI payment in excess of 100% fixed remuneration to acquire Deferred
	Shares.
LTI	Eligible to receive LTI grants of 100% of fixed remuneration (or such greater amounts as may
	be determined by the Board from year to year) provided by way of either or both performance
	shares and options in such proportions determined by the Board, annually in its discretion.
	Grants are divided into two equal tranches, with the following performance targets being
	applied to each tranche:

1. TSR performance target

If Perpetual’s TSR ranking relative to the comparator group is: - less than the median, 0% vests;
at the median, 50% vests;
- greater than the median but less than 75%, 50% plus 2% for every percentile increase vests; and
- 75% or above, 100% vests.

2. EPS performance target

If Perpetual’s growth in EPS is:

less than or equal to the threshold EPS growth target, 0% vests;
greater than the threshold EPS growth target but less than the maximum EPS growth target, 2% for every 0.1% of EPS growth in excess of threshold EPS growth target.
- at or above the maximum EPS growth target, 100% vests.

The TSR and EPS targets are tested on the third anniversary of the grant date. After this date, any unvested portion is forfeited.

Sign-on In recognition of the remuneration foregone by Mr Ryan as a consequence of joining entitlements Perpetual, a sign-on entitlement was agreed: (i) $500,000 gross (less applicable taxation) to be paid in cash three months after the commencement date; and (ii) $600,000 in the form of performance shares (subject to shareholder approval) subject to vesting conditions (50% subject to a relative TSR hurdle and 50% subject to an EPS hurdle, as described above) measured over a two-year performance period (1 April 2011 to 1 April 2013). If shareholder approval is not obtained, Mr Ryan will receive a cash equivalent to the performance shares which would have become exercisable, subject to the satisfaction of the performance hurdles. Relocation benefits Reasonable costs associated with Mr Ryan’s relocation from Hong Kong to Sydney will be met by the Company in accordance with Perpetual’s Relocation Policy.

(ii) $600,000 in the form of performance shares (subject to shareholder approval) subject to vesting conditions (50% subject to a relative TSR hurdle and 50% subject to an EPS hurdle, as described above) measured over a two-year performance period (1 April 2011 to 1 April 2013). If shareholder approval is not obtained, Mr Ryan will receive a cash equivalent to the performance shares which would have become exercisable, subject to the satisfaction of the performance hurdles.

The agreement contains provisions for the termination of Mr Ryan’s employment as follows:

Termination of employment

(a) Termination by Mr Ryan on 12 months' notice in writing to the Board (or such shorter period as may be agreed). In the event the Board agrees to a notice period of less than 12 months, the agreement will be subject to no entitlement to receive a payment of fixed remuneration (or any other remuneration or amount) in respect of any period after termination date. There is no entitlement for STI for that financial year; and unvested STI held as shares, all unvested LTI and unvested share-based sign-on is forfeited.
(b) Termination by the Company on 12 months’ notice in writing (or such shorter period as may be agreed). The Executive is entitled a pro-rata STI for that financial year; and unvested STI held as shares, unvested LTI and unvested share-based sign-on due to vest within two years of the termination date, will remain eligible for vesting, subject to satisfaction of performance conditions in due course. Unvested LTI due to be tested after two years of the termination date is forfeited.
(c) If the executive becomes incapacitated by illness or injury for an accumulated period of three months in any 12 month period, the Company may terminate this agreement by giving 12 months’ notice in writing (or such shorter period as may be agreed). The Executive is entitled to a pro-rata STI for that financial year; and unvested STI held as shares, unvested LTI and unvested share-based sign-on due to vest within two years of the termination date, will remain eligible for vesting, subject to satisfaction of performance conditions in due course. Unvested LTI due to be tested after two years of the termination date is forfeited.
(d) Termination without notice following an Agreed Material Diminution Event. Upon such termination, the company must, within 7 days, pay the Executive fixed remuneration in lieu of 12 months notice and a pro-rata STI for that financial year. Unvested STI held as shares, unvested LTI and unvested share-based sign-on due to vest within two years of the termination date, will remain eligible for vesting, subject to satisfaction of performance conditions in due course. Unvested LTI due to be tested after two years of the termination date is forfeited.
(e) Termination by the Company for poor performance on six months’ notice in writing (or such shorter period as may be agreed) or termination by the Company without notice. There is no entitlement for STI for that financial year; and unvested STI held as shares, all unvested LTI and unvested share-based sign-on is forfeited.
(f) termination in the event of Mr Ryan's death - his estate is entitled to pro-rata STI for that financial year; and unvested STI held as shares, unvested LTI and unvested share-based sign-on remain eligible for vesting subject to satisfaction of performance conditions in due course.

The agreement also provides that the Company may elect to make a payment in lieu of notice.

Contract terms for the former Managing Director

Contract Details	David Deverall, former Managing Director and Chief Executive Officer to 23 June 2011
Overview	• Term of contract: From the date of the agreement (24 September 2007) until terminated
	in accordance with its terms.
	• Mr Deverall resigned with effect on 23 June 2011. In accordance with the terms of his
	contract, Mr Deverall received a termination payment based on a pro-rata of his previous
	year’s STI. All unvested shares and options lapsed upon cessation of employment.
Fixed Remuneration	$1,000,000 per annum, reviewable in accordance with Perpetual’s policies.
STI	• STI of up to the maximum STI for previous year multiplied by the change in the Profit
	Participation Pool.
	• 20% of the STI will be subject to the Board’s assessment annually of additional
	performance criteria.
LTI – Group	Eligible to receive LTI – Group grants equivalent to $1.025 million per annum (or such
	greater amounts as may be determined by the Board from year to year). 50% of the LTI –
	Group benefits is provided by way of performance shares and 50% by way of options.
	Grants are divided into two equal tranches, with the following performance targets being
	applied to each tranche:
	1. TSR performance target
	If Perpetual’s TSR ranking relative to the comparator group is:
	- less than the median, 0% vests;
	- at the median, 50% vests;
	- greater than the median but less than 75%, 50% plus 2% for every percentile increase
	vests; and
	- 75% or above, 100% vests.
	2. EPS performance target
	If Perpetual’s growth in EPS is:
	- less than 10% per annum, 0% vests; and
	- at 10% or more, 100% vests.

The TSR and EPS targets are first tested on the third anniversary of the grant date. If any portion remains unvested, it is retested on the fourth anniversary of the grant date. After this date, any unvested portion is forfeited.

LTI – Business	Eligible to receive LTI - Business grants up to $6,000,000. 50% of the LTI – Business benefit
One-off grant made	is provided by way of shares and 50% by way of options. LTI Business benefit will vest on 30
on 1 July 2007	June 2012 subject to compound annual growth in EPS targets and UPAT targets.

A threshold compound annual growth in EPS of 11% measured over five years is required before any shares or options can vest in 2012.

Once the threshold is achieved, vesting operates as follows:

vesting of 10% of the total shares and options occurs upon achievement of compound annual growth in EPS of 11% and required UPAT target;
100% of the shares and options will vest if compound annual growth in EPS is 20% and required UPAT target is achieved;
a sliding scale of vesting operates if compound annual growth in EPS is greater than 11% and below 20% and required UPAT targets are achieved.

There is an opportunity for accelerated vesting as at 30 June 2010 of up to 67% ($4,000,000) of the original benefit. A threshold compound annual growth in EPS of 15% is required before any shares or options can vest in 2010. Once the threshold is achieved, vesting operates as

follows:

vesting of shares and options valued at $2,000,000 occurs upon achievement of a compound annual growth in EPS of 15% and required UPAT target;
shares and options valued at a total of $4,000,000 will vest upon achievement of a compound annual growth in EPS of 25% and required UPAT target;
a sliding scale of vesting operates if compound annual growth in EPS is greater than 15% and below 25% and required UPAT targets are achieved.

Mr Deverall is not permitted to transfer or exercise any shares or options that vest under these accelerated vesting provisions until after 30 June 2011. If accelerated vesting is achieved, the balance of the LTI-Business will vest on 30 June 2012 subject to the original targets. There is no provision for retesting if performance targets are not achieved as of 30 June 2012. Any shares and options that do not vest will be forfeited as at 30 June 2012.

Termination of Mr Deverall can resign by providing 12 months’ notice. Perpetual can terminate Mr Deverall’s employment employment at any time by providing 12 months’ notice; immediately for misconduct or other circumstances justifying summary dismissal; as a result of Mr Deverall’s illness by providing 12 months’ notice; and for poor performance by providing 6 months’ notice. When notice is required, the Company can make a payment in lieu of all or part of any notice period.

Immediate termination without notice in certain circumstances

STI – no entitlement in respect of year in which termination occurs. LTI – Group – shares and options not vested at termination date are forfeited. LTI – Business – shares and options not vested at termination date are forfeited.

Termination by Perpetual on notice or due to illness – 12 months’ written notice (for payment in lieu)

STI – pro-rated, based on prior year entitlements. LTI – Group - eligible to receive vesting of shares and options that have not vested at the termination date for a period of 24 months after the termination date, subject to the original performance hurdles and performance period. LTI – Business – entitled to the greater of a pro-rata proportion of shares and options (subject to performance targets measured at the date of termination) and 1/10 of the LTI – Business.

Termination by Perpetual due to poor performance – 6 months’ written notice (or payment in lieu) STI – no entitlement in respect of year in which termination occurs. LTI – Group – shares and options not vested at the termination date are forfeited. LTI – Business – entitled to the greater of a pro-rata proportion of shares and options (subject to performance targets measured at the date of termination) and 1/10 of the LTI – Business. Voluntary termination – 12 months’ written notice (or payment in lieu) STI – pro-rated, based on previous year entitlements. LTI – Group – shares and options not vested at the termination date are forfeited. LTI – Business – shares and options not vested at the termination date are forfeited.

Death of Mr Deverall

STI – pro-rata entitlement based on previous year’s STI. LTI – Group – eligible to receive vesting of shares and options that have not vested at the termination date, subject to the original performance hurdles and performance period. LTI – Business – eligible to receive allocated but unvested equity at the discretion of the Board.

Termination provisions for Group Executives

Term	Who	Conditions
Duration of Contract	Brian Henderson	4 years from the commencement date (unless
		terminated earlier in accordance with the
		termination provisions)
	All other Group Executives	Ongoing until notice is given by either party
Notice to be provided by Group	Geoff Lloyd	4 months, where notice is given within 24
Executive to terminate the		months of the commencement date
employment agreement		6 months, where notice is given on or after 24
		months of the commencement date
	Janine Stewart	12 weeks
	Paul Ryan	2 months
	Shailendra Singh	2 months
	All other Group Executives	3 months
Notice to be provided by Perpetual	Geoff Lloyd	12 months, where notice is given within 24
to terminate the employment		months of the commencement date
agreement for poor performance		6 months, where notice is given on or after 24
		months of the commencement date
	Roger Burrows	6 months
	Janine Stewart	12 weeks
	Paul Ryan	2 months
	Shailendra Singh	2 months
	All other Group Executives	3 months
Notice to be provided by Perpetual	Geoff Lloyd	12 months, where notice is given within 24
to terminate the employment		months of the commencement date
agreement without cause		6 months, where notice is given on or after 24
		months of the commencement date
	Roger Burrows	6 months
	Ivan Holyman	3 months’ notice plus 3 weeks per completed
		year of service (up to 52 weeks)
	Janine Stewart	12 weeks
	Paul Ryan	2 months
	Shailendra Singh	2 months
	All other Group Executives	3 months
Termination payments and/or	Payment in lieu of notice
benefits to be made on termination
without cause	All Group Executives	Group Executives are entitled to payment in
		lieu of any unexpired part of the notice period
	STI
	All Group Executives	Subject to the terms and conditions of the STI
		Plan.
	LTI
	All Group Executives	Subject to the terms of the Offer and LTI Plan

Term	Who Conditions
Termination for cause	Payment in lieu of notice
	All Group Executives None – immediate termination for cause
	STI
	All Group Executives Subject to the terms and conditions of the STI Plan.
	LTI
	All Group Executives Subject to the terms of the Offer and LTI Plan
Post-employment restraints	Geoff Lloyd 4 months non-solicitation restraint, where notice is given within 24 months of the commencement date 6 months non-solicitation restraint, where notice is given on or after 24 months of the commencement date All other Group Executives 6 month non-solicitation restraint

9. Remuneration of Non-executive Directors

Remuneration Policy

The company’s Remuneration Policy for Non-executive Directors aims to ensure we can attract and retain suitably skilled, experienced and committed individuals to serve on the Board.

Non-executive Directors do not receive performance-related remuneration and are not entitled to receive performance shares or options over Perpetual shares.

Fee framework

Non-executive Directors receive a base fee. Except for the Chairman, they also receive fees for participating in Board Committees (other than the Nominations Committee), either as Chairman or as a member of a Committee.

Non-executive Directors’ fees	2010/11	2011/12
	$	$
Chairman	468,500	468,500
Directors	170,000	170,000
Audit Risk and Compliance Committee Chairman	40,000	40,000
Audit Risk and Compliance Committee Member	20,000	20,000
People and Remuneration Committee Chairman	28,500	28,500
People and Remuneration Committee Member	14,250	14,250
Investment Committee Chairman	28,500	28,500
Investment Committee Member	14,250	14,250
Nominations Committee Member	14,250	Nil

In addition to their base fee, they receive superannuation contributions of up to 9% of Non-executive Director fees, capped at the maximum prescribed under Superannuation Guarantee legislation. They may receive employer superannuation contributions in one of Perpetual’s employee superannuation funds or in a complying fund of their choice. Non-executive Directors may also salary-sacrifice superannuation contributions out of their base fee if they wish.

Total remuneration available to Non-executive Directors is approved by shareholders and is currently $2,250,000, as approved at the 2006 annual general meeting. Total fees paid to Non-executive Directors in 2011 were $1,951,994. More details are provided on page 65.

Alignment with shareholder interests

The constitution requires Non-executive Directors to acquire a minimum of 500 Perpetual shares on appointment and at least 1,000 shares when they have held office for three years.

The Non-executive Directors’ Share Purchase Plan (now closed) allowed Non-executive Directors to sacrifice up to 50% of their directors’ fees to acquire shares in Perpetual. Shares acquired in this way are not subject to performance targets, as they are acquired in place of cash payments. Following changes to tax rules, this plan was closed on 1 July 2009.

Shares are held in the plan until the earlier of 10 years or retirement from the Board.

Non-executive Directors do not receive share options. Directors’ holdings held directly or indirectly (for example, through a superannuation fund) are shown on page 66.

Retirement Policy

Non-executive Directors who have held office for three years since their last appointment must retire and seek re-election at the annual general meeting.

In order to revitalise the Board, Perpetual’s Non-executive Directors agree not to seek re-election after three terms of three years. However, the Board may invite a non-executive director to continue in office beyond nine years if it is advantageous to the company for reasons such as leadership or continuity.

Contract terms and Non-executive Director fees and responsibilities*

	Robert M Savage1	Peter B Scott2	Meredith J Brooks	Paul V Brasher	Philip Bullock3	E Paul McClintock	Elizabeth M Proust	Philip J Twyman
	$	$	$	$	$	$	$	$
Board fees (per annum)
Chairman	468,500	468,500	-	-	-	-	-	-
Independent Director	-	-	170,000	170,000	170,000	170,000	170,000	170,000
Committee fees (per annum)
Audit Risk and Compliance Committee
Chairman	-	-	-	-	-	-	-	40,000
Member	-	-	20,000	20,000	-	-	20,000	-
People and Remuneration Committee
Chairman	-	-	-	-	-	-	28,500	-
Member	-	-	-	14,250	14,250	14,250	-	-
Investment Committee
Chairman	-	-	-	-	-	28,500	-	-
Member	-	-	14,250	-	14,250	-	-	14,250
Nomination Committee
Member4	-	-	-	-	-	14,250	14,250	14,250
	August	July 2005
	2001 as	as
Appointed	Director and October	Director and October	November 2004	November 2009	June 2010	April 2004	January 2006	November 2004
	2005 as	2010 as
	Chairman	Chairman

In addition to committee fees, directors are entitled to minimum superannuation guarantee contributions.

1 Robert Savage retired as Chairman of the Nominations Committee on 23 July 2010 but remained as a Member of that Committee until his retirement from the Board on 26 October 2010.

2 Peter Scott became Chairman of the Board on 26 October 2010 and retired from the People and Remuneration Committee on 26 October 2010.

3 Philip Bullock was appointed as a member of the Investment Committee and the People and Remuneration Committee on 9 August 2010.

4 From 1 July 2011, there will be no fees paid to members for serving on the Nominations Committee

Remuneration of the Non-executive Directors (accounting treatment)

Name	Total	Total	Short-term	Short-term	Post employment	Post employment	Share-based	Share-based
			Cash salary, fees and
			short-term compensated absences 1,2		Pension and Superannuation		Equity settled
	2011	2010	2011	2010	2011	2010	2011	2010
	$	$	$	$	$	$	$	$
R M Savage	156,235	469,461	147,376	447,421	8,859	22,040		-	-
P B Scott	402,303	206,961	387,104	192,500	15,199	14,461		-	-
P V Brasher	219,449	133,969	169,449	83,969	50,000	50,000		-	-
M J Brooks	219,449	212,461	204,250	198,000	15,199	14,461		-	-
P Bullock	210,711	14,955	195,512	13,750	15,199	1,205		-	-
E P McClintock	242,199	234,461	227,000	220,000	15,199	14,461		-	-
E M Proust	247,949	262,915	232,750	248,454	15,199	14,461		-	-
P J Twyman	253,699	245,461	238,500	231,000	15,199	14,461		-	-
TOTAL	1,951,994	1,780,644	1,801,941	1,635,094	150,053	145,550		-	-

1 Cash salary is the ordinary cash salary. Under a share purchase plan for non-executive directors approved by shareholders on 20 October 1998, non-executive directors may sacrifice up to 50 per cent of their fees to acquire shares in the company. 2 Non-executive Directors do not receive any non-cash benefits as part of their remuneration.

Shares, options, dividends and units held by non-executive directors

	Ordinary	shares	Dividends	received	Options	Options		Registered scheme interests 1	Registered scheme interests 1
	2011	2010	2011	2010	2011	2010		2011	2010
	No.	No.	$	$	No.	No.		$	$
R M Savage	9,787	9,609	10,863	15,560		-	-	2,943,086	2,015,797
P B Scott	2,291	2,140	4,353	3,410		-	-	93,065	73,888
P V Brasher	1,000	1,000	2,000	1,050		-	-	637,045	497,825
M J Brooks	6,156	5,753	11,700	9,165		-	-	1,598,841	1,568,458
P Bullock	1,000	1,000	2,000	-		-	-	-	-
E P McClintock	9,203	8,768	17,747	14,102		-	-	202,821	188,674
E M Proust	4,401	3,245	8,564	5,227		-	-	-	-
P J Twyman	8,107	8,107	15,214	13,543		-	-	1,412,253	2,045,167

1 Amounts invested in Perpetual's products

Non-executive Director holdings held directly or indirectly

	Balance at the start of					Balance at the end of
Name	the year, or for directors appointed in the year, the date of	Shares acquired via salary sacrifice during the year		Other	changes during the year	the year, or for directors who retired in the year, the date of
	appointment					retirement
			No of shares
R M Savage	9,609	-			178	9,787
P B Scott	2,140	-			151	2,291
P V Brasher	1,000	-			-	1,000
M J Brooks	5,753	-			403	6,156
P Bullock	1,000	-			-	1,000
E P McClintock	8,768	-			435	9,203
E Proust	3,245	-			1,156	4,401
P J Twyman	8,107	-			-	8,107

Directors' Report For The Year Ended 30 June 2011 (continued)

Chief Executive Officer's and Chief Financial Officer's Declaration

The Chief Executive Officer and Chief Financial Officer declared in writing to the Board, in accordance with section 295A of the Corporations Act 2001 that the financial records of the Company for the financial year have been properly maintained, the Company's financial reports for the year ended 30 June 2011 comply with accounting standards and present a true and fair view of the Company's financial condition and operational results. This statement is required annually.

Non-audit services

During the year KPMG, the Company's auditor, performed other non-audit services in addition to their statutory duties amounting to $288,000 (2010: Nil).

The Board has a review process in relation to any non-audit services provided by the external auditor. The Board considered the non-audit services provided by the auditor and, in accordance with written advice provided by resolution of the Audit Risk and Compliance Committee, is satisfied that the provision of these non-audit services by the auditor is compatible with, and does not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons:

all non-audit services are subject to the corporate governance procedures adopted by the Company and are reviewed by the Audit Risk and Compliance Committee to ensure they do not impact the integrity and objectivity of the auditor;
the non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they do not involve reviewing or auditing the auditor’s own work, acting in a management or decision making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards.

The Lead Auditor's independence declaration for the 30 June 2011 financial year is included at the end of this report.

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 Order, amounts in the financial report and the Directors' Report have been rounded off to the nearest thousand dollars, unless otherwise stated.

This report is made in accordance with a resolution of the directors:

==> picture [136 x 70] intentionally omitted <==

Peter B Scott Chairman

==> picture [155 x 81] intentionally omitted <==

Chris Ryan Chief Executive Officer and Managing Director

Sydney 26 August 2011

ABCD

Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001

To: The Directors of Perpetual Limited

I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2011 there have been:

(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.

==> picture [83 x 47] intentionally omitted <==

KPMG

==> picture [112 x 92] intentionally omitted <==

Andrew J Yates Partner

Sydney

26 August 2011

Financial Statements of Perpetual Limited and its controlled entities for the year ended 30 June 2011

		Page No.
Consolidated Statement of Comprehensive Income		70
Balance Sheet		72
Statement	of Changes in Equity	73
Cash Flow Statement		74
Notes to the Financial Statements
Note 1.	Reporting entity	75
Note 2.	Summary of significant accounting policies	75
Note 3.	Revenue	90
Note 4.	Net profit before tax	90
Note 5.	Individually significant items included in profit for the year	91
Note 6.	Segment information	92
Note 7.	Auditor's remuneration	94
Note 8.	Income tax expense	95
Note 9.	Deferred tax assets/(liabilities)	96
Note 10.	Dividends	98
Note 11.	Earnings per share	99
Note 12.	Cash and cash equivalents	99
Note 13.	Receivables	100
Note 14.	Assets and liabilities held for sale	100
Note 15.	Other financial assets	101
Note 16.	Derivative financial instruments	101
Note 17.	Property, plant and equipment	102
Note 18.	Intangibles	103
Note 19.	Prepayments	104
Note 20.	Payables	104
Note 21.	Structured products - income received in advance	104
Note 22.	Non-current interest-bearing liabilities	105
Note 23.	Provisions	105
Note 24.	Contributed equity	106
Note 25.	Reserves	107
Note 26.	Employee benefits	107
Note 27.	Financial arrangements	112
Note 28.	Financial risk management	113
Note 29.	Structured products assets and liabilities	124
Note 30.	Commitments	128
Note 31.	Contingencies	128
Note 32.	Related parties	128
Note 33.	Controlled entities	129
Note 34.	Parent entity disclosures	131
Note 35.	Business combinations	132
Note 36.	Notes to the Cash Flow Statement	133
Note 37.	Subsequent events	134
Note 38.	Remuneration details provided as part of the financial report	135
Directors' Declaration		141
Independent Auditor's Report to the members of Perpetual Limited		142
Securities	exchange and investor information	144

Securities exchange and investor information

Consolidated Statement of Comprehensive Income for the year ended 30 June 2011

Note	2011 2010 $'000 $'000 Consolidated
Revenue from the provision of services Investment income Total revenue 3 Staff related expenses excluding equity remuneration expense Occupancy expenses Administrative and general expenses Financing costs Equity remuneration expense Depreciation and amortisation expense 4 Proceeds from sale of investments Cost of investments disposed of Impairment of assets 5 Impairment of available-for-sale securities 5 Net profit before tax Income tax expense Income tax (expense) / benefit on disposal of investments 5 Income tax expense 8 Net profit after tax Profit after tax attributable to non-controlling interests Net profit after tax attributable to equity holders of Perpetual Limited Share of loss of equity accounted investments, net of income tax Income from structured products Distributions and expenses relating to structured products	430,415 407,923 69,149 83,595 13,964 14,422
	513,528 505,940 (225,534) (195,441) (20,920) (18,734) (72,490) (60,076) (50,904) (50,606) (3,627) (2,772) (18,586) (26,755) (15,649) (14,857) 75,138 36,977 (68,977) (33,064) (14,694) - (1,534) (7,085) - (16)
	95,751 133,511 (32,661) (43,573) (722) 784
	(33,383) (42,789) 62,368 90,722
	(337) (216)
	62,031 90,506

The Consolidated Statement of Comprehensive Income is to be read in conjunction with the 'Notes to the Financial Statements' set out on pages 75 to 140.

Consolidated Statement of Comprehensive Income for the year ended 30 June 2011 (continued)

Note 2011 2010 $'000 $'000 Consolidated	Note 2011 2010 $'000 $'000 Consolidated
Net profit after tax Other comprehensive income/(expense), net of tax Available-for-sale reserve Cash flow hedge reserve Foreign currency reserve Foreign exchange translation differences Other comprehensive (expense)/income, net of income tax Total comprehensive income Non-controlling interests Equity holders of Perpetual Limited Total comprehensive income 11 11 Loss of previously impaired available-for-sale financial assets reclassified to profit and loss upon disposal Net increase in fair value of available-for-sale financial assets Diluted earnings per share attributable to ordinary equity holders – cents per share Impairment of available-for-sale financial assets reclassified to profit and loss Effective portion of changes in fair value of cash flow hedges Total comprehensive income is attributable to: Basic earnings per share attributable to ordinary equity holders – cents per share	62,368 90,722 1,761 2,051 1,534 5,259 (2,416) (423) 38 301 (1,288) (2,856)
	(371) 4,332 61,997 95,054
	588 216 61,409 94,838
	61,997 95,054
	152.7 227.1
	140.8 210.5

The Consolidated Statement of Comprehensive Income is to be read in conjunction with the 'Notes to the Financial Statements' set out on pages 75 to 140.

Balance Sheet as at 30 June 2011

		Consolidated	Consolidated
	Note	2011	2010
		$'000	$'000
Current assets
Cash and cash equivalents	12	220,320	187,539
Receivables	13	72,722	86,843
Assets held for sale	14	754	-
Other financial assets	15	100	100
Structured products – EMCF assets	29	899,146	1,191,066
Structured products – receivable from investors	29	20,806	26,157
Derivative financial instruments	16	-	11
Prepayments	19	6,525	7,447
Total current assets		1,220,373	1,499,163
Non-current assets
Receivables	13	-	3,648
Other financial assets	15	53,732	49,949
Structured products – loans receivable from investors	29	130,253	162,675
Property, plant and equipment	17	26,310	27,796
Intangibles	18	148,326	163,508
Deferred tax assets	9	34,413	33,219
Prepayments	19	614	858
Total non-current assets		393,648	441,653
Total assets		1,614,021	1,940,816
Current liabilities
Payables	20	40,342	40,661
Liabilities held for sale	14	904	-
Structured products – EMCF liabilities	29	896,348	1,190,342
Structured products – interest-bearing liabilities	28	17,386	24,818
Structured products – income received in advance	21	11,057	13,918
Derivative financial instruments	16	613	662
Current tax liabilities		15,468	16,736
Employee benefits	26	40,792	35,880
Provisions	23	1,585	7,670
Total current liabilities		1,024,495	1,330,687
Non-current liabilities
Payables	20	-	6,206
Interest-bearing liabilities	22	45,000	45,000
Structured products – interest-bearing liabilities	28	134,109	164,807
Deferred tax liabilities	9	7,533	7,198
Employee benefits	26	3,201	2,894
Provisions	23	23,582	23,000
Total non-current liabilities		213,425	249,105
Total liabilities		1,237,920	1,579,792
Net assets		376,101	361,024
Equity
Contributed equity	24	245,066	206,017
Reserves	25	44,245	56,861
Retained earnings		76,705	96,494
Total equity attributable to equity holders of Perpetual Limited		366,016	359,372
Non-controllinginterest		10,085	1,652
Total equity		376,101	361,024

The Balance Sheet is to be read in conjunction with the 'Notes to the Financial Statements' set out on pages 75 to 140

Statement of Changes in Equity for the year ended 30 June 2011

Consolidated $'000	Gross contributed equity	Treasury share reserve	Total contributed equity	Available- for-sale reserve	General reserve	Foreign currency translation reserve	Equity compensation reserve	Cash flow hedge reserve	Total reserves	Retained earnings	Equity holders of Perpetual	Non-controlling interest	Total
Balance at 1 July 2010 Total comprehensive income/(expense) Issue of ordinary shares Employee Share Purchase Plan loan repayments during the year Treasury shares issued during the year Treasury shares vested during the year Fair value adjustment on recycled and vested TSR shares Dividends on treasury shares used to purchase equity Dividends paid to shareholders Dividends reinvestment plan allotment Dividends paid on treasury shares Equity remuneration expense Non-controllinginterest	379,392 - 93 - 23,726 - (5,308) - - 14,044 - - -	(173,375) - - 177 (23,726) 24,777 5,308 (42) - - - - -	206,017	2,871 628 - - - - - - - - - - -	103 - - - - - - - - - - - -	(3,347) (1,288) - - - - - - - - - - -	57,688 - - - - (24,777) - 42 - - (5,747) 18,488 -	(454) 38 - - - - - - - - - - -	56,861	96,494 62,031 - - - - - - (73,774) (14,044) 5,747 - 251	359,372	1,652 588 - - - - - - - - - - 7,845	361,024

			-						(622)		61,409		61,997

			93						-		93		93
			177						-		177		177
			-						-		-		-
			24,777						(24,777)		-		-
			-						-		-		-
			(42)						42		-		-
			-						-		(73,774)		(73,774)
			14,044						-		-		-
			-						(5,747)		-		-
			-						18,488		18,488		18,488
			-						-		251		8,096
Balance at 30 June 2011	411,947	(166,881)	245,066	3,499	103	(4,635)	45,694	(416)	44,245	76,705	366,016	10,085	376,101
CHECK CHECK CHECK CHECK CHECK CHECK
Consolidated $'000	Gross contributed	Treasury share	Total contributed	Available- for-sale	General reserve	Foreign currency	Equity compensation	Cash flow hedge reserve	Total reserves	Retained earnings	Equity holders of	Non-controlling interest	Total
	equity	reserve	equity	reserve		translation	reserve				Perpetual
						reserve
Balance at 1 July 2009 Total comprehensive income/(expense) Issue of ordinary shares Employee Share Purchase Plan loan repayments during the year Treasury shares issued during the year Treasury shares purchased on market Treasury shares vested during the year Fair value adjustment on recycled and vested TSR shares Dividends on treasury shares used to purchase equity Dividends paid to shareholders Dividends reinvestment plan allotment Dividends paid on treasury shares Equity remuneration expense Non-controllinginterest	347,350 - 10,569 - 17,584 - - (5,406) - - 9,295 - - -	(173,128) - - 157 (17,584) (1,271) 13,110 5,406 (65) - - - - -	174,222	(4,016) 6,887 - - - - - - - - - - - -	103 - - - - - - - - - - - - -	(491) (2,856) - - - - - - - - - - - -	48,457 - - - - - (13,110) - 65 - - (4,479) 26,755 -	(755) 301 - - - - - - - - - - - -	43,298	72,413 90,506 - - - - - - - (61,609) (9,295) 4,479 - -	289,933	108 216 - - - - - - - - - - - 1,328	290,041

			-						4,332		94,838		95,054

			10,569						-		10,569		10,569
			157						-		157		157
			-						-		-		-
			(1,271)						-		(1,271)		(1,271)
			13,110						(13,110)		-		-
			-						-		-		-
			(65)						65		-		-
			-						-		(61,609)		(61,609)
			9,295 - - -						- (4,479) 26,755 -		- - 26,755 -		- - 26,755 1,328
Balance at 30 June 2010	379,392	(173,375)	206,017	2,871	103	(3,347)	57,688	(454)	56,861	96,494	359,372	1,652	361,024

The Statement of Changes in Equity is to be read in conjunction with the 'Notes to the Financial Statements' set out on pages 75 to 140.

Cash Flow Statement for the year ended 30 June 2011

Note 2011 2010 $'000 $'000 Consolidated	Note 2011 2010 $'000 $'000 Consolidated
Cash flows from operating activities Cash receipts in the course of operations Cash payments in the course of operations Dividends received Interest received Interest paid Income taxes paid Net cash from operating activities 36 Cash flows from investing activities Payments for property, plant, equipment and software Payments for investments Repayments of advances made under the Employee Share Purchase Plan Acquisition of business (net of cash acquired) Proceeds from the sale of investments Repayment of Palisade loan Tax paid on sale of investments Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Sale of units in seed funds to non-controlling interests Payments for on market share purchase Dividends paid Net cash used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at 1 July Cash and cash equivalents at 30 June 12	503,416 484,067 (361,794) (310,896) 1,101 838 11,954 12,386 (3,627) (2,772) (36,566) (31,070)
	114,484 152,553
	(13,884) (11,816) (74,227) (38,141) 177 157 (9,673) (35,449) 75,138 36,977 7,165 - (722) -
	(16,026) (48,272)
	14,044 9,295 8,097 - - (1,271) (87,818) (70,904)
	(65,677) (62,880)
	32,781 41,401 187,539 146,138
	220,320 187,539

The Cash Flow Statement is to be read in conjunction with 'Notes to the Financial Statements' set out on pages 75 to 140.

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 1. Reporting entity

Perpetual Limited ("the Company") is domiciled in Australia. The consolidated financial report of the Company as at and for the year ended 30 June 2011 comprises the Company and its controlled entities (together referred to as "the consolidated entity") and the consolidated entity’s interests in associates.

The financial report was authorised for issue by the Directors on 26th August 2011.

The consolidated annual report for the consolidated entity as of and for the year ended 30 June 2011 is available at www.perpetual.com.au.

Note 2. Summary of significant accounting policies

i. Statement of compliance

The financial report is a general purpose financial report prepared in accordance with Australian Accounting Standards adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001.

The financial report of the consolidated entity also complies with International Financial Reporting Standards adopted by the International Accounting Standards Board (IASB).

ii. Basis of preparation

The consolidated financial statements have been prepared on a historical cost basis, except for available-forsale financial assets and derivative financial instruments which are measured at fair value. Non-current assets are stated at the lower of carrying amount or fair value less selling costs.

The consolidated financial statements are presented in Australian dollars, which is the functional currency of the majority of the consolidated entity.

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, all financial information presented in Australian dollars has been rounded to the nearest thousand unless otherwise stated.

The preparation of the financial report requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the consolidated financial report is disclosed in:

Note 9. Deferred tax assets/(liabilities)
Note 16. Derivative financial instruments
Note 18. Intangibles
Note 23. Provisions
Note 26. Employee benefits
Note 29. Structured products assets and liabilities
Note 31. Contingencies

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 2. Summary of significant accounting policies (continued)

iii. Basis of consolidation

(a) Business combinations

Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that currently are exercisable.

Acquisitions on or after 1 July 2009

For acquisitions on or after 1 July 2009, the Group measures goodwill at the acquisition date as: - the fair value of the consideration transferred; plus

the recognised amount of any non-controlling interests in the acquiree; plus if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less
the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profit.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.

Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit.

When share-based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree's employees (acquiree's awards) and related to past services, then all or a portion of the amount of the acquirer's replacement award is included in measuring the consideration transferred in the business combination. This determination is based in the market-based value of the replacement awards compared with the marketbased value of the acquiree's awards and the extent to which the replacement awards relate to past and/or future service.

Acquisition between 1 July 2004 and 1 July 2009

For acquisitions between 1 July 2004 and 1 July 2009, goodwill represents the excess of the cost of the acquisition over the Group's interest in the recognised amount (generally fair value) of the identifiable assets, liabilities and contingent liabilities of the acquiree. When the excess was negative, a bargain purchase gain was recognised immediately in profit or loss.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurred in connection with business combinations were capitalised as part of the cost of the acquisition.

Acquisition prior to 1 July 2004 (date of transition to IFRSs)

As part of its transition to IFRSs, the Group elected to restate only those business combinations that occurred on or after 1 July 2003. In respect of acquisitions prior to 1 July 2003, goodwill represents the amount recognised under the Group's previous accounting Framework, Australian Generally Accepted Accounting Practices. Acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners and therefore no goodwill is recognised as a result of such transactions. The adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary.

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 2. Summary of significant accounting policies (continued)

iii. Basis of consolidation (continued)

(b) Subsidiaries

Subsidiaries are entities controlled by the consolidated entity. Control exists when the consolidated entity has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights presently exercisable are taken into account. Financial statements of subsidiaries are included in the consolidated financial statements from the date control commences until the date control ceases.

(c) Share plan entities

The consolidated entity has established a number of share plan entities (SPE) in relation to the administration of employee share plans rather than for trading and investment purposes. A SPE is consolidated if, based on an evaluation of the substance of its relationships within the consolidated entity and the SPE’s risks and rewards, the consolidated entity concludes that it controls the SPE. SPEs controlled by the consolidated entity were established under terms that impose strict limitations on the decision making powers of the SPE's management and that result in the consolidated entity receiving the majority of the benefits related to the SPE operations and net assets, being exposed to risks incidental to the SPE's activities and retaining the majority of the residual or ownership risks related to the SPE or their assets.

(d) Associates

Associates are those entities in which the consolidated entity has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the consolidated entity holds between 20 and 50 percent of the voting power of another entity. Associates are accounted for using the equity method. The consolidated financial statements include the consolidated entity’s share of the income and expenses of associates, after adjustments to align the accounting policies with those of the consolidated entity, from the date significant influence commences until the date significant influence ceases. When the consolidated entity’s share of losses exceeds its interest in an associate, the carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the consolidated entity has incurred legal or constructive obligations to make payments on behalf of an associate.

(e) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing consolidated financial statements. Unrealised gains arising from transactions with associates are eliminated against the investment to the extent of the consolidated entity’s interest in the associate. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. Gains and losses are recognised when the contributed assets are consumed or sold by the associates or, if not consumed or sold, when the consolidated entity’s interest in such entities is disposed of.

iv. Foreign currency translation

(a) Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit or loss.

Translation differences on financial assets and liabilities carried at fair value are reported as part of their fair value gain or loss. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit and loss are recognised in profit and loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equities classified as available-for-sale financial assets are included in the available for sale reserve in equity.

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 2. Summary of significant accounting policies (continued)

iv. Foreign currency translation (continued)

(b) Foreign operations

The results and financial position of subsidiaries that have a functional currency different from the presentation currency are translated into Australian dollars as follows:

Assets and liabilities for each Balance Sheet presented are translated at the closing rate at the date of that balance sheet.
Income and expenses for each Statement of Comprehensive Income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions).

Foreign currency differences are recognised in other comprehensive income. When a foreign operation is disposed of, in part or in full, the relevant amount in the foreign currency translation reserve is transferred to profit or loss or to non-controlling interest as part of the profit or loss on disposal.

v. Intangible assets

(a) Goodwill

Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets. For the measurement of goodwill at initial recognition, see note 18.

Measurement

Goodwill represents the excess of acquisition cost over the fair value of the consolidated entity’s share of the net identifiable assets of the acquired subsidiary or associate at the date of acquisition. Goodwill on acquisition of subsidiaries is presented with intangible assets and on acquisition of associates is included in investment in associates. Goodwill is allocated to cash-generating units and is not amortised, but tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired. When impaired, goodwill is carried at cost less accumulated impairment losses (see accounting policy xx).

Subsequent measurement

Goodwill is measured at cost less accumulated impairment losses. In respect of associates, the carrying amount of goodwill is included in the carrying amount of the investment, and an impairment loss on such an investment is not allocated to any assets, including goodwill, that forms part of the carrying amount of the associate.

Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

A discount upon acquisition is recognised directly in profit or loss.

(b) Software

Certain internal and external costs directly incurred in acquiring and developing software have been capitalised and are amortised over their useful life. Development costs include only those costs directly attributable to the development phase and are only recognised following completion of a technical feasibility study and where the consolidated entity has an intention and ability to use the asset. Costs incurred on software maintenance are expensed as incurred.

(c) Other intangible assets

Other intangible assets acquired by the consolidated entity, which have finite useful lives, are stated at cost less accumulated amortisation (refer to accounting policy v(e)) and impairment losses (see accounting policy xx).

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 2. Summary of significant accounting policies (continued)

v. Intangible assets (continued)

(d) Subsequent expenditure

Subsequent expenditure is capitalised only when it increases future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.

(e) Amortisation

Amortisation is calculated over the cost of the asset, or another amount substituted for cost, less its residual value.

Amortisation is recognised in profit and loss on a straight-line basis over the period the benefits from the assets arise, unless these assets are indefinite life assets. Goodwill and other intangible assets with an indefinite useful life are systematically tested for impairment at each balance sheet date or more frequently if events or changes in circumstances indicate that they might be impaired. Other intangible assets are amortised from the date they are available for use.

The estimated useful lives in the current and comparative periods are as follows:

capitalised software costs: 2.5 - 7 years
funds under management acquired: 5 years
customer contracts and relationships acquired: 5 - 10 years.

Amortisation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.

vi. Revenue and income recognition

Revenue is recognised at fair value of consideration received or receivable net of goods and services tax payable to the taxation authority.

(a) Revenue from the provision of services

Revenue is earned from provision of services to customers outside the consolidated entity. Revenue is recognised when services are provided.

(b) Income from structured products

Refer to accounting policy xi for details on income from structured products.

(c) Investment income

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

Dividend income is recognised in profit or loss on the date the entity's right to receive payment is established which, in the case of quoted securities, is the ex-dividend date.

Unit trust distributions are recognised in profit or loss as they are received.

(d) Proceeds from sale of investments

Net gains or losses on disposal of non-current assets are included in profit or loss. The gain or loss arising from disposal of an item of property, plant and equipment is determined as the difference between net disposal proceeds, being the cash price equivalent where payment is deferred, and the carrying amount of the item.

Profit or loss on disposal of assets is brought to account at the date an unconditional contract of sale is signed.

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 2. Summary of significant accounting policies (continued)

vii. Segment reporting

The consolidated entity determines and presents operating segments based on the information that internally is provided to the Chief Executive Officer (CEO), who is the consolidated entity's chief operating decision maker.

An operating segment is a component of the consolidated entity that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the consolidated entity's other components. All operating segments' operating results are regularly reviewed by the consolidated entity's CEO to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, head office expenses, and income tax expenses, assets and liabilities.

viii. Interest-bearing borrowings

Interest-bearing borrowings are initially recognised at fair value net of transaction costs incurred. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between initial carrying amount and redemption value being recognised in the profit or loss over the period of the borrowings using the effective interest method.

Interest-bearing borrowings are removed from the Balance Sheet when the obligation specified in the contract is discharged, cancelled or expired.

ix. Income tax

Income tax expense comprises current and deferred tax. Income tax expense is recognised in the net profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in other comprehensive income.

Current tax is expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at reporting date and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised in respect of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and amounts used for taxation purposes.

Deferred tax is not recognised for the following temporary differences:

the initial recognition of goodwill
the initial recognition of assets or liabilities that affect neither accounting nor taxable profit
differences relating to investments in subsidiaries to the extent that they probably will not reverse in the foreseeable future.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilised. Deferred tax assets are reviewed at each balance sheet date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 2. Summary of significant accounting policies (continued)

ix. Income tax (continued)

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend is recognised.

The Company and its wholly owned Australian resident entities are part of a tax consolidated group. As a consequence, all members of the tax consolidation group are taxed as a single entity. The head entity within the tax consolidated group is Perpetual Limited.

x. Investments

(a) Held-to-maturity investments

Investments are classified as held-to-maturity if the consolidated entity has the positive intent and ability to hold to maturity. Held-to-maturity investments are measured at amortised cost using the effective interest method, less any impairment losses.

(b) Available-for-sale financial assets

The consolidated entity’s investments in equity securities and unlisted unit trusts are classified as available-forsale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses (see accounting policy xx), are recognised in other comprehensive income. When an investment is derecognised, the cumulative gain or loss in equity is transferred to profit or loss.

The fair value of financial instruments classified as available-for-sale is their quoted bid price at the reporting date.

(c) Investments at fair value through profit or loss

Investments are classified at fair value through profit or loss if they are held for trading or designated as such upon initial recognition. The consolidated entity’s derivative instruments within asset management incubation funds are classified as held for trading financial assets. On initial recognition, attributable transaction costs are recognised in profit or loss when incurred.

Financial instruments designated at fair value through profit or loss are measured at fair value and changes recognised in profit or loss.

xi. Structured products

Structured products comprise products sold to investors where there is residual risk taken by the Company. Currently, structured products comprise products such as the Exact Market Cash Funds (the EMCF product) and Perpetual Protected Investments (PPI).

(a) Exact Market Cash Funds

The EMCF product consisting of two Funds (EMCF 1 and EMCF 2) is consolidated as the consolidated entity is deemed to control the EMCF Funds since it retains the residual risks and benefits through the swap agreements. The swap agreements result in the benchmark rate of return being paid to the unit holders in the Fund. The swap agreements are inter-company transactions between a subsidiary of the Company and the Funds and are eliminated on consolidation.

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 2. Summary of significant accounting policies (continued)

xi. Structured products (continued)

(a) Exact Market Cash Funds (continued)

Assets and liabilities of the EMCF product are disclosed separately on the face of the Balance Sheet as structured product assets and structured product liabilities. The benchmark return generated by the EMCF product and distributions to unit holders are shown separately on the Statement of Comprehensive Income as distributions and expenses related to structured products.

The financial assets represented by the structured products assets balance are accounted for in accordance with the underlying accounting policies of the consolidated entity. These consist of investments accounted for at fair value as available-for-sale financial assets.

(b) Perpetual Protected Investments

Loans to investors which are held as non-current assets at amortised cost on the Balance Sheet (refer to structured products - loan receivables) are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses.

Loans to investors are subject to recurring review and assessment for possible impairment. Provisions for loan losses are based on an incurred loss model, which recognises a provision where there is objective evidence of impairment at each balance sheet date, and are calculated based on the discounted values of expected future cash flows.

The incurred loss model makes specific provisions where specific loan impairment is identified. For individual loans not impaired, assets with similar risk profiles are pooled and collectively assessed for losses that may have been incurred but not yet identified. Bad debts are written off in the period in which they are identified.

Management makes judgements whether there is any observable data indicating that there is a significant decrease in the estimated future cash flows from a portfolio of loans. This evidence may include observable data indicating that there has been an adverse change in the payment status of the borrowers in a group, or national or local economic conditions that correlate with defaults on assets in that group.

xii. Property, plant and equipment

(a) Recognition and measurement

Property, plant and equipment are measured at cost or deemed cost less accumulated depreciation and impairment losses (see accounting policy xx).

Cost includes expenditures that are directly attributable to the acquisition of the asset. Cost of self-constructed assets includes cost of materials, direct labour, an appropriate proportion of overheads and where relevant, the initial estimate of the costs of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment. When revalued assets are sold, the amounts included in the revaluation reserve are transferred to retained earnings.

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 2. Summary of significant accounting policies (continued)

xii. Property, plant and equipment (continued)

(b) Subsequent costs

The consolidated entity recognises the cost of replacing part of an item of property, plant and equipment in the carrying amount of that item when the cost is incurred, it is probable that future economic benefits embodied within the item will flow to the consolidated entity and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other costs are recognised in profit or loss as an expense when incurred.

(c) Depreciation

Depreciation is recognised in the Statement of Comprehensive Income on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. The estimated useful lives for the current and comparative periods are as follows:

plant and equipment: 4 - 10 years
leasehold improvements: 3 - 15 years.

The residual value, useful life and depreciation method applied to an asset are reassessed at least annually.

xiii. Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs.

Subsequent to initial recognition loans and receivables are measured at amortised cost using the effective interest method less impairment losses (see accounting policy xx).

Loans and receivables comprise trade and other receivables. Refer to accounting policy xi(b) for structuredproducts loan receivables.

xiv. Expenses

(a) Operating leases

Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the term of the lease. Incentives received by the consolidated entity on entering a lease agreement are recognised on a straight-line basis over the term of the lease.

The difference between the cash amount paid and the amount recognised as an expense is recognised as a lease provision in the Balance Sheet (see accounting policy xvi). The provision is expected to be realised over the term of the underlying leases.

(b) Financing costs

Financing costs comprise interest payments on borrowings and derivative financial instruments calculated using the effective interest method, and unwinding of discounts on provisions.

xv. Payables

Payables are non-interest bearing and are stated at amortised cost, with the exception of contingent consideration which is recorded at fair value at the acquisition date.

Contingent consideration is classified as a financial liability and is subsequently remeasured to fair value with changes in fair value recognised in profit or loss.

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 2. Summary of significant accounting policies (continued)

xvi. Provisions

A provision is recognised in the Balance Sheet when the consolidated entity has a present legal or constructive obligation as a result of a past event that can be measured reliably and it is probable that an outflow of economic benefits will be required to settle the obligation.

Management exercise judgement in estimating provision amounts. It may be possible, based on existing knowledge, that outcomes in the next annual reporting period differ from amounts provided and may require adjustment to the carrying amount of the liability affected.

Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. The unwinding of the discount is recognised as a finance cost.

(a) Onerous leases and make good

A provision for onerous leases is recognised when the expected benefits to be derived by the consolidated entity from a lease contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the consolidated entity recognises any impairment loss on the assets associated with that contract. A provision for make good is recognised when the consolidated entity is responsible for the make good of leased premises on termination of operating leases.

(b) Restructuring

A provision for restructuring is recognised when the consolidated entity has approved a detailed and formal restructuring plan and the restructuring has either commenced or has been announced publicly. Future operating costs are not provided for.

(c) Operational process review

A provision for operational process reviews is recognised when operational errors in relation to unit pricing are identified and represents the cost that the consolidated entity expects to incur in rectification and restitution costs.

(d) Self-insurance

Provision for self-insurance recognises incurred but not reported claims. These provisions are measured at the cost that the consolidated entity expects to incur in settling the claim, discounted using a government bond rate with a maturity date approximating the term of the obligation.

(e) Legal provision

A provision for litigation is recognised when reported litigation claims arise and are measured at the cost that the consolidated entity expects to incur in settling the claim.

(f) Lease expense

A provision for lease expense represents the difference between the cash amount paid and the amount recognised as an expense. The provision is expected to be realised over the term of the underlying lease.

(g) Employee benefits

Refer to accounting policy xxiii for details on employee benefits provisions.

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 2. Summary of significant accounting policies (continued)

xvii. Financial guarantee contracts

Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measured at fair value and subsequently at the higher of the amount determined in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less cumulative amortisation, where appropriate.

Where guarantees in relation to loans or other payables of subsidiaries are provided for no compensation, the fair values are accounted for as contributions and recognised as part of the cost of the investment.

xviii. Share capital

(a) Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.

(b) Repurchase of share capital (treasury shares)

When share capital recognised as equity is repurchased or held by employee share plans and subject to vesting conditions, the amount of the consideration paid, including directly attributable costs, is recognised as a deduction from equity. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity.

(c) Dividends

Dividends are recognised as a liability in the period in which they are declared.

xix. Cash and cash equivalents

Cash and cash equivalents comprise bank balances, deposits at call and short-term deposits.

xx. Impairment

(a) Financial assets (including receivables)

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is any objective evidence of impairment. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by a debtor, restructuring of an amount due to the consolidated entity on terms that the consolidated entity would not consider otherwise, indications that a debtor or issuer will enter bankruptcy and the disappearance of an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in fair value below its cost is objective evidence of impairment.

The consolidated entity considers evidence of impairment for receivables and held-to-maturity investment securities at both a specific asset and collective level. All individually significant receivables and held-to-maturity investment securities are assessed for specific impairment. All individually significant receivables and held-tomaturity investment securities found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Receivables and held-to-maturity investment securities that are not individually significant are collectively assessed for impairment by grouping together receivables and held-to-maturity investment securities with similar risk characteristics.

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 2. Summary of significant accounting policies (continued)

xx. Impairment (continued)

In assessing collective impairment the consolidated entity uses historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for management's judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate. Losses are recognised in profit and loss and reflected in an allowance account against receivables. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

Impairment losses on available-for-sale investment securities are recognised by transferring the cumulative loss that has been recognised in other comprehensive income, and presented in the available-for-sale reserve in equity, to profit or loss. The cumulative loss that is removed from other comprehensive income and recognised in profit or loss is the difference between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any impairment loss previously recognised in profit or loss.

If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognised in profit or loss, then the impairment loss is reversed, with the amount of the reversal recognised in profit or loss. However, any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognised in other comprehensive income.

(b) Non-financial assets

The carrying amounts of the consolidated entity’s non-financial assets, other than deferred tax assets (see accounting policy ix), are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, recoverable amount is estimated at each balance sheet date.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit" or CGU). Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment is tested reflects the lowest level at which goodwill is monitored for internal reporting purposes.

The consolidated entity's corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the Statement of Comprehensive Income. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then, to reduce the carrying amount of the other assets in the unit on a pro rata basis.

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 2. Summary of significant accounting policies (continued)

xx. Impairment (continued)

(b) Non-financial assets (continued)

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each balance sheet date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

xxi. Recognition and derecognition of financial assets and liabilities

The consolidated entity initially recognises loans and receivables and deposits on the date that they are originated. All other financial assets (including assets designated at fair value through profit or loss) are recognised initially on the trade date at which the consolidated entity becomes a party to the contractual provisions of the instrument.

The consolidated entity derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the consolidated entity is recognised as a separate asset or liability.

Financial liabilities (including liabilities designated at fair value through profit or loss) are recognised initially on the trade date at which the consolidated entity becomes a party to the contractual provisions of the instrument. The consolidated entity derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.

Financial assets and liabilities are offset and the net amount presented in the balance sheet when, and only when, the consolidated entity has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

xxii. Derivative financial instruments

The consolidated entity holds derivative financial instruments within structured products and incubation funds to hedge its interest rate, foreign exchange and market risk exposures.

On initial designation of the hedge, the consolidated entity formally documents the relationship between the hedging instrument and the hedged item, including the risk management objectives and strategy in undertaking the hedge transaction, together with the methods that will be used to assess the effectiveness of the hedging relationship. The consolidated entity makes an assessment, both at the inception of the hedge relationship as well as on an ongoing basis, whether the hedging instruments are expected to be "highly effective" in offsetting the changes in the fair value or cash flows of the respective hedged items during the period for which the hedge is designated, and whether the actual results of each hedge are within a range of 80-125 per cent. For a cash flow hedge of a forecast transaction, the transaction should be highly probable to occur and should present an exposure to variations in cash flows that could ultimately affect reported net income.

Derivatives are recognised initially at fair value. Attributable transaction costs are recognised in profit or loss when incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below.

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 2. Summary of significant accounting policies (continued)

xxii. Derivative financial instruments (continued)

(a) Cash flow hedges

To the extent that the hedge is effective, changes in the fair value of a derivative hedging instrument designated as a cash flow hedge are recognised in the cash flow hedge reserve. To the extent that the hedge is ineffective, changes in fair value are recognised in the net profit and loss.

If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in equity remains there until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount recognised in equity is transferred to the carrying amount of the asset when it is recognised. In other cases the amount recognised in equity is transferred to the net profit or loss in the same period that the hedged item affects profit and loss.

(b) Other derivatives

When a derivative financial instrument is not designated in a qualifying hedge relationship, any changes in fair value are recorded in profit and loss.

xxiii. Employee benefits

(a) Defined contribution superannuation funds

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the periods during which services are rendered by employees.

(b) Long service leave

The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

(c) Wages, salaries, annual leave, sick leave and non-monetary benefits

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

Non-accumulating benefits, such as sick leave, are not provided for but are expensed as the benefits are taken by the employees.

Non-accumulating non-monetary benefits, such as medical care, housing, cars and free or subsidised goods and services are expensed based on the net marginal cost to the consolidated entity as the benefits are taken by the employees.

A provision is recognised for the amount expected to be paid under short-term bonus or profit-sharing plans if the consolidated entity has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee.

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 2. Summary of significant accounting policies (continued)

xxiv. Share-based payment transactions

(a) Employee share purchase and option plans

Share option and share incentive programs allow employees to acquire shares in the Company. The fair value of shares and/or options granted under these programs is recognised as an employee expense with a corresponding increase in equity. Fair value is measured at grant date and amortised over the period during which employees become unconditionally entitled to the shares and/or options.

The fair value of the options granted is measured using a binomial model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest except where forfeiture is due to share prices not achieving their threshold for vesting.

(b) Deferred staff incentives

The Company grants certain employees shares under long-term incentive and retention plans. Under these plans, shares vest to employees over relevant vesting periods. To satisfy the long-term incentives granted, the Company purchases or issues shares under the Executive Share Plan, Deferred Share Plan or the Global Employees Share Trust.

The fair value of the shares granted is measured by the share price adjusted for the terms and conditions upon which the shares were granted. This fair value is amortised on a straight-line basis over the applicable vesting period.

The consolidated entity make estimates on the number of shares that are expected to vest. Where appropriate, revised estimates are reflected in profit or loss with the corresponding adjustment to the equity compensation reserve. Where shares containing a market linked hurdle do not vest, due to total shareholder return not achieving the threshold for vesting, an adjustment is made to contributed equity and equity compensation reserve.

xxv. Earnings per share

The consolidated entity presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the net profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for shares held by the Company's employee share plan trust. Diluted EPS is determined by dividing the net profit or loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding, adjusted for shares held by Company's sponsored employee share plan trust and for the effects of all dilutive potential ordinary shares, which comprise shares and options granted to employees under long-term incentive and retention plans.

xxvi. New standards and interpretations not yet adopted

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 July 2010, and have not been applied in preparing these consolidated financial statements. None of these is expected to have a significant effect on the consolidated financial statements of the consolidated entity, except for AASB 9 Financial Instruments , which becomes mandatory for the consolidated entities 2014 consolidated financial statements and could change the classification and measurement of financial assets. The consolidated entity does not plan to adopt this standard early and the extent of the impact has not been determined.

xxvii. Australian Government's proposed carbon pricing mechanism

The Australian Government announced the "Securing a Clean Energy Future - the Australian Government's Climate Change Plan" (the Plan) on 10 July 2011. Whilst the announcement provides further details of the framework for a carbon pricing mechanism, uncertainties continue to exist on the impact of any carbon pricing mechanism on the Group as legislation has yet to be drafted, and must be voted on and passed by both houses of Parliament.

The consolidated entity has not incorporated the potential impact of any carbon price mechanism in its impairment testing at 30 June 2011. The Plan is not expected to have a material impact on the financial statements.

Notes to and forming part of the financial statements for the year ended 30 June 2011

	Consolidated
	2011 2010
	$'000 $'000
Note 3. Revenue Revenue from the provision of services Gross revenue from fees and commissions Total revenue from the provision of services Other income Income from structured products Total other income Investment income Dividends Interest Unit trust distributions Total investment income Note 4. Net profit before tax Net profit before tax has been arrived at after charging/(crediting) the following items: Depreciation of property, plant and equipment: – Leasehold improvements – Plant and equipment Amortisation of intangible assets: – Capitalised software – Other intangible assets Depreciation and amortisation expense Rental charges – operating leases Net loss on sale of property, plant and equipment Net movements in provision for: – Employee benefits – Bad and doubtful debts – Credit losses on structured products Net foreign exchange (loss)/gain
	430,415 407,923
	430,415 407,923 69,149 83,595
	69,149 83,595 1,071 901 12,241 13,213 652 308
	13,964 14,422
	513,528 505,940
	2,628 2,750 2,624 2,996
	5,252 5,746 6,569 5,783 3,828 3,328
	10,397 9,111
	15,649 14,857
	16,296 14,729 795 78 5,219 7,107 (22) 251 196 1,644 (717) 2,421

Notes to and forming part of the financial statements for the year ended 30 June 2011

	Consolidated
	2011 2010
	$'000 $'000
Note 4. Net profit before tax (continued) Total staff related expenses: – Staff related expenses – Equity remuneration expense Profit/(loss) on disposal and impairment of investments: – Profit on sale of part of investment portfolio – Impairment of available-for-sale securities Total profit/(loss) on disposal of investments Income tax (expense)/benefit applicable Total gain/(loss) on disposal and impairment of investments after tax Restructuring costs Private equity proposal response costs Impairment of assets Income tax benefit applicable Note 5. Individually significant items included in profit for the year Exact Market Cash Fund profit Income tax benefit applicable Income tax benefit applicable Income tax expense applicable	225,534 195,441 18,586 26,755
	244,120 222,196 6,161 3,913 (1,534) (7,085)
	4,627 (3,172) (722) 784
	3,905 (2,388)
	13,932 29,024 (4,180) (8,707)
	9,752 20,317
	(9,125) - 2,737 -
	(6,388) -
	(4,408) - 1,322 -
	(3,086) -
	(14,694) - - -
	(14,694) -

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 6. Segment information

	Perpetual Investments1 $’000	Private Wealth $’000	Corporate Trust $’000	Total $’000
30 June 2011 External revenues Inter-segment revenue/(expense) Interest revenue Total revenue for reportable segment Reportable segment net profit before tax Reportable segment assets Reportable segment liabilities Capital expenditure 30 June 20102 External revenues Inter-segment revenue/(expense) Interest revenue Total revenue for reportable segment Reportable segment net profit before tax Reportable segment assets Reportable segment liabilities Capital expenditure Depreciation and amortisation Depreciation and amortisation	287,937 117,334 96,249 501,520 1,239 (1,239) - - 692 42 956 1,690
	289,868 116,137 97,205 503,210 (5,459) (6,259) (3,156) (14,874) 87,142 13,312 25,346 125,800 1,111,605 128,326 44,602 1,284,533 (1,088,104) (16,485) (8,764) (1,113,353) 1,997 2,305 891 5,193
	295,408 112,002 85,628 493,038 11,240 (11,240) - - 759 6 1,840 2,605
	307,407 100,768 87,468 495,643 (5,900) (4,626) (3,592) (14,118) 97,789 17,387 25,111 140,287 1,472,485 128,990 48,989 1,650,464 (1,422,994) (25,134) (5,380) (1,453,508) 1,006 3,702 766 5,474

1 Segment information for Perpetual Investments includes the Exact Market Cash Funds.

2 Prior period comparatives have been amended to reflect the reportable segments as at 30 June 2011.

Notes to and forming part of the financial statements for the year ended 30 June 2011

Consolidated
2011	2010
$'000	$'000

Note 6. Segment information (continued)

Revenues Total revenue for reportable segments Group and Support Services revenue Total group revenue Net profit before tax Total net profit before tax for reportable segments Financing costs Profit on disposal of investments Impairment of available-for-sale securities Impairment of intangible assets Restructuring costs Private equity proposal response costs Share of loss of equity accounted investees Group and Support Services expense Net profit before tax Total assets Total assets for reportable segments Group and Support Services assets Total assets Total liabilities Total liabilities for reportable segments Group and Support Services liabilities Total liabilities Reconciliations of reportable segment revenues, net profit before tax, total assets and liabilities	503,210 495,643 10,318 10,297
	513,528 505,940
	125,800 140,287 (3,627) (2,772) 6,161 3,913 (1,534) (7,085) (14,694) - (9,125) - (4,408) - - (16) (2,822) (816)
	95,751 133,511
	1,284,533 1,650,464 329,488 290,352
	1,614,021 1,940,816
	1,113,354 1,453,508 124,566 126,284
	1,237,920 1,579,792

The consolidated entity has identified three operating segments based on the internal reports that are reviewed and used by the consolidated entity's CEO in assessing performance and in determining the allocation of resources. For each of the reportable segments, the consolidated entity's CEO reviews internal management reports on a monthly basis. The following summary describes the operations in each of the reportable segments:

a. Services provided

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 reportable segments derive revenue are:

Perpetual Investments Manufacturer of financial products, management and investment of monies on behalf of private, corporate, superannuation and institutional clients.

Private Wealth Private Wealth provides a wide range of investment and non-investment products and services. These include a comprehensive advisory service, portfolio management, philanthropic, executorial and trustee services to high net worth and emerging high net worth Australians. Private Wealth also provides many of these services to charities, not for profit and other philanthropic organisations.

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 6. Segment information (continued)

Reconciliations of reportable segment revenues, net profit before tax, total assets and liabilities (continued)

a. Services provided (continued)

Corporate Trust

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

As a result of changes in information reported to the consolidated entity's CEO the comparative segment information has been restated in conformity with the requirement of AASB 8 Operating Segments. Segment information has been prepared on a revised basis.

b. Geographical information

The consolidated entity operates predominantly in Australia. More than 90 per cent of revenue and non-current assets relate to operations in Australia.

c. Major customers

The consolidated entity does not rely on any major customer.

Note 7. Auditor's remuneration Audit Services Auditors of the Company *KPMG Australia:* Audit and review of the consolidated and subsidiary financial statements Audit services in accordance with regulatory requirements Other assurance services *Overseas KPMG firms:* Audit and review of financial statements Other assurance services Total audit fee attributable to the audit of Perpetual Limited *KPMG Australia:* Audit and review of managed funds and superannuation funds Audit services in accordance with regulatory requirements *Overseas KPMG firms:* Audit of funds Other assurance services Total audit fee attributable to the audit of non-consolidated funds for which the consolidated entity acts as responsible entity1 Audit of DIY superannuation funds for which Perpetual acts as administrator or trustee1 Audit services for non-consolidated managed funds, Superannuation funds and DIY superannuation funds;	Consolidated
	2011 2010
	$ $
	533,314 595,568 205,000 175,000 31,800 5,000 70,625 63,800 2,470 2,400
	843,209 841,768
	2,007,098 1,891,047 715,256 695,774 301,421 290,867 19,750 22,340 91,780 15,955
	3,135,305 2,915,983

	3,978,514 3,757,751

1 These fees were paid for the audit and review of 574 managed funds (2010: 573 managed funds) and 1,180 (2010: 1,171) DIY superannuation funds and which contained assets totalling $27.2 billion (2010: $26.9 billion). These fees are incurred by the consolidated entity and are subsequently recovered from the funds via management fees.

Notes to and forming part of the financial statements for the year ended 30 June 2011

Consolidated	Consolidated
2011	2010
$	$

Note 7. Auditor's remuneration (continued)

Non Audit services

*KPMG Australia:* Assurance services	288,000 -
	288,000 -

Non-audit services paid to KPMG have been incurred in relation to assurance services for the Company's private equity response and are in accordance with the Company's auditor independence policy as outlined in Perpetual's Corporate Responsibility Statement.

Note 8. Income tax expense a. Income tax expense Current tax expense Deferred tax expense Over provided in prior years Total Increase in deferred tax assets Total Deferred tax included in income tax expense comprises: Decrease/(increase) in deferred tax liabilities	Consolidated
	2011 2010
	$'000 $'000
	37,082 48,022 (1,831) (4,798) (1,868) (435)
	33,383 42,789
	1,008 5,316 823 (518)
	1,831 4,798

The above movements in deferred tax assets and deferred tax liabilities are net of movements in these balances recognised directly in other comprehensive income.

Prima facie income tax expense calculated at 30% (2010: 30%) on profit for the year Increase in income tax expense due to: – Accounting write down on assets – Foreign source loss – Net taxable capital gain – Imputation gross-up on dividends received – Other non-deductible expenditure Decrease in income tax expense due to: – Net taxable capital loss (accounting gain on sale of investments) – Write back deferred tax liability arising from business combinations – Franking credits on dividends received Income tax expense attributable to profit for the year before tax Less: Income tax over provided in prior years 1Prior period comparatives have been restated. Income tax expense attributable to profit for the year b. Reconciliation of income tax expense to prima facie income tax payable1	28,726 40,053
	4,408 - 1,866 2,294 - 173 79 60 2,186 1,204 (1,148) - (602) (361) (264) (199) 35,251 43,224 (1,868) (435)
	33,383 42,789

Notes to and forming part of the financial statements for the year ended 30 June 2011

Notes to and forming part of the financial statements for the year ended 30 June 2011	Notes to and forming part of the financial statements for the year ended 30 June 2011
Consolidated
2011	2010
$'000	$'000

Note 8. Income tax expense (continued)

b. Reconciliation of income tax expense to prima facie income tax payable (continued)

The realisation of the deferred tax assets relating to the realised and unrealised capital losses is dependent on future capital gains being in excess of the losses shown in note 9 below.

c. Current tax liabilities

The current tax liability for the consolidated entity represents income taxes payable in respect of the current and prior financial year. In accordance with tax consolidation legislation, the Company, as head entity of the Australian tax-consolidated group, has assumed the current tax liability recognised by members in the tax consolidated group.

d. Income tax recognised in other comprehensive income

Note 9. Deferred tax assets / (liabilities)1 The balance comprises temporary differences attributable to: Provisions and accruals Intangible assets Capital expenditure deductible over 5 years Structured products - interest received in advance Employee benefits Property, plant and equipment Realised net capital losses Unrealised net capital losses Other items Total deferred tax assets Intangible assets Unrealised net capital gains Other items Total deferred tax liabilities Net deferred tax assets Available-for-sale financial assets Cash flow hedges	(186) (227) 1,158 2,705
	972 2,478
	10,766 11,589 1,076 - 1,266 274 3,418 4,289 10,750 10,970 3,691 1,819 2,078 1,433 523 2,636 845 209
	34,413 33,219
	(5,464) (6,845) (1,176) - (893) (353)
	(7,533) (7,198)
	26,880 26,021

At 30 June 2011, the consolidated entity had carried forward realised tax capital losses of $6,925,000 (30 June 2010: $4,778,000) which had a tax benefit of $2,078,000 (30 June 2010: $1,433,000); the tax benefit of these capital losses has been recognised in deferred tax assets.

As at 30 June 2011, the consolidated entity had carried forward unrealised tax capital losses of $1,745,000 (30 June 2010: $8,787,000) which had a tax benefit of $523,000 (30 June 2010: $2,636,000). Of this amount $1,070,000 (30 June 2010: $8,732,000) which had a tax benefit of $321,000 (30 June 2010: $2,620,000) has been recognised in profit and loss in the current and prior periods, and $675,000 (30 June 2010: $55,000) which had a tax benefit of $202,000 (30 June 2010: $16,000) has been recognised in other comprehensive income in the current and prior periods. The tax benefit of these capital losses has been recognised in deferred tax assets.

At 30 June 2011, the consolidated entity has carried forward foreign tax losses of EUR$40,647,697 (30 June 2010: EUR$36,387,552). This loss converted to $54,892,231 (30 June 2010: $52,138,634) which had a tax benefit of $6,861,529 (30 June 2010: $6,517,329) at 12.5 per cent that was not recognised in the Balance Sheet.

1 Prior period comparatives have been restated.

Notes to and forming part of the financial statements for the year ended 30 June 2011

		Recognised in
Balance	Recognised	other	Acquired in	Balance
1 July	in profit or	comprehensive	business	30 June
2010	loss	income	combinations	2011
$'000	$'000	$'000	$'000	$'000

Note 9. Deferred tax assets / (liabilities) (continued)

Movement in temporary differences during the year

Consolidated Deferred tax assets Provisions and accruals Intangible assets Capital expenditure deductible over 5 years Structured products - interest received in advance Employee benefits Property, plant and equipment Realised net capital losses Unrealised net capital losses Other items Deferred tax liabilities Intangible assets Other items Unrealised net capital gains	11,589 (823) - - 10,766 - 1,076 - - 1,076 274 992 - - 1,266 4,289 (871) - - 3,418 10,970 (220) - - 10,750 1,819 1,872 - - 3,691 1,433 645 - - 2,078 2,636 (2,299) 186 - 523 209 636 - - 845
	33,219 1,008 186 - 34,413
	(6,845) 1,381 - - (5,464) - (18) (1,158) - (1,176) (353) (540) - - (893)
	(7,198) 823 (1,158) - (7,533)
	26,021 1,831 (972) - 26,880

	Balance 1 July 2009 Recognised in profit or loss Recognised in other comprehensive income Acquired in business combinations Balance 30 June 2010 $'000 $'000 $'000 $'000 $'000
Consolidated Deferred tax assets Provisions and accruals Intangible assets Capital expenditure deductible over 5 years Structured products - interest received in advance Employee benefits Property, plant and equipment Realised net capital losses Unrealised net capital losses Other items Deferred tax liabilities Intangible assets Other items Structured products-interest paid in advance	10,288 1,301 - - 11,589 (3,685) 3,685 - - - - 274 - - 274 4,281 8 - - 4,289 8,102 2,868 - - 10,970 4,181 (2,362) - - 1,819 1,734 (301) - - 1,433 5,157 (43) (2,478) - 2,636 323 (114) - - 209
	30,381 5,316 (2,478) - 33,219
	- (2,302) - (4,543) (6,845) (1,575) 1,575 - - - (562) 209 - - (353)
	(2,137) (518) - (4,543) (7,198)
	28,244 4,798 (2,478) (4,543) 26,021

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 10. Dividends

a. Dividends paid

Dividends paid or provided for in the current and comparative year are as follows:

	Cents per	Total amount	Franked1 /	Date of
	share	$'000	Unfranked	payment
2011
Final 2010 ordinary	105	45,602	Franked	28 Sep 2010
Interim 2011 ordinary	95	42,216	Franked	30 Mar 2011
	200	87,818
2010
Final 2009 ordinary	60	25,506	Franked	30 Sep 2009
Interim 2010 ordinary	105	45,398	Franked	1 Apr 2010
Total amount	165	70,904

1 All franked dividends declared or paid during the year were franked at a tax rate of 30 per cent and paid out of retained earnings.

The Company introduced a Dividend Reinvestment Plan (DRP) in May 2009. The DRP is optional and offers ordinary shareholders in Australia and New Zealand the opportunity to acquire fully paid ordinary shares, without transaction costs. A shareholder can elect to participate in or terminate their involvement in the DRP at any time.

b. Subsequent events

Since the end of the financial year, the directors declared the following dividend. The dividends have not been provided for and there are no tax consequences.

			Cents per	Total amount2	Franked1/	Date of
			share	$'000	Unfranked	payment
Final	2011	ordinary	90	40,204	Franked	27 Sep2011

1 All franked dividends declared or paid during the year were franked at a tax rate of 30 per cent and paid out of retained earnings. 2 Calculation based on the ordinary shares on issue as at 30 June 2011.

The financial effect of this dividend has not been brought to account in the financial statements for the year ended 30 June 2011 and will be recognised in subsequent financial reports.

c. Dividend franking account 30% franking credits available to shareholders for subsequent financial years	2011 2010
	$'000 $'000
	60,880 62,474

The above available amounts are based on the balance of the dividend franking account at 30 June 2011 adjusted for franking credits that will arise from the payment of the current tax liabilities, and franking credits that will arise from the receipt of dividends recognised as receivables by the tax consolidated group at the year-end.

The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends. The impact on the dividend franking account of dividends proposed after the balance sheet date, but not recognised as a liability, is to reduce it to $43,650,000 (2010: $42,936,000).

Notes to and forming part of the financial statements for the year ended 30 June 2011

	Consolidated
	2011 2010
Note 11. Earnings per share Diluted earnings per share Net profit after tax attributable to equity holders of Perpetual Limited Effect of dilutive securities: Share options Weighted average number of treasury shares on issue Basic earnings per share The following reflects the income and share information used in calculating the basic and diluted earnings per share: Weighted average number of ordinary shares used in the calculation of basic earnings per share Weighted average number of ordinary shares and potential ordinary shares used in the calculation of diluted earnings per share	152.7 227.1 Cents per share
	140.8 210.5
	$'000 $'000 62,031 90,506
	40,618,084 39,855,523 9,252 27,893 3,421,085 3,115,243 Number of shares
	44,048,421 42,998,659

Subsequent to the reporting date, nil options were exercised by employees who have left the Company (2010: nil).

Note 12. Cash and cash equivalents Deposits at call Short-term deposits Bank balances	2011 2010 $'000 $'000 Consolidated
	79,478 54,345 86,601 79,462 54,241 53,732
	220,320 187,539

Deposits at call are invested in a cash management trust operated by the consolidated entity. Short-term deposits represent investments in the Perpetual Credit Income Fund and Perpetual High Grade Treasury Fund. These funds have a Standard & Poor's fund credit quality rating of 'Af' and invest in high grade credit products with the intention of generating a return in excess of the UBS Bank Bill Index and are generally available at seven days' notice.

Notes to and forming part of the financial statements for the year ended 30 June 2011

	2011 2010 $'000 $'000 Consolidated
Note 13. Receivables Current Trade debtors Less: Provision for doubtful debts Other debtors Non-current Other debtors Balance as at 1 July 2010 Provision for impairment recognised during the year Receivables written off during the year as uncollectible Unused amount reversed Balance as at 30 June 2011 Movements in the provision for bad and doubtful debts are as follows :	70,196 70,699 (500) (522)
	69,696 70,177 3,026 16,666
	72,722 86,843
	- 3,648
	522 271 316 770 (260) (214) (78) (305)
	500 522

Movements in the provision for bad and doubtful debts have been recognised in administrative and general expenses in the Consolidated Statement of Comprehensive Income. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.

This note should be read in conjunction with Note 28 i(c).

Note 14. Assets and liabilities held for sale

The operations of smartsuper Pty Ltd within the Perpetual Investments operating segment are presented as a disposal group held for sale following the commitment of the Group's management in June 2011 to a plan to sell the operation. Efforts to sell the disposal group commenced prior to 30 June 2011, and the sale was completed on 12 August 2011. At 30 June 2011 the disposal group comprised assets of $0.8 million and liabilities of $0.9 million.

An impairment loss of $4.1 million on the remeasurement of the disposal group to the lower of its carrying amount and its fair value less costs to sell has been recognised in impairment of assets. This is in addition to the $10.6 million impairment of goodwill recognised in the six months to 31 December 2010.

Assets classified as held for sale Receivables Prepayments Liabilities classified as held for sale Payables Employee benefits	716 - 38 -
	754 -
	760 - 144 -
	904 -

100

Notes to and forming part of the financial statements for the year ended 30 June 2011

	2011 2010 $'000 $'000 Consolidated
Note 15. Other financial assets Current Non-current Listed equity securities available-for-sale – at fair value Unlisted unit trusts available-for-sale – at fair value Secured loans Note 16. Derivative financial instruments Current assets Current liabilities Interest rate swap contracts This note should be read in conjunction with Note 28(iii)(b). Forward foreign exchange contracts Government, municipal and other public securities Government, municipal and other public securities held-to-maturity	100 100
	47,461 36,030 5,882 13,538 102 122 287 259
	53,732 49,949
	- 11
	613 662

Instruments used by incubation funds

As part of the consolidated entity's asset management incubation fund strategy and to diversify its investment portfolio, seed capital was invested in various incubation funds. These funds may be party to derivative financial instruments in the normal course of business in order to hedge exposure to fluctuations in foreign exchange rates, interest rates, equity indices and to trade from their movements in accordance with the funds' financial risk management policy.

Forward foreign exchange contracts

The consolidated entity has entered into forward exchange contracts which are economic hedges but do not satisfy the requirements for hedge accounting. These contracts are subject to the same risk management policies as other derivative contracts outlined. Accordingly, they are accounted for as held for trading financial instruments.

These contracts are fair valued by comparing the contracted rate to the current market rate for a contract with the same remaining period to maturity. Any changes in fair values are recorded in profit or loss.

Interest rate swap contracts

Interest rate swap contracts held for hedging purposes associated with the PPI structured product are disclosed in Note 28(iii)(b).

101

Notes to and forming part of the financial statements for the year ended 30 June 2011

	Consolidated
	2011 2010
	$'000 $'000
Note 17. Property, plant and equipment Plant and equipment – at cost Accumulated depreciation Leasehold improvements – at cost Accumulated depreciation Project work in progress – at cost	17,281 19,276 (11,244) (12,653)
	6,037 6,623
	31,887 30,820 (12,688) (10,186)
	19,199 20,634
	1,074 539
	26,310 27,796

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

Consolidated Balance as at 1 July 2010 Additions Transfers from work in progress Depreciation and amortisation Reclassification to assets held for sale Disposals Balance as at 30 June 2011 Consolidated Balance as at 1 July 2009 Acquisitions through business combinations Additions Transfers from work in progress Depreciation and amortisation Disposals Balance as at 30 June 2010	Plant and equipment Leasehold improvements Project work in progress Total $'000 $'000 $'000 $'000
	6,623 20,634 539 27,796 2,234 1,309 535 4,078 - - - - (2,624) (2,628) - (5,252) (189) (96) - (285) (7) (20) - (27)
	6,037 19,199 1,074 26,310
	7,214 20,516 - 27,730 289 2,271 - 2,560 2,223 214 1,211 3,648 289 383 (672) - (2,996) (2,750) - (5,746) (396) - - (396)
	6,623 20,634 539 27,796

102

Notes to and forming part of the financial statements for the year ended 30 June 2011

	2011 2010 $'000 $'000 Consolidated
Note 18. Intangibles Goodwill – at cost Impairment loss Other intangibles – at cost Accumulated amortisation Capitalised software – at cost1 Accumulated amortisation1 Project work in progress – at cost	113,539 113,539 (10,583) -
	102,956 113,539
	22,636 27,618 (7,980) (6,276)
	14,656 21,342
	37,724 76,749 (16,898) (53,704)
	20,826 23,045
	9,888 5,582
	148,326 163,508

1 Capitalised software - at cost and accumulated amortisation have been reduced by $31,227,000 during the year as those fully amortised assets which were no longer in use were removed.

Amortisation

Amortisation is recognised in the following line items in the Statement of Comprehensive Income :

Depreciation and amortisation expense

10,397 9,111

Reconciliations of the carrying amounts for each class of intangibles are set out below:

Consolidated Balance as at 1 July 2010 Additions Transfers from work in progress Impairment loss Amortisation for the year Reclassification to assets held for sale Disposals Balance as at 30 June 2011 Balance as at 1 July 2009 Acquisitions through business combinations Additions Transfers from work in progress Amortisation for the year Disposals Balance as at 30 June 2010	Goodwill Other intangibles Capitalised software Project work in progress Total $'000 $'000 $'000 $'000 $'000
	113,539 21,342 23,045 5,582 163,508 - - 198 9,608 9,806 - - 4,833 (4,833) - (10,583) - - - (10,583) - (3,828) (6,569) - (10,397) - (2,858) (165) - (3,023) - - (516) (469) (985)
	102,956 14,656 20,826 9,888 148,326
	76,639 9,529 20,765 5,727 112,660 36,900 15,141 70 - 52,111 - - 518 7,650 8,168 - - 7,586 (7,586) - - (3,328) (5,783) - (9,111) - - (111) (209) (320)
	113,539 21,342 23,045 5,582 163,508

103

Notes to and forming part of the financial statements for the year ended 30 June 2011

	2011 2010 $'000 $'000 Consolidated
Note 18. Intangibles (continued) Impairment tests for cash generating units containing goodwill The following cash generating units have significant carrying amounts of goodwill: Private Wealth Securitisation Perpetual Lenders Mortgage Services smartsuper Australian Equities	77,159 77,159 16,653 16,653 5,648 5,648 - 10,583 3,496 3,496
	102,956 113,539

Impairment testing of these goodwill balances is based on each cash generating unit's value in use, calculated as the present value of forecast future cash flows from those cash generating units using discount rates of between 12.5% and 15% (2010: discount rates of between 12.5% and 15%). The forecast future cash flows used in the impairment testing are based on assumptions as to the level of profitability for each business over a forecast period. Forecast future cash flows have been projected for 5 years based on the 2012-2016 Operating Plan which has been approved by the Board and then projected for an indefinite period by including a terminal value with a growth rate in perpetuity of 2.5%.

Following a review of the smartsuper business at 31 December 2010, the group assessed the recoverable amount of the cash-generating unit that comprises that business. As a result of this assessment, an impairment loss of $10,583,000 (30 June 2010: nil) has been recognised. The impairment loss was allocated to goodwill, reducing the goodwill included in the smartsuper business to nil and is included in impairment of assets in the consolidated statement of comprehensive income. The recoverable amount of the smartsuper cash generating unit was based on value in use. Value in use was determined by discounting the future cash flows expected to be generated from the continuing use of the unit determined at 31 December 2010. As at 30 June 2011, the smartsuper cash generating unit was classified as held for sale. See Note 14 for additional information.

Note 19. Prepayments

Current Prepayments Non-current Prepayments Note 20. Payables Current Trade creditors Other creditors and accruals Non-current Other creditors and accruals This note should be read in conjunction with Note 28 (ii).	6,525 7,447
	614 858
	30,825 29,024 9,517 11,637
	40,342 40,661
	- 6,206

Note 21. Structured products – income received in advance

Current Interest income	11,057 13,918

Income received in advance consists of deferred interest income received associated with the PPI structured product. The PPI structured product is disclosed in Note 28 (i)(a).

104

Notes to and forming part of the financial statements for the year ended 30 June 2011

	Consolidated
	2011 2010
	$'000 $'000
Note 22. Non-current interest-bearing liabilities Floating rate bill facility	45,000 45,000

See Notes 27 and 28 iii(b) for additional information. Bank facility associated with the PPI structured product is disclosed in Note 29 ii.

Note 23. Provisions

Current Internal insurance and legal provision1 Onerous leases and make good Operational process review provision Lease expense provision Non-current Internal insurance and legal provision1 Lease expense provision	477 5,404 - 75 249 1,667 859 524
	1,585 7,670
	800 800 22,782 22,200
	23,582 23,000

1 The internal insurance and legal provision includes the provision for self insurance and the provision for litigation. The provision for selfinsurance recognises incurred but not reported claims. The provision for litigation claims includes provisions for legal cost and settlement amounts. These provisions are measured at the cost that the entity expects to incur in defending and/or settling the claim.

Reconciliations of the carrying amounts of each class of provision are set out below:

Internal insurance and legal provision Carrying amount at beginning of year Unused amounts reversed during the year Carrying amount at end of year Onerous leases and make good Carrying amount at beginning of year Carrying amount at end of year Carrying amount at beginning of year Amount transferred from other debtors Additional provision made during the year Unused amounts reversed during the year Payments made during the year Amounts paid, recognised as receivable Carrying amount at end of year Additional provision made during the year Operational process review provision Additional provision made during the year Payments made during the year Payments made during the year	6,204 5,969 440 1,180 (417) (895) (4,950) (50)
	1,277 6,204
	75 172 - 25 (75) (122)
	- 75
	1,667 5,469 - 1,406 2,250 5,520 (1,204) (3,207) (2,464) (6,259) - (1,262)
	249 1,667

105

Notes to and forming part of the financial statements for the year ended 30 June 2011

	Consolidated
	2011 2010
	$'000 $'000
Note 23. Provisions (continued) Lease expense provision Carrying amount at beginning of year Unused amounts reversed during the year Unwinding of provisions Carrying amount at end of year Additional provision made during the year Payments made during the year	22,724 21,144 14,894 12,475 (14,376) (11,310) (231) (133) 630 548
	23,641 22,724

Note 24. Contributed equity

Share capital

Movements in share capital Balance at beginning of year Shares issued: Issued in business combination Dividend reinvestment Executive share plans (vested during the year) Employee equity allocation purchased on market Employee share plans (vested during the year) Issued on market Balance at end of year Unvested shares from share plans Ordinary shares fully paid Ordinary shares fully paid (excluding unvested shares from share plans) 44,671,129 (2010: 43,417,478) ordinary shares, fully paid	245,066 245,066 206,017

	2011 2010
	Number of shares $'000 Number of shares $'000
	40,094,528 206,017 39,358,781 174,222 - - 283,950 10,569 483,569 14,044 255,682 9,295 441,443 24,777 225,580 13,110 (1,162) (42) (29,465) (1,336) - 177 - 157 3,091 93 - -
	41,021,469 245,066 40,094,528 206,017
	41,021,469 245,066 40,094,528 206,017 3,649,660 166,881 3,322,950 173,375
	44,671,129 411,947 43,417,478 379,392

Note 26 provides details of shares issued on exercise of options.

The Company does not have authorised capital or par value in respect of its issued shares.

Shares issued under the executive and employee share plans were issued at market value.

Terms and conditions

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

In the event of winding up of the Company, ordinary shareholders rank after creditors and are fully entitled to any surplus capital.

106

Notes to and forming part of the financial statements for the year ended 30 June 2011

	Consolidated
	2011 2010
	$'000 $'000
Note 25. Reserves General Available-for-sale reserve Equity compensation reserve Cash flow hedge reserve Foreign currency translation reserve
	103 103 3,499 2,871 45,694 57,688 (416) (454) (4,635) (3,347)
	44,245 56,861

The available-for-sale reserve represents movements in the fair value of shares and unit trusts. When these assets are sold or considered impaired, the cumulative gain / loss that had been recognised directly in equity is recycled to profit and loss.

The equity compensation reserve represents the value of the Company's own shares held by an equity compensation plan that the consolidated entity is required to include in the consolidated financial statements. This reserve will be reversed against share capital when the underlying shares vest to the employee. No gain or loss is recognised in profit and loss on the purchase, sale, issue or cancellation of the consolidated entity's own equity instruments.

The cash flow hedge reserve is used to record gains or losses on hedging instruments designated as cash flow hedges as described in accounting policy Note 2 xxiii(a). Amounts are recognised in the Statement of Comprehensive Income when the associated hedged transaction affects profit and loss.

The foreign currency translation reserve records the foreign currency differences arising from the translation of selfsustaining foreign operations, the translation of transactions that hedge the company’s net investment in a foreign operation or the translation of foreign currency monetary items forming part of the net investment in a selfsustaining operation. Refer to accounting policy Note 2 iv.

Note 26. Employee benefits

i. Aggregate liability for employee benefits, including on-costs

Current Liability for annual leave Liability for long service leave Other employee benefits Restructuring provision Non-current Liability for long service leave Restructuring provision Carrying amount at beginning of year Carrying amount at end of year Payments made during the year Additional provision made during the year	6,650 6,705 3,512 3,283 24,605 25,852 6,025 40
	40,792 35,880
	3,201 2,894
	40 804 9,125 - (3,140) (764)
	6,025 40

107

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 26. Employee benefits (continued)

i. Aggregate liability for employee benefits, including on-costs (continued)

The non-current portion of the long service leave provision has been discounted using a rate of 5.3 per cent (2010: 5.3 per cent).

The number of full time equivalent employees at 30 June 2011 was 1,480 (2010: 1,550).

ii. Equity based plans

(a) 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.

All options are to be settled by physical delivery of shares.

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	Movement in number of options on issue
Grant date Exercise date Expiry date Weighted average exercise price 1 July 2010 Issued Forfeited Exercised Outstanding at 30 June 2011 Number of options exercisable
Jul 2004 Jun 2007 Jul 2010 $47.08 978 - (978) - - - Jul 2006 Jun 2009 Jul 2012 $71.88 29,950 - (29,950) - - - Jul 2007 Jun 2010 Jul 2013 $79.17 236,436 - (236,436) - - - Jul 2008 Jun 2011 Jul 2014 $42.73 57,390 - (57,390) - - - Jun 2009 Jun 2012 Jun 2015 $28.34 47,585 - (47,585) - - - Jul 2009 Jul 2012 Jun 2015 $28.34 5,911 - (5,911) - - - Jul 2010 Jul 2013 Jun 2016 $28.74 - 76,606 (76,606) - - - 378,250 76,606 (454,856) - - - Movement in number of options on issue
	378,250 76,606 (454,856) - - -
	Movement in number of options on issue
Grant date Exercise date Expiry date Weighted average exercise price	1 July 2009 Issued Forfeited Exercised Outstanding at 30 June 2010 Number of options exercisable
Jul 2004 Jun 2007 Jul 2010 $47.08 978 - - - 978 978 Jul 2005 Jun 2008 Jul 2011 $56.85 28,144 - (28,144) - - - Jul 2006 Jun 2009 Jul 2012 $71.88 29,950 - - - 29,950 - Jul 2007 Jun 2010 Jul 2013 $79.17 236,436 - - - 236,436 - Mar 2008 Mar 2011 Mar 2013 $52.71 75,301 - (75,301) - - - Jul 2008 Jun 2011 Jul 2014 $42.73 57,390 - - - 57,390 - Jan 2009 Jun 2013 Jan 2015 $31.42 182,215 - (182,215) - - - Jun 2009 Jun 2012 Jun 2014 $29.74 58,939 - (58,939) - - - Jun 2009 Jun 2012 Jun 2015 $28.34 47,585 - - - 47,585 - Jul 2009 Jul 2012 Jun 2015 $28.34 - 5,911 - - 5,911 -
	716,938 5,911 (344,599) - 378,250 978

On 23 June 2010, the company announced that Managing Director, David Deverall, had given notice of his resignation. As a result, no long term incentives, including the options outstanding as at 30 June 2010, will vest as a result of Mr Deverall's resignation and all unvested options will be forfeited on ceasing employment. The options outstanding as at 30 June 2010 had a carrying value of $Nil.

The options outstanding at 30 June 2010 have an exercise price of $28.34 to $79.17 and a weighted average contractual life of 3 years. There are no options outstanding at 30 June 2011.

108

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 26. Employee benefits (continued)

ii. Equity-based plans (continued)

(a) Option plans (continued)

The weighted average share price at the date of exercise for share options exercised during the year ended 30 June 2011 was nil (2010: $nil).

The fair value of services received in return for share options granted is based on the fair value of share options granted, measured using a binomial option pricing model, with the following inputs (weighted average):

	2011	2010
Fair value at grant date ($)	5.29	8.25
Share price ($)	30.80	28.54
Exercise price ($)	28.74	28.34
Expected volatility (%)	30	45
Option life (years)	5	5
Expected dividends (%)	6.16	5.60
Risk free interest rate (%)	4.83	5.18

(b) Executive Share Plan (ESP)

The ESP was approved by shareholders at the Company's Annual General Meeting in 1997 and was amended at the 1999 AGM.

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. Longterm grants vest after periods of between three to five years, and may include the achievement of specific performance hurdles.

The issue price of grants of shares is the weighted average of the prices at which shares were traded on the ASX 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 eligible employees.

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

(c) Employee Share Purchase Plan (ESPP)

This plan was discontinued on 10 December 2004 and no further issues have been made under this plan.

The ESPP provided eligible employees with a non-recourse interest free loan, for a period not exceeding 10 years, to purchase shares under the plan. The invitation was open to employees who commenced permanent employment with Perpetual prior to 1 June 2004 with an offer to purchase a minimum number of shares equivalent in value to $1,000 and a maximum number of shares equivalent in value to $4,000. The issue price under the plan 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.

The shares vest when the loan is fully repaid.

109

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 26. Employee benefits (continued)

ii. Equity based plans (continued)

(d) Tax Exempt Share Plan (TESP)

Under the TESP, eligible employees will be able to salary sacrifice up to $1,000 of short term incentive to acquire an equivalent value of Perpetual shares. These shares cannot be sold or transferred until the earlier of three years after the date of allocation or the time the participant ceases to be an employee of Perpetual. Shares will be acquired in ordinary trading on the Australian Securities Exchange or issued by Perpetual. Executive directors and executives are not able to participate in this plan.

(e) The Tax Deferred Share Plan (TDSP)

Under the TDSP, eligible employees are able to salary sacrifice all or part of their short term incentive to acquire an equivalent value of Perpetual shares. Shares are acquired in the ordinary course of trading on the Australian Securities Exchange. Executive directors and executives have the opportunity to participate in this plan. Shares acquired under this plan by executive directors and executives are not subject to performance hurdles because they are acquired on a salary or bonus sacrifice basis.

(f) Deferred Share Plan (DSP)

The DSP forms part of the structure for short-term and long-term variable remuneration components paid to eligible employees of the Australian business. Grants under the plan vest subject to the achievement of specific performance hurdles and service.

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

While shares are held by the DSP, eligible employees have voting rights and receive dividends directly or reinvest dividends into Perpetual shares.

(g) Global Employee Share Trust (GEST)

The GEST forms part of the structure for long-term variable remuneration components paid to eligible employees of the Perpetual Investments Global Equities business.

The issue price of grants is the weighted average of the prices at which shares traded on the Australian Securities Exchange for the five days prior to the date of grant of shares. Shares are either purchased on market or issued by the company to satisfy grants made to eligible employees.

Dividends paid on shares held by the GEST are retained in the GEST for the benefit of the employee until performance hurdles are tested, at which time the dividend accumulated may be distributed to the employee. Voting rights attached to unvested shares that are held in the GEST are exercisable by the trustee of the GEST.

Grants under the plan vest subject to the achievement of specific performance hurdles.

(h) Long-term incentive plan

In February 2011, the Board approved the introduction of a new plan, the Perpetual Limited Long-term Incentive Plan, for the purpose of making future long-term incentive grants to executives, including the sign-on grant of shares to the new Managing Director if approved by shareholders.

110

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 26. Employee benefits (continued)

ii. Equity-based plans (continued)

(i) Details of the movement in employee shares

Of share grants under the ESP, DSP and GEST in the 2011 financial year, 750,351 shares were issued at market price and 281,126 shares were re-issued from the forfeited share pool at market price. Certain share plans stipulate that dividends received on unvested long-term incentive shares (44,887 shares at last dividend payment) are to be reinvested into Perpetual shares. During the period 1,155 shares were purchased on market at an average price of $36.92 to satisfy this requirement. As a result of changes in the employee share scheme rules enacted in 2009, dividends that were being reinvested in Perpetual shares on long term incentive schemes are either now being received directly by the employees or held in the share plan bank account depending on the likelihood of the shares vesting.

The amounts recognised in the financial statements of the consolidated entity in relation to the share plans referred to above during the year were amortisation of performance shares totalling $18,586,000 (2010: $26,755,000) recognised as an expense with the corresponding entry directly in equity.

(j) Non-executive directors' share purchase plan

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

During this financial year and last financial year there were no directors that purchased shares on market in the Non-executive directors share purchase plan.

111

Notes to and forming part of the financial statements for the year ended 30 June 2011

			Consolidated	Consolidated
			2011	2010
			$'000	$'000
Note	27.	Financial arrangements

The consolidated entity has access to the following line of credit:

Facilities utilised Floating rate bank facility Facilities not utilised Floating rate bank facility	45,000 45,000
	25,000 25,000

Bill facilities

The floating rate bank bill facility is unsecured and has a floating interest rate of 5.45 per cent at 30 June 2011 (30 June 2010: 5.07 per cent). Repayment of the existing facility is due on 31 December 2012.

The consolidated entity 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, a minimum interest cover, a maximum amount of structured product liabilities and a maximum provision for PPI credit losses as a specified percentage of PPI investor loans. The consolidated entity is in compliance with the covenants at 30 June 2011. Should the consolidated entity not satisfy any of these covenants, the outstanding balance of the loans may become due and payable.

Bank facilities associated with the PPI structured product are disclosed in Note 29 ii.

This note should be read in conjunction with Note 28 iii(b).

112

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 28. Financial risk management

Perpetual recognises that risk is part of doing business and that the ongoing management of risk is critical to its success. The approach to managing risk is articulated in the Risk Management Framework. The Risk Management Framework is supported by the Risk Group, who are responsible for the design and maintenance of the framework, establishing and maintaining group wide risk management policies, and providing regular risk reporting to the Board, the Audit Risk and Compliance Committee (ARCC) and the Group Executive Committee. This framework is approved by the Perpetual Board of Directors (the Board) and is reviewed for adequacy and appropriateness on an annual basis.

The Board regularly monitors the overall risk profile of the group and sets the risk appetite for the group, usually in conjunction with the annual planning process. The Board is responsible for ensuring that management have appropriate processes in place for managing all types of risk, ranging from financial risk to operational risk. To assist in providing ongoing assurance and comfort to the Board, responsibility for risk management oversight has been delegated to the ARCC. The main functions of this Committee are to oversee the consolidated entity’s accounting policies and practices, the integrity of financial statements and reports, the scope, quality and independence of external audit arrangements, the monitoring of the internal audit function, the effectiveness of risk management policies and the adequacy of insurance programs. This Committee is also responsible for monitoring overall legal and regulatory compliance.

The activities of the consolidated entity expose it to the following financial risks: credit risk, liquidity risk and market risk. These are distinct from the financial risks borne by customers which arise from financial assets managed by the consolidated entity in its role as fund manager, trustee and responsible entity.

The risk management approach to and exposures arising from the Exact Market Cash Fund (EMCF) are disclosed in Note 29.

The following discussion relates to financial risks exposure of the consolidated entity in its own right.

i. Credit risk

Credit risk is the risk of financial loss from a counterparty failing to meet its contractual commitments. The consolidated entity is predominantly exposed to credit risk on its Perpetual Protected Investments (PPI) loans which are issued only in Australia to retail customers, derivative financial instruments and deposits with banks and financial institutions, outstanding receivables and committed transactions.

The maximum exposure of the consolidated entity to credit risk on financial assets which have been recognised on the balance sheet is the carrying amount, net of any provision for doubtful debts. The table below outlines the consolidated entity's maximum exposure to credit risk as at reporting date.

consolidated entity's maximum exposure to credit risk as at reporting date.
Cash and cash equivalents Trade debtors Structured products - loans receivable (PPI) Other loan receivables Available-for-sale listed equity securities and unlisted unit trusts Held-to-maturity securities Derivative financial instruments used for hedging: assets	2011 2010 $'000 $'000 Consolidated
	220,320 187,539 69,696 70,177 151,059 188,832 3,312 20,573 53,344 49,568 202 222 - 11

Credit risk is managed on a functional basis across the various business segments. As a result of the swap agreements between the EMCF and the consolidated entity, the consolidated entity is also exposed to credit risk on its exposure to the $906 million (2010: $1,199 million) of underlying investments held by the EMCF. This maximum exposure would only be realised in the unlikely event that the recoverable value of all of the underlying investments held by the EMCF decline to $nil. Further details of the credit risk relating to the EMCF are disclosed in Note 29.

113

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 28 - Financial risk management (continued)

i. Credit risk (continued)

(a) Structured products – Perpetual Protected Investment loans

In order to manage the credit risk arising from lending to investors in PPI structured product offerings, the consolidated entity has in place a Credit Office who report to the General Manager, Service and Operations. The Credit Office is governed by the Credit Risk Policy which stipulates the criteria that investors are required to meet prior to being granted a loan, and hence ensures that all investors under this arrangement possess the desired level of credit worthiness. The Credit Risk Policy is reviewed periodically by the Chief Risk Officer (CRO) to ensure its continued compliance with the Group’s Risk Management Framework. All loans are secured by the investor’s investment in the structured product and the consolidated entity has recourse to the investor and the investment in the event of default. A charge over additional collateral may be required for loans greater than $2 million. As at 30 June 2011, loans for which Perpetual holds additional collateral amounted to $3.5 million (30 June 2010: $3.5 million).

The Credit Office monitors the loan portfolio on a daily basis and provides reports on a monthly basis to Group Finance and the Risk Group for review. Arrears above 30 days are reviewed on a monthly basis by the Credit Committee, and are followed up and managed by the Credit Officer and recovery initiatives can include litigation if required.

The consolidated entity minimises concentrations of credit risk by imposing a limit on the exposure it can have with each investor. The maximum standard exposure per borrower is set at $1 million. For amounts greater than $1 million, approval from both the CRO and the Chief Financial Officer (CFO) is required.

There were no PPI loans that were past due but not impaired as at the reporting date. Further information on the risk management approach to and exposures arising from the PPI structured product offerings is disclosed below in this note and in Note 29.

(b) Investments held by incubation funds

Perpetual incubates new investment strategies through the establishment of seed funds for the purpose of building investment track records and developing asset management skills before releasing products to Perpetual’s investors. Exposure to credit risk arises on the consolidated entity's financial assets held by the incubation funds mainly being deposits with financial institutions and derivative financial instruments.

The exposure to credit risk is monitored on an ongoing basis by the funds' investment manager and managed in accordance with the investment mandate of the funds.

Credit risk is not considered to be significant to the incubation funds as investments held by the funds are predominantly equity securities.

(c) Other financial assets

The consolidated entity's exposure to trade debtors is influenced mainly by the individual characteristic of each customer.

Trade debtors are managed by the accounts receivable department. Outstanding fees and receivables are monitored on a daily basis and an aged debtors report is prepared and monitored by Group Finance. Management assesses the credit quality of customers by taking into account their financial position, past experience and other factors.

114

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 28 - Financial risk management (continued)

i. Credit risk (continued)

(c) Other financial assets (continued)

Credit risk further arises in relation to financial guarantees given to wholly owned subsidiaries. Such guarantees are only provided in exceptional circumstances and are subject to specific Board approval and are monitored on a quarterly basis as part of the consolidated entity's regulatory reporting.

Credit risk arising from cash investments is mitigated by ensuring they have a Standard & Poor’s rating of ‘A’ or higher, and transactions involving derivatives are limited to high credit quality financial institutions.

The credit quality of financial assets that are neither past due nor impaired is assessed by reference to external credit ratings, if available, or to historical information on counterparty default rates.

The tables below provide an aged analysis of the financial assets which were past due but not impaired as at the reporting date.

30 June 2011	30 June 2011	30 June 2011	30 June 2011	30 June 2011	30 June 2010	30 June 2010	30 June 2010	30 June 2010	30 June 2010
Less than 30 days $'000	30 to 60 days $'000	60 to 90 days $'000	More than 90 days $'000	Total $'000	Less than 30 days $'000	30 to 60 days $'000	60 to 90 days $'000	More than 90 days $'000	Total $'000
2,176 737 371 693 3,977 1,696 803 607 664 3,770 936 57 119 12 1,124 697 10 - 95 802
3,112 794 490 705 5,101 2,393 813 607 759 4,572

The trade debtors in the above table relate to a number of independent customers and investors for whom there is no recent history of default.

A loan of $7.2 million was included in Other debtors - Current as at 30 June 2010. The loan was repaid in full on 31 July 2010.

115

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 28 - Financial risk management (continued)

i. Credit risk (continued)

(c) Other financial assets (continued)

The nominal values of financial assets which were impaired are as follows:

Trade debtors Structured products - loans receivable	$'000 $'000 Consolidated 2011 2010
	2,831 2,635 500 522
	3,331 3,157

The impaired financial assets relate mainly to independent customers and investors who are in unexpectedly difficult economic situations, where the consolidated entity is of the view that the full carrying value of the receivable cannot be recovered. The consolidated entity does not hold any collateral against the trade debtors. Collateral held in respect of PPI loans is discussed in Note 28(i)(a) above. For details of the provisions for impairment refer to Notes 13 and 29.

ii. Liquidity risk

Liquidity risk is the risk that the financial obligations of the consolidated entity cannot be met as and when they fall due without incurring significant costs. The consolidated entity’s approach to managing liquidity is to maintain a level of cash or liquid investments sufficient to meet its ongoing financial obligations. The consolidated entity has a robust liquidity risk framework in place which is principally driven by the Capital Management Review (refer to capital management disclosed below in Note 28 iv for further details).

The consolidated entity manages liquidity risk by continually monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. Surplus funds are generally only invested in instruments that are tradeable in highly liquid markets. In addition, a five year forecast of liquid assets, cash flows and balance sheet is reviewed by the Board on a semi-annual basis as part of the Capital Management Review to ensure there is sufficient liquidity within the Group.

The repayment of the existing utilised facility of $45 million (refer to Note 27) is due on 31 December 2012.

The $25 million unutilised bank facility may be drawn at any time at the discretion of the consolidated entity. The consolidated entity's bank facilities are subject to annual review and management intends to refinance the existing facility for a further period after the due date.

116

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 28 - Financial risk management (continued)

ii. Liquidity risk (continued)

Maturities of financial liabilities

The tables below show the maturity profiles of the financial liabilities and gross settled derivative financial instruments for the consolidated entity. These have been calculated using the contractual undiscounted cash flows.

	30 June 2011	30 June 2011	30 June 2011	30 June 2011	30 June 2010	30 June 2010	30 June 2010	30 June 2010
	Less than 1 year $'000	1 to 5 years $'000	More than 5 years $'000	Total $'000	Less than 1 year $'000	1 to 5 years $'000	More than 5 years $'000	Total $'000
Consolidated Liabilities Trade and other payables Interest bearing liabilities Structured products - interest bearing liabilities Derivatives Net settled - interest rate swaps Gross settled - other derivatives - outflow - (inflow)	40,342 - - 40,342 40,661 6,206 - 46,867 - 45,000 - 45,000 - 45,000 - 45,000 17,386 134,109 - 151,495 24,818 164,807 - 189,625
	57,728 179,109 - 236,837 65,479 216,013 - 281,492
	200 509 - 709 227 812 - 1,039 1,134 - - 1,134 663 - - 663 (1,117) - - (1,117) (663) - - (663)
	217 509 - 726 227 812 - 1,039

117

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 28 - Financial risk management (continued)

iii. Market risk

The consolidated entity is subject to the following market risks:

(a) Currency risk

The exposure to currency risk, as defined in AASB 7 Financial Instruments: Disclosures , arises when financial instruments are denominated in a currency that is not the functional currency of the entity and are of a monetary nature. Hence the gains/(losses) arising from the translation of the controlled entities’ financial statements into Australian dollars are not considered in this note.

A significant proportion of the monetary financial instruments held by the consolidated entity, being liquid assets, receivables, loans receivable, interest-bearing liabilities and payables, interest rate swaps, are denominated in Australian dollars. Hence fluctuations in exchange rates do not materially impact the profit/(loss) for the year or shareholders' equity.

Investments held in listed securities and unlisted unit trusts including incubation funds are of a non-monetary nature and therefore are not exposed to currency risk as defined in AASB 7 Financial Instruments: Disclosures . The currency risk relating to non-monetary assets and liabilities is a component of price risk and arises as the value of the securities denominated in other currencies fluctuates with changes in exchange rates.

(b) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The consolidated entity's exposure to interest rate risk arises predominantly on investor loans granted under the PPI structured product offering.

PPI structured product loans bear interest rates which are either fixed for the term of the product (7 years), fixed annually or variable. The consolidated entity has entered into fixed and variable rate banking facilities in order to finance loans provided to investors as a result of exposure to interest rate risk arising from:

(a) Fixed rate assets being financed with floating rate liabilities; and (b) Maturity or duration mismatches.

In order to manage the interest rate risk relating to PPI structured products, it is the consolidated entity’s policy to hedge at least 95 per cent of its loan exposure by entering into floating-to-fixed interest rate swaps where the banking facilities have a variable interest rate. The hedging of interest rate exposure is managed by Group Finance and is reported to the Audit Risk and Compliance Committee on a half-yearly basis.

118

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 28 - Financial risk management (continued)

iii. Market risk (continued)

(b) Interest rate risk (continued)

The consolidated entity's exposure to interest rate risk for the financial assets and liabilities is set out as follows:

Consolidated

	Note	Fixed interest rate maturing in	Fixed interest rate maturing in	Fixed interest rate maturing in
		6 months or less $'000	6-12 months $'000	4-7 years $'000
At 30 June 2011 Financial assets Cash assets Receivables Other financial assets Structured products – loans receivable - current Structured products – loans receivable - non- current Financial liabilities Payables Interest-bearing liabilities Structured products – interest-bearing liabilities - current Structured products – interest-bearing liabilities - non-current Effect of interest rate swaps At 30 June 2010 Financial assets Cash assets Receivables Other financial assets Structured products – loans receivable - current Structured products – loans receivable - non- current Financial liabilities Payables Interest-bearing liabilities Structured products – payable to investors Structured products – interest-bearing liabilities Effect of interest rate swaps	12 220,070 13 - 15 60 29 20,806 29 15,583	250 - - - 220,320 - - - 72,722 72,722 142 - - 53,630 53,832 - - - - 20,806 - 51,368 63,302 - 130,253
	256,519	392 51,368 63,302 126,352 497,933
	20 - 22 45,000 29 17,386 29 64,572 (43,186)	- - - 40,342 40,342 - - - - 45,000 - - - - 17,386 - 13,255 56,282 - 134,109 - 36,455 6,731 - -
	83,772	- 49,710 63,013 40,342 236,837
	12 187,239 13 7,165 15 60 29 26,157 29 20,489	250 50 - - 187,539 - - - 83,326 90,491 162 - - 49,827 50,049 - - - - 26,157 - 65,457 76,729 - 162,675
	241,110	412 65,507 76,729 133,153 516,911
	20 - 22 45,000 29 24,818 29 80,729 (50,815)	- - - 46,867 46,867 - - - - 45,000 - - - - 24,818 - 17,150 66,928 - 164,807 - 43,600 7,215 - -
	99,732	- 60,750 74,143 46,867 281,492

119

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 28 - Financial risk management (continued)

iii. Market risk (continued)

(b) Interest rate risk (continued)

The table below demonstrates the impact of a 1 per cent change in interest rates, with all other variables held constant, on the profit after tax and equity of the consolidated entity.

Consolidated Change in variable + 1 per cent - 1 per cent	30 June 2010 Impact on equity $'000 Impact on profit after tax $'000 30 June 2011 Impact on equity $'000 Impact on profit after tax $'000
	(1,768) 1,670 (1,676) 1,016 (1,016) 1,074 (1,074) 1,758

The impact on profit after tax for the year would be mainly as a result of an increase / (decrease) in interest revenue earned on cash and cash equivalents. The impact on equity would be mainly the result of an increase/(decrease) in the fair value of the cash flow hedges associated with variable interest rate borrowings.

(c) Market risks arising from Funds Under Management and Funds Under Advice

The consolidated entity’s revenue is significantly dependent on Funds Under Management and Funds Under Advice which are influenced by equity market movements. Management calculates the expected impact on revenue for each 1% movement in the All Ords. Based on the level of the All Ords at the end of 30 June 2011 (4,659.8), a 1% movement in the market changes annualised revenue by approximately $2.0m to $2.5m. It is worth noting this movement is not linear to the overall value of the market. This means that as the market reaches higher or lower levels, a 1% movement may have a larger or smaller effect on revenue as FUM and FUA are comprised of both equity market and non-equity market-sensitive asset classes.

(d) Market risks arising from incubation funds

The consolidated entity is exposed to equity price risk on investments held by its incubation funds. The funds may also be exposed, to a small extent, to the other risks which influence the value of those shares or units (including foreign exchange rates and interest rates).

Market risk in the incubation funds is limited by a predetermined seed capital funding pool which has been allocated based on the consolidated entity’s balance sheet. The Investment Committee is responsible for determining the size of the pool and approving new incubation fund strategies. They also ensure management has appropriate processes and systems in place for managing investment risk for each fund. The funds' specialist asset managers aim to manage the impact of price risks through the use of consistent and carefully considered investment guidelines. Risk management techniques are used in the selection of investments, including derivatives, which are only acquired if they meet specified investment criteria. Daily monitoring of trade restrictions and derivative exposure against limits is undertaken with any breach of these restrictions reported to the Chief Risk Officer.

These funds may be party to derivative financial instruments in the normal course of business in order to hedge exposure to fluctuations in foreign exchange rates, interest rates and equity indices in accordance with the funds' investment guidelines.

120

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 28 - Financial risk management (continued)

iii. Market risk (continued)

(d) Market risks arising from incubation funds (continued)

The impact on the consolidated profit after tax of a potential change in the returns of the funds in which the consolidated entity invested at year end is not material. The potential change has been determined using historical analysis and management’s assessment of an appropriate rate of return. The analysis is based on the assumption that the returns on asset classes have moved, with all other variables held constant and that the relevant change occurred as at the reporting date. However, actual movements in the risk may be greater or less than anticipated due to a number of factors, including unusually large market shocks resulting from changes in the performance of economies, markets and securities in which the funds invest. As a result, historic variations in risk variables are not a definitive indicator of future variations in the risk variables.

The incubation funds may be exposed to currency risk and interest rate risk. Their investment managers may enter into derivative contracts (such as forwards, swaps, options and futures) through approved counterparties to minimise risk. However, the use of these contracts must be consistent with the investment strategy and restrictions of each incubation fund, and agreed acceptable level of risk. These funds are also exposed to interest rate risk on cash holdings. Interest income from cash holdings is earned at variable interest rates and investments in cash holdings are at call.

(e) Market risks arising from the Exact Market Cash Funds

The consolidated entity is further subject to market risks through the establishment of the Exact Market Cash Fund (EMCF). The fund was established with the purpose of providing an exact return utilising the UBS Bank Bill Index (the benchmark index) to investors. The impact of the EMCF on the consolidated entity’s financial results is dependent on the performance of the fund relative to the benchmark.

The risk management approach to and exposures arising from the EMCF are disclosed in Note 29.

iv. Capital management

A Capital Management Review is carried out on a semi-annual basis and is submitted to the Board for review and approval. The capital management policy ensures that the level of financial conservatism is appropriate for the Company's businesses including acting as custodian and manager of clients' assets and operation as a trustee company. This policy also aims to provide business stability and accommodate the growth needs of the consolidated entity. This policy comprises three parts:

(a) Dividend Policy

Dividends paid to shareholders are typically in the range of 80-100 per cent of the consolidated entity's net profit after tax attributable to members of the Company, which is in line with the historical dividend range paid to shareholders. In certain circumstances, the Board may declare a dividend outside that range.

(b) Review of capital and distribution of excess capital

A review of the consolidated entity’s capital base is performed at least semi-annually and excess capital that is surplus to the Group's current requirements is potentially returned to shareholders in the absence of a strategically aligned, value accretive investment opportunity.

121

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 28 - Financial risk management (continued)

iv. Capital management (continued)

(c) Gearing Policy

The consolidated entity seeks to maintain a conservative financial management profile. Its gearing policy includes a maximum debt / debt and total equity ratio of 30 per cent and EBITDA interest cover of more than 10 times. Corporate debt (excluding product debt) has been maintained at $45 million throughout the year (2010: $45 million), and the consolidated entity is within its stated gearing policy at year end.

The gearing ratio for the consolidated entity as at 30 June 2011 is 11 per cent (2010: 11 per cent) and an EBITDA interest cover ratio of 40 times (2010: 54 times) was achieved.

v. Fair value

The following tables present the consolidated entity's assets and liabilities measured and recognised at fair value, by valuation method, at 30 June 2011. The different levels have been defined as follows:

Level 1: quoted prices in active markets for identical assets and liabilities
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
Level 3: inputs for the asset or liability that are not based on observable market data.

Consolidated

Consolidated
	Level 1 $'000	Level 2 $'000	Level 3 $'000	Total $'000
At 30 June 2011 Financial assets Available-for-sale listed equity securities Available-for-sale unlisted unit trusts Structured products - EMCF assets1 Financial liabilities Derivative financial instruments - forward exchange contracts Derivative financial instruments Deferred acquisition consideration Consolidated	47,461 5,882 - - - 5,882 47,461 - 866,996 - - 866,996
	47,461 872,878 - 920,339
	- 6 - 6 - 3,339 607 3,339 - - 607 -
	- 613 3,339 3,952

	Level 1 $'000	Level 2 $'000	Level 3 $'000	Total $'000
At 30 June 2010 Financial assets Available-for-sale listed equity securities Available-for-sale unlisted unit trusts Derivative financial instruments Structured products - EMCF assets1 Financial liabilities Derivative financial instruments Deferred acquisition consideration	36,030 - - 36,030 - 13,538 - 13,538 - 11 - 11 - 1,154,517 - 1,154,517
	36,030 1,168,066 - 1,204,096
	- 662 - 662 - - 11,819 11,819
	- 662 11,819 12,481

1 The EMCF liability is not included as it is accounted for at amortised cost.

122

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 28 - Financial risk management (continued)

v. Fair value (continued)

Deferred acquisition consideration Opening balance Acquisitions through business combinations Accrual of interest Closing balance Payments made during the year	2011 2010 $'000 $'000 Consolidated
	11,819 2,440 - 8,583 1,193 796 (9,673) -
	3,339 11,819

The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the consolidated entity is the current bid price. Marketable shares included in other financial assets are traded in an organised financial market and their fair value is the current quoted market bid price for an asset. The carrying amounts of bank term deposits and receivables approximate fair value. The 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.

Derivative contracts classified as held for trading are fair valued by comparing the contracted rate to the current market rate for a contract with the same remaining period to maturity.

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of forward exchange contracts is determined using forward exchange market rates at the reporting date. The estimates of fair value where valuation techniques are applied are subjective and involve the exercise of judgement. Changing one or more of the assumptions applied in valuation techniques to reasonably possible alternative assumptions may impact on the amounts disclosed.

The consolidated entity's financial assets and liabilities included as current and non-current in the balance sheet are carried at amounts in accordance with Notes 12, 13, 15, 20 and 29. The carrying amount of financial assets and financial liabilities, less any impairment, approximates their fair value, except for those outlined in the table below, which are stated at amortised cost.

Non-current Structured products – loans receivable Structured products – interest bearing liabilities	Carrying amount Fair value Carrying amount Fair value $'000 $'000 $'000 $'000 2011 2010
	130,253 124,702 162,675 159,318 134,109 125,714 164,807 154,309

123

Notes to and forming part of the financial statements for the year ended 30 June 2011

Consolidated
2011	2010
$'000	$'000

Note 29. Structured products assets and liabilities

Note 29. Structured products assets and liabilities
i. Exact Market Cash Funds Current assets Exact Market Cash Fund 1 Exact Market Cash Fund 2 Current liabilities Exact Market Cash Fund 1 Exact Market Cash Fund 2	382,901 693,243 516,245 497,823
	899,146 1,191,066
	383,598 695,129 512,750 495,213
	896,348 1,190,342

The Exact Market Cash Funds current asset balances reflect the fair value of the net assets held by the funds. The current liabilities balances represent the consolidated entity's obligation to the funds investors under the swap agreements and reflect the net assets of the funds for unit pricing purposes.

The Exact Market Cash Fund 1 (EMCF 1) was established during the financial year ended 30 June 2005 with the purpose of providing an exact return that matched the UBS Bank Bill rate (the benchmark index), or a variant thereon, to investors. The fund's ability to pay the benchmark return to the investors is guaranteed by the consolidated entity. The National Australia Bank has provided the EMCF 1 product with a guarantee to the value of $20 million in 2011 (2010: $20 million) to be called upon in the event that the consolidated entity is unable to meet its obligations. Due to the guaranteed benchmark return to investors, the consolidated entity is exposed to the risk that the return of the EMCF 1 differs from that of the benchmark. The return of the EMCF 1 is affected by risks to the underlying investments in the EMCF 1 portfolio, which are market, liquidity, and credit risks.

In March 2009, the consolidated entity changed the swap agreement valuation methodology between the fund and the consolidated entity. The underlying investments are now valued on a hold to maturity basis for unit pricing purposes, which is consistent with the way in which Perpetual now manages the portfolio. The underlying assets were valued at their fair value at the date of change, which for many assets was at a discount to their maturity value. The discount to maturity value will be amortised over the remaining term of the assets. The change in valuation methodology will not affect the investment returns to investors in the EMCF 1.

The Exact Market Cash Fund 2 (EMCF 2) was established in July 2008 and aims to provide an exact return that matches the benchmark index to investors in the fund. It has a similar structure to EMCF 1, but in addition, there are specific rules that govern the withdrawal of funds. EMCF 2 invests in debt securities issued by parties or securities with a minimum credit rating of 'BBB-' by Standard & Poor's or equivalent rating agency at the time of purchase. The investments held by EMCF 2 are recorded at fair value within the fund, and in the consolidated entity's financial statements. National Australia Bank has provided the fund with a guarantee to the value of $6 million (2010: $6 million) to be called upon in the event that Perpetual does not meet its obligations to the fund under the swap agreement.

The EMCF 1 product has been assigned a ‘AAf’ fund credit quality rating by Standard & Poor’s and invests predominantly in the Perpetual Premium Treasury Fund and Cash Alpha Pool Fund of the consolidated entity. These funds cannot invest in securities which have a Standard & Poor’s credit rating below ‘BBB-'. They can invest in assets directly or indirectly by investing in other managed funds that have similar investment objectives and authorised investments. The underlying funds may invest in a variety of cash and debt securities, predominantly floating rate securities, cash deposits and fixed rate securities.

124

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 29. Structured products assets and liabilities (continued)

i. Exact Market Cash Funds (continued)

The EMCF 2 product invests directly into a variety of cash and debt securities, predominantly floating rate securities, cash deposits and fixed rate securities with a minimum credit rating band of 'BBB-' by Standard & Poor's or equivalent rating agency at the time of purchase.

EMCF 1 and EMCF 2 (EMCF) use professional investment managers to manage the impact of these risks by using prudent investment guidelines and investment processes. The investment manager explicitly targets low volatility and aims to achieve this through a quality-screening process that is designed to assess the likelihood of default and difficult trading patterns during periods of rapid systematic risk reduction. There is a clearly defined mandate for the inclusion of sectors and issuances. In periods of risk reduction, diversification may be narrowly focused on cash and highly liquid investment-grade assets. At times of higher risk tolerance, appropriate diversification should be expected.

Interest rate exposure is limited to +/- 90 days versus the benchmark. The portfolio is constructed with the goal of having a diversified portfolio of securities, while largely retaining the low-risk characteristics of a cash investment.

Liquidity risk of EMCF is managed by maintaining a level of cash or liquid investments in the portfolio which are sufficient to meet a reasonable expectation of investor redemptions, distributions or other of the fund's financial obligations. This is complemented by a dynamic portfolio management process that ensures liquidity is increased when there is an expectation of a deterioration in market conditions. Cash flow forecasts are prepared for the funds, including the consideration of the maturity profile of the securities, interest and other income earned by the funds, and projected investor flows based on historical trends and future expectations.

Furthermore, the credit quality of financial assets is managed by the EMCF using Standard & Poor’s rating categories or equivalent, in accordance with the investment mandate of the EMCF. The EMCF’s exposure in each credit rating category is monitored on a daily basis. This review process allows assessment of potential losses as a result of risks and the undertaking of corrective actions. The investment managers have undertaken to restrict the asset portfolio of the underlying funds to securities, deposits or obligations that meet Standard & Poor’s 'AAf' fund credit quality rating criteria.

The investment managers of the underlying funds invested by the EMCF enter into a variety of derivative financial instruments such as credit default swaps and foreign exchange forwards in the normal course of business in order to mitigate credit risk exposure, and to hedge fluctuations in foreign exchange rates.

Details of the assets held by the underlying funds are set out below:

Corporate bonds Mortgage and asset backed securities1 Cash Corporate bonds Mortgage and asset backed securities Cash 30 June 2010 30 June 2011	AAA to A+ to BBB+ to Total AA- A- BBB- $'000 $'000 $'000 $'000
	240,382 80,756 43,039 364,177 383,062 3,181 3,796 390,039 151,706 - - 151,706
	775,150 83,937 46,835 905,922
	AAA to A+ to BBB+ to Total AA- A- BBB- $'000 $'000 $'000 $'000
	234,236 167,492 61,990 463,718 537,385 5,011 9,831 552,227 183,375 - - 183,375
	954,996 172,503 71,821 1,199,320

1 An asset with a value of $822,325 as at 30 June 2011, and which had been rated by Standard & Poor's, ceased to be rated on 17 May 2011.

125

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 29. Structured products assets and liabilities (continued)

i. Exact Market Cash Funds (continued)

The table below demonstrates the impact of a 1 per cent change in the fair value of the underlying assets of the EMCF, due to market price movements, based on the values at reporting date.

1 per cent increase 1 per cent decrease	2010 $'000 $'000 2011
	9,059 (9,059) 11,993 (11,993)

The actual impact of a change in the fair value of the underlying assets of the EMCF on the consolidated profit before tax is dependent on the calculation of the swap agreement between the fund and the consolidated entity and the performance of the fund relative to the benchmark index. If the fund’s performance is below the benchmark return, then the consolidated entity will be obliged to make payments to the fund under the swap agreement. Conversely, if the fund’s performance is higher than the benchmark, then the fund will make payments to the consolidated entity.

A 1% increase or decrease in the fair value of the underlying assets of the EMCF, assuming all other variables are held constant, would result in a $9,059,000 (2010: $11,993,000) increase or decrease in the consolidated entity’s current assets EMCF balance. However, any variance between the consolidated entity’s current assets EMCF balance and the consolidated entity’s current liabilities EMCF balance would be reflected in reserves, except in the case of a credit default which would impact the consolidated profit before tax.

ii. Perpetual Protected Investments

The Perpetual Protected Investments structured product (the PPI product) was established in the financial year ended 30 June 2007 for the purpose of providing investors the ability to select investments from a menu of managed funds while providing capital protection at maturity via a constant proportion portfolio insurance structure. The seven-year investment allows investors to borrow up to 100 per cent of their original invested amount (and their first year's interest if the interest is pre-paid), subject to a minimum loan of $50,000.

Structured products – loans receivable at reporting date consists of the following:

Current Structured products – receivable from investors Non-current Structured products – loans receivable from investors Less: loan establishment fees Less: provision for credit losses Balance as at 1 July Provision utilised during the year Provision for credit losses recognised during the year Unused amounts reversed Balance as at 30 June Movements in the provision for credit losses are as follows :	2011 2010 $'000 $'000 Consolidated
	20,806 26,157
	133,314 165,690 (230) (380)
	133,084 165,310 (2,831) (2,635)
	130,253 162,675
	2,635 991 (189) - 385 2,376 - (732)
	2,831 2,635

In June 2011, a number of investors in the PPI product advised the Group that they intended to repay all or some of their loans. This gave rise to the reclassification to current assets and liabilities in relation to the PPI and corresponding bank funding facilities. Repayments received from investors will be applied to reduce the bank funding facilities used to finance these loans.

126

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 29. Structured products assets and liabilities (continued)

ii. Perpetual Protected Investments (continued)

Investment and interest loans made to investors are funded by fixed and variable interest rate banking facilities. Total bank facilities available and utilised under these financial arrangements as at 30 June 2011 were $151.5 million (2010: $189.6 million).

It is the consolidated entity's policy to hedge variable rate facilities from exposure to fluctuating interest rates in accordance with its financial risk management policies. Accordingly, the consolidated entity has entered into interest rate swap contracts in order to hedge exposure to fluctuations in interest rates under which it is obliged to receive interest at variable rates and to pay interest at fixed rates. Details of the consolidated entity's exposure to risks arising from Perpetual Protected Investments are set out in Note 28.

The contracts are settled on a net basis. For the 1 year interest rate swap, the fixed rate payment is paid either annually in advance or monthly in arrears, and the floating rate payment is received monthly in arrears; for the 7 years interest rate swap, the fixed rate leg is paid annually in advance, and the floating rate leg is received quarterly in arrears.

At year end interest rate swap contracts entered into cover approximately 96 per cent (2010: 97 per cent) of the variable interest rate banking facilities and are timed to expire as each loan falls due. The fixed interest rates of these swaps range from 4.94 per cent to 7.37 per cent (2010: 4.74 per cent to 7.37 per cent) and the banking facilities' variable interest rates range from 6.24 per cent to 6.26 per cent (2010: 5.89 per cent to 6.1 per cent).

The interest rates under the fixed interest banking facilities range from 5.34 per cent to 7.77 per cent (2010: 5.24 per cent to 7.77 per cent). There were $69.5 million fixed interest banking facilities at 30 June 2011.

Interest rate swaps have been both terminated and entered into in accordance with the Group's product interest rate risk policy.

The fair value of interest rate swap contracts outstanding as at reporting date and period of expiry are as follows:

Less than 1 year 4-7 years	Fair Notional Fair Notional value amount value amount $'000 $'000 $'000 $'000 2010 2011
	(102) 36,455 (11) 43,600 (539) 6,731 (651) 7,215
	(641) 43,186 (662) 50,815

The gain or loss from re-measuring interest rate swap contracts at fair value is deferred in other comprehensive income in the cash flow hedge reserve, to the extent that the hedge is effective, and re-classified into profit or loss when the hedged interest expense is recognised. The ineffective portion is recognised in profit or loss immediately.

As at 30 June 2011, an unrealised loss of $0.4 million (2010: loss of $0.4 million) was deferred in equity in the cash flow hedge reserve.

127

Notes to and forming part of the financial statements for the year ended 30 June 2011

Notes to and forming part of the financial statements for the year ended 30 June 2011	Notes to and forming part of the financial statements for the year ended 30 June 2011
Consolidated
2011	2010
$'000	$'000

Note 30. Commitments

Capital expenditure commitments

Contracted but not provided for and payable within one year 320 1,207

Capital expenditure contracted but not provided for and payable within one year relates primarily to costs associated with the fit out of Angel Place, Sydney and the costs associated with software development.

Operating lease commitments

Future operating lease rentals not provided for in the financial statements and payable:

Not later than 1 year Later than 1 year and not later than 5 years Later than 5 years Operating leases are predominantly related to premises.	16,350 15,761 61,674 62,100 58,981 73,581
	137,005 151,442

Note 31. Contingencies

The Directors are of the opinion that the recognition of liabilities is not required in respect of the matters below, as it is not probable that future sacrifice of economic benefits will be required and the amount is not capable of reliable measurement.

Contingent liabilities

A controlled entity has bank guarantees to the favour of the
Australian Securities and Investments Commission in respect
of dealer's licence arrangements.	-	20
Bank guarantees of a controlled entity in favour of the ASX
Settlement and Transfer Corporation Pty Limited with respect
to normal trading activities.	1,000	1,000
Bank guarantees of a controlled entity in favour of various
lessors for rental bonds on leased premises.	984	340

In the ordinary course of business, contingent liabilities exist in respect of claims and potential claims against entities in the consolidated entity. The consolidated entity does not consider that the outcomes of any such claims known to exist at the date of this report, either individually or in aggregate, are likely to have a material effect on its operations or financial position.

Note 32. Related parties

Controlled entities and associates

The consolidated entity has a related party relationship with its Key Management Personnel (see Note 38).

Business transactions with related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

For a fixed term from 2 November 2009 to 2 May 2010, Meredith Brooks provided advisory and consulting services to Perpetual Investment Global Equities business. In accordance with the consulting agreement, Ms Brooks received $197,000 for providing those services. This cash payment is in addition to the fees Ms Brooks received in her capacity as a non-executive director.

Ms Brooks did not provide advisory consulting services to Perpetual in the year ended 30 June 2011.

128

Notes to and forming part of the financial statements for the year ended 30 June 2011

	Beneficial	interest
Name of Company	2011	2010	Country of
	%	%	incorporation
Note 33. Controlled entities
Perpetual Limited
Controlled Entities 1
Australian Trustees Limited	100	100	Australia
Commonwealth Trustees Pty Limited2	100	100	Australia
Financial Pursuit Pty Limited	100	100	Australia
Fordham Business Advisors Pty Ltd	100	100	Australia
Grosvenor Financial Services Pty Ltd	100	100	Australia
Investor Marketplace Limited	100	100	Australia
Perpetual Assets Pty Limited2	100	100	Australia
Perpetual Australia Pty Limited	100	100	Australia
Perpetual Investment Management Limited	100	100	Australia
Perpetual Legal Services Pty Limited	100	100	Australia
Perpetual Loan Company Limited	100	100	Australia
Perpetual Loan Company No. 2 Limited	100	100	Australia
Perpetual Mortgage Services Pty Limited	100	100	Australia
Perpetual Nominees Limited	100	100	Australia
Perpetual Services Pty Limited2	100	100	Australia
Perpetual Trust Services Limited	100	100	Australia
Perpetual Trustee Company (Canberra) Limited	100	100	Australia
Perpetual Trustee Company Limited	100	100	Australia
Perpetual Trustees Consolidated Limited	100	100	Australia
Perpetual Trustees Queensland Limited	100	100	Australia
Perpetual Trustees SA Limited	100	100	Australia
Perpetual Trustees Victoria Limited	100	100	Australia
Perpetual Trustees WA Limited	100	100	Australia
PI Investment Management Limited	100	100	Ireland
Queensland Trustees Pty Limited	100	100	Australia
smartsuper Pty Limited	100	100	Australia
Perpetual Concentrated International Share Fund	-	100	Australia
Perpetual Resource Fund	66	92	Australia
Perpetual Wholesale Geared International Share Fund	-	92	Australia
Perpetual Asia Pool Fund	100	100	Australia
Perpetual Equity Imputation Portfolio	100	100	Australia
Perpetual Capital Accumulation Portfolio	100	100	Australia
Global Equities UCITS Fund	100	100	Ireland
Perpetual Pure Value 2 Fund	100	100	Australia
Perpetual Wholesale Dynamic Fixed Income Fund	100	-	Australia
Exact Market Cash Fund 1	100	100	Australia
Exact Market Cash Fund 2	100	100	Australia
Entities under the control of Australian Trustees Limited
Wilson Dilworth Partnership Pty Limited2#	100	100	Australia

129

Notes to and forming part of the financial statements for the year ended 30 June 2011

	Beneficial	interest
Name of Company	2011	2010	Country of
	%	%	incorporation
Note 33. Controlled entities (continued)
Entities under the control of Fordham Business Advisors Pty Limited
Fordham Investment Management Pty Ltd	100	100	Australia
Garnet Investment Management Pty Ltd	100	100	Australia
Garnet Superannuation Pty Ltd	100	100	Australia
Transcript Pty Ltd2 #	100	100	Australia
Entities under the control of Grosvenor Financial Services Pty Limited
Perpetual Tax and Accounting Pty Ltd3	100	100	Australia
Entities under the control of Perpetual Assets Pty Limited
Perpetual Asset Management Limited	100	100	Australia
Entities under the control of Perpetual Asset Management Limited1
Perpetual Superannuation Ltd	100	100	Australia
Entities under the control of Perpetual Trustee Company Limited
Perpetual Corporate Trust Limited	100	100	Australia
Perpetual Custodians Limited	100	100	Australia
Perpetual Service Network Pty Limited2 #	100	100	Australia
PT Limited	100	100	Australia
Entities under the control of Perpetual Trustees Consolidated Limited
Perpetual Nominees (Canberra) Limited	100	100	Australia
Perpetual Custodian Nominees Pty Limited2	100	100	Australia
Entities under the control of Perpetual Trustees Victoria Limited
Perpetual Executors Nominees Limited#	100	100	Australia
Entities under the control of Perpetual Trustees WA Limited
Terrace Guardians Limited#	100	100	Australia
Entities under the control of PT Limited1
Perpetrust Nominees Pty Limited2	100	100	Australia
Entities under the control of Wilson Dilworth Partnership Pty Limited1 #
Wilson Dilworth Limited#	100	100	Australia

1 Entities in bold are directly owned by Perpetual Limited with the exception of Perpetual Asset Management Limited, P.T. Limited and Wilson Dilworth Partnership Pty Limited which are owned by Perpetual subsidiaries. 2 A small proprietary company as defined by the Corporations Act 2001 and is not required to be audited for statutory purposes. 3 Grosvenor Tax & Accounting Pty Limited changed its name to Perpetual Tax & Accounting Pty Ltd on 19 January 2011. # Perpetual applied to Australian Securities and Investments Commission (ASIC) to voluntarily deregister these companies prior to 30 June 2011. We are waiting for confirmation from ASIC that these companies have been now deregistered.

130

Notes to and forming part of the financial statements for the year ended 30 June 2011

	2011 2010 $'000 $'000 Company
Note 34. Parent entity disclosures Result of the parent entity Profit for the period Other comprehensive (expense)/income Total comprehensive income for the period Financial position of the parent entity at year end Current assets Total assets Current liabilities Total liabilities Total equity of the parent entity comprising: Share capital Reserves Retained earnings Total Equity As at, and throughout, the financial year ending 30 June 2011 the parent entity of the consolidated entity was Perpetual Limited.	72,398 56,296 (619) 4,478
	71,779 60,774
	177,498 154,815
	534,760 576,524
	106,432 155,157
	133,255 190,121
	274,980 236,724 37,029 50,509 89,496 99,170
	401,505 386,403

Parent entity contingencies

The Directors are of the opinion that provisions are not required in respect of these matters, as it is not probable that a future sacrifice of economic benefits will be required or the amount is not capable of reliable measurement.

Parent entity contingencies The Directors are of the opinion that provisions are not required in respect of these matters, as it is not probable that a future sacrifice of economic benefits will be required or the amount is not capable of reliable measurement.
Uncalled capital of the controlled entities.	7,100 9,893
Capital expenditure commitments Operating lease commitments Future operating lease rentals not provided for in the financial statements and payable: Not later than 1 year Later than 1 year and not later than 5 years Later than 5 years Operating leases are predominantly related to premises. Contracted but not provided for and payable within one year In the ordinary course of business, contingent liabilities exist in respect of claims and potential claims against the parent entity. The parent entity does not consider that the outcome of any such claims known to exist at the date of this report, either individually or in aggregate, are likely to have a material effect on its operations or financial position.	- 1,207
	10,661 10,817 44,656 55,340 53,946 53,946
	109,263 120,103

131

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 34. Parent entity disclosures (continued)

Parent entity guarantees

The Company's policy is to provide financial guarantees only to wholly-owned subsidiaries and it has provided financial guarantees in respect of:

Guarantee to secure a $70,000,000 bank facility ($45,000,000 is utilised) of a controlled entity amounting to $70,000,000 (2010: $70,000,000).
Guarantees to secure lending associated with structured products amounting to $8,991,000

(2010: $11,371,000). - No liability was recognised by the Company in relation to these guarantees as the fair value of these guarantees is considered to be immaterial. The Company does not expect the financial guarantees to be called upon.

Note 35. Business combinations

Contingent consideration

The balance of contingent consideration relating to business combinations acquired in previous periods has decreased by $8.5 million in the year ended 30 June 2011. Total cash consideration of $9.7 million was paid to the selling stakeholders of Financial Pursuit Pty Limited and Fordham Business Advisors Pty Ltd as certain predetermined targets were achieved. The unwinding of the discount, relating to business combinations in previous periods, was $1.2 million for the year ended 30 June 2011.

132

Notes to and forming part of the financial statements for the year ended 30 June 2011

	2011 2010 $'000 $'000 Consolidated
Note 36. Notes to the Cash Flow Statement Cash flows from operating activities Profit for the year Add/(less) items classified as investing/financing activities: Profit on sale of investments Reinvestment of dividends and unit distributions Working capital acquired from business combinations Leave liabilities acquired from business combinations Deferred acquisition consideration Repayment of Palisade loan Deferred tax recognised on intangibles acquired Share of loss of equity accounted investees, net of income tax Tax paid on the sale of investments Add/(less) non-cash items: Loss on sale of property, plant and equipment Depreciation and amortisation expense Equity remuneration expense Transfer to foreign currency translation reserve Transfer to available-for-sale reserve Profit after tax attributable to non-controlling interests Impairment of available-for-sale securities Net cash provided by operating activities before change in assets and liabilities Change in assets and liabilities during the financial year: Decrease/(increase) in receivables (Increase)/decrease in net structured products assets Decrease in derivative assets Decrease in derivative liabilities (Decrease)/increase in payables Decrease in prepayments Increase in employee benefits Decrease in provisions (Decrease)/increase in current tax liabilities Increase in deferred tax assets Increase in deferred tax liabilities Increase in assets held for sale Increase in liabilities held for sale Increase in cash flow hedge reserve Net cash provided by operating activities	62,031 90,506 (6,161) (3,913) (153) (512) - 5,724 - (903) 9,673 (8,583) 7,165 - - (4,543) - 16 722 (784) 795 78 15,649 14,857 18,586 26,755 (1,288) (2,856) (1,261) (1,125) 337 216 1,534 7,085
	107,629 122,018
	17,769 (8,143) (3,218) 2,051 11 134 (49) (159) (6,525) 9,606 1,166 3,515 5,219 7,107 (5,503) (2,084) (1,268) 16,586 (1,194) (2,838) 335 5,061 (754) - 904 - (38) (301)
	114,484 152,553

133

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 37. Subsequent events

On 15 August 2011 the Company announced the following events to the market:

(i) the closure of its Dublin-based in-house manufacturing capability for the international equity asset class and (ii) the sale of the smartsuper business.

(i) International Share funds

(ii) Sale of smartsuper

On 12 August 2011 the smartsuper business was sold on terms in line with its revised carrying value. Proceeds from the sale were not material.

Off-market Buy-back

On 26 August 2011 the Company announced its intention to return up to approximately $70 million of surplus capital to shareholders through an off-market buy-back tender process.

134

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 38. Remuneration details provided as part of the financial report

The following disclosures required under AASB 124 are required to be included in the Financial Report:

Para 16 'Total Compensation of Key Management Personnel'
� Para 25.7.3 'Options and Rights holdings' � Para 25.7.4 'Equity Holdings and Transactions' � Para 25.9 'Disclosure of Other Transactions'.

Total compensation of key management personnel

Total compensation of key management personnel
	Consolidated
	2011	2010
	$	$
Short-Term Post-Employment Termination benefits Share-Based	8,119,849	742,219 8,309,185 (444,168) 336,371
	262,101
	1,308,470
	1,552,701
Total	11,243,121 8,943,607

Negative balances are a result of adjustments made in the year to reflect the most current expectations of vesting of LTI grants with non-market conditions hurdles.

Related party disclosures

Executives have not entered into material contracts with the Company or a member of the consolidated entity since the end of the previous financial year and there were no material contracts involving KMP's interests existing at year end.

Option holdings of Executive Director and Group Executives

	Movement during theyear
Name Grant date Exercise period Exercise price Held at 1 July 2010 $ No. of options	Granted Forfeited Exercised No. of options	Held at 30 June 2011 Vested & exercisable at 30 June 2011 Fair value per option at grant date1 Proceeds received on exercise No. of options No. of options $ $
Former Managing Director D Deverall2 Options granted prior to 1 July 20083 267,364 1 Jul 08 1 Jul 11 - 1 Jul 14 42.73 57,390 29 Jun 09 1 Jul 12 - 29 Jun 15 28.34 47,585 3 Jul 09 1 Jul 12 - 29 Jun 15 28.34 5,911 01-Jul-10 1 Jul 13 - 29 Jun 16 28.74 - Aggregate Value	- 267,364 - - - - 57,390 - - - 8.97 - - 47,585 - - - 9.58 - - 5,911 - - - 9.58 - 76,606 76,606 5.47 $419,035 $27,087,496 - -

Options granted to the former Managing Director were granted from the Executive Option Plan. No other key management personal hold options over Perpetual shares.

1 Equity instruments issued have been valued by PricewaterhouseCoopers (PwC) using a Binomial Option Pricing model at grant date.

3 These options were granted on 19 October 2004 (978; 100% forfeited in the current year), 1 July 2006 (29,950; 100% forfeited in the current year) and 1 July 2007 (236,436; 100% forfeited in the current year). There are no options outstanding as at 30 June 2011.

4 Percentage of total remuneration received as options for the Managing Director and Group Executives was: D Deverall (0%)

135

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 38. Remuneration details provided as part of the financial report (continued)

Option holdings of Executive Director and Group Executives (continued)

Option holdings of Executive Director and Group Executives (continued)
	Movement during theyear
Name Grant date Exercise period Exercise price Held at 1 July 2009	Granted Forfeited Exercised	Held at 30 June 2010 Vested & exercisable at 30 June 2010 Fair value per option at grant date1 Proceeds received on exercise
$ No. of options	No. of options	No. of options No. of options $ $
Managing Director D Deverall2 Options granted prior to 1 July 20083 295,508 1 Jul 08 1 Jul 11 - 1 Jul 14 42.73 57,390 29 Jun 09 1 Jul 12 - 29 Jun 15 28.34 47,585 3 Jul 09 1 Jul 12 - 29 Jun 15 28.34 - Aggregate Value Departed Group Executives E Gonzalez 20 Jan 09 30 Jun 13 - 20 Jan 15 31.42 182,215 Aggregate Value J Nesbitt 9 Jun 09 30 Jun 12 - 30 Jun 14 28.34 58,939 Aggregate Value E Wang 31 Mar 08 31 Mar 11 - 31 Mar 13 52.71 75,301 Aggregate Value	- 28,144 - 267,364 978 - - - 57,390 - 8.97 - - - - 47,585 - 9.58 - 5,911 - - 5,911 - 9.58 - $56,627 $1,599,986 - - - 182,215 - - - 6.60 - - $5,725,195 - - - 58,939 - - - 9.06 - - $1,670,331 - - - 75,301 - - - 9.96 - - $3,969,116 - -

Options granted to the former Managing Director were granted from the Executive Option Plan. No other key management personal hold options over Perpetual shares.

1 Equity instruments issued have been valued by PricewaterhouseCoopers (PwC) using a Binomial Option Pricing model at grant date

2 Approval for the issue of options to D Deverall was obtained under ASX Listing Rule 10.14 at Perpetual's AGMs held on 19 October 2004, 17 October 2006, 30 October 2007, 28 October 2008 and 22 October 2009. 3 These options were granted on 19 October 2004 (978), 1 July 2005 (28,144), 1 July 2006 (29,950) and 1 July 2007 (236,436). On 23 June 2010, the company announced that Managing Director, David Deverall, had given notice of his resignation. As a result, no long term incentives, including the options outstanding as at 30 June 2010, will vest as a result of Mr Deverall's resignation and all unvested options will be forfeited on ceasing employment. The options outstanding as at 30 June 2010 have a carrying value of $Nil. 4 Percentage of total remuneration received as options for the Managing Director and Group Executives are: D Deverall (0%), E Gonzalez (0%), J Nesbitt (0%) and E Wang (0%).

136

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 38. Remuneration details provided as part of the financial report (continued)

Unvested share holdings of Executive Director, group and other executives

Unvested share holdings of Executive Director, group and other executives
	Movement during the year
Name Grant date Issue price Vesting date Held at 1 July 2010 No of shares	Granted Forfeited Vested No of shares	Held at 30 June 2011 Fair value per share ($) TSR Hurdle Fair value per share ($) non- TSR hurdle No of shares
Executive Director C Ryan - - - - Aggregate Value Former Executive Director D Deverall1 Shares granted prior to 1 July 20082 51,496 1 July 2008 42.73 1 July 2011 11,993 29 June 2009 28.34 1 July 2012 18,083 1 July 2010 28.74 1 July 2013 - Aggregate Value Group Executives R Brandweiner Shares granted prior to 1 July 2008 3 1,359 1 October 2008 48.63 1 October 2011 4,112 1 October 2009 38.15 1 October 2012 7,208 1 October 2010 30.80 1 October 2013 - Aggregate Value R Burrows Shares granted prior to 1 July 20084 11,383 1 October 2008 48.63 1 October 2011 12,338 1 October 2009 38.15 1 October 2012 15,727 1 October 2010 30.80 1 October 2013 - Aggregate value C Doyle Shares granted prior to 1 July 2008 5 25,531 1 October 2008 48.63 1 October 2011 7,197 1 October 2009 38.15 1 October 2012 9,174 1 October 2010 30.80 1 October 2013 - Aggregate Value C Green Shares granted prior to 1 July 2008 6 2,291 1 October 2008 48.63 1 October 2011 4,112 1 October 2009 38.15 1 October 2012 6,553 1 October 2010 30.80 1 October 2013 - Aggregate Value B Henderson - - - - Aggregate Value I Holyman Shares granted prior to 1 July 2008 7 11,992 1 October 2008 48.63 1 October 2011 9,253 1 October 2009 38.15 1 October 2012 11,795 1 October 2010 30.80 1 October 2013 - Aggregate Value G Lloyd Shares granted prior to 1 July 2008 - 10 August 2010 31.33 10 August 2011 - 1 October 2010 30.80 1 October 2013 - Aggregate Value J Stewart Shares granted prior to 1 July 20088 584 1 October 2008 48.63 1 October 2011 3,084 1 October 2009 38.15 1 October 2012 3,931 1 October 2010 30.80 1 October 2013 - Aggregate Value R Vahtrick - - - - Aggregate Value Current Executives who were in Acting Group Executive roles during the year P Ryan Shares granted prior to 1 July 2008 9 1,495 1 October 2008 48.63 1 October 2011 2,287 1 October 2009 38.15 1 October 2012 3,538 1 October 2010 30.80 1 October 2013 - Aggregate Value S Singh Shares granted prior to 1 July 2008 10 1,365 1 October 2008 48.63 1 October 2011 2,261 1 October 2009 38.15 1 October 2012 3,538 1 October 2010 30.80 1 October 2013 - Aggregate Value Departed Executives M Miller Shares granted prior to 1 July 2008 11 1,631 1 October 2008 48.63 1 October 2011 2,467 1 October 2009 38.15 1 October 2012 8,519 1 October 2010 30.80 1 October 2013 - Aggregate Value M Pancino Shares granted prior to 1 July 2008 12 2,294 1 October 2008 48.63 1 October 2011 5,140 1 October 2009 38.15 1 October 2012 6,553 Aggregate Value R MacIntyre Shares granted prior to 1 July 2008 13 7,241 1 October 2008 48.63 1 October 2011 1,028 1 October 2009 38.15 1 October 2012 2,096 Aggregate Value	- - - - - - - - - - 51,496 - - - 11,993 - - 38.97 50.80 - 18,083 - - 21.30 28.01 17,832 17,832 - - 18.97 27.65 $512,492 $5,562,385 - - 1,359 - - - - - 4,112 38.97 50.80 - - - 7,208 29.02 37.93 11,931 - - 11,931 20.59 30.80 $367,475 $99,941 - - - - 11,383 - - - 12,338 38.97 50.80 - - - 15,727 29.02 37.93 19,480 - - 19,480 20.59 30.80 $599,984 - - - 8,030 7,938 9,563 - - - 7,197 38.97 50.80 - - - 9,174 29.02 37.93 22,727 - - 22,727 20.59 30.80 $699,992 $554,938 $415,005 - 2,291 - - - - - 4,112 38.97 50.80 - - - 6,553 29.02 37.93 10,551 - - 10,551 20.59 30.80 $324,971 $168,480 - - - - - - - - - - - 5,873 - 6,119 - - - 9,253 38.97 50.80 - - - 11,795 29.02 37.93 14,610 - - 14,610 20.59 30.80 $449,988 $424,970 - - - - - - - 12,767 - - 12,767 N/A 27.65 21,915 - - 21,915 20.59 30.80 $1,074,972 - 584 - - - - - - 3,084 38.97 50.80 - - - 3,931 29.02 37.93 8,668 - - 8,668 20.59 30.80 $266,974 $43,940 - - - - - - - - - - - 1,495 - - - - - 2,287 38.97 50.80 - - - 3,538 29.02 37.93 4,870 - - 4,870 20.59 30.80 $149,996 $109,942 - - 1,365 - - - - - 2,261 38.97 50.80 - - - 3,538 29.02 37.93 4,870 - - 4,870 20.59 30.80 $149,996 $100,232 - - 1,631 - - - 2,467 - - 38.97 50.80 - 8,519 - - 29.02 37.93 10,551 10,551 - - 20.59 30.80 $324,971 $889,885 - - 2,294 - - - 5,140 - - 38.97 50.80 - 6,553 - - 29.02 37.93 - $667,656 - - 2,283 4,958 - - 1,028 - - 38.97 50.80 - 2,096 - - 29.02 37.93 - $292,718 $337,094

1 Approval for the issue of shares to David Deverall was obtained under ASX Listing Rule 10.14 at Perpetual's AGM held on 19 October 2004, 17 October 2006, 30 October 2007, 28 October 2008 and October 2009.

2 These shares were granted on 1 July 2006 (7,130; 100% forfeited in the current year) and 1 July 2007 (44,366; 100% forfeited in the current year).
3 These shares were granted on 1 October 2007 (1,359; 100% forfeited in the current year).
4 These shares were granted on 31 March 2008 (11,383).
5 These shares were granted on 4 December 2006 (1,645; 100% forfeited in the current year), 1 October 2007 (4,759; 100% forfeited in the current year) and 20 February 2008 (19,127; 9% forfeited in the current year and 41% vested in the current year).
6 These shares were granted on 1 October 2007 (2,291; 100% forfeited in the current year).
7 These shares were granted on 2 October 2006 (5,873; 100% forfeited in the current year) and 1 October 2007 (6,119).
8 These shares were granted on 10 September 2007 (584; 100% forfeited in the current year).
9 These shares were granted on 1 October 2007 (1,495; 100% forfeited in the current year).
10 These shares were granted on 3 July 2006 (139; 100% forfeited in the current year) and 1 October 2007 (1,226; 100% forfeited in the current year).
11 These shares were granted on 1 October 2007 (1,631; 100% forfeited in the current year).
12 These shares were granted on 14 August 2006 (255; 100% forfeited in the current year) and 1 October 2007 (2,039; 100% forfeited in the current year).

Grants of performance shares after 30 June 2003 contain 50% of the shares with a performance hurdle linked to TSR and 50% of the shares granted with a performance hurdle linked to EPS. Where applicable, the fair value of shares with a TSR performance hurdle are disclosed. The fair value of TSR-linked shares is calculated by PwC using valuation techniques which take into account the probability of vesting as reflected in the fair value at grant.

137

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 38. Remuneration details provided as part of the financial report (continued)

Unvested share holdings of Executive Director, group and other executives (continued)

Unvested share holdings of Executive Director, group and other executives (continued)
	Movement during theyear
Name Grant date Issue price Vesting date Held at 1 July 2009 No of shares	Granted Forfeited Vested No of shares	Held at 30 June 2010 Fair value per share ($) TSR Hurdle Fair value per share ($) non- TSR hurdle No of shares
Executive Director D Deverall1 Shares granted prior to 1 July 20082 58,532 1 July 2008 42.73 1 July 2011 11,993 29 June 2009 28.34 29 June 2012 18,083 Aggregate Value Group Executives R Brandweiner Shares granted prior to 1 July 20083 2,748 1 October 2008 48.63 1 October 2011 4,112 1 October 2009 38.15 1 October 2012 - Aggregate Value R Burrows Shares granted prior to 1 July 20084 11,383 1 October 2008 48.63 1 October 2011 12,338 1 October 2009 38.15 1 October 2012 - Aggregate value C Doyle Shares granted prior to 1 July 20085 25,531 1 October 2008 48.63 1 October 2011 7,197 1 October 2009 38.15 1 October 2012 - Aggregate Value C Green Shares granted prior to 1 July 20086 5,031 1 October 2008 48.63 1 October 2011 4,112 1 October 2009 38.15 1 October 2012 - Aggregate Value I Holyman Shares granted prior to 1 July 20087 16,464 1 October 2008 48.63 1 October 2011 9,253 1 October 2009 38.15 1 October 2012 - Aggregate Value M Miller Shares granted prior to 1 July 20088 3,308 1 October 2008 48.63 01/10/2011 2,467 1 October 2009 38.15 01/10/2012 - Aggregate Value M Pancino Shares granted prior to 1 July 20089 4,159 1 October 2008 48.63 1 October 2011 5,140 1 October 2009 38.15 1 October 2012 - Aggregate Value J Stewart Shares granted prior to 1 July 200810 584 1 October 2008 48.63 1 October 2011 3,084 1 October 2009 38.15 1 October 2012 - Aggregate Value P Ryan Shares granted prior to 1 July 200811 2,946 1 October 2008 48.63 1 October 2011 2,287 1 October 2009 38.15 1 October 2012 - Aggregate Value S Singh Shares granted prior to 1 July 200812 1,931 1 October 2008 48.63 1 October 2011 2,261 1 October 2009 38.15 1 October 2012 - Aggregate Value R MacIntyre Shares granted prior to 1 July 200813 9,498 1 October 2008 48.63 1 October 2011 1,028 1 October 2009 38.15 1 October 2012 - Aggregate Value Departed Executives E Gonzalez Shares granted prior to 1 July 200814 26,622 1 October 2008 48.63 1 October 2011 16,450 20 January 2009 31.42 30 June 2013 39,783 Aggregate Value J Nesbitt Shares granted prior to 1 July 200815 23,004 1 October 2008 48.63 1 October 2011 16,450 9 June 2009 29.74 30 June 2012 20,174 1 October 2009 38.15 1 October 2012 - Aggregate Value E Wang Shares granted prior to 1 July 200816 21,832 1 October 2008 48.63 1 October 2011 6,169 Aggregate Value	- 7,036 - 51,496 - - - 11,993 38.97 50.80 - - - 18,083 21.30 28.01 - $399,997 - - 1,389 - 1,359 - - - 4,112 38.97 50.80 7,208 - - 7,208 29.02 37.93 $274,985 $96,582 - - - - 11,383 - - - 12,338 38.97 50.80 15,727 - - 15,727 29.02 37.93 $599,985 - - - - - 25,531 - - - 7,197 38.97 50.80 9,174 - - 9,174 29.02 37.93 $349,988 - - - - 2,740 2,291 - - - 4,112 38.97 50.80 6,553 - - 6,553 29.02 37.93 $249,997 - $199,938 - 4,472 - 11,992 - - - 9,253 38.97 50.80 11,795 - - 11,795 29.02 37.93 $449,979 $300,026 - - 1,677 - 1,631 - - - 2,467 38.97 50.80 8,519 - - 8,519 29.02 37.93 $325,000 $121,348 - - 1,865 - 2,294 - - - 5,140 38.97 50.80 6,553 - - 6,553 29.02 37.93 $249,997 $134,951 - - - - 584 - - - 3,084 38.97 50.80 3,931 - - 3,931 29.02 37.93 $149,968 - - - 1,451 - 1,495 - - - 2,287 38.97 50.80 3,538 - - 3,538 29.02 37.93 $134,975 $104,994 - - 566 - 1,365 - - - 2,261 38.97 50.80 3,538 - - 3,538 29.02 37.93 $134,975 $40,956 - - 2,257 - 7,241 - - - 1,028 38.97 50.80 2,096 - - 2,096 29.02 37.93 $79,962 $158,700 - - 26,622 - - - 16,450 - - 38.97 50.80 - 39,783 - - N/A 31.42 - 3,949,872 $ - - 23,004 - - - 16,450 - - 38.97 50.80 - 20,174 - - N/A 29.74 20,969 20,969 - - 29.02 37.93 $799,967 $3,849,818 - - 21,832 - - - 6,169 - - 38.97 50.80 - $1,595,883 -

2 These shares were granted on 1 July 2005 (7,036; 100% forfeited in the current year), 1 July 2006 (7,130) and 1 July 2007 (44,366).
3 These shares were granted on 30 September 2005 (745; 100% forfeited in the current year), 2 October 2006 (644; 100% forfeited in the current year) and 1 October 2007 (1,359).
4 These shares were granted on 31 March 2008 (11,383).
5 These shares were granted on 4 December 2006 (1,645), 1 October 2010 (4,759) and 20 February 2008 (19,127).
6 These shares were granted on 1 October 2007 (2,291) and 17 July 2006 (2,740; 100% vested in the current year)
7 These shares were granted on 30 September 2005 (4,472; 100% forfeited in the current year), 2 October 2006 (5,873) and 1 October 2007 (6,119).
8 These shares were granted on 30 September 2005 (641; 100% forfeited in the current year), 2 October 2006 (1,036; 100% forfeited in the current year) and 1 October 2007 (1,631).
9 These shares were granted on 14 August 2006 (255), 2 October 2006 (1,865; 100% forfeited in the current year) and 1 October 2007 (2,039).
10 These shares were granted on 10 September 2007 (584).
11 These shares were granted on 2 October 2006 (1,451; 100% forfeited in the current year) and 1 October 2007 (1,495).
12 These shares were granted on 3 July 2006 (139), 2 October 2006 (566; 100% forfeited in the current year) and 1 October 2007 (1,226).

13 These shares were granted on 30 September 2005 (876: 100% forfeited in the current year), 2 October 2006 (1,381; 100% forfeited in the current year), 1 October 2007 (1,359) and 3 December 2007 (5,882). 14 These shares were granted on 30 September 2005 (7,453; 100% forfeited in the current year), 2 October 2006 (8,291; 100% forfeited in the current year) and 1 October 2007 (10,878; 100% forfeited in the current year).

15 These shares were granted on 30 September 2005 (5,217; 100% forfeited in the current year), 2 October 2006 (6,909; 100% forfeited in the current year) and 1 October 2007 (10,878; 100% forfeited in the current year).16 These shares were granted on 30 September 2005 (1,729; 100% forfeited in the current year), 2 October 2006 (1,796; 100% forfeited in the current year), 1 October 2007 (4,079; 100% forfeited in the current year) and 31 March 2008 (14,228; 100% forfeited in the current year).
17 Grants of performance shares after 30 June 2003 contain 50% of the shares with a performance hurdle linked to TSR and 50% of the shares granted with a performance hurdle linked to EPS. Where applicable, the fair value of shares with a TSR performance hurdle are disclosed. The fair value of TSR-linked shares is calculated by PwC using valuation techniques which take into account the probability of vesting as reflected in the fair value at grant.

138

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 38. Remuneration details provided as part of the financial report (continued)

Vested shareholdings of Managing Director, group and other executives

Name	Balance at 1 July 2010	LTI Shares vesting in the period No of shares	Other changes during the year No of shares	Balance at 30 June 2011 No of shares*
Managing Director C Ryan - - - - Former Managing Director D Deverall 35,540 - - 35,540 Group Executives R Brandweiner 402 - - 402 R Burrows - - - - C Doyle - 7,938 (7,113) 825 C Green 4,796 - - 4,796 B Henderson - - - - I Holyman 2,736 - - 2,736 G Lloyd - - - - J Stewart - - - - R Vahtrick - - - - P Ryan - - - - S Singh - - - - Departed Group Executives M Miller 234 - (234) - M Pancino - - - - R MacIntyre 16,893 4,958 (440) 21,411

Or date of departure for Group Executives that departed in the year.

Other changes during the year represent shares acquired via bonus sacrifice, conversion of options into shares and disposal of shares. Disposals during the year include C Doyle (7,113), M Miller (234) and R MacIntrye (440).

Name	Balance at 1 July 2009	LTI Shares vesting in the period No of shares	Other changes during the year No of shares	Balance at 30 June 2010 No of shares*
Managing Director D Deverall 35,540 - - 35,540 Group Executives R Brandweiner 402 - - 402 R Burrows - - - - C Doyle - - - - C Green 2,056 2,740 - 4,796 I Holyman 2,736 - - 2,736 M Miller 234 - - 234 M Pancino - - - - J Stewart - - - - R MacIntyre 16,893 - - 16,893 P Ryan - - - - S Singh - - - - Departed Group Executives E Gonzalez 88,279 - (69,632) 18,647 J Nesbitt 7,417 - - 7,417 E Wang 600 - - 600

Or date of departure for Group Executives that departed in the year. Other changes during the year represent shares acquired via bonus sacrifice, conversion of options into shares and disposal of shares. Disposals during the year include E Gonzalez (69,632).

139

Notes to and forming part of the financial statements for the year ended 30 June 2011

Note 38. Remuneration details provided as part of the financial report (continued)

Remuneration of Non-Executive Directors

Directors’ individual shareholdings

	Balance at the			Balance at
	start of the	Shares		the end of
	year, or for	acquired via	Other	the year, or
	directors	salary	changes	for directors
	appointed in	sacrifice	during the	who retired
	the year, the	during the	year	in the year,
	date of	year		the date of
	appointment			retirement
Directors
R M Savage	9,609	-	178	9,787
P V Brasher	1,000	-	-	1,000
M J Brooks	5,753	-	403	6,156
P Bullock	1,000	-	-	1,000
E P McClintock	8,768	-	435	9,203
E Proust	3,245	-	1,156	4,401
P B Scott	2,140	-	151	2,291
P J Twyman	8,107	-	-	8,107

Prior year Directors’ individual shareholdings

	Balance at the			Balance at
	start of the	Shares		the end of
	year, or for	acquired via	Other	the year, or
	directors	salary	changes	for directors
	appointed in	sacrifice	during the	who retired
	the year, the	during the	year	in the year,
	date of	year		the date of
	appointment			retirement
Directors
R M Savage	9,380	-	229	9,609
P V Brasher1	-	-	1,000	1,000
M J Brooks	5,500	-	253	5,753
P Bullock2	-	-	1,000	1,000
E P McClintock	8,485	-	283	8,768
E Proust	3,147	-	98	3,245
P B Scott	2,047	-	93	2,140
PJTwyman	8,772	-	(665)	8,107

1 Paul Brasher was appointed as a Director on 1 November 2009.

2 Philip Bullock was appointed as a Director on 1 June 2010.

140

Directors' declaration

1 In the opinion of the directors of Perpetual Limited (the "Company"):
a. the consolidated financial statements and notes, and the Remuneration report in the Directors' report, set out on pages 25 to 66, are in accordance with the Corporations Act 2001, including:
- (i) giving a true and fair view of the Consolidated Entity's financial position as at 30 June 2011 and of its performance for the financial year ended on that date; and
- (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001;
b. the financial report also complies with International Financial Reporting Standards as disclosed in Note 2(i);
c. there are reasonable grounds to believe that the consolidated entity will be able to pay its debts as and when they become due and payable.
2 The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive Officer and the Chief Financial Officer for the financial year ended 30 June 2011.

Signed in accordance with a resolution of the directors:

Dated at Sydney this 26th day of August 2011.

==> picture [136 x 70] intentionally omitted <==

Peter B Scott

==> picture [155 x 81] intentionally omitted <==

Chris Ryan Director

141

ABCD

Independent auditor’s report to the members of Perpetual Limited

Report on the financial report

We have audited the accompanying financial report of Perpetual Limited (the Company) which comprises the balance sheet as at 30 June 2011, and consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year ended on that date, notes 1 to 38 comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration of the Group comprising the Company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ responsibility for the financial report

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement whether due to fraud or error. In note 2, the directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements , that the financial report, comprising the financial statements of the Group comply with International Financial Reporting Standards.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control . An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting Standards, a true and fair view which is consistent with our understanding of the Group’s financial position and of its performance.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001 .

142

ABCD

Auditor’s opinion

In our opinion:

(a) the financial report of the Group is in accordance with the Corporations Act 2001 , including:

(i) giving a true and fair view of the Group’s financial position as at 30 June 2011 and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.

(b) the financial report also complies with International Financial Reporting Standards as disclosed in note 2.

Report on the remuneration report

We have audited the Remuneration Report included in pages 25 to 66 of the directors’ report for the year ended 30 June 2011. The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with Section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with auditing standards.

Auditor’s opinion

In our opinion, the remuneration report of Perpetual Limited for the year ended 30 June 2011, complies with Section 300A of the Corporations Act 2001 .

==> picture [72 x 40] intentionally omitted <==

KPMG

==> picture [107 x 88] intentionally omitted <==

Andrew Yates Partner

Sydney

26 August 2011

143

Securities exchange and investor information

2011 Annual General Meeting

The 2011 Annual General Meeting of the Company will be held in the Heritage Ballroom, Level 6, The Westin Sydney, 1 Martin Place, Sydney on 3 November 2011 commencing at 10:00 am.

Stock exchange listing

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

Substantial shareholders

Queensland Trustees Pty Limited is a substantial shareholder of Perpetual Limited as at 31 July 2011.

Distribution schedule of holdings	Number of	Number of
as at 31 July 2011	holders	shares
1 – 1,000 shares	21,287	8,051,116
1,001 – 5,000 shares	4,898	10,255,146
5,001 – 10,000 shares	443	3,174,417
10,001 – 100,000 shares	293	6,227,803
100,001 and over shares	30	16,962,647
Total	26,951	44,671,129
Number of shareholders with less than a marketable parcel:	638

Twenty Largest Shareholders as at 31 July 2011

	Number of	Percentage of
Name	ordinary shares	issued capital
Queensland Trustees Pty Limited¹	3,092,536	6.92%
HSBC Custody Nominees (Australia) Limited¹	2,166,477	4.85%
National Nominees Limited¹	2,110,853	4.73%
J P Morgan Nominees Australia Limited¹	1,582,716	3.54%
Australian Foundation Investment Company Limited	933,657	2.09%
Milton Corporation Limited	818,126	1.83%
RBC CEES Trustee Limited¹	620,921	1.39%
J P Morgan Nominees Australia Limited (Cash Income A/c)¹	593,622	1.33%
Perpetual Trustee Company Limited¹	581,584	1.30%
Washington H Soul Pattinson & Co Ltd	529,598	1.19%
Diversified United Investment Limited	500,000	1.12%
Australian United Investment Co. Limited	400,000	0.90%
Bond Street Custodians Limited¹	376,211	0.84%
Argo Investments Limited	350,880	0.79%
UBS Wealth Management Australia Nominees Pty Ltd¹	344,048	0.77%
Citicorp Nominees Pty Limited	330,989	0.74%
Enbeear Pty Ltd	310,678	0.70%
T Eustace	285,081	0.64%
RBC Dexia Investor Services Australia Nominees Pty Ltd¹	244,993	0.55%
Carlton Hotel Ltd	237,332	0.53%
Total	16,410,302	36.75%

1 Held in capacity as executor, trustee or agent.

144

Securities exchange and investor information (continued)

Other Information

Perpetual Limited, incorporated and domiciled in Australia, is a publicly listed company limited by shares.

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.

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 2011 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 dividend

The final dividend of 90 cents per share will be paid on 27 September 2011 to shareholders entitled to receive dividends and registered on 6 September 2011 being the record date.

Enquiries

If you have any questions about your shareholding or matters such as dividend payments, tax file numbers or change of address you are invited to contact the company’s share registry office below, or visit their website at www.linkmarketservices.com.au or email [email protected]

Link Market Services Limited Perpetual Shareholder Information Line: Level 12, 680 George Street 1300 732 806 or (02) 8280 7620 Sydney NSW 2000 Fax: (02) 9287 0303

Locked Bag A14 Sydney South NSW 1235

Any other enquiries which you may have about the Company, can be directed to the Company’s registered office or visit the company’s website.

Principal registered office

Level 12 Tel: (02) 9229 9000 123 Pitt Street Fax: (02) 8256 1461 Sydney NSW 2000

Company Secretary

Joanne Hawkins

Website address: www.perpetual.com.au

145

AI assistant

Perpetual Limited — Annual Report 2011

10538_rns_2011-08-25_333d7d9a-c118-468e-b9c7-23e3ae11326a.pdf

Directors' Report For The Year Ended 30 June 2011

Directors' Report For The Year Ended 30 June 2011 (continued)

Directors

Peter B Scott, Chairman and Independent Director

BE (Hons), M.Eng.Sc (Age 57)

Paul V Brasher, Independent Director

BEc (Hons), FCA (Age 61)

Meredith J Brooks, Independent Director

BA, FIAA (Age 49)

Philip Bullock, Independent Director

BA, MBA, GAICD, Dip. Ed. (Age 58)

Directors' Report For The Year Ended 30 June 2011 (continued)

Directors (continued)

E Paul McClintock AO, Independent Director

BA, LLB (Age 62)

Elizabeth M Proust AO, Independent Director BA (Hons), LLB, FAICD (Age 60)

Philip J Twyman, Independent Director

BSc, MBA, FAICD (Age 67)

Directors' Report For The Year Ended 30 June 2011 (continued)

Directors (continued)

Chris Ryan, Managing Director

B. Bus. (Age 51)

Directors who resigned during the period

Robert M Savage AM, Chairman and Independent Director FASCPAS, FAICD, FAIM (Age 69)

David M Deverall, Managing Director

BE (Hons), MBA (Stanford) (Age 45)

Alternate Directors

Roger L Burrows, Alternate Director

BCom, CPA, MAICD (Age 47)

Ivan D Holyman, Alternate Director

BEc, LLB (Age 55)

Company Secretaries

Joanne Hawkins

BCom, LLB, Grad Dip CSP FCIS

Directors' Report For The Year Ended 30 June 2011 (continued)

Company Secretaries (continued)

Glenda Charles

Grad. Dip. Corp. Gov. ASX Listed Entities, CSA (Cert)

Directors’ meetings

Principal activities

Review of operations

Directors' Report For The Year Ended 30 June 2011 (continued)

Dividends

All franked dividends declared or paid during the year were franked at a tax rate of 30 per cent and paid out of retained earnings.

State of affairs

Events subsequent to reporting date

(i) International Share funds

(ii) Sale of smartsuper

Off-market Buy-back

Likely developments

Directors' Report For The Year Ended 30 June 2011 (continued)

Environmental regulation

Indemnification of directors and officers

Insurance

Corporate Responsibility Statement

ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations

1. Role of the Board

2. Board structure

3. Director independence

4. Contracts with Directors

5. Indemnity of directors and officers

6. Board access to information and independent advice

7. Nomination, appointment, re-election and retirement of directors

8. Meetings of the Board

9. Board committees

Audit, Risk and Compliance Committee

Investment Committee

People and Remuneration Committee

Nominations Committee

10. Board performance

11. Company Secretaries

12. Perpetual’s subsidiary Boards

13. Ethical conduct

14. Diversity

15. Trading in securities by Directors and employees

16. Risk Management

17.

Perpetual Limited Annual Report 2011