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									National             Holdings
       WealthManagement      Limited

          ABN 73 093329983

           30 September
National                     HoldingsLimited
FinancialReportfor the year ended30 September2007

Table of contents
Directors' Report
Auditors IndependenceDeclaration
Income Statement
Balance Sheet
Statement of cash flows
Statement of recognisedincome and expenses
Notes to the financial statements
  1 Significant accounting
  2     Incomc
  3     Expcnses
  4     Income Tax
  5     Dividcnds and distribution
  6     Financial assets
  7     Property, plant and equiPment
        Goodwill and other intangible assets
        Defined bencfit pension schemc asset
  10    Policy liabilitics
  II    Provisions
  13    Payables
  14    Unvcstedpolicyownerliabilitics
  15    Units attributable to minority unitholdcrs
        Contributed equif'
  1'7 Rescrves
  18 Retained profits
  19    Shares,pcrlormance options and pcrformance rights
  20    Risk management information
  21    Notes to the cash flow statement
  22    Particulars in relation to controlled entities
  23    Other life insurance disclosurcs                     56
  24    Commitments, contingencies and hduciary activities
  25    Related party disclosures                            59
  26    Remuneration of extemal auditor                      60
  2'7   Subscquentevents                                     60
Directors' declaration                                       61
Independent audit report                                     62
NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

Directors' Report
The Directors prcsent thcir report togethcr with the financial report of National wealth Management Holdings Limited (the "Company") and the
consolidated financial report ofthe Consolidatcd Entity, bcing the Company and its controllcd entities, for the ycar ended 30 September2007 and
the auditors' report thereon.


The namcs ofthe Company's Directors in ofhce during thc financial ycar and until the date ofthis report are as follows:

M H Codd
I K Crow
C A Tomlinson
W A H Wcbster
J A Moule
E K Stafford
A Fahour
S J Tucker
A G Thorbum

Unlcss indicatcd otherwise, all Directors held their position as a Dircctor through the entire financial year and up to thc date ofthis rcport'

Principal activities

During the ycar the principal continuing activities ofthe Group consistcd of:
(a) provision of life insurance products,
(b) provision offunds managementproducts, and
(c) the operation of financial planning licencccs in order to provide financial advice

There wcrc no significant changcs in the nature of the activities ofthe Group during the year.

Corporate information

Thc Company is a Company limited by sharesthat is incorporated and domiciled in Australia. Its ultimate parent cntiqv is National Australia Bank
Limited("NAB")(ABN12004044937).Thcaddressofitsregisteredofficeisl05-l53MillcrStreet,NorthSydney,NSW2060. Thisisalsothe
principal place of business.

Review and results of operations

T h c c o n s o l i d a t c d p r o f i t f o r t h e y e a r c n d e d 3 0 s c p t e m b e r 2 0 0 T a m o u n t e d t o $ 4 5 8 m i l l i o n ( 2 0 0 6 : $ 4 2 9 m i l l i o n ) .e p r o f i t w a s a t t a i n e d i n t h e n o r m a l
course of operations of the Consolidated Entity.

On I July 2007, MLC Limited, a consolidated Group entity, sold its investmcnt in Medfin Australia Pty Limited ("Mcdfin") to its ultimatc parent
cntity, NAB. As part of thc sale agrccment, NAB has agreed to take on "back-up servicer" obligations from MLC Limited in rcspect of sccuritiscd
assctsof Medfin. A consolidated profit of $3 million was made on this salc'


A dividcnd of$1 17 million was paid during thc financial year (2006: $445 million) and a dividend of$494 million has been proposedsincc the end of
the financial year.

State of affairs

In the opinion of the Dircctors there were no significant changes in the state of affairs of the Group drat occurred during the financial ycar.

NationalWealthManagement     HoldingsLimited
FinancialReportfor the year ended 30 September2007

Directors'Report (continued)
Significant EventsOccurring after BalanceDate

No other items,transactions evenlsofa materialand unusualnafurehave arisenbetweenthe end ofthe financial year and the date ofthis report,
arc likcly, in thc opinion ofthc Dircctors,to affbct significantly thc opcrationsofthc Cornpany,thc rcsultsofthosc opcrations,or thc statcof
which attairs of the Company in l'uturetinancial years.

                  Nnd expectedresults
Likely developments

Infbrmation about likely developments the operationsof the Group and the expectedresultsof thoseoperationsin future tinancial yearshas not
bccnincludcdin thc rcportbccausc
                               disclosurc                                                      prcjudiccto thc Group.
                                        ofthc inlbnnationwould bc likcly to rcsultin unrcasonablc

Environmental regulation and performance

The Group'soperations not subject significant
                    are         to          environniental        underCommonwealth Statelegislation.
                                                        regulations               or

Indemnification and insuranceof Directors

                                                                     or     a                for
                                                                                    agreenrent indeninilying
Sincetheend ofthe previouslinancialyear,the Companyhasnot indenrnified nrade relevant                             liability,any
personwho is or has beenan officer or auditor ofthe Conrpanyor its controlledentities.

During the financialyear the Companypaid insurance   premiurnsin respectofDirectors' and oflicers' liabitity and legal expenses the year ended
30 September  2007. Since the financial year, the Companyhaspaid, or agreedto pay, premiurnsin respectofsuch insurancecolltractstbr tlie year
enditrgotr 30 September 2008, Such insurancecontractsinsureagainstcertain liabilities (subjectto specific exclusions)persottswho are or have been
Directorsor executiveot'ficarsof the Corrpany and its controlled entities.

Disclosureof the natureof the liabilities and the amountof the premium is prohibited by the confidentiality clauseof the contractsof insurance.

                    DeclarNtion the Directorsof National Wealth l\lanagementHoldings Limited
Auditors Independence          for

We have obtainedan independence    declarationfronr our auditors.Emst & Young, which is set out on the following page and forms part of the
Directon' repofi fbr the year ended30 Septentber2007.

                                   ofthe Directors
                  with a resoltttion
Sicnedin accordance




       *YouNc                                        I Ernst& YoungCentre
                                                       680 CeorgeStn:et
                                                                                       r Tel 61 2 9248 5555
                                                                                         Fax 61 2 9).485959
                                                       SydneyNSW .2000

                                                       CPO Box2646
                                                       SydneyNSW .2001

                      Declaration to the Directors of National Wealth
 Auditoros Independence
 ManagementHoldings Limited

 In relation to our audit of the financial report of National Wealth ManagementHoldings Limited
 for the financial year ended 30 September2007, to the best of my knowledge and belief, there
 have been no contraventionsof the auditor independence       requirementsof the CorporationsAct
 2001 or any applicablecode ofprofessionalconduct.

 Ernst& YoungV

 27 November

                                                                   Liability limited by a schenreapproved under
                                                                   Prolcssional tandardLegirlation
                                                                                 S         '
National                     HoldingsLimited
FinancialReportfor the year ended30 September2007

Income Statement

                                                                          Group                   Company
For the vear ended 30 September2007                                2007             2006   2007         2006
                                                                    $m                $m    $m              $m

Prcmium and rclated revenue                                 2     788
Investmcnt rcvenue                                          2    8,374            6 555    160          201

Other opcrating income                                      2     946               896
Total rcvenuc                                                    10,108           8,171                 391

Claims expense                                              3      sl5             441
Change in net lifc insurance contract policy liabilities    10    (136)            (26)
Change in net life investment contract policy liabilities   10   6,000            4 554

Change in liabilities cedcd under reinsurance               10      (24)            (85)
Change in policyowner retained profits                      t4        3               5
Opcrating expenses                                          3    1,564            I 566                       ;
Finance Costs                                               3      t02              108    47               l4
Total cxpcnscs                                                   8,024            6,569    47               22
Profit before income tax expense                                 2,n84            1,602    u3           369
Incomc tax cxpcnse/(benefit)                                      632              460     (r4)          (3)
Prolit after tax from continuing operations                      1,452            I l4')   127          )tl

Discontinued operations
Profit aftcr tax from discontinued ooerations               22                      36
Net profit for the period                                        1,452            1,178

Profit attributable to minority interest                           994             749
Net profit attributable to the member of the Companv              458               429

NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007


                                                                                       Group                    Company
As at 30 September2007                                                          2407            2006     2007             2006
                                                                                 $m               $m      $m                Sm
Cash and cash equivalents                                            21        1,076         956           41
Financial assets                                                  6(a)& (b)   63,652         l
                                                                                           56, 06          -10
Loans and other receivablcs                                         6(c)        430          360
Property, plant & equipment                                           7           44           46
Gross life insurance policy liabilitics ceded undcr rcinsurancc      l0           95           7l
Sharesin controlled entities                                         22                                 6,907         6,685
                                                                                               q 114
Goodwill and other intangible assets                                 8        5,305
Pcnsion assct                                                                   2l               2',7
Deferred tax assets                                                  4          65               6l
Total assets                                                                  70,698       62,966       6,931         6,703
Gross life insurance contract liabilities                            l0        1,995        2,131
Gross lifc investment contract liabilities                           10       50,935       44,180
Unvcstcdpolicyowncr liabilities                                      14         166           t63
Current tax liabilities                                                            I            3
Provisions                                                           ll         262           3t7
Payablcs                                                             IJ        1,028          732         2l               l5
Financial liabilities                                                12        1,378        t,'730       749              J3 t

Units attributable to minority unitholdcrs                           15          16
                                                                               8,1          7,249
Dcferred tax liabilities                                             4          595           580
Total liabilities                                                             64,483       s7,085                         552
Net assets                                                                    6,215            5,881    6,161         6,151

          cquity                                                     t6       6,165            6,16s    6,165         6,r65
Reserves                                                             l1         36               4l
Rctainedprofits / (Losses)                                           |8          14            (325)      (4)             (14)
Total equity                                                                  6,215            5.881    6,161            1

NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September2007

Statementof cash flows

                                                                                  Group              Company
For the vear ended 30 Seotember 2007                                            2007         2006   2007        2006
                                                                      Note       $m            $m     $m           $m
Cash llows from operating activities
Premiums received rclating to life insurance contracts                           873         322
Premiums reccived relating to life investmcnt contracts                       10,060       7,624
Policy paymcnts in respect of life insurance contracts                          (660)       (641)
Policy payments in rcspect of life investment contracts                       (9,085)     (6,7s4)
Investment and intcrest income received                                          600         669
Dividends and distributions rcccivcd                                             922         7'73   159         446
Nct cash in rcspcctofrcinsurance ffansactions                                   (s2)         (33)
Fees and othcr incomc received                                                   524         623
Other cash receipts in thc course ofoperations                                 1,651       | {1/.

Interest paid                                                                    (74)       (54)     (46)          (8)
Income tax paid                                                                 (s00)      (32s)      (1)
Income tax rcfundcd                                                               3l          44       3
Othcr cash payments in the course ofopcrations                                (2,022)     (2,449)     (r)
Net proceeds from salc of /(investment in) investments
 backing life insurance policies                                                 30           25
Net procceds from sale of (investment in) invcstments
 backing life investrnentpolicies                                             (2,rr7\     (1,1 2)
Net cash provided by/(used in) operating activities                  2l(a)      181         246     tt4         438
Cash flows from investing activities
Nct proceeds fiom sale ofcontrolled cntitieJ?/                                    9
Payments for purchase of investmcnts

                                                                                                    (222)      /''l <1\
Payments for investments in controlled entitics
Net movement in other assets                                                     (2)
Payments for property, plant and equipment                                      (12)          (6)

Net cash used in investing activities                                            (5)        536     (222)      (153)
Cash flows from financing activities
Proceedsfrom issue of senior and subordinated debts                             450         298     450         298
Repaymcnts of subordinated debt                                                             (10)
Net movementin other bonowings                                                 (381)       (2'71)   (228)
Net increase in amounts due to / (from) controlled
 cntities and related parties                                                   o1,          29        6        238
Reduction of share capital                                                                 (37s)               (37s)
Dividends and distributions oaid                                               (1r7)       (446)    (117)      (44s)
Net cash orovidcd bv financins activities                                       (69)       ('71s)   1l l       (284')
Net increase(decrease)in cash and cash equivalents                              107          7         3
                                                                                838         831
Cash and cash equivalents at beginning ofyear
Effccts ofcxchange rate changes on balance ofcash held in foreign cunencies      (7',                  i
Cash and cash equivalents at end of year                             21(b)      938         838

(1) Net of @sh disposedfor the Group

National                     HoldingsLimited
FinancialReportfor the year ended30 September2007

                     incomeand expenses
Statementof recognised

                                                                                    Group                  Company
                                                                             2007            2006   2007             2006
Income and expenses recognised directlv in equitv                             !im             $m     $m               $m
Cashflow hcdgcs
               takento equity
   Gains(losscs)                                                               I              (1)
Exchangedifferences translation foreignoperations
                  on          of                                              (4)              e
Acfirarial gain(loss) on defined benefit plans                                (6)              6
Income tax on items taken dircctly to or transferred directly from equity      2              (2)
Nct incomc recogniscd directly in equity                                      (7)             12
Netprofitfortheyear                                                         1,62            1,178   127              372
Total net income recognised                                                 I,US            1,190   t27              372

    Mcmberof thc parent                                                       451            441    127              372
    Minority interest                                                         994
Total net income recognised                                                 l,U5            1,190   127              372

NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

I Significant Accounting Policies
This general purposc financial report has been prepared in accordancewith the requirements ofthc Corporations Act 200 1 (Cth) and Australian
Accounting Standards,and was authorised for issuc in accordancewith a resolution ofdirectors on 27th November 2007 .

The preparation of financial statcmcntsin conformity with AIFRS requires the use of certain critical accounting estimatesand assumptionsthat affect
the reported amounts ofassets, liabilities, revenues and expensesand the disclosed amount ofcontingent liabilities. Assurnptions made at each balancc
shcct datc are based on best estimatesat that datc. Although thc Group has intcrnal control systems in place to ensure that estimatesare reliably
measured,actual amounts may differ from thosc cstimatcs. It is not anticipated that such diffcrences would be material.

Basis of preparation
The financial statemcntshave been prepared under the historical cost convention, as modified by the application of fair value measurementsas
required by the relevant accounting standards.

Statement of compliance
Australian Accounting Standardsincludc Australian Equivalents to Intemational Financial Reporting Standards (AIFRS). Compliance with AIFRS
cnsurcs that the financial report, comprising of the financial statementsand notes thereto, complies with Intemational Financial Reporting

Whcn necessary,comparativcs for the year ended 30 September 2006 have been reclassified for consistency with current year disclosures.

Comparatives relating to the Part 9 Schemeshave not bccn restated.For details ofassets and liabilities transferred refer to note 25.

Recently issued accounting standards to be applied in future reporting periods
The AASB has issued new standardsand amendments that were available for adoption, but not mandatory for 30 September2007 reporting periods.
The amcndments which are applicablc and which are likely to have an impact on the Group's disclosurcs but have not yet been applied by the Group
in preparing this financial rcports are:
  . AASB 7 "Financial Instrumcnts: Disclosures" (August 2005) (AASB 7) withdraws AASB 130 "Disclosures in the Financial Statementsof Banks and
     Similar Financial Institutions" and supersedesparagraphs 5 1-95 ofAASB 132. AASB 7 is applicable for annual reporting periods bcginning on or
     aftcr 1 January 2007.
 .   AASB 2005-10 "Amendmcnt to Australian Accounting Standards" (AASB 2005-10): following the issue of AASB 7 the following AASB Standards
     have becn amended- AASB 132; AASB 101 "Presentation Financial Statements";
                                                         of                     AASB 114 "Scgmcnt Rcporting"; AASB 117 "Leases";
     AASB 133 "Eamings Per Share";AASB 130; AASB 4; AASB 1023 "Gencral InsuranceContracts";and AASB 1038.
 .   AASB 101 "Prescntation ofFinancial Statements" (September 2007) superscdcsthc prcvious version ofAASB              101 and make changesto
     nomenclature and content ofthe financial statements,including the presentation ofa statcment of comprehensive income.
 .   AASB 2007-8 "Amendments to Australian Accounting Standardsarising from AASB 101 (Scptember2007) amcnds numerous standardsarising
     from thc applicationof AASB 101.

The Group plans to adopt AASB 7 and AASB 2005-10 from 1 October 2007. The Group has not yct dctcrmincd thc date from which AASB 101 and
AASB 2007-8 will be applied.The initial applicationof AASB 7, AASB 2005-10, AASB 101 and AASB 2007-8 is not expectedto have an impact on
the financial results of thc Company or the Group as the standardsare concemed only with disclosures.

Early adoptions
The Group has clccted to early adopt the following accounting standardsand amcndmcnts:
 . AASB 8 "Operating Segments"
 .   AASB 2007-3 "Amendments to Australian Accounting Standardsarising from AASB 8"
 .   AASB 2007-4 "Amendments to Australian Accounting Standardsarising from ED 15I and Other Amendments"
 .   AASB 2007-7 "Amendments to Australian Accounting Standardsarising from AASB 107 Cash Flow Statcments"

All amounts are expresscd in Australian dollars unless otherwise stated.In accordancewith ASIC Class Order 98/100, all amounts have been rounded to
thc nearestmillion dollars, except where indicated.

Principles of consolidation
The consolidated financial report incorporatcs assctsand liabilities of all entities controlled by the Company and the results ofthe controlled entities
for the year. The Company and its controlled entities together are referred to in this financial report as the Group. Where an entiry either began or
ceasedto be controlled during the year, the results are included from the date control commenced or up to the date control ceased.The balances and
effects oftransactions between controlled entitics includcd in the financial statementshave been eliminated.

NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

L Significant Accounting Policies(continued)
The Group conducts its life insurancebusincss through separatcLife statutory funds. Transactions within these statutory funds are consolidated into
the Group's financial report along with all activities attributable to the shareholdersofthe lifc companies.

In addition, where the Group's life insurancc statutory funds have the capacity to control managed investment schemcs in which thcy are thc majority
invcstor, the Group has consolidated all ofthc assets,liabilities, rcvenues and expensesofthese managed investment schemes.

The financial statcmentsofthe controlled entitics uscd for consolidation purposcs havc the same reporting period as the parent Company, other than
conholled managed investmcnt schemesfor which reliefhas been obtained from ASIC. Thcsc financial statementshave been prepared using consistent
accounting policies.

The acquisition of controllcd cntities is accounted for using the purchase method of accounting. The purchase method of accounting involves allocating
the cost ofthe business combination to the fair value ofthe assetsacquired, including identifiable intangiblc assets,and the liabilities and contingent
liabilitics assumedat the date of accuisition.

Significant accounting estimates and assumptions
The carrying amounts of certain assetsand liabilitics arc dctcrmined bascd on estimatesand assumptionsof future events. The key estimatesand
assumptionsthat havc a significant risk of causing a matcrial adjustment to the carrying amounts of aertain assetsand liabilities within thc next annual
rcporting period are:

(i) Actuarial assumptions
The assumptionsmadc in dctermining the carrying amount of life insurance and life investmcnt conflacts arc dctailed in note 10.

(ii) Impairmcnt of goodwill
Thc Group determines whether goodwill is impaired at lcast on an annual basis. This requires an estimation of the recoverable amount of the cash
gencrating units to which the goodwill is allocated. The assumptionsused in this estimation of recoverable amount and the carrying amount of goodwill
are detailed in note 8.

(iii) Defined benefit plans
Whcn dctcrmining the Group's pension bcncfit obligations, various actuarial assumptionshave been made, which are dctailcd in thc pcnsion assct notc
(note 9).

Principles underlying conduct of life insurance business
The Australian lifc insurance ooerations consist of investmentlinked business and non invcstrnent-linked business.

Investmentlinked busincss is businesswhere the benefit amount is directly linked to thc markct value of the investments held in the particular
invcstmcnt-linked fund. While the undcrlying assetsare registcred in the name of the Company and the investment-linkcd policy owner has no direct
accessto the specific asscts,thc contractual arrangementsare such that the investment-linked policyowncr bcars thc risks and rcwards ofthe fund's
investment performance. Thc Group derives fee income from the administration of investrnentlinked policies and funds.

Non investment-linked business is business where the insured benefit is payable on the occurrence ofa specified event such as dcath, injury or disability
caused by accident, illncss or, in the case ofan annuity, the continuance ofthe annuitant's life. The insured benefit is either not linked or only partly
linked to thc markct value of the investments held, and the financial risks are substantially bome by thc Group.

Policy contracts that includc both investment-linked and non investment-linked elements are separatedinto these two elements and reported accordingly.
All other operating activities ofthe Group arc conducted within thc Sharcholdcrs' Fund.

Monies held in the statutory funds arc subjcct to distribution and transfcr rcstrictions govcmcd by the Life Act.

Premiurn revenue
(i) Lifc insurance contracts
Premiums are separatedinto their revenue and liability components. Premium amounts eamed by providing services and bearing risks including
protection business arc trcated as revenue. Other premium amounts reccivcd, nct of initial fce income, which arc akin to dcposits, arc rccognised as an
increasein policy liabilities.

For traditional business,all premiums are recognised as revenues as it is not possible to separaterisk and investment components ofpremiums.

NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

1 Significant Accounting Policies(continued)
Premiums with a rcgular due date are recognised as revenue on a due basis. Premiums without a due date are recognised as revenue, or an incrcasc in
policy liabilitics, on a cash received basis. Premiums due before the end ofthe financial year but not received as at year end are includcd as "outstanding
premiums" in note 6(c).

(ii) Lifc invcstrncnt contracts
The initial fee, which is the diffcrcnce bctween the premium rcceived and thc initial surrcnder value is recognised as premium revenue. For thc Group's
investmcnt-linkcd business,all premiums are recognised as an increasein policy liabilities.

Feesfor management servicesrendered
Revenue is rccogniscd to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured.The
following specific recognition criteria must also bc mct bcfore revenue is recognised.

Fees are charged to customers in connection with lifc investment contracts and other flnancial scrvices contracts. Rcvcnuc is rccogniscd at thc time that
services are provided. In some casesservices are provided at the inception of the contract while other services are pcrformed over the lifc of the
contract. The revenue that can bc attributed to the services provided at inccption is rccogniscd at that time.

Fccs for ongoing investrnent management scrvices and for other services are charged on a regular basis and recognised as income at the time the service
is provided.

Investment revenue
Dividends and distributions
Dividends and distribution incomc are brought to account on an accruals basis when the recipient obtains control ofthe right to receive the income.
Dividcnds arc recognised as revenue as they become due.

Interest and other revenues
assetand allocating the interest incomc over the relevant period using the effcctive interest rate, which is the rate that exactly discounts estimated
fuhrre cash receipts through thc cxpected life of the financial assetto the net carrying amount ofthe financial asset.

Realised and unrealised gains and losses
Net realised gains and lossesand fair value movemcnts are recognised in thc income statcment in the period in which they occur.

Claims are recognised whcn the liability to the policyowner under the policy contract has been established,or upon notification ofthe insured event
depcnding on thc type of claim. Claims are separatedinto their expense and liability components.

Life insurance contracts
Claims incurred that relate to providing scrviccs and bcaring risks, including protcction business,are treated as expenses. For traditional busincss
all claims are recogniscd as expensesas it is not possible to separaterisk and investment components ofclaims.

Life investment contracts
Claims incurred which arc akin to withdrawals are recognised as a reduction in policy liabilities. For investrnent-linked business,all claims arc
recognised as a decreasein policy liabilitics.

Basis of expense apportionment
All life company expensoschargcd to the income statementare cquitably apportioned to thc different classesofbusiness in accordancewith Division 2
ofPart 6 ofthe Lifc Act as follows:

(i)    Expenses and other outgoings that relate specifically to a particular statutory fund have been directly charged to that fund.
(ii)   Expensesand other outgoings (excluding commissions, medical fees and stamp duties relating to policies, which are all directly charged) are
       apportioned between classesofbusiness by ltrst allocating the expensesto major functions and activities, (including those of sales support and
       marketing, new business processing and policyowner servicing) and thcn to classcsofproducts using rclcvant activity cost drivers (including
       commissions, policy counts, premiums and funds under management).
(iii) Investmcnt incomc, profits and losseson sale of property, plant and equipment, profits and losseson sale of investments and appreciation and
       depreciation ofinvestments have been directly credited or chargcd to thc appropriate Statutory Fund or Shareholders' Fund.

                                                                                                                                                 P a g e1 0
NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September2OO7

1 Significant Accounting Policies(continued)
Apportionmcnt bctwccn policy acquisition, policy maintenance and investment managemcnt has been made in accordancc with thc principles set out in
the Life Insurance Actuarial StandardsBoard (LIASB) Valuation of Policy Liabilities Standard (Actuarial StandardAS 1.04).

Management Fees
A number of entities within the Croup have agrcemcnts with a related entity, National Wealth Management Services Limited ("NWMS"), for the
provision of management,administration and related services. These entities pay managemcnt fees to NWMS for thcsc scrviccs.

Management fees are recognised on an accrual basis in accordanccwith agrccd tcrms and conditions,

Policy acquisition costs
The extent to which policy acquisition costs arc defcrrcd varics according to the classification ofthc contract acquired (either life insurance or life

(i) Life Insurance Contracts
Thc costs incurred in selling or generating new business include advisor fees, commission payments, application processing costs, relevant advertising
costs and costs for promotion ofproducts and related activities.

The amount ofnew business sclling costs not recovered by specific charges received from the policyholder at inception are deferred, provided that the
busincss gcncrated continues to be profitable. Policy acquisition costs incurred are recorded in thc income statement and include the fixed and variable
costsofacquiringnewbusincss. TheAppointedActuaryassessesthevalueandfuturerecoveryofthesecostsindeterminingthepolicyliabilities.
These costs arc dcfcrrcd to the extent they are deemed recoverable in the premiums or policy charges (as appropriate for each policy class).
Acquisition costs dcfcrred are limited to the lesser ofthe actual costs incuned and the allowance for the recovery of such costs in the premium or policy

This has the effect that acquisition costs deferred are amortised over the period that they will be recovered from premiums or policy charges,thc nct
profit impact ofwhich is reflectcd in "change in net life insurance contract policy liabilitics" in the income statement.

Losses arising on acquisition are recognised in the income statementin the period in which they occur.

(ii) Life Investment Contracts
Thc incrcmental costs incurred in selling or gencrating new business include advisor fees and commission paymcnts and arc cxpenscd as incurred.

Borrowing Costs
Borrowing costs are expensedas incurrcd.

Income tax
lncome tax cxpcnsc or revenue is the tax payable (or receivable) on the current period's taxable incorne based on the applicable tax rate in each
jurisdiction adjusted by changcs in dcfcrred tax assetsand liabilities.

Deferred tax assetsand liabilities arc recognised for temporary differcnces arising bctween the tax bascsofasscts and liabilities and their carrying
amounts in the balance shect, and to unused tax losses.Defcrrcd incomc tax is dctcrmincd using tax ratcs (and laws) that havc bccn cnactcd or
substantially enactedby the balance sheet date and arc cxpected to apply when the related deferred income tax assetis realised or the deferred income
tax liability is settled. A deferred tax assetor liability is not recognised if it arises fiom initial recognition of an assetor liability (in a transaction other
than a business combination) that at the time ofthe transaction affects neither accounting profit nor taxable profit or loss.

Defened tax assetsarc only rccognised for temporary differences, unuscd tax losscs and unused tax credits if it is probablc that futurc taxable amounts
will arise to utilise those temporary differences and losses.

Defened tax liabilities are not rccogniscd for tcmporary differences arising from investments in conft:lled entities where the timing of the reversal o1'
the temporary difference is controlled by thc National Group and it is probable that the difference will not reverse in the foreseeablefuture.

Deferred tax assetsare not recognised for temporary differences arising from investmcnts in controlled entities whcrc it is probablc that the difference
will not reverse in the foreseeablefuture, and it is not probable that taxable profit will be available against which thc tcmporary diffcrence can be utilised

                                                                                                                                                        Page 11
NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

1 Significant Accounting Policies(continued)
Income taxes relating to items rccognised directly in equiry are recognised in equity and not recogniscd in thc incomc statcmcnt.
For life insurancebusiness,taxation is not based on the concept ofprofit. Special legislative provisions apply to tax policyholders and shareholderson
different bases.According to the class ofbusiness to which their policies belong, policyholders havc thcir invcstmcnt camings taxcd at thc following
rates in Australia:
     superannuationpolicies - 15%;
     annuity policics - 0%o;
     other policies - 30%.
The shareholdcrs' funds and fee income are taxed at the Companv rate of 30T;o.

Tax consolidation
National Australia Bank Limited is the head cntity in thc tax consolidatcd group comprising National Australia Bank Limited and all of its Australian
wholly owned controlled entitics.

Urgent IssuesGroup Intcrpretation 1052 requires the Group to recognise its own deferred tax assetsand dcfcncd tax liabilitics relating to temporary
differenccs and incomc tax expense. Under the NAB Group's tax funding agreement,the Group rccogniscs its current tax liability(asset) as a
intercompany payablc/(rcceivable). Tax lossesmeeting recognition requirements as deferred tax assetsaro recognised as intcrcompany receivablcs.

Goods and Services Tax
Revenues,expensesand assctsare recognised net ofthe amount ofgoods and services tax (GST), cxccpt whcrc thc amount ofGST incurrcd is not
recoverablefromthcAustralianTaxOfficc(ATO). InthesccircumstanccsthcGSTisrecognisedaspartofthecostofacquisitionoftheassetoras
part ofthe expensc.

ReceivablesandpayablesarestatcdinclusiveofGST. ThenetamountofGSTrecoverablefrom,orpayablcto,thcATOisincludcdasacurrentassctor
liability in the balancc shcet.

Cash flows are included in thc cash flow statementon a gross basis. The GST components of cash flows arising from invcsting and financing activitics
which are recoverable from, or payablc to, the ATO are classified as operating cash flows.

Foreign currency translation
(i) Functional and presentation currency
Both the functional and presentation currency of the Company and its Australian controlled cntities is Australian Dollars ($). The functional currency
of thc UK controllcd cntities is Pounds Sterline and the New Zealand controlled entities is New Zcaland Dollars.

(ii) Transactions and balanccs
Foreign currency transactionsare translated into the functional currency using the exchange rates prcvailing at the dates ofthe transactions.Foreign
exchangc gains and lossesresulting from the settlement of such transactionsand from the translation at ycar-cnd cxchangc rates ofmonetary assetsand
liabilities denominated in foreign currcncies are recognised in the income statement,except when deferred in equity as qualiffing cash flow hedges and
qualifying net investment hedges. Translation differcnces on non-monctary itcms, such as equity securitiesheld at fair value through profit or loss, are
rcportcd as part ofthe fair value gain or loss.

(iii) Controlled and other entities
On consolidation, exchangc differences arising from the translation ofthe net investment in foreign entities, and ofborrowings and other currency
instruments dcsignated as hedges ofsuch investments, are taken to the foreign currency translation reserve. When a foreign operation is sold, such
exchangc diffcrcnccs are recognised in the income statement as part of the gain or loss on sale.

Leasehold improvements, plant and equipment
All assetsacquired including leasehold improvcmcnts, plant and equipment are initially recorded at thcir cost at thc datc ofacquisition, being the fair
value of the consideration provided plus incidcntal costs directly attributable to the acquisition. Expenditure is only recognised as an assetwhen the
Groupcontrolsfutureeconomicbenefitsasaresultofthecostsincurred,thatareprobableandcanbemeasuredreliably. Costsattributabletofeasibility
and altemative approach asscssmcnts cxpensed as incurrcd.

Costs incurred on assetssubsequcntto initial acquisition arc capitalised when it is probable that future economic benefits in excessofthe originally
assessed performance ofthe assetwill flow to the consolidated entiff in future years.

Costs that do not meet the criteria for capitalisation are expensed as incurred.

                                                                                                                                               Page 12
NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

I Significant Accounting Policies(continued)
Depreciation is calculatcd on a straight-line basis ovcr the cstimated useful life ofthe assetsas follows:
 o      Plant and equipment 3-10 years
 .      Leaseholdimprovementsupto l0years

An item ofproperty, plant and equipment is derecognisedupon disposal or when therc arc no future economic benefits expected from its use or disposal.
Any gain or loss on derecognition is included in thc incomc statcmcnt in thc ycar ofdcrecognition.

Goodwill and other intangible assets
Goodwill arises on the acquisition ofan entity, and representsthe excessof the fair valuc ofthc purchase consideration and direct costs ofmaking the
acquisition, over thc fair value ofthe Group's sharc ofthc net assetsat thc time ofthe acquisition.
Goodwill is capitalised and reviewcd annually for impairment, or more frequently when there arc ind:icationsthat impairment may have occurred.
Goodwill is allocated to cash-generatingunits for the purpose ofimpairmcnt testing. Each ofthese cash-generatingunits is representedby an individual
primary reporting segment, or a subdivision of a primary segment.

Thc idcntifiable and directly associatcdcxtcrnal and intemal costs of acquiring and developing software are capitalised and rccogniscd as an intangible
assetwherc the software is controlled by thc Group, and where it is probable that future economic benefits that exceed its cost will flow from its use over
more than one year. Costs associatedwith maintaining software are recogniscd as an cxpcnsc as incurred.

Other intangible assetsacquircd, including management rights, are initially recorded at their cost ofacquisition at the datc of acquisition, being fair valuc
of the consideration provided plus incidental costs dircctly attributable to the acquisition. Expenditure is only recognised as an assetwhen the entity
controls future economic benefits as a result ofthe costs incurred, that are probable and can be measuredreliably.
Capitalised computer software costs arc amortised on a straight-line basis over their expected useful lives, usually this is ofbetwecn thrcc and five ycars.

Amortisation of intangible assef
lntangible assetsthat have limitcd useful lives are amortised using the straight line method over their estimatcd uscful livcs. Assets arc amortiscd from
from the datc ofacquisition or, in respect of intcmally constructcd asscts,fiom the time an assetis completed and held ready for use.
Amortisation rates and methods arc reviewed annually for appropriateness.Changes to amortisation rates are rcflcctcd prospcctivcly in currcnt and
future periods on1y.
Management agreementsarc amortised over 20 years. The remaining useful life of the managemcnt agrccmcnts is l5 years.

Impairrnent of assets
Assets measuredat fair value, where changesare reflected in the income statement,arc not subjcct to impairment testing. All other assetsare subject to
impairment tcsting.

Assets that havc an indefinite useful life, including goodwill, are not subject to amortisation but are testcd at least annually for impairmcnt.
Asscts that are subject to depreciation or amortisation are reviewed for impairment whcnever events or changesin circumstancesindicate that the
carrying amount may not bc recovcrable.

An impairmcnt loss is recognised in the income statcmcnt, being thc amount by which the carrying amount of an assetexceeds its rccovcrablc amount.
The recoverable amount is the highcr ofan assetrs group ofassets) fair valuc, including realisation costs, and its value in use.

Cash and cash equivalents
Cash and cash cquivalents in the balance sheet comprises cash at bank and in hand and short term deposits with an original maturity ofthree months or

For the purposes ofthe statementof cash flows, cash includcs cash on hand, dcposits hcld at call with banks and invcstmcnts in moncy market
instruments. net of bank overdrafts.

Financial assets
Financial assetswithin the scope of AASB 139 Financial Instruments: Recognition and Management are classified as one of the following:
  . Financial assetsat fair value through proht or loss
 .      Loans and receivables
 .   Hcld to manrrity
 .   Available for sale

NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

1 Significant Accounting Policies(continued)
Financial assetsare recorded initially at fair valuc plus, in the case ofassets not at fair value through profit or loss, directly attributable transaction

Non-derivative financial assctswith fixed or determinable payments arc classificd as held-to-maturity when the Group has thc positivc intention and
ability to hold to maturity and are measured at amortised cost.

All rcgular way purchasesand salcs offinancial assetsare recognised on the trade datc. Rcgular way sales or purchasesare those under contracts that
require delivery of the assctswithin the period establishcd generally by rcgulation or convention in the marketplace.

Assetsbacking life insurance and life investment contrcrcts
All financial assetswithin the lifc company statuiory funds are deemed to back life insurancc business. Accordingly all financial assetsin thc statutory
funds are designatedas 'fair value through profit or loss'.

The fair value ofinvestments that are actively traded in organised financial markets is determincd by refcrence to quoted market bid prices at the close
ofbusiness on the balance shcct date. For investments with no active market, fair valuc is dctcrmined using valuation techniques. Such techniques
include using recent arm's lcngth market transactions;reference !o the current market value ofanother instrument, that is substantially the same;
discounted cash flow analysis and option pricing models.

Financial assetsat fair value through proJit or loss
This category includes financial assetshcld for trading and items specifically designated,including fnancial assetsin statutory funds as described above.
All non-hcdging derivatives are requircd to be classified as trading. After initial recognition, financial assetsin this category are measuredat fair value
with gains or lossesbeing recogniscd in the income statement.

Loans and receivables
Loans and receivables,not recorded in the life statutory funds, are non-derivativc hnancial assetswith fixed or determinable paymcnts that arc not
quoted in an active market. Such assetsare held at amortised cost using thc cffcctive interest method . Trade and other short term receivables are
recogniscd at the cash value to bc rcccived, less any provision for doubtful debts.

Fair value measuremenl
Fair value is determined as follows
 o   Shares,fixed interest securities,options and units listed on stock exchanges are recorded at the quoted bid prices at balance date.
 o   Unlisted fixed interest sccurities are recorded at amounts based on valuations using ratcs ofinterest equivalent to the yields obtainable on
     comparable investmcnts at balance date.
 o   Unlisted unit trusts are rccordcd at fund managers' valuation with reference to the estimated fair valuc of thc nct assctsof the investment, the most
     recent published unit prices or on the advice of suitably qualificd valuers.
 o   Other unlistcd assetsare determined by refcrcnce to valuation techniques,which may include using recent arm's length transactions,reference to
     other comparable assets,discounted cash flow analysesand option pricing models.
 o   Loans on policies, recorded in stahrtory funds, are recordcd at account value which approximates fair value.

Derecognition of fi nancial assets
A financial asset(or, when applicablc a part ofa financial assetor part ofa group ofsimilar financial assets)is derecognisedwhen:
 o   the rights to receive cash flow from the assethave expired,
 r   thc Group retains the right to receive cash flows from thc assct,but has assumcd an obligation to pay them in full without material delay to a third
     party under a 'pass-through'arrangemcnt, or
 o   the Group has transfcrred its rights to receive cash flows from the assetand either:
     - has transferred substantially all the risks and rewards ofthe asset,or
     - has ncither transferred nor retained substantially all the risks and rewards ofthe assct,but has transfened control ofthe asset.

When the Group has transferred its right to rcccivc cash flows from an assetand has neither ffansfcrrcd nor rctaincd substantially all thc risks and rcwards
ofthe assetnor transferred control ofthe asset,the assetis recognised to the extent ofthe Group's continuing involvement in assct.Continuing
involvcmcnt that takes the form of guaranteeover the transferred assetis measured at the lower of the original carrying arnount ofthe assetand the
maximum amount of consideration that the Group could be required to pay.

                                                                                                                                                     Page 14
NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

1 Significant Accounting Policies(continued)
When continuing involvement takes the form ofa writtcn and/or purchascd option (including the cash settled option or similar position) on the hansferred
asset,the extent ofthe Group's continuing involvement is the amount ofthe transfcrrcd assct that the (iroup may repurchase,except that in the case of
a written put option (including a cash settled option or similar provision) on an assetmeasured at fair valuc, thc cxtcnt ofthe Group's continuing
involvement is limited to the lowcr ofthe fair value ofthe transferred assetand the option exercise pricc.

I)erivative financial instruments and hedge accounting
All derivatives are recogniscd in the balance sheet at fair value on trade date. Any gains or lossesarising from changcs in fair valuc ofderivativcs, exccpt
for those that qualiff as cash flow hcdgcs, are taken directly to net profit or loss for the year. The carrying value of a derivative is remeasuredat fair
value throughout the life of thc contmct. Derivatives are canied as assetswhen the fair value is positivc and as liabilitics whcn thc fair valuc is ncgativc.
Derivatives may qualifu for hedge accounting ifthc effectivcncss ofthe hedging relationship can be establishedat the inception ofthe hedge and is
maintainedforthcdurationofthehedge. Ifhcdgcsarcasscsscdnottobccffcctivcinanygivenreportingperiodthenhedgeaccountingmustbe

Hedges entered into by thc Group can be designated as a
 o Fair valuc hcdge - against changesin thc fair valuc ofa recogniscd assct or liability
 o Cash flow hcdgc - against variability in cash flows of a recognised assetor liability or a forecast transaction
 .   Net investmcnt in overseasentiw

Fair value hedges
For qualifying fair value hedges, the carrying valuc ofthc hcdgcd item is adjustcd for gains and lossesattributable to the hedged risk. The derivative is
rcmeasuredto fair value and gains and losses from both movements are taken to the income statement.

Ifa hedge no longer meets the criteria for hedge accounting, the adjusfinent to the carrying amount ofa hedgcd itcm for which thc cffcctivc interest
method is used, is amortised to the income statementover the period to maturity.

Cashflow hedges
The effective portion ofthe gain or loss on the hedging instrumcnt is rccognised directly in equity, while the ineffective portion is recognised in the
income statemcnt immediatelv.

Ifhedgc accounting is discontinued, the cumulativc gain or loss in equity at that time remains in cquity until thc hcdgcd itcm affccts thc incomc
statement,such as when hedged transactionsare recognised. At this time the amount in equity is transferred to the income statement. If a forecast
transaction is no longer likely to occur, amounts previously recognised in equity are hansfcrrcd to thc incomc statcmcnt.

Hedges ofa net investment in aforeign operation
These quali$ring hcdgcs arc accounted for in a similar way to cash flow hedges. Cumulative amounb recorded in equity are transferred to thc incomc
statemcnt on disposal ofthe foreign operation.

Investments in controlled entities
Investrnentsin controlled entities arc carricd in the Company's financial statementsat the lower ofcost and recoverable amount.

Units attributable to minority unitholders
Minority unitholders in controllcd unit trusts have the right to redecm their interestsin the unit trust at any time for cash equal to their proportionate
share of the assetvalue. This minority interest is shown as a liability in the Group's balance sheet.

Financial liabilities
Financial liabilities may be held at fair value through profit or loss or at amortised cost. When a financial liability is recognised, initially it is measured
at fair value plus transaction costs, unlcss dcsignated as fair value through profit or loss.

Items held at fair value through proftt or loss comprise both liabilities held for trading and items specifically designated. Such liabilitics arc initially
recognised at fair value with transaction costs being recognised immediately in the incomc statcment. Subscqucntly thcy are measured at fair value with
any gains and lossesrecognised in the income statementas they arise. Financial liabilitics may bc dcsignatcd as fair value through profit or loss only
ifthey meet certain criteria.

All other financial liabilities are measured at amortised cost usins thc cffcctive interest method.

                                                                                                                                                     P a g e1 5
NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

I Significant Accounting Policies(continued)
Derecognition of linancial liabilities and of insurance, trade and other payables
Financiai liabilities and insurance, tradc and othcr payables are derecognisedwhen the obligation undcr the liability is discharged, cancelled or expired.

Life insurance contract liabilities
Life insurance contract liabilitics arc dctcrmined using the Margin on Scrvices (MoS) methodology and in accordancc with Actuarial Standards.
Under MoS, the excessofprcmium rcccived over claims and cxpcnscs is rccogniscd ovcr the lifc ofthc contract in a manncr that reflects the pattem of
risk accepted from the policyholder. Thc movement in lifc insurancc contract liabilities recogniscd in the incomc statementreflects the planned release
of this margin.

Life insurance contract liabilities are typically determined using a projcction mcthod, whercby estimatesofpolicy cash flows are projected into the
future and discountcd back to their net present value using best estimate assumptions. When the bcnefits undcr a contract are linkcd to the supporting
assets,the discount ratc applied is based on the expected future eaming rate of those assets. In other casesa discount rate based on an appropriate
risk-frcc ratc is uscd.

The assumptionsused in the calcuiation ofpolicy liabilities are reviewed at each reporting date.

Policyowner retained profits
Participating bcnefits vested in policyowners in rclation to thc financial year arc trcatcd as cxpensesand recognised as a component ofpolicy liabilitics
until paid. Participating benefits that are unvested are recognised as cxpensesfor thc financial year end, and a conesponding liability for policyowner
retaincd profits is recognised.

Life investment contract liabilities
Policy liabilities relating to life investment contracts are measured at fair value. As the value of thcse liabilitics is closcly linked to the performancc and
valuc ofthe assetsthat support thc liabilitics, the fair value of such liabilities is the same as the fair value ofthose assets.

A provision is recognised when thcrc is a legal, equitable, or constructive obligation as a result ofa past event and it is probable that a future sacrifice of
cconomic benefits will be required to scttlc the obligation, the timing or amount of which is uncertain.

Ifthe cffect is material, a provision is dctcrmincd by discounting the expected future cash flows (adjusted for expected future risks) required to settle the
obligation at a pre-tax rate. The unwinding of the discount is treated as a finance cost.

Trade and other payables
Payables are carricd at amortised cost and representliabilities for goods and services provided to thc Group prior to thc cnd ofthc financial ycar that
are unpaid and arise when the Group bccomes obliged to make future payments in respect ofthe purchase ofthese goods and services.

Contributed equity
Contributcd equity is recognised as the fair valuc of considcration reccivcd. Incrcmcntal costs directly attributable to the issue of new cquity as a
deduction,nct oftax, ofthe proceeds.

Share Based Payments
The National Group providcs cquity-based remuneration to its employees in respect ofservices received. The value ofthe services received is measured
by reference to the fair value of the shares,performancc options or pcrformance rights relating to NAB Ltd providcd to cmployecs at grant date. The
fair valuc expenseofeach tranche ofshares, performance options or performance right granted is recognised in the income statementon a straight-line
basis over the period that the services are reccived by the Group, which is the vesting period.

The fair value ofshare plans granted is generally determined by rcference to the weightcd-average NAB Ltd share price in thc wcck up to, and including
thc da0eon which the shareswere issued. Existing employee share plans are linked to intemal performance or seryice conditions and vest whcn thcse
conditions arc satisficd.

                                                                                                                                                   P a g e1 6
NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

I Significant Accounting Policies(continued)
Thc fair value and expected vcsting period ofthe performance options and performance rights grantod is detcrmined using a simulatcd vcrsion ofthe
Black Scholes option pricing model. The valuation technique takes into account factors such as thc cxcrcisc pricc ofthc pcrformancc option, thc
current share price, the risk free interest rate, the expected volatilif   ofthe share price and the probability of achieving market-basedperformance
hurdles. Non-market-bascd performance hurdles are not taken into account when determining the fair value and expected vesting period ofperformance
options and performance rights. Instead, non-markct-bascd performance conditions arc takcn into account by adjusting the number of performance
options and performance rights included in the measurementof the expense so that ultimately, the amount recognised in the income statementreflects
thc numbcr of performance options or performance rights that achrally vested. Amounts recorded in thc incomc statcmcnt rclatc to Group cmployecs
and are rechargedby NAB Ltd.

Employee benelits
I|'ages, salaries and annual leave
Liabilities for employee bcncfits for wages, salariesand annual leave expected to be settled within 12 months ofthc ycar cnd rcpresent prescnt
obligations resulting from employecs' scrvices provided to reporting date, calculated at undiscounted amounts based on remuneration wage and salary
rates that the consolidated entity expects to pay as at reporting date, including related on-costs.

Long service leave
Thc provision for employee entitlements to long service leavc rcprcscnts thc prcsent valuc of the estimated future cash outflows to be made by the
employer resulting from scrviccs provided by employees up to reporting date.

The provision is calculatcd using expected fuhrre increasesin wage and saiary rates including rclatcd on-costs and cxpoctcd scttlcmcnt datc bascd on
tumover history and is discounted using the rates attaching to government securities at balance date which most closely match the terms of mah-rrityof
the related liabilitics. The unwinding ofthe discount is treated as long service leave expense.

Profit sharing and bonus plans
A liability is recognised for profit sharing and bonus plans, including benefits based on the future value ofequity instruments and benefits under plans
allowing thc consolidated entity to settle in either cash or sharesonce the cash election is dccidcd, when thcre is no rcalistic altcmative, the bcnefit
calculations arc formally documented, and dctcrmined bcforc signing thc financial rcport and past prartice supports the calculation.

Superannuation plans
Thc Group contributes to several defincd benefit and defined contribution superannuationplans. Confibutions to defined contribution schemesare
recognised as an cxpcnse as they are made.

The defined benefit plan providcs dcfincd lump sum bencfits bascd on years ofservice and a salary ccmponent determined in accordancewith the
specific plan. A liability or assct in respect of defined benefit superannuationplans is recognised in the balance sheet and is measured as the present
value ofthe defined benefit obligation at the reporting date less the fair value ofthe superannuation fund's assetsat that date and any unrecognised past
service cost.

The present value ofthe dcfincd bcnefit obligations for each plan is discounted by either the govemment bond rate, or the average AAA credit rated
bond rate for bonds that havc maturity dates approximating to the terms ofthe Group's obligations. The present value ofthe defined benefit obligations
is calculatcd evcry threc years using the projected unit credit method and updated every year for material movements in the plan position.

Past service costs are recognised immediately in incomc, unless thc changesto the superannuation fund are conditional on the employees remaining in
service for a specified period oftime (vcsting period). In this casc, thc past service cost is amortiscd on a straight linc basis ovcr the vesting period.

Thc Group's policy where actuarial gains and lossesarise as a result ofactual experience is to fully recognise such amounts directly into retaincd eamings.

Future taxes that are funded by the enti$ and are part of the provision ofexisting benefit obligations (eg taxes on investment incomc and cmployer
contributions) are taken into account in mcasuring thc nct liability or asset.

                                                                                                                                                   Page 17
NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007


                                                                                              2007         2006     2007             2006
                                                                                                $m           $m      $m                $m

fncome from Continuing           Operations

Premium and related revenue
Total lifc insurancc and investment contract premium received and rcccivable               10,851         8.570
Less: Amount recognised as a change in policy liabilitics (x)                              (9,934)       (7,723)
Lifc insurancc contract Drcmium revenue                                                       917           847
Outwards         expense                                                                     (129)         (12'7)
Premium and related revcnuc                                                                                720
+ Included in amounts recognised as a changc in policy liabilities is fee income of$520m (2006: $441m)

Investment revenue
Controlled entities
    Dividends and distributions                                                                                     159              387
   Net realised gains/(losscs)                                                                  ;            ;

Financial assctshcld at fair value through profit or loss
    Dividcnds and distributions                                                             1,208          966
    Interest income                                                                         1,149          b/)

    Property income                                                                           158          l4l
   Nct rcaliscd gains/(losses)                                                              4,223        3,'760
    Fair value movements                                                                    1,57t         929

Other interest income
   Related parties
        Ultimate parcnt cntity                                                                  8           l7
        Other related parties                                                                   I            I
    Financial assetsheld to manrrity                                                           t7           36
    Othcr                                                                                      37           26       I                 A

Investrnent revenue                                                                         8,374                   160              391

Other operating incorne
Management fees                                                                               429          399
Fees and commissions                                                                          420          397
Rclatcd party management & other incomc
    Ultimate parent entity                                                                     50           35
    Other related partics                                                                      t7           2t
Net foreign exchange diffcrcnccs                                                                           (10)
Other revenue                                                                                  30           50
Othcr opcrating income                                                                                     896

                                                                                                                                     P a g e1 8
NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2OO7

3 Expenses

       from ContinuingOperations

Claims expense
Total life insurance and investmcnt contract claims paid and payable    9,773
Less: Amount rccogniscd as a change in policy liabilities              (9,119\          (7,s99)
Life insurance contract claims cxocnse                                    594             543
Reinsurancerecoveries                                                     (7e)             (e6)
Claims cxpcnsc                                                           515              447

Operating expenses
Policy acquisition cxpcnses - life insurance contracts
    Commissions                                                           93               82
    Other                                                                 87               77
Policy acquisition expenses- life investmcnt contracts
    Commissions                                                          152              134
    Other                                                                 55               46
Policy maintenance expenses- lifc insurance contracts
    Commissions                                                           65               59
    Other                                                                 83
Policy maintenance expenscs- lifc investment contracts
    Commissions                                                          153              135
    Other                                                                l4l              134
Investment managementexpcnscs                                             20               Jt

Employee expenses                                                        292              284
Depreciation and amortisation expenses                                    15               )l

Travel and related cxpenses                                               t2               12
Property expenses                                                         45
Communication.postageand stationcryexpenses                               ,1               21
Fees and commissions                                                      97               oo
Markcting and advertising expenses                                        15                8
Consulting and othcr professional expenses                                6l               5l
Related party cxpcnscs
    Ultimate parent entity                                               118               92
    Other related parties                                                 66              109
Otherexpenses                                                            (29)              65
Total operating cxpcnses                                               1,564            r,566

Finance costs
    Rclatcd partics
           Ultimate parent entity                                         t7               29     3
           Othcr relatcd parties                                          28               z)
    Bonds, notes and subordinatcd notes                                   55               38     44
    Other                                                                  )               l8
Total finance costs

                                                                                                       P a g e1 9
NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

4 Income tax
                                                                                                            Group                  Company
                                                                                                    2007             2006   2007              2006
                                                                                                      $m              $m     $m                 $m

(a) Income tax expense(benefit) is made up of:
Total income tax charged to income:
Current tax
   Current income tax charge                                                                        622              423
   (Over) / under provision in relation to prior years                                                210
Dcfcrred tax - temDorary differences                                                                  829
Total income tax expense/(benefi$                                                                   632              462    (14)               (3)

Total income tax charged(credited)      to equity:
Deferred tax                                                                                                          (2)
Total income tax chargcd/(credited) to equity                                                                         (2)

(b) Reconciliation of income tax expense shown in the income statement with
 prima facie tax payable on the pre-tax accounting profit

Profitbefore income tax expense - continuing opcrations                                           2,084             t,602   113               369
Prima facie income tax expcnse/(benefit) calculated at 30%                                          625              481    34                llt
Addi(deduct): Tax cffect ofamounts which are not deductible/(assessable)
    Non-deductible expcnses
              Other                                                                                                    2
              Impairment on investment in controlled entities                                                          2                        2
    Gross up fee income                                                                              rsir            (20)
                 income - rclating to minority interest
    Non assessable                                                                                 (2e8)            (22s)
    Rebateabledividends from controlled cntitics                                                                            (48)             ( 11 6 )
    (Over) i undcr provision in relation to prior years                                              (2)             (40)
    Tax expenseattributable to policyholden                                                         381              260
    Rclcascof specific tax provisions                                                                (r2)
    Other                                                                                             (8)
Total income tax expcnsc/Ocncfit)- continuing operations                                            632              460    (14)                (3)

Profit bcfore income tax expense - discontinucd operations                                                            38
Prima facie income tax expense(bcncfit) calculated at 1'1.5%o
Add/(deduct): Tax effect ofamounts which are not deductible(assessable)
    Other                                                                                                             (s)
Total income tax cxpcnse/(benefit) - discontinucd opcrations (notc 22(b))

(c) Deferred tax

Deferred tax assctscomprise:
   Expenditure deductible in future years                                                            l3               12
    Provisions                                                                                       l8               10
    Unrealised investment losses                                                                      I
    Other                                                                                            33               39
Total dcfcrred tax assets                                                                            65               61

These deferred tax assetswill only bc obtained if:
.  fuhrre assessable income is derivcd ofa naturc and an amount sufficient to enable the benefit to bc realiscd;
. thc conditions for deductibilif imposed by tax legislation continue to be complied with; and
.   no changesin tax lcgislation adversely affect the Group in rcalising thc benefit.

NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

4 Income tax (continued)

                                                                                                      2007           2006           2007             2006
                                                                                                        $m             Sm             $n                $m

Deferred tax liabilities comprise:
   Unrcaliscd invcstmcnt gains                                                                        587            5'71
    Othcr                                                                                               8
Total defened tax liabilities                                                                         59s            580

Tax consolidation
National Australia Bank Limited is the hcad cntity in the tax consolidatcd group comprising thc National Australia Bank Limited and all of its
Australian wholly owned controlled entities. Entitics in the tax consolidated group currently have Tax Funding Agrecments in place which push
cunent and defcrrcd tax amounts to controlled entities via the inter-comDanv account.

Each controlled entity in the tax consolidated group recognises its current tax liability/(asset) as an intercompany payable/(receivable) to the head
entity. Tax losscs meeting recognition requircments as Deferred Tax Assets are recognised as intercompany rcccivablcs.

Under the Tax Funding Agrccmcnts, each entity determines its own tax liability on the basis that it is a stand alone entity but makes adjustmentsto
exclude any receipt of dividends from group entities or intra-group transfer of assets. In respect of assessingthe recoverability of tax losses/credits
a separatetaxpayer within thc group approach is adopted such that the loss/credit may be recognised as a Defened Tax Asset to the extent that it is
it is recoverable by the Group and notjust thc stand-aloneentity.

                                                                                                                    Group                  Company
The following amounts have been recogniscd in rcspect oftax consolidation.                            2007           2006           2001             2006
                                                                                                        $m             $m            $m                 $m

Total increase(reduction) to inter-company assetsofthe Group                                             3              4
Total increase (reduction) to inter-company liabilities ofthe Group                                    r5t            148

                                                                                                                                               Page 21
NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

5 Dividends and distributions
                                                                                                               per                Total
                                                                                                              share          amount
                                                                                                              dollar                $m

Dividends declared and paid during the year

Ordinary sharc capital
   Final dividend for 2006                                                                                   0.0r9
Rcdeemable preference shares
   Final dividcnd for 2006                                                                                   0.019                 43
Total dividends paid                                                                                                              lt7
Ordinary share capital
   Final dividend for 2005                                                                                   0.021                 80
   Interim dividend for 2006                                                                                 0.048                184
Redeemablepreference shares
   Final dividcnd for 2005                                                                                   0.021                 55
   Interim dividend for 2006                                                                                 0.048                126
Total dividends oaid                                                                                                              445

Proposed final dividend
On 27th November 200'7,the directors declared the following dividend:
Ordinary shares                                                                                               0.08            3ll
Redeemablepreference shares                                                                                   0.08            183
Total dividcnds proposed                                                                                                          494

Australian franking credits
As partofenteringthe tax consolidation                    group,all frankingcrcditsarisingfrom 1 Octobcr
                                     regimetax-consolidated                                            2002belongto theNational
Australia                                     in
         BankLimitedandarcno lonscrdisclosed thc financialstatements.

                                                                                                                           Page 22
NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

6 Financial assets
                                                                                                               Group                   Company
                                                                                                        2007             2006   2007         2006
                                                                                                         $m               $m     $m              $m

(a) Financial assetsat fair value through profit or loss
Equity securities
Equity securitiesheld directly                                                                         819             , ,10

Equity securitieshcld via unit trusts                                                               40,575         33,612

Total equiWsecurities                                                                               41394          35,851

Debt Securities
       bearing         helddircctly
              securities                                                                             2,785
Interest               heldvia unit trusts
              securities                                                                            15,299         1175n

Total debt securities                                                                               18,084         16,112

Property investments
Proocrfv held via unit trusts                                                                        4,184             3,809
Total property investments                                                                           4,184             3,809

Hedging derivatives                                                                                                       l0
Trading derivatives                                                                                                        I
Total derivatives                                                                                                         ll

Total financial assets at fair value through profit or loss                                         63,662         55,783                        l0

(b) Financial assetsheld to maturity
Finance leasessecured                                                                                                   )zJ

Total financial assetsheld to maturitv                                                                                  323

Total financial assets                                                                              63,662         56,I 06                       l0

(c) Loans and other receivables
Reinsurance claims receivable                                                                            5
Invcstment income accrued and receivable                                                                35               44
Loans on policies                                                                                        t1              22
Outstanding premiums                                                                                    78               77
Fecs rcceivable                                                                                         37               54
Related party receivables:
   Ultimate parcnt entity - tax related                                                                 36                      13
   Ultimatc parcnt cntity - other                                                                       16               20
   Other related parties                                                                                26               35
Unsettled invesunent transactions                                                                       10                5
Receivables                                                                                             65               JD      ;
Other life insurance assets                                                                             94               24
Other                                                                                                    5                7
Total loans and other receivables                                                                      430

All financial assctsare current except for the following which are cxpected to be recovered after 12 rnonths

   Financial assetsheld to maturitv
    Hcdging dcrivativcs                                                                                                   l0                     10

National                     HoldingsLimited
FinancialReportfor the year ended30 September2007
      TO                  STATEMENTS

7 Propertyoplant and equipment

                                                                  Group           Company
                                                                2007      2006    2007       2006
                                                                 $m        $m      $m         $m

Leasehold improvements
At cost                                                          37        38
Deduct: Accumulated deoreciation                                (27)      (23)
                                                                 t0        l5
Furniture, fixtures and fittings and other equipment
At cost                                                         lt8       115
Deduct: Accumulated dcprcciation                                (90)      (e0)
                                                                28        25
Dstr processing equipment
At cost                                                          39        38
Deduct: Accumulated deorcciation                                (33)      (32)

Total property, plant and cquipment                             44        46

Reconciliations of movements in property, plant and equipment

Leasehold improvements
Balance at beginning ofyear                                      t:       26
Disposals from sale ofcontrollcd cntitics                                  r'S)
Additions                                                                   I
Disposals                                                        (2\       (3)
Depreciation                                                     (3)       r5\
Foreign currency translation adiustmcnts                                    I
Balance at end ofyear                                            l0       15

Furniture, fixtures and fittings and other equipment
Balance at beginning ofycar                                     t(        39
Disposals from sale ofconholled entities                                  (3)
Additions                                                       1;         3
Disposals                                                       (1)       (7)
Depreciation                                                    (6)       (8)
Foreign currency translation adjustments                         (r)       1
Balance at end ofyear                                           28        25

Data processing equipment
Balance at beginning ofyear                                       6         7
Disposals from sale of controlled entities                                 (t)
Additions                                                         1         5
Depreciation                                                     (3)
Balance at end ofyear

                                                                                         Page 24
National                     HoldingsLimited
FinancialReportfor the year ended30 September2007

8 Goodwill and other intangible assets
                                                                             2007        2006
                                                                              $m          $m

Cost at ycar end                                         5,261    5,291
Accumulated impairment lossesat year end                   Q7)      (34)
Toul goodwill at year end                                5,234    5 l{7

Internally generated software
Cost at year end                                           {t        49
Accumulated amortisation at year end                       (47)     (3e)
Total intemally gencratcd software at year end                       l0

Acquired software
Cost at year end                                           6l        67
Accumulated amortisation at year end                       (61)     (66)
Total acouired software at vear end

Other acquired intangibles
Cost at year end                                          102
Accumulated amortisation at ycar cnd                       (36)

Total other acquired intangiblcs at ycar cnd

Total goodwill and other intangible assetsat year end    5,305    s 110

Cost at beginning ofycar                                 5,297    5 556

Accumulatcd impairment lossesat beginning of year          (34)   (108)
Total goodwill atbeginning ofyear                        5,257    5,448
Disposal of controlled entities                            (r2)   (2r0)
lmpairmcnt losscs rccognised                                        (5)
Forcigncurrency         adjustments                        (11)     24
Balance at the end ofthe year                            5,234

Internally generated software
Cost at bcginning ofyear                                             48
Accumulated amortisation at beginning of year             (39)
Total intemally generatedsoftware at beginning of year     10        23
Additions                                                   I
Amortisation                                                (4)     ( 13 )
Other movements                                             (2)

Balancc at the cnd ofthe year                                        10

Acquired software
Cost at beginning ofyear                                   61        z)

Accumulatcd amortisation at bcginning of year             (66)      (21)
Total acquircdsoftwarcat bcginning ofyear
Amortisation                                                (r)
Balance at the end ofthe year

                                                                                       Page 25
National                     HoldingsLimited
FinancialReportfor the year ended30 September2007
      TO                  STATEMENTS

8 Goodwill and other intangible assets(continued)

Other acquired intangibles
Costatbeginning ofyear                                                                                102            102
Accumulatcd amortisation at bcginning of year                                                         (31)           (26)

                                                                                                       7r             '76
Total other acquired intangibles at beginning ofyear
Amortisation                                                                                           (s)            (s)
Balance at the end ofthe year                                                                          66             7l

Impairrnent testing for goodwill

For thc purposes of undertaking impairment tcsting, cash generating units (CGU's) arc identified. CGU's are dctcrmincd according to the smallest
groupofassctsthatgeneratecashinflowsthatarelargelyindcpcndentofthecashinflowsfromotherassetsorgroupsofassets. Goodwill
impairment is assessed the group of cash generating units that representsthc lowcst level within the Group at which goodwill is maintained for
intcmal managementpurposes, which is at thc segment level.

Impairment testing compares the carrying value of an individual assct or CGU with its recoverable amount. For thc purpose of impairment of
goodwill, the recoverablc amount has been calculated using a "value in use" approach (ic prcsent value ofprojected future cash flows).

As the underlying business tends to be long-term, cash flows are projected for at least 30 years into the future, using best estimatc assumptions.
The best estimate assumptionsare set with rcfercnce to the medium-term management approved forecasts,in conjunction with rcccnt cxperience
and cxpectations for the long-tcrm future.

Thc projected cash flows have been discounted at thc following discount rates:
                                                                                                     zo07           2006

- Life Insurance
               Business                                                                              11.5           11.0
- Non-LifeInsuranceBusincss                                                                          12.6           12.1

The discount rate reprcscntsthe pre tax discount ratc applicd to the cash flow projections.
Thc discount rate reflects the markct determined, risk adjusted, discount rate which was adjusted for specific risks relating to the CGU.

Other key assumptions are described below:

1. Sales volumes and growth ratcs - the volume of new business expected to bc gcncratcd from existing sales channels and relationships, and the rate
   at which salesvolumes are expcctcd to grow from year to year. The sales growth rates rangc from I L5% in thc short term, through to 7 .5%:o
    5% in the medium to long term.
2. Expenses - thc expcctcd direct costs and overhcads of managing thc business.
3. Lapscs / attrition - the rate at which customers are expected to remove their business.

The carrying amount of goodwill allocated to cash generating units is:
                                                                                                      2107           2006
                                                                                                       $m             $m
    Australia (excluding assetmanagement)                                                            4,E34         4,834
   Asset managemcnt                                                                                   155            155
    Medfin                                                                                              -12
   Plum                                                                                                35              35
   New Zealand                                                                                          77
   UK                                                                                                 203            214
                                                                                                     5234           5,257

NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

8 Goodwill and other intangible assets
Other acquired intangibles - Management agreements

In detcrmining the value of all fuhrrc profits to emerge from the cash gencrating units, carcful consideration is given !o both future business and
economic assumptionsaffecting the business.Many ofthcse assumptions require signifrcantjudgement becausethey are dcpcndent on a number of
factors that cannot be precisely dctcrmined at the time thc valuation is madc.

Thc key business assumptions uscd relate to sales (volume and growth), profit margin squceze,discontinuanccs,cxpensesand claims. These
assumptions are determined after an cxamination ofthe expcrience ofthe busincss, their short-term and long-term busincss plans, and industry
expcricnce and expectations.

The key economic assumptionsused in this calculation vary by product and are as follows:
   .   Investmenteamingsof 6.1% to 9.3%;o;
   o   Risk discountof 12.6%;
   o   Inflation of2.5Yo:and
   o   Tax rate of30%o.
These assumptionsare determined after an examination ofcurrent market rates and funrre markct expectations.

                                                                                                                                               Page 27
NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

9 Defined benefit pensionschemeasset

The Group maintains one defincd benefit superannuationplan.

Surpluscs and deficiencies depend on many diverse factors and can vary significantly over time having rcgard, for example, to movements in the
investment markets, future salary incrcasesand changes in employment patterns. This notc setsout dre Group's position in relation to its defined
benefit p1an.The Plan listed below shows the position using the most recent information available.

(a) Superannuation plans
The Group's accounting policy for superannuation commitments is set out in notc l. In 2007 the Group contributed to the National Wealth
Management Superannuation Plan, which had a defined benefit section. The defined benefit scction providcs lump sum benefits based on years of
scrvice and final average or avcrage salary. The defined pension plan is closed to ncw mcmbers.

Thc dcfincd contribution section receives frxed contributions from Group companies and the Group's legal or constructive obligation is limited to
these contributions.

The following sets out details in respect ofthe defined benefit sections only.

(b) Balance sheet amounts
Thc amounts recognised in the Group's balance sheet are as follows:
                                                                                                                                                                                 Group                                       Company
                                                                                                                                                                        2007                  2006                  2007                  2006
                                                                                                                                                                           $m                    $m                   $m                     $m
Net assetin the balance sheet
Prcscntvalue of funded obligations                                                                                                                                      (68)                   (ss)
Fair value ofnlan assets                                                                                                                                                  86                    78
Net assetbeforc adiustment for contribution tax                                                                                                                           18                    23
Adiustment for contribution tax                                                                                                                                             3                     4
Net assetin the balancc shcct"'                                                                                                                                           21                    27

t " T h e G r o u p h a s n o l e g a l b e n e f i t f r o m a n y s u r p l u s i n t h e p l a nh e G r o u p i n t e n d s t o c o n t r i b u t e t o t h e d e f i n e d b e n e f i t s e c t i o n o f t h e p l a n a , t a r u t e o f l 4 . l y o
(2006: 17.2o/,)of salariesin accordance                            from the actuary,Mr D O'Keefe,Alea Actuarial Consulting Pty Ltd.
                                      with the latestrecommendations

(c) Categories of plan assets
Set out below is the fair value ofthc Group's dehned benefit plan assct allocation including the percentageofthe total plan assetsas at 30 Scptcmbcr:

                                                                                                                    Group                                                                              Company
                                                                                         2007                                   2006                                    2007                                        2006
                                                                                           $m                  Vo                  $m%                                    $m                      "$m                                         %
Equity instrumcnts                                                                        53              6r.6                    48            60.7
Dcbt instruments                                                                          26              30.2                    23            30.4
Property                                                                                   4               4.5                     4             5.1
Other assets                                                                               3               3.7                     3             3.8
Fair value ofpian assets                                                                  86                                      78

(d) Reconciliations
                                                                                                                                                                                Group                                       Company
                                                                                                                                                                        2007                  2006                  2007                  2006
                                                                                                                                                                          $m                     $m                   $m                     $m
Reconciliation ofthe present value ofthe defined benefit obligation
Balance at the beginning ofthe year                                                                                                                                     (ss)                   (s4)
Current service cost                                                                                                                                                     (4)                    (4)
Intcrest cost                                                                                                                                                            (3)                    (2)
Actuarial gains and losses                                                                                                                                              (13)                    (1)
Benefits oaid                                                                                                                                                             7                       6
Balance at the cnd ofthe year                                                                                                                                           (68)                  (ss)

NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

9 Defined benefit pension schemeasset(continued)
Reconciliation ofthe fair value ofplan assets
Balance at the beginning ofthc year                                                                        78                 1l

Expected retum on plan assets "'                                                                            5                  5
Actuarial gains and losscs                                                                                   7                 5
Contributionsby Croup companics                                                                              3                 5
Bencfits paid                                                                                               (7)               (6)
Plan expenses                                                                                                                 (l)
Contributions tax                                                                                                             (l)
Balance at the end ofthe year
(r)                                         (2006: 9.3%).
    The actualretum on plan assets
                                 was I I .8%o

(e) Amounts recognised in the income statement
The amounts recosnised in the consolidated statcmentsof income are as follows:
                                                                                                                  Group                          Company
                                                                                                           2007             2006        2007
                                                                                                            $m                $m            $m
Current service cost                                                                                         44
Intcrcst on obligation                                                                                       32
Expected retum on plan assets                                                                               (s)               (5)
Plan expenses                                                                                                -l
Total defined benefit expense

Total amount of actuarial gains recognised dircctly in retained eamings is $6 million (2006: $6million).

(f) Principal actuarial assumptions
The invcstment policy and strategy for defined plan assetsare bascd on an expectation that equigr securitieswill outperform debt securitics over the
long term. The composition of plan assetsis broadly maintaincd at a ratio of approximately 2:1 allocation between equity and debt sccurities. By
managing thc composition of plan assets,the Group aims to minimise investment risk. The Group plans to make contributions in accordancewith
actuarial recommendations to reduce plan deficits over time. The Group's cxpected rate ofretum on defined plan assetsis determincd by the plan
assets'historical long-tcrm investment performance, the currcnt assctallocation and estimatesof future long-term retums by assetclass.

TheassctsofthcfundcdplanarcheldindependentlyofthcGroup'sassetsinseparateadministeredfunds. Defincdbcncfitschemesarevaluedby
independent actuaries for accounting purposcs using the projected unit credit mcthod cvcry ycar. Thc latest actuarial valuations were made by
applying thc following average actuarial assumptionsat September 30 (weighted averages):
                                                                                                                                        2007               2006
                                                                                                                                            %                    %
Discount rate (per annum)                                                                                                                   f,                5
Expected rcturn on plan asscts(per annum)                                                                                                   8                 7
Rate ofcompensation increase(per annum)                                                                                                     4                 4

(g) Net surplus
Listedbelowaredetails theNationalWealthManagement
                      of                        Supcrannuation
                                                             Plan. Theaccrued       plan assets nct marketvalueandnet
                                                                            benefits,         at
surplus/(dcficit) these
               of      planswcrc:
                                                                                        2007                                         2006

                                                                                                  Net Bccrued                                      Net accrued
                                                                                                      benefit                                             benefit
                                                                            Accrued       Plan       surplus/         Accrued           Plan             surplus/
                                         Most recent                        benefits     assets      (dencit)             benefits     assets         (deficit)
Name of defined benefit fund             plan infomation                         $m        $m               $m                $m            $m               $m
National Wealth Managcmcnt               30 June2007
SuoerannuationPlan                                   Report
Total defined bencfit funds                                                     68         86              18                                               a)

NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

10 Policy liabilities
                                                                                                                Group                             Compmy

                                                                                                         2007             2006             2007            2006
                                                                                                           $m              $m               $m                $m

Life insurance contracts

Best estimate liabilities
   Value of future policy benefits                                                                      5,166            \ ))q

    Value of futurc expenses                                                                            1,493            I a)1

    Value of future premiums                                                                          (7,154)           (6,8s5)
    Future charges for acquisition costs                                                                 (s6)             (60)
Total best estimate liability                                                                           (ssl)            (263)
Value of future profits
   Value of future policy owner bonuses                                                                   587             588
   Value of future shareholder profit margins                                                           t,M4             I 71<

Total value of future orofits                                                                           2,451
Net policy liabilities for life insurance contracts                                                     1,900            2,060
Policy liabilitiesceded undcr rcinsurance                                                                 95               11
Gross oolicv liabilities for life insurancc contracts                                                   1,995            2,t3t

Life Investment Contracts
Lifc Investment Contract Liabilities                                                                  50,935            44,180
Total Life Insurance Policy Liabilitics                                                               52,930            46,311

Refer to Note 25 for information in rclation to the Part 9 Transfcr which is in the rcconciliation below.

The total value of declarcd bonuses is $93 million (2006: $90m).

In respect of lifc insurance contracts with a discretionary participating feah.rre,
                                                                                  there are $ 1,569 million (2006: $ I ,685m) of liabilities that relate to

Reconciliation of movements in policy liabilities
                                                                                                         Group                            Company
                                                                                                         2007             2006             2007            2006
                                                                                                          $m               $m               $m                $m

Life insurance contract policy liabilities
Life insurance contract liabilities at bcginning ofycar                                                 2,137            t os7
Impact of transition to AIFRS                                                                                            (3e3)
Increasc/(decrease)  rcflcctcd in the income statement
 - relating to continued operations                                                                     (136)             (26)
 - relating to discontinued operations                                                                                      10

Disposals                                                                                                                (486)
Lifc insurance contract liabilities at end ofyear                                                       1,995            2,131

NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

10 Policy liabilities (continued)
                                                                                                              Group                             Company

                                                                                                       2007             2006           2007               2006
                                                                                                        $m                $m               $m              $m
Life investment contracts policy liabilities
Lifc invcstment contract liabilities at the beginning ofthe year                                    44,180            38,808
Impact of transition to AIFRS                                                                           -               828
                  reflected in the income statcmcnt
Increase/(decrease)                                                                                 6,000              4,554
Premiums recognised in policy liabilities                                                           9,934              7,723
Claims recognised in policy liabilities                                                            (9,179\            (7,s99)
Disposal of controlled entities                                                                         -               (134)
Lifc investmcnt contract liabilities at the end ofthe vear                                          50,935            44,r 80
Totalgrosspolicy liabilitiesat endofyear                                                            52,930            46.311

Liabilities ceded under reinsurance
Balance at the beginning ofyear                                                                        (7r)              195
Incrcasc/(dccrcasc)in rcinsurance assetsreflected in thc income statement                              (24',)           (8s)
Increase/(decrease) life insurance contracts from recapture of
    reinsurance treaty                                                                                                 (l8r)
Balanceatyearend                                                                                       (95)             (71)
Nct policy liabilitics at end ofyear                                                                52,835            46,240

For the majorify of policy liabilities, there is no fixed settlement date. Bascd on thc group's assumptions as to likely withdrawal and claims pattems,
it is estimated that the approximate amounts that may be settled within l2 months is $7,625 million (2006: $6,413 million).

The Group conducts its life insurance busincss through a number of entities including MLC Limitcd (MLC) and MLC Lifetime Company Limited
(Lifetime) in Australia and BNZ Life Insurance Limited in New Zealand.

The effective date of the Financial Condition Report (includes policy liabilities and solvency reserves) is 30 September 2007. The actuarial report
was prepared by the Appointed Actuary, Kevin Allport BA, FIA, FIAA, ASA, who is satisfied with the accuracy of the data upon which policy
liabilities havc bccn determined. Policy liabilities have been determined in accordancewith the Lifc Insurance Act 1995 (Cth) and with the standards
of the Life Insurance Actuarial StandardsBoard (LIASB).

(a) Details of the solvencyposition of each Life insurer

Australian life insurers

Under the LiJb Insurance Act I 995 (Cth), lifc insurcrs arc rcquircd to hold rcscrvcs in cxccss ofpolicy liabilities to meet certain solvency and capital
adequacy requiremcnts. Thcse additional reservesare necessaryto support the life insurer's capital requirements under its business plan and to provide
a cushion against adverse experience in managing long-term risks. In Australia, the Lifc Insurance Actuarial StandardsBoard has issucd Actuarial
Standard AS 2.04 "Solvcncy Standard" for determining the level of solvency reserves. This standard prescribes a minimum capital requirement for each
statutory fund and the minimum level of assctsrcquircd to be held in each statutory fund. Capital adcquacy is dctermined in accordancewith Actuarial
StandardAS 3.04 "CaDital Adeouacv Standard".

The solvency position of each Australian lifc insurcr in thc group is shown below. For detailed solvcncy information on a statutory fund basis, users of
this annual financial report should refcr to thc financial statcmcntsprcpared by each lifc insurcr

At 30 September 2007                                                                                            NAFiM           Lifetime           MLC
Solvency rcscrvc ($m)                                                                                                                      36              757
Asscts availablc for solvcncy ($m)                                                                                                      135               1234
Covcragc of solvency rcscrvc (times)                                                                                                   3.75               r.63

NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

10 Policy liabilities (continued)

At 30 September 2006                                                                                                                                                         NAFiM                    Lifetime                   MLC

Solvcncy reserve ($m)                                                                                                                                                                      l1                      561                       73
Assetsavailablcfor solvency ($m)                                                                                                                                                           )/                     806                    310
Coveragc of solvency rescrvc (times)                                                                                                                                                   2.91                       1.44                   4.25

(b) Actuarial methods and assumptions- Australian life insurers

(i) Policy liabilities

Thc policy liabilities have been calculated in accordancc with Actuarial Standard AS l 04 "Valuation ofPolicy Liabilities" issued by the Life Insurancc
Achrarial StandardsBoard (refer to note l). This measurcment is consistentwith the requircmcnts of the applicable accounting standards:AASB 1038
for life insurance contracts and AASB | 39 and AASB 118 for life investmcnt contracts.

(ii) Types of business and profit carriers
Thc mcthods used, and in thc case of insurancc contracts, the profit carriers used in order to achieve the systcmatic releaseofprofit margins are

Product type                                                                                                                                                                        Method                                     Profit canier

Investment-linked                                                                                                                                                              Fair value                                                   n/a
      Traditional business - participating                                                                                                                                    Projection                                           Bonuses
      Traditional business - non-participating                                                                                                                                Projection                                         Premiums
      Term lifc insurance - regular premiums                                                                                                                                  Projection                                         Premiums
      Term life insurance - single premiums                                                                                                                                   Projection                                              Claims
      Disability incomc insurance                                                                                                                                             Projection                                   Premiums
      Annuity business                                                                                                                                                        Projection                            Annulty paymcnts

(iii) Discount rates

These arc thc rates used to discount future cash flows to determine thcir nct prcscnt value. To the extent that policy benefits are contractually linked
                                                                                                                                                   et ro
t o t h e p e r f o r m a n c c o f a s s e t s h e l d , t h e r a t c u s e d i s b a s e d o n t h e m a r k e t r e t u m s o f t h o s e a s sF os . t h e r p o l i c y l i a b i l i t i c s , t h c r a t c s u s c d a r e b a s e d o n
risk-free rates.
                                                                                                                                    NAFiM                                                               MLC andMLC Lifetime
                                                                                                                                   2007                        2006                                               2007                    2006
Traditionalbusincss participating
      Ordinary                                                                                                                       nla                         nla                                        s.gvr$                  5.6oAQ)
      Superannuation                                                                                                                 nla                         n/a                                        7. l o \ t )          6 . g1 %
Traditional business - non participating
      Ordinary                                                                                                                       nla                  5.8%                                                  6.70                        nla
Term life and disability insurance (excluding claims
  in payment) insurance                                                                                                              nls           5.8-6.\YoQ)                                            6.6-7.00/o 5.8-6.lyoQ)
Disability business                                                                                                                  nla              5.g\uQ)                                                   6.70                5.9yoQ)
                                                                                                                                                           Q)                                                                            Q)
AnnuiW business                                                                                                                      nlt          5.9-6.OVo                                               6.5-6,8oh 5.9-6.|Yo
      After tm.                             Before tat

(iv) Future expense inflation and indexation

Futurc cxpense inflation is assumedto be 3 .'1Vo  (2006: 2.5%) per annum rate of inflation. Fuhlre invesfincnt management fees have been assumedto
rcmain at current rates. Benefits and/or premiums on certain policies are automatically indexed by thc consumer price index. The policy liabilities
assumea fuhlre take-up ofthesc indcxation options based on the relevant company's recent experience. The assumedannual indexation ratcs for
policy liabilities for outstanding disabilif and salary continuance claims was 3.'7% (2006: 3.4%).

(v) Rates oftaxation
Rates oftaxation in relation to the Australian life insurance business are outlined in note I

 NationalWealth ManagementHoldings Limited
 Financial Report for the year ended 30 September 2007

 10 Policy liabilities (continued)
(vi) Mortality and morbidity

Futurc mortality and morbidity assumptions are based on achrarial tables publishcd by thc Institute of Actuarics of Australia, with adjustmentsto
claim incidence and termination rates bascd on rcccnt experience as follows:

                                                         2007                                                               2006
Traditional business                                   Male 90Voof IA 95-97'                                            Malc: 90% of [A 95-97{
                                                       Female:957oof IA 95-97(')                                        Fcmale:850/o IA95-97(t)

Tcrm lifc insurancc                                    Male/Femalc: 65 - 80% of IA 95-97 for non-                       Male/Female:65 - 80% of IA 95-97 for non-
                                                       smokers with adjustments for smokers"'                           smokers with adjustments for smokcrsrl)

Loan cover term life insurance                         Male/Female:80 - I l0% of IA 95-97 for non-                      Male/Female:80 - 110% of IA 95-97 for non-
                                                       smokers with adjusfinents for smokers"'                          smokers with adjustments for smokersrrl

Disability income insurance                            Male: Ratcs similar to 105% of incidence                         Male: Ratessimilar to 120% of incidence
                                                       and,70 - 100% of termination rates of IAD 89-934Q)               and l20o/oofclaim costsofIAD 89-93",.r)
                                                       Female: Rates similar to 75% olincidcnce                         Female: Rates similar to 75% of incidence
                                                       and'70 - 100% of termination ratcs o;14p 39-93r:rr:)             and 120'Yo claim costsof IAD 89-93'?,.j'

Loan cover disability income insurance                 Male,/Female:Rates similar to | | 5 - 140% for non-              Male,/Female:Ratcs similar to 180% for non-
                                                       smokcrsand 145 - 175% for smokersofincidencc                     smokers and225"/o for smokcrs ofincidence
                                                       and 100% of termination ratcs of IAD 89-93'?r                             of
                                                                                                                        and 112%o claim costs of IAD 89-93(?'

Annuity business                                       Malc:61.'15ok+ 0.95% for eachyear                                              +
                                                                                                                        Malc:61.75%o 0.95% for eachyear
                                                       > 75 to max 95Yoof IM92@                                         > 75 to max 95%o IM92ta)
                                                       Female:4'7.5%o L5%ofor cach year                                                +
                                                                                                                        Female:4'7.5T;o 1.5o% cach year
                                                       > 75 to max I0OYIof ll92'-"                                      > 75 to max lO0Yoof lb92 "'
      IA 95-97 is a mortality table developed by the Institute ofActuaries   ofAustralia   based on Australian   insured lives experiencefrom   1995 to 1997
'"    IAD 89-93 is a disability table developedby the Institute ofActLtariesofAustralia basedon Attstralian insured lives disability income business
      froml 989 to 1993.
&      L 2007, the assumptionrelating to claim continuance Disability Income[nsurancehave beenexpressed a percentageoJ the IAD 89-93termination
       rates, rather than a '%of the claim costsimplied b))the IAD 89-93 table. Overall, the assumptionchangehas increasedtheprojected claim costs.
      IM 92 sncl IF 92 are mortality tablesdevelopedby the Institute ofActuaries and the Faculty ofActuaries basedon UK anruritantlives experience.from        l99l
      to 1994. The tables refer to male andfemale lives, respectively and incorporate factors which allow for mortality improvementssince the date of the investigat
      (thereis no standardAttstralian annuitant mortality table).

(vii) Discontinuances

Assumed future annual rates ofdiscontinuance for the maior classesofbusiness arc as follows
                                                                                                                        NAFiM           MLC Limited and MLC Lifetime
Product                                                                                                          2007            2006              2007          2006
Traditional busincss - participating
      Ordinary                                                                                                    nla             n/a            6.00           6.0%
      Superannuation                                                                                              nla             nla            7.0Yo          7.0%
Traditional business - non participating
   Ordinary                                                                                                      n/a            3.0%             3.0o/o           n/a
Term life insurance                                                                                              nla            11.0%           10.00/0        t1.0yo
Disability insurance                                                                                             nla            14.0%      ll.0-12.00h    12.0-14.0%
Loan cover term life and disabilify insurancc                                                                    n/a            30.o%          31.0y"          30-00/o
Superannuationbusincss                                                                                           nla              n/a      14.0-15.00     14.0-15.0%
                                                                                                                    nla           l8.0Yo         18.0%
Allocated pension business                                                                                       \/a              nla           l4,0oh         14.0%

NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

10 Policy liabilities (continued)
(viii) Surrender values

Sunendcr values are based on the provision spccified in policy contracts and on the current surrendcr value basis for traditional policies, and may
include a recovery ofpolicy acquisition and maintenance costs. In all cases,the surrender values specified in the contracts exceed those required by thc
Life Insurance Act | 995 (Cth)

(ix) Future participating benefits

For participating business,the Group's policy is to set bonus rates such that ovcr long periods, the retums to policyholdcrs arc commensuratewith the
investment rctums achieved on relcvant assetsbacking the policics, together with other sources of profit arising from this business. Pre-tax profit arc
split between policyholders and shareholderswith the valuation allowing for shareholdersto share in the pre-tax profits at the maximum rate of20o%
(15% for certain policies issued bcfore 1980). In applying the policyholders' share ofprofits to providc bonuses,consideration is given to equity
betweengenerationsofpolicyholdersandcquitybenveenvariousclassesandsizesofpoliciesinforce. Assumedfuturcbonusratcsincludedinpolicy
liabilitics arc set such that thc prcsent value ofpolicy liabilitics cquatcs to the present value ofassets supporting the business together with assumed
fuhrre investmcnt rctums, allowing for the shareholders' right to participatc in future pre-tax profits.

Assumed future annual bonus rates for the maior classcsofbusiness are;
                                                                               Ordinarybusiness                                              Superannuationbusiness
                                                                              2007          2006                                                2007                 2006
Bonus rate on sum assured                                                          2.60         2.0%                                                 3.40                  2-8o/o
Bonus ratc on existins bonuses                                                     2.60         2.0%                                                 3.40h                 23%

(c) Effects of changes in actuarial assumptions from 30 September 2006 to 30 September 2041

                                                                                              Change in future profit margins               Change in net policy liabilities
                                                                                                  increase/ (decrease)                          increase/ (decrease)

Assumptioncategory                                                                                         $m                                           $m

Market related changcs to discount rates                                                               (r3s)                                             61
Non-market related changesto discount rates                                                                   (4)
Inflation rate                                                                                                 )                                        (4)
Mortality and morbidity                                                                                       95
Discontinuance rates                                                                                          )',
Maintenance Expenses                                                                                          (s)
Other Assumptions                                                                                              2
Total                                                                                                      (23)

(d) Sensitivity Analysis

Sensitivity analysesare conductcd to quantify the exposure to risk ofchanges in the key underlying variablcs such as risk discount rato, mortality,
morbidity, discontinuancesand cxpcnses. The valuations included in the reported results and the best estimatc of futurc pcrformancc arc calculatcd
using ccrtain assumptions about thesc variables. The movement in any key variable will impact the pcrformance and financial position and as such
reprcscnts risk. The table below illustrates how changes in kcy assumptionswould impact the reported profit and policy liabilities ofthe group in
resoect of lifc insurance business.
                                                                                                              2007                                      2001
                                                                                                Gross (before reinsurance)                       Net (ofreinsurance)
                                                                                              Profit/(loss)         Policyliabilities       ProfiV(loss)       Policyliabilities
                             Changein variable                                                    $m                       $m                   $m                    $m

Risk Discount Rates          17o increasein risk discount rates                                            (se)                    84                  (se)                  84
Inflation Rate               0.50%increase in inflation rate                                                   6                  (e)                      6                 (e)
Annuitant Mortality              increasein the rate of mortality improvement
                             5Oo/o                                                                            r'l                       I               r'l                    i
Mortality                    10%oincreasein mortality rates
Morbidity                       increasein disability incidence rates
Morbidity                    10o%decreasein disability termination rates                                   (14)                    20                  (r2)                  77
Discontinuance Rates         l0o%increase in discontinuance ratcs
Maintenance Expenses         10% increasc in maintcnancc exDensos

NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

10 Policy liabilities (continued)
(e) Terms and conditions of insurance contracts

The key terms and conditions of the life insurance contracts that have a material effect on the amount, timing and uncertainty of future cash flows
are outlined below

      ofcontract                          Narureof                                                             risks affec"tinefuture cash flows

Term life and disability                  Payment ofspecificd benefits on death                           Mortality, morbidity, lapse rates
                                          or ill health ofpolicyholder.

Life annuity contracts                    Regular income for the lifc of the insured                      Mortality
                                          in exchangefor initial singlc prcmium

Conventional with discretionary           Combination oflife insurance and savings.                       Mortality, lapse rates, investmcnt eamings
participating benefits                    Sum assuredis specified and is augmented by
                                          annual reversionary bonuscs.

NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

11 Provisions
                                                                                                               Group                  Company

                                                                                                       2007            2006    2007             2006
                                                                                                        $m               $m     $m               Sm

Superannuationcontributions tax                                                                        140             158
Employee entitlements                                                                                   43              4l
Warranty                                                                                                t9              l9
Compensation payment                                                                                     7              l4
Rcmedial Action Programs                                                                                                 1
Rcstructuring costs                                                                                      8              17
Tax related provision                                                                                   ll              22
PACT                                                                                                    16              15
Othcr                                                                                                   t8              30
Total provisions                                                                                       762             3t7

Provision for restructuring costs compriscs

Provisions expected to be scttled within 12 months                                                     226             280
                     to be settled after more than 12 months                                            36               JI

                                                                                                       262             =

Reconciliations of movements in provisions

Superannuation contributions tax
Balanceat bcginning ofyear                                                                             158              171
Provision made                                                                                         29r              235
Paymentsoutofprovision                                                                                 (309)           (248)
Balance at end ofyear                                                                                  140             158

This represcntscontributions tax dcducted from TUSS supcrannuation members accounts which is payable to the ATO. This includes transfer of
iaxable contributions (Section 275 transfer) to the Group.

Employee entitlements
Balance at bcginning ofyear                                                                              4l             45
Provision made                                                                                           93              o/

Payments out of provision                                                                               (e0)            (6e)
Sale of controlled entities                                                                                              (2)
Balanceat end of year                                                                                   43               4l

Thisrelates annualleaveandlong service
          to                          leaveprovisions

Balance bcginning
       at        ofyear                                                                                 19
Provisionmade                                                                                                            l9
Balanceat end of year                                                                                   l9               l9

The Provision relates to potential paymcnts for outstanding items relating to the Asia salc in 2006.

                                                                                                                                          Page 36
 NationalWealth ManagementHoldings Limited
 Financial Report for the year ended 30 September 2007

 11 Provisions(continued)
                                                                                                       2007          2006          2007         2006
                                                                                                         $m            $m           $m              $m
 Compensation payment
Balance at beginning ofyear                                                                             t4              IJ

Provision made                                                                                           6               7
Paymcnts out of provision                                                                               (6)             (6)
Provision no loqger required                                                                            (7\
Balance at cnd ofyear                                                                                                  t4

This representsa client compensation payment and reportable events

Remedial Action Programs
Balanccat beginning ofyear                                                                                             r0
Payments out of provision                                                                                               (8)
Other                                                                                                                   (l)
Provision no longer required                                                                            (1)
Balance at end ofyear

The provision relates to the implcmcntation of Remedial Action Programs to meet APRA regulation.

Restructuring costs
Balanceat beginning ofyear                                                                              l7             JJ

Paymcnts out of provision                                                                               (2)            (6)
Provision no longer required                                                                            (7)           (10)
Balance at end ofyear                                                                                                  t'7

This provision relates to intemal restructuring in intemational controlled entities (New Zealand and United Kingdom), and amalgamation of thc
Group's lifc insurancc busincsscs.

Tax related provision
Balance at beginning ofyear                                                                             22             15
Provision made
Payments out of provision                                                                               (4)
Provision no longer required                                                                            (7)
Balancc at cnd ofycar                                                                                   It

This remaining provision relates to stamp duty chargcs raised in 2005 which are potentially payable in WA, NSW, Victoria and Qucensland

Balance beginning
       at        ofycar                                                                                 15             t4
Provisionmadc                                                                                            I                  I
Balanccat cnd ofycar                                                                                    16             t5

The objective of PACT is to provide unique opportunities for Wealth Management employees and their families to enrich thcir lives and the lives of
others. The initial allocation of funds was $11.6 million with future funding contributions made at the discretion of the Group.

Balance at beginning ofyear                                                                             30             L)

Provision made                                                                                          10             16
Payments out of provision                                                                              (1s)
Provision no longer required                                                                            (3)
Sale of controlled entities(t)                                                                          (s)            (e)
Balanceat end ofyear                                                                                    18            30
     Reletesto the sale ofconftolled entities.

                                                                                                                                             Page 37
NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

12 Financial liabilities
                                                                                                                  Group                    Company

                                                                                                         2007              2006     2007             2006
                                                                                                             $m             $m       $m               $m

Bank ovcrdraft(r)
    Ultimate parent                                                                                      103                80
    Other                                                                                                 35                38
Approved scnior and subordinated debts(2)                                                                745               629      745              309
Other Loans
   Ultimate parent(3)                                                                                    67               519                        228
    othcr related parties                                                                               424               464
Hedsins derivatives                                                                                       4
Total financial liabilities                                                                             1,378             1,730     749              537

Payable within 12 months                                                                                 138               468                       228
Payable in more than 12 months                                                                         1,240              1,262     749              309
                                                                                                       I,378              1.730     749              537

(1) Bank overdraft
. The Group has a $150 million overdraft facility (2006: $150 million) with the NAB which is subject to review on an annual basis.
    As at 30 Scptember 2007, thc faciliry was partially drawn to $ l03 million (2006: $80.2 million). Interest is chargcd at bcnchmark rate less 2.95%
    payable quarterly. Thc bcnchmark rate is published in a major metropolitan ncwspaper each wcck. A linc fee of 0.25% applies on the limit or pcak
    debt, whichever is the greater,payable quarterly in advance.

.   The Group has a $40 million overdraft facility (2006: $40 million) with Westpac bank. As at 30 Septembcr 2007,he facility was drawn to
    $35.1 million (2006: $38.4 million). Intcrcst is charged at Westpac'sRefercncc Lending Rate "RLR". Thc RLR is published in a major metropolitan
    newspaper each week. A line fcc of 0.35% applies on thc limit payable monthly in advancc.

(2) Approved senior and subordinated debts
. Medfin Trust has a series of Senior Notes and Subordinated Notcs. Intcrcst is calculated on the Bank Bill Swap Rate ("BBSW") plus margin.
   Maturity date varics for each notc range from vary from Octobcr 2006 to May 2012. As Medfin Australia Pty Limited was sold on I July 2007, thc
    trust is no longcr controlled and thcrefore not consolidated.

.   In June 2006, the Company issued $300 million of subordinated debt for a 10 year pcriod with an option to extend to 2026. $200 million was issued
    at a fixed rate of 6.7 55%o. 100 million was issued at variable interest rate of 3-months BBSW mid plus 63 basis point. A swap was entered into to
    convert the fixcd portion to variablc at the 3-month BBSW plus margin of 63 basis point.

.   In December 2006, the Company issued $300 million of scnior debt for a 5 year period. $ 150 million was issued at a fixed rate of 6.50V:o.
    $150 million was issued at variable interest rate of 3-month BBSW mid plus 30 basis point. A swap was entered into to convert the fixed portion to
    variablc at the 3-month BBSW plus margin of 30 basis point.

.   In March 2007,the Company issued $150 million of senior debt for a 3 ycar period. $150 million was issued at a variable interest rate of 3-month
    BBSW plus margin of 22 basis point.

(3) Other loans
Loans from ultimate parent
.   ANZDT6millionfullydrawncashadvancefacility(2006:NZD'76million)withanexpirydateof2lDeccmbcr20ll.Asat30Scptember200T
    thefacilitywasfullydrawn. Interestischargedata90daybenchmarkrateplusamarginof50basispoints.Alinefeeof0.l5%appliesonthelimit
    payable quarterly in advancc.

(4) Loans from other related parties
.   AGBPl85millionfullydrawncashadvancefacility(2006:GBPl35million)withanexpirydate2lDecember20ll.Asat30September200T
    thc facility was fully drawn. Intcrest is charged at LIBOR (3 month) plus a margin of 65 basis points.

NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

12 Financial liabilities (continued)
Derivative financial instruments held for hedging purposes

In Junc 2006, the Company issucd $300 million of subordinated debt. A derivative financial instrument was entered into to hedge exposuresto interest
rate risk on thc fixcd rate portion ofthis debt. Thc Group applics fair value accounting to hedge movements in thc valuc offixcd interest rate risk.

In December 2006, the Company issued $300 million ofsenior dcbt. A dcrivative financial instrument was entered into to hcdgc oxposuresto interest
ratc risk on the fixed rate portion ofthis debt. The Group applies fair valuc accounting to hedge movements in the valuc of fixcd intercst rate risk.

                                                                                                         Group                         Company
                                                                       Notional                   FairValue       FairValue      Fair Value      Fair Value
                                                                       principal                      Assets      Liabilities       Assets        Liabilities
                                                                          2007                         2007           2007            2007              2007
                                                                            $m                           $m              $m             $m               $m
Interest ratc-related contracts
   Swaps - Sub Debts                                                      200                                                I                            I
   Swaps - Senior Debts                                                   150                                            J                                J

Total intcrcst rate-relatedconffacts                                      350

Financing facilities available

Total facilities
   Bank overdraft                                                                                      190            190

Facilities used at reporting date
   Bank overdraft
                                                                                                       138            118

13 Payables
                                                                                                              Group                           Company

                                                                                                       2007           2006            2007              2006
                                                                                                        $m               $m            $m                $m

Relatcd parties payables:
   Ultimate parent entity - tax rclated                                                                406            255
   Ultimate parent entity - other                                                                       74              )L

   Controlled entities                                                                                                                 t4
   Other related parties                                                                                t9              2;
Policy claims in proccss of payment                                                                     95              67
Unscnledinvestmenttransacl    ions                                                                      l0              15
Unrealised loss on forward contract                                                                                     61
Unsettled reinsurance transactions                                                                       9
Expense accruals                                                                                       200             ll/

Trade creditors                                                                                        161              "14
Accrued intercst payable                                                                                 8               6              7
Other creditors                                                                                         46              36
Total payables                                                                                       I,028            732              2l

All payablcs arc cxpccted to be seftled within 12 months.

 NationalWealth ManagementHoldings Limited
 Financial Report for the year ended 30 September 2007

 14 Unvestedpolicyowner liabilities
                                                                                                                    Group                          Company

                                                                                                             2007           2006            2007              2006
                                                                                                              $m              $m             $m                $m
Balancc at beginning ofyear                                                                                  163            158
Increase/(dccrcase) policyowner retained profi ts
   - recosnised in income statcmcnt

Balance at end ofthe ycar                                                                                    166            153

All unvested policyowner liabilities are expected to be settled after 12 months.

15 Units attributable to minoritv unitholders
                                                                                                                                           2007               2006
                                                                                                                                             $m                $m

Unit attributableto minority unitholders                                                                                                 8,116             7 )40

Minority unitholdings in controlled unit trusts reprcsent interests in Group controlled unit trusts held by extemal parties. Unit holdcrs in the controlled
unit fusts have the right to rcdccm their interest in thc controllcd unit trusts at any time for cash, equal to their proportionate share ofthe assct valuc
ofthe unit trust. The names ofthe signihcant rcgistered schemeswhich the Group has consolidated at 30 September2007 have bcen included in note

                                                                                                                                                    Page 40
NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

16 Contributed equity
                                                                                                     Group                                     Company

                                                                                             2007                 2006
                                                                                               $rn                  $m

Issued and paid-up share capital
Ordinary sharcs, fully paid(r)                                                             3,885                3,885                 3,885              3,885
Redeemablepreference shares,fully paid(')                                                  2,280                ) )en                 2,280              2,280
                                                                                           6,165                  6
                                                                                                                6,1 s                 6,r65              6,165
\'/ All shareshave no par value

Reconciliations of rnovements in contributed equity
Ordinary share capital
Balanceatbeginning ofyear                                                                  3,885                3,885                 3,885              3,885
Balance at end ofyear                                                                      3,EE5                3,885                 3,88s              3,885

Number of ordinarv shares on issue                                                                                2007                  2006
                                                                                                                   No.                   No,
Ordinary shares, fully paid
Balance at beginning ofyear                                                                                  20,532
                                                                                                        3,881,t             3 , 8 8,1 2 0 , 5 3 2
Balance theendofthe year
      at                                                                                                3,881,120,532       3,881,120,532

Holdcrs ofordinary sharcs arc cntitled to rcceive dividcnds as declared from time to time and are entitled to one vote pcr sharc on a show ofhands or, on
a poll, one vote for cach fully paid ordinary sharc hcld at shareholders' meetings.

In the event of a winding-up ofthe Company, ordinary shareholdersrank after all other shareholdersand creditors.

                                                                                                     Group                             Company
                                                                                             2007                 2006                  2007              2006
                                                                                               $m                   $m                    $m                $m
Redeemable preference shares
Balance at beginning ofyear                                                                2,280                ) 6\5                 2,280              7 655
Rcduction of sharc capital                                                                                       (375)                                   (37
Balanceat end ofyear                                                                       2,280                2,280                 2,280              2.280

Number ofredeematlle preference shares on issue                                                                    Company
                                                                                                                  2007                  2006
                                                                                                                   No.                   No.
Balance at beginning ofyear                                                                             2,280,306,705       2,655.306.705
Reductionofshare capital                                                                                            -        (375,000.000)

Balancc at the cnd of the ycar                                                                          2,280,306,705       2,280,306,705

Thesc sharesarc only rcdeemable at the option of the issucr at thc issue price and will continue to exist until redeemed. To thc cxtcnt of the rights
attachingtotheshares,thesharesrankaheadoftheordinarysharesissuedbytheissucrinawindingup. Holdenofredeemablepreferenccsharesare
entitled to receive dividends as declared by the issuer and entitied to one vote per share at shareholder meetinss.

                                                                                                                                                    Page 41
NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

17 Reserves
                                                                                                         Group                                 Compmy
                                                                                                          2007            2006         2n07              2006
                                                                                                           $m               $m           $m               $m

Foreign currency translation rescrve                                                                       (1)              3
Gcncral reserve                                                                                            JI              )t

Cash flow hcdge reserve                                                                                                      I
Total rcscrvcs                                                                                             36              4l

Reconciliations of rnovements in reserves

Foreign currency translation reserve
Balanceat beginning ofyear                                                                                  J              (17)
Currency translation adjustmcnts                                                                           (4)               9
Transfer from rctaincd profits                                                                                              (1)
Transfcr to incomo statementon sale of controlled entities                                                                  l2
Balance at end ofyear                                                                                      (1)

The forcign cuncncy translation reservc records the foreign currency differences arising from thc translation offoreign operations, the translation of
transactionsthat hcdge the Group's net invcstment in a foreign operation or the translation of loreign currency monetary itcms forming part ofthe net
investment in a foreign opcratron.

General reserve
Balancc at bcginning ofyear                                                                                37
Balance at end ofyear                                                                                      37

Cash flow hedge reserve
Balancc at beginning ofyear                                                                                 I
AIFRS transitionaladjustmenton adoptionof AASB132, 139 and 4                                                                 2
Gains(losses) on cash flow hedging instruments                                                              1               (1)
Transfer to retained Drofits                                                                               (2)
Balance at end ofyear

The cash flow hedge reserve records fair value revaluations ofderivatives and other financial insffuments designated is cash flow hedging instruments.

18 Retained profits
                                                                                                                  Group                        Company
                                                                                                          2007            2006         2007              2006
                                                                                                           $m               $m           $m               $m

Balance at beginning ofyear                                                                              (32s)             67           (14)              59
Transitional adiustmentson adoption of AASBl32,      139 and4                                                             (381)
Restatedopening balance                                                                                  (32s)            (3l4)         r'1'
Actuarial gain(loss) on defincd bcnefit plans                                                              (6)               6
Current/deferred taxes bookcd to cquity                                                                     2               (2)
Net profit attributable to member of the Company                                                          458             429          121               3',72
Total availablefor appropriation                                                                          r29             1r9          113               431
Transfer to foreign currency translation reserve                                                                             I
Transfer to cash flow hedge reserve                                                                         )
Dividends oaid                                                                                           (l 17)           (44s')      (u7)           (445)
Balanceatend ofyear                                                                                        14             (325)          (4)             (14)

                                                                                                                                                Page 42
NationalWealth ManagementHoldings Limited
FinancialReport for the year ended 30 September2007

19 Shares,performance options and performance rights
Shares(subject to various restrictions) of the ultinate parent entity (NAB Ltd), perfomance options and perfomance rights are used by the National Group to provide shorl-tem
and long-tem incentives (STI md LTI) to employees.

The plans described below involve the provision of sharesto employees and to non-executive directors ofthe Group, and performance options and perfomance rights to senior
employees ofthe Group.

(a) National Australia Bank Staff Share Ownership Plan (staffshare ownership plan)

This plan provides for the NAB Ltd Board to invite any employee or non-executive director ofthe Group to participate in an offer under this plan. The NAB Ltd Board may also
invite any employee to apply for a loan to acquire sharesor offer to have NAB Ltd provide funds to acquire sharessubject to the provisions of applicable laws and regulations.
Noloanhasbeenmadeavailabletoanyemployeesincel999.                TheNABLtdBoarddeteminesthenumberofsharestobemadeavailableandthefomulatobeusedincalculating
price per share. NAB Ltd may provide funds for a trustee to subscribe for or purchase fully paid ordinary sharesin NAB Ltd on behalf of participating employees or
non-executive directors (ifrequired). The trustee must subscribe for or purchase the shareswithin a predetemined timeframe.

Sharesacquired under this plan are held in trust, and may not be dealt with by the employee or non-executive director until a prescribed period after they were acquired, unless
othemise detemined by the NAB Ltd Board. Employees and non-executive directors receive dividends and may exercise voting dghts (through the trustee which are equivalent to
those for other ordinary shares in NAB Ltd) in respect of the sharesthat are held in trust. Most trusGheld sharesunder this plan are forfeited upon temination for serious
under employee offers).

Sharesmust not be issued under this plan if the total number of sharesissued in the last five years under NAB Ltd's employee share,perfomance option or perfomance rights plans
and the total number of outstanding perfomance options and perfomance rights granted under its plans, including any proposed offer, exceed 5oloofthe number of sharesin the
issuedsharecapitalofNABLtdatthetimeoftheproposedoffer.              Thiscalculationdoesnotincludeoffersorgrantsmadeofshares,perfomanceoptionsorperfomancerights
2001 (Cth) (eg. sharesprovided to executive offlcers ofthe Group), otheruise thm as a result ofrelief granted by ASIC.

Employee offers

A number ofoffers were made to employees under this plan during the period:

.   Australian employees may be provided a STI for individual and businessperfomance. Employees are provided with an STI in the fom of shares,cash or superannuation,
    depending on employee preference on the up to target STI component. Eligible employees are generally required to take any above target STI in NAB sharesfor awards in
    excessof$500 (2006: $500). Up to target STI, sharesare forfeited during the holding period ifthe employee is teminated for serious misconduct involving dishonesty.
    Above target STI, shmes are forfeited during the first year after allocation if the employee resigns or fails to passboth quality gates (behaviour and compliance) in respect of
    their perfomance review at the end of the following financial year or is teminated for serious misconduct.
    through profit or loss
.   the Ownership offer provides for cefiain employees of the Croup to r€ceive up to 5oloof their notional benefit slary in shares,based on length of seruice (continuing an
    arangement in place prior to NAB Ltd's acquisition ofthe Group), issued biannually. Individuals who have been employed by the Croup since I January 2003 tre not eligible to
    participate in the Omership offer;

.   Enterprise Agreement (EA) sharesare provided in accordance with the provision of the 2006 - 2009 NAB Enterpdse Agreement. Eligible employees are offered a portion of
    the value of their Total Employment Comp€nsation in the fom of sharesup to a maximum mount per employ€e, as set out under the EA. The tems of the offer include
    forfeiture upon resignation or summary temination before specified key dates;

.   Recognition sharesare provided on a very limited basis with to individuals in significant key roles where retenlion is critical over a medium-tem timefrme. The sharesare
    subject to perfomance standards including staggered forfeiture on resignation or retirement before key dates and/or milestones ile achieved or ifthe individual engages in a
    breach ofthe Company's Code ofConduct (or other applicable standmds set from time to time) or in the event oftemination          for serious misconduct.

(b) National Australia Bank Staff Share Allocation Plan (staff share allocation plan)

This plan provides for the Board to invite any employee of the Group to participate in an offer under this plil.   Under this plan, the Company provides funds (if required) for a
trustee to subscribe for or purchase fully paid ordinary shtres in the Company on behalf ofparticipating employees.

Sharesmust not be offered under this plan if the total number of sharesissued in the last five years under the Company's employee shae, perfomance option or perfomance rights
plans and the total number of outstanding perfomance options and perfomance rights granted under its plans, including any proposed offer, exceed 5oloof the number of sharesin
the issued share capital ofthe Company at the time ofthe proposed offer.

                                                                                                                                                                     Page 43
NationalWealthManagement      HoldingsLimited
FinancialReport for the year ended 30 September2007

19 Shares,performance options and performance rights (continued)

(c) National Australia Bank Executive Share Option Plan No.2 (executive share option plan) &
   National Australia Bank Performance Rights Plan (performance rights plan)

Perfomance options and perfomance rights are long-tem incentives which are provided as a key mechanism for recognising executive potential and talent in the Group. The
attached performance hurdles align any rewards for employees to the outcomes for other shareholdersover the same timeframe. The value ofany perfomance option and
perfomance rights rewrd (if and when any securities vest) also depends on the market value of the NAB Ltd's ordinary sharesat the time of exercise. Each perfomance option
and perfomance rights is exchanged for one fully paid ordinary share in the NAB upon exercise by the employee. The exercise price for perfomance options is generally the
mrket price for the NAB Ltd's fully paid ordinary sharesas at the date the perfomance options was granted or such other relevant date detemined by the NAB Board.
No exercise price is payable by the holder on exercise of perfomance rights. The perfomance rights plan tems were amended in 2007 to change the exercise price payable
liom $ 1 per batch exercised to nil. Such change was made after receiving a waiver from the ASX from the relevant listing rules to amend the lems of the perfomance right
plan in the way.

Terms and conditions ofperformance        options and performance rights:

                                                                                      grets,   generally   for executi ves j oining    the Group   after the mnual   all@ation.

                                                                                      assessmots     of perfommce       and pototial     uder   the Group's   Executive    Talent Review
                             value ofrehrm     ofthe individual

                                      up to 3 months prior to expiry date                                                                     3 trmes over a 24 month penod up to
                                                                                                                                        months prior to oxpiry date

                             After 8 yeas from grmt date.                                                                               Atttr 5 years md 6 months.
                             Vested secuities may be exercisedup            glmt date.               date.                              Ifm effective dote is set md the restriction
                             to expiry date. Unvested s@urities             Ifan effective date      lfm effective date ls              is shorterthm 3 yetrs, the expiry date rs set
                             camot be exercised.                            is set and the           set md the restnctr@               erlier thm 5 yeus md 6 months.
                                                                            restrictim period is     period is shorter tho 3
                                                                            shorter tho 3 years,     years, the expiry date is
                                                                            the expiry date is       set eulier th@ 5 yeils
                                                                            set eillier thm 8

                             Total   Shtreholder   Retum   (TSR)   on the
                                                                                                                                        executives:TSR.                sfllor execunves:
                                                                                                                                        Forothqs: Regional             TSR
                                                                                                                                        retum on equrty and            For others: Regional
                                                                                                                                        cash emings growth             total businessretum
                                                                                                                                        agalnst3to5ymr                 perfommca against
                                                                                                                                        businessplm fot                to 5 yeu business
                                                                                                                                        perfommce options,             plan.
                                                                                                                                        md emings per share
                                                                                                                                        (EPS) growth against
                                                                                                                                        the finmcial services
                                                                                                                                        peer group (se below)

                                                                                                                                        For the 80 most sflior executives, the TSR peer
                             onwards, compued with that of the top 50 compmies in the                compred against top                group as described to the immediate left applies.
                             S&P ASX 100 by mrket capitalisation (excl. property trusts)             50 compmies in the
                                                                                                     S&P ASX 100 by                     For perfomance     rights issued to other executives
                                                                                                     marked capitalisation              prior to February 2007, the EPS growth hwdle is
                                                                                                     (excl. property trusts).           basedon the sme finmcial servicespeq group a
                                                                                                     Other 5070:basedon                 used for the TSR hudle.
                                                                                                     the Compmy's TSR
                                                                                                     growth relative to the
                                                                                                     top 12 finmcial services
                                                                                                     compmies in the S&P
                                                                                                     ASX200 by muket

                             Peer group selection attmpts  to approximate the tlpes     of           Using mo peer groups in tmdm      prevflts the possibility of all of I
                             companies that investors might choose 6 m altmative         to          seorities vesting if N,AB perfoms poorly relative to other organisations              rn
                             investing in NAB Ltd.                                                   the finmcial seroices business sector.

                             The size ofthe peer groups rs an importut     consideraion. A           Usingthe sme finmcial seruices peo group for both the TSR md the EPS
                             larger peer group helps to reduce volatilit), md me@s that uy           hwdles maintains a link baween those outcomes for senior md other
                             chmge in the members of the group composition should have               executives, md asures that the EPS hurdle is equally challenging.

                                                                                                                                                                                       Page 44
NationalWealthManagement      HoldingsLimited
FinancialReport for the year ended 30 September2007

19 Shares,performance options and performance rights (continued)

Terms and conditions of performance options and

  Mesuring     the            Each TSR compmson to                                                                                        testtng has been replaced with thre€
  perfommce      hurdles md   pes group data is averaged over five            comprison is          day avsaging, the             sepaate hurile tests at the 3'd, 4s, md 5d
  reasons for choosing        trading days to prevent vesting being           averagedover 30       relevant TSR percentile       miversary of the grmt or effective date. Tests
  these testing methods       b6ed on my short-tm      spike in TSR           trading days to       must be maintained for        use 30-day averaged TSR, md the best available
                              results.                                        better ensure that    30 consecutive trading        RCE, ROE, TBR or EPS data for NAB (and EPS
                                                                              my short-tem          days (ie. vesting only        for pes orgmisations).    Each participilt's
                              Perfommce     is tested daily during the        spike in TSR          occurs ifthere is             allocation is divided into thre equal trmches,
                              perfomance    period, although for              results does not      sustained TSR                 with trmche I tested on the 3'd md 4ft
                              practical reasons, perfomm@       tests ile     impact m              perfommce).                   miversaries,    trmche 2 tested on the 46 md 5d
                              gmually    conducted quarterly.                 vesting.                                            mivqsaries,     md trmche 3 tested only once, on
                                                                                                                                  the 5'anniversary dale. Thrs chmge minimrses
                                                                                                                                  retestrng of the prfomance     hurdle. yet marntans
                                                                                                                                  emplovee focus on the 3 to 5 veu time honzon
                              Vesting occurs to the extat that the perfommce hurdle is satisfied as shown below. Vesting does not occu during the restdation pqiod
                              (unlessthe maximm life of the secuities has been short@ed due to the fld of the individual's mployment as describedbelow).
                              No vesting occurs                                                     No vestlng occurs             For the TSR md EPS hurdle tests, no vestlng
  vesting schedule            below the 25-               percentile perfommce of the peer          below the 51"                 occurs below the 51'percfltile      perfoman€     of
                              perrentile of the per       group.. 507oofthe securitiesvest at       percantile perfommc€          each peer group. 357o ofthe securities vest at the
                               grotp . 25o/o of the       the 50'pucentile with 2% further          ofeach peo group.             5|"  percentrle with 2 60o fi.rther vesting per
                              secuities vest at the       Yestingper percatile up to 100%o          Halfofthe    securities       percentile up to 100%0 vesting at (and above) the
                              25t percatile     with      vesting at (md above) the 75'             vest at the 5 I "             76* percfltile.   For the ROE/RCE hurdle test, no
                              I 70 fudher vesting         percentlle.                               percmtile with 27o            vesting occurs if ROE is more thm 1 psrcqtage
                              per perciltile   up to                                                further vesting per           point below plm. Once this threshold is mst,
                              the point where half                                                  percentile up to 1009/0       357o of the perfmmce        options vest at 909/0 of
                              ofthe secuities                                                       vesting at (md above)         RCE planned growth, with 2.27o furthq vesting
                              would vest at the 50ft                                                the 76'pucmtile.              per 7o achievement up to l0O7o ofthe options
                              ps€ntile,     md thm                                                                                vesting when RCE growth is at (or above) 12Oo/o
                              27o further vesting                                                                                 ofplan.   For the TBR hurdle test, 5070 ofthe
                              per percmtrle    up to                                                                              securities vest at 90yo ofTBR plmned growth,
                              10070 vestingat (md                                                                                 with 2.5%o furths vesting per 0/oachievmflt        up
                              above) the 75*                                                                                      to I 007o of the sccurities vesting when TBR
                                                                                                                                            is at (or above) I 2o7o of
  Lapsing ofsecunties                                                                               ln addition to the tems shown on the left, where the Boud detemines that
                              date as above. Securities will also goerally lapse 30 days (or        secuities may be retained at the ild of m individual's mplolment            dunng
                              such shorter time tr detemined at the time of grmt) after m           the restriction period, the number ofsecurities retained may be pro-rated, md
                              extrutive ceases to be mployed      by the Group, unless the          the rmaining      life of the retained secuities shortened. This d@s not apply to
                              Boud detemines othevise         (gmually  only in cases of            securities provided on commencemmt,           or in cases ofdeath or total and
                              retirflent, redmdmcy,      contract completion, death, or total       pemmmt        disablement.
                              and pemaent     disablmflt).
                                                                                                    Guerally,    the Bord will allow securities to be retained only in cases of
                              For some gr@ts if m exsutive     ceses employment with the            retiremilt,   redudilc),  contract completion, death, or total @d pemm@t
                              Group as the result of death or total md pemment                      disablemflt.
                              disablement, the secwities may be automatically retained. For
                              some grmts, securities retained in such cases may be exqcised
                              before the md of the restriction paiod md regudless of the

                                          may allow secuity     holders to exercise the securities regardless ofthe nomal   criteria ifcertain   events occur, including   a takeover
                              offer or mouwmat          to the holders of fullv paid ordinry shues in the Compmv.

NationalWealthManagement      HoldingsLimited
FinancialReport for the year ended 30 September2007

19 Shares,performance options and performance rights (continued)

Current employee share plans:

  Staff Share Owneruhip Plan                                                            No. offully paid
                                                             Issuedate   lssue price     ordinary shres

  2004 At-risk reward     JANA                         April I 5, 2005      s29.97                3s39
  2005 Wealth Management Ownership                     May 26,20O5             .
                                                                            $31 64              89,085
  2005 Wealth Mmagement - Perfomance Rewrd             May 26,2005             .
                                                                            $31 64                2,260
  2005 Commencement Shares                             May 31, 2005         s3l .52               4,759
  2005 Recognition Shaes                               May 31 ,2005            .
                                                                            $31 s2              19,713
  2006 Wealth Mmagement Perfomance Rewrd               May 19,2OO6          s36.64                1,E04
  2006 Above Target                                   March 1'7,2OO6        $33.23                1,359
  2006 Enterprise Agreement Shares                       June 2, 2006       $36.20                   195
  2006 Weatth Mmagement Ownerebip Shares               May 22,20O6          bJo. ) f,           66,439
  2006 Wealth Mmagement Omership     Shares             Nov 22, 2005        s33.23              77,000
  2006 Wealth Mmagement Owning Our Success              Dec 15, 2005        s31.72              40,854

  2006 Recognition Shres                              March 17,20Q6         $33.23                  236

  2006 Recognition Shres                              March 17,2006         s34.53
  2O06 Recognition Shaes                               May 19,2006          $37.53
  2006 Recognition Shres                               April 28, 2006       s37.54              12,640
  2006 Above Trget                                      Nov 22,2005         s33.23                  207

  2006 Up To Trget                                     Nov 22,2005          s33.23              59.547

  2006 Enterprise Agreement Shues                     March22,2006          $36.20              99,760
 2007 Above Target                                      Nov 14,2006         $39.52             123,188
 2007 Recognition Shares                                Nov 14,2006         $39.52
 2007 Wealth Mmagement Ownership Shues                  Nov 14,2006         $39.s2              57,441
 2007 Up To Target                                      Nov 14,2006         s39.52              58 , 9 8 4

 2007 Recognition Shres                                  Feb 7,2007         $40.91                8,217
 2007 Enterprise Agreement Shares                     March22,2OO7          $36.20                1.578
 2007 Enterprise Agreement Shares                     Much22,2OO7           940.23
 2007 Recognition Shares                               May 30,2OO7          $43.43              15,445
 2007 Above Target Supp                                May 3Q,2Q07          $39.s2                1,303
 2007 Wealth Mmagement Ownership Shres                 May 30,2OO7          $42.93              la <<1

 2007 Enterprise Agreement Shares                      May 30,2007          $40.23                    J)

  Stalf Share Alloution    Plan

  2005 Mid-Year Shre Offer                              Sep 19,2005         bJ l. /o            4 7J r l
  2006 Yea-End Shre Offer                               Dec 15,2005         $3r.72              48,906
  2007 Year-End Shre Offer                              Dec 20. 2006        $39.81              58,925

NationalWealth ManagementHoldings Limited
FinancialReport for the year ended 30 September2007

19 Shares,performance options and performance rights (continued)

Movements in executive share option plans and performance rights plans during the period:

                             Exercise    Exercise     No. held at   No. granted   No. tmfetred        No. expired or    No. exercised    No held al
      Issue date             periodr'/    price of   Sep 30, 2006    dwing the    in & out during    forGited dwin51       dwing the    Sep 30, 200?
                                          options                        perrod       the perioddr      the period rl          period

 Executive Share Option Plans

 Mar2l,2003        Mar2l,2O06-           $30.46         41,7,066              -          (8,379)            (l,l2Z)                        407,565
                   Mar 20,20ll

 Aug 8, 2003       Mar 21,2006 -         530.46            9.068                                                                              9,068
                   Mar 20,2011

 Jan 16, 2004      Jan 16,2007 -         $30.25         490,584               -            1.563          (22,967)                  -      469,180
                   Jan 15,2012

 Jan 30,2004       Jan 16,2OO7-          $30.25           3,612                                                (84)                 -         3,528

 Iun25,2OO4        Jan16,2007-           $30.25            1,344              -          (1,344)
                   Jan 15,2012

 Jun25,2004        Janl6,2o07 -          529.91            1,156              -          (1,156)
                   Ian 15,2012

Feb7,2005          Feb 7,2008 -          529.93         454,519               -           17,929          (28"846)                  -      443,602

Feb 6,2006         Feb 7,2009 -          $34.53         442,474               -         232,000           (30,798)                  -      643,676

                   Feb 6,201 I

Feb 7,200'7        Feb 7,2o1o -          $40.91                 -     736.686                    -        (21.028)                  -      715,658


Feb 7,2007         Feb 7,2010 -          $40.9'l                -      87,500                                                       -       87,500


 Aug3.2007         Feb 7,2010 -          $40.91                 -      40,208                                                       -       40,208


Performance Rights Plans

Mar21,2003         Mar21,20O6                           104,013               -          (2,096)              (203)                 -      101,714
                   Mar 20,2011

Aug 8, 2003        Mar 21,2006                            2"544                                                                              2,544
                   Mar 20,2011

 1an16,2004        Janl6,20o7 -                  -      122,089               -              350            (5.751)                 -      116.688
                   Jan 15,2012

 Jan30,2O04        Jan 16,20O7 -                 -          904                                                (21)                 -           883

 Itn25,2OO4        Jan16,2OO7-                   -          625               -            (625)
                   Jan 15,2012

Feb 7,2005         Feb 7, 2008                          111,222               -            4,484            (7,315)                 -      108,387
                   F e b6 , 2 0 1 0

Feb 6, 2006        Feb 7,2009                           I 10,580              -          58,005             (7,581)                 -      161,004
                   Feb 6,201 I

Feb 7,2oo7         Feb 7, 20lO                                  -     184,269                    -          (5,259)                        179,010

Feb 7,2007         Feb 7,2010                                   -      21,875                                                       -       21,475


Aus3.2007          FehT2oto                                     -      10.055                                                                10,055


                                                                                                                                                       Page 47
NationalWealth ManagementHoldings Limited
FinancialReport for the year ended 30 September2007

19 Shares,performance options and performance rights (continued)
(l ) The latesl date to exercise perfomance   options and perfomance   righ* is the bst date ofthe exercise period.   Ihe exercise period for a particular   grant ma! reJbrence the
grantdate,ormayreferencean.effectivedate,whichisdilJbrenttothegrantdate. Aneffectivedatemq)beusedtolinkonanqecutive'slewardtoaparticulartimeperiod,
eg. an effective date may be the commencementdale ofan individual's emplol,ment, although the securities are granted some time after commencemenL

(2) Inter-company transfers due to recharge agreement with the NAB Group.

(3) Performance options and perfomance        rights generally lapse 30 days ajler cessation of employment unless othemise detemined 4i the NAB Ltd Board.

                                               2007 was $39.71 (2006: $36.70).
The market price ofNAB Ltd's shares 30 September

Summarv of movements:

                                                                                   Excutive    share option pan              Performance rights

                                                                                   Number             Weighted         Number             Weighted
                                                                                                        avetage                             average
                                                                                                  exercise price                      exercls pnce

   Equity instruments outstanding as at October 1, 2(XX                           |,449,354               $30.21        359,735
   Grilted                                                                          460,926               $34.53        115,275
   Forfeited                                                                       (90,457)               s31.03       (23,033)
   Equity instruments outstanding as at September 30, 2006                        l,819,823               $31.26        451,977
   Grmted                                                                           9.64 794              $40.91        216,199
   Trmsferred in & out                                                              240,613               $34.45         60,118
   Forfeited                                                                      (104,84s)               $33.56       (26,134)_
   Eouitv instruments outstandins as at Sentember 30, 2007                        2.819.985               $34.40        702.160

   Equity instruments exercisatrle as at SeDtember 30' 2(X)7                             1
                                                                                    889,34                s30.35        221,829

Fair valuations ofoptions and rights

Valuations are based on a numerical pricing method, which takes into account both the probability ofachieving the pefomance           hurdle rquired for these performance options or
perfomance rights to vest, and the probability of early exercise after vesting. The numerical pricing model applied by NAB Ltd to value perfomance options and perfomance
rights is a simulated version of the Black-Scholes method. The simulation approach allows the valuation to take into account both the probability of achieving the perfomance
hurdle required for the perfomance options or perfomance rights to vest and the potential for early exercise of vested perfomance options or perfomance rights.
The Black-Scholes method is modified in order to incorporate the perfomance hurdle requirements that are integral to the number of perfomance options or perfomance rights
vesting (which may be zero), and the option or perfomance rights holder's ability to exercise the perfomance option or perfomance right. The key assumptions and inputs for
ofshare price rehrms for companies in the performance hurdle peer National Group are also required, but are of lesserimportance to the valuation results.

NationalWealthManagement      HoldingsLimited
FinancialReport for the year ended 30 September2007

19 Shares,performance options and performance rights (continued)
The following significant assumptionswere adopted to determine the fair value of perfomance options and performance rights:

                                                                     Aug 03. 2007        Feb 07, 2007         Fcb 7 - 2Oo7         Feb 7 - 2OO7

   Risk-free interest rate (per mnum)                                     6.19yo              6.040/0             5.900                  5.900/0
   Life ofoptions                                                         5 yers            5.5 years           5.5 yeas             4.5 yeus
   Volatility of shae price                                               15.00/o             t5.oo               t5.oo/o                t5.oo/o
   Dividend rate (per mnum)                                               4.4OYo              4.7oyo              4.70yo                 4.709/0
   Exercise price of options                                              $40.91              $40.91              $40.91               $38.29

   Fair value of perfommce     options                                     $4.98               s4.20               $4.01                s2.68
   Fair value of perfommce     rights                                     s21.31              s 18.67             $18.23               s13.57

                                                                     Feb 06, 2006        Feb 06. 2006         Feb7, 2005          .lun 25. 2004

   Risk-free interestrate (per mnum)                                      5.200/0             5.20vo              5.30o/o                5.600/0
   Life ofoptions                                                       5.5 yeas              5 yeas             5 yeas                8 yeas
   Volatiliq' of shre price                                               l5.)Yo              15.0Y,              l6.OYo                 20.9Yo
   Dividend rate (per mnum)                                               5.30Yo              5.3OYo              5.80%                  5.300io
   Exercise price of options                                              $34.53              $34.53              $29.93               $29.91

   Fair value of perfommce     options                                     s3.39               $3.23               $2.80                 $4.42
   Fair value of perfommce     rights                                     $I 8.23                                 $ 1 7t.5             s22.O9

                                                                     Ju25.2004        Je 16 & Jm30,           Aug 8, 2OO3         Mar 2 I , 2OO3
   Risk-free int€rest rate (per annum)                                    5.600/0             5.50vo              5.38yo                 5.38yo
   Life of options                                                        8 yeas              8 yeas             8 yeas                8 yeas
   Volatility of shae price                                               20.90               2t.704              18.0v.                 18.0%
   DiYidend rate (per mnum)                                               5.3O9/o             5.too               4.7|v.                 4.7lyo
   Exercise price of options                                              $30.25              $30.25              s30.46               s30.46

   Fair value of perfommce     options                                     $4.33               $4.71               $4.51                $4.51
   Fair value of performmce rights                                        $22.O9              $21.86              922.O2               s22.O2

Expense arising from equity-based payment transactions
Total expensesarising from equity-based payment transactions recognised during the period as part ofpersonnel expense were as follows:
                                                                                                                 2007               2006
                                                                                                                 $'m0               $ 000

   Equity-based   payment expense
   Options and rights grmted under employee plus                                                                  5,160              4,339
   Shdes sranted under
   I                                                                                                             23.425             17,180

NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

20 Risk Managementinformation
(a) Financial risk management objectives
The Group is a mcmber of the National Group and subscribcs to and complies with its govemance and risk managementframework. The National Group's
overall risk managementprogram is carried out in accordancewith policics sct by the Board and regular reporting is madc to executive managcmcnt and
the Board on risk management matters. Thc key financial risks to which the Group is exposed arc interest rate risk, currcncy risk, credit risk and liquidity

(b) Derivative fi nancial instrurnents
Thc life insurance entitics in the group typically use derivative financial instrumcnts as part ofthcir normal investment managemcnt activity.
Thc Group may purchase and sell futurcs and options contracts from time to time to vary the cxposute to assetclasses,in the manner that other authoriscd
investmcnts are purchased and sold. Such contracts are not entered into for spcculative purposes. In addition, the Company has an intcrcst rate swap to
hedge against interest rate movcments.

All derivatives are recordcd in the balance shcct at fair value as detailed in note 1.

(c) Interest rate risk
Interest rate risk is thc risk ofloss due to changes in interest rates.

The Group managcs interest rate risk in accordancewith the National Group policy by maintaining an appropriatc mix of fixed and variable rate
instruments and the managementof maturity dates of interest bearing instrumcnts. The Group also etters into intcrcst rate options and futures to manage
cash flows, exploit opportunities to increaseretums, to reduce risk and to reduce transaction costs.

Information on repricing dates or contract maturity, whichever is thc earlicr, of the Group and Company's financial assctsand liabilities that are exposed
to interest ratc risk is shown below. Financial instruments that are not interest bearing, and thcrefore not exposed to interest rate risk, arc not included m
thc information presentedbclow.
                                                         Less than                                                             Over                   effective
                                                             I year   l-2 year(s)   2-3 year(s)   3-4 year(s)   4-5 years    5 years       Total   interest rate
                                                               $m            $m           Sm            $m           $m         $m           $m            Topa

Septenber 30 2007
(i) Group
Financial Assets
Cash and cash equivalents                                  1,076                                                                 -       1,076      6.00
Financial asscts- at fair value
    through profit or loss                                 1,370           181           246            44         126      13,497      15,464      4.7oh
Loans and othcr receivables                                 101                                                                 -         tol       8.3010
Gross life insurance policy liabilities
    ceded under reinsurance                                   (2r)                                                                         (21',    7.9o
                                                           2.526           r81           246            44         126      13.497      16.620

Financial liabilities
Financial liabilities                                      1,028                                                   150        200        1,378      6.70
                                                           1,028                                                   1s0        200        1,378

(ii) Company
Financial Assets
Cash and cash cquivalcnts                                                                                                                           6.lo/o

Financial liabilities
Financial liabilities                                        399                                                   150        200          749      6.90/0
                                                             399                                                   150        200          749

                                                                                                                                                   Page 50
NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

20 Risk Management information (continued)

                                                        Less than                                                           Over                   effective

(i) Group
Financial Assets
Cash and cash cquivalents                                   956                                                                -          956        5.3%
Financial assets- at fair value:
    throughprofitorloss                                   l,'122         309           102             189      44       11,221      13,587          5.1%
Financial assets- held to mahrriq/                            3            -           320                                   -            323        79%
Loans and otherrcceivables                                   99             -                                                             99         6'2%
Gross life insurance policy liabilities
                                                                            -                            -        -            -          (24)       '7.2o/o
    ceded undcr reinsurance                                 (24)
                                                          2.7s6          309           422             189      44       1r.221      14.941

Financial liabilifies
                                                            '189            -             -                     '72
Financialliabilities                                                                                   122                  747        1,'730         6.5V'
                                                            '789                                                ',72
                                                                                                       122                  747        1;730

(ii) Company
Financial Assets
Cash and cash eouivalcnts                                                                                                                             ss%

Financial liabilities
Financial liabilities                                       328             -             -              -        -         209           537         6;1o/n
                                                            328                                                             209           537

(d) Foreign currency risk
Foreign currcncy risk is the risk ofloss due to changes in foreign cunency exchangc ratcs.

The Group's financial assctsare primarily denominatcd in thc samc currcncy as its policy liabilities, which mitigatcs thc forcign currcncy exchange risk
arising from operations in Ncw Zealand and UK. Cunency forward foreign cxchange contracts are entered into to facilitate efficicnt portfolio
managementby obtaining desired currency cxposures or to hcdge against existing holdings ofcertain invcsfincnts in foreign currencies or significant
foreign currency transactions.

(e) Credit risk
Credit risk is the risk of loss arising from the failure of a counterparty to perform as contracted.

                                                     into valuations and risk of loss is implicitly pruvided for in the carrying value.
Market prices gencrally incorporate credit assessmcnts
The credit risk exposures on financial assetsis the carrying amount, net of any provision for doubtful debts.

The Group minimises concentrations ofcrcdit risk by undertaking transactionswith a large number ofBoard approved counterparties.In developing
transaction guidelines, consideration is given to geographical distribution, counterpartiesto be used, aggregatelimits and investrnent grade ratings. The
Group is not materially cxposed to any individual overseascountry or region, or any individual counterparfy.
Futures and options have minimal crcdit risk, as such risk is backed by clearing houses associatedwith recognised Stock or Futures Exchanges.Forward
foreign currency contracts are subject to crcditworthiness ofcountcrpartics, which arc principally large financial institutions and are monitored as part
investment compliance proccdurcs. No significant concentrations exist with any one counterparty.

Reinsurance is placed with high rated counterparties and each year end management assessthe creditworthincss of its rcinsurers. In addition, the
Appointed Actuary provides advicc on thc suitability ofrcinsurancc arrangements.

(f) Liquidity risk
Liquidity risk is the risk that funds will not be available to meet commitments associatedwith financial instruments.

The Group managesliquidity risk by ensuring that there is adequateaccessto rescrves,banking facilities and borrowing commitments through ongoing
monitoring ofactual and forecast cash flows.

NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

21 Notesto the cashflow statement
                                                                                                      Group                                 Company
                                                                                                       2007           2006           2007        2006
                                                                                                         $m             $m            $m          $m

(a) Reconciliation of net profit attributable to members of the Company
    to net cash provided by/(used in) operating activities

Net profit                                                                                           1,452          1, 1 7 8
Add(dcduct): Non-cashitcms
    Dcprcciation and amortisation                                                                       tt             )t

    Defincd benefit pension expcnsc                                                                       2              2
    Amortisation of intangible asscts                                                                    (7)             6
    Impairmcnt of intangible asscts                                                                       J              5
    (Proht)/loss on sale of controllcd entities before income tax cxpcnsc                                (:,          @3)
    (Cain) / losson loan conversion                                                                                    5

Changes in assetsand liabilities
   Dccrease/(increase) invcstment assets                                                            (8,01s)        (s,092)             -8
    (Incrcase)/decrease pcnsion assets
                      in                                                                                               (4)
    Increase/(dccrease) defened tax asset
                      in                                                                                (e)             (e)            -         (11)
    Increase/(decrease) loans and receivablcs
                      in                                                                              (r4e)            44            (14)         55
    Increasc/(dccrcase)in other asscts                                                                 (6e)           (31)            r:         (t:)
    Increase(decrease)in policy liabilities                                                          6,601          4,285
    Increase(decrease)in provision for income tax                                                      185            (11)
    Net increasc/(dccrease) provision for dcferred taxes
                          in                                                                            2l             55
    Increase/(decrcase) provisions and othcr liabilities
                       in                                                                              144           (1 8 1 )        (14)
Net cash provided by(used in) operating activitics                                                     181                           tl4

(b) Reconciliation ofcash and cash equivalents

For the purposes ofrcporting cash flows, cash and cash equivalents include cash and liquid asscts,short tcrm deposits, net ofbank overdrafts.

Cash and cash equivalents at the end ofthe year as shown in the cash flow statcment is reconciled to the related itcms in thc balance sheetas

Cash at bank and in hand                                                                             1,016            956                          I
Bank overdrafts (note 12)                                                                             (138)          (118)
Total cash and cash equivalcnts                                                                        938

(c) Salesofcontrolled entities

The following saleswcrc made during the last two years :
   2007 - Medfin Australia Pty Limitcd
    2006 - MLC Hong Kong, PT MLC Lifc Indonesia, BNZ Invcstmcnt Managcmont Limited and BNZ Nominees Limited

On 1 July 2007, MLC Limited, a consolidated Group entity, sold its investnent in Medfin Australia PW Limitcd ("Mcdfin") to its ultimate parcnt
entity, NAB. As part of the salc agrccmcnt, NAB has agreed to take on "back-up servicer" obligations from MLC Limited in respect of securitised
assetsof Medfin. A consolidatcd orofit of $3 million was made on this sale.

NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

21 Notesto the cashflow statement(continued)
TheoperatingresultsofthccontrolledentitieshavebeenincludedintheGroup'sincomestatement uptothedateofsale. Detailsofthesales
were as follows:
                                                                                                     Group           Company
                                                                                                2007         2006    2007      2006
                                                                                                     $m        $m     $m        $m
Cash consideration received                                                                      16          571
Less:   Cash and cash cquivalents                                                                    (7)     (23)
Net cash consideration reccivcd                                                                              548

Net assetsof controlled entities sold
Financial assets- at fair value through profit and loss                                                      859
Loans and other reccivables                                                                      20;           5
Property, plant & cquipment                                                                       I            8
Dcfened tax assets                                                                                1
Due from controlled entitics                                                                         )
Other assets                                                                                                   6;
Policy liabilities                                                                                           (620)
Current tax liabilitics                                                                                        (2)
Provisions                                                                                       (7\           (2)
Due to controlled entities                                                                      (18)
Bonds, notes and subordinated debt                                                             (20e)
Financial liabilities                                                                                        (:42)
Other liabilitics                                                                                    (2)     (2e)
Total net assetsof controllcd entities sold                                                          I       241
Goodwill                                                                                         t2          2lo
Transaction costs ofdisposal ofcontrolled cntitics sold
 (including FCTR, warranty provision and subordinated debt)                                                   93
Total costs ofdisoosal ofcontrolled entitics sold                                                13
ProfiV(loss) on sale ofcontrollcd cntities before income tax expense(benefit)

2006 - sale of life insurance businessesin Asia, including MLC Hong Kong and PT MLC Life Indonesia

Thc net cash flows ofsales during the period are as follows:
                                                                                                2007         2006
                                                                                                     $m        $m
Operating activities
Investing activitics
Financing activitics

NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

22 Particulars in relation to controlled entities
(a) Controlled entities
The following table presentsthe significant controlled entities ofthe Group.

Entity name                                                      Incorporated/fomed in   Ownership o%         lnvestment ($m)


National Australia Financial Manascmcnt Limited                    Australia             100            100   6,857
   MLC Holdings Limited                                            Australia             100            100
     MLC Lifetime Company Limitcd                                  Australia             100            100
     MLC Investments Limited                                       Australia             100            100
     MLC Limitcd                                                   Australia             100            100
       Plum Financial Services Limitcd                             Australia             100            100
       Medfin Australia Pty Limited                                Australia                            100
       MLC Nominees Pty Limited                                    Australia             100            100
     Your Prosperity Limited                                       Australia             100            100
     Apogee Financial Planning                                     Australia             100            100
   National Wealth Managcment Intemational                         Australia             100            100
       Holdings Limitcd                                            Australia             100            100
     NWM NZ Holdings Limited                                       New Zealand           100            100
       BNZ Life Insurance Limitcd                                  New Zealand           100            100
     NWM Europe Holdings Limited                                   UK                    100            100
   National Corporatc Investment Services Limitcd                  Australia             100            100
   GWM Adviser Services Limitcd                                    Australia             100            100
   National Australia Management Limited                           Australia             100            100
   JANA Investmcnt Advisers Pty Limitcd                            Australia             100            100
   MLC Corporate Serviccs Asia                                     Singaporc             100            100
   National Aushalia SuperannuationPty Limited                     Australia             100            100
ACN 094 484 625 Ltd                                                Australia             100            100
   National Wealth Manaecment Services Limited                     Australia             100            100
                                                                                                              6,907             6,685

(b) Discontinued operations

In May 2006thc groupcompleted salcof its Asianlife insurance
                             the                                    at                                 passed theacquirer.
                                                           businesses, whichtime controlofthc businesses    to
Thebusinesses                        segment wereincluded thc Insurancc
             formedthc Asiangeographic        and             in            businesssegment.

National                 HoldingsLimited
FinancialReport the yearended30 September
              for                        2007
      TO               STATEMENTS

22 Particulars in relation to controlled entities (continued)
The results ofthe discontinued operationsuntil the date ofdisposal are presentedbelow.
                                                                                          2007             2006
                                                                                           $m               Sm

Life insurancecontract premium mcomo                                                         -             146
Outwards ReinsuranceExpense                                                                  -              (4)
Premium and related revenue                                                                  -             142
lnvestment revenue                                                                           -44
Other operating income                                                                       -1
Total revenue                                                                                              187

Claims expense                                                                                             25
Change in life insuranceconfract policy liabilities
Change in life investment contract policy liabilities
Movement in policy liabilities                                                                              79
Operating expenses                                                                                          45
Total expenses                                                                                             149

Profit before income tax expense                                                                            38
Income tax expense(benefit)                                                                                  2
Profit after ta,r from discontinued operations

For other details relating to the disposal refer note 21(c).

(c) Controlled registered schemes

The following table presentsthe significant controlled registeredschemesin the Group.

Entityname                                                                 /
                                                                Incorporatedfomed in                        Ownership
                                                                                                     2007           2006
                                                                                                     o/o                o/o

WM Sector - Australian Equities Trust                                 Australia                            8E                 87
WM Sector - Global Equities (Unhedged) Trust                          Australia                            86                 87
WM Sector - Diversified Debt (All) Trust                              Australia                            86                 86
WM Sector - Global Equities (Hedged) Trust                            Australia                            92
WM Sector - Diversified Debt (Short) Trust                            Australia                            80                 19
WM Pool - Capital Intemational Global Equities Trust                  Australia                            86
WM Pool - MBA Australian Equities Trust                               Australia                            87                 8;
WM Pool - lnflation Linked SecuritiesTrust                            Australia                            84                 84
WM Pool - Bernstein Global Equities Trust                             Australia                            86                 87
WM Pool - Global Equities Trust No.5                                  Australia                            86                 87
NCIT - Global EquitiesTrust No.2                                      Australia                            87                 88
WM Pool - NSIM Cash Trust                                             Australia                            96                 84
MLC (NCIT) Global Share Trust With Cunency Hedged                     Australia                            60                 OL

WM Pool - Wellington Global Equities Trust                            Australia                            86                 87
WM Pool - Lazard Australian Equities Trust                            Australia                            87                 87
WM Sector - Property Securities Trust                                 Australia                            80                 83
WM Pool - ABN Amro Global Equities Trust                              Australia                            86                 87
WM Pool - Jardine Fleming Australian Equities Trust                   Australia                            87                 87
WM Pool - Contango Australian Equities Trust                          Australia                            88                 87
WM Pool - Global PropertiesTrust                                      Australia                            83                 82

Reliefhas been obtained from ASIC from the requirementsofs323(D) ofthe CorporationsAct to synchronisethe year ends ofthe controlled
unit trusts with that ofthe oarent.

NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

23 Other life insurance disclosures
                                                                        Group                 Company
                                                                 2007           2006   2007             2006
                                                                  $m             $m     $m               $m

Sources of operating profit

Life insurance contracts
   Emcrgcnce of shareholder planned margins                      142            t28
   Experience profi t/(loss)                                       9             19
   Effcct ofchanges to assumptions                                               (2)
   Rcversal of capitalised losses(losscs recognised)                             (3)
Life investment contracts
   Feeseamed                                                     137            t22
Invcstment eamings on shareholdcr rctained profits and capital    20            s3
Profi t/(loss) from non-1ife busrness                            150            112    127              372
Profit/(loss) after incomc tax                                                  429    127              372

NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

24 Commitments,contingenciesand fiduciary activities
                                                                                                                  Group                         Compmy
                                                                                                           2007            2006          2007            2006
                                                                                                            $m              $m            $m                $m

(a) Commitments
Estimated minimum lease commitments under non-cancellable operating leases
    Due within I year                                                                                        7              o
    Duewithinl      5years                                                                                   6              8
Total operating leasecommitments                                                                            13              14

Aggregate amount of forward invcstmcnt commitments not provided for
   Due within 1 year                                                                                     1,073            1,038
Total                                                                                                    1,073            1,038

(b) Contingencies
In accordancewith thc rcquirements of Options Clcaring Housc Pty Limitcd ("Options Clearing House"), bank guaranteesto the value of $9.5 million
(MLC Limitcd $6.65 million plus MLC Lifetime $2.85 million) have been issued to the Options Clearing House to covo trading which may bc
undertaken by thc Consolidated Entity in exchangc traded options. A contingcnt liabilifz cxists to the extent that the bank guaranteesmay be called
upon by thc Options Clearing House.

Business Equity Valuation (BEV)
Certain controllcd cntities entered buycr oflast resort arrangementswith the principals ofFinancial Planning busincssesthat operate under the entities
licences whereby these controlled entities must purchase thc principals busincss "client servicing rights" ifthey are unable to sell it indcpcndcntly and
satisry other tests.Thc purchase price is calculated as either a specified multiple ofthe recurring client rcvenue (agreementsto 30 September2006)
and market value (agreemcntsafter I October 2006).

Reinsurance - External
MLC Lifetime entered into a reinsurance arrangcment with an cxtcmal party cffective 31 December 1998 whereby it has reinsurcd 90% of thc lump sum
protection busincss ccded by MLC Limitcd. MLC Lifetime has undertaken to reimburse the reinsurcr for any shortfall between the expected and achral
value ofacquisition costs that are not recovcrcd from reinsurancepremiums paid. At 30 September2007, no shortfall arose (2006: nil).

MLC Lifetime has entered into a rcinsurance arrangementwith an cxtcmal party cffoctivc 1 September2002. Under thc alrangcmcnt, 90% of thc
individual lump sum protection busincss ceded by MLC Limited to MLC Lifctimc (cxcluding Group Life and National Credit Card Covcr) and disability
income riders attaching to Loan Cover, Mortgage Safe and Loan Safe has becn rcinsured.

Tax on internal reinsurance arrangements
The ATO continues its review ofa reinsurance contract entered into by MLC Lifetime in the | 998 tax year and amended in thc 2000 tax year.
The ATO previously cxpressed the view that expenditurc incurred under thc reinsurancecontract was not deductible under certain technical provisions
of the tax law.

In August 2007, thc ATO concluded its review of this mattcr and issucd an amcndcd assessment MLC Lifetime. The ATO assessment       was for
approximately $54 million of primary tax and interest and penalties of $16 million (after tax), a total of $70 million (after tax).

In accordanccwith ATO practice on disputed assessmcnts, Group entity has paid 50% ofthc amount owing under the &mendedassessment.

An objection has been lodged by MLC Lifetime disputing the ATO'S amended assessment.The objection has not yet been determined by the ATO. MLC
Lifetime is confident that its position in rclation to the application ofthe taxation law to this transaction is correct and it intends to vigorously defend
its position. Consequently, this payment has been recognised as an assetin the related Group entity on the basis that the Group expects full recovery
of thc amount paid to the ATO. Interest may accrue on the unpaid disputed amount.

Based on this treatment no provision has been raised for this matter.

NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

24 Commitments,contingenciesand fiduciary activities (continued)

Entitics within the Group are defendants from time to time in lcgal proceedings arising from the conduct of their business. Thc Company does not
consider that the outcome of any proceedings, cither individually or in aggregate,are likcly to have a matcrial effcct on its financial position.
Where appropriate, provisions have been made.

Theremaybecontingentliabilitiesinrcspcctofclaims,potentialclaimsandcourtproceedingsagainstentitiesinthcGroup. Theaggregateofpotential
liabilif   in respect thereofcannot be accurately asscsscd.

Deferred Capital Gains Tax
On I January 2002, thc Croup acquired the European and New Zcaland Wcalth Management and Life Company operations of the NAB Group. As this
was a transfer within the National Australia Bank Group, rollovcr relicf (defcrral) was availablc from taxation ofthe profit on the sale for the vendor
companies. In thc cvcnt the acquired businessesare on sold outside thc National Australia Bank Group, thc Group will be liable for the taxation deferred
as at 1 January 2002. The Company has received an undertaking from managemcnt ofthc NAB Group to pay such tax in thc evcnt ofthe sale ofone
or more ofthe acquired entities.

Letters of Support to Overseas Entities
In October 2006, National Wealth Management Intemational Holdings, a controllcd entity, provided Lettcrs of Support for the following entities:
     National Wcalth Management Europe Services Limited, limited to f20 million; and
   National Wealth Management New Zealand Holdings Limited, limited to $30million NZD.
These Letters of Support expire on the earlicr of 30 Scptcmbcr 2007 or until the sale of the entities.

In August 2007, National Australia Financial Managcmcnt, a controlled entity, provided Letters of Support for the following entities:
    National Wealth Managcmcnt Europe Services Limited, limited to f20 million; and
   National Wealth ManagementNew Zealand Holdings Limited, limited to $3Omillion NZD.
These Lcttcrs of Support expire on the earlier of 30 September 2008 or until the sale ofthe entitics.

(c) Fiduciary activities

Restrictions on assets
Asscts and liabilities held in the Statutory Funds arc subjcct to the distribution and transfer restrictions and other rcquirements ofthe Life Act and the
Constinrtion of the respectivc companics. Investments held in the Funds can only be used within the restrictions imposed under the Life Act. The main
rcstrictions are that the assetsin a Fund can only bc uscd to mcct thc liabilities and cxpcnscs ofthat Fund, to acquire invqstmcnts, to further the business
ofthc Fund or as distributions when solvency and capital adequacy requirements are met. Participating policyowncrs can rcccivc a distribution when
solvency rcquircments are meq whilst shareholdcrscan only receivc a distribution when thc capital adequacy requirements arc met. The Shareholders'
Funds are subject to Managemcnt Capital requirements imposed by Actuarial Standards.

A number of controlled entities have minimum net assetor liquidity requirements that have to be maintained at all times, which may potentially restrict
future distributions.

Managed assets
Thc Group's fiduciary activities consist ofinvestment management and other fiduciary activities conducted as manager! custodian or trustee for a number
of investrnentsand trusts, including superannuationand approved deposit funds, and wholcsale and retail investmcnt trusts. Thc aggrcgatc amounts of
funds conccmcd, which are not included in the Group's balance sheet,are as follows:
                                                                                                                                         2007           2006
                                                                                                                                         $m              $m
Funds under management                                                                                                                31,720         )1 )\6

Funds undcr custody and investment administration                                                                                     20,746         16,649

Trustee activities
Certain controlled entities act as trustee in relation to superannuationpolicies issuedby the Group. Arrangements are in place to ensure that the activities
ofthe trusteesare managed separatelyto those ofthe Group.

                                                                                                                                                Page 58
NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

25 Related party disclosures
Apart from the details disclosed in this note, no Director has entered into a matcrial contract with the Company since the end of the previous financial
ycar and therc were no matcrial contracts involving Directors' interestsexisting at the reporting datc.

Compensation of key management personnel (KMP)
                                                                                                                    Group                       Company
                                                                                                             2007            2006        2007         2006
                                                                                                             $000            s000        s000         s000

Compensation of key management personnel
Short term                                                                                                4,789             a )17      1,064          oJl

Post employmcnt                                                                                             224              203         37            20
Share based oavmcnts                                                                                      2,699             1,941       9s1           386
Total                                                                                                     7,7r2             6,376      2,052        1,03',7


The ultimate parent entity is National Australia Bank Limited, a company incorporated in Australia.

On I October 2006, undcr two separatePart 9 Schemesin accordancewith the Life Insurance Act 1995, thc lifc insurancc business ofthc controllcd
cntities, National Australia Financial Management Limited (,'NAFiM") and MLC Lifetime Company Limited ("Lifetime") was transferred to MLC
Limited ("MLC").

The Part 9 schemesstipulatcd that MLC will assumethe liabilities of both Lifetime and NAFiM in retum for the assetsthat back those liabilities.
This includes the assetsand equity being held for adherenceto regulatory solvency and capital adequacy standards.

Details of thc assctsand liabilites transferrcd at carryins amounts as at 1 October 2006 are listed below:
                                                                                                                                     Lifetime      NAFiM

Assets                                                                                                                                    $m              $m
Cash and cash equivalents                                                                                                                 4           ltl
Reccivables                                                                                                                              105            l3
Investment Assets                                                                                                                      2,450        1,129
Group lifc insurance policy liabilities ccdcd under reinsurance                                                                            -74
Total Assets                                                                                                                           2,559        1,327
Creditors and Borrowings                                                                                                                  30           84
Provisions                                                                                                                               82            t4
Gross Policy Liabilities                                                                                                              2,401         1,202
Total Liabilities                                                                                                                     2,513         1,300
Net Assets

Exccpt for the transactionslisted bclow, all transactionswith non-director related parties are on normal terms and conditions Amounts         from
and payablc to non-director related parties are interest free and unsecured. These are shown in notcs 6 and l3 rcspcctivcly.

Balances with entities within the wholly-owncd Consolidatcd Entity                                                                       2007         2006
                                                                                                                                          $m               $m
Thc aggrcgate amounts receivable from, and payable to, wholly-owned Consolidated Entities
by the Company at balance date:
    Other loans

NationalWealth ManagementHoldings Limited
Financial Report for the year ended 30 September 2007

26 Remunerationof externalauditor
                                                                                                                 Group                         Company
                                                                                                         2007              2006        2007            2006
                                                                                                         $'000            s'000        $'000           $'000

Total amount paid or due and payable to the auditors ofthe Company for:

    Audit or rcview ofthe financial reoort                                                             2,533             ) )11

    Othcr scrviccs
        Rcgulatorv                                                                                     2,309             ) )7)

Total remuncration of cxtcmal auditor                                                                  4,842             A \AO

The auditor of the company is Emst & Young

27 Subsequent
No other items, transactionsor events ofa material and unusual nature have arisen between the end ofthe financial year and the date ofthis report,
which are likely, in the opinion ofthe directors, to affect significantly the operations ofthe Group, the results ofthose opcrations, or the stateof
affairs of the Group in futurc financial years.

                                                                                                                                                 Page 60
NationalWealthManagement     HoldingsLimited
FinancialReportfor the year ended 30 September2007

In the opinionof the directors NationalWealthManagement

(a)                                                                   with the Corporations 2001,including:
                  statements notes, out on pages to 60 arein accordance
      the financial       and     set          4                                          Act

      (i)    giving a trueand fair view ofthe financialpositionofthe Companyand the Croup as at 30 September     2007 and oftheir perfomance.
             as represented the resultsoftheir operations
                           by                              and their sash flows for the year endedon that date;and

      (ii)   complying with AceountingStandards Australiaand the CorporationsRegulations
                                              in                                        2001; and

(b)                      groundsto bclieve that the Corlpany will be able to pay its debtsas and whcn they becomedue and payable.
      therearc reasorrable

               is                                   with a resolution directors 27th day ofNoventber2007.
This declalation madeand signedin Sydneyin accordance               of        this



flEnrrvsr*YouNc                                        f Ernst& YoungCentre
                                                         680 CeorgeStreet
                                                                                        r Tel 61 2 9248 5555
                                                                                          Fax 61 2 9218 5959
                                                         SydneyNSW 2000                   DX Sydney  Stock
                                                         Australia                            Exchange 72

                                                         CPO Box264t,
                                                         SydneyNSW 2001

 Independentauditor's report to the membersof National Wealth Management
 lloldings Limited

 We have audited the accompanyingfinancial report of National Wealth ManagementHoldings
 Limited, which comprisesthe balancesheetas at 30 September2007, and the income statement,
 statementof changesin equity and cash flow statementfor the year endedon that date, a summary
 of significant accountingpolicies, other explanatorynotes and the directors' declarationof the
               entity comprising the company and the entities it controlled at the year's end or from
 time to time during the financial year.

 Directors' Responsibilityfor the Financial Report
 The directors of the company are responsiblefor the preparationand fair presentationof the
 financial report in accordance   with the Australian Accounting Standards(including the Australian
 Accounting Interpretations)and the Corporations Act 2001. This responsibility includes
 establishingand maintaining internal controls relevant to the preparationand fair presentationof the
 financial report that is free from material misstatement,whether due to fraud or effor; selectingand
 applying appropriateaccountingpolicies; and making accountingestimatesthat are reasonablein
 the circumstances. Note 1, the directors also statethat the financial report, comprising the
 financial statements  and notes, complies with International Financial Reporting Standards.

 Auditor's Responsibility
 Our responsibility is to expressan opinion on the financial report basedon our audit. We conducted
 our audit in accordancewith Australian Auditing Standards. TheseAuditing Standardsrequire that
 we comply with relevant ethical requirementsrelating to audit engagements     and plan and perform
 the audit to obtain reasonableassurance whether the financial report is free from material

 An audit involves performing proceduresto obtain audit evidenceabout the amountsand
 disclosuresin the financial report. The proceduresselecteddependon our judgment, including the
 assessment the risks of material misstatementof the financial report, whethendue to fraud or
 error. In making those risk assessments, consider intemal confrols relevant to the entity's
 preparationand fair presentationofthe financial report in order to design audit proceduresthat are
 appropriatein the circumstances, not for the purposeof expressingan opinion on the
 effectivenessof the entity's internal controls. An audit also includes evaluatingthe appropriateness
 of accountingpolicies used and the reasonableness accountingestimatesmade by the directors,
 as well as evaluating the overall presentationof the financial report.

 We believe that the audit evidencewe have obtained is sufficient and appropriateto provide a basis
 for our audit opinion.

                                                                      Liability lirnited by a schemeapprovedunder
                                                                      Professional   Standards Lesislation

 In conducting our audit we have met the independence    requirementsof the Corporations Act 2001.
                                                                                      Declaration' a
 We have given to the directors of the company a writtenAuditor's Independence
                                                                                               report, we
 copy of wlich is included in the directors' report. In addition to our audit of the financial
 *".L           to undertakethe servicesdisclosedin the notesto the financial statements.The
 provision of theseserviceshas not impaired our independence.

 Auditor's Opinion
 In our opinion:
 l.      the financial report of National Wealth ManagementHoldings Limited and its controlled
         entities is in accordancewith the Corporations Act 2001, including:
         (i)     giving a true and fair view of the financial position of National Wealth Management
                 Holdings Limited and the consolidatedentity at 30 September2007 and of their
                 performancefor the year endedon that date; and
         (iD     complying with Australian Accounting Standards(including the Australian
                 Accounting Interpretations)and the Corporations Regulations2001.

 2.      the financial report also complies with International Financial Reporting Standardsas
         disclosedin Note 1.

 Ernst & Youngv

 27 November

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