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Notes to the consolidated fnancial statements (continued)

for the year ended 30 June 2011

7. Banking – Specifc disclosures (continued)

7.10 Banking – Preference shares

CONSOLIDATED

2011 2010 2011 2010 No. of shares No. of shares $m $m

Reset preference shares each fully paid 1,022,582 1,440,628 102 144 Convertible preference shares each fully paid 7,350,000 7,350,000 728 725 Total preference shares 8,372,582 8,790,628 830 869

Current 102 – Non-current 728 869

Total preference shares 830 869

Preference shares are issued by SML. Holders of preference shares are entitled to vote in limited circumstances in which case shareholders will have the same rights as to the manner of attendance and to voting as SML ordinary shareholders with one vote per preference share. The limited circumstances are set out in the Information Memorandum/ Prospectus.

In the event of the winding-up of SML, preference

shareholders rank above SML ordinary shareholders but after depositors, creditors and subordinated note holders and are entitled to the proceeds of liquidation only to the extent of the issue price of the shares. (a) Reset preference shares

The reset preference shares (RPS) are perpetual, paying fxed non-cumulative dividends with certain terms periodically reset. Holders have an option on each reset date to request the preference shares be exchanged. Once a holder’s exchange request is received, SML has the option to elect to exchange for cash or SML ordinary shares of approximately equal value to the original issue price of the preference shares, or to have the preference shares acquired by a third party with proceeds delivered to the holder. It is SML’s current intention to exchange the relevant RPS for cash consideration rather than exchanging the RPS for SML ordinary shares (subject to APRA approval). Holders of the RPS are entitled to receive a dividend as calculated by the formula set out in the Information Memorandum dated 16 August 2001. Such dividends are at the discretion of the directors and only payable if the restrictions as set out in the Information Memorandum are complied with. The dividends are expected to be fully franked.

The Suncorp Group’s restructure was a Control Event as defned in the RPS terms. It triggered an option for holders to request exchange. Exchange requests for 418,046 RPS were received. Exchange consideration of $42 million was settled in cash on 23 March 2011 and the exchanged RPS were cancelled on this date. The next reset date is 14 September 2011.

(b) Convertible preference shares

The convertible preference shares (CPS) are fully paid preference shares issued by SML which will mandatorily convert into a variable number of the Company’s ordinary shares on 14 June 2013 (subject to certain requirements being met). In addition, SML must convert the CPS into a variable number of Company’s ordinary shares or redeem the CPS for cash within 35 days of the occurrence of an Acquisition Event (subject to certain conditions being met). The CPS Prospectus dated 14 May 2008 was amended for SML being substituted by the Company as the issuer of ordinary shares upon conversion of the CPS as a result of the execution of the CPS Deed Poll from the Suncorp Group Restructure.

Holders of the CPS are entitled to receive foating rate quarterly non-cumulative preferred dividends calculated by the formula set out in the Prospectus and which are subject to payment tests also documented in the Prospectus. Such dividends are at the discretion of the directors and only payable if the restrictions, as set out in the Prospectus, are complied with. The dividends are expected to be fully franked.