Perpetual Limited — Interim / Quarterly Report 2011

Feb 22, 2011

1H11 Results for six months ended 31 December 2010 Presented by: David Deverall Roger Burrows

23 February 2011

ABN 86 000 431 827

Disclaimer

Important information

The information in this presentation is general background information about the Perpetual group and its activities current as at 23 February 2011. It is in summary form and is not necessarily complete. It should be read together with the company’s half year accounts lodged with ASX on 23 February 2011. The information in this presentation is not intended to be relied upon as advice to investors or potential investors and does not take into account your financial objectives, situation or needs. Investors should consult with their own legal, tax, business and/or financial advisors in connection with any investment decision.

No representation or warranty is made as to the accuracy, adequacy or reliability of any statements, estimates, opinions or other information contained in the presentation (any of which may change without notice). To the maximum extent permitted by law, the Perpetual group, its directors, officers, employees, agents and contractors and any other person disclaim all liability and responsibility (including without limitation any liability arising from fault or negligence) for any direct or indirect loss or damage which may be suffered through use or reliance on anything contained in or omitted from this presentation. This presentation contains forward looking statements. Prospective financial information has been based on current expectations about future events and is, however, subject to risks, uncertainties and assumptions that could cause actual results to differ materially from the expectations described in such prospective financial information.

All references to dollars, cents or $ in this presentation are to Australian currency, unless otherwise stated. All references to NPAT, UPAT etc. are in relation to Perpetual Limited ordinary shareholders.

Note:

• 1H10 refers to the financial reporting period for the six months ended 31 December 2009

• 2H10 refers to the financial reporting period for the six months ended 30 June 2010

• 1H11 refers to the financial reporting period for the six months ended 31 December 2010

• FY11 refers to the financial reporting period for the twelve months ending 30 June 2011

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Agenda

• Group highlights David Deverall Managing Director until 23/2/11

� Financials Roger Burrows Chief Financial Officer � Remarks Chris Ryan CEO & Managing Director from 23/2/11

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1H11 Overview

• 1H11 Underlying Profit After Tax $41.0m up 13% (1H10:$36.4m) driven by:

• Benefits of rebound in equity and credit markets during the period

• Private Wealth acquisitions

• Improved performance from Mortgage Services

• Reduction in equity remuneration expense

• 1H11 Net Profit After Tax $35.0m fell 29% (1H10: $49.2m) due to:

• Reducing profits from recovery of prior period EMCF losses

• KKR takeover response costs

• Impairment charge of smartsuper intangible asset

• Increased financial strength

• FY11 interim dividend 95 cps fully franked (FY10 interim:105 cps fully franked)

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Average equity markets flat over 1H11

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Spot close All Ords FY10 Avg All Ords 1st Half Avg All Ords 2nd Half Avg All Ords
5,000
FY10 1H11
4,750 2H10 Avg All Ords
1H11 Avg All Ords
FY10 Avg All Ords
4,500
1H10 Avg All Ords
4,250
4,000
Jul-09Aug-09Sep-09Oct-09Nov-09Dec-09Jan-10Feb-10Mar-10Apr-10May-10Jun-10 Jul-10Aug-10Sep-10Oct-10Nov-10Dec-10
All Ords
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All Ords refers to the S&P/ASX All Ordinaries Price Index

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Industry inflows yet to recover

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Total market flows
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0
(5.0)
(10.0)
(15.0)
Source: Plan for Life September 2010
Mar 06Jun 06Sep 06Dec 06Mar 07Jun 07Sep 07Dec 07Mar 08Jun 08Sep 08Dec 08Mar 09Jun 09Sep 09Dec 09Mar 10Jun 10Sep 10
$b
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Securitisation issuance continues its slow and modest recovery

RMBS issuance v average revaluation margin - 2 Year Senior RMBS

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Non AOFM AOFM Margin above BBSW
60 250
50
200
40
150
30
100
20
50
10
0 0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Calendar year ended
$b
basis points over BBSW
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Source: www.AOFM.gov.au; S&P, Macquarie Bank and Perpetual

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Our brand health amongst advisors remains ahead of market

Brand health indicator

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Perpetual
Competitor A
Competitor B
Competitor C
Competitor D
Competitor E
Competitor F
Competitor G
Competitor H
Competitor I
0 5 10 15 20 25 30 35
Net positive word association (%)
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Source: Wealth Insights – Dec 10

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Momentum in underlying profit

For the 6 month period	1H11 $m 2H10 $m 1H10 $m		1H11 v 1H10
Underlying profit after tax (UPAT) Significant items	41.0 (6.0) 36.4 4.9 36.4 12.8		13%
Net profit after tax (NPAT)	35.0 41.3 49.2		(29%)
Diluted EPS on UPAT (cps) Annualised ROE on UPAT (%) Dividend fully franked (cps)	93.9 22.6 95.0 84.1 20.6 105.0 85.1 22.9 105.0		10% (10%)

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Perpetual Investments – healthy revenue margin and good cost discipline

For the 6 month period	1H11 $m 2H10 $m 1H10 $m		1H11 v 1H10	Key themes: �1H11 revenue benefited from rebound in markets �1H11 v 2H10 operational expenses held flat �Money Magazine Fund Manager of the Year �Launched Secured Private Debt Fund
Revenue Operating expenses	112.8 (60.7) 116.2 (61.7) 111.5 (56.2)		1% (8%)
EBITDA Depreciation, amortisation & equity remuneration	52.1 (9.2) 54.5 (15.7) 55.3 (14.6)		(6%) 37%
Profit before tax	42.9 38.8 40.7		5%
Margin on revenue Closing FUM ($b) Average FUM ($b) Average revenue margin (bps)	38% 27.5 27.5 79 33% 26.9 28.4 78 37% 29.3 28.4 75		(6%) (3%) 5%

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− Perpetual Investments outperformance maintained

Excess investment performance p.a. – gross as at end December 2010 Period Industrial Australian Small Concentrated International Diversified Share Share Companies Equity Share Income Fund Fund Fund Fund Fund Fund 1 year +0.94% +4.61% +13.30% +2.08% -3.88% +5.73% 3 years +3.34% +4.30% +7.95% +5.18% +1.71% -0.53% 5 years +2.14% +2.29% +5.60% +3.09% +0.67% -0.68% 7 years +1.84% +2.45% +3.80% +2.03% N/A N/A 10 years +3.56% +3.60% +7.73% +4.44% N/A N/A

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FUM benefits from improved equity markets – offsetting outflows from lower margin products

outflows from lower margin	products
1H10 $b At end of	Other(1) $b 1H11 $b Net flows $b 2H10 $b
8.7 14.2 6.4 Institutional Intermediary Retail	0.7 0.8 0.4 8.3 13.1 6.1 (0.5) (0.6) (0.2) 8.1 12.9 5.9
29.3 All channels	27.5 1.9 (1.3) 26.9
19.8 1.6 Australian equities Global equities	19.1 1.3 1.7 - (0.1) (0.1) 17.5 1.4
21.4 6.6 1.3 Equities Cash & fixed interest Other	20.4 5.8 1.3 1.7 0.1 0.1 (0.2) (1.0) (0.1) 18.9 6.7 1.3
29.3 All asset classes	27.5 1.9 (1.3) 26.9

(1) Includes reinvestments, distributions, income and asset growth

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Private Wealth profit up

For the 6 month period	1H11 $m 2H10 $m 1H10 $m		1H11 v 1H10
Total revenues Operating expenses	56.9 (41.7) 59.0 (41.7) 41.8 (28.8)		36% (45%)
EBITDA Depreciation, amortisation & equity remuneration	15.2 (3.6) 17.3 (2.8) 13.0 (2.3)		17% (57%)
Profit before tax	11.6 14.5 10.7		8%
Margin on revenue Closing FUA ($b) Average FUA ($b)	20% 8.8 8.5 25% 8.3 8.5 26% 8.1 7.8		9% 9%

Key themes:

• Acquisitions drive increase in revenue in 1H11 versus 1H10

• 1H11 profit before tax up 17% on 1H10 after adjusting for acquisition costs & changes in 1H11 expense allocations

• Fordham & Grosvenor integrations on track

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Private Wealth acquisitions are performing and diversifying our revenues

For the 6 month period	1H11 $m 1H10 $m		1H11 v 1H10
Market related revenue Non-market related revenue	39.4 17.5 33.5 8.3		18% 111%
Total revenues	56.9 41.8		36%

Key themes:

• Non-market revenue driven by acquisitions that provide tax and accounting services

� Non-market related revenue in 1H11 was 31% of total revenues versus 20% in 1H10

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Integration on track

		Grosvenor	Fordham
	Date acquired	September 2009	January 2010
	Synergies:
	─1H11 annualised run rate to date	$0.5m	$1.3m
	Client retention rate	98%	99%
	Premises	January 2011	May 2010
	Expected combined FY11 EBITDA before integration costs	$8 to 9 million

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Private Wealth FUA increases in response to improved equity markets

1H10 $b At end of	Other(1) $b 1H11 $b Net flows $b 2H10 $b
2.9 2.3 Financial advisory: �Superannuation �Non-superannuation	0.3 0.1 3.5 2.3 (0.1) - 3.3 2.2
5.2	5.8 0.4 (0.1) 5.5
1.2 1.7 Fiduciary services: �Philanthropic �Trusts and estates	1.2 1.8 0.1 0.1 - - 1.1 1.7
2.9	3.0 0.2 - 2.8
8.1 Total Funds under Advice	8.8 0.6 (0.1) 8.3

(1) Includes reinvestments, distributions, income and asset growth

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Corporate Trust – FUA run-off rate slows and PLMS financial performance improving

Key themes:

									Key themes:
For the 6 month		1H10	2H10	1H11			1H11 v		�Trust & Fund Services:
period		$m	$m	$m			1H10		─Decline in revenue reducing in
									response to improving FUA run-
Total revenues		41.6	45.9	52.3			26%		off rate
Operating expenses		(22.2)	(29.7)	(32.2)			(45%)		−Benefited from increase in new
									issuance and higher interest rates
EBITDA		19.4	16.2	20.1			4%		slowing principal repayment rates
Depreciation,									─Maintained market share
amortisation & equity remuneration		(1.6)	(1.7)	(1.2)			25%		�Mortgage Services:
Profit before tax		17.8	14.5	18.9			6%		─Improved underlying performance
									─Volume up on run rate benefit of
Margin on revenue		43%	32%	36%					business secured in FY10
Closing FUA ($b)		222.4	210.5	209.4			(6%)		─1H11 includes $2m one-off fee
PLMS matters (‘000s)		81	118	131			62%		income
									─Continued focus on process and
									profitability improvements

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Mortgage Services revenue benefits from run rate growth of business secured in FY10

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1H10 1H11 1H11 v
For the 6 month period
$m $m 1H10
Trust & Fund Services 27.9 26.9 (4%)
Mortgage Services 13.7 25.4 85%
Total revenues 41.6 52.3 26%
Funds under Administration Mortgage Matters
250
250 200 140
200 150 120
150 100 100
100 50 80
50 0
60
0 1H09 2H09 1H10 2H10 1H11
40
1H09 2H09 At the end of 1H10 2H10 1H11 20
At end of 0
CMBS & ABS RMBS - Non bank 1H09 2H09 1H10 2H10 1H11
CMBS & ABSRMBS - Repos RMBS - Non bankRMBS - Bank
For the 6 month period
RMBS - Repos RMBS - Bank
$b
$b
'000s
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Financials

Roger Burrows Chief Financial Officer

Improved underlying performance

For the 6 month period	1H11 $m 2H10 $m 1H10 $m		1H11 v 1H10
Revenue Operating expenses	227.1 (150.6) 226.2 (149.7) 200.1 (124.6)		13% (21%)
EBITDA Depreciation & amortisation Equity remuneration	76.5 (7.4) (8.4) 76.5 (7.7) (13.5) 75.5 (7.0) (13.3)		1% (6%) 37%
EBIT Interest expense	60.7 (1.6) 55.3 (1.6) 55.2 (1.2)		10% (33%)
UPBT	59.1 53.7 54.0		9%

Key themes:

• 1H11 v 1H10 opex up due to Private Wealth acquisitions & business investment and growth in mortgage service volumes

• 1H11 v 2H10 opex broadly in line

• 1H11 equity remuneration lower than 1H10 mainly due to acceleration of expenses in 2H10

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Significant items impacts NPAT

For the 6 month period	1H11 $m 2H10 $m 1H10 $m		1H11 v 1H10
UPBT Tax expense	59.1 (18.1) 53.7 (17.3) 54.0 (17.6)		9% (3%)
UPAT Profit/(loss) on investments EMCF recoveries KKR takeover response costs Goodwill impairment	41.0 1.6 6.0 (3.0) (10.6) 36.4 (4.3) 9.2 - - 36.4 1.7 11.1 - -		13% (46%)
NPAT to Perpetual ordinary shareholders	35.0 41.3 49.2		(29%)

Key themes:

• Lower tax rate in 1H11 due to prior over provision. Excluding over provision rate was around 32%

• EMCF profit unwind continues at reducing rate

• $3.0m after tax one-off costs associated with response to KKR takeover proposal

• $10.6m after tax expense relating to impairment of smartsuper goodwill

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Non-cash goodwill impairment charge of $10.6m after tax

• smartsuper, acquired in September 2008, is a SMSF administration provider based in Sydney

• smartsuper revenue represents <1% of Group revenues

• Regular review of assets ascertained that the business is unlikely to achieve the long-term growth that had been forecast

• Even though service levels have continued to improve and client feedback continues to be positive, the ability to maintain profit margins and growth are being challenged by what is proving to be a very competitive environment

• Goodwill for smartsuper now 100% written off

• Management determined that no other impairment charges were required

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Financial strength continued to improve

	1H10	2H10	1H11
	$m	$m	$m
Total equity	348	361	372
Less: Intangibles(1)	(184)	(190)	(171)
Net tangible assets Net tangible assets per share Corporate debt	164 $3.80 $45m	171 $3.95 $45m	201 $4.56 $45m
Corporate debt to capital ratio	11.5%	11.1%	10.8%
Interest coverage Cash & Liquid investments	63x $227m	48x $237m	48x $232m
EMCF assets	$1.3b	$1.2b	$1.0b
PPI loans	$199m	$189m	$160m
Risk-based capital coverage ratio	1.15x	1.50x	1.38x
Cash flow from operations	$66m	$87m	$25m

Key themes:

• NTA per share up 15% due to increase in Total equity and reduction in Deferred tax assets

• Interest coverage remains very strong at 48x

• Group Liquidity remains strong

• Continuing to reduce Group exposure to credit risk assets

• Cash flow from operations impacted by timing of payments driven by the improvement in Group financial performance (tax payments & variable remuneration) and reduction in EMCF loss recoveries

• Operating cash flow typically skewed to second half of financial year

• (1) Intangibles comprise: Intangible assets plus deferred tax assets less deferred tax liabilities

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Risk capital requirements reflect growth in business

At end of	1H10 $m	2H10 $m	1H11 $m
Liquid assets	203	212	204
Risk based capital	177	141	148
Coverage ratio	1.15x	1.50x	1.38x

Liquid assets = cash + 50% of liquid investments

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FY11 interim dividend 95 cps fully franked equivalent to 92% payout ratio on 1H11 NPAT excluding goodwill impairment

Key Themes:

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Source of EPS
$1.20
$1.00
$0.80
$0.60
$0.40
$0.20
$0.00
1H10 2H10 1H11
For the 6 month period
UPAT EMCF/Investments
Diluted EPS
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• 1H11 EPS based on UPAT up 10% and 12% over 1H10 and 2H10 respectively

• 1H11 NPAT reduced by $10.6m noncash impairment charge and does not materially affect the Group’s liquidity, cash flows, or current or future operations

• Board has excluded the impact of the impairment charge on NPAT in determining the FY11 interim dividend

• As foreshadowed, profit contribution from EMCF expected to continue to decline

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Summary

• 1H11 UPAT up 13% on 1H10 and 2H10

• 1H11 NPAT adversely impacted by non-cash impairment charge

• Improving market conditions but investors and advisors remain cautious

• Increased financial strength

• Fully franked dividend of 95 cents given steady underlying performance and financial strength

• We believe we remain well positioned given:

• ─ Our brand

• ─ Our people

• ─ Focus on mass affluent/high net worth client segment

• ─ Proven products and services

• Next scheduled update – Chairman’s letter in May 2011

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