PERPETUAL LIMITED

ABN 86 000 431 827

AND ITS CONTROLLED ENTITIES

HALF-YEAR FINANCIAL STATEMENTS

31 DECEMBER 2008

PERPETUAL LIMITED AND ITS CONTROLLED ENTITIES Table of Contents

		Page No.
Directors' Report		3
	Lead Auditor's Independence Declaration	10
	Consolidated Income Statement	11
	Consolidated Balance Sheet	12
	Consolidated Statement of Changes in Equity	13
	Consolidated Cash Flow Statement	14
	Notes to the Financial Statements
Note 1.	Reporting entity	15
Note 2.	Summary of significant accounting policies	15
Note 3.	Revenue	31
Note 4.	Profit before tax	31
Note 5.	Proceeds from sale of investments	31
Note 6.	Individually significant and other items included in profit for the period	32
Note 7.	Segment information	33
Note 8.	Income tax expense	34
Note 9. Note 10.	Dividends Earnings per share	35 36
Note 11.	Other financial assets	36
Note 12.	Structured products assets and liabilities	37
Note 13.	Derivative financial instruments	37
Note 14.	Interest in associates using the equity method	39
Note 15.	Interest-bearing liabilities	39
Note 16.	Employee benefits	39
Note 17.	Provisions	40
Note 18.	Contributed equity	40
Note 19.	Business combination	41
Note 20.	Notes to the Consolidated Cash Flow Statement	41
Note 21.	Contingent assets and liabilities	41
Note 22.	Events subsequent to balance date	42
Directors' Declaration		43
	Independent Auditor's Review Report	44
Appendix 1	Pro-forma Consolidated Income Statement for the half-year ended 31 December
	2008 adjusted for the removal of structured products	45
Appendix 2	Pro-froma Consolidated Balance Sheet as at 31 December 2008 adjusted for
	the removal of structured products	46
Appendix 3	Pro-forma Segment Information for the half-year ended 31 December 2008 adjusted for the removal of structured products	47

DIRECTORS' REPORT

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 half-year ended 31 December 2008 and the independent auditor's review report thereon.

Directors

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

FASCPAS, FAICD, FAIM (Age 67) Robert M Savage, Chairman and Independent Director

Appointed as a director in 2001 and as Chairman in October 2005. He was formerly Chairman and Managing Director of IBM Australia and New Zealand. He is Chairman of David Jones Limited and a director of Fairfax Media Limited. He is Chairman of Perpetual's Nominations Committee and a member of the People and Remuneration Committee.

Mr Savage brings to the Perpetual board his experience as a senior executive in Australia and the Asian region, including experience in people management and organisation effectiveness issues and several years as a nonexecutive director and chairman across a wide range of Australian companies.

Listed company directorships held during the past three financial years:

• David Jones Limited from October 1999 (current)
• Smorgon Steel Group Limited from April 2000 to August 2007
• Mincom Limited (Chairman) from May 2002 to May 2007
• Fairfax Media Limited from June 2007 (current)

Meredith J Brooks, Independent Director

BA, FIAA (Age 47)

Appointed as a director in November 2004. She was formerly Managing Director, US Institutional Investment Services for Frank Russell Company based in New York. Prior to that she held the position of Managing Director of Frank Russell Australasia for five years and was previously Director, European Funds based in London. Ms Brooks is Chair of Synergy & TaikOz Limited. 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.

E Paul McClintock, Independent Director

BA, LLB (Age 59)

Appointed as a director in April 2004. He is a director of investment banking firm McClintock Associates, a role he has held since 1985, apart from the period between July 2000 and March 2003, when he was Secretary to the Cabinet and Head of the Cabinet Policy Unit in the Australian Government. He is Chairman of Thales Australia, Medibank Private Limited and COAG Reform Council. 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
• Macquarie Infrastructure Investment Management Limited (the manager of Macquarie Infrastructure Group) from May 2003 (current)

DIRECTORS' REPORT (continued)

Directors (continued)

Elizabeth M Proust, Independent Director BA (Hons), LLB, FAICD (Age 58)

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 the Premier and Cabinet and Chief Executive Officer of the City of Melbourne. She is currently a director of Spotless Group Limited, Insurance Manufacturers of Australia Pty Ltd, Sinclair Knight Merz Pty Ltd and NonProfit Australia. 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 current

Peter B Scott, Independent Director BE (Hons), M.Eng.Sc (Age 54)

Appointed as a director in July 2005. 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 Management Limited and a director of Stockland Corporation Limited. Mr Scott is an advisory board member of Pilotlight Australia and an advisory panel member of Laing O'Rouke Australia. He is a member of Perpetual's Investment Committee and People and Remuneration 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 (current)

Alexander Stevens, Independent Director

MB BS (Hons), FRACS, MBA (AGSM), MAICD (Age 49)

Appointed as a director in June 2008. He was formerly Chief Executive Officer of PepsiCo Australia and New Zealand, and a member of the PepsiCo Asia Executive Committee. Prior to that he transitioned through several senior Executive roles within PepsiCo, in both Australia and the USA. Before joining PepsiCo, he held Executive positions in Investment Banking at Ord Minnett (now JP Morgan) in both the Corporate Finance and Equity Markets divisions, and also at DBSM (now UBS). Mr Stevens is chairman of Crescent Food Group and a member of the Advisory Board to the Faculty of Medicine at the University of New South Wales. He is a Fellow of the Royal Australasian College of Surgeons and a member of the Australian Institute of Company Directors. He is a member of Perpetual's Audit Risk and Compliance Committee and Investment Committee.

Mr Stevens resigned as a director on 3 February 2009.

DIRECTORS' REPORT (continued)

Directors (continued)

Philip J Twyman, Independent Director BSc, MBA, FIA, FIAA (Age 64)

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 (current)

David M Deverall, Managing Director BE (Hons), MBA (Stanford) (Age 42)

Appointed Managing Director in September 2003. He held senior management positions at Macquarie Bank Limited for seven years including Group Head of the Funds Management Group and Head of Strategy, Analysis and Planning. Prior to this he was a strategy consultant with Bain International and The LEK Partnership. Mr Deverall is Chair of the Investment and Financial Services Association (IFSA) and a member of the Executive Council of the Faculty of Business at the University of Technology Sydney.

Mr Deverall brings to Perpetual a combination of strategic ability and commercial drive and skills in product innovation and experience in management across a broad range of investment products and services. He also possesses an extensive overall understanding of the wealth management and wider financial services industry.

Alternate Directors

Roger Burrows, Alternate Director BCom, CPA (Age 45)

Alternate director for Mr Savage from December 2008. 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 53)

Alternate director for Mr Deverall from May 2006. 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.

DIRECTORS' REPORT (continued)

Directors (continued)

Directors who retired during the period

P John Nesbitt, Alternate Director

BFA, CA (Age 50)

Appointed as alternate director for Mr Savage on 15 November 2005 and resigned on 13 May 2008, following his appointment as Group Executive, Perpetual Private Wealth.

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.

Glenda Charles

Grad. Dip. Corp. Gov. ASX Listed Entities

Joined Perpetual in August 1994. She was appointed Assistant Company Secretary of Perpetual in 1999. Ms Charles has over ten years experience in company secretarial practice and administration and has worked in the financial services industry for over 20 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 half-year to 31 December 2008 were:

				Audit Risk &					People &
			Compliance		Investment		Nominations		Remuneration
Director	Board 1		Committee		Committee		Committee		Committee
	Eligible to attend	Attended	Eligible to attend	Attended	Eligible to attend		Attended Eligible to attend	Attended	Eligible to attend	Attended
R M Savage	7	7	-	-	-	-	-	-	3	3
M J Brooks	7	6	4	4	2	2	-	-	-	-
E P McClintock(a)	7	7	-	-	2	2	-	-	3	3
E M Proust	7	6	4	4	-	-	-	-	3	3
P B Scott(b)	7	6	-	-	2	2	-	-	3	3
A Stevens(c)	7	7	4	4	2	2	-	-	-	-
P J Twyman	7	7	4	4	2	2	-	-	-	-
D M Deverall(d)	7	7	-	-	-	-	-	-	-	-

¹ Meeting held on 10 November 2008 was an unscheduled meeting.

(a) Paul McClintock was appointed as a member of the People and Remuneration Committee on 31 July 2008.

(d) David Deverall retired from the Investment Committee on 31 July 2008.

⁽b) Peter Scott retired as a member of the Audit Risk and Compliance Committee on 31 July 2008.

⁽c) Alexander Stevens was appointed to the board of Perpetual Limited on 24 June 2008. He was appointed as a member of the Audit Risk and Compliance Committee and Investment Committee on 31 July 2008. Mr Stevens resigned as a director on 3 February 2009.

DIRECTORS' REPORT (continued)

Review of Operations

Global and domestic financial markets experienced exceptionally severe conditions in the first 6 months of the 2009 financial year. The All Ordinaries Index fell 31% between 30 June and 31 December 2008 and the spread on the Australian ITRAXX index increased 148% in the same period causing bond valuations to also fall significantly. The rapid contraction of these markets has reduced Perpetual's revenue base by:

• Substantially lower asset values on which management fees are earned
• Withdrawals of client funds as investors switched to guaranteed cash deposits
• Reduced flow of new investments as potential clients delay entering markets
• Payments to the Exact Market Cash Fund 1 to offset reduced asset values

In response to our operating environment and its impact on our revenue streams, Perpetual undertook a restructure in the first half of the year to reduce expenses that encompassed all of our operating segments. The financial effect of this restructure was to eliminate \$32.5 million of annualised expenses from our cost base. The cost in the current year to achieve these savings was \$8.4 million after tax. This expense has been disclosed as a significant item included in profit for the period.

A review of our operating segments is below:

Perpetual Investments' operating profit before tax fell 60% to \$35.7 million from \$88.9 million for the six months to 31 December 2007. This result excludes \$21.3 million of before tax losses associated to our Exact Market Cash Products which are treated as a significant item. The decline is driven by a fall in average Funds Under Management (FUM) mostly due to the fall in the Australian Equity Market. FUM has also been affected by a decline in applications, particularly retail applications as investor's have placed their funds into less risky cash based, asset classes. FUM at 31 December 2008 was \$24.6 billion, a reduction from \$30.3 billion at 30 June 2008.

Perpetual Private Wealth's operating profit before tax fell 33% to \$17.4 million for the six months to 31 December 2008 from \$25.8 million for the six months to 31 December 2007. The decrease was driven by a decline in financial advisory fees as a result of a fall in average Funds Under Advice (FUA), which fell to \$6.5 billion at 31 December 2008, down from \$7.7 billion at 30 June 2008.

Perpetual Corporate Trust's operating profit before tax grew 47% to \$20.0 million for the six months ended 31 December 2008 from \$13.6 million for the six months to 31 December 2007. The increase in profit before tax was driven by reductions in the expense base, due to restructuring undertaken in the prior financial year, followed by further expense reduction initiatives in the current period. The period ended 31 December 2007 included a restructure expense of \$1.4 million within the Corporate Trust's operating results, whereas restructuring costs in the current period have been excluded from Corporate Trust's business unit results and treated as part of the significant item referred to above. Corporate Trust's revenue has been supported during the current period by a lower than expected "run-off" of Funds Under Administration (FUA) on Residential Mortgage Backed Securities (RMBS), particularly non-bank RMBS. FUA for Perpetual Corporate Trust totalled \$246.1 billion at 31 December 2008 an increase from the balance of \$222.9 billion at 30 June 2008. The increase in FUA was driven by RMBS repurchase agreements ("repo") which generally operate at lower margins to traditional bank and non-bank RMBS.

The Group and Support Services result has decreased for the six months ended 31 December 2008 due primarily to restructuring costs included within the support services cost base. The decrease in the expense base was slightly offset by a fall in interest revenue on corporate funds due to declining interest rates and the fall in operating cashflows.

The consolidated profit after tax for the half-year ended 31 December 2008 attributable to the members of Perpetual Limited was \$14,192,000 (2007: \$87,594,000). Perpetual's operating profit after tax represents the result of Perpetual's underlying operations and is calculated as follows:

AND ITS CONTROLLED ENTITIES PERPETUAL LIMITED ABN 86 000 431 827

DIRECTORS' REPORT (continued)

Review of Operations (continued)

	6 months ended
	31/12/2008	31/12/2007
Reconciliation of Operating Profit After Tax	\$'000	\$'000
Profit for the period after tax	14,192	87,594
Add / (less) : Loss / (profit) on sale of investments after tax	4,392	(21,099)
Add : Restructuring costs after tax	8,412	-
Add : Exact Market Cash Fund losses after tax	14,904	12,809
Operating profit after tax attributable to
equity holders of the parent	41,900	79,304
Less : Losses attributable to minority interest	(278)	-
Perpetual's operating profit after tax	41,622	79,304

Perpetual has incurred losses of approximately \$21.3 million before tax (\$14.9 million after tax) as a result of its guarantee of the benchmark return to the investors of the Exact Market Cash Fund (EMCF). Losses within the EMCF have been caused by the rapid widening of credit spreads within debt securities issued by global financial organisations as their losses from exposures to sub-prime and other toxic assets increased, particularly within the first three months of the current financial year. Within these losses \$3.0 million before tax have been realised due to the failure of the global Investment Bank Lehman Brothers. The balance of \$18.3 million are unrealised "mark to market" losses that will reverse over time as the securities within the EMCF portfolio mature. EMCF losses before tax of \$21.3 million are included in Distributions and expenses relating to structured products on the Consolidated Income Statement.

Perpetual's operating EBITDA is similarly calculated as follows:

	6 months ended
	31/12/2008	31/12/2007
Reconciliation of Operating EBITDA*	\$'000	\$'000
EBITDA for the period	52,161	110,127
Add : Exact Market Cash Fund losses	21,291	18,299
Add : Restructuring costs	7,673	-
Perpetual's operating EBITDA	81,125	128,426

* EBITDA represents earnings before interest, tax, depreciation and amortisation of equity remuneration. It includes EMCF losses and restructuring costs excluding equity remuneration expenses relating to the restructuring and excluding investment sales.

Dividends

On 18 February 2009, the directors resolved to pay a fully franked interim dividend of 40 cents per share (2007: 189 cents per share).

State of Affairs

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

Events Subsequent to Balance Date

The directors are not aware of any other event or circumstance since the end of the financial period 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 date are set out in note 22 to the consolidated financial report.

DIRECTORS' REPORT (continued)

Lead Auditor's Independence Declaration Under Section 307C of the Corporations Act 2001

The Lead Auditor's Independence Declaration is set out on page 10 and forms part of the directors' report for the half-year ended 31 December 2008.

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 Class Order, amounts in this report and financial report are rounded off to the nearest thousand dollars, unless otherwise stated.

Signed on behalf and in accordance with a resolution of the directors:

______________________________ ______________________________

Robert Savage David Deverall

Chairman Managing Director

Dated at Sydney this 18th day of February 2009.

PERPETUAL LIMITED AND ITS CONTROLLED ENTITIES

Consolidated Income Statement for the half-year ended 31 December 2008

			Consolidated
	Note	31 Dec 2008	31 Dec 2007
		\$'000	\$'000
Revenue from the provision of services		187,927	250,169
Income from structured products		77,980	71,466
Investment income		6,774	10,980
	3	272,681	332,615
Staff related expenses		(83,761)	(94,311)
Occupancy expenses		(8,526)	(7,559)
Administrative and general expenses		(28,962)	(30,853)
Distributions and expenses relating to structured products		(99,271)	(89,765)
Earnings before interest, tax, depreciation and amortisation (EBITDA) excluding investment sales		52,161	110,127
Financing costs		(1,638)	(1,549)
Equity remuneration amortisation expense		(15,504)	(8,732)
Depreciation and amortisation expense	4	(6,079)	(3,972)
		(23,221)	(14,253)
Proceeds from sale of investments	5	81,371	76,800
Cost of investments disposed of		(87,015)	(46,902)
Profit / (loss) on disposal of investments		(5,644)	29,898
Impairment of available-for-sale securities		(651)	-
Share of loss of equity accounted investees, net of income
tax		(102)	-
Profit before tax		22,543	125,772
Income tax expense		(10,532)	(29,379)
Income tax benefit / (expense) on disposal of investments		1,903	(8,799)
Income tax expense	8	(8,629)	(38,178)
Profit after tax		13,914	87,594
(Profit) / loss after tax attributable to minority interests		278	-
Profit after tax attributable to members of Perpetual Limited		14,192	87,594
Basic earnings per share attributable to ordinary equity
holders - cents per share	10	36.4	224.7
Diluted earnings per share attributable to ordinary equity
holders - cents per share	10	33.8	211.4

The Income Statement is to be read in conjunction with the notes to the half-year financial statements set out on pages 15 to 42.

PERPETUAL LIMITED AND ITS CONTROLLED ENTITIES

Consolidated Balance Sheet

as at 31 December 2008

	Note	31 Dec 2008	Consolidated 30 Jun 2008	31 Dec 2007
		\$'000	\$'000	\$'000
Current assets
Cash and cash equivalents	20(a)	107,708	183,111	196,735
Receivables		79,024	88,503	86,221
Other financial assets	11	100	100	100
Structured products assets	12	2,091,902	1,507,331	1,749,033
Structured products assets - receivable from investors		8,358	-	-
Derivative financial instruments	13	1,362	15,503	6,692
Prepayments		7,768	7,781	7,042
Current tax assets		6,993	-	-
Total current assets		2,303,215	1,802,329	2,045,823
Non-current assets
Receivables		-	-	5,200
Shares in other companies, investments in unlisted unit trusts and other financial assets
Interests in associates using the equity method	11 14	60,505 780	77,032 -	94,097 -
Structured products - loan receivable		332,274	343,633	216,374
Property, plant and equipment		29,978	30,654	29,205
Intangibles		104,474	87,956	84,303
Deferred tax assets		27,216	28,538	19,264
Total non-current assets		555,227	567,813	448,443
Total assets		2,858,442	2,370,142	2,494,266
Current liabilities
Payables Structured products liabilities		52,113	43,554	45,922
Structured products - payable to investors	12	2,091,902 -	1,507,331 122,705	1,749,033 -
Structured products - income received in advance		14,631	21,264	6,110
Derivative financial instruments	13	11,165	235	69
Current tax liabilities		-	25,408	19,314
Employee benefits	16	14,186	37,122	23,578
Provisions	17	2,416	825	1,050
Total current liabilities		2,186,413	1,758,444	1,845,076
Non-current liabilities
Payables		86	8,401	7,314
Interest-bearing liabilities	15	45,000	45,000	45,000
Structured products - interest-bearing liabilities		330,720	215,600	216,568
Deferred tax liabilities		3,558	1,587	7,998
Employee benefits Provisions	16 17	2,255 29,416	2,125 24,575	1,965 24,110
Total non-current liabilities		411,035	297,288	302,955
Total liabilities		2,597,448	2,055,732	2,148,031
Net assets		260,994	314,410	346,235
Equity
Contributed equity	18	168,829	163,811	160,770
Reserves		24,515	44,280	46,938
Retained earnings		64,606	105,574	138,527
Total equity attributable to holders of parent		257,950	313,665	346,235
Minority interest		3,044	745	-
Total equity		260,994	314,410	346,235

The Balance Sheet is to be read in conjunction with the notes to the half-year financial statements set out on pages 15 to 42.

PERPETUAL LIMITED AND ITS CONTROLLED ENTITIESConsolidated Statement of Changes in Equity as at 31 December 2008

\$00 0	Gro ss Co ntr ibu ted	Tre Sha asu ry re Res	Tot al Co ntr ibu ted	Ava ilab le f or Sal e Re	Ge al ner Re	For eig n Cu rre ncy Re	Equ ity Co atio mp ens n Re	Cas hflo w Hed ge Re	Tot al Re	Ret ain ed Ear nin	Min orit y inte	Tot al
Bal t 1 Jul y 2 008 anc e a	Equ ity 324 ,70 3	erv e (16 0,8 92)	Eq uity 163 ,81 1	ser ve 4,9 07	ser ve 103	ser ve (68 8)	ser ve 37, 114	ser ve 2,8 44	ser ves 44, 280	gs 105 4 ,57	t res 745	314 ,41 0
Item nis ed dire ctly in ity s re cog equ
For eig xch latio n d iffe e tr n e ang ans ren ces Imp airm of inve ent stm ent s Cha s in fai lue of f ina ncia l as aila ble for sale set nge r va s av Def d in x lia bilit han in fa ir va lue of a e ta ts erre com y o n c ge sse	- - - -	- - - -	- - - -	- 651 (12 7) ,55 3,7 72	- - - -	2,0 18 - - -	- - - -	- - - -	2,0 18 651 (12 7) ,55 3,7 72	- - - -	- - - -	2,0 18 651 (12 7) ,55 3,7 72
Net inc nis ed dire ctly in ity om e re cog equ	-	-	-	(8,1 34)	-	2,0 18	-	-	(6,1 16)	-	-	(6,1 16)
fit f Pro or t he iod per	-	-	-	-	-	-	-	-	-	14, 192	(27 8)	13, 914
Tot al r ise d in nd e fo r th erio d eco gn com e a exp ens e p	-	-	-	(8,1 34)	-	2,0 18	-	-	(6,1 16)	14, 192	(27 8)	7,7 98
Con trib utio f eq uity (op tion ised ) ns o s ex erc Em ploy Sha re P has e P lan loa dur ing the riod nts ee urc n re pay me pe Tre har issu ed dur ing the riod asu ry s es pe Tre har cha sed rke t asu ry s es pur on ma	1,0 96 - 11, 199 -	- 98 (11 9) ,19 (41 0)	1,0 96 98 - (41 0)	- - - -	- - - -	- - - -	- - - -	- - - -	- - - -	- - - -	- - - -	1,0 96 98 - (41 0)
Tre har est ed dur ing the riod asu ry s es v pe Div ide nds tre har d to rch uity on asu ry s es use pu ase eq TS R v ed sha and ycle d s har es f air val adj est ust nt res rec ue me Div ide nds id to sh hold pa are ers	- - (29 9) -	4,4 92 (45 5) 496 -	4,4 92 (45 5) 197 -	- - - -	- - - -	- - - -	(4,4 88) 455 - -	- - - -	(4,4 88) 455 - -	- - - (59 ,18 1)	- - - -	4 - 197 (59 ,18 1)
Div ide nds har tre on asu ry s es Ma rk-t ark f in et o tere st r ate o-m sw aps nsfe r of f in fit a Tra rk-t ark et o tere st r ate to nd loss ma o-m sw aps pro Am orti sat ion of t har rea sur y s es Am orti sat ion of o ptio ns	- - - - -	- - - - -	- - - - -	- - - - -	- - - - -	- - - - -	(4,0 21) - - 16, 178 (82 5)	- (20 1) ,82 (12 7) - -	(4,0 21) (20 1) ,82 (12 7) 16, 178 (82 5)	4,0 21 - - - -	- - - - -	- (20 1) ,82 (12 7) 16, 178 (82 5)
Min orit y in tere st	-	-	-	-	-	-	-	-	-	-	2,5 77	2,5 77
Bal t 31 De ber 20 08 anc e a cem	336 ,69 9	(16 7,8 70)	168 ,82 9	(3,2 27)	103	1,3 30	44, 413	(18 ,10 4)	24, 515	64, 606	3,0 44	260 ,99 4
\$00 0	Gro ss Co ibu ted ntr	Tre Sha asu ry re Res erv e	Tot al Co ibu ted ntr	ilab le f Ava or Sal e Re ser ve	Ge al ner Re ser ve	eig For n Cu rre ncy Re ser ve	ity Equ Co atio mp ens n Re ser ve	Cas hflo w Hed ge Re ser ve	Tot al Re ser ves	Ret ain ed Ear nin	Min orit y inte t res	Tot al
Bal Jul t 1 y 2 007 anc e a	Equ ity 277 ,79 9	(12 58) 5,1	Eq uity 152 ,64 1	32, 660	103	(91 3)	32, 539	117	64, 506	gs 123 ,81 7	-	340 ,96 4
Item nis ed dire ctly in ity s re cog equ For eig xch latio n d iffe e tr n e ang ans ren ces	-	-	-	-	-	408	-		408	-	-	408
Cha fair of f for in lue ina ncia l as set aila ble sale nge va s av Fai lue adj ust nts sale of inve stm ent r va me on s Def d in x lia bilit han in fa ir va lue of a e ta ts erre com y o n c ge sse	- - -	- - -	- - -	861 (27 ,08 7) 7,8 68	- - -	- - -	- - -		861 (27 ,08 7) 7,8 68	- - -	- - -	861 (27 ,08 7) 7,8 68
Net inc nis ed dire ctly in ity om e re cog equ	-	-	-	(18 ,35 8)	-	408	-	-	(17 ,95 0)	-	-	(17 ,95 0)
Pro fit f he iod or t per	-	-	-	-	-	-	-		-	87, 594	-	87, 594
Tot al r ise d in nd e fo r th erio d eco gn com e a exp ens e p	-	-	-	(18 ,35 8)	-	408	-	-	(17 ,95 0)	594 87,	-	69, 644
Con trib utio f eq uity ns o Sha Em ploy re P has e P lan loa nts dur ing the riod ee urc n re pay me pe	3,0 61 -	- 262	3,0 61 262	- -	- -	- -	- -	- -	- -	- -	- -	3,0 61 262
Tre har issu ed d d urin g th erio d asu ry s es or p roc ure e p Div ide nds har d to rch uity tre on asu ry s es use pu ase eq Tre har ed dur ing the riod est asu ry s es v pe Div ide nds id to sh hold pa are ers	17, 610 - - -	(18 ,86 0) (68 5) 6,7 41 -	(1,2 50) (68 5) 6,7 41 -	- - - -	- - - -	- - - -	- 685 (6,7 41) -	- - - -	- 685 (6,7 41) -	- - - (77 ,26 1)	- - - -	(1,2 50) - - (77 ,26 1)
Div ide nds id o sha n tr pa eas ury res Ma rk-t ark f in et o tere st r ate o-m sw aps fair Per pet ual Jam Fie ldin lue adj ust nt es g va me Am orti sat ion of t har rea sur y s es	- - - -	- - - -	- -	- - (11 0) -	- - - -	- - - -	(4,3 77) - - 8,7 32	- 2,1 93 - -	(4,3 77) 2,1 93 (11 0) 8,7 32	4,3 77 - - -	- - - -	- 2,1 93 (11 0) 8,7 32

The Statement of Changes in Equity is to be read in conjunction with the notes to the half-year financial statements set out on pages 15 to 42.

PERPETUAL LIMITED AND ITS CONTROLLED ENTITIES Consolidated Cash Flow Statement for the half-year ended 31 December 2008

		Consolidated
	Note	31 Dec 2008	31 Dec 2007
		\$'000	\$'000
Cash flows from operating activities
Cash receipts in the course of operations		201,082	257,291
Cash payments in the course of operations		(170,212)	(178,726)
Dividends received		631	1,340
Interest received		5,154	6,996
Interest paid		(2,000)	(1,549)
Income taxes paid		(25,285)	(41,193)
Net cash from operating activities		9,370	44,159
Cash flows from investing activities
Payments for property, plant and equipment		(5,778)	(8,875)
Payments for investments		(80,239)	(38,735)
Repayments of advances made under the Employee Share
Purchase Plan		98	262
Acquisition of business		(12,931)	(4,289)
Proceeds from sale of investments		81,371	80,020
Tax paid on sale of investments		(8,799)	(16,187)
Net cash (used in) / from investing activities		(26,278)	12,196
Cash flows from financing activities
Proceeds from issue of shares		1,096	3,061
Payments for on market share purchase		(410)	-
Dividends paid		(59,181)	(77,261)
Net cash used in financing activities		(58,495)	(74,200)
Net decrease in cash and cash equivalents		(75,403)	(17,845)
Cash and cash equivalents 1 July		183,111	214,580
Cash and cash equivalents at 31 December	20(a)	107,708	196,735

The Cash Flow Statement is to be read in conjunction with the notes to the half-year financial report set out on pages 15 to 42.

Note 1. Reporting entity

Perpetual Limited ("the Company") is domiciled in Australia. The consolidated half-year financial report of the Company as at and for the half-year ended 31 December 2008 comprises the Company and its controlled entities (together referred to as the consolidated entity) and the consolidated entity's interests in associates.

The half-year financial report was authorised for issue by the directors on 18 February 2009.

The consolidated annual report for the consolidated entity as of and for the year ended 30 June 2008 is available at www.perpetual.com.au.

Note 2. Summary of significant accounting policies

a. Statement of compliance

The half-year financial report is a general purpose financial report prepared in accordance with AASB 134: Interim Financial Reporting and the Corporations Act 2001.

The consolidated half-year financial report also complies with International Financial Reporting Standards and Interpretations (IFRS) adopted by the International Accounting Standards Board (IASB).

The consolidated half-year financial report does not include all of the information required for a full annual report and should be read in conjunction with the consolidated annual financial report of the consolidated entity for the year ended 30 June 2008.

b. Basis of preparation

The consolidated half-year financial statements have been prepared on a historical cost basis, except for availablefor-sale 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 half-year financial statements are presented in Australian dollars, which is the Company's functional and presentation currency and the functional currency of the consolidated entity. Functional currency is the currency of the primary economic environment in which the entity operates.

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 half-year 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 half-year financial report are:

• Valuation of financial instruments
• Impairment of goodwill and intangibles with indefinite useful lives
• Ability to realise deferred tax assets
• Provisions and contingencies
• Vesting profile of treasury shares
• Structured product loans receivable provision
• Business combinations

b. Basis of preparation (continued)

The accounting policies set out below have been applied consistently to all periods presented in the consolidated half-year financial report, and have been applied consistently by the consolidated entity.

Except as described below, the accounting policies applied by the consolidated entity in this half-year financial report are the same as those applied by the consolidated entity in its annual financial report as at and for the year ended 30 June 2008.

c. Basis of consolidation

(i) 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 half-year financial statements from the date control commences until the date control ceases. Investments in subsidiaries are carried at cost in the Company's financial statements.

(ii) 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 with 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 all of the benefits related to the SPE's operations and net assets, being exposed to risks incident to the SPEs activities and retaining the majority of the residual or ownership risks related to the SPEs or their assets.

(iii) 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 half-year 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.

(iv) Transactions eliminated on consolidation

Intra-group balances 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.

d. Foreign currency translation

(i) 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 Income Statement.

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-forsale financial assets are included in the asset revaluation reserve in equity.

(ii) 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 income statement 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)
• All resulting foreign exchange differences are recognised as a separate component of equity.

When a foreign operation is sold, a proportionate share of such exchange differences are recognised in the Income Statement as part of the gain or loss on sale where applicable.

e. Intangible assets

(i) Goodwill

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 included in 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 u).

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

Negative goodwill arising on an acquisition is recognised directly in the Income Statement.

e. Intangible assets (continued)

(ii) 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 technical feasibility and where the consolidated entity has an intention and ability to use the asset. Costs incurred on software maintenance are expensed as incurred.

(iii) 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 e(v)) and impairment losses (see accounting policy u).

(iv) 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.

(v) Amortisation

Amortisation is recognised in the Income Statement on a straight-line basis over the period the benefits from the assets arise, unless these assets are indefinite life assets. Goodwill and 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 5 years
• funds under management acquired: 5 years
• customer contracts acquired: 5 10 years.

f. Revenue and income recognition

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

(i) 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.

(ii) Investment income

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

Dividend income is recognised in the Income Statement 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 the Income Statement as they are received.

f. Revenue and income recognition (continued)

(iii) Sale of non-current assets

Net gains or losses on disposal of non-current assets are included as other operating income or other operating expenses accordingly. 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.

g. Segment reporting

A segment is a distinguishable component of the consolidated entity engaged in providing related services (business segment), or providing services within an economic environment (geographical segment), which is subject to risks and rewards different from those of other segments. The consolidated entity's primary format for segment reporting is based on business segments. The business segments are determined based on the consolidated entity's management and internal reporting structure.

h. 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 Income Statement 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.

i. Income tax

Income tax expense comprises current and deferred tax. Income tax expense is recognised in the Income Statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

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 provided using the balance sheet method, providing for temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and amounts used for taxation purposes.

i. Income tax (continued)

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.

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.

(i) Tax consolidation

The Company and its wholly owned Australian resident entities, formed a tax-consolidated group with effect from 1 July 2003 and are therefore taxed as a single entity from that date. The head entity within the taxconsolidated group is Perpetual Limited.

Current tax expense, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax consolidated group are recognised in the separate financial statements of the members of the tax consolidated group using the 'group allocation' approach by reference to the carrying amounts of assets and liabilities in the separate financial statements of each entity and the tax values applying under tax consolidation.

Current tax liabilities or assets and deferred tax assets arising from unused tax losses and tax credits of subsidiaries, are assumed by the Company in the tax-consolidated group and are recognised as amounts payable to or receivable from other entities in the tax-consolidated group in, conjunction with any tax funding arrangement amounts (refer accounting policy i (ii)). Any difference between these amounts is recognised by the Company as an equity contribution or distribution.

The Company recognises deferred tax assets arising from unused tax losses of the tax-consolidated group to the extent that it is probable that future taxable profits of the tax-consolidated group will be available against which the asset can be utilised.

Any subsequent period adjustments to deferred tax assets arising from unused tax losses as a result of revised assessments of the probability of recoverability are recognised by the head entity only.

i. Income tax (continued)

(ii) Nature of tax funding arrangements and tax sharing arrangements

The head entity, in conjunction with other members of the tax-consolidated group, has entered into a tax funding arrangement which sets out funding obligations of members of the tax-consolidated group in respect of tax amounts.

The tax funding arrangements require payments to or from the head entity equal to the current tax liability or asset assumed by the head entity and any tax loss deferred tax asset assumed by the head entity, resulting in the head entity recognising a receivable or payable equal to the tax liability or asset assumed. The intercompany receivable or payable is at call.

Contributions to fund the current tax liabilities are payable as per the tax funding arrangement and reflect the timing of the head entity's obligation to make payments for tax liabilities to the relevant tax authorities.

The head entity, in conjunction with other members of the tax-consolidated group, has also entered into a tax sharing agreement. The tax sharing agreement provides for the determination of the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. No amounts have been recognised in the financial statements in respect of this agreement as payment of any amounts under the tax sharing agreement is considered remote.

j. Goods and services tax

Revenues, expenses and assets are recognised net of goods and services tax (GST), except where GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated with GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the Balance Sheet.

Cash flows are included in the Cash Flow Statement on a gross basis. GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

k. Investments

(i) 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.

(ii) 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 u), are recognised as a separate component of equity. When an investment is derecognised, the cumulative gain or loss in equity is transferred to the Income Statement.

k. Investments (continued)

(ii) Available-for-sale financial assets (continued)

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

(iii) 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 the Income Statement when incurred.

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

l. 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 Fund (the EMCF product) and Perpetual Protected Investments (PPI).

(i) Exact Market Cash Fund

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 total return swaps. The total return swaps result in the benchmark rate of return being paid to the unitholders in the Fund. The total return swap is an inter-company transaction between the Company and the Funds and is eliminated on consolidation.

Assets and liabilities of the EMCF product, which net to zero, 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 Income Statement.

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:

• (a) investments in unit trusts accounted for at fair value as available for sale financial assets (EMCF 1)
• (b) investments in debt securities are either accounted for at fair value or on an amortised cost basis using the effective interest method if they are expected to be held to maturity (EMCF 1 and EMCF 2).

(ii) 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.

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.

l. Structured products (continued)

(ii) Perpetual Protected Investments (continued)

The incurred loss model makes specific provision where specific loan impairment is identified. For individual loans not impaired, assets with similar risk profiles are pooled and collectively assessed for losses that 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.

m. Property, plant and equipment

(i) Recognition and measurement

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

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.

(ii) 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, if 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 the Income Statement as an expense when incurred.

(iii) Depreciation

Depreciation is recognised in the Income Statement 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, if not insignificant, and the useful life and depreciation method applied to an asset are reassessed at least annually.

n. Receivables

Receivables are stated at amortised cost using the effective interest method less impairment losses (see accounting policy u).

o. Expenses

(i) Operating leases

Operating lease payments are recognised as an expense in the Income Statement 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 in the Income Statement is recognised as a lease provision in the Balance Sheet (see accounting policy q). The provision is expected to be realised over the term of the underlying leases.

(ii) Financing costs

Financing costs comprise interest payments on borrowings and derivative financial instruments calculated using the effective interest method.

p. Payables

Payables are stated at amortised cost and are non-interest bearing.

q. Provisions

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

Management exercises judgement in estimating provision amounts. It may be possible, based on existing knowledge, that outcomes in the next annual reporting period will 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.

(i) 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.

(ii) 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.

q. Provisions (continued)

(iii) 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.

(iv) Employee benefits

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

r. 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.

s. Share capital

(i) 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.

(ii) Repurchase of share capital

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.

In the Company's financial statements, the transactions of the Company sponsored employee share plan trust are treated as being executed directly by the Company (as the trust acts as the Company's agent). Accordingly, shares held by the trust are recognised as treasury shares and deducted from equity.

(iii) Dividends

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

t. Cash and cash equivalents

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

u. Impairment

(i) Financial assets

A financial asset 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.

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 original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its current fair value.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

Impairment losses are recognised in the Income Statement. Any cumulative loss in respect of an available-for-sale financial asset recognised previously in equity is transferred to the Income Statement.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost and available-for-sale financial assets that are debt securities, the reversal is recognised in the Income Statement. For available-for-sale financial assets that are equity securities, the reversal is recognised directly in equity.

(ii) Non-financial assets

Carrying amounts of the consolidated entity's non-financial assets, other than deferred tax assets (see accounting policy i), 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.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognised in the Income Statement. 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.

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.

u. Impairment (continued)

(ii) 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.

(iii) Derecognition of financial assets and liabilities

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:

• the rights to receive cash flows from the asset have expired
• the consolidated entity retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party
• the consolidated entity has transferred its rights to receive cash flows from the asset and either: has transferred substantially all the risks and rewards of the asset; or has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Income Statement.

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

(i) Cash flow hedges

To the extent that the hedge is effective, changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised directly in equity. To the extent that the hedge is ineffective, changes in fair value are recognised in the Income Statement.

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 Income Statement in the same period that the hedged item affects profit and loss.

w. Employee benefits

(i) 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 Income Statement as incurred.

(ii) 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.

(iii) 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 and the obligation can be estimated reliably.

x. Share-based payment transactions

(i) 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.

x. Share-based payment transactions (continued)

(ii) Deferred staff incentives

The Company grants certain employees shares under long-term incentive and retention plans. Under these plans, shares vest with 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 adjusting the share price 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 Company and consolidated entity make estimates on the number of shares that are expected to vest. Where appropriate, revised estimates are reflected in the income statement or directly against opening retained earnings (in the case where shares containing a market linked hurdle do not vest due to share prices not achieving their threshold for vesting) with the corresponding adjustment to the equity compensation reserve.

y. 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 profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise shares and options granted to employees under long-term incentive and retention plans.

z. New standards and interpretations not yet adopted

The following standards, amendments to standards and interpretations have been identified as those which may impact the consolidated entity in the period of initial application. They are available for early adoption at 31 December 2008, but have not been applied in preparing this financial report:

Revised AASB 3 Business Combinations changes the application of acquisition accounting for business combinations and the accounting for non-controlling (minority) interests. Key changes include the immediate expensing of all transaction costs, measurement of contingent consideration at acquisition date with subsequent changes through the Income Statement, measurement of non-controlling (minority) interests at full fair value or the proportionate share of the fair value of the underlying net assets, guidance on issues such as reacquired rights and vendor indemnities and the inclusion of combinations by contract alone and those involving mutuals. The revised standard becomes mandatory for the consolidated entity's 30 June 2010 financial statements.

z. New standards and interpretations not yet adopted (continued)

• AASB 8 Operating Segments is effective for annual reporting periods commencing on or after 1 January 2009. AASB 8 will result in a change in the approach to segment reporting, as it requires adoption of a 'management approach' to reporting on financial performance. The information being reported will be based on what the key decision makers use internally for evaluating segment performance and deciding how to allocate resources to operating segments. Application of AASB 8 may result in different segments, segment results and different types of information being reported in the segment note of the financial report. The consolidated entity has not yet determined the potential effect of the revised standard on the consolidated entity's financial report.
• Revised AASB 101 Presentation of Financial Statements introduces as a financial statement (formerly 'primary' statement) the 'statement of comprehensive income'. The revised standard does not change the recognition, measurement or disclosure of transactions and events that are required by other AASBs. The revised AASB 101 will become mandatory for the consolidated entity's 30 June 2010 financial statements and half-year financial statements as at 31 December 2009. The consolidated entity has not yet determined the potential effect of the revised standard on the consolidated entity's disclosures.
• Revised AASB 123 Borrowing Costs removes the option to expense borrowing costs and requires that an entity capitalise borrowing costs directly attributable to the acquisition or construction of a qualifying asset as part of the cost of that asset. The revised AASB 123 will become mandatory for the consolidated entity's 30 June 2010 financial statements and half-year financial statements at 31 December 2009 and will constitute a change in accounting policy. In accordance with the transitional provisions, the consolidated entity will apply the revised AASB 123 to qualifying assets for which capitalisation of borrowing costs commences on or after the effective date. The consolidated entity has not yet determined the potential effect of the revised standard on future earnings.
• Revised AASB 127 Consolidated and Separate Financial Statements changes the accounting for investments in subsidiaries. Key changes include the measurement to fair value of any previous or retained investment when control is obtained or lost with any resulting gain or loss being recognised in the Income Statement and the treatment of increases in ownership interest after control is obtained as transactions with equity holders in their capacity as equity holders. The revised standard will become mandatory for the consolidated entity's 30 June 2010 financial statements. The consolidated entity has not yet determined the potential effect of the revised standard on the consolidated entity's financial report.
• AASB 2008-1 Amendments to Australian Accounting Standards Share-Based Payment: Vesting Conditions and Cancellations changes the measurement of share-based payments that contain non-vesting conditions. AASB 2008-1 becomes mandatory for the consolidated entity's 30 June 2010 financial statements and half-year financial statements as at 31 December 2009. The consolidated entity has not yet determined the potential effect of the amending standard on the consolidated entity's financial report.

	Consolidated
	31 Dec 2008 \$'000	31 Dec 2007 \$'000
Note 3. Revenue
Revenue from the provision of services
Gross revenue from fees and commissions	187,927	250,169
Investment income Dividends Interest - Related parties - Other parties Unit trust distributions	489 - 4,300 1,985	1,157 - 6,222 3,601
Total investment income	6,774	10,980
Other income
Income from structured products	77,980	71,466
Total other income	77,980	71,466
	272,681	332,615

Note 4. Profit before tax

Profit before tax has been arrived at after charging/(crediting) the following items:

Depreciation of property, plant and equipment	2,349	1,184
Amortisation of intangible assets:
- Capitalised software	3,055	2,344
- Other intangible assets	675	444
	3,730	2,788
Depreciation and amortisation expense	6,079	3,972
Rental charges – operating leases	6,733	6,395
(Loss) / profit on disposal of investments	(5,644)	29,898
Note 5. Proceeds from sale of investments
Gross proceeds from sale of part of investment portfolio	81,371	76,800

Consolidated
31 Dec 2008	31 Dec 2007
\$'000	\$'000
(5,644)	29,898
(651)	-
(6,295)	29,898
1,903	(8,799)
(4,392)	21,099
(21,291)	(18,299)
6,387	5,490
(14,904)	(12,809)
	-
	-
(8,412)	-
	8,290
	(12,017) 3,605 (27,708)

Note 7. Segment information

	Perpetual Investments3	Private Wealth4	Corporate Trust	Group and Support Services 5	Consolidated
	\$' 000	\$' 000	\$' 000	\$' 000	\$' 000
31 December 2008
Total Revenue	183,355	44,978	40,973	3,375	272,681
EBITDA1	27,841	19,663	21,733	(17,076)	52,161
Amortisation and depreciation2	(13,398)	(2,231)	(1,709)	(4,245)	(21,583)
Segment result	14,443	17,432	20,024	(21,321)	30,578
Financing costs					(1,638)
Loss on disposal of investments6					(5,644)
Impairment of available-for-sale securities					(651)
Share of loss of equity accounted investees, net of
income tax					(102)
Income tax expense					(8,629)
Profit after tax					13,914
(Profit) / loss after tax attributable to minority interests					278
Profit after tax attributable to members of Perpetual
Limited					14,192
31 December 2007
Total Revenue	229,768	54,630	41,623	6,594	332,615
EBITDA 1	79,057	27,266	15,173	(11,369)	110,127
Amortisation and depreciation 2	(8,431)	(1,423)	(1,574)	(1,276)	(12,704)
Segment result	70,626	25,843	13,599	(12,645)	97,423
Financing costs					(1,549)
Profit on disposal of investments					29,898
Income tax expense					(38,178)
Profit after tax					87,594
(Profit) / loss after tax attributable to minority interests					-
Profit after tax attributable to members of Perpetual Limited					87,594

1 EBITDA represents earnings before interest, tax, depreciation and amortisation. It includes EMCF losses and excludes losses on sale of investments.

2 Includes equity remuneration amortisation expense.

3 Total revenue for Perpetual investments includes income from structured product of \$77,980,000 (2007: \$71,466,000). Segment result for Perpetual Investments includes EMCF losses of \$21,291,000 (2007: \$18,299,000) before tax.

4 Perpetual Private Wealth was previously disclosed as Perpetual Private Clients and was created as part of our corporate restructuring in 2007. The Perpetual Private Wealth segment includes our Private Clients and Direct businesses. The Direct business was previously disclosed in the Perpetual Investments segment. Comparative information for these segments have been reclassified to conform to current year presentation.

5 EBITDA for Group and Support Services include restructuring costs incurred during the period of \$7,673,000. Equity remuneration expenses relating to the restructuring are included in amortisation and depreciation expenses.

6 Net of impairment of available-for-sale investments held by seed funds.

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 above segments derive revenue are:

Services

Perpetual Investments	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.
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.

The revenue reported for each segment pertains to services provided to external parties only.

	Consolidated
	31 Dec 2008	31 Dec 2007
	\$'000	\$'000
Note 8. Income tax expense
a) Income tax expense
Current tax	2,214	34,685
Deferred tax	7,065	3,489
(Over) / under provided in prior year	(650)	4
Total	8,629	38,178
Deferred income tax included in income tax expense comprises:
Decrease in deferred tax assets	4,277	1,610
Increase in deferred tax liabilities	2,788	1,879
Total	7,065	3,489
The above movements in deferred tax assets and deferred tax liabilities are net of movements in these
balances recognised directly in equity.
b) Reconciliation of income tax expense to prima facie income tax payable
Prima facie income tax expense calculated at
30% (2007: 30%) on profit for the period	6,763	37,732
Increase in income tax expense due to:
- Accounting loss on credit funds	386	-
- Accounting loss on disposal of investments	1,693	-
- Assessable capital gains	-	8,799
- Impairment of available-for-sale securities	195	-
- Imputation gross-up on dividends received	35	141
- Foreign source loss - effect of lower tax rate	1,147	389
- Foreign source loss not recognised as a deferred tax asset - Other expenditure	820 697	278 274
	11,736	47,613
Decrease in income tax expense due to:
- Accounting profit on disposal of investments	-	8,969
- Realised net capital losses	1,662	-
- Unrealised net capital losses	680	-
- Franking credits on dividends received	115	470
	2,457	9,439
Income tax expense attributable to profit for the period before
tax over provided in comparable period	9,279	38,174
Less: Income tax (over) / under provided in prior period
- Other Income tax expense attributable to profit for	(650)	4
the period	8,629	38,178

At 31 December 2008, the consolidated entity had carried forward realised net capital losses of \$5,539,000 (31 December 2007: Nil) which had a tax benefit of \$1,662,000 (31 December 2007: Nil); the tax benefit of these capital losses has been recognised in deferred tax assets.

PERPETUAL LIMITED AND ITS CONTROLLED ENTITIES

Notes to and forming part of the financial statements for the half-year ended 31 December 2008

	Consolidated
31 Dec 2008 31 Dec 2007
\$'000	\$'000

Note 8. Income tax expense (continued)

a) Income tax expense (continued)

The consolidated entity had unrealised net capital losses recognised in income of \$8,386,000 (31 December 2007: Nil) which had a tax benefit of \$2,516,000 (31 December 2007: Nil); the tax benefit of those capital losses has been recognised in deferred tax assets.

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

Carried forward foreign tax losses of \$45,752,000 (31 December 2007 : \$37,321,000) which had a tax benefit of \$5,719,000 (31 December 2007: \$4,665,000) at 12.5% (Irish corporate tax rate) are not recognised in the Income Statement.

c) Amounts recognised directly in equity

Deferred tax arising in the reporting period and not recognised in
the net profit or loss but directly debited to equity.	3,772	7,868

Note 9. Dividends

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

	Cents per share	Total Amount \$'000	Franked / Unfranked	Date of Payment
31 December 2008 Final 2008 - Ordinary dividend	141	59,181	Franked	25 September 2008
Total amount		59,181
31 December 2007
Final 2007 - Ordinary dividend	187	77,261	Franked	14 September 2007
Total amount		77,261

The directors resolved on 18 February 2009 to pay an interim ordinary dividend of 40 cents per share franked at 30% (2007: 189 cents per share franked at 30%). This dividend has not been provided for as at 31 December 2008. The dividend is payable on 13 March 2009 with a record date of 27 February 2009.

Consolidated
31 Dec 2008	31 Dec 2007
\$'000	\$'000

Dividend franking account

30% (2007: 30%) franking credits 34,078 59,405 Franking credits available after the payment of income tax provided for in the financial statements:

59,405

The above available amounts are based on the balance of the dividend franking account at 31 December 2008 adjusted for franking credits that will arise from the payment of the current tax liabilities.

			31 Dec 2008	Consolidated 31 Dec 2007
			\$'000	\$'000
Note 10.	Earnings per share			Cents per share
	Basic earnings per share		36.4	224.7
	Diluted earnings per share		33.8	211.4
	The following reflects the income and share information used in calculating the basic and diluted earnings per share:
	Net profit used in calculating basic and diluted earnings per share		\$'000 14,192	\$'000 87,594
	Weighted average number of ordinary shares used in the calculation of basic earnings per share			Number of shares
	Effect of dilutive securities:		38,977,665	38,976,799
Share options	Weighted average number of treasury shares on issue		3,809 3,058,692	92,002 2,368,802
	Weighted average number of ordinary shares and potential ordinary shares used in the calculation of diluted earnings per share		42,040,166	41,437,603
	Note 11. Other financial assets	31 Dec 2008 30 Jun 2008 \$'000	Consolidated \$'000	31 Dec 2007 \$'000
Current	Government, municipal and other public securities held to maturity	100	100	100
		100	100	100
Non-current
	Listed equity securities available for sale - at market value 1 Unlisted unit trusts available for sale - at market value 2	22,914 37,266	39,547 37,164	34,109 59,696
	Government, municipal and other public securities held to maturity	122	122	122
Secured loans		203 60,505	199 77,032	170 94,097

1 The Trustee Companies Act 1984 (Victoria) requires that a Reserve Fund be provided, the value of which shall be not less than one half of a percentum of trust estates in Victoria. In the event of the appointment of a liquidator, a receiver, a receiver and manager or an official manager of a trustee company, monies in its Reserve Fund are available for the payment of sums due from the trustee company in accordance with Section 39(3) of the above Act. Pursuant to Section 38 of the above Act, the Company may otherwise provide for the Reserve Fund by appropriating other funds available in any manner in which trust monies may be invested by a trustee under the Trustee Act 1958 (Victoria). The Reserve Fund for the current reporting period is held in cash and cash equivalents.

2 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. Investments are also made in newly launched products to provide a capital base from which investments can be made.

	Consolidated
	31 Dec 2008	30 Jun 2008	31 Dec 2007
	\$'000	\$'000	\$'000
Note 12. Structured products assets and liabilities
Current assets and liabilities
Exact Market Cash Fund 1 - at market value	1,753,902	1,507,331	1,749,033
Exact Market Cash Fund 2 - at amortised cost	338,000	-	-
	2,091,902	1,507,331	1,749,033

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 benchmark return is guaranteed to the investors by the consolidated entity. The National Australia Bank has provided the EMCF 1 product with a guarantee to the value of \$20 million (2007: \$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 risks and credit risks. The fund's underlying investments are recorded at market value.

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 different structure from EMCF 1 and the fund's underlying investment are recorded at amortised cost and are not affected by any mark to market losses that may occur. EMCF 2 invests in debt securities issued by parties or securities with a minium credit rating of BBB-. As such these investments have been recorded at amortised cost in accordance with accounting standards. The market value of the fund's underlying investments is \$339 million as at 31 December 2008. National Australia Bank (NAB) has provided the fund with a guarantee to the value of \$5 million (2008: nil) to be called upon in the event that Perpetual does not meet its obligations to the fund under the swap agreement.

Note 13. Derivative financial instruments

Assets
Current
Forward foreign exchange contracts 1.(ii)	58	175	-
Interest rate swap contracts 2.*	1,304	15,328	6,692
	1,362	15,503	6,692
Liabilities
Current
Index futures contracts 1.(i)	-	-	36
Forward foreign exchange contracts 1.(ii)	-	-	33
Interest rate swap contracts 2.*	11,165	235	-
	11,165	235	69

* Includes interest paid in advance.

1. 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 fund's financial risk management policy.

(i) Index futures contracts

An incubation fund has entered into index futures contracts to hedge its exposure to equity movements which are economic hedges but do not satisfy the requirements for hedge accounting. As a result changes in the fair values of these contracts are recorded in the Income Statement.

Note 13. Derivative financial instruments (continued)

(i) Index futures contracts (continued)

The following table shows the fair value, notional value and maturities at 31 December 2007 of index futures contracts:

	Fair value		Net fair	Notional
	Asset \$'000	Liability \$'000	value \$'000	value \$'000
Within 1 year	-	(36)	(36)	949

There were no index futures contracts held at 31 December 2008.

(ii) 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.

The consolidated entity has the following held for trading forward exchange contracts outstanding at 31 December 2008 (Australian dollar equivalents):

		Fair value		Average
		Assets	Liability	exchange
	Maturity	\$'000	\$'000	rate
Sell Australian dollars, buy US dollars	6-12 months	58	-	1.1802
		58	-

The incubation funds had the following held for trading forward exchange contracts outstanding at 31 December 2007 (Australian dollar equivalents):

		Fair value		Average
	Maturity	Assets \$'000	Liability \$'000	exchange rate
Sell Swiss Francs, buy Australian dollars	0-2 months	-	(11)	1.0179
Sell Euros, buy Australian dollars	0-2 months	-	(12)	0.6154
Sell British Pounds, buy Australian dollars	0-2 months	-	(10)	0.4272
		-	(33)

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 taken to the Income Statement.

2. Interest rate swap contracts

Investment and interest loans made to investors are funded by variable rate banking facilities. It is the Company's policy to hedge these 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.

At 31 December 2008 the fair value, notional principal amounts and period of expiry of the interest rate swap contracts are as follows:

		Fair value		Notional
	Asset \$'000	Liability \$'000	value \$'000	amount \$'000
Less than 1 year	1,304	(139)	1,165	176,700
5-7 years	-	(11,026)	(11,026)	107,375
	1,304	(11,165)	(9,861)	284,075

PERPETUAL LIMITED AND ITS CONTROLLED ENTITIES Notes to and forming part of the financial statements

for the half-year ended 31 December 2008

	Consolidated
31 Dec 2008	30 Jun 2008	31 Dec 2007
\$'000	\$'000	\$'000

Note 13. Derivative financial instruments (continued)

2. Interest rate swap contracts (continued)

At 31 December 2007 the fair value, notional principal amounts and period of expiry of the interest rate swap contracts are as follows:

	Fair value		Net fair	Notional
	Asset	Liability	value	amount
	\$'000	\$'000	\$'000	\$'000
Less than 1 year	2,749	-	2,749	83,560
6-7 years	3,943	-	3,943	98,375
	6,692		- 6,692	181,935

Note 14. Interest in associates using the equity method

Investment in associate	780	-	-
	780	-	-

	Country of	Reporting	Ownership Interest
Name of Entity	Incorporation	Date	31 Dec 2008	30 Jun 2008	31 Dec 2007
Perpetual Wholesale Geared
International Share Fund
(PIWGIF)	Australia	31 Dec	45%	56%	100%

PIWGIF was previously treated as a consolidated entity up until December 2008 when additional units being issued to third party investors diluted the consolidated entity's interest below 50%.

Note 15. Interest-bearing liabilities

	Consolidated
	31 Dec 2008	30 Jun 2008	31 Dec 2007
	\$'000	\$'000	\$'000
Non-current
Floating rate bill facility	45,000	45,000	45,000

The floating rate bank bill facility of \$45,000,000 is unsecured and has a floating interest rate of 4.97 per cent at 31 December 2008. Repayment of the existing facility is due at 31 January 2010.

Note 16. Employee benefits

Current
Liability for annual leave	5,088	6,816	4,851
Liability for long service leave	2,526	2,573	2,506
Other employee benefits	6,309	27,003	15,121
Restructuring provision	263	730	1,100
	14,186	37,122	23,578
Non-current
Liability for long service leave	2,255	2,125	1,965
	2,255	2,125	1,965

			Consolidated
	31 Dec 2008 \$'000		30 Jun 2008 \$'000		31 Dec 2007 \$'000
Note 17. Provisions
Current
Administration process review provision	-		-		350
Other	-		-		700
Restructuring provision	2,182		425		-
Onerous leases and make good	234 2,416		400 825		- 1,050
Non-current
Internal insurance and claims provision	8,679		6,165		6,538
Lease expense provision	20,737		18,410		17,572
	29,416		24,575		24,110
Note 18. Contributed equity
Share capital
42,218,658 (30 June 2008: 41,952,619, 31
December 2007: 41,505,316) ordinary shares, fully
paid	168,829		163,811		160,770
	Number		Number		Number
Movement in share capital	of Shares	\$'000	of Shares	\$'000	of Shares	\$'000
Balance at beginning of the period Shares issued:	39,197,876	163,811	39,130,102	160,770	38,894,418	152,641
- Exercise of staff options	33,779	1,096	66,664	2,068	80,186	3,061
- Executive share plans (vested during period)	78,828	4,689	13,173	933	181,275	6,741
- Employee equity allocation purchased on market	(19,503)	(865)	(12,063)	(591)	(25,777)	(1,935)
- Employee share plans (vested during period) Balance at end of the period	- 39,290,980	98 168,829	- 39,197,876	631 163,811	- 39,130,102	262 160,770
Ordinary shares fully paid (excluding unvested
shares from share plans)	39,290,980	168,829	39,197,876	163,811	39,130,102	160,770
- Unvested shares from share plans	2,927,678	167,870	2,754,743	160,892	2,375,214	137,700
Ordinary shares fully paid	42,218,658	336,699	41,952,619	324,703	41,505,316	298,470

During the half-year, the Company issued 232,260 (30 June 2008: 380,639, 31 December 2007: 231,639) ordinary shares under the Perpetual Executive Share Plan. These shares were issued at market value.

During the half-year, the Company issued 33,779 (30 June 2008: 66,664, 31 December 2007: 80,186) ordinary shares in accordance with Perpetual's Executive Option Plan at a weighted average share price of \$32.46 (30 June 2008: \$31.02, 31 December 2007: \$38.17) per share.

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 all other shareholders and creditors and are fully entitled to any surplus capital.

Note 19. Business combination

On 24 September 2008 the Company acquired 100% of the issued share capital of smartsuper Pty Limited, which is a Self Managed Superannuation Funds administration provider based in North Sydney.

The acquired business contributed revenue of \$1.3 million and net profit after tax of \$0.3 million to the consolidated entity for the period from 24 September 2008 to 31 December 2008. If this acquisition had occurred on 1 July 2008, the revenue and net profit would have been \$2.5 million and \$0.6 million respectively.

Total purchase consideration was \$16.6 million including cash consideration of \$16.0 million, direct costs relating to the acquisition of \$0.2 million and employee and equipment lease liabilities assumed of \$0.4 million. The fair value of net identifiable assets acquired was \$6.0 million, consisting of net working capital of \$0.4 million, plant and equipment of \$0.6 million and intangible assets of \$5.0 million. The resulting goodwill from this acquisition was \$10.6 million.

Note 20. Notes to the Consolidated Cash Flow Statement

(a) Reconciliation of cash

For the purposes of the Cash Flow Statement, cash includes cash on hand, at bank and short-term deposits at call.

		Consolidated
	\$'000	31 Dec 2008 30 June 2008 \$'000	31 Dec 2007 \$'000
Cash	41,840	51,433	52,843
Deposits at call	12,380	46,559	49,358
Short-term deposits	53,488	85,119	94,534
	107,708	183,111	196,735

Deposits at call and short-term deposits are largely invested in cash management trusts, credit income funds and credit enhanced cash funds operated by the consolidated entity.

(b) Financing facilities

Refer to Note 15.

Note 21. Contingent assets and liabilities

The directors are of the opinion that recognition of assets and liabilities is not required in respect of these matters, as it is not probable that future economic benefits will arise nor future sacrifice of economic benefits be required and the amount is not capable of reliable measurement.

PERPETUAL LIMITED AND ITS CONTROLLED ENTITIES

Notes to and forming part of the financial statements

for the half-year ended 31 December 2008

	Consolidated
	31 Dec 2008 \$'000	30 Jun 2008 \$'000	31 Dec 2007 \$'000
Note 21. Contingent assets and liabilities (continued)
(a) Contingent assets
Discussions with our insurers regarding a possible insurance claim recovery disclosed as a contingent asset in the prior years have been resolved at balance date. The consolidated entity received an indemnity payment of \$1.90 million (\$1.33 million after tax) as settlement of the claim in the period ending 30 June 2008.
	-	-	3,900
(a) Contingent liabilities
Controlled entity has bank guarantees to the favour of the Australian Securities and Investments Commission in respect of Dealer's licence arrangements.	20	20	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	1,000
Bank guarantees of a controlled entity in favour of various lessors for rental bonds on leased premises	209	209	123
Contingent liabilities exist in respect of certain overdrawn trust and estate accounts against which ample assets are held in the respective trusts and estates.	-	-	-
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 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.	-	-	-

Note 22. Events subsequent to balance date

The directors are not aware of any other event or circumstance since the end of the financial period 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.

PERPETUAL LIMITED AND ITS CONTROLLED ENTITIES Directors' Declaration

The directors have received a declaration from the Managing Director and the Chief Financial Officer under section 295A of the Corporations Act 2001.

In the opinion of the directors of Perpetual Limited:

• 1. the financial statements and notes, set out on pages 11 to 42, are in accordance with the Corporations Act 2001, including:
• (a) giving a true and fair view of the financial position of the consolidated entity as at 31 December 2008 and of its performance, as represented by the results of its operations and cash flows for the half-year ended on that date; and
• (b) complying with Australian Accounting Standard AASB 134 "Interim Financial Reporting" and the Corporations Act 2001; and
• 1. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of the directors:

Robert Savage David Deverall Director Director

Dated at Sydney this 18th day of February 2009.

	Consolidated
	Note	31 Dec 2008 \$'000	31 Dec 2008 \$'000
Revenue from the provision of services	3	187,927	250,169
Investment income	3	6,774	10,980
		194,701	261,149
Staff related expenses		(83,761)	(94,311)
Occupancy expenses		(8,526)	(7,559)
Administrative and general expenses Exact market cash fund losses		(28,962) (21,291)	(30,853) (18,299)
Earnings before interest, tax, depreciation and amortisation (EBITDA) excluding investment sales		52,161	110,127
Financing costs		(1,638)	(1,549)
Equity remuneration amortisation expense		(15,504)	(8,732)
Depreciation and amortisation expense	4	(6,079)	(3,972)
		(23,221)	(14,253)
Proceeds from sale of investments	5	81,371	76,800
Cost of investments disposed of		(87,015)	(46,902)
Profit on disposal of investments		(5,644)	29,898
Impairment of available-for-sale securities		(651)	-
Share of loss of equity accounted investees, net of income tax		(102)	-
Profit before tax		22,543	125,772
Income tax expense		(10,532)	(29,379)
Income tax on disposal of investments		1,903	(8,799)
Income tax expense	8	(8,629)	(38,178)
Profit after tax		13,914	87,594
(Profit) / loss after tax attributable to minority interests		278	-
Profit after tax attributable to members of Perpetual Limited		14,192	87,594
Basic earnings per share attributable to ordinary equity holders - cents per share	10	36.4	224.7
Diluted earnings per share attributable to ordinary equity holders - cents per share	10	33.8	211.4

Appendix 1 - Pro-forma Consolidated Income Statement for the half-year ended 31 December 2008 adjusted for the removal of structured products

The Income Statement is to be read in conjunction with the notes to the half-year financial statements set out on pages 15 to 42.

			Consolidated
	Note	31 Dec 2008	30 Jun 2008	31 Dec 2007
		\$'000	\$'000	\$'000
Current assets
Cash and cash equivalents	20	107,708	183,111	196,735
Receivables		79,024	88,503	86,221
Other financial assets	11	100	100	100
Derivative financial instruments	13	1,362	15,503	6,692
Structured products corporate funding		9,912	5,328	-
Prepayments		7,768	7,781	7,042
Current tax assets		6,993	-	-
Total current assets		212,867	300,326	296,790
Non-current assets
Receivables		-	-	5,200
Shares in other companies, investments in
unlisted unit trusts and other financial assets	11	60,505	77,032	94,097
Interests in associates using the equity
method	14	780	-	-
Property, plant and equipment		29,978	30,654	29,205
Intangibles Deferred tax assets		104,474 27,216	87,956 28,538	84,303 19,264
Total non-current assets		222,953	224,180	232,069
Total assets		435,820	524,506	528,859
Current liabilities
Payables Structured products - corporate funding		52,113 -	43,554 -	45,922 194
Structured products - income received in advance		14,631	21,264	6,110
Derivative financial instruments	13	11,165	235	69
Current tax liabilities		-	25,408	19,314
Employee benefits	16	14,186	37,122	23,578
Provisions	17	2,416	825	1,050
Total current liabilities		94,511	128,408	96,237
Non-current liabilities
Payables		86	8,401	7,314
Interest-bearing liabilities	15	45,000	45,000	45,000
Deferred tax liabilities		3,558	1,587	7,998
Employee benefits	16	2,255	2,125	1,965
Provisions	17	29,416	24,575	24,110
Total non-current liabilities		80,315	81,688	86,387
Total liabilities		174,826	210,096	182,624
Net assets		260,994	314,410	346,235
Equity
Contributed equity	18	168,829	163,811	160,770
Reserves		24,515	44,280	46,938
Retained earnings		64,606	105,574	138,527
Total equity attributable to holders of parent		257,950	313,665	346,235
Minority interest		3,044	745	-
Total equity		260,994	314,410	346,235

Appendix 2 - Pro-forma Consolidated Balance Sheet as at 31 December 2008 adjusted for the removal of structured products

The Balance Sheet is to be read in conjunction with the notes to the half-year financial statements set out on pages 15 to 42.

Appendix 3 - Pro-forma Segment Information for the half-year ended 31 December 2008 adjusted for the removal of structured products

	Perpetual Investments	Private Wealth 3	Corporate Trust	Group and Support Services	Consolidated
	\$' 000	\$' 000	\$' 000	\$' 000	\$' 000
31 December 2008
Total revenue	105,375	44,978	40,973	3,375	194,701
EBITDA 1	27,841	19,663	21,733	(17,076)	52,161
Amortisation & depreciation 2	(13,398)	(2,231)	(1,709)	(4,245)	(21,583)
Segment result	14,443	17,432	20,024	(21,321)	30,578
Financing costs					(1,638)
Loss on disposal of investments 4					(5,644)
Impairment of available-for-sale securities					(651)
Share of loss of equity accounted investees, net of
income tax					(102)
Income tax expense Profit after tax					(8,629) 13,914
(Profit) / loss after tax attributable to minority interests					278
Profit after tax attributable to members of Perpetual
Limited					14,192
31 December 2007
Total revenue	158,302	54,630	41,623	6,594	261,149
EBITDA 1	79,057	27,266	15,173	(11,369)	110,127
Amortisation & depreciation 2	(8,431)	(1,423)	(1,574)	(1,276)	(12,704)
Segment result	70,626	25,843	13,599	(12,645)	97,423
Financing costs					(1,549)
Profit on disposal of investments Income tax expense					29,898 (38,178)
Profit after tax					87,594
(Profit) / loss after tax attributable to minority interests					-
Profit after tax attributable to members of Perpetual
Limited					87,594

1 EBITDA represents earnings before interest, tax, depreciation and amortisation of equity remuneration excluding

investment sales and including Exact Market Cash Fund losses of \$21,291,000 (2007: \$18,299,000).

2 Includes equity remuneration amortisation expense.

Perpetual Private Wealth was previously disclosed as Perpetual Private Clients and was created as part of our corporate restructuring in 2007. The Perpetual Private Wealth segment includes our Private Clients and Direct businesses. The Direct business was previously disclosed in the Perpetual Investments segment. Comparative information for these segments have been reclassified to conform to current year presentation.

4 Net of impairment of available-for-sale investments held by seed funds.

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 above segments derive revenue are:

Services

3

Perpetual Investments	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.
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.

The revenue reported for each segment pertains to services provided to external parties only.