MARKET RELEASE

6 April 2004

CHALLENGER TO ACQUIRE ASSOCIATED PLANNERS GROUP LIMITED

6 April 2004, Sydney - Diversified financial services company Challenger Financial Services Group Limited (CGF), today announced it had entered into a Merger Implementation Agreement with Associated Planners Group Limited (Associated Planners) which relates to the acquisition by Challenger of all the shares in Associated Planners by way of interdependent schemes of arrangement under the Corporations Act. The meetings to vote on the schemes of arrangement are expected to be held in late June or early July.

Challenger's CEO, Mr Chris Cuffe, said in the event the schemes of arrangement are approved by Associated Planners shareholders and confirmed by the Court, it would be Challenger's intention to merge its existing financial planning arm, Garrisons Financial Planning, with Associated Planners.

"This is a very important development for Challenger. Associated Planners is regarded as one of the leading financial planning firms in Australia. A combined financial planning business, including Associated Planners and Garrisons, will create one of the strongest dealer groups in this country and one of the largest with approximately 450 planners nationally and funds under advice of more than \$7.5 billion."

"Financial planning at a dealership level is a scale business. Challenger could continue to grow its existing business organically but we believe that the combination of Associated Planners and Garrisons would enable us to significantly leap-frog what could otherwise be achieved. It allows us to quickly realise our aspirations for a robust and profitable dealership. We want the dealership's financial planners to have available to them extensive best-of-breed resources to enable them to concentrate on providing quality advice and service their clients," Mr Cuffe said.

The Directors of Associated Planners have unanimously agreed to recommend to shareholders that they approve the proposed schemes of arrangement.

The Chairman of Associated Planners, Mr Richard Thomas said that the Board had discussed the proposal with a number of the major shareholders of Associated

Planners, including Zurich, and they have advised the Board that in the absence of a superior offer they support the schemes of arrangement.

Under the Scheme of Arrangement, each ordinary and Z Class Associated Planners shareholders will receive approximately 5.7 Challenger shares for each Associated Planners share they hold. This equates to a purchase price for all the issued shares in Associated Planners of approximately \$100 million.

The Challenger shares that are to be issued to Zurich (which holds all Z Class shares approximating 30 per cent of Associated Planners) will be fully vested on issue.

Challenger shares will be issued to the holders of Associated Planners ordinary shares. However, 50 per cent of these shares will be subject to escrow conditions, which will be released in tranches over a three-year period, subject to certain conditions.

The proposed merger is subject to a number of conditions, including;

• Approval of the schemes by the relevant security holders
• Obtaining of Court orders approving the schemes
• Challenger shares, which are to be issued pursuant to the schemes, being accepted for quotation on ASX
• The Merger Implementation Agreement between Challenger and Associated Planners not being terminated prior to Court approval.
• The warranties remaining true and correct at the date of the scheme meetings and Court approval date.

Associated Planners Managing Director, Mr Ray Miles, will be appointed Managing Director of the combined financial planning group, while Associated Planners deputy Managing Director, Mr Andrew Creaser, and Garrisons Acting Managing Director, Mr Jim Mckay, will assume joint deputy Managing Director roles.

"The Challenger group will accelerate the continued growth of Associated Planners. Challenger clearly recognises the skills, focus and professionalism of Associated Planners member firms, but most importantly Challenger understands and is committed to the high value we place on autonomy in the financial planning process and in delivering outstanding quality advice and service," Mr Miles said.

"Over the years, Associated Planners has been approached with a variety of considerations. Our discussions with Challenger have been positive from the outset. We have very similar views about the direction of the financial planning industry.

Equally, we felt very strongly that any consideration would only work with a progressive, non-traditional institution. Challenger fits that bill."

Challenger's General Manager, Funds Management & Distribution, Mr Rob Adams, confirmed Challenger's commitment to upholding Associated Planners values and said Challenger and Associated Planners had finalised a "Charter of Independence" that would be upheld at all times.

"Challenger recognises the need for the financial planning process to be free from commercial influences that may result in suboptimal outcomes for clients. This means that within the combined Associated Planners and Garrisons dealership Challenger's in-house products will be judged on merit against other competitor products before being considered for inclusion in client's portfolios. With that in mind, we will obviously focus on developing and offering products that deliver value in a better way for planners and investors, " Mr Adams said.

Both Challenger and Associated Planners have agreed to give break fees in certain circumstances if the merger does not take effect. [Attachment 1 to this Announcement sets out the terms of the break fee arrangements.

Independent schemes will also be proposed for the Associated Planners options and Class A Redeemable Preference Shares.

It is expected that documents will be sent to Associated Planners shareholders towards the end of May and that, subject to satisfaction of all conditions, the scheme would be effective in early to mid July.

ENDS

About Associated Planners: Associated Planners Group Limited was established in 1989 by a team of progressive financial planners to cater to the needs of quality financial planner member firms. The shareholders in Associated Planners comprise Zurich (which holds all Z Class shares representing approximately 30% of issued capital), member firms (holding ordinary shares representing 62.5% of issued capital) and employees (holding ordinary shares representing 7.5% of issued capital).

ATTACHMENT1

Extract of Merger Implementation Agreement - (Clauses Dealing with Deal Protections, Including Break Fee)

$\overline{7}$ . RECOMMENDED SCHEME

$7.1$ AP Recommendation

AP shall ensure that the directors of AP have resolved, in the absence of a bona fide Competing Takeover Proposal which in the view of the AP directors must be recommended in preference to the Schemes or another reason which in law requires the directors to alter their recommendation, that they will:

• $(a)$ recommend to the holders of AP Shares and EPI Options that they vote in favour of and approve the Schemes; and
• $(b)$ not make any public statement or take any other action which would suggest that the Schemes are not recommended by the AP directors.

$7.2$ Non-Solicitation

• AP shall not, nor shall it permit any of its Subsidiaries to, nor shall it authorise or $(a)$ permit any officer, director or employee of, or require any investment banker, attorney or other advisor, agent or representative of AP or any of its Subsidiaries to:
• $(i)$ directly or indirectly solicit or initiate proposals regarding any Competing Takeover Proposal;
• $(ii)$ accept or enter into any agreement, arrangement or understanding with respect to any Competing Takeover Proposal or directly or indirectly participate in any discussions or negotiations regarding or furnish to any person any information with respect to, or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, a Competing Takeover Proposal; or
• $(iii)$ approve or recommend any Competing Takeover Proposal.

$(b)$ Paragraphs (a)(ii) and (iii) do not restrict AP or the AP Board from taking or refusing to take any action with respect to a bona fide Competing Takeover Proposal provided that the AP Board has determined in good faith and acting reasonably after consultation with its financial advisors and outside legal counsel. that such bona fide Competing Takeover Proposal, that was not solicited or initiated by AP in contravention of clause $7.2(a)(i)$ , is superior to the Schemes having regard to the interests of AP and the holders of AP Shares.

$7.3$ AP Undertaking

Background $(a)$

• $(i)$ Challenger has represented to AP that its reasonable estimate of its reasonable opportunity costs connected with the proposed Schemes together with other out of pocket expenses and costs exceeds \$1,000,000 and Challenger will continue to incur substantial costs and out of pocket expense in performing its obligations under this agreement.
• Challenger is induced to enter into this agreement on the basis that, in the $(ii)$ circumstances provided for by this clause 7.3, AP shall pay to Challenger its actual costs and expenses connected with the Schemes, subject to the cap in clause 7.5.

$(b)$ Undertaking

AP undertakes to Challenger that if:

• a Competing Takeover Proposal is announced or open for acceptance and, $(i)$ pursuant to that Competing Takeover Proposal, the bidder acquires a relevant interest in more than 50% of all AP's Shares and the Competing Takeover Proposal becomes free from any defeating conditions either before or after the end of the applicable offer period; or
• $(ii)$ this agreement is terminated by Challenger by reason that any of the AP Conditions Precedent (other than the condition set out in clause $6.1(h)$ ) is not satisfied.

then subject to this clause 7, AP must pay Challenger the Challenger Compensating Amount.

$(c)$ Challenger Compensating Amount

The Challenger Compensating Amount means the actual costs and expenses incurred by Challenger in performing its obligations under this deed including:

• $A_{1}$ advisory costs, legal costs (on a solicitor own client basis), costs of management and directors' time;
• $\mathbf{B}$ . out-of-pocket expenses incurred after 13 November 2003 including, without limitation, airfares, hotel accommodation, meals and associated expenses incurred by Challenger employees, advisors and agents;
• $C_{\star}$ costs incurred by Challenger in negotiating, planning and implementing the Schemes and this agreement,

in each case, incurred or suffered by Challenger as a result of AP having entered into this agreement or pursuing the Schemes and related transactions, including all preparatory investigations and due diligence undertaken in connection therewith since 13 November 2003.

$(d)$ Limitation on Payment

AP will not have any obligation under paragraph (b) where the holders of any class of AP Shares or the holders of the EPI Options vote against the resolution to approve the relevant Scheme and at the time of such vote the AP Board continues to recommend the Schemes.

$7.4$ Challenger Undertaking

$(a)$ Background

AP is induced to enter into this deed on the basis that, in the circumstances provided for by this clause 7.4, Challenger shall pay to AP its actual costs and expenses connected with the Schemes, subject to the cap in clause 7.5.

$(b)$ Undertaking

Challenger undertakes to AP that if Challenger terminates this agreement other than in accordance with clause 12 then, subject to this clause 7, Challenger must pay AP the AP Compensating Amount.

$(c)$ AP Compensating Amount

The AP Compensating Amount means the actual costs and expenses incurred by AP in performing its obligations under this deed including:

• $A_{\cdot}$ advisory costs, legal costs (on a solicitor own client basis), costs of management and directors' time;
• $\mathbf{B}$ . out-of-pocket expenses incurred after 13 November 2003 including, without limitation, airfares, hotel accommodation, meals and associated expenses incurred by AP employees, advisors and agents;
• $\mathbb{C}$ . costs incurred by AP in negotiating, planning and implementing the Schemes, this agreement and steps to be carried out by AP that are incidental to or precursors to the Schemes;

in each case, incurred or suffered by AP as a result of Challenger having entered into this agreement or pursuing the Schemes and related transactions, including all preparatory investigations, due diligence and work carried out in connection with company meetings or agreements with members, undertaken in connection therewith since 13 November 2003.

$7.5$ Cap

The maximum aggregate liability of AP under clause 7.3 or Challenger under clause 7.4 is in each case \$1,000,000.

$7.6$ Demand for Payment

Any demand for payment of the Challenger Compensating Amount or the AP Compensating Amount must:

$(i)$ be in writing; and $(ii)$ certify the amount and provide reasonable supporting details thereof.

Payment must be made by within 3 Business Days of receipt of the demand.

* * * * * * * * * * * *

Definitions which are relevant to clause 7:

AP Conditions Precedent means the conditions precedent which are referred to in the MIA.

AP Shares means Z Class Shares, Ordinary Shares and Class A Preference Shares.

Class A Preference Shares means 460,000 shares by that name which are issued in the capital of AP.

Competing Takeover Proposal means any proposal or offer with respect to any transaction (by purchase, merger, amalgamation, scheme of arrangement, business combination, liquidation, dissolution, recapitalisation, take-over bid or otherwise) that would, if completed substantially in accordance with its terms, result in any person (or group of persons) other than Challenger or its associates acquiring 25% or more of the AP voting shares or a controlling interest in an asset or assets of AP which have a value in excess of \$25,000,000.

Effective Date means the date when the Schemes take effect.

EPI Option Deeds means:

• the agreement dated 26 February 2004 between AP and 4 People Pty Limited; and
• the agreement to be executed prior to the date of the Scheme Booklet between AP and, respectively, AP Financial Coach Pty Limited and Hindmarsh Square Financial Services Pty Limited in its capacity as trustee of the Hindmarsh Square Unit Trust.

each on materially the same terms as the agreement with 4 People Pty Limited except to the extent agreed with Challenger.

EPI Options means the options to acquire ordinary shares to be issued in the capital of AP in accordance with the terms of the EPI Option Deeds.

Ordinary Shares means 24,892,447 ordinary shares issued in the capital of AP at the date of this agreement together with up to a further 30,000 Ordinary Shares to be issued before the date of the Scheme Booklet.

Scheme, or Schemes means the schemes of arrangement pursuant to Part 5.1 of the Corporations Act proposed between AP and, respectively:

• $(a)$ the holders of the Ordinary Shares as at the Effective Date;
• the holder of the Z Class Shares: $(b)$
• the holders of the Class A Preference Shares as at the Effective Date; and $(c)$
• $(d)$ the holders of the EPI Options,

a copy of which will be included in the Scheme Booklets for the Schemes together with any alterations or conditions made or required pursuant to sub-section 411(6) of the Corporations Act.

Scheme Booklet means a booklet containing information about the Scheme proposed to be sent to the Scheme Participants.

Subsidiaries has the same meaning as in the Corporations Act.

Z Class Shares means 10,503,800 shares by that name which are issued in the capital of AP at the date of this agreement together with up to a further 64,529 Z Class Shares to be issued before the date of the Scheme Booklet.