Leverage Your Investment Ideas with SG Warrants

1. Leverage Your Investment Ideas with SG Warrants 1800 TALK SG www.warrants.com/au

2. Disclaimer SG Australia Equities Limited (ABN 88 090 099 317) ("SGAEL") takes responsibility for publishing this presentation. It is not be be directly or indirectly distributed to any person other than securities licensees, exempt dealers, exempt investment advisers and securities representatives as defined in the Corporations Law. At the time of publication the ASX and ASIC have not approved the issue of the securities the subject of this presentation. SGAEL has not taken into account your investment objectives, financial situation or particular needs and for this reason SGAEL suggests that you seek your own independent financial and taxation advice prior to investing in these securities. SGAEL and its related entities may hold interests in, and may profit from, the trading of warrants and their related securities at any time. No part of this presentation is to be construed as a solicitation, recommendation, offer or invitation to buy or sell any security. The information in this presentation is, to SGAEL’s knowledge, reliable and accurate as at the time of publication but this cannot be guaranteed. The views of SGAEL reflected in this presentation may change without notice. To the maximum extent possible at law, SGAEL and its related entities do not accept any liability whatsoever arising from the use of the material or information contained in this presentation.

3. Introducing SG SG is a global bank • SG is the investment banking arm of Société Générale • Société Générale is one of the largest banks in the world with more than AUD 900 billion in assets • Société Générale is a French bank but most of its activities are outside of France • In Australia, SG operates through its Australian subsidiary, SG Australia. • “Founding Father” of the covered warrants market, SG is leader worlwide • SG Australia is fully guaranteed by Société Générale • Société Générale is rated AA- by Standard & Poors

4. Introducing SG SG is a leading warrants issuer in Australia • Entered the market in June 2000 • Introduced the first warrants over international shares in July 2000 • Introduced instalment warrants in October 2000 • Note : Instalment warrants can help reduce your tax bill ! • Introduction of SG CaPELSTM in April 2001 • Overall market share: over 20% Thanks to a simple strategy: educate • Free monthly seminars • Free monthly newsletter, the Navigator • Regular presence at investment fairs • Free call 1 800 TALK SG (1 800 8255 74) • State-of-the-art website www.warrants.com/au

5. SG Warrants - the sea of options Whatever your risk profile, there’s a warrant to suit you! Risk Equity Warrants Index Warrants Currency Warrants Instalment Warrants TM SG CaPELS Shares Reward

6. SG Warrants - the sea of options SG CaPELSTM • A stock market investment with a money back guarantee! • No subscription or management fees • AUD exchange rate guarantee for international shares • investment horizon: 5 years Trading Warrants • at issuance, costs a small fraction of the share price • price movements will be 3 to 6 times those observed on the share • successful investments require having good timing and visibility • investment horizon : 1 week to 4 months Instalment Warrants • at issue, costs roughly half the share price yet you receive full dividends and franking credits • tax effective as interest component embedded in the warrants is tax-deductable • “cash extraction” facility • investment horizon: 1 to 5 years

7. SG Warrants - the sea of options Where to find info? www.warrants.com/au

8. Trading Warrants What are Call and Put Warrants? These provide the right but not the obligation to buy (call) or sell (put) the underlying security at a predetermined price (Exercise Price). This can be done during the life of the warrant (“American Style” warrant) or at maturity (“European Style” warrant). Call (Put) Warrants give the opportunity to profit from a rise (fall) in the value of the underlying security. Losses are limited to the price paid for the warrant. Upside potential is unlimited for call warrants, while for puts it is limited to the underlying security’s price falling to zero. Take advantage of movement in a share’s price without owning it! Call (Put) Warrants are used to take advantage of a rise (fall) in the value of the underlying security (can be shares, indices or currencies).

9. Definitions How is a warrant’s price determined? A warrant’s price results from the interaction of 6 pricing parameters • Exercise Price • Maturity • Underlying Price • Implied Volatility • Dividend Yield • Interest Rates A theoretical value is generated using a pricing model, along with sensitivity coeffcients which give an indication of how the warrant will behave for a given move in one of the parameters. Three important coefficients are • Delta • Theta • Vega

10. Delta “How much will the price of my warrant change if the share moves $1.00?” Example: TAHWGA (Delta 7% with TAH at $9.64*) If the TAH share rises $1(+10%), one TAHWGA warrant will rise by $0.07. As such, the returns on the TAHWGA investment are higher in percentage terms than those obtained from a direct investment in TAH. At 11/05/01 This phenomenon is known as the LEVERAGE EFFECT.

11. Elasticity Generally speaking, for a 1% move in the underlying, a warrant will experience a 2-6% move. This is known as the warrant’s Elasticity In the previous example, TAHWGA has elasticity of over 11. This means that for a 1% move in the TAH share, each TAHWGA warrant will experience a move of over 11%.

12. Hedging Put warrants can be used to protect the value of your share portfolio against adverse market movements or against a long stock position. • Puts can act like an insurance policy as they guarantee a minimum value for your security, which is equal to the Exercise Price of the Put. The price of this “insurance” is equal to the price of the warrant. • With put warrants, you are “transforming” the downside risk as the put warrant will appreciate with the drop in the market and thus off-set the depreciation of the portfolio.

13. Instalment Warrants • Longer term Investment warrant, European or American style. • What happens when you buy an SG Instalment for 55 to 60% of the share price? • SG buys the share on market and it is held in trust for the benefit of the warrant holder. Warrant holders are entitled to dividends and franking credits. • The value of the instalment warrant moves in line with the share price during the life of the product. • What happens at expiry? • Holders pay the final instalment amount and receive the underlying share. This is a fixed amount equal to the balance of the underlying share price not paid in the first instalment plus an interest component. • If holders do not want to exercise the warrant, the share in trust is sold and they receive an amount equal to the proceeds of the sale, less the amount of the second payment. • If the final instalment is higher than the proceeds of the sale, the warrant will expire worthless.

14. SG Instalment Warrants For whom are these products designed? Investors who… • Wish to participate in the performance of a share over the medium term by paying in increments • Wish to receive dividends and franking credits for the share without paying for it in full • Have Self-Managed Super Funds as instalments are a great way to leverage your super • Are looking for a product with tax advantages

15. Australian Possibilities

16. Introducing SG CaPELS TM Series 1: “My First Global Portfolio” • 5-year maturity, with sale & purchases possible on a daily basis and weekly overnight limit order facilities • Exposure to a balanced portfolio of leading blue chip shares • The “Accumulated Performance”: the value of the investment will be equal to the Issue Price multiplied by the 5 annual performances, with an annual limit of 20%. • Maximum return of 148% over five years, meaning a $1,000 investment can grow to $2,488 in five years ! • = $1,000 x 120% x 120% x 120% x 120% x 120% • Minimum value guaranteed at maturity of $1,000

17. “My First Global Portfolio” During the life of the product - the value of the SG CaPELSTM • The value of the portfolio and the value of the SG CaPELSTM are different. • Portfolio = the sum of the shares converted into AUD using a fixed exchange rate • SG CaPELSTM = a guaranteed investment offering the accumulated performance of the portfolio • As such, the value of the SG CaPELSTM will be affected by moves in many elements: • a drop in long term interest rates > a rise in the SG CaPELSTM • a rise in the shares of the portfolio > a rise in the SG CaPELSTM • a rise in market volatility > a drop in the SG CaPELSTM • a rise in the AUD > no impact on the SG CaPELSTM

18. “My First Global Portfolio” During the life of the product - events relating to the shares • The composition of the portfolio will be adjusted upon the occurrence of corporate events. From the investor’s point of view, the treatment will just like he were long the share. • takeover > the share of the absorbing company will be replaced • split > the number of shares will be increased • bankruptcy > the value of the portfolio will drop • For further information please read the Offering Circular.

19. “My First Global Portfolio” During the life of the product - liquidity • SG CaPELSTM will be listed on the ASX. • As the shares in the portfolio are listed overseas, in different time zones, the price of the product will not move much during ASX business hours and the spread will be wide (roughly 3%) • However, on every Thursday night, SG look at the orders in SEATS and execute on Friday morning the orders which were filled in overnight trading. • For reference purposes the normal bid-ask spread is 1%. The Fair Value is the Ask price (or the selling price)

20. “My First Global Portfolio” Example - liquidity • SG CaPELSTM My First Global Portfolio will be issued at $1,000. • On June 25, 2001, the SG market on the ASX will be $970 - $1,000. • Two years later, suppose the fair value (= ask price) of the SG CaPELSTM My First Global Portfolio is $1300. • The SG market on the ASX will be $1,261-$1,300. • If you are in a hurry to buy or sell, you can hit these prices. • However, if you want a better repurchasing price (=bid price), place your limit order with your broker on Thursday. • If the market does not move considerably overnight, we can consider that the fair repurchasing price will be $1,287(=$1,300 x .99)

21. “My First Global Portfolio” How can I follow the value of my investment ? • Your broker and financial planner are the best sources of information. • Prices for SG CaPELSTM My First Global Portfolio will be available on www.sgcapels.com • CaPELS updates will be given in SG’s free monthly newsletter, The Navigator Investor’s choices at maturity • Exercise and take delivery of the shares • Fill in the exercise notice and pay the aggregate exercise price ($0.01 x the number of CaPELSTM being exercised). The investor must have settlement and custody arrangements in the country of each share. • Do nothing & receive a cash amount equal to the “accumulated annual performance”

22. How can I trade SG Warrants? SG Warrants are ASX-listed and are available through your broker or your financial planner. SG Instalment Warrants and CaPELS are available directly from SG through the application forms contained in the Offering Circulars. Before investing you will be given a copy of the ASX Explanatory Booklet “Understanding Trading & Investment Warrants” and asked to sign a Warrant Client Agreement Form. As warrant terms are not standardised, investors are advised to familiarise themselves with the particular characteristics of each warrant, as set out in each warrant’s Offering Circular. Find out about the Special Offers we have with Participating Brokers!