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Annual General Meeting 2006

Annual General Meeting 2006. Annual General Meeting 2006. Chairman’s Speech Ian Blair. Agenda. Chairman’s Address Chief Executive Officer’s Report Formal Resolutions General Business Questions Close of Meeting and Afternoon Tea. Chairman’s Address. 2005/06 excellent financial year

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Annual General Meeting 2006

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  1. Annual General Meeting 2006

  2. Annual General Meeting 2006 Chairman’s Speech Ian Blair

  3. Agenda • Chairman’s Address • Chief Executive Officer’s Report • Formal Resolutions • General Business • Questions • Close of Meeting and Afternoon Tea

  4. Chairman’s Address • 2005/06 excellent financial year • Delivered on commitment to shareholders • Service First • Community focus • Going forward • Board matters

  5. 2005/06 Excellent financial year • Net profit after tax $23.3 million • Cash earnings $44.4 million • Fully franked dividends of 27 cents per share • Total assets under management $29 billion • Total shareholder return of 32.4%

  6. Our commitment to shareholders • Strong profit, higher dividend, solid capital position • Continued strong growth in FUMA • Delivered on strategic initiatives • Perennial Real Estate Investments • Perennial Investment Partners acquisition • A solid year in transition

  7. Service First • 160 years old • 230,000 Australian investors • Top quartile service provider over next 3 years • Customer Care team • Constantly improve client service offering • Aim to be efficient, responsive, easy to deal with

  8. Community Focus • IOOF Foundation • Established 2002 to perpetuate our history • Disadvantaged families, aged care, disadvantaged children and youth • Total grants now over $1.4 million

  9. Going forward • The industry and the sharemarket • Changes to superannuation • Foundations of the last two years • Restructuring for growth

  10. Board matters • Change and renewal • Governance • Strengthen industry knowledge • New director

  11. Annual General Meeting 2006

  12. 2006 Annual General Meeting CEO’s Speech – Mr Ron Dewhurst

  13. Outline • Overview • 2005/06 in review • Perennial acquisition • Strategic direction

  14. Overview • Strong growth in underlying Funds under Management and Administration (“FUMA”) • Net profit growth of 54% for the year ending June 2006 • Perennial Investment Partners Ltd (“PIPL”) acquisition • Organisational restructure geared towards improving business accountability and transparency

  15. 2005/06 in review

  16. 2005/06 in review • FUMA ($bn) $29.0b 30% W/Sale FUM Retail FUMA 82% growth in FUMA since 2004

  17. 2005/06 in review Capitalising on operating leverage Note: Cash earnings is equivalent to Earnings before tax, net market value excess, depreciation and amortisation * Excludes consolidation of benefit funds

  18. 2005/06 in review • Objectives for 2005/06 Achievements • Best of breed alpha generator • Best Practice Services and Solutions • Commitment to depth as well as • breadth of relationships Perennial Real Estate Investments Development of ‘Pursuit’ ‘Service First’ Initiative Consultum Financial Advisers

  19. 2005/06 in review • Retail Funds Management Highlights • Launch of IOOF / Perennial Global Property Trust • Investment Grade rating by Morningstar • IOOF / Perennial International shares • Rainmaker Marketing Excellence award nomination • Best Website of the Year - Superannuation • Creation of Consultum Financial Advisers • Merger between Winchcombe Carson and Financial Partnership

  20. 2005/06 in review • Perennial Wholesale FUM Growth Diversification is successfully reducing volatility in growth

  21. Continued growth in Gross Margin Increasing economic relevance from Perennial (including PVM) Continued cost control 2005/06 in review Cash Earnings Management of both revenue and costs are contributing to growth

  22. 2005/06 in review • Operating Efficiency Cash operating expenses to Gross Profit* Note: Gross Profit is inclusive of other operating income and the Group’s share of PVM. * Excludes the impact of Benefit fund consolidation

  23. Acquisition of PIPL minorities

  24. Acquisition of PIPL minorities • IOOF has announced the acquisition of PIPL minorities shareholding • This will make PIPL a wholly-owned subsidiary of IOOF • 100% ownership significantly improves the growth potential of IOOF’s investment in PIPL • Increases IOOF’s exposure to one of its core businesses • More closely aligns Perennial’s growth opportunities with IOOF’s access to capital • Improved clarity and understanding of Perennial’s value proposition PIPL’s relationship with underlying boutiques remains unchanged

  25. Acquisition of PIPL minorities • Perennial success factors • Operational independence • Alignment of interests with investment professionals • Best of breed talent, both front and back office • Scalable business model • Cultural fit IOOF seeks to support these fundamental principles

  26. Acquisition of PIPL minorities • Minority shareholders to receive an initial payment of $67.9m • Based on 100% valuation of PIPL of $320m (“Initial Valuation”) • IOOF will compensate certain other key PIPL executives in exchange for them relinquishing their claims to PIPL equity ($9.4m) • Both shareholders and key executives eligible for a potential deferred payment based on PIPL’s 2008/09 audited financial performance Represents a final acquisition multiple of 25 times NPAT with an initial payment based on a PIPL valuation of $320m

  27. Acquisition of PIPL minorities • Voting on Resolutions 4 and 5 • Details outlined in Explanatory Memorandum • Independent Expert considers the terms of the transaction ‘fair and reasonable’ • Amendment to original terms of the transaction • As a result of unintended accounting implications • Payment based on actual 2008/09 NPAT if Michael Crivelli or Anthony Patterson resign in the intervening period • Significant incentives exist for continued involvement in the business Independent Directors unanimously recommend that shareholders vote in favour of the resolutions

  28. Strategic direction

  29. Strategic direction • Expand scope of asset management capabilities • Re-invigorate client-centric culture • Focused approach to platforms • Deeper more meaningful relationships • Client Segmentation • Strategic Cornerstones Best of breed asset management Product innovation Commitment to relationships Creator of value…not simply gatherer of assets

  30. 2006/07 Building momentum 2005/06 Transitionary year 2004/05 Setting the foundations • Acquisition of PIPL minorities • Launch of ‘Pursuit’ platform • Establishment of Perennial Retail business model • More closely aligning IOOF’s business offerings to stakeholder needs • Establish Perennial Real Estate Investments • Development of Consultum value proposition • Reinvigorate product range • IOOF’s brand ‘DNA’ • Communicating and decision-making framework • Developing and engaging talent Strategic direction • Progress since 2004…

  31. Strategic direction • Transforming IOOF - Creating end-to-end accountability • Asset Management • Perennial • Value • Growth • Real Estate • Fixed Interest • International • Asia • Adviser Services • Platforms • Pursuit • Strategic alliances • Employer Sponsored Superannuation • Multi-Investment Manager Solutions • Dealer Group Services • Consultum Financial Advisers • Strategic Alliances Understanding advisers’ needs Making ‘Service First’ Create, package and market investment performance

  32. Guidance on 2006/07 • Adviser Services - Re-energising IOOF’s offerings to advisers • ‘Pursuit’ – A flexible approach to investment administration • Consultum – Maximising the value of adviser’s practices • Asset Management • Best of breed asset management • Intellectual property and cultural fit • Capability gaps

  33. Guidance on 2006/07 • Financial outlook • Funds under Management and Administration • $30bn in FUMA at the end of September 2006 • FY07 earnings • 15% growth in normalised earnings (after minorities) • Assuming modest investment market returns • Excludes acquisition and restructuring related costs (after tax) • PIPL acquisition - $3.5m • Organisational restructure – up to $3.0m On track to meet earnings guidance on a normalised basis

  34. Annual General Meeting 2006

  35. Annual General Meeting 2006Resolutions

  36. IOOF Holdings Ltd - 2006 AGM Resolution 2a - To re-elect Ian Blair to the Board Votes % FOR 10,839,545 52.77% AGAINST 100,701 .49% DISCRETIONARY* 9,599,649 46.74% *The number of the Chairman’s discretionary proxy votes are 43.12% Note: These figures relate to the proxies lodged 48 hours prior to the meeting

  37. Annual General Meeting 2006Resolutions

  38. IOOF Holdings Ltd - 2006 AGM Resolution 2b - To re-elect Michael Crivelli to the Board Votes % FOR 10,748,949 52.35% AGAINST 171,518 .84% DISCRETIONARY* 9,611,691 46.81% *The number of the Chairman’s discretionary proxy votes are 43.21% Note: These figures relate to the proxies lodged 48 hours prior to the meeting

  39. Annual General Meeting 2006Resolutions

  40. IOOF Holdings Ltd - 2006 AGM Resolution 2c - To re-elect Roger Sexton to the Board Votes % FOR 10,810,556 52.62% AGAINST 119,547 .58% DISCRETIONARY* 9,614,081 46.80% *The number of the Chairman’s discretionary proxy votes are 43.19% Note: These figures relate to the proxies lodged 48 hours prior to the meeting

  41. Annual General Meeting 2006Resolutions

  42. Remuneration Report • What is covered in the Remuneration Report? • The board’s philosophy and approach to rewarding our employees, executives and directors • Largely set by the Corporations law, accounting standards and ASX Corporate Governance Guidelines

  43. Remuneration Report • Why have a Remuneration Report? • To make it as clear as possible to shareholders: • how senior members of the company are paid • and on what basis

  44. Remuneration Report • What is our approach to rewarding people at IOOF? • an approach to attract, recruit, motivate and keep high quality people • to give the desired performance outcome for shareholders

  45. Remuneration Report • For executives • a fixed amount, a short term incentive amount and a long term incentive amount • conditional on the executives meeting a series of performance hurdles

  46. Sample scorecard

  47. Remuneration Report • For non executive directors • A single fee

  48. Remuneration Report • Regular independent reviews …. • to understand the marketplace

  49. Remuneration Report • A few changes …. • a more scaled method for rewarding performance in excess of the hurdle rates • increased focus on achieving the total operating cost target for executives • a simple, single fee, for all non executive directors

  50. Remuneration Report • So what about the vote? • The IOOF Board takes notice of what our shareholders tell us

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