Perpetual Limited — Management Reports 2010

Chairman’s letter to shareholders 27 May 2010

Perpetual Limited ABN 86 000 431827 Angel Place Level 12, 123 Pitt Street Sydney NSW 2000 Australia

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Dear shareholder

I am pleased to update you on Perpetual’s performance and outlook as we near the end of this financial year.

Firstly, I would like to introduce our new Directors. Mr Paul Brasher joined your Board on 1 November 2009. During his career with PricewaterhouseCoopers, Mr Brasher was Chairman of both their global and Australian Boards. He brings to your Board extensive experience in finance, accounting and corporate governance. He is also Chairman of the Reach Foundation which aims to inspire young people of all backgrounds to believe they can achieve, is a Board member of the Victorian Arts Centre Trust and Honorary Treasurer of Vision Australia’s i-access project.

On 1 June 2010 Philip Bullock will also join your Board. During his career with IBM Mr Bullock was Managing Director, Australia and New Zealand, and has extensive experience in Asia. He brings to your Board his broad knowledge of organisation management, technology and marketing. He is a non-executive Director on the Boards of Healthscope Limited and CSG Limited, and is also the Chair of Skills Australia which advises the Commonwealth Government on Australia’s workforce skills and development needs.

Just over a year ago, the world was in the grip of the worst financial crisis in generations, which greatly impacted our clients, our business and our shareholders.

I believe the way we responded, as a trustee, investment manager and adviser, lived up to our reputation for protecting our clients’ interests and staying true to our long-standing investment principles. For example, our major share funds have out-performed their benchmarks over the last three challenging years.

As a business we were able to navigate through the financial storm in a prudent and measured way by reinforcing our balance sheet, reducing our business risks and controlling our costs. We weren’t forced to make hasty business decisions or undertake capital raisings and were able to continue paying dividends to our shareholders.

Impact of market conditions

Notwithstanding the recent market instability our operating environment improved considerably over the past year. Sharemarkets and credit markets rebounded strongly from the multi-year lows of March 2009, and the Australian economy has so far proved resilient.

We are in a strong financial position and in good shape to pursue our strategy to be the leading provider of wealth management services to financially successful investors and their advisers, and to be the leading corporate trustee.

The sharemarket rallies from their March 2009 lows increased our revenue from the funds we manage and the clients we advise, and the gradual thawing of markets for residential mortgage backed securities has brightened prospects for this mainstay of our corporate trust business.

As at 30 April 2010 funds under management were $29 billion, an 11 per cent increase on 30 June 2009, and funds under advice, including increases from acquisitions, were up 28 per cent to $8.7 billion. Given the sensitivity of our funds under management and advice to market movements the downturn in May will have an impact. As at 30 April 2010 securitised funds under administration were down 11 per cent to $215 billion compared to 30 June 2009.

While investor confidence has gradually improved over the past year, it remains somewhat fragile, and recent instability would not have helped. However, ultimately our clients need to invest for the long term to grow their wealth and we have the proven capability to help them do so.

Regulatory reviews

The Australian Government’s response to reviews covering all aspects of taxation, superannuation and financial advice will inevitably require operational changes for companies involved in the wealth management industry. We have a clear strategy that positions us well to adapt to the changing regulatory environment, and believe it should present long-term growth opportunities.

It is very pleasing that the Government’s initial response to the Henry Review of Taxation clearly reinforced superannuation as its preferred means for individuals and the nation to fund retirement.

We also support the Government’s plans to legislate for stronger professional standards and transparent remuneration for financial advisers, including the phasing out of commissions by 2012. While Perpetual has always fulfilled the highest level of fiduciary duty to our clients, following years of debate, the new measures should help restore broad public confidence in our industry.

Investing in our business for future growth

Our proven capability and focus on providing premium products, advice and services to financially successful Australians means we are well-positioned to adapt and prosper in the coming years.

We continue to invest in growing our businesses to meet the needs of Australians who want high quality advice and management of their wealth. This includes the acquisition of specialist advisory groups serving key segments of the high net worth market, including medical professionals and private business owners.

As an employer of choice we continue to attract high calibre professionals across all areas of the business and develop and promote top performers internally. Our investment team continues to retain and attract outstanding talent and we have been receiving strong interest from premium advisers attracted by our high professional standards and reputation.

Our brand continues to be a great source of strength for all areas of our business. We remain the most highly regarded funds management brand amongst financial advisers and we are intent on deepening awareness with premium clients through our targeted advertising campaign ‘The Perpetual Truths of Sound Investing’.

We have also completely upgraded our website to make it much more engaging, easier to navigate and a better presentation of our brand, expertise and client offerings. I encourage you to visit us at www.perpetual.com.au

2010 earnings outlook

Subject to there being no dramatic deterioration in financial markets and business conditions over the remainder of the financial year we expect our second half year underlying profit to be broadly in line with our first half results.

We expect the underlying profit after tax (UPAT) for the 12 months to the end of June 2010 to be in the range of $65m to $75m. This includes the impact of acquisitions and continued investment in our businesses. In particular, we have invested in Private Wealth to sharpen our focus on high net worth clients; and our mortgage processing business, Perpetual Lenders Mortgage Services, has greatly increased staffing to support its rapidly expanding business for major lending institutions.

UPAT excludes gains or losses on the sale of investments; and gains from the Exact Market Cash Fund generated from improved credit markets.

Assuming no impairments within the Exact Market Cash Fund or other significant items, we expect the net profit after tax (NPAT) for the 12 months to the end of June 2010 to be in the range of $85m to $95m, a significant improvement on the prior year’s result, which was adversely affected by the steep market falls.

We will continue to pay dividends in keeping with our sustainable policy of paying our shareholders between 80% and 100% of our net profit after tax.

Our dividend reinvestment plan introduced last year proved popular, with shareholders representing over 13% of our issued capital taking up the opportunity to reinvest in our company at a 2.5% discount to the market price. If you don’t already participate in the dividend reinvestment plan and would like to do so, please complete and return the enclosed form.

In conclusion, we are confident but not complacent about our business prospects. The nature of our business means we are leveraged to the fortunes of financial markets. As always, we will continue to focus on the things we can control and helping our clients grow and protect their wealth over the long term.

Yours faithfully

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Robert Savage AM Chairman