Perpetual Limited — Capital/Financing Update 2011

May 25, 2011

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ASX Announcement

Perpetual Announces First Series of Initiatives Targeting Improved Focus and Performance

• Greater discipline in business portfolio management

• Group Executive appointments in critical areas of Marketing and Operations

• Moving towards more variable cost base and outsourcing of non-core processes

• Full year cost savings of approximately $9 million before tax

• Active capital management

• FY11 UPAT expected broadly in line with FY10

• FY11 Final Dividend expected to be around 90cps fully franked

26 May 2011

Chris Ryan, Managing Director and CEO of Perpetual Limited (Perpetual) today outlined the first series of initiatives resulting from the wide-ranging review undertaken by the Company over the last three months. In addition to an assessment of Perpetual’s business portfolio priorities, the review’s outcomes focus on distribution opportunities, improved cost management and efficiency, active capital management and the strengthening of the executive management team with international specialist expertise.

Mr Ryan indicated that although Perpetual continues to have a number of key strengths that give it a unique position in the industry, more needed to be done to translate these into sustainable shareholder returns.

“We have a company with a great brand, scale, independence, diverse earnings streams and a strong balance sheet. Our asset management and executive teams are highly regarded, as are our staff. What we need is a step-up in terms of business portfolio discipline and focus on activities that add real value for clients and shareholders. We want to run what is a great Australian company to international standards,” he said.

Portfolio review

All of Perpetual’s product lines, services and infrastructure were assessed to determine whether they were best managed for growth, profit or exit. The decision process has not yet been completed and the Company will update the market as further decisions are made.

In the Perpetual Investments business unit, both the Australian equities and the Income & Multi Sector businesses will utilise their well recognised manufacturing strengths and develop new strategies and products to respond to what in recent years have been ever-changing and challenging market conditions.

“Demand and opportunities also exist for our involvement in the international equity asset class, which is continuing to grow as a proportion of investor portfolios. We currently manage a number of products, including international equities, global resources and Asian equities, and we are working hard on redefining our approach to this asset class,” Mr Ryan said.

Angel Place, Level 12, 123 Pitt Street Tel +612 9229 9000 Sydney NSW 2000, Australia Fax +612 8256 1494 GPO Box 4172, Sydney NSW 2001, Australia investor.relations@perpetual.com.au

Perpetual Limited ABN 86 000 431 827

In Private Wealth, clear client segmentation, supported by increased scale and capabilities, is helping the business ensure it meets the true needs and growth potential of its target segment, High Net Worth (HNW). This drive is supported by the expansion of the Private Wealth service range to include additional sources of revenue, and the continuation of the Company’s organic and inorganic growth strategy.

Previous acquisitions Fordham and Grosvenor are performing well and are on target to deliver FY11 EBITDA of about $8 million. “Perpetual Private Wealth now has significant presence in the HNW segment and is positioned strongly for future growth,” Mr Ryan said.

“Activities within the Corporate Trust unit have also been reviewed. The Securitisation Trustee business continues to hold a leading market position, generates good margins, and can pursue opportunities in emerging asset classes as its operational environment improves,” he continued.

“Similarly, we are looking at options to profitably grow Fund Services and improve margins in the Lenders Mortgage Services business. Corporate Trust continues to provide diversification benefits from non-equity market linked revenues and leverages the values underpinning our service approach in the other business units,” Mr Ryan noted.

Cost and efficiency drive

A second focus point of Perpetual’s review has been cost and efficiency. The Company will move towards more active cost management by building greater flexibility into its cost base. The first initiative to achieve this transition has been a redistribution of certain roles.

As a result of the decisions made about priorities in the business portfolio, the number of roles has been reduced in some activities and new positions have been created in areas earmarked for growth. The resulting net reduction of 102 roles is expected to create cost savings of approximately $9 million before tax on an annualised basis from FY12 onwards.

Perpetual has also determined which existing functions it is best suited to perform in-house. The outcome of this assessment has been the decision to consider outsourcing mature processes providing commoditised services. Responses to a Request For Proposal for a possible outsourcing of platform administration services for Private Wealth clients (PACT) are currently under review.

Efficiencies achieved as a result will allow further investment to be directed towards client facing systems and processes, and support increased client servicing and engagement. Work continues on the first three company-wide processes that are being considered for outsourcing.

“Moving towards a more variable cost base will enable us to take advantage of improvements in terms of both revenue generation and operational environment, as well as give us the means to better manage periodic downturns. To give greater impetus to this effort, I have appointed Richard Vahtrick as Group Executive Operations. Richard joins us from IBM in June and will have a company-wide mandate to accelerate the introduction of the variable cost structure and the transformation of our IT architecture to a competitive cost model,” Mr Ryan said.

Perpetual will also be allocating most of its Group and Support Services expenses to the business lines. As a result, unallocated central costs will be lowered to approximately $10 million from $37 million in FY10.The new allocation approach will be reflected in the Company’s FY11 results announcement.

Distribution focus

“We have recognised that Perpetual can do more in terms of its product distribution capability,” Mr Ryan continued. “We have a great brand and outstanding investment performance, but are facing challenges in terms of distribution to some target client segments. Perpetual needs to develop the agility to strategically develop new products and services based on identifying market growth opportunities and then resource the response adequately.

“To address this I have created two new Group Executive roles, in sales and in marketing. Brian Henderson, formerly with Fidelity International, will join us in June as Group Executive Marketing and we are also well advanced with the appointment of a Group Executive Sales. Brian is a seasoned industry professional with extensive international experience, and together with his sales counterpart,

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he will ensure that across the Company we deliver a more disciplined, focused and coordinated approach to sales and marketing,” Mr Ryan said.

Active capital management

In line with the portfolio decisions resulting from the review, Perpetual is taking a more active approach to the management of its capital. The first measure has been the revision of the Group’s risk based capital requirements as at 31 March 2011 to $140 million in response to the continued reduction in risk assets and improved market conditions. This is well covered by the $236 million of cash and liquid investments on the balance sheet as at 31 March 2011.

Perpetual is also lowering the amount of shareholder capital currently invested in certain seed funds by around $10 million and implementing a more disciplined approach to funding incubation strategies. Balance sheet exposure to Perpetual capital guaranteed products will continue to be reduced.

Mr Ryan noted: “The Group currently has surplus capital and if we find suitable shareholder value creating opportunities, we will deploy capital for that purpose. If not, we will return it to our shareholders in an efficient and timely manner.”

Operational and regulatory environment

In presenting the initiatives, Perpetual’s CEO indicated that while short-term challenges remained in terms of net industry fund flows and the demand for some of Perpetual’s services, the longer term outlook remained positive.

“Demand for asset management services stands to benefit from the proposed increase in superannuation contributions. Equally, with the increasing number of High Net Worth individuals and the ageing of the population, we are already seeing greater demand for quality advice and for products and services that meet the needs of an expanding demographic segment. Additional opportunities to service these growing markets exist for Perpetual,” he said.

Referring to the Federal Government’s Future of Financial Advice plans, Mr Ryan pointed out that Perpetual supported government and industry group efforts to enhance the reputation, relevance and value of financial advice in Australia by adopting higher professional standards. “Our business model already is well positioned in that regard, particularly in terms of higher fiduciary standards, a fee-forservice approach and the opt-in requirement. A greater focus on client interests in the industry also favours our independent, high quality manufacturing capability,” he said.

Outlook[1]

Perpetual’s Underlying Profit After Tax (UPAT) for the 2011 fiscal year is expected to be broadly in line with the $72.8 million result achieved in the previous year. At the UPAT level, the result for the second half of FY11 will reflect lower than expected inflows and the significant reduction in mortgage servicing levels as a result of the softer demand for housing finance. It will also include the $2 million cost incurred as a result of the senior management transition and $2 million in costs associated with the outsourcing projects.

At the Net Profit After Tax (NPAT) level, FY11 will be impacted by an after tax restructuring provision of approximately $4.7 million, incurred to generate the annualised cost savings before tax of approximately $9.0 million. Full Year NPAT will also reflect EMCF recoveries of approximately $9.5 million, as well as the previously recorded[2] private equity takeover response costs ($3.0 million after tax) and smartsuper goodwill impairment ($10.6 million after tax).

Perpetual’s final dividend for the year is expected to be around 90 cents per share fully franked, with the Company’s strong capital position and ability to generate cash from operations allowing it to pay above its normal payout policy.

1 The guidance assumes no other impairments and is subject to there being no material deterioration in financial markets and business conditions over the remainder of FY11.

2 Recorded in Perpetual’s December 2010 Half Year Financial Statements

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In concluding the announcement, Mr Ryan emphasised that the initiatives outlined were part of a continued effort to drive better outcomes. “We want to create an immediate impact, but we also want to put ourselves in a better position in the future,” he said.

“Clearly, subdued investor confidence has affected flows in the industry and in our case, other distractions have hampered business. The latter are now behind us and the slowing rate of redemptions would suggest a possible turn in market sentiment. Although the timing of a clear recovery in investor confidence remains hard to call, we are aiming to enhance our market leverage by focusing on the relevant activities in our portfolio, introducing a more flexible cost structure and improving the way we approach distribution. That way, we will take immediate advantage of an improvement in the operational environment.

“The initiatives will ensure we enhance our business discipline and focus, and are a first step to further lift our practices to international standards. More can and will be done to achieve improved performance on an ongoing basis and I look forward to informing investors when we take additional measures in the pursuit of this objective,” Mr Ryan concluded.

For further information, please contact:

Investors: Mike Woods General Manager – Corporate Finance & Affairs Perpetual Limited

Media: Yves Noldus Senior Manager – Group Corporate Affairs Perpetual Limited

Tel: 02 9229 3449

Tel: 02 9229 9893

About Perpetual

Perpetual is an independent financial services group operating in funds management, financial advisory and trustee services. Our origin as a trustee company, coupled with our strong track record of investment performance, has created our reputation as one of the strongest brands in financial services in Australia. For further information, go to www.perpetual.com.au.

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ADDENDUM

Biographical details Brian J Henderson

Brian Henderson is a senior executive with extensive experience in all elements of marketing and communications, including strategy development, brand management, advertising, internal and external corporate communications and change management. He has previously led large teams in North America, Asia and Australia.

Brian has been in marketing and communications roles with the Fidelity group of companies since 1993, initially with Fidelity Investments Canada and Japan, and most recently with Fidelity International, based in Hong Kong.

In that role, he was Executive Director, Marketing and Corporate Communications, Asia Pacific. His responsibilities included brand, communications, distribution and investment marketing, as well as product design and development.

Biographical details Richard Vahtrick

Richard Vahtrick has more than 30 years of experience in the IT industry in areas including finance, operations, client support, shared services and sales. He has led teams in various locations across the globe, including Australia.

Most recently, Richard was IBM’s Chief Operations Officer, Global Technology Services Australia/New Zealand, based in Sydney. Prior to this, he held a number of senior roles during a 33-year career with IBM.

In his COO role, Richard helped introduce major change programmes to support business leadership improvements and greater accountability, as well as enhance management systems and staff communications.

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