E*TRADE AUSTRALIA Shareholders Approve
Strategic Alliance with ANZ
ANZ acquires 10% of E*TRADE Australia?s share capital.
Computershare Limited acquires a further 1,489,599 shares in E*TRADE Australia taking their holding to 8,109,827 shares (13.5% of issued capital).
E*TRADE Australia?s share of online trades performed on the ASX moving toward 25%.
Active accounts exceed 23,500.
SYDNEY, 25 August 1999 - Shareholders of E*TRADE Australia (ASX:ETR), a leading provider of online stockbroking services (www.etrade.com.au), today voted overwhelmingly to accept the agreement to form a strategic alliance with ANZ.
In what is considered an Australian first, this deal will provide E*TRADE Australia with access to ANZ?s four million-strong customer base in Australia and New Zealand while giving ANZ the opportunity to be issued with up to 40 per cent equity in E*TRADE Australia. The innovative agreement builds in a high degree of incentive for ANZ to maximise take-up among its client base by tying eligibility for this equity to the delivery of valuable clients.
?We are delighted that our shareholders have shown such enthusiasm for this groundbreaking alliance,? said Malcolm Spry, Chairman, E*TRADE Australia. ?This partnership places us in an excellent position to become the market leader in online financial services within the next 12 months as the market reach it delivers greatly enhances our competitiveness.?
In considering this resolution, shareholders were provided with an independent expert?s report produced by Grant Samuel & Associates which concluded that the terms of the proposed alliance with ANZ are fair and reasonable. The report also stated that the benefits of the proposed alliance exceed the value of shares and options to be issued to ANZ, taking into account any risks and disadvantages.
With shareholder approval and the ANZ due diligence completed, the alliance goes into effect immediately. The co-branded E*TRADE Australia-ANZ site, to be named ANZ E*TRADE Online Investing will go live by the end of September 1999. At that time, ANZ customers will be able to click through to the ANZ E*TRADE Online Investing site directly from the ANZ online banking services site.
?The ANZ E*TRADE Online Investing site will offer ANZ clients immediate access to the full range of E*TRADE Australia?s tools and information including real time price quotes, market depth, automatic portfolio updates, current market and company news, as well as straight through order processing to SEATs, ? said Kerry Roxburgh, CEO, E*TRADE Australia.
E*TRADE Australia Records Further Growth
E*TRADE Australia recorded further growth during the month of August. As at 20 August, client numbers had grown to more than 23,500 and the market participation rate consolidated at 3.3 per cent of trades performed on the ASX. E*TRADE Australia estimates that it is responsible for almost 25 per cent of all online transactions performed in the Australian market.
?Our business continues to grow at a very pleasing rate and so far it?s all been organic?, said Kerry Roxburgh. ?With the ANZ now poised to market the co-branded service to its customer base, we are about to enter a new era of sustained acceleration in our growth rate.?
As part of the alliance, ANZ now holds an initial 10% stake in E*TRADE Australia and is entitled to one seat on the E*TRADE Australia Board. At a Board meeting held immediately after the General Meeting, the directors of E*TRADE Australia voted in favour of ANZ?s nominee and Mr Satyendra Chelvendra, Managing Director, Personal e-Commerce, was welcomed to the E*TRADE Australia Board.
Other resolutions approved by E*TRADE Australia shareholders today were:
the issue and allotment of 1,489,599 fully paid ordinary shares to Computershare Limited taking their holding to 8,109,827 shares (13.5% of issued capital);
the ratification of 6,620,228 fully paid ordinary shares issued to Computershare Limited on 17 May 1999;
the ratification of 878,000 fully paid ordinary shares issued to the Vale Trust on 29 April 1999;
the appointment of Mr Mark Elliott, Chief Operating Officer, Computershare to the Board as a director .
A full copy of the transcript of the Chairman?s address to the General Meeting is attached.
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About E*TRADE Australia (www.etrade.com.au)
E*TRADE Australia?s services are provided by ETRADE Australia Securities Limited, a member of the Australian Stock Exchange and holder of a dealers licence and a subsidiary of ETRADE Australia Limited. E*TRADE Australia is a trademark of E*TRADE Group Inc. ETRADE Australia Securities Limited holds the licence from E*TRADE Group Inc., a leading branded provider of online investing services, headquartered in Menlo Park, California. The licence provides ETRADE Australia Securities Limited the rights to the E*TRADE brand, technology and services, under the E*TRADE banner. E*TRADE offers independent investors the convenience and control of automated securities order placement, along with a suite of value-added products and services that can be personalised, including portfolio tracking, charting and quote applications, real-time company announcements, news and other information services. E*TRADE does not provide investment advice.
CHAIRMAN?S ADDRESS TO THE GENERAL MEETING
Before we commence with the formal business of the meeting, I would like to update you on the progress of the company.
ETRADE Australia continues to experience strong growth.
Unaudited brokerage revenue in July exceeded $1 million for the first time in a single month, up 32 per cent on June.
The number of customer accounts continues to grow and currently we have around 24,000 clients.
E*TRADE Australia?s market participation rate has increased to 3.3% - up 18% on the previous month. We estimate E*TRADE Australia now accounts for around 25% of all online transactions. And it should be noted that online brokers now participate in more than 14% of all ASX trades.
The value of client assets at the end of July was $916 million. 10.63% up on the previous month.
The company also announced that it had participated as online broker to the issue in the initial public offering of WAM Capital Limited, Spike Networks Limited and International All Sports Limited
Utilising the Internet as a key distribution channel, we sent our customers an email inviting them to view these prospectuses. To subscribe, customers simply clicked on the prospectus icon and read it online before printing and sending back the completed application form.
We were extremely pleased with the online process and the take-up by our customers. There is no doubt the rapid growth in the online trading space has opened up a powerful and inexpensive new primary distribution channel. We'll certainly be using this ever-increasing market power to compete strongly for future IPO business and to put the public into public offerings.
At the last General Meeting held on the 29th April 1999, I advised that we were poised to move into a new chapter of our business. A chapter that had the potential for quite phenomenal growth.
I am excited to tell you that, subject to shareholder approval today, we are again embarking on a period of significant potential that has the capability to make our business a market leader in the on-line investing and financial services industry. I refer specifically to our alliances with Computershare and the ANZ, which are the 2 principal items on the agenda for today?s meeting.
We are being asked today, as shareholders, to approve the completion of the placement of shares to Computershare in accordance with the terms of our alliance with them. The Directors recommend that shareholders approve the resolution:
The association with Computershare has the potential to open up strategic opportunities for E*TRADE Australia and could lead to technology transfers between the two companies.
There is a great deal of synergy between E*TRADE Australia and Computershare, especially in view of the level of services provided by Computershare to E*TRADE Australia;
Computershare?s shareholding in E*TRADE Australia has provided a significant cash injection which will facilitate investment in new offerings and the expansion of our business.
We are also being asked today to approve the issue of shares and options to ANZ and the Directors again recommend that shareholders approve the resolution:
E*TRADE Australia will have access to ANZ?s approximately 4 million-strong customer base across Australia and New Zealand
the market reach delivered by this alliance effectively places E*TRADE Australia in a highly competitive position in the online financial services industry;
E*TRADE Australia?s objective of being the online market leader within the next 12 months is substantially enhanced;
the agreement builds in a high degree of incentive for ANZ to maximise take-up among its client base by tying eligibility for equity in E*TRADE Australia to the delivery of valuable clients;
ANZ will make a significant marketing investment into educating its client base on the benefits of online investing with the aim of generating traffic to the co-branded site;
E*TRADE Australia has the opportunity to move into a new league of growth that may have taken considerably longer to achieve through organic growth;
The Independent Expert?s Report prepared by Grant Samuel & Associates concluded that, and I quote:
?The terms of the proposed alliance with ANZ are fair and reasonable. The benefits and advantages of the proposed alliance exceeds the value of the shares and options to be issued into ANZ taking into account any risks and disadvantages?.
ETRADE Australia chose ANZ for very good reasons. For many years the bank has been an active participant in the securities markets. It has also demonstrated an ability to successfully partner with other companies to deliver innovative product offerings.
I am personally confident that this alliance with ANZ will be a significant contributor to positioning E*Trade Australia as one of the select few major organisations that will be a leader in the online investing and financial services industry from a long term perspective.
Subject to the approval of the ANZ alliance at this meeting, Mr Satyendra Chelvendra. ANZ?s nominee, will be appointed to the Board of Directors of E*TRADE Australia.
In addition to these two significant alliances, the company is continuing to identify and implement new and exciting product offerings. In the next six months, our customers will be able to trade managed funds. They will also be able to invest in US securities listed on NASDAQ. We will continue to make our site offering the most rewarding and information rich destination in the online investing arena.
There will also be a special purpose Investor Relations site set up in the next six months to keep shareholders updated about the company. This will include relevant and up to date information about the company including the latest annual report, information about your Directors and current ASX and media releases.
In conclusion, your Directors advise that the company is performing in accordance with their expectations. Strong growth continues and we expect it to for a long time to come.