GIO AUSTRALIA HOLDINGS LIMITED (ASX.GIO)

the New South Wales Court of Appeal today ordered that Geoffrey William Vines, a former Chief Financial Officer of GIO Australia Holdings Ltd (GIO), pay a pecuniary penalty of $50,000 for his conduct during a takeover bid by AMP Limited (AMP) for GIO in late 1998 (in 2006, Justice Austin of the Supreme Court of New South Wales had ordered that Mr Vines be disqualified from managing a corporation for three years and pay a $100,000 pecuniary penalty) - the Court of Appeal today held that, given the seriousness of the contraventions and Mr Vines' partially successful appeal in April this year, a $50,000 pecuniary penalty was appropriate

orders were made in Court today (see background in note below dated 23/08/2005) against Geoffrey William Vines, Francis Timothy Robertson and Timothy John Henry Fox, three former directors of GIO Insurance Limited, a subsidiary of GIO Australia Holdings Limited as follows: Mr Vines was disqualified for a ‘notional' period of 3 years until 30 June 2007, a pecuniary penalty of $100,000 was imposed and he was ordered to pay 22% of ASIC's costs • Mr Robertson was disqualified for a ‘notional' period of 3 years until 30 June 2007, a pecuniary penalty of $50,000 was imposed and he was ordered to pay 28% of ASIC's costs • Mr Fox was disqualified for a ‘notional' period of 12 years until 30 June 2016, a pecuniary penalty of $220,000 was imposed and he was ordered to pay a third of ASIC's costs

Justice Austin of the Supreme Court of New South Wales today found that former GIO directors, Messrs Geoffrey William Vines, Francis Timothy Robertson and Timothy John Henry Fox breached their duties during the course of AMP's 1998-99 takeover bid for GIO Australia and further found Mr Fox to have breached his duty to act honestly - the two broad areas of concern were the formulation and methodology used to maintain an $80 million profit forecast for GIO Re in response to the takeover offer from AMP (including the impact of Hurricane George) and entering into a financial reinsurance agreement with AM Re, which allegedly purported to protect the $80 million profit forecast

TAX IMPACT - the ATO has decided to allow shareholders to either include the compensation as a capital gain in your 2003-04 tax return or treat the compensation as additional capital proceeds for the disposal of your GIO shares - which will affect the amount of the capital gain or capital loss you made in the income year you disposed of the shares (either the 1998-1999 or the 1999-2000 year) - it will depend on your individual circumstances whether the first option or the second option is better - if you use the second option, and you owned your GIO shares for more than 12 months before you disposed of them, you can recalculate the capital gain using either the indexation or the discount method, even if you originally used the indexation method to work out your capital gain - no general interest charge (GIC) will apply to GIO amendments under either option provided they are requested by 30 June 2005

shareholders in the class action should note that there are Capital Gains Tax consequences - the compensation is treated as additional capital proceeds in respect of the GIO shares you were required to dispose of to AMP in return for AMP income securities under the scheme of arrangement on 30 December 1999 - therefore, the compensation affects the amount of the capital gain or capital loss you made on the disposal of your GIO shares in the 1999-2000 year - we recommend you see http://www.ato.gov.au/individuals/content.asp?doc=/content/47093.htm and/or seek professional help as a general interest charge (GIC) may apply and may be avoided only if certain action is taken by 16 September 2004

class action - the matter has now been finalised - shareholders in the class action received a proportionate share of $97 million, the net settlement amount - the total compensation received was $1,262.60 per 1,000 GIO shares held

reports that ASIC's action against the three former senior executives of GIO Re which commenced in the Supreme Court on 21 October 2003 is nearing an end - closing submissions will be made on 14 April 2004

Maurice Blackburn Cashman report that the final list of former GIO shareholders to participate in the GIO class action settlement has been determined by the Federal Court - after a three day hearing in late November the Court has now finalised the list and made final orders under which the first payment of settlement monies to those participating in the settlement must be made by 28 February 2004 - former GIO shareholders who are not eligible to participate in the settlement but who believe they have a claim arising out of the same circumstances, have their rights preserved, subject to time limitations - they can pursue their own actions if they wish to - they will need to obtain their own private legal advice as Maurice Blackburn Cashman have indicated that they are not taking any further actions in the matter

some 900 shareholders indicate an interest after the announcement of a settlement - the court is overseeing the process

ASIC begins Supreme Court action against three executives claiming they entered into a sham arrangement to cover up huge losses when Hurricane Georges hit the Gulf of Mexico in September 1998

a great victory for GIO shareholders and for shareholders generally as the Court approves the settlement - shareholders should receive the first instalment in November 2003 and the second possibly in December or early next year

the various milestones and background to the successful class action are reflected below - we suggest you read up from the bottom to get the sequence of events

AMP announces a settlement of the action involving a total payment of $112m - AMP's contribution being $56.8m with other parties paying the balance - some 67,000 GIO shareholders were potentially affected but 17,000 formally opted out of the action and despite a court approved notification process, up to 27,000 have not identified themselves or responded - that leaves 23,000 identified group members who will participate in the settlement, providing it is approved by the Federal Court on 26 August - in rough terms the settlement would appear to yield between $1.20 and $1.30 per share as well as allowing for legal fees of approximately $15m

Moore J makes various directions including orders for further discovery by Grant Samuel and PriceWaterhouseCoopers

Allsop J dismisses an application by the fifth respondent Mr Steffey for leave to appeal from Moore J's 3 June judgment

Moore J makes orders for unrepresented group members to take steps to identify themselves as group members to remain in the class

Moore J gives judgment on the adequacy of the applicant's particulars of his claim against the former GIO directors

The applicant provides additional particulars of claim to Grant Samuel and the former GIO directors in response to their requests and Moore J hears argument on the adequacy of those particulars

Maurice Blackburn Cashman file outlines of evidence on behalf of applicant

Court fixes case for trial to commence on 3 May 2004 and identifies the common issues to be determined at that trial

Maurice Blackburn Cashman file a motion seeking a timetable for conduct of the trial

Federal Court rules that GIO can send a questionnaire to group members on the basis that it was not to be compulsory and it was not to be sent directly to group members who had formally retained Maurice Blackburn Cashman to act for them - the questionnaire is now non-compulsory, and MBC are advising any clients who have received it that they are not obliged to answer it (the questionnaire seeks a response from group members as to their reading of the Part B Statement and other matters)

Full Court dismisses Macquarie Bank's motion to strike out GIO's cross claim against it

Court orders by consent that applicant has leave to rely at trial on witness statements of 3 former GIO employees and consultants

Full Court dismisses GIO's application for leave to appeal

Court gives judgement on the right of respondent GIO to communicate directly with unrepresented group members. Applicant argues potential prejudice in logistical ability to give individual legal advice prior to determination of the common questions. Court sets up a regime for written communications only with notice to applicant's solicitors. GIO appeals judgement

Court makes further orders for discovery by GIO

Court orders extension of time for opting out for certain group members and reinstatement of certain group members. Respondents appeal reinstatement of some group members but later withdraw appeal

The respondents file cross claims against several new parties - they are GIO's reinsurance subsidiary GIO Insurance Ltd, its adviser on the Part B statement Macquarie Bank Limited, its auditors PricewaterhouseCoopers, its business and reinsurance adviser PricewaterhouseCoopers Securities Ltd and its actuarial adviser PricewaterhouseCoopers Actuarial Pty Ltd

Respondents to the case ordered to file any claims against any third parties by the 7th December 2001 - once these claims are filed the parties in the case will be finalised. Court allows amendment to applicant's Statement of Claim to clarify detail of the "risk factors" which the applicant alleges shareholders were not adequately warned about.

Court orders ninth, tenth and eleventh tranche of discovery by GIO (we have no dates but during the period from 20 Jun to 24 Oct 2001)

ASIC launches civil penalty prosecution against 3 former executive officers of GIO in the Supreme Court of NSW

Opt Out Notice sent - it is for those who do not wish to be part of the class action

Orders for further discovery by respondents

Full Court settles on form of the Opt-Out Notice to be sent to all former registered owners of GIO shares - the Notice will be sent to former GIO shareholders by 11 May 2001 - class members who have become clients of Maurice Blackburn Cashman and signed a fee agreement need not make any response in relation to the Opt-Out Notice

Court orders seventh tranche of discovery by GIO

Court gives judgment on form of opt out notice but GIO appeals that decision arguing there needed to be warnings of the consequences of not opting out and the need for shareholders to prove individual reliance on GIO's conduct

Maurice Blackburn Cashman complain to the Court about insufficient provision ("discover") of documents by the Respondents. Court orders by consent a third, fourth fifth and sixth "tranche" of discovery by GIO by February 2001. The Court also considered the form of the Notice to be sent to class members. (we do not have a precise date for this)

Full Court agrees that the class action was the appropriate procedure for former GIO shareholders to obtain damages for negligence and misleading or deceptive conduct and confirms decision of trial judge on 12 May 2000

Court judgement dismissing claims by respondents that the class action should be set aside on the grounds that shareholders were not entitled to form A class action because each shareholder did not necessarily have a claim against every one of the respondents

preliminary hearing in the class action

preliminary hearing in the class action

delisted following completion of the Scheme of Arrangement to merge with AMP Limited

preliminary hearing in the class action

following an announcement by GIO of a further deterioration in its financial position (by $180m), AMP gives notice it does not intend proceeding with the scheme of arrangement on the original terms - under the revised scheme each shareholder will receive AMP Income Securities equivalent in nominal value to $2.75 plus one AMP Reinsurance Note for every share they own (the Notes entitled holders to payments depending on GIO's subsequent results - they turned out to be worthless)

first directions hearing in the Federal Court which directs the filing of a statement of claim by 26 Oct'99 and the defences of the respondents by 26 Nov'99 (the class action is being conducted on a "No Win, No Charge" basis, which means participants are not liable for any legal costs unless their claim is successful)

GIO announces it will propose a scheme of arrangement which, if implemented, will result in AMP acquiring the 43% of GIO shares which it does not already own

AMP agrees with scheme of arrangement proposal by GIO that would see consideration for the remaining 43% of shares not owned by AMP in the form of AMP Income Securities equivalent to $3.05 per share and an unlisted instrument of AMP which offers additional amounts dependent on GIO's results

participants in the class action defined as those who owned shares in GIO continuously from 25 August 1998 to 4 January 1999 and who did not accept takeover offers by AMP by reason of the conduct and representations made by GIO

Solicitors Maurice Blackburn Cashman initiate a class action on behalf of former minority shareholders in GIO - the respondents are GIO, its former Board of Directors and Grant Samuel and Associates Pty Ltd - the case is the largest shareholders' class action in Australian legal history - the basis for the action is that representations made by the respondents were misleading and deceptive or negligent - the action seeks recovery of losses when shareholders did not accept AMP's takeover offer of $5.35 per share allegedly as a result of statements (and silences) by the respondents to them in the Part B takeover defence document

AMP says extent of losses in relation to GIO's Reinsurance business was far worse than expected and significantly out of line with information provided in the Part B Statement, issued to shareholders by GIO directors in December 1998

AMP declares it is not surprised by the announcement of GIO reinsurance losses - AMP said repeatedly during the course of the 1998 bid for GIO that it expected that the GIO reinsurance business would suffer losses after the significant events of last year

AMP today said that GIO's interim profit announcement demonstrates that AMP paid the right price in its take-over offer for GIO as the key trends for GIO's businesses are positive

AMP's offer closes and AMP subsequently confirms it has a 57% holding

AMP confirms that GIO shareholders accepting the AMP Offer by 4 January (the scheduled close date) will still receive $5.35 cash or one AMP share for every four GIO shares as described in AMP's Offer documentation

despatch of AMP's Offer documents to GIO shareholders

AMP refines bid for GIO shares to ensure that GIO shareholders accepting its scrip offer are certain to receive AMP shares worth at least $4.88 for each of their GIO shares