ASX:AU1 · 11 December 2020Price sensitive

Addendum to the Notice of Meeting & Supplementary IER

ADDENDUM TO NOTICE OF ANNUAL GENERAL MEETING AND SUPPLEMENTARY INDEPENDENT EXPERT’S REPORT The Agency Group Australia (ASX:AU1) (“The Agency” or “the Company”) advises of the release of an Addendum to the Company’s Notice of Annual General Meeting dated 23 November 2020 (“Addendum”). The Addendum includes a Supplementary Independent Expert’s Report (“Supplementary IER”) to the original Independent Expert’s Report which accompanied the Notice of Annual General Meeting dated 23 November 2020 (“NoM”). The Board of The Agency appointed Nexia Perth Corporate Finance Pty Ltd (“NCPF”) to prepare an Independent Expert’s Report opining on whether the proposed potential issue of fully paid ordinary shares to Peters Investments Pty Ltd 1, upon conversion of convertible notes and/or upon exercise of options, is fair and reasonable to The Agency shareholders (“Original IER”). The Original IER was included in the NoM.

Subsequent to the issue of the Original IER to shareholders, The Agency announced on 8th December 2020 that it had received a letter from Magnolia Equities III Pty Limited (“Magnolia”) on Friday, 4 December 2020, which sets out a “proposal to make an unsolicited, conditional offer” to purchase all of the fully paid ordinary shares in The Agency (“Proposal”).

The Original IER has now been updated by NCPF by virtue of the Supplementary IER in accordance with guidance in ASIC Regulatory Guide 111 (Changes in circumstances) following the announcement of the Proposal.

The Supplementary IER is included in the Addendum (see attached).

The opinion of NCPF has not changed and the Board of The Agency continue to advise shareholders TAKE NO ACTION in relation to the Proposal or any document received from Magnolia in relation to the Proposal until shareholders receive The Agency Directors’ formal recommendation.

This ASX release has been approved for release by the board of The Agency.

If you require further information, please contact:

Investors Media The Agency Australia Ltd Chapter One Advisors Paul Niardone David Tasker / Colin Jacoby T: +61 08 9204 7955 T: +61 433 112 936 / +61 439 980 359

1 For further details relating to the proposed transaction, refer to ASX announcement dated 29th October 2020.

THE AGENCY GROUP AUSTRALIA LTD ACN 118 913 232 ADDENDUM TO NOTICE OF ANNUAL GENERAL MEETING The Agency Group Australia Ltd (ACN 118 913 232) (Company), hereby gives notice to shareholders of the Company that, in relation to the Notice of Annual General Meeting dated 23 November 2020 (Notice of Meeting) in respect of the Company’s annual general meeting of Shareholders to be held at 9:00am (WST) on Wednesday, 23 December 2020 at 68 Milligan Street, Perth (Meeting), following advice by Nexia Perth Corporate Finance Pty Ltd, the Directors have determined to amend and supplement the information contained in the Notice of Meeting provided to Shareholders by this addendum to the Notice of Meeting (Addendum) for the purposes set out below.

General

Definitions in the Notice of Meeting have the same meaning in this Addendum. In the event of any inconsistency the definitions used in this Addendum prevail.

This Addendum is supplemental to the original Notice of Meeting and should be read in conjunction with the original Notice of Meeting.

Background to Addendum

As announced on 8 December 2020, the Company received a letter from Magnolia Equities III Pty Limited (Magnolia) on Friday, 4 December 2020, which sets out a proposal to make an unsolicited, conditional offer to purchase all of the fully paid ordinary shares in the Company (Proposal).

The Proposal states that:

(a) Magnolia proposes to make an off-market cash takeover bid for all of Company’s Shares for no less than 4 cents per Share.

(b) the proposed bid, and Magnolia’s obligation to make the bid, are subject to the defeating conditions set out in Schedule 1 to this Addendum; and

(c) further information regarding the “bid” and the conditions will be provided to Shareholders in Magnolia’s Bidder’s Statement.

The Board does not consider that the Proposal:

(a) provides Shareholders with enough information to be considered a credible proposal; or

(b) constitutes a legitimate alternative to the proposed issue of $5 million in Convertible Notes to Peters Investments Pty Ltd (the subject of Resolution 6 of the Notice of Meeting).

However, as a result of the receipt and announcement of the Proposal, in accordance with the Australian Securities and Investments Commission’s guidance contained in Regulatory Guide 111 (Changes in circumstances), Nexia Perth Corporate Finance Pty Ltd (the Independent Expert) has prepared a supplementary Independent Expert’s Report (Supplementary IER) to the Independent Expert’s Report included in the Notice of Meeting for the purposes of Resolution 6 of the Notice of Meeting.

The Supplementary IER is included in Schedule 2 to this Addendum.

The Supplementary IER mainly updates section 1.1 (General Background), section 2 (Purpose of Report), section 3.2 (Assessment of Reasonableness), section 11 (Assessment of Reasonableness) and Appendix A (Glossary).

Shareholders are urged to carefully read the Supplementary IER in full to understand the scope of the report, the methodology of the valuation and the sources of information and assumptions made.

The Board notes that the Independent Expert’s conclusion in relation to the transaction contemplated by Resolution 6 of the Notice of Meeting has not changed following receipt of the Proposal. The Independent Expert’s opinion remains that the transaction contemplated by Resolution 6 is not fair but reasonable.

Proxy Forms

The Company confirms that there have been no changes to the Proxy Form previously dispatched to Shareholders and this Proxy Form is annexed to this Addendum. Shareholders are advised that:

If you have already completed and returned the Proxy Form which was annexed to the original Notice of Meeting and you wish to change your vote, you must complete and return the Proxy Form annexed to this Addendum.
If you have already completed and returned the Proxy Form which was annexed to the original Notice of Meeting and you do not wish to change your vote, you do not need to take any action as the earlier submitted Proxy Form will be accepted by the Company unless you submit a new Proxy Form.
If you have not yet completed and returned a Proxy Form and you wish to vote on the Resolutions in the Notice of Meeting, please complete and return the Proxy Form annexed to this Addendum to the Notice of Meeting.

To vote in person, please attend the Meeting at the time, date and place set out above.

By this Addendum, the Notice of Meeting and the Explanatory Statement are supplemented by the information set out in this Addendum.

Stuart Usher Company Secretary Dated: 11 December 2020

BY ORDER OF THE BOARD

Enquiries

Shareholders are requested to contact the Company Secretary on +61 (0) 499 900 044 if they have any queries in respect of the matters set out in these documents.

SCHEDULE 1: PROPOSED DEFEATING CONDITIONS

Defined terms used in this Schedule have the same meaning as attributed in the Proposal, a copy of which was released on the Company’s ASX announcements platform on 8 December 2020.

Proposed defeating conditions

(a) 90% minimum acceptance

During or at the end of the Bid’s bid period, Magnolia and its associates have relevant interests in 90% (by number) of the ordinary fully paid shares in AU1 subject to the Bid.

(b) No approval of the Peters Proposal

During the period starting on the date of the announcement to which this is attached (Announcement Date) and ending at the end of the Offer Period, none of the proposed resolutions numbered 3-7 in the AGM Materials (i.e. Agenda items 4 – 8) is moved and passed by the AU1 shareholders in general meeting.

EITHER

(Pre-Bid disclosure)

Before 16 December 2020 AU1 provides Magnolia with copies of the following documents (Listed Documents) and the Listed Documents do not disclose that any condition other than this condition would be triggered by material contained in the Listed Documents (or any of them) or by performance of any or all of them:

1. Unaudited income statement of AU1 for the 3 months ended 30 September 2020;

2. Unaudited balance sheet of AU1 as at 30 September 2020;

3. AU1’s share and option registries at 4 November 2020;

4. AU1’s group structure a provided by management;

5. Draft October 2020 Convertible Note Agreement in connection with the Peters Proposal;

6. Final Convertible Note Agreement in connection with the Peters Proposal;

7. Copies of any and all mandates which have not been disclosed in the Independent Expert’s Report and Financial Services Guide dated 23 November 2020 (Report) prepared by Nexia Perth Corporate Finance Pty Ltd (Nexia Australia);

8. Management Information relied on by Nexia Australia in the Report;

9. Any and all non-public contracts or arrangements which would have rights of termination or which would impose material obligations or penalties on AU1 if Magnolia made the Bid and the condition in paragraph (a) is satisfied; and

10. Any and all other non-public material information which would impact a valuation of The Agency.

(Target’s Statement disclosure)

In its Target’s Statement AU1 specifically addresses:

1. the Listed Documents (including whether there are any documents in each category of the Listed Documents); and

2. whether any of the Listed Documents discloses that any condition other than this condition would be triggered by material contained in in the Listed Documents (or any of them) or by performance of any or all of them.

(d) No prescribed occurrences between Announcement Date and the end of the Offer Period

During the period starting on the Announcement Date and ending at the end of the Offer Period, none of the occurrences listed in section 652C(1) and (2) occurs (each as a separate condition and each condition refreshed and separated each time such an event occurs).

(e) No material transactions

Except for any proposed transaction reasonably full details of which are publicly announced by AU1 before the Announcement Date, none of the following events occurs during the period starting on the Announcement Date and ending at the end of the Offer Period without the written consent of Magnolia:

(i) AU1, or any subsidiary of AU1, acquires, offers to acquire or agrees to acquire one or more companies or assets (or an interest in one or more companies or assets) for an amount in any single transaction of more than A$1 million or an amount in aggregate in any series of transactions of more than A$0.5 million, or makes an announcement about such an acquisition or acquisitions;

(ii) AU1, or any subsidiary of AU1, enters into, offers to enter into or announces that it proposes to enter into any joint venture, partnership or dual listed company structure involving a commitment of greater than A$0.5 million in any single transaction or an amount in aggregate in any series of transactions of more than A$0.25 million, or makes an announcement about such a commitment; or

(iii) AU1, or any subsidiary of AU1, incurs or commits to, or grants to another person a right the exercise of which would involve AU1 or any subsidiary of AU1 incurring or committing to any capital expenditure or liability for one or more related items of greater than A$0.5 million, or makes an announcement about such a commitment.

(f) No material adverse change

During the period starting on the Announcement Date and ending at the end of the Offer Period, no change occurs, is discovered (including where Magnolia becomes aware that information publicly filed is, or is likely to be, incomplete, incorrect or untrue or misleading) or becomes public which has or could

reasonably be expected to have a material adverse effect on the assets, liabilities, financial position, performance, profitability or prospects of AU1 including no material adverse change to the value of the AU1’s group total assets (Rent Roll and Mortgage Book) (Assets). For the avoidance of doubt, the Assets are valued at no less than $27million as described in the ASX Announcement made by AU1 on 29 October 2020.

(g) No material failings in filings

Magnolia does not become aware, during the period starting on the Announcement Date and ending at the end of the Offer Period, that:

(i) any document (including the AGM Documents) filed by or on behalf of AU1 with ASX, ASIC or any other regulator or given to AU1 shareholders contains a statement which is incorrect or misleading in any material particular or from which there is a material omission; or

(ii) there has been an omission by AU1 to give any material information to ASX, ASIC or any other regulator or AU1 shareholders required by the ASX Listing Rules, the Corporations Act or any other applicable law.

(h) No persons exercising rights under certain agreements or instruments

Before the end of the Offer Period, there is no person exercising or purporting to exercise or stating an intention to exercise any rights under any provision of any agreement or other instrument to which AU1 is a party or by or to which AU1 or any of its assets may be bound or be subject, which results, or could result, to an extent to which is material in the context of AU1 taken as a whole, in:

(i) any money borrowed by AU1 being or becoming repayable or being capable of being declared repayable immediately or earlier than the repayment date stated in such agreement or other instrument;

(ii) any such agreement or other such instrument being terminated or modified or any action being taken or arising thereunder;

(iii) the interest of AU1 in any firm, joint venture, trust corporation or other entity (or any arrangements relating to such interest) being terminated or modified; or

(iv) the business of AU1 with any other person being adversely affected.

(i) Conduct of AU1’s business

During the period starting on the Announcement Date and ending at the end of the Offer Period, none of AU1 nor any body corporate which is or becomes a subsidiary of AU1, without the written consent of Magnolia:

(i) declares, or distributes any dividend, bonus or other share of its profits or assets except for a dividend by a wholly-owned subsidiary of AU1;

(ii) alters the rights attached to any of its shares or other securities or proposes to do so;

(iii) makes any change to its constitution or passes any special resolution or proposes to do so;

(iv) gives or agrees to give any encumbrance (including a security interest or mortgage) over any of its assets otherwise than in the ordinary course of business;

(v) increases the aggregate limit of AU1 and its subsidiaries’ bank facility limit, or draws down on that facility or otherwise borrows other than in the ordinary course of the business of AU1 and its subsidiaries taken as a whole;

(vi) releases, discharges or modifies any substantial obligation to it of any person, firm or corporation or agrees to do so;

(vii) appoints any additional director to its board of directors whether to fill a casual vacancy or otherwise;

(viii) enters or agrees to enter into any contract of service or varies or agrees to vary any existing contract of service with any director or manager, enters or agrees to enter into any contract for service or varies or agrees to vary any existing contract for service with any consultant or contractor or other person for the provision of the services of a director or manager or the provision of services the same as or substantially similar to those provided (or that otherwise would be provided) by a director or manager, or pays or agrees to pay any retirement benefit or allowance to any director, manager or other employee or consultant or contractor, or makes or agrees to make any substantial change in the basis or amount of remuneration of any director, manager or other employee or consultant or contractor (except as required by law or provided under any superannuation, provident or retirement scheme as in effect on the Announcement Date);

(ix) conducts its business otherwise than in the ordinary course; or

(x) executes a deed of company arrangement or passes any resolution for liquidation, or has appointed or becomes susceptible to the appointment of an administrator, a receiver, a receiver and manager or a liquidator, or becomes subject to an investigation under the Australian Securities and Investments Commission Act 2001 (Cth) or any corresponding legislation involving a contravention of the Corporations Act by AU1 or a subsidiary of AU1.

(j) Conduct of AU1 Key Personnel

During the period starting on the Announcement Date and ending on the expiry of the Offer Period, any Key Personnel nominated by Magnolia, fail to enter into an agreement to remain in the employ of AU1 for a period of 12 months from the completion of the takeover on terms no less favourable than their current terms of employment.

(k) No break/inducement fees

During the period starting on the Announcement Date and ending at the end of the Offer Period, none of AU1 and any body corporate which is or becomes a subsidiary of AU1, pays or provides or agrees (whether conditionally or contingently) to pay or provide any benefit to any person, or foregoes or otherwise reduces any payment or benefit or agrees to forgo or reduce any payment or benefit to which it would otherwise be entitled, in connection with any person making or agreeing to participate in, or enter into negotiations concerning: 6

(i) a takeover bid for AU1 or any body corporate which is or becomes a subsidiary of AU1; or

(ii) any other proposal to acquire any interest (whether equitable, legal, beneficial or economic) in shares in, or assets of, AU1 or any body corporate which is or becomes a subsidiary of AU1, or to operate AU1 as a single economic entity with another body corporate;

except for a payment, benefit or agreement:

(iii) for providing professional advisory services to AU1;

(iv) which is approved in writing by Magnolia;

(v) which is approved by a resolution passed at a general meeting of AU1; or

(vi) which is made to, provided to, owed by or made with Magnolia.

(l) No force majeure event

During the period starting on the Announcement Date and ending at the end of the Offer Period, no act of war (whether declared or not) or terrorism, mobilisation of armed forces, civil commotion or labour disturbance, fire or natural disaster, infectious disease or other event beyond the control of AU1 or the relevant subsidiary occurs which has an adverse effect or is likely to have an adverse effect on the assets, liabilities, financial position, performance, profitability or prospects of AU1 and its subsidiaries taken as a whole.

(m) Non-existence of certain rights

During the period starting on the Announcement Date and ending at the end of the Offer Period, no person has any right (whether subject to conditions or not) as a result of Magnolia acquiring AU1 shares:

(i) to acquire, or require AU1 or a subsidiary of AU1 to dispose of, or offer to dispose of, any material asset of AU1 or a subsidiary of AU1; or

(ii) to terminate or vary any material agreement with AU1 or a subsidiary of AU1.

(n) No superior alternative proposal

No alternative proposal to Magnolia’s takeover bid is announced during the Offer Period that:

(i) is recommended by any AU1 director; or

(ii) offers consideration that is equal or higher than the consideration offered under the Bid valued, as far as practicable, in accordance with the principles applying under section 621(3) of the Corporations Act and ASIC Regulatory Guide 9: Takeover bids.

(o) Market movement (10% fall)

During the period starting on the Announcement Date and ending at the end of the Offer Period:

(i) The All Ordinaries Index is 10% or more below its level as at the close of trading immediately preceding the Announcement Date; or

(ii) The S&P/ASX 200 Index is 10% or more below its level as at the close of trading immediately preceding the Announcement Date;

for a duration of longer than 3 consecutive ASX trading days.

(p) No material litigation

During the period starting on the Announcement Date and ending at the end of the Offer Period:

(i) none of AU1 and any body corporate which is or becomes a subsidiary of AU1 has threatened or commenced against it any material claims or proceedings in any court or tribunal (and a claim or proceeding is taken to be material if it may reasonably result in a judgment of A$100,000 or more), other than that which has been fully and fairly publicly disclosed to ASX prior to the Announcement Date;

(ii) the consideration under the Bid is required to be increased or Magnolia or an associate of Magnolia is required or reasonably likely to be required to pay any amount to any one or more AU1 shareholders in connection with the Bid as a result of:

(A) any litigation that is commenced, is threatened to be commenced, announced or is made known to AU1 (whether or not becoming public); or

(B) any preliminary or final decision or order of any regulator or other government agency, other than as a result of Magnolia publicly undertaking to increase the consideration under the Bid or Magnolia lodging a notice of variation under section 650D of the Corporations Act relating to an increase of the consideration under the Bid; or

(iii) the aggregate liability of AU1 and any body corporate which is a subsidiary of AU1 under or in connection with any existing claim or proceeding in any court or tribunal is or is likely to be materially more than the provision made for the claim or proceeding in AU1’s last audited annual financial statements or, if no provision has been made, is or likely to be more than A$100,000.

SCHEDULE 2: SUPPLEMENTARY INDEPENDENT EXPERT’S REPORT

The Agency Group Australia Ltd Proposed potential issue of fully paid ordinary shares to Peters Investments Pty Ltd and its associates upon conversion of convertible notes and/or upon exercise of options.

Supplementary Independent Expert’s Report and Financial Services Guide

10 December 2020

In our opinion the Proposed Transaction is not fair but reasonable

FINANCIAL SERVICES GUIDE

Dated: 10 December 2020

What is a Financial Services Guide (“FSG”)?

This FSG is designed to help you decide whether to use any of the general financial product advice provided by Nexia Perth Corporate Finance Pty Ltd ABN 84 009 342 661 (“NPCF”), Australian Financial Services Licence (“AFSL”) Number 289358.

This FSG includes information about:  NPCF and how they can be contacted;  the services NPCF is authorised to provide;  how NPCF are paid;  any relevant associations or relationships of NPCF;  how complaints are dealt with as well as information about internal and external dispute resolution systems, and how you can access them; and  the compensation arrangements that NPCF has in place.

Where you have engaged NPCF we act on your behalf when providing financial services. Where you have not engaged NPCF, NPCF acts on behalf of our client when providing these financial services and are required to provide you with a FSG because you receive a report or other financial services from NPCF.

Financial Services that NPCF is Authorised to Provide

NPCF holds an AFSL authorising it to carry on a financial services business to provide financial product advice for securities and deal in a financial product by arranging for another person to issue, apply for, acquire, vary or dispose of a financial product in respect of securities to retail and wholesale clients.

We provide financial product advice when engaged to prepare a report in relation to a transaction relating to one of these types of financial products.

NPCF’s Responsibility to You

NPCF has been engaged by the directors of The Agency Group Australia Ltd (“AU1”, “The Agency Group” or the “Client”) to provide general financial product advice in the form of an independent expert’s report to be included in the Notice of Annual General Meeting (“NoM” or “Document”) sent to The Agency Group shareholders on or about 23 November 2020, and further updated in this supplementary report to be included in the addendum to the NoM sent to The Agency Group shareholders on or about 10 December 2020 (“Report”).

You have not engaged NPCF directly but have received a copy of the Report because you have been provided with a copy of the NoM. NPCF or the employees of NPCF are not acting for any person other than the Client.

NPCF is responsible and accountable to you for ensuring that there is a reasonable basis for the conclusions in the Report.

General Advice

As NPCF has been engaged by the Client, the Report only contains general advice as it has been prepared without taking into account your personal objectives, financial situation or needs.

You should consider the appropriateness of the general advice in the Report having regard to your circumstances before you act on the general advice contained in the Report.

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You should also consider the other parts of the Document before making any decision in relation to the Proposed Transaction.

Fees NPCF May Receive

NPCF charges fees for preparing Reports. These fees will usually be agreed with, and paid by the Client. Fees are agreed on either a fixed fee or a time cost basis. In this instance, the Client has agreed to pay NPCF approximately $20,000 (excluding GST and out of pocket expenses) for preparing the Report. NPCF and its officers, representatives, related entities and associates will not receive any other fee or benefit in connection with the provision of this Report.

Referrals

NPCF does not pay commissions or provide any other benefits to any person for referring customers to them in connection with a Report.

Associations and Relationships

Through a variety of corporate and trust structures NPCF is controlled by and operates as part of Nexia Perth Pty Ltd (or the “Nexia Perth Entity”). NPCF’s directors and authorised representative may be directors in the Nexia Perth Entity. Mrs Muranda Janse Van Nieuwenhuizen, authorised representative of NPCF and director in the Nexia Perth Entity, has prepared this Report. The financial product advice in the Report is provided by NPCF and not by the Nexia Perth Entity.

From time to time NPCF, the Nexia Perth Entity and related entities (“Nexia Entities”) may provide professional services, including audit, tax and financial advisory services, to companies and issuers of financial products in the ordinary course of their businesses.

Over the past three years $78,550 (excluding GST) in professional fees has been received from the Client and/or the Client’s related parties in relation to Independent Expert Reports and other valuation related services.

No individual involved in the preparation of this Report holds a substantial interest in, or is a substantial creditor of, the Client or has other material financial interests in the Proposed Transaction.

Complaints Resolution

If you have a complaint, please let NPCF know. Formal complaints should be sent in writing to:

Nexia Perth Corporate Finance Pty Ltd Compliance Officer GPO Box 2570 Perth WA 6001

If you have difficulty in putting your complaint in writing, please telephone the Compliance Officer, Mr Henko Vos, on +61 8 9463 2463 and he will assist you in documenting your complaint.

Written complaints are recorded, acknowledged within 5 days and investigated. As soon as practical, and not more than 45 days after receiving the written complaint, the response to your complaint will be advised in writing.

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External Complaints Resolution Process

If NPCF cannot resolve your complaint to your satisfaction within 45 days, you can refer the matter to the Australian Financial Complaints Authority (“AFCA”). The AFCA is an independent company that has been established to provide free advice and assistance to consumers to help in resolving complaints relating to the financial services industry.

Further details about the AFCA is available at the AFCA website https://www.afca.org.au/ or by contacting them directly at:

Australian Financial Complaints Authority Limited GPO Box 3, Melbourne, Victoria 3001 Telephone: 1300 56 55 62 Facsimile (03) 9613 6399 Email: info@afca.org.au

The Australian Securities and Investments Commission also has a free call info line on 1300 300 630 which you may use to obtain information about your rights.

Compensation Arrangements

NPCF has professional indemnity insurance cover as required by the Corporations Act 2001 (Cth) (“Corporations Act”).

Contact Details

You may contact NPCF at:

Nexia Perth Corporate Finance Pty Ltd GPO Box 2570 PERTH WA 6001

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10 December 2020

The Directors The Agency Group Australia Ltd 68 Milligan Street PERTH WA 6000

Dear Sirs,

Independent Expert’s Report on the Proposed Potential Issue of Fully Paid Ordinary Shares to Peters Investments Pty Ltd and its Associates Upon the Conversion of Convertible Notes and/or Upon the Exercise of Options

1. BACKGROUND AND OUTLINE OF THE PROPOSED TRANSACTION

1.1. General Background

On 15 May 2020, The Agency Group Australia Ltd (“AU1”, “The Agency Group” or the “Company”) issued $1 million of convertible notes (“May 2020 Convertible Notes”) and 2 million options (“AU1 Options”) in the Company (“May 2020 Options”) to Peters Investments Pty Ltd (“Peters Investments”).

On 29 October 2020, AU1 announced that the Company and its subsidiaries (“the Group”) had secured a long-term $11 million funding package (“Funding Package”) comprising the following:  “Convertible Notes”, which is made up of: o $5 million in new convertible notes (“October 2020 Convertible Notes”), and 12 million AU1 Options (“October 2020 Options”) to be issued to Peters Investments; and o the existing $1 million May 2020 Convertible Notes previously issued to Peters Investments, with their terms to be amended to be in line with the terms of the October 2020 Convertible Notes (“Amended May 2020 Convertible Notes”); and  an extended $5 million primary secured debt facility from Macquarie Bank Limited (“Macquarie Bank”), down from $12 million (“Senior Debt”) and subject to shareholder approval of the Convertible Notes, with final documentation and terms to be finalised.

The Macquarie Bank loan was originally due for repayment on 30 September 2020, however, the Company effectuated an option to renew for a further 3 months to 31 December 2020. Subsequently, a Deed of Forbearance was entered into which expires on 30 December 2020 (“Deed of Forbearance”).

There is currently a joint and several guarantee that has been provided to Macquarie Bank in relation to the Senior Debt by five shareholders (“Guarantors”), of which one is a director of the Company (refer to Section 1.3 and note 5b of section 5.6.2).

Nexia Perth Corporate Finance Pty Ltd (“NPCF”) has been requested by the directors of the Company to prepare an Independent Expert’s Report (“Report”) in relation to the potential issue of fully paid ordinary shares in AU1 (“AU1 Shares”) to Peters Investments if the Convertible Notes are converted and/or if the May 2020 Options and the October 2020 Options (together referred to as the “Peters Investments Options”) are exercised (“Proposed Transaction”).

The Proposed Transaction is subject to shareholder approval and is the subject of Resolution 6 of the Notice of Annual General Meeting (“NoM” or “Document”) for the Annual General Meeting (“AGM”) which will be held on or around 23 December 2020. If the Proposed Transaction is approved, Peters Investments’ voting power in the Company may increase from 0% to 45.00%, assuming the Convertible Notes are converted immediately at the date of the Report. If the Convertible Notes are converted closer to their maturity date, Peters Investments’ voting power in the Company may increase further to 49.53% (as outlined in section 1.4).

Further information on the May 2020 Convertible Notes and the May 2020 Options (together referred to as the “May 2020 Convertible Notes and Options”), and the October 2020 Convertible Notes and October 2020 Options (together referred to as the “October 2020 Convertible Notes and Options”), are outlined below in sections 1.2 and 1.3.

Subsequent to the issuance of our report dated 23 November 2020, on 8 December 2020, The Agency Group announced that it had received a letter from Magnolia Equities III Pty Limited on 4 December 2020, stating that Magnolia Equities III Pty Limited, or an entity nominated by it (“Magnolia”) intends to make a takeover bid for 100% of the fully paid ordinary shares in The Agency Group at $0.04 per Share (the “Proposal“). The Proposal states that the proposed bid, and Magnolia’s obligation to make the bid, are subject to a number of conditions, including, amongst others, 90% minimum acceptance, no approval of the resolutions 3 to 7 in the NoM, the provision of material information to Magnolia, no superior alternative proposal, market movement (10% fall) and no material litigation. Also, an indicative timetable in relation to the Proposal contemplates the takeover bid opening late January 2021 and closing (unless extended) late February / early March 2021.

Also, on 8 December 2020, The Agency Group management responded to the letter from Magnolia advising shareholders to take no action in relation to the Proposal or any document received from Magnolia in relation to the Proposal until they receive the Directors’ formal recommendation.

1.2. May 2020 Convertible Notes and Options

As indicated in section 1.1 the Funding Package includes the amendment of the terms of the $1,000,000 May 2020 Convertible Notes, so that these are in line with the terms for the proposed October 2020 Convertible Notes (as outlined in the table in section 1.3).

Full details of the amendment of the terms are detailed in the NoM, however, a summary of the material amendments relevant to our Report are set out below:

Terms May 2020 Convertible Notes Amended May 2020 Convertible Notes Maturity The earlier of 31 December 2020 or when 31 March 2023. date the Senior Debt has been repaid, unless otherwise agreed. Interest 9% per annum, calculated from 15 May The higher of 8% per annum and the interest 2020. rate of the remaining Senior Debt, to be calculated from 15 May 2020 to the Maturity Date, and may be satisfied in cash or AU1 Shares upon agreement by the Company and Peters Investments. Conversion The lower of $0.04 and a 20% discount The lower of $0.027 and the issue price of price to the 15-day volume weighted average AU1 Shares offered under any subsequent price (“VWAP”) prior to the conversion capital raising to raise over $1 million date. completed on or before the Maturity Date.

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Terms May 2020 Convertible Notes Amended May 2020 Convertible Notes Suspension (None) Upon the announcement of a trade sale, of scheme of arrangement or takeover (each, a Conversion “Takeover Event”) by the Company, to the Right upon extent required by the ASX Listing Rules Takeover and/or the Corporations Act, Peters Event Investments’ right to convert the convertible note will be suspended until the earlier of the completion or the termination of the Takeover Event. Source: Draft NoM and Company announcement on 15 May 2020.

The amendment of the terms as detailed above is subject to shareholder approval, being the subject of Resolution 5 of the NoM. For the purposes of this Report, it has been assumed that Resolution 5 will be approved by AU1’s shareholders.

The funds for the May 2020 Convertible Notes is currently held in trust (see section 5.6.2, notes 2 and 5c), pending shareholder approval of the Proposed Transaction. If the Proposed Transaction does not proceed, the funds from the May 2020 Convertible Notes will not be released to AU1. The requirement to repay Peters Investments if the Proposed Transaction does not proceed (as detailed in section 1.3) will also apply to the terms of the Amended May 2020 Convertible Notes. As such, if the Proposed Transaction does not proceed, the Company will also be required to repay to Peters Investments, in cash, any fees and interest accrued on the May 2020 Convertible Notes up to the repayment date. For the purposes of the Report, we have estimated the interest accrued on the Amended May 2020 Convertible Notes to be $38,370 (see section 9.1.1).

The May 2020 Options that were issued with the May 2020 Convertible Notes are each exercisable at the lower of $0.04 or at a 20% discount to a 15-day VWAP prior to the date of issue of the options, and expire 2 years from the date of issue. The options were issued on 25 May 2020, and on that date, AU1 Shares had a VWAP of $0.042285 and a discounted VWAP of $0.033828. As such, the May 2020 Options are exercisable at $0.033828 each and expire on 25 May 2022.

1.3. October 2020 Convertible Notes and Options

Full details of the terms of the agreement related to the October 2020 Convertible Notes (“October 2020 Convertible Notes Agreement”) is provided in the NoM, however, a summary of the material terms of the October 2020 Convertible Notes Agreement are set out below:

Terms October 2020 Convertible Notes Principal $5,000,000 (excluding Facilitation Fee). Maturity Date 31 March 2023. Facilitation $150,000, which is to be capitalised and added to the face value of the October 2020 Fee Convertible Notes. Interest The higher of 8% per annum and the interest rate of the remaining Senior Debt, to be calculated from 1 October 2020 to the Maturity Date, and may be satisfied in cash or AU1 Shares upon agreement by the Company and Peters Investments. Conversion The lower of $0.027 and the issue price of AU1 Shares offered under any subsequent Price capital raising to raise over $1 million completed on or before the Maturity Date. Suspension of Upon the announcement of a Takeover Event by the Company, to the extent required Conversion by the ASX Listing Rules and/or the Corporations Act, Peters Investments’ right to Right upon convert the convertible note will be suspended until the earlier of the completion or the Takeover termination of the Takeover Event. Event Source: Draft NoM and October 2020 Convertible Note Agreement.

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Also indicated in the NoM, on the basis that the funds received from the October 2020 Convertible Notes are intended to be applied towards reducing the Senior Debt, there will ultimately be a corresponding reduction in the joint and several guarantee provided by the Guarantors.

The funds for the October 2020 Convertible Notes was advanced by Peters Investments at the beginning of October 2020, and is currently held in trust pending shareholder approval of the Proposed Transaction. If the Proposed Transaction does not proceed, the funds from the October 2020 Convertible Notes will not be released to AU1.

In addition, under the terms of the October 2020 Convertible Notes Agreement, if the Proposed Transaction is not approved, the Company is required to repay to Peters Investments, in cash, the facilitation fee (being $150,000), as well as any other fees and interest accrued on the October 2020 Convertible Notes up to the repayment date. For the purposes of the Report, we have estimated the interest accrued on the October 2020 Convertible Notes to be $38,928 (see section 9.1.1).

The October 2020 Options, which is part of the October 2020 Convertible Notes Agreement, is made up of:  8,829,559 AU1 Options, which were issued on 4 November 2020 (“Upfront Options”); and  the remainder, being 3,170,441 AU1 Options (“Remainder Options”), which have not yet been issued (as detailed in the NoM).

Under the terms of the October 2020 Convertible Note Agreement, if the Remainder Options are not approved by AU1’s shareholders at the AGM, the Company is also required to pay Peters Investments an amount equal to the Black-Scholes valuation amount (as defined) of the Remainder Options (valued as at the time of the AGM), within 5 business days of the AGM date. For the purposes of the Report, we have estimated the amount repayable on this basis to be approximately $89,475.

The October 2020 Options are exercisable at $0.027 each and will expire on 31 March 2023.

1.4. Potential Impact of the Proposed Transaction on the Company’s Shareholdings At the date of this Report, Peters Investments holds a 0% interest in the issued shares of the Company, as well as the 2,000,000 May 2020 Options and the 8,829,559 Upfront Options. If the Proposed Transaction goes ahead, Peters Investments will have the right to:  convert the amount of the Convertible Notes, being: o the total principal of $6,150,000 (being $1 million from the May 2020 Convertible Notes, $5 million from the October 2020 Convertible Notes, and the $150,000 facilitation fee); and o the accrued interest on the Convertible Notes, estimated at $77,299, assuming an interest rate of 8% (see section 9.1.1).  exercise the 2,000,000 May 2020 Options; and  exercise a total of 12,000,000 October 2020 Options (being the 8,829,559 Upfront Options and the 3,170,441 Remainder Options).

As an indication of the likely impact that the conversion of the Convertible Notes and the potential exercise of the Peters Investments Options may have on The Agency Group’s existing shareholders as a collective group, the table below summarises the position if the Convertible Notes are converted at $0.027 per share. The analysis also assumes that the Company issues no other shares between the date of this Report and the

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date of conversion and/or exercise and that Peters Investments makes no change to its equity interest in the Company other than conversion of the Convertible Notes and the exercise of the Peters Investments Options.

Existing Peters Total Shares Shareholders Investments Current number of AU1 Shares 298,954,431 298,954,431 – Current shareholding 100.00% 100.00% 0.00% Potential issue of AU1 Shares from conversion of face value of Convertible Notes (including facilitation 227,777,778 – 227,777,778 fee) Potential issue of AU1 Shares from conversion of 2,862,912 – 2,862,912 interest accrued on Convertible Notes Potential issue of AU1 Shares from exercise of 2,000,000 – 2,000,000 May 2020 Options Potential issue of AU1 Shares from exercise of 12,000,000 – 12,000,000 October 2020 Options Number of AU1 Shares Outstanding after the 543,595,121 298,954,431 244,640,690 Proposed Transaction Potential Shareholding after Conversion and 100.00% 55.00% 45.00% Exercise Source: Nexia analysis.

The above analysis shows that ‘all other things being equal’, on the conversion of the Convertible Notes and the exercise of the Peters Investments Options, Peters Investments’ interest in AU1 would increase from 0% to 45.00% and the existing shareholders’ collective interest would decrease from 100.00% to 55.00%.

The above analysis assumes that the Convertible Notes are converted at the date of the Report. As an illustrative example, the following table summarises the position if the Convertible Notes are not converted until just before their maturity date (31 March 2023), and assuming no repayments are made until that date.

Existing Peters Total Shares Shareholders Investments Current number of AU1 Shares 298,954,431 298,954,431 – Current shareholding 100.00% 100.00% 0.00% Potential issue of AU1 Shares from conversion of face value of Convertible Notes (including facilitation 227,777,778 – 227,777,778 fee) Potential issue of AU1 Shares from conversion of 51,628,480 – 51,628,480 interest accrued on Convertible Notes Potential issue of AU1 Shares from exercise of 2,000,000 – 2,000,000 May 2020 Options Potential issue of AU1 Shares from exercise of 12,000,000 – 12,000,000 October 2020 Options Number of AU1 Shares Outstanding after the 592,360,689 298,954,431 293,406,258 Proposed Transaction Potential Shareholding after Conversion and 100.00% 50.47% 49.53% Exercise Source: Nexia analysis.

This indicative analysis indicates that the additional shares to be issued due to the Convertible Notes being converted just before maturity will increase Peters Investments’ interest in the Company from 0% to 49.53%. Consequently, the existing shareholders’ collective shareholding in AU1 would reduce from 100.00% to 50.47%.

The above analyses also do not take into account any additional AU1 Shares issued as a result of the following:  an increase of the interest on the Convertible Notes resulting from an increase of the Senior Debt interest beyond 8%; and

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 a reduction in the conversion price of the Convertible Notes due to a subsequent capital raising completed by the Company (as detailed in section 1.3) before the maturity date of the Convertible Notes.

Should one or more of the above events occur, this could result in a further increase in Peters Investments’ interest in the Company and further dilute the holdings of the existing shareholders.

2. PURPOSE OF REPORT

The purpose of this Report is to advise the non-associated shareholders of The Agency Group (i.e. those not associated with Peters Investments, or “Non-Associated Shareholders”) on the fairness and reasonableness of the Proposed Transaction.

Under section 606 of the Corporations Act 2001 (Cth) (“Corporations Act”), a transaction that would result in an entity and its associates increasing their voting power in an entity from: • 20% or below to greater than 20%; or • a position above 20% and below 90% is prohibited without making a takeover offer to all shareholders unless an exemption applies.

Item 7 of section 611 of the Corporations Act provides an exemption from the above if the transaction is approved by shareholders in a general meeting.

Peters Investments does not currently hold any AU1 Shares and therefore has 0% voting power in the Company at present. The Proposed Transaction would result in Peters Investments’ entitlements to AU1 Shares and resulting voting power in the Company to be greater than 20% (being 45.00 and potentially up to 49.53%, as illustrated in section 1.4).

As Peters Investments’ voting power in the Company will increase from 0% to a position of greater than 20%, the Proposed Transaction requires shareholder approval (being the subject of Resolution 6 of the NoM issued on 23 November 2020 to The Agency Group’s shareholders).

The Australian Securities and Investments Commission (“ASIC”) has issued Regulatory Guide 74: Acquisitions approved by members (“RG 74”) and Regulatory Guide 111: Content of expert reports (“RG 111”) which set out the material disclosure requirements to shareholders when seeking their approval under item 7 of section 611 of the Corporations Act. As part of the disclosure requirements, ASIC requires a detailed analysis of the transaction that complies with RG 111, which can either be undertaken by the directors, if they believe they have sufficient skill and expertise, or by an independent expert. ASIC also requires that the independent expert’s report comply with ASIC’s issued Regulatory Guide 112: Independence of experts (“RG 112”).

Consistent with the guidance in RG 74, RG 111 and RG 112 the Directors of The Agency Group have requested NPCF to prepare an independent expert’s report, the purpose of which is to provide an independent opinion as to whether or not the Proposed Transaction is fair and reasonable to the Non-Associated Shareholders.

The independent expert’s report was updated in this supplementary report in accordance with guidance in RG 111 (Changes in circumstances) following the announcement of the Proposal from Magnolia.

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3. SUMMARY AND OPINION

This section is a summary of our opinion and cannot substitute for a complete reading of this Report. Our opinion is based solely on information available as at the date of this Report.

The principal factors that we have considered in forming our opinion are summarised below.

3.1 Assessment of Fairness

As discussed in section 4, in determining whether the Proposed Transaction is fair to the Non-Associated Shareholders, we have compared the fair value of a share in AU1 on a control basis prior to the Proposed Transaction to the fair value of a share in AU1 on a minority basis after the Proposed Transaction.

This is summarised below:

Low Preferred High Fair value of an AU1 Share on a control basis $0.044 $0.055 $0.067 before the Proposed Transaction Fair value of an AU1 Share on a minority basis $0.028 $0.033 $0.039 after the Proposed Transaction Source: Nexia analysis.

The above values indicate that, in the absence of any other relevant information, the Proposed Transaction is not fair to the Non-Associated Shareholders.

Therefore, we have concluded that the Proposed Transaction is not fair.

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3.2 Assessment of Reasonableness

In accordance with RG 111, a control transaction is reasonable if:  the transaction is fair; or  despite not being fair, but considering other significant factors, there are sufficient reasons for security holders to accept the offer in the absence of a higher bid before the close of an offer.

In forming our opinion we have considered the following relevant factors (also see section 11):

Advantages Disadvantages

 The Proposed Transaction will significantly  Peters Investments will hold a significant reduce the risk of AU1 defaulting on its loan interest in AU1 (45.00% or up to 49.53%) from Macquarie Bank; which could result in a change of control, and severely dilute existing shareholders’ collective  The Proposed Transaction may be AU1’s only interest in AU1; and option for funding prior to the end date of the Macquarie Bank loan Deed of Forbearance;  The Proposed Transaction could reduce the liquidity of AU1 Shares.  The terms of the Convertible Notes allow the Company to reserve its cash balances in the short-term;  The Proposed Transaction will allow AU1 to continue to operate and achieve its strategic goals and business objectives;  The conversion of the Convertible Notes will improve AU1’s solvency in the long-term; and  The exercise of the Peters Investments Options will enable the Company to raise an additional $391,656.

As detailed in section 1.1, on 8 December 2020 the Company announced that it had received the Proposal from Magnolia. The Proposal contains a number of important considerations, including various conditions to be met and an indicative timetable contemplating the takeover bid opening late January 2021 and closing (unless extended) late February / early March 2021.

As noted in section 1.1, the Macquarie Bank loan is subject to a Deed of Forbearance which has an end date on 30 December 2020. We note that, given the Proposal’s indicative timetable, in the absence of an extension to the Macquarie Bank loan maturity, there is a risk that the Company will default on the Macquarie Bank loan, which could lead to Macquarie Bank exercising its rights to appoint an administrator to wind-up the assets of the Group.

Beyond the Funding Package (as detailed in section 1.1, including the Convertible Notes issued to Peters Investments which are subject to shareholder approval under the Proposed Transaction) and the Proposal (as discussed above), the Directors have advised us that they do not currently have any other alternatives.

Therefore, if the Proposed Transaction is not approved, and, as a result, the Funding Package is not secured, the Company will need to raise additional near term funds or find alternative sources of funding to repay the Macquarie Bank loan by 30 December 2020, being the Deed of Forbearance end date.

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In addition, if the Proposed Transaction does not proceed, the funds from the Convertible Notes (currently held in trust) will not be released to AU1, and approximately $316,774 (as estimated on the date of the Report) would need to be repaid to Peters Investments in cash. This amount includes the facilitation fee, interest accrued on the Convertible Notes, and the Black-Scholes valuation amount of the Remainder Options. The portion relating to the Remainder Options would need to be repaid within 5 business days of the AGM. This will also increase the risk of the Group defaulting on its loan with Macquarie Bank.

Although the Proposed Transaction is not fair, taking into account other significant factors (including the consideration of the matters above and in the absence of any other higher offers for current AU1 Shares), we have concluded that the Proposed Transaction is reasonable to the Non-Associated Shareholders.

3.3 Opinion

Accordingly, in our opinion, the Proposed Transaction is not fair but reasonable to the Non- Associated Shareholders.

The ultimate decision on whether to approve the Proposed Transaction should be based on shareholders’ own assessment of their circumstances. We strongly recommend that shareholders consult their own professional advisers, carefully read all relevant documentation provided, including the NoM, and consider their own specific circumstances before voting in favour of or against the Proposed Transaction.

Yours faithfully

Nexia Perth Corporate Finance Pty Ltd (AFSL 289358)

Muranda Janse van Nieuwenhuizen CA RCA Authorised Representative

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STRUCTURE OF REPORT

Our Report is set out under the following headings:

3. SUMMARY AND OPINION ……………………………………………………………………………………………..11 4. BASIS OF EVALUATION ………………………………………………………………………………………………..15 5. OVERVIEW OF THE AGENCY GROUP ……………………………………………………………………………….16 6. INDUSTRY ANALYSIS AND MARKET OUTLOOK ………………………………………………………………….35 7. VALUATION METHODOLOGIES ………………………………………………………………………………………38 8. VALUE OF THE AGENCY GROUP ON A CONTROL BASIS BEFORE THE PROPOSED TRANSACTION …40 9. VALUE OF THE AGENCY GROUP ON A MINORITY BASIS AFTER THE PROPOSED TRANSACTION ….44 10. ASSESSMENT OF FAIRNESS ………………………………………………………………………………………….47 11. ASSESSMENT OF REASONABLENESS……………………………………………………………………………….47 12. OPINION …………………………………………………………………………………………………………………..50

APPENDICES

APPENDIX A – GLOSSARY……………………………………………………………………………………………………51 APPENDIX B – SOURCES OF INFORMATION ……………………………………………………………………………54 APPENDIX C – STATEMENT OF DECLARATION & QUALIFICATIONS ……………………………………………..55 APPENDIX D – VALUATION METHODOLOGIES …………………………………………………………………………57

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4. BASIS OF EVALUATION

RG 74 and RG 111 provide guidance as to matters that should be considered in determining whether a transaction is fair and reasonable in a range of circumstances.

RG 74 and RG 111 state that in deciding an appropriate form of analysis, the expert needs to consider that the main purpose of the Report is to deal with the concerns that could reasonable be anticipated by those persons affected by the transaction. An expert should focus on the purpose and outcome of the transaction; that is the substance of the transaction, rather than the legal mechanism used to effect the transaction.

RG 111 requires analysis of a transaction under two distinct criteria being:  is the offer ‘fair’?; and  is it reasonable?

That is the opinion of fair and reasonable is not considered as a compound phrase.

In determining what is fair and reasonable for a control transaction, RG 111 states that:  an offer is fair if the value of the offer price or consideration is equal to or greater than the value of the securities the subject of the offer. This comparison should be made o assuming a knowledgeable and willing, but not anxious, buyer and a knowledgeable and willing, but not anxious, seller acting at arm’s length; and o assuming a 100% ownership of the target and irrespective of whether consideration is cash or scrip; and  an offer is reasonable if it is fair, or if the offer is not fair, the expert believes that there are sufficient reasons for security holders to accept the offer in the absence of a higher bid before the close of an offer.

When considering the value of the securities subject of the offer in a control transaction, it is inappropriate for the expert to apply a discount on the basis that the shares being acquired represent a minority or portfolio interest and so the expert should consider this value inclusive of a control premium.

For the purpose of considering whether or not the Proposed Transaction is fair to the Non-Associated Shareholders, we have compared the fair value of a share in AU1 on a control basis prior to the Proposed Transaction to the fair value of a share in AU1 on a minority basis after the Proposed Transaction.

In our assessment of the reasonableness of the Proposed Transaction, our consideration has included the following matters:  Peters Investments’ pre-existing voting power in securities in AU1;  other significant security holding blocks in AU1;  the liquidity of the market in AU1’s securities;  any special value of AU1 to Peters Investments, such the potential to write-off outstanding loans from AU1, etc.;  the likely market price if the Proposed Transaction does not proceed;  the value to an alternate bidder and the likelihood of an alternative offer being made;  other significant matters set out in section 11.

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4.1 Individual Shareholders’ Circumstances

The ultimate decision whether to approve the Proposed Transaction should be based on each shareholder’s assessment of the Proposed Transaction, including their own risk profile, liquidity preference, tax position and expectations as to value and future market conditions. If in doubt about the Proposed Transaction or matters dealt with in this Report, shareholders should seek independent professional advice.

4.2 Limitations on Reliance on Information

The documents and information relied on for the purposes of this Report are set out in Appendix B. We have considered and relied upon this information and believe that the information provided is reliable, complete and not misleading and we have no reason to believe that documents and material facts have been withheld. The information provided was evaluated through analysis, enquiry and review for the purpose of forming an opinion as to whether the Proposed Transaction is fair and reasonable to the shareholders. However, we do not warrant that our enquiries have identified or verified all of the matters which an audit or extensive examination might disclose.

We understand the accounting and other financial information that was provided to us has been prepared in accordance with generally accepted accounting principles.

An important part of the information used in forming an opinion of the kind expressed in this Report is the opinions and judgement of Directors and management. This type of information has also been evaluated through analysis, enquiry and review to the extent practical. However, it must be recognised that such information is not always capable of external verification or validation.

NPCF are not the auditors of The Agency Group. We have analysed and reviewed information provided by the Directors and management of The Agency Group and made further enquiries where appropriate. Preparation of this Report does not imply that we have in any way audited the accounts or records of The Agency Group.

In forming our opinion we have assumed:  matters such as title, compliance with laws and regulations and contracts in place are in good standing and will remain so and that there are no material legal proceedings, other than as publicly disclosed;  the information set out in the NoM to be sent to shareholders is complete, accurate and fairly represented in all material respects; and  the publicly available information relied upon by NPCF in its analysis was accurate and not misleading.

This Report has been prepared after taking into consideration the current economic and market climate. We take no responsibility for events occurring after the date of this Report which may impact upon this Report or which may impact upon the assumptions referred to in the Report.

5. OVERVIEW OF THE AGENCY GROUP

5.1 Corporate History

The Agency Group (previously Ausnet Financial Services Ltd, or “Ausnet”) is a public listed company headquartered in Perth, Australia (ASX code: AU1).

Ausnet originally commenced operating as a real estate agency in Western Australia in 1996 and completed a reverse acquisition of Namibian Copper Ltd to become listed on the ASX on 28 December 2016. The Company was renamed from Ausnet Financial Services Ltd to The Agency Group Australia Ltd on 12 December 2017.

Since the Company’s renaming on 12 December 2017, The Agency Group has acquired the assets of several companies including those of Sell Lease Property Pty Ltd, Value Finance Pty Ltd and Complete Settlements Pty Ltd (on 21 February 2018) and Inglewood Estate Agency (on 12 June 2018).

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On 11 January 2019, the Company also completed the acquisition of Top Level Real Estate (“TLRE”) and acquired the residential sales and management division of The Vicus Property Group, taking the total number of properties under the Company’s management to 4,200.

Other than The Agency Group’s head office in Western Australia, it also has 6 offices in New South Wales and two offices in Victoria.

The Agency Group’s current group structure includes the following entities:

Source: Management information.

* At the date of the Report, The Agency Property Management WA Pty Ltd (“TAPM”) is no longer part of The Agency Group’s current group structure as this entity was sold to Managex Funds Management Pty Ltd (“Managex”). See section 5.3 for further details.

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5.2 Business Activities and Operations

The Agency Group and its subsidiaries (the “Group”) is a real estate group that provides real estate services, mortgage broking, settlement services, property management and project marketing services to the real estate sectors in Western Australia, New South Wales, Queensland and Victoria.

The Agency as a brand entered the market in 2017, aiming to disrupt the market with its innovative structure. The Group has been on a rapid growth trajectory growing from $9.57 million revenue during the year ended 30 June 2017 (“FY 2017”) to $28.5 million for the year ended 30 June 2019 (“FY 2019”). The growth was achieved organically and via a number of acquisitions, including the acquisition of Top Level Real Estate (“TLRE”) in January 2019. The growth from FY 2019 to the following year was even more significant, increasing to $42.9 million for the year ended 30 June 2020 (“FY 2020”). This was due to an increase in the number and value of property sales during the year, driven by growth in combined gross commission income from 3,153 sales and $2.9 billion worth of property sold across the Group.

The Group has three main operating divisions, including property sales, property management and ancillary services, as follows:

5.2.1 Property Sales This division operates an agent recruitment model, conducting sales of residential properties on behalf of property vendors under The Agency and the Sell Lease Property (“SLP”) brands. The Group has grown from 8 agents in January 2017 to its National Real Estate network of 281 agents operating under The Agency and SLP brands as at September 2020. For September 2020, the Group had listings with an estimated value of $420.6 million and achieved 422 exchanges for the month.

5.2.2 Property Management This division manages residential and commercial properties on behalf of property owners. The division operates an agent incentive model and operates under The Agency brand, growing from no properties under management in January 2017 to 4,838 as at 30 June 2020. The Group recently sold its West Coast rent roll business and entered into a strategic partnership with Managex. See section 5.3 for further details. As at September 2020 (and after the sale of the Group’s west coast rent roll), the Group had the following portfolio of properties under management: Portfolio Properties Annual Under Management Management Fees New South Wales 3,457 $5,844,078 Victoria 100 $195,516 Queensland 26 $44,186 Total 3,583 $6,083,780 Source: Management information.

5.2.3 Ancillary Services This division’s ancillary services include mortgage broking, conveyancing and settlement services, and provides cross-sell opportunities for the rest of the business. As at 31 March 2020 the Group had a mortgage loan book with approximately 4,300 loans and $1.9 million in annualised trail income ($2 million in annualised trail income at September 2020).

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5.3 Sale of West Coast Rent Roll and Strategic Partnership with Managex

As announced by the Company on 9 September 2020, the Group recently sold its west coast rent roll business to Managex for approximately $3.6 million (before adjustments). The sale was effectuated through the sale of TAPM. As part of the sale agreement, the Group formed a strategic partnership with Managex, whereby Managex licences The Agency brand in Western Australia for its property management business and refer sales leads to the Group, and with the Group referring property management leads in Western Australia to Managex.

Under the licence agreement, Managex will use The Agency brand in WA with a focus on retaining property management staff. The Group has agreed to accommodate Managex at its Perth office.

As part of the transaction, a reciprocal referral agreement will be entered into by both parties whereby all sales leads that come from Managex be referred in first instance to the Group while all WA property management leads from the Group will be referred to Managex.

So far, proceeds of $2.7 million (representing 85% of an adjusted sale price of $3.26 million) for the sale of the Group’s West Coast rent roll business was received at the beginning of October 2020, which was used to partially reduce the Group’s debt with Macquarie Bank. The remaining retention amount (up to $0.485 million) will be received by the Company 6 months after the finalisation of the sale (approximately April 2021).

5.4 Impact of Coronavirus (COVID-19)1

On 11 March 2020, the World Health Organization declared the spread of the Coronavirus Disease (“COVID- 19”) a worldwide pandemic. The COVID-19 pandemic is having significant effects on global markets, supply chains, businesses, and communities. Specifically, ‘Stage 2’ of the Australian government’s measures and restrictions to limit and/or contain the spread of COVID-19 was announced and implemented on 24 March 2020. The aim of the COVID-19-induced government lockdown measures, was to reduce gatherings of multiple people. The measures included a restriction on public auctions and open houses, which affected the real estate sector, particularly in the area of property sales.

As shown in the charts below, the fall-out of COVID-19 generally had an impact on the Group’s turnover, particularly on the Group’s commission income generated from property sales, which was noticeable during April and May 2020.

Source: AU1’s announcement lodged with the ASX on 31 July 2020

1 Source: AU1 announcements lodged with the ASX on 30 April 2019, 31 July 2019, 30 January 2020, 25 March 2020, 30 April 2020 and 31 July 2020. page | 19

Source: AU1’s announcement lodged with the ASX on 31 July 2020

During this period, the Group already developed and had in operation a number of alternative products and processes for its buyers and sellers to use other means, such as digital platforms, to enable auctions, home opens and sales to occur. In anticipation of the government’s measures being introduced the Company had been expanding the rollout of these across the business in the first few weeks of March 2020, including moving all client communications on-line. During the period of the Stage 2 restrictions the Company also employed innovative solutions including digital viewings and auctions.

At the time of the Stage 2 announcement, the Group had successfully sold two properties in New South Wales under auction using alternative products and processes, including a combination of an online platform and telephone bidding. At the time, the Group’s agents had also been proactively engaging with owners regarding the use of these tools and other alternatives to ensure sales campaigns proceed based upon owners’ wishes, buyer interest and minimising the health risk for all parties.

In addition, the Group generated the majority of its revenue in Western Australia and New South Wales where the government related lock downs were less intrusive than in Victoria. Western Australia, in particular, which accounts for more than 50% of sales volume, does not traditionally sell by auction and therefore was less impacted by the Stage 2 and other government measures and restrictions. This, together with the Group’s initiatives as described above, and the relaxation of restrictions in June (particularly in Western Australia), contributed towards the increase of the Group’s commission income to pre COVID-19 levels in the month of June.

As such, the Group’s overall gross commission income during the March and June 2020 quarters was higher than the gross commission income during previous quarters (with the exception of the December 2019 quarter), despite the fallout from COVID-19, as shown in the tables below.

Key Metrics of The Agency Group Sep19 Qtr Dec19 Qtr Mar20 Qtr Jun20 Qtr Gross Commission Income ($’000,000) $10.7 $14.2 $12.1 $11.0 Number of properties sold 703 888 804 756 Value of Properties Sold ($’000,000) $632.6 $884.4 $747.0 $678.8 Listings 883 1,072 1,001 1,001 Source: AU1 announcements lodged with the ASX on 30 January 2020, 30 April 2020 and 31 July 2020.

Key Metrics of The Agency Group Mar19 Qtr Jun19 Qtr Gross Commission Income ($’000,000) $10.3 $10.0 No. of Properties Sold 616 674 Value of Properties Sold ($’000,000) $613.4 $600.8 Listings 1,040 800 Source: AU1 announcements lodged with the ASX on 30 April 2019 and 31 July 2019.

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Source: AU1’s announcement lodged with the ASX on 31 July 2020

As shown in the chart above the Group’s property management business, on the other hand, continued to grow despite the onset of the COVID-19 pandemic and government imposed restrictions. The Group’s east coast and west coast operations reported a total management portfolio of 4,737 properties under management as at 31 March 2020, which rose to 4,763 properties under management as at 21st April 2020 and 4,838 as at 30 June 2020. The Group also had limited requests from tenants for rent relief, due to the Group’s proactive management of rent deferral programs in Western Australia, New South Wales and Victoria, which meant that the Group’s property management income was not materially affected by COVID-19.

The Group implemented a range of initiatives in the third quarter of the year ended 30 June 2020 to deal with the fallout from COVID-19 and to proactively managing its cost base. One of the initiatives included a transition of its workforce to remote working using the Company’s “remote ready” cloud-based platform. The Company also reduced working hours of all staff (including management and board) temporarily in line with reduced workloads as well as a small number of redundancies. This resulted in a cost saving of approximately $600,000 and enabled the Company to retain the majority of its staff, moving all staff back to full working hours and full salaries in June 2020.

The Group also benefitted from the Australian government’s cash flow management initiatives such as the JobKeeper (for which $1,080,000 was granted during the quarter ended 30 June 2020 and $1,392,000 during the quarter ended 30 September 2020, granted based on actual reduction in turnover during the months of March and/or April 2020 for some of the Group’s entities) and the Cash Flow Boost payments. See further details at note 6 of section 5.6.1.

Overall, despite the impact of the COVID-19 pandemic, the Group achieved their first ever full year EBITDA profit and positive operating cash flows during FY 2020, with strong year-on-year revenue growth and growth across key metrics, adding to the sustained growth the business has achieved over the past three years.

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5.5 Directors and Key Management

The following is a table of the Directors and Key Management Personnel of The Agency Group:

Director / Key Management Personnel Position Andrew Jensen Executive Chairman and Chief Operations Officer1 Paul Niardone Managing Director (appointed 19 December 2016) Matthew LaHood Executive Director (appointed 17 January 2019) Adam Davey Non-executive Director (appointed 19 December 2016) Arjan van Ameyde Chief Financial Officer (appointed 1 February 2020) Stuart Usher Company Secretary (appointed 28 December 2016) Source: AU1’s 30 June 2020 audited financial statements.

1 Andrew Jensen was appointed as a Non-Executive Director on 18 February 2019. His role as Non-Executive Director changed on 1 February 2020 when he became the Group’s Executive Chairman and Chief Operations Officer.

5.6 Financial Information

Set out in sections 5.6.1, 5.6.2 and 5.6.3 are the audited consolidated financial statements of the Group for the years ended 30 June 2018, 2019 and 2020 (“FY 2018”, “FY 2019” and “FY 2020” respectively), as included in the annual reports lodged by the Company for those years.

The Group’s auditor’s reports for FY 2018, FY 2019 and FY 2020 were unmodified, however they each contained an emphasis of matter in relation to the material uncertainty regarding the Group’s ability to continue as a going concern. It was noted in the Group’s annual report for FY 2020 that the Directors were satisfied the going concern basis of preparation was appropriate, based on the following:  the Group reduced its borrowings from $21.1 million at 30 June 2019 to $13.8 million at 30 June 2020 (see note 5 in section 5.6.2 for further details);  with regards to the Group’s Senior Debt with Macquarie Bank (which made up the majority of working capital deficit as at 30 June 2020), originally due for repayment on 30 September 2020, the Group effectuated an option to renew for a further 3 months to 31 December 2020;  at the time of lodgement of the annual report, the Group was actively negotiating the extension of its financing arrangements with Macquarie Bank, and expected to have its facilities refinanced imminently (as indicated in section 1.1, the extension of the Group’s financing arrangements is part of the $11 million Funding Package as announced on 29 October 2020);  the Group had entered into a binding sales agreement for the sale of the Group’s west coast rent roll business (as detailed in section 5.3); and  the Directors had prepared a cash flow forecast, which indicated at the time that the Group will have sufficient cash flows to meet commitments and working capital requirements for the 12-month period from the date of signing the FY 2020 financial report.

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5.6.1 Financial Performance Set out in the table below is the summary of the audited consolidated profit and loss accounts of the Group for FY 2018, FY 2019 and FY 2020: ($’000) Notes FY 2018 FY 2019 FY 2020 Audited Audited Audited Revenue 2 16,768 28,338 41,862 Other income 46 165 994 Total revenue and other income 2 16,814 28,503 42,856 Gain on acquisition 78 – – Advertising and promotion expenses (479) (670) (1,242) Computers and information technology expenses (432) (1,006) (1,330) Consultancy, legal and professional fees (2,406) (3,103) (2,917) Occupancy costs 4 (516) (2,178) (984) Salaries and employment costs 6 (14,608) (24,024) (31,070) Share-based payments expense – (134) – Other expenses (1,422) (1,768) (2,649) EBITDA 1, 2, 3 (2,971) (4,381) 2,663 Depreciation and amortisation (495) (2,267) (6,039) Impairment (200) (1,378) (5,230) EBIT 1 (3,666) (8,026) (8,606) Interest income 9 13 18 Interest and finance costs 4, 5 (224) (1,243) (1,769) Net loss from ordinary activities before 1 (3,881) (9,255) (10,357) income tax expense Income tax benefit/(expense) 139 1,425 1,292 Net loss from ordinary activities 1 (3,742) (7,831) (9,065)

Key Ratios (%) Revenue and other income growth from prior year 2 75.78% 69.51% 50.36% Increase in salaries and employment costs 6 73.09% 64.46% 29.33% EBITDA margin 1, 2 (17.67%) (15.37%) 6.21% EBIT margin 1 (21.80%) (28.16%) (20.08%) Net loss before tax margin 1 (23.08%) (32.47%) (24.17%) Net loss after tax margin 1 (22.26%) (27.47%) (21.15%)

Source: Nexia analysis and AU1’s 30 June 2018, 2019 and 2020 audited financial statements. Notes: 1. Other than the Group’s positive EBITDA result for FY 2020, the Group had been operating at a loss with negative EBIT and EBITDA in the last few years. The Group’s prior negative EBTIDA levels were mainly due to the Group’s rapid growth, especially through the acquisition of TLRE on 11 January 2019 (refer to note 17 in section 5.6.2). During the period from 11 January to 30 June 2019, TLRE’s business contributed $2,818,080 to the Group’s net loss (as mentioned in note 2 below). However, the Group’s continued growth over the years has enabled the Group to achieve a positive EBITDA level for FY 2020 and for the quarter ended 30 September 2020 (see note 2 below). 2. The Group has been on a rapid growth trajectory since The Agency as a brand entered in 2017, growing via acquisitions including TLRE (during FY 2019, as per note 17 in section 5.6.2), which contributed revenues of $10,155,115 and a net loss of $2,818,080 during the period from 11 January to 30 June 2019), as well as through increasing the number of its agents over the years, as shown in the table below: Key Metrics of The Agency Group At 30 Jun At 30 Jun At 30 Jun At 30 Jun 2017 2018 2019 2020 Number of agents 50 185 272 283 Number of properties sold 366 1,326 2,419 3,153 Gross commission income ($’000,000) 3.8 28.8 37.9 47.9 Value of exchanges ($’000,000,000) 0.2 1.8 2.4 2.9 Number of new listings 639 1,776 3,430 3,957 Source: AU1’s 30 June 2017, 2018, 2019 and 2020 audited financial statements. page | 23

The table above shows that the growth in the Group’s revenue over the years has also been driven by the Group’s growth in combined gross commission income over the years. Particularly in FY 2020, despite the effects of government imposed COVID-19 restrictions (see section 5.4 for more details on this), the Group achieved a positive EBITDA for FY 2020, which was driven by growth in combined gross commission income from 3,153 sales and $2.9 billion worth of property sold across the Group, as mentioned in section 5.2. We also note that since 30 June 2020, the Company has released the results for the quarter ended 30 September 2020: Key Metrics of The Agency Group At 30 Sep 2020 Number of agents 281 (see section 5.2.1) Number of properties sold 1,117 Gross commission income ($’000,000) 16.6 Value of exchanges ($’000,000,000) 0.9 Number of new listings 1,240 Source: Nexia analysis and AU1’s announcement lodged with the ASX on 29 October 2020 3. As announced by the Company on 9 September 2020, the Group recently sold its west coast rent roll business to Managex for approximately $3.6 million (before adjustments), with an adjusted sale price of $3.26 million (see section 5.3 for further details). The west coast rent roll business contributed approximately $0.49 million to the Group’s net EBITDA for FY 2020. 4. The accounting standard AASB 16 Leases came into effect on 1 July 2019, replacing the old AASB 117 Leases accounting standard. This resulted in the Company’s property and printing equipment lease liabilities, and their associated right-of-use assets, being capitalised and recognised on the balance sheet on 1 July 2019. This consequently resulted in about $1,951,373 (as disclosed in The Agency Group’s annual report for FY 2020, which would previously have been classified as occupancy costs under the old standard), to be classified as interest, depreciation and amortisation during FY 2020. 5. The increase in interest in FY 2019 compared to FY 2018 was also due to the Group’s acquisition of TLRE during that year, which resulted in the Group acquiring additional borrowings during that year (see note 9 of section 5.6.2). 6. On 30 August 2019 (in the first quarter of FY 2020), the Company announced that it had identified and begun implementing $2.8 million in cost savings, which was achieved during the year. The Group also implemented a range of initiatives in the third quarter of FY 2020 to deal with the fallout from COVID-19 and to proactively manage its cost base. This included reducing working hours of all staff (including management and the Board of Directors) temporarily in line with reduced workloads as well as a small number of redundancies. This lasted from about mid-April 2020 to mid-June 2020 and resulted in a cost saving of approximately $600,000, which enabled the Group to retain the vast majority of its staff during this period. In addition, according to the Group’s annual report for FY 2020, the Group received $1,080,000 in government grants from the Australian Government’s JobKeeper Payment scheme, which was represented as a deduction to the Group’s salaries and employment costs during FY 2020. The amount was granted based on actual reduction in turnover during the months of March and/or April 2020 for some of the Group’s entities. $390,000 of this amount was accrued for the month of June 2020 and paid in July 2020. After 30 June 2020, the Group received into their bank accounts additional JobKeeper payments totalling $1,377,000 during the quarter ended 30 September 2020 (which includes the $390,000 as mentioned above) and $405,000 during October (related to the month of September 2020).

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5.6.2 Financial Position Set out in the table below is the summary of the audited consolidated balance sheets of AU1 as at 30 June 2018, 2019 and 2020 (“FY 2018”, “FY 2019” and “FY 2020” respectively): ($’000) Notes FY 2018 FY 2019 FY 2020 Audited Audited Audited Current Assets Cash and cash equivalents 1,022 2,597 2,724 Trade and other receivables 1 2,743 4,080 4,601 Financial assets 2 – – 1,600 Current tax asset 191 – – Other current assets 3 254 413 550 Total Current Assets 4,210 7,091 9,476 Current Liabilities Trade and other payables 4 7,379 13,556 9,773 Borrowings 5 1,100 21,127 13,843 Provisions 4 388 1,113 2,287 Leases 7 – – 1,980 Total Current Liabilities 8,867 35,795 27,883 Net Current Liabilities 5 (4,657) (28,704) (18,407) (Net Working Capital Deficit)

Non-Current Assets Trade and other receivables 1 – 283 270 Financial assets 8 408 1,142 170 Property, plant, and equipment 4 521 2,578 2,040 Right of use asset 7 – – 4,645 Intangible assets 9, 10 4,648 39,036 30,376 Total Non-Current Assets 5,577 43,039 37,502 Non-Current Liabilities Trade and other payables – 35 – Provisions 64 600 337 Leases 7 – – 3,895 Deferred tax liabilities 11 296 4,668 3,251 Total Non-Current Liabilities 360 5,304 7,483 Net Non-Current Assets 5,217 37,735 30,019

Total assets 9,787 50,130 46,977 Less: Total liabilities (9,227) (41,099) (35,366) Net Assets 560 9,031 11,611

Equity Issued capital 12, 13 11,480 27,765 39,396 Reserves 566 583 929 Accumulated losses (11,487) (19,317) (28,713) Total Equity 560 9,031 11,611

Net cash and financial assets / (borrowings) 5d 330 (17,387) (8,806)

Source: Nexia analysis and AU1’s 30 June 2018, 2019 and 2020 audited financial statements. Notes: 1. The majority of the Group’s receivables are commission due on property sales. This balance increased significantly in FY 2019 due to the acquisition of TLRE (see note 17 for further details). 2. This balance represents restricted cash, which at FY 2020 is made up of $1,000,000 received from Peters Investments for the May 2020 Convertible Notes during FY 2020 (and currently held in trust) and $600,000 which Macquarie Bank has not yet given access to AU1. page | 25

3. The balance of $550,476 at FY 2020 is mainly made up of $481,716 of current bank guarantees and $61,124 of rental deposits. 4. The increase of the balances for trade and other payables, provisions, and property, plant, and equipment from FY 2018 to FY 2019, were mainly due to the acquisition of TLRE on 11 January 2019 (see note 17 for further details). 5. The Group’s net working capital deficit position and net borrowings position, particularly at FY 2019 and FY 2020 is mainly due to the Group’s borrowings (the majority of which is the Senior Debt with Macquarie Bank), which was assumed through the Group’s acquisition of TLRE on 11 January 2019 (see note 17 for further details). During FY 2020, the Group reduced its borrowings (excluding leases) during the year from $21,126,603 at FY 2019 to $13,843,235, assisted by the conversion of $5,798,388 of debt to equity. The balance of the Group’s borrowings at 30 June 2020 was made up of the following: ($’000) FY 2020 Senior Debt (see notes 5a and 5b) 12,093 Convertible (see note 5c) 1,000 Other loans 750 Total Borrowings at 30 June 2020 13,843 Source: Nexia analysis and AU1’s 30 June 2020 audited financial statements. a. The Senior Debt has a first ranking change over all the assets of the Group. Up to the 12 months prior to the Report date, the facility’s interest rate ranged between 8.64% and 9.60%, with a closing rate of 8.59% per annum before the announcement of the Group’s Funding Package on 29 October 2020 (refer to section 1.1). b. As noted in sections 1.1 and 1.3, the Guarantors provided a joint and several guarantee to Macquarie Bank in relation to the Senior Debt. The Guarantors include the following shareholders of AU1: i. Teldar Real Estate Pty Ltd <MJ Lahood Family A/C>, an entity controlled by one of AU1’s directors, Matthew Lahood; ii. MAC Property Group Pty Ltd <MAC A/C>; iii. SEMC 2 Pty Ltd <The Chen Asset A/C>; iv. Ben Collier Investments Pty Ltd; and v. Daring Investments Pty Ltd. The Proposed Transaction will effectively reduce each of the Guarantors’ joint and several guarantee to Macquarie Bank down from $8,716,071 to $3,716,071 respectively. c. The above amount relates to the May 2020 Convertible Notes. The proceeds from the convertible note is currently in trust and has not been released to AU1 (see note 2). d. The amount of borrowings (net of cash) as at 30 June 2020 is calculated as follows: ($’000) FY 2020 Borrowings 13,843 Less: Cash and cash equivalents (2,724) Less: Financial assets (non-current) (see notes 2 and 8 above) (1,770) Less: Other current assets (current bank guarantees and rental deposits) (543) Total Borrowings (Net of Cash) 8,806 Source: Nexia analysis and AU1’s 30 June 2020 audited financial statements. 6. Following from the above note, since 30 June 2020, during the quarter ended 30 September 2020, the Group’s cash and cash equivalents increased by $2.062 million. This was mainly due to the Group’s strong performance during the quarter (see note 2 of section 5.6.1) as well as receiving an additional $1,377,000 for the JobKeeper Payment scheme during the quarter (see note 6 of section 5.6.1). In addition, as announced by the Company on 9 September 2020, the proceeds on sale of the Group’s west coast rent roll business was received at the beginning of October 2020. The proceeds received by the Group was $2.7 million (85% of the adjusted sale price) and was used to reduce the Senior Debt (see section 5.3 for more details).

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Taking into account the above factors, the borrowings of the Group (net of cash) as at the date of the Report is estimated as follows: ($’000) FY 2020 Borrowings (net of cash) as at 30 June 2020 (as per note 5d above) 8,806 Less: Increase of cash and cash equivalents during the quarter ended 30 Sep 2020 (2,062) Less: Proceeds received on sale of the Group’s west coast rent roll business (Oct 2020) (2,747) Estimated Borrowings (Net of Cash) at the Date of the Report 3,997 7. The accounting standard AASB 16 Leases came into effect on 1 July 2019 and as a result, the Company’s property and printing equipment lease liabilities and their associated right-of-use assets were capitalised and recognised on the balance sheet during FY 2020. 8. This balance includes bank guarantees and other restricted cash. 9. The significant increase in intangible assets from FY 2018 to FY 2019, was mainly due to the Group’s acquisitions of Vicus Residential (see note 16) and TLRE (see note 17) on 11 January 2019. Also see notes 14 and 15 for details of the Group’s acquisitions of Sell Lease Property, Complete Settlements and Value Finance on 21 February 2018 (note 14) and Inglewood Estate Agency on 12 June 2018 (note 15), which contributed to the increase of intangible assets from $3.2 million at FY 2017 to $4.6 million at FY 2018. 10. The majority of the Company’s intangible assets balance at FY 2020 consists of goodwill from the acquisition of subsidiaries (net of impairment) of $11,773,237 and the Company’s rent roll and trail book value (net of accumulated amortisation) of $18,417,546. According to The Agency Group’s management, this is broken down as follows: ($’000) FY 2020 Goodwill from the acquisition of TAPM, net of impairment (see note 10a) 1,069 Goodwill from the acquisition of other subsidiaries, net of impairment 10,704 Goodwill from the acquisition of subsidiaries, net of impairment 11,773 AU1’s east coast rent roll book value, net of accumulated amortisation 16,267 AU1’s west coast rent roll book value, net of accumulated amortisation (see note 10b) 1,964 AU1’s trail book value, net of accumulated amortisation 186 Rent roll and trail book value, net of accumulated amortisation 18,418 Other intangible assets, net of accumulated amortisation 186 Total net intangible assets 30,376 Source: Management information. a. The sale of the Group’s west coast rent roll business to Managex (see section 5.3) was effectuated through the sale of TAPM. b. This amount reflects the net book value of the Group’s west coast rent roll as at 30 June 2020, which was part of the west coast rent roll business sold to Managex. As noted in section 5.3, the proceeds for the sale of the business was received at the beginning of October 2020. 11. The deferred tax liabilities mainly relate to the Company’s rent roll balances. We also note that as at 30 June 2020, the Group had unrecognised unused tax losses of $3,315,284. 12. The significant increase in issued capital during FY 2019 was mainly due to: a. shares issued for the acquisition of Vicus Residential (valued at $453,333, as per note 16); b. shares issued for the acquisition of TLRE (valued at $2,566,667, as per note 17); c. shares issued to repay TLRE’s borrowings (valued at $5 million); and d. capital raising undertaken during the year (totalling $8.4 million). 13. The increase in issued capital during FY 2020 was due to: a. capital raised during the year (totalling $5,584,398); and b. approximately $5.8 million of loans which were settled by issuing shares.

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14. During FY 2018, on 21 February 2018, the Group acquired Sell Lease Property, Complete Settlements and Value Finance Pty Ltd and assumed 100% of those entities’ assets and liabilities. The fair value of the consideration for all entities was $950,000, which was paid in cash. The details of the transaction, including the allocation of the consideration across all entities, the fair values of assets and liabilities acquired and the goodwill and/or bargain on purchase for each entity are detailed below: Sell Lease Property $ Total consideration 800,000 Less: Fair value of assets and liabilities acquired (28,375) Goodwill (Recognised under Intangible Assets) 771,625 Source: AU1’s 30 June 2019 audited financial statements. Complete Settlements $ Total consideration 50,000 Less: Fair value of assets and liabilities acquired (3,520) Goodwill (Recognised under Intangible Assets) 46,480 Source: AU1’s 30 June 2019 audited financial statements. Value Finance Pty Ltd $ $ Total consideration 100,000 Less: Identifiable intangible assets (rent roll) (285,587) Deferred tax liability 78,536 (207,051) Bargain purchase to be recognised in profit and loss (107,051) Less deferred tax on bargain price 29,439 Credit to Profit and Loss for Bargain Price (77,612) Source: Nexia analysis and AU1’s 30 June 2019 audited financial statements. All of the above was included in the Group’s balance sheet and results on 21 February 2018. 15. During FY 2018, on 12 June 2018, the Group acquired the real estate assets and rent roll of Inglewood Estate Agency. The fair value of the consideration was $436,180, of which $348,944 was paid upfront and the remaining $87,236 was retained and paid in June 2019. The fair value of the net identifiable assets and liabilities assumed at acquisition and recognised in the Group’s balance sheet from 12 June 2018 was $279,909, which was made up of the following: Inglewood Estate Agency $ Rent rolls acquired (recognised under intangible assets) 386,082 Less: Deferred tax liability (106,173) Net Fair Value of Identifiable Assets Acquired 279,909 This resulted in goodwill of $156,271 being recognised on acquisition, which was also recognised in the Group’s intangible assets from 12 June 2018. 16. During FY 2019, on 11 January 2019, the Group acquired Vicus Residential, the residential sales and management division of The Vicus Property Group. The fair value of the consideration was $535,833, comprising $67,500 which was paid in cash and $453,333 which was satisfied by the issue of 2,666,667 AU1 Shares at $0.17 per share. The fair value of the rent roll in the Vicus Residential business amounted to $535,833, and was recognised in the Group’s intangible assets from 11 January 2019.

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17. During FY 2019, on 11 January 2019, the Group acquired TLRE and assumed 100% of TLRE’s assets and liabilities. The fair value of the consideration was $2,566,667, which was satisfied by the issue of 18,333,333 AU1 Shares at $0.14 per share. The fair value of the net identifiable assets and liabilities assumed at acquisition was negative $13,395,469, which was made up of the following: TLRE $ Cash and cash equivalents 594,258 Trade and other receivables 2,831,759 Property, plant, and equipment 2,155,716 Rent rolls acquired (recognised under intangible assets) 20,692,117 Trade and other payables (6,767,664) Borrowings (25,553,559) Provisions (1,234,080) Deferred tax liability (5,690,332) Other assets (net of other liabilities) (423,684) Net Fair Value of Identifiable Assets (Net of Liabilities) Assumed (13,395,469) Source: Nexia analysis and AU1’s 30 June 2020 audited financial statements. This resulted in goodwill of $15,962,136 being recognised on acquisition, which was also recognised in the Group’s intangible assets from 11 January 2019.

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5.6.3 Cash Flow Statements Set out in the table below is the summary of the audited consolidated cash flow statements of the Group for FY 2018, FY 2019 and FY 2020: ($’000) Ref / FY 2018 FY 2019 FY 2020 Notes Audited Audited Audited Cash Flows from Operating Activities EBITDA 5.6.1 (2,971) (4,381) 2,663 Less: Net interest and finance costs paid 1 (216) (1,230) (1,385) Other non-cash flows: Share-based payments expensed 5.6.1 – 134 – Gain on acquisition 5.6.1 (78) – – Movements in working capital and other assets and liabilities (net of acquisitions): (Increase)/Decrease in trade and other (1,553) 1,014 (609) receivables (Increase)/Decrease in financial assets (408) (626) 372 Increase/(Decrease) in trade and other payables 2,840 (653) (1,617) Increase/(Decrease) in provisions 48 (689) 911 Net Cash (Used in)/Generated by 2 (2,336) (6,431) 335 Operating Activities

Cash Flows from Investing Activities Purchase of property, plant, and equipment (218) (241) (283) Advancement of bank guarantee (408) (600) (481) Return of bank guarantee – – 346 Purchase of intangibles 3, 4 (892) – (193) Deferred purchase consideration paid (200) (75) (15) Purchase of subsidiary, net of cash acquired 4 – 594 – Net Cash Used in Investing Activities 2 (1,718) (322) (626)

Cash Flows from Financing Activities Proceeds from issue of shares 2 1,920 8,400 5,612 Share issue costs (146) (277) (398) Repayments of borrowings – (44) (2,732) Proceeds from borrowings 1,100 250 – Leases payments – – (2,065) Net Cash Provided by Financing Activities 2,874 8,328 418

Net increase in cash and cash equivalents held (1,181) 1,575 127 Cash and cash equivalents at the beginning of 2,203 1,022 2,597 the year Cash and Cash Equivalents at the End of 1,022 2,597 2,724 the Year

Source: Nexia analysis and AU1’s 30 June 2018, 2019 and 2020 audited financial statements. Notes: 1. As per notes 4 and 17 in section 5.6.2, the level of net borrowings increased significantly during FY 2019 due to the acquisition of TLRE on 11 January 2019, thereby increasing the level of interest paid by the Group during FY 2019 and FY 2020.

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2. The Group has been operating at negative operating and investing cash flows in the last few years (with the exception of a positive operating cash flows for FY 2020). In particular, the dramatic increase of net cash used in operating activities during FY 2019 was due to the acquisition of TLRE on 11 January 2019 (see note 17 in section 5.6.2). The Group’s rapid growth and expansion during FY 2018 and FY 2019 also contributed to the Group’s negative operating and investing cash flows during these years. The Group have funded these negative cash flows by means of raising capital and settling loans through the issue of shares in the last few years. Also refer note 12 in section 5.6.2 with regards to share capital raised in the last few years. 3. The purchase of intangibles during FY 2018 include rent rolls and goodwill recognised upon the acquisition of Sell Lease Property, Complete Settlements and Value Finance Pty Ltd on 21 February 2018 (see note 14 of section 5.6.2), and the acquisition of Inglewood Estate Agency on 12 June 2018 (see note 15 of section 5.6.2). 4. As per note 17 in section 5.6.2, during FY 2019, on 11 January 2019, the Group acquired TLRE via an issue of ordinary shares. As such, there was no cash outflow recorded for the purchase of intangibles or other net assets and liabilities related to the acquisition of TLRE, except for TLRE’s cash balance of $594,258 at 11 January 2019.

5.7 Capital Structure and Ownership

The Group’s capital structure as at 5 November 2020 comprised issued capital of 298,954,431 fully paid ordinary shares, 113,011,319 options and 5 incentive performance shares, as shown below:  298,954,431 fully paid ordinary shares (see section 5.7.1);  101,515,093 listed options (see section 5.7.2);  11,496,226 unlisted options (see section 5.7.3); and  5 incentive performance shares (see section 5.7.4).

5.7.1 Fully Paid Ordinary Shares The top 10 AU1 shareholders as at 5 November 2020 held 69.38% of AU1’s issued capital and are set out below: Shareholder Shareholding % Total Magnolia Equities III Pty Ltd 49,969,507 16.71% Ben Collier Investments Pty Ltd <Ben Collier Investments P/L> 27,060,515 9.05% MAK Property Group Pty Ltd <MAK A/C> 25,690,547 8.59% SEMC 2 Pty Limited <The Chen Asset A/C> 24,475,530 8.19% Teldar Real Estate Pty Ltd <MJ Lahood Family A/C> 24,349,790 8.14% Hanzheng KSW Pty Ltd <Hanzheng KSW Unit A/C> 16,666,667 5.57% Daring Investments Pty Ltd 13,770,150 4.61% Daring Investments Pty Ltd <Kolenda Family A/C> 10,979,394 3.67% Honan Insurance Group Pty Ltd 7,692,308 2.57% Nutsville Pty Ltd <Indust Electric Co S/F A/C> 6,763,230 2.26% Top ten shareholders 207,417,638 69.38% Other 91,536,793 30.62% Total shares 298,954,431 100.00% Source: AU1’s share registry as at 5 November 2020. The table below summarises AU1 shareholders by size of shareholding at 5 November 2020: Range No. of holders Shares % Total 1 – 1,000 221 36,127 0.01% 1,001 – 5,000 124 347,216 0.12% 5,001 – 10,000 107 790,246 0.26% 10,001 – 100,000 332 12,435,669 4.16% 100,001 and over 137 285,345,173 95.45% Total 921 298,954,431 100.00% Source: AU1’s share registry as at 5 November 2020.

As at the date of the Report, Peters Investments does not currently hold any shares in AU1.

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5.7.2 Listed Options The top 10 listed optionholders as at 5 November 2020 held 85.57% of AU1’s listed options and are set out below: Optionholder Optionholding % Total Magnolia Equities III Pty Ltd 29,811,994 29.37% Teldar Real Estate Pty Ltd <MJ Lahood Family A/C> 9,622,044 9.48% SEMC 2 Pty Limited <The Chen Asset A/C> 9,622,044 9.48% Ben Collier Investments Pty Ltd <Ben Collier Investments P/L> 9,481,654 9.34% MAK Property Group Pty Ltd <MAK A/C> 9,481,653 9.34% Aura Principal Investments Pty Ltd 4,162,103 4.1% Kalonda Pty Ltd <Leibowitz Super Fund A/C> 4,000,000 3.94% Nutsville Pty Ltd <Indust Electric Co S/F A/C> 3,949,461 3.89% Honan Insurance Group Pty Ltd 3,846,154 3.79% Daring Investments Pty Ltd 2,891,275 2.85% Top ten optionholders 86,868,382 85.57% Other 14,646,711 14.43% Total listed options 101,515,093 100.00% Source: AU1’s listed option registry as at 5 November 2020. AU1’s 101,515,093 listed options are exercisable at $0.065 and expire on 31 December 2020. The table below summarises AU1’s listed optionholders by size of optionholding at 5 November 2020: Range No. of holders Options % Total 1 – 1,000 12 4,796 0.00% 1,001 – 5,000 18 49,247 0.05% 5,001 – 10,000 6 45,485 0.04% 10,001 – 100,000 32 1,360,741 1.34% 100,001 and over 34 100,054,824 98.56% Total 102 101,515,093 100.00% Source: AU1’s listed options registry as at 5 November 2020.

As at the date of the Report, Peters Investments does not currently hold any listed options in AU1.

5.7.3 Unlisted Options The details of AU1’s unlisted options and optionholders as at 5 November 2020 are set out below: Optionholder Exercise Price Expiry Date Optionholding PAC Partners Pty Ltd $0.750 20 December 2020 266,667 PAC Partners Pty Ltd $1.200 20 December 2020 66,667 Mr Adam Stuart Davey <Shenton Park $0.300 11 January 2022 333,333 Investment A/C> Peters Investments Pty Ltd (see Note 1) $0.0341 25 May 2022 2,000,000 Peters Investments Pty Ltd (see Note 2) $0.027 31 March 2023 8,829,559 Total unlisted options 11,496,226 Source: AU1’s unlisted option registry as at 5 November 2020 and recent ASX announcements. Notes: 1. These are the May 2020 Options as referred to in sections 1.1 and 1.2. The May 2020 Options are exercisable at $0.033828 as per section 1.2. 2. These are the Upfront Options as referred to in section 1.3.

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5.7.4 Incentive Performance Shares The details of the holders of the incentive performance shares and their holdings as at 5 November 2020 are as follows: Incentive Performance Share Holder Holding Adam Davey (current director) 1 Paul Niardone (current director) 1 John Kolenda (previous director) 1 Philip Re (previous director) 1 Ross Cotton (previous director) 1 Total incentive performance shares 5 Source: AU1’s FY 2020 annual financial report.

5.8 Share Price and Volume Trading Analysis

The following chart provides a summary of the trading volumes and prices for AU1 Shares from 30 September 2019 to 30 September 2020 (the last full day of trading prior the trading halt and voluntary suspension as requested by the Company on 1 October 2020 and 5 October 2020 respectively, and which was in place until 29 October 2020, the date on which the Funding Package was announced (see section 1.1)). The chart below does not include the effects that the announcement of the Funding Package may have had on AU1’s share price:

Source: Yahoo! Finance and Nexia analysis

The prices and volumes for the last 180 days prior to 30 September 2020 are summarised in the table below:

Period to Trading as a % 30 September 2020 Share Share Cumulative of current issued Price Low Price High Volume Traded VWAP capital 1 day $0.035 $0.035 – N/A 0.00% 7 days $0.033 $0.035 185,000 $0.035 0.06% 30 days $0.028 $0.043 1,662,376 $0.037 0.56% 60 days $0.028 $0.043 3,315,642 $0.033 1.11% 90 days $0.028 $0.043 7,008,759 $0.033 2.34% 180 days $0.028 $0.058 8,860,229 $0.034 2.96% Source: Yahoo! Finance and Nexia analysis

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The following table also provides the values and volumes of AU1 Shares being transacted on ASX from 30 September 2019 to 30 September 2020, detailed on a monthly basis:

Trading as a % Share Share Cumulative of current issued Month Price Low Price High Volume Traded VWAP capital October 2019 $0.052 $0.067 2,584,560 $0.060 0.87% November 2019 $0.056 $0.076 2,270,799 $0.065 0.76% December 2019 $0.058 $0.072 571,615 $0.060 0.19% January 2020 $0.044 $0.065 1,605,277 $0.050 0.54% February 2020 $0.050 $0.060 758,047 $0.050 0.25% March 2020 $0.038 $0.060 619,647 $0.050 0.21% April 2020 $0.035 $0.058 952,882 $0.040 0.32% May 2020 $0.030 $0.040 225,641 $0.039 0.08% June 2020 $0.035 $0.047 892,292 $0.043 0.30% July 2020 $0.028 $0.043 3,693,117 $0.030 1.24% August 2020 $0.028 $0.043 1,927,458 $0.043 0.64% September 2020 $0.033 $0.043 1,388,184 $0.035 0.46% Source: Yahoo! Finance and Nexia analysis

The chart and tables above indicates that AU1’s share price has fluctuated over the period since 30 September 2019. During this period the closing share price of AU1 Shares has traded within a range of $0.028 and $0.075 over the 12 months with a closing price of $0.035 at 30 September 2020. The volume weighted average price of AU1 Shares over the 12 months to 30 September 2020 is calculated at $0.047.

During the first few months of the period since 30 September 2019 (up to January 2020), AU1’s closing share price ranged between $0.044 and $0.076, and AU1’s monthly VWAP ranged from $0.050 to $0.065. There was a notable drop in share prices during February 2020 to June 2020 (being the approximate periods when the COVID-19 related lockdowns were in place for most Australian states), however, this seems to have stabilised again from July 2020. Since July 2020 the closing share price of AU1 Shares traded within a range of $0.028 and $0.043. The volume weighted average price of AU1 Shares over the 3 months to 30 September 2020 is calculated at $0.033.

Although less than 3% of the Company’s capital were traded in the last 90 and 180 days, AU1 Shares have a moderate level of liquidity with relatively free flow of trading in the shares during the year (including the last 3 months) to 30 September 2020. There was also a notable reduction in trading volumes during February 2020 to June 2020, however this increased since July 2020 to near pre COVID-19 levels, with the highest single day trading volume (excluding insider trading) recorded on 4 August 2020 when 1,007,586 AU1 Shares were traded.

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6. INDUSTRY ANALYSIS AND MARKET OUTLOOK

The Group mainly operates within the real estate services industry in Australia.

6.1 Industry Analysis – Real Estate Services2

6.1.1 Industry Definition Businesses in the real estate services industry primarily appraise, purchase, sell (by auction or private treaty), manage or rent residential property, commercial property, or a combination of the two.

6.1.2 Industry Life Cycle The real estate services industry is in the mature stage of its life cycle. The key factors contributing to the industry being in the mature stage are as follows:  demand for industry services is mainly influenced by economic activity and interest rates;  industry establishment numbers have fallen slightly over the past five years; and  the industry’s products and services have largely remained the same over the long term.

6.1.3 Industry Performance and Outlook The real estate services industry has faced volatile operating conditions over the past five years. Government incentives and falling interest rates have supported growth in housing prices over the period, despite turbulent economic conditions. However, a decline in the number of housing transfers over the past five years has constrained industry revenue. Government limits on foreign property investment have constrained demand for residential real estate over the past five years. However, commercial property markets have benefited from more robust demand over the period, supporting demand for industry services. House prices fell in 2018-19, and while industry conditions had been improving over 2019-20, the outbreak of COVID-19 in early 2020 created significant headwinds for industry operators. As a result, industry revenue is expected to fall at an annualised 0.1% over the five years through 2020-21, to $26.5 billion. This includes an anticipated decline of 8.1% in 2020-21, as economic conditions weaken following the outbreak of COVID-19. Industry profitability has fallen over the past five years, due to intense industry competition and an increasingly saturated market. Small, self-employed agents and property managers continue to dominate the industry. However, some players have expanded their operations over the period. The property management segment has faced growing competition from the residential property operators industry over the past five years, due to an increasing share of owner-lessors managing property themselves rather than employing an agent.

2 Source: Real Estate Services in Australia, Industry Report L6720 by James Thomson, IBISWorld, published on

August 2020. Accessed at https://my.ibisworld.com/au/en/industry/l6720/about on 12 October 2020. page | 35

More high-density residential properties are anticipated to become available over the next five years, as governments and the construction division respond to increased urbanisation and population growth. As economic conditions stabilise in the wake of the COVID-19 pandemic, population growth and positive consumer sentiment are projected to support rising property prices and demand for real estate services over the next five years. Industry revenue is forecast to grow at an annualised 1.9% over the five years through 2025-26, to total $29.2 billion. However, competition from technological alternatives that allow buyers and renters to circumvent industry operators is projected to limit industry growth. Owner- lessors bypassing real estate agents in favour of online channels poses a significant threat to the industry over the next five years.

6.2 Market Outlook3

During the first half of the year, the COVID-19 pandemic led to the most severe contraction in global and domestic economic activity in decades. Since around May, economic conditions have started to recover as containment measures have been eased and fiscal and monetary policies have provided significant support. But a high degree of uncertainty surrounds the outlook domestically and abroad. The main source of uncertainty is the evolution of the pandemic and medical developments. Indeed, a resurgence in new cases has already led to the reinstatement of containment measures in some economies, which has slowed their recoveries, including in Australia. Beyond the direct effects from reinstated containment measures, there is also considerable uncertainty over the voluntary response from households and businesses. Inflationary pressures are likely to remain subdued globally for some time because of considerable spare capacity, though in the longer term there is more uncertainty over the inflation profile given supply will also be lower.

Assuming a widespread and synchronised global resurgence in infections is avoided, GDP of Australia’s major trading partners is expected to contract by around 3 per cent (in year-average terms) in 2020, with the trough in activity in the June quarter, followed by an increase of around 6 per cent in 2021. This would leave the level of major trading partner GDP around 3 per cent below what was expected before the outbreak.

3 Source: Statement of Monetary Policy August 2020 (Section 6. Economic Outlook) by Reserve Bank of Australia, published on 6 August 2020. Accessed at https://www.rba.gov.au/publications/smp/2020/aug/ on 12 October 2020. page | 36

Domestically, a gradual recovery in GDP is now underway across much of the country, following the largest shock to growth since the 1930s. Employment and hours worked are also expected to increase slightly over the second half of the year in most of the country. However, the effects of the heightened activity restrictions in Victoria are likely to offset the pick-up in GDP growth in other parts of the economy in the September quarter. The restrictions in Victoria, alongside some job losses occurring as a result of the JobKeeper program beginning to be tapered nationally after September, will weigh on labour market outcomes in the September and December quarters; this is likely to more than offset any employment growth elsewhere. The unemployment rate is expected to continue to rise over this period as a result of employment losses in Victoria, as well as increased labour force participation elsewhere in Australia. After a sharp fall in the June quarter, headline inflation is expected to rebound in the second half of the year following the end of the free child care program and a pick-up in fuel prices. However, underlying inflation is expected to remain subdued over the forecast period, given low wages growth and substantial spare capacity in the economy.

Further outbreaks of the virus and associated restrictions on activity are the key risks to the outlook. For example, the recent outbreak of the virus in Victoria and the associated introduction of restrictions on activity are likely to reduce national GDP growth in the September quarter by at least 2 percentage points, relative to the situation if the outbreak had not occurred. Other considerations include how long uncertainty and diminished confidence weigh on household spending and businesses’ hiring and investment plans.

Given the high degree of uncertainty for the outlook, a number of scenarios are considered, with different assumptions about the outbreak and restrictions, and their effects on household and business confidence. In all scenarios, fiscal policy settings are assumed to be in line with current public guidance:  The baseline scenario assumes the heightened restrictions in Victoria are in place for the announced six weeks and then gradually lifted. In other parts of the country, restrictions continue to be gradually lifted or are only tightened modestly for a limited time, although restrictions on international departures and arrivals are assumed to stay in place until mid-2021. Under this scenario: GDP is expected to contract by around 6 per cent over the year to December 2020, but then grow by around 5 per cent over 2021; the unemployment rate is expected to rise to almost 10 per cent over the next six months and gradually decline to around 7 per cent over the latter part of the forecast period; and underlying inflation is expected to remain below 2 per cent over the next couple of years;  A stronger economic recovery is possible if faster progress in controlling the virus is achieved in the near term. A series of positive health outcomes would help limit the damage to consumer and business confidence and support a more rapid economic recovery. In this scenario, the virus is assumed to be rapidly controlled domestically (but not overseas) and activity restrictions are lifted (with the exception of international travel), leading to a faster recovery in consumption, investment and employment. The unemployment rate would peak at a lower level and decline faster than in the baseline scenario; and  However, a plausible downside scenario is where Australia faces further periods of outbreaks and heightened restrictions in certain areas, and the world experiences a widespread resurgence in infections in the near term. In this scenario, it is likely that the recovery in service exports would be delayed further and consumer spending would continue to fall through the second half of 2020, despite continued policy stimulus and income support measures. Business investment would also decline sharply. Domestic activity would take much longer to recover in this scenario, resulting in the unemployment rate remaining close to its peak throughout 2021.

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7. VALUATION METHODOLOGIES

7.1 Definition of Market Value

In forming our opinion as to whether or not the Proposed Transaction is fair and reasonable to AU1’s existing shareholders, we have assessed the value of the issued AU1 Shares on a fair value basis. RG 111 defines fair value as the amount: “assuming a knowledgeable and willing, but not anxious, buyer and a knowledgeable and willing, but not anxious, seller acting at arm’s length…”.

7.2 Selection of Methodology

RG 111 provides guidance on the valuation methods that an independent expert should consider. These methods include:  the discounted cash flow method (“DCF”) and the estimated realisable value of any surplus assets;  the application of earnings multiples (appropriate to the business or industry in which the entity operates) to the estimated future maintainable earnings or cash flows of the entity, added to the estimated realisable value of any surplus assets (the capitalisation of earnings method);  the amount that would be available for distribution to security holders on an orderly realisation of assets (asset based method);  the quoted price for listed securities, when there is a liquid and active market and allowing for the fact that the quoted price may not reflect their value, should 100% of the securities be available for sale (quoted market price or “QMP” methodology);  any recent genuine offers received by the target for the entire business, or any business units or assets as a basis for valuation of those business units or assets; and  the amount that an alternative bidder might be willing to offer if all the securities in the target were available for purchase.

The above are covered in more detail in Appendix D to this Report. Each methodology is appropriate in certain circumstances. The decision as to which methodology to apply generally depends on the nature of the asset being valued, the methodology most commonly applied in valuing such an asset and the availability of appropriate information.

It is possible for a combination of different methodologies to be used together to determine an overall value where separate assets and liabilities are valued using different methodologies.

7.3 Valuation Methodology Applied

In our assessment of the value of AU1, we have employed the following methodologies:  the capitalisation of earnings method, which estimates the market value of a company by determining a future maintainable earnings figure for the company’s business and multiplying that figure by an appropriate capitalisation multiple. The value of any surplus assets or liabilities are then added to this and any net debt is then deducted, to determine the equity value; and  the QMP methodology, as this represents the value that a shareholder may receive for a share if it were sold on market.

An equal weighting has been applied to both approaches in determining the fair value of AU1.

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We have chosen the above methodologies for the following reasons:  Although the Group does not appear to have a recent history of sustainable profitability (especially when considering the Group’s negative EBIT and EBITDA results in FY 2018 and FY 2019), this is mainly due to the Group’s rapid growth during those years. As such, we have considered that the Group’s negative results for the financial periods before FY 2020 do not reflect the Group’s sustainable (non-)profitability at the date of the Report. As noted in section 5.6.1 (see note 2), the Group’s continued growth has enabled it to achieve positive EBITDA and operating cash flow levels since FY 2020. As such, we consider that the positive EBITDA result for FY 2020 is indicative of the Group’s ongoing earnings potential. This allows for a comparison to be made against the earnings of similar companies and therefore the capitalisation of earnings method can be applied; and  The QMP basis is a relevant methodology to consider because AU1 shares are listed on the ASX, therefore reflecting the value that a shareholder will receive for a share sold on the market. This means that there is a regulated and observable market where AU1’s shares can be traded. However, in order for the QMP method to be considered appropriate, the Company’s shares should be liquid and the market should be fully informed on the Company’s activities. In this case, AU1 Shares have a moderate level of liquidity, with relatively free flow of trade of AU1 Shares, and with trading volumes increasing again after July to near pre COVID-19 levels (as detailed in section 5.8). Therefore, we consider that the value that could be achieved through a market sale should be reflected in our overall valuation. As such, we considered it appropriate to apply the QMP basis as part of our valuation approach.

The valuation calculation for AU1 Shares before and after the Proposed Transaction are set out respectively in sections 8 and 9 of this Report.

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8. VALUE OF THE AGENCY GROUP ON A CONTROL BASIS BEFORE THE PROPOSED TRANSACTION

As discussed in section 4, in evaluating the Proposed Transaction we are first considering the fair value of an AU1 Share on a control basis in accordance with RG 111.

As indicated in sections 7.2 and 7.3, we have employed the following methodologies:  capitalisation of earnings (see section 8.1); and  QMP (see section 8.2); applying an equal weighting to both approaches in determining the fair value of AU1.

8.1 Fair Value Calculation – Capitalisation of Earnings

The calculation of the fair value of AU1 Shares using the capitalisation of earnings method is summarised below: ($’000) Ref Low Preferred High Maintainable EBITDA 8.1.1 2,173 2,357 2,541 Multiple applied 8.1.2 6.35x 6.88x 7.43x Enterprise Value 13,792 16,211 18,866

Adjustments: Borrowings (net of cash) at the date of the 8.1.3 (3,997) (3,997) (3,997) Report Equity Value of AU1 on a Control Basis 9,795 12,214 14,869 Number of AU1 Shares outstanding 8.1.4 298,954,431 298,954,431 298,954,431 Value per AU1 Share on a Control Basis $0.033 $0.041 $0.050 Source: Nexia analysis.

8.1.1 Maintainable EBITDA As discussed in section 7.3, we have calculated the Group’s maintainable EBITDA by reference to the Group’s EBITDA’s result for FY 2020. This has been adjusted to remove the net earnings that were generated from the Group’s west coast rent roll business, as follows: ($’000) Ref Low Preferred High FY 2020 EBITDA 5.6.1 2,663 2,663 2,663

Normalisation Adjustment: Less: EBITDA generated from the Group’s note 1 (490) (306) (123) west coast rent roll business during the year Total Adjustments (490) (306) (123)

Normalised EBITDA 2,173 2,357 2,541 Source: AU1’s 30 June 2020 audited financial statements and Nexia analysis. Notes: 1. As per section 5.6.1, note 3, the Group’s west coast rent roll business contributed approximately $0.49 million to the Group’s net EBITDA for FY 2020. As the business was sold after year end, these amounts needs to be adjusted as it is not representative of the Group’s ongoing maintainable earnings. In this case, we have deducted 100% of the west coast rent roll business’s EBITDA in the low scenario, 25% of the EBITDA in the high scenario, and 62.5% in the preferred scenario. We have deducted 25% and 62.5% of the EBITDA in the high and preferred scenarios (instead of the full amount of the EBITDA), as the sale agreement included a strategic partnership which includes cross- referrals between the Group and Managex. As such, the low and the preferred scenarios take into account that a portion of the EBITDA would still be maintainable into the future, given the strategic partnership.

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No other adjustments have been made to the Group’s financial performance for FY 2020, as there were no other material one-off and/or non-recurring expenses. In making this assessment we have considered the following:  the Group’s negative EBIT and EBITDA results in FY 2018 and FY 2019 is mainly due to the Group’s rapid growth during those years (see notes 1 and 2 in section 5.6.1). As such, we have considered that the Group’s negative results for the financial periods before FY 2020 do not reflect the Group’s sustainable (non-)profitability at the date of the Report;  As noted in section 5.6.1 (see note 2), the Group’s continued growth has enabled it to achieve positive EBITDA and operating cash flow levels since FY 2020. As such, we consider that the positive EBITDA result for FY 2020 is indicative of the Group’s ongoing earnings potential;  Although the Group applied AASB 16 Leases during FY 2020 (see section 5.6.1, note 4), this has not been taken up as a “normalisation adjustment” as data from comparable listed companies for FY 2020 do not include this adjustment; and  Although the Company saved approximately $600,000 in salaries and employment costs and received $1 million from the JobKeeper Payment scheme during FY 2020 (see section 5.6.1, note 6), this is related to the fallout from COVID-19. COVID-19 also had an impact on the Company’s revenues, however, this is unquantifiable, although would probably at least offset the salaries and employment cost savings and the receipt from the JobKeeper Payment scheme. As such, no adjustment has been made to the result for FY 2020 with regards to this. Based on the above, we have considered that the Group’s maintainable EBITDA to be between $2.2 million and $2.5 million, with a preferred maintainable EBITDA of $2.4 million.

8.1.2 Capitalisation Multiple The capitalisation multiple has been determined with reference to identified listed companies. In determining comparable listed companies, consideration has been given to the companies that operate and/or are involved in the real estate services industry. Details of the most comparable companies and their EBITDA multiples are set out below: ($’000,000) EBITDA Enterprise Market EBITDA Multiple Value Capitalisation Revenue EBITDA Margin (Trailing) McGrath Limited 52.8 45.9 91.6 4.8 5% 5.65x Savills plc 2,627.8 2,139.0 3,361.5 265.4 8% 7.04x Mean 1,340.3 1,092.4 1,726.6 135.1 7% 6.35x Source: S&P Capital at 27 October 2020. The descriptions of the companies identified above are set out below: Comparable Description Companies McGrath McGrath Limited operates as an integrated residential real estate services company Limited in Australia. (ASX: MEA) Savills plc Savills plc, together with its subsidiaries, provides real estate services in the Americas, (LSE: SVS) the United Kingdom, Continental Europe, the Asia Pacific, Africa, and the Middle East. The company advises on commercial, residential, rural, and leisure properties; and offers corporate finance advisory, investment management, and a range of property- related financial services. Source: S&P Capital at 27 October 2020.

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In determining an appropriate multiple we have considered:  The Agency Group has a much smaller market capitalisation rate when compared to the listed comparable companies above. As a result, consideration must be had to the size and diversification of the Group’s services when compared to the listed comparable companies above;  Other factors such as the Group’s size, geographical location, diversification of services and growth profile, especially when compared to companies like Savills plc; and  As a result of the above factors, we have applied a discount of 10% to 20% to the comparable company multiples identified above. Finally, as the valuation of the AU1 Shares is on a control basis, we have adjusted the average implied multiple for listed companies, where the share price reflects a minority interest, for a control premium of between 25% and 30%. In determining the control premium to apply we have considered academic research on long term approaches to size premium, surveys on market practice and other analysis of the market on recent risk premiums. This shows a long term average of 20% to 30% and recent analysis tending towards 30% particularly for 100% transactions. Therefore, we have applied a control premium at the higher end of the long term range at 25% to 30%. Based on the above we have determined that an appropriate capitalisation multiple for AU1 is between 6.35 and 7.43 times, with a preferred capitalisation multiple of 6.88 times.

8.1.3 Net Debt at the Date of the Report As detailed in section 5.6.2, notes 5 and 6, the Group’s borrowings (net of cash) as at 30 June 2020 was $8.806 million, and decreased to an estimated $3.997 million at the date of the Report, after adjusting for the following:  the increase of cash and cash equivalents during the quarter ended 30 Sep 2020 ($2.062 million); and  the receipt of proceeds on sale of the Group’s west coast rent roll business at the beginning of October 2020, which was used to reduce the Senior Debt ($2.747 million).

8.1.4 Number of AU1 Shares Outstanding before the Proposed Transaction As detailed in section 5.7, the number of shares on issue as at the date of our Report is 298,954,431. Also as per section 5.7, we note that the Company has 101,515,093 listed options (exercisable at $0.065 and expiring on 31 December 2020); 11,496,226 unlisted options (including 666,667 of which do not belong to Peters Investments and are exercisable at between $0.30 and $1.20 each, expiring between 20 December 2020 and 11 January 2022); and 5 incentive performance shares. The closing share price of AU1 Shares traded within a range of $0.028 and $0.058 over the 180 days to 30 September 2020, with a general downward trend over the period and with a closing price of $0.035 (see section 5.8 for further details). As such, it is considered that the listed options, as well as the unlisted options not owned by Peters Investments, are unlikely to be exercised in the near future as those options are unlikely to be in-the-money (as defined) in the near future. The May 2020 Options and the Upfront Options are in-the-money as they are currently exercisable at $0.028 or at $0.027 at 30 September 2020 (see section 5.7.3 for further details). However, given the Proposed Transaction includes the exercise of all of the AU1 Options belonging to Peters Investments, we do not consider it appropriate to present the diluted value of a AU1 Share before the Proposed Transaction. The 5 incentive performance shares have also not been considered as part of a dilutary value of each AU1 Share before the Proposed Transaction, as we have considered that the impact of the conversion of each incentive performance share would not be significant. Given the factors above, our valuation of each AU1 Share prior to the Proposed Transaction has been calculated on an undiluted basis i.e. based on the total number of 298,954,431 AU1 Shares.

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8.2 Fair Value Calculation – QMP

As noted in section 5.8, AU1’s share price and trading volumes has fluctuated over the period since 30 September 2019, with a particular drop during February 2020 to June 2020 (being the approximate periods when the COVID-19 related lockdowns were in place for most Australian states). However, as noted in section 5.8, AU1’s share price and trading volumes have stabilised since July 2020. Prior to the onset of COVID-19, during the months up to January 2020, the share price ranged between $0.044 and $0.076, and AU1’s monthly VWAP ranged from $0.050 to $0.065.

To remove any effects that the uncertainty around COVID-19 would have had on the quoted market price, we have used the following as our references for the purposes of this calculation:  the lowest share price during the months up to January 2020, being $0.044, as our ‘low’ quoted market price;  the highest VWAP during the months up to January 2020, being $0.065, as our ‘high’ quoted market price; and  the mid-point between $0.044 and $0.065, being $0.055, as our ‘preferred’ quoted market price.

In the calculation below we have also applied a control premium range from 25% to 30% with the midpoint at 27.5% to reflect the value of the Company on a control basis. This reflects an interest where a shareholder has advantages such as the ability to exert influence over the strategic direction and cash flow of a company, amongst other areas.

This results in the following QMP valuation of AU1 on a control basis: ($’000) Ref Low Preferred High Total AU1 Shares on issue 8.1.4 298,954,431 298,954,431 298,954,431 QMP per AU1 Share $0.044 $0.055 $0.065 Value of AU1 on a minority basis 13,154 16,293 19,432 Add: Control premium 3,288 4,481 5,830 (25%, 27.5% and 30%) Total value of AU1 on a control basis 16,442 20,774 25,262

Value per AU1 Share on a control $0.055 $0.069 $0.085 basis Source: Nexia analysis.

8.3 Conclusion on Fair Value of AU1 Shares on a Control Basis before the Proposed Transaction

As discussed in section 4, in evaluating the Proposed Transaction we are first considering the fair value of an AU1 Share on a control basis.

To determine the fair value of an AU1 Share on a control basis, we have used the mid-point value determined under each of the valuation methods in sections 8.1 and 8.2 above. Each valuation approach has been given equal weighting.

Based on this, we have concluded the fair value of an AU1 Share on a control basis before the Proposed Transaction to be as follows:

Low Preferred High Fair value of an AU1 Share on a control $0.044 $0.055 $0.067 basis before the Proposed Transaction Source: Nexia analysis.

Based on the results above we consider the value of an AU1 Share prior to the Proposed Transaction on a control basis to be between $0.044 and $0.067, with a preferred value of $0.055.

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9. VALUE OF THE AGENCY GROUP ON A MINORITY BASIS AFTER THE PROPOSED TRANSACTION

As discussed in section 4, in evaluating the Proposed Transaction we are considering the fair value of an AU1 Share on a minority basis after the Proposed Transaction in accordance with RG 111.

9.1 Fair Value Calculation

To determine the fair value of a minority interest per share after the Proposed Transaction, we have considered the fair value determined in section 8, adjusted by the Proposed Transaction.

($’000) Ref Low Preferred High Fair value of an AU1 Share on a control 8.3 $0.044 $0.055 $0.067 basis before the Proposed Transaction Number of AU1 Shares on issue before the 8.1.4 298,954,431 298,954,431 298,954,431 Proposed Transaction Total value of AU1 on a control basis 13,119 16,494 20,065 before the Proposed Transaction

Proposed Transaction: Interest accrued and to be capitalised onto 9.1.1 (77) (77) (77) the Convertible Notes Increase in equity from the conversion of the face value and interest portion of both 9.1.2 6,227 6,227 6,227 Convertible Notes Proceeds to be received upon the exercise 9.1.3 68 68 68 of May 2020 Options Proceeds to be received upon the exercise 9.1.4 324 324 324 of October 2020 Options Total value of AU1 on a control basis after 19,660 23,036 26,607 the Proposed Transaction Less: Minority discount (4,537) (4,968) (5,321) (30%, 27.5% and 25%) Total Value of AU1 on a Minority 15,123 18,067 21,286 Basis after the Proposed Transaction

Number of Shares Number of AU1 Shares on issue before the 8.1.4 298,954,431 298,954,431 298,954,431 Proposed Transaction Potential Issue of AU1 Shares to Peters Investments under the Proposed 9.1.5 244,640,690 244,640,690 244,640,690 Transaction Number of AU1 Shares outstanding 543,595,121 543,595,121 543,595,121 after the Proposed Transaction

Value per AU1 Share $0.028 $0.033 $0.039 on a Minority Basis Source: Nexia analysis.

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9.1.1 Interest Accrued and to be Capitalised onto the Convertible Notes As indicated in section 1.4, we have estimated the interest accrued on the Convertible Notes to be $77,299. This has been calculated as follows: Note Amended May 2020 Convertible Notes Issue date 1 15-May-2020 Principal amount 1 $1,000,000 Interest rate 3 8.00% Date of conversion 5-Nov-2020 Term (months) 5.67 Interest on Amended May 2020 Convertible Notes $38,370 October 2020 Convertible Notes Deemed issue date 2 1-Oct-2020 Principal amount 2 $5,150,000 Interest rate 3 8.00% Date of conversion 5-Nov-2020 Term (months) 1.13 Interest on October 2020 Convertible Notes $38,928 Total Interest Accrued on Convertible Notes $77,299 Source: Nexia analysis. Notes: 1. As per the terms of the Amended May 2020 Convertible Notes as detailed in section 1.2, which includes a principal value of $1,000,000 and interest to be calculated from 15 May 2020. 2. As per the terms of the October 2020 Convertible Notes as detailed in section 1.3, which includes a principal value of $5,150,000 (including facilitation fee) and interest to be calculated from 1 October 2020. 3. According to the terms of the Convertible Notes (detailed in sections 1.2 and 1.3), the interest is at the higher of 8% and the interest rate of the Senior Debt. As per note 5 of section 5.6.2, the interest on the Senior Debt just prior to the announcement of the Funding Package was 8.59% per annum. For the purposes of this Report, we have assumed an interest rate of 8%.

9.1.2 Dollar Amount of Convertible Notes to be Converted into AU1 Shares Following the above calculation of interest accrued on Convertible Notes in section 9.1.1, we have detailed below the calculation of the estimated dollar amount of Convertible Notes to be converted into AU1 Shares: Note Principal Interest Total

Amounts to be Converted from Convertible Notes Amended May 2020 Convertible Notes 1 $1,000,000 $38,370 $1,038,370 October 2020 Convertible Notes 2 $5,150,000 $38,928 $5,188,928 Total Amounts to be Converted $6,150,000 $77,299 $6,227,299 Notes: 1. See details of principal and interest calculations as set out in notes 1 and 3 of section 9.1.1 above. 2. See details of principal and interest calculations as set out in notes 2 and 3 of section 9.1.1 above.

9.1.3 Proceeds to be Received Upon the Exercise of May 2020 Options According to section 1.2, the 2 million May 2020 Options are exercisable at $0.033828 each.

9.1.4 Proceeds to be Received Upon the Exercise of October 2020 Options According to section 1.3, the 12 million October 2020 Options are exercisable at $0.027 each.

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9.1.5 Potential Issue of AU1 Shares Issued to Peters Investments under the Proposed Transaction Following the above notes in sections 9.1.1, 9.1.2, 9.1.3 and 9.1.4, we have detailed below the calculation of the potential number of AU1 Shares to be issued upon conversion of the Convertible Notes (including interest accrued) and upon the exercise of the Peters Investments Options: Ref / Note Principal Interest Total

Conversion of Convertible Notes Total amount to be converted from 9.1.2 $6,150,000 $77,299 $6,227,299 Convertible Notes Conversion price note 1 $0.027 $0.027 $0.027 Potential Number of AU1 Shares to be Issued from Conversion of Convertible 227,777,778 2,862,912 230,640,690 Notes

Exercise of Peters Investment Options Potential Number of AU1 Shares to be 9.1.3 2,000,000 Issued from Exercise of May 2020 Options Potential Number of AU1 Shares to be Issued from Exercise of October 2020 9.1.4 12,000,000 Options Potential Number of AU1 Shares to be Issued from Exercise of Peters 14,000,000 Investments Options

Total Potential Number of AU1 Shares 244,640,690 to be Issued to Peters Investments

Source: Nexia analysis. Notes: 1. According to the terms of the Convertible Notes, the conversion price is the lower of $0.027 and the issue price of AU1 Shares offered under any subsequent capital raising to raise over $1 million. Due to the uncertainty of issue prices the Company may offer under any future capital raising, we have assumed a conversion price of $0.027 per AU1 Share for the purposes of this calculation.

9.2 Conclusion on Fair Value of AU1 Shares on a Minority Basis after the Proposed Transaction

As discussed in section 4, in evaluating the Proposed Transaction we are considering the fair value of an AU1 Share on a minority basis.

Based on this we have concluded the fair value of an AU1 Share on a minority basis after the Proposed Transaction to be as follows:

Ref Low Preferred High Fair value of an AU1 Share on a minority 9.1 $0.028 $0.033 $0.039 basis after the Proposed Transaction Source: Nexia analysis.

Based on the results above we consider the value of an AU1 Share after the Proposed Transaction on a minority basis to be between $0.028 and $0.039, with a preferred value of $0.033.

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10. ASSESSMENT OF FAIRNESS

This is summarised below:

Ref Low Preferred High Fair value of an AU1 Share on a control basis 8.3 $0.044 $0.055 $0.067 before the Proposed Transaction Fair value of an AU1 Share on a minority basis after the Proposed 9.2 $0.028 $0.033 $0.039 Transaction Source: Nexia analysis.

The above values indicate that, in the absence of any other relevant information, the Proposed Transaction is not fair to the Non-Associated Shareholders.

Therefore, we have concluded that the Proposed Transaction is not fair.

11. ASSESSMENT OF REASONABLENESS

11.1 Approach to Assessing Reasonableness

In forming our conclusions in this Report, we have compared the advantages and disadvantages to the Non- Associated Shareholders if the Proposed Transaction proceeds.

11.2 Advantages of the Proposed Transaction

We have outlined the potential advantages of the Proposed Transaction in the following table:

Advantage Explanation

The Proposed As indicated in section 1.1, the Funding Package, which includes the extension Transaction will of the $5 million primary secured debt facility from Macquarie Bank, is significantly reduce contingent on the Proposed Transaction proceeding. If the Proposed the risk of AU1 Transaction does not proceed, the Funding Package will not be secured and as defaulting on its loan such AU1 will need to raise additional funds in order to meet Macquarie Bank’s from Macquarie repayment requirements as previously negotiated by the Group’s Board of Bank. Directors. If the Group is unsuccessful in raising additional funds, this will significantly increase the risk of the Group’s loan from Macquarie Bank defaulting and consequently increase the risk of Macquarie Bank exercising its rights to appoint an administrator to wind-up the assets of the Group.* If this happens, this will decrease AU1’s shareholders’ chances of realising any value for their shares. * Even though the Senior Debt has a joint and several guarantee from the Guarantors, the Company will still be liable for these funds.

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Advantage Explanation

The Proposed The Proposed Transaction may be the only opportunity that AU1 has to raise a Transaction may be significant amount of funds currently or in the near future, especially when AU1’s only option for taking into account the current uncertain market environment and market funding prior to 30 volatility associated with the global COVID-19 pandemic. December 2020, the This may result in challenges for the Company to raise funds from more end date of the traditional means such as equity raisings, or to find any other alternative Macquarie Bank loan sources of funding. Deed of Forbearance.

The terms of the The Group’s current net deficit working capital and net current liabilities as at Convertible Notes 30 June 2020 was $18.4 million. The Convertible Notes do not require interest allow the Company or repayments to be made in cash, and also allows for the facilitation fee and to reserve its cash any interest accrued to be capitalised. As such, the Proposed Transaction will balances in the short- enable the Group to increase its solvency in the short-term by enabling the term. Company to reserve its level of cash.

The Proposed If the Proposed Transaction proceeds, AU1 will not need to raise additional Transaction will funds (as per above) and AU1 will be able to continue to operate and focus on allow AU1 to achieving its strategic goals, business objectives and growth. continue to operate This in turn will increase AU1’s shareholders’ chances of realising the value of and achieve its their shares. strategic goals and business objectives.

The conversion of the Upon conversion of the Convertible Notes into equity, the Group’s long-term Convertible Notes solvency will improve as the Group’s obligation to repay the Convertible Notes will improve AU1’s is terminated. Therefore the Proposed Transaction places the Group in a better solvency in the long- financial position. term.

The exercise of the If the Peters Investments Options are exercised, this will enable the Company Peters Investments to raise $391,656 ($67,656 from the exercise of the May 2020 Options and Options will enable $324,000 from the exercise of the October 2020 Options), further improving the Company to raise the Group’s financial position. an additional $391,656. Source: Nexia analysis.

11.3 Disadvantages of the Proposed Transaction

We have outlined the potential disadvantages of the Proposed Transaction in the following table:

Disadvantage Explanation Peters Investments If the Proposed Transaction goes ahead, Peters Investments’ holdings in AU1 and its related will increase from 0% to 45.00%*, resulting in Peters Investments having a parties will hold a significant interest in the Company, which could result in a change in control. significant interest in However, as indicated in the NoM, Peters Investments has no intention of AU1, which could influencing the operational and financing decisions of the Company. result in a change of Conversely, the existing shareholders’ collective interest in AU1 will reduce control and severely from 100% to 55.00%*, representing a severe dilution of the existing dilute existing shareholders’ collective interest in AU1. shareholders’ collective interest in AU1.

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Disadvantage Explanation The Proposed The Proposed Transaction will result in an additional 244,640,690 AU1 Shares Transaction could being issued to Peters Investments, bringing the total of AU1 Shares reduce the liquidity outstanding and on the market to 543,595,121 (refer to section 1.4)**. of AU1 Shares. This could result in the Company’s trading percentage of issued capital to reduce from 2.96% (as per section 5.8) to 1.63%** (assuming the same levels of trading as the trading volumes recorded over the last 180 days to 30 September 2020). As noted in section 5.8 however, despite the Company’s low trading percentage, AU1 Shares had a moderate level of liquidity with relatively free flow of trading. Source: Nexia analysis.

* This is based on the assumption that the Convertible Notes are exercised immediately as at the date of the Report and that no repayments are made by the Company to Peters Investments before conversion. If the Convertible Notes are exercised just before the maturity date, Peters Investments’ holdings in AU1 could increase from 0.00% to 49.53% and existing shareholders’ collective interest in AU1 will reduce from 100% to 50.47% (refer to section 1.4 for further details).

** This is based on the assumption that the Convertible Notes are exercised immediately as at the date of the Report and that no repayments are made by the Company to Peters Investments before conversion. If the Convertible Notes are exercised just before the maturity date, an additional 293,406,258 AU1 Shares would be issued to Peters Investments resulting in a total of 592,360,689 AU1 Shares outstanding and on the market. This could result in the Company’s trading percentage of issued capital to reduce to 1.50%.

11.4 Alternatives to the Proposed Transaction

11.5 Implications of the Proposed Transaction Not Proceeding

As mentioned in section 11.2, if the Proposed Transaction does not proceed the Funding Package will not be secured, resulting in the Company needing to raise additional near term funds in order to repay the Macquarie Bank loan by 30 December 2020, being the Deed of Forbearance end date. Taking into account the current uncertain market environment and market volatility, it may be difficult, even challenging for the Company to raise from more traditional means such as equity raisings, or to find any other alternative sources of funding.

This will in turn increase the risk of the Group’s loan from Macquarie Bank defaulting and consequently increase the risk of Macquarie Bank exercising its rights to appoint an administrator to wind-up the assets of the Group. This may result in AU1’s shareholders’ not being able to realise any value for their shares in AU1.

In addition, if the Proposed Transaction does not proceed, the funds from the Convertible Notes (currently held in trust) will not be released to AU1, and approximately $316,774 will need to be repaid to Peters Investments in cash. The amounts that have to be repaid to Peters Investments are made up of the following:  the facilitation fee for the October 2020 Convertible Notes (being $150,000);

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 the total interest accrued up to the date of repayment (estimated at $77,299, see sections 1.2 and 1.3); and  the Black-Scholes valuation amount of the Remainder Options (estimated to be approximately $89,475, see section 1.3). This amount is required to be repaid within 5 business days of the AGM.

The above factors will put additional pressure on the Group’s financial position and further increase the risk of the Group defaulting on its loan with Macquarie Bank.

11.6 Conclusion as to Reasonableness

In accordance with RG 111, a transaction is reasonable if:  the transaction is fair; or  despite not being fair, but considering other significant factors, there are sufficient reasons for security holders to accept the offer in the absence of a higher bid before the close of an offer.

In our consideration of the advantages and disadvantages of the Proposed Transaction (as set out in sections 11.2 and 11.3), the alternatives to and the implications of the Proposed Transaction not proceeding (as described in sections 11.4 and 11.5), and, in the absence of any other higher offers for AU1 Shares currently, we have concluded that there are sufficient reasons for the Non-Associated Shareholders to vote in favour of the Proposed Transaction.

As such, although the Proposed Transaction is not fair, considering and taking into account other significant factors, we have concluded that the Proposed Transaction is reasonable to the Non-Associated Shareholders.

12. OPINION

Taking into consideration the matters above (including those set out in sections 10 and 11), we have concluded that, in our opinion, the Proposed Transaction is not fair but reasonable to the Non- Associated Shareholders.

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APPENDIX A – GLOSSARY

Term Definition Denotes that all figures in the table are stated in thousands of dollars ($’000) (unless otherwise indicated). Denotes that all figures in the table are stated in millions of dollars (unless ($’000,000) otherwise indicated). Denotes that all figures in the table are stated in billions of dollars (unless ($’000,000,000) otherwise indicated). AFCA Australian Financial Complaints Authority AFSL Australian Financial Services Licence AGM Annual General Meeting to be held by AU1 on 23 December 2020. Amended May 2020 Refers to the May 2020 Convertible Notes, updated to reflect the terms of Convertible Notes the October 2020 Convertible Notes (see section 1.2 for further detail). ASIC Australia Securities and Investment Commission ASX Australian Securities Exchange AU1, Client, Company, or The Agency Group Australia Ltd (ACN: 118 913 232) The Agency Group AU1 Option(s) Option(s) in AU1. AU1 Share(s) Fully paid ordinary share(s) in AU1. Ausnet “Ausnet Financial Services Ltd”, being the previous name of AU1. The Black-Scholes Valuation Model, also known as the Black-Scholes- Merton Valuation Model, is a mathematical model for pricing an options contract. In particular, the model estimates the variation over time of Black-Scholes Valuation financial instruments. It assumes these instruments (such as stocks or Model futures) will have a lognormal distribution of prices. Using this assumption and factoring in other important variables, the equation derives the price of a call option. CAANZ Chartered Accountants Australia and New Zealand Refers collectively to the (Amended) May 2020 Convertible Notes and the Convertible Notes October 2020 Convertible Notes. Corporations Act Corporations Act 2001 (Cth) A family of viruses that include COVID-19 (see below) and other respiratory Coronavirus illnesses. The terms “coronavirus” and “COVID-19” are used interchangeably in this Report to denote the current global pandemic. COVID-19 COVID-19 is the respiratory illness related to the current global pandemic. DCF Discounted Cash Flow methodology. The Deed of Forbearance entered into between Macquarie Bank Limited Deed of Forbearance and Top Level Real Estate Pty Ltd. EBIT Earnings Before Interest and Tax EBITDA Earnings Before Interest, Tax, Depreciation and Amortisation FSG Financial Services Guide Refers to a $11 million funding package, as announced by the Company on 29 October 2020, which includes:  the Amended May 2020 Convertible Notes and the October 2020 Convertible Notes, which will be used to pay down the Group’s debt with Macquarie Bank; and Funding Package  an extended $5 million primary secured debt facility with Macquarie Bank, which is subject to shareholder approval of the Proposed Transaction. Further details of the funding package as announced is set out in section 1.1. FY 2017 The financial year ended or as at 30 June 2017. FY 2018 The financial year ended or as at 30 June 2018. FY 2019 The financial year ended or as at 30 June 2019. FY 2020 The financial year ended or as at 30 June 2020.

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Term Definition The Guarantors include the following shareholders of AU1 who provided a joint and several guarantee to Macquarie Bank in relation to the Senior Debt:  Teldar Real Estate Pty Ltd <MJ Lahood Family A/C>, an entity controlled by one of AU1’s directors, Matthew Lahood; Guarantors  MAC Property Group Pty Ltd <MAC A/C>;  SEMC 2 Pty Ltd <The Chen Asset A/C>;  Ben Collier Investments Pty Ltd; and  Daring Investments Pty Ltd. See further details in note 5b of section 5.6.2. Group AU1 and its subsidiaries. GST Goods and Services Tax In-the-Money or Deep- The term for when the strike price of a call option is lower than the current in-the-Money underlying share price. Macquarie Bank Macquarie Bank Limited Managex Managex Funds Management Pty Ltd Magnolia Magnolia Equities III Pty Limited, or an entity nominated by it Refers to the maturity date of the Amended May 2020 Convertible Notes Maturity Date and the October 2020 Convertible Notes, being 31 March 2023. Refers to the convertible notes issued by AU1 on 15 May 2020 to Peters May 2020 Convertible Investments to raise $1 million (see sections 1.1 and 1.2 for further Notes details). May 2020 Convertible Refers collectively to both the (Amended) May 2020 Convertible Notes and Notes and Options the May 2020 Options. Refers to the 2 million AU1 Options which was issued to Peters Investments together with the May 2020 Convertible Notes. The options were issued on May 2020 Options 25 May 2020, are exercisable at $0.033828 each and expire on 25 May 2022 (see section 1.2 for further details). Nexia Entities or Nexia Nexia Perth Pty Ltd and its related entities. Perth Entity Non-Associated Shareholders of AU1 who are not associated with Peters Investments or its Shareholders associates. Notice of Meeting, NoM Document to be sent to shareholders on or about the date of this Report or Document in which this Report is included. NPCF Nexia Perth Corporate Finance Pty Ltd (AFSL 289358) Refers to the convertible notes to be issued by the Company to Peters Investments to raise $5 million under the October 2020 Convertible Note October 2020 Agreement. Convertible Notes The issue of the October 2020 Convertible Notes is subject to shareholder approval as outlined in section 1.1. The terms of the convertible notes are outlined in section 1.3. Refers to the convertible note agreement the Company entered into with October 2020 Peters Investments to raise $5 million. Convertible Note As part of the agreement, the Company also agreed to issue 12 million AU1 Agreement Options (“October 2020 Options”) to Peters Investments. See further details in section 1.3. October 2020 Refers collectively to both the October 2020 Convertible Notes and the Convertible Notes and October 2020 Options. Options

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Term Definition Refers to the 12 million AU1 Options related to the October 2020 Convertible Note Agreement, which is made up of:  8,829,559 AU1 Options which were issued on 4 November 2020 (“Upfront Options”); and October 2020 Options  3,170,441 AU1 Options which has not yet been issued and is part of the Proposed Transaction (“Remainder Options”, see sections 1.1 and 1.3). Each of the October 2020 Options are (or will be) exercisable at $0.027 each and (will) expire on 31 March 2023. The term for when the strike price of a call option exceeds the current Out-of-the-Money underlying share price. Peters Investments Peters Investments Pty Ltd and its associates. Peters Investments Refers collectively to the May 2020 Options and the October 2020 Options Options issued to Peters Investments. Refers to the letter dated 4 December 2020 from Magnolia Equities III Pty Limited stating that Magnolia Equities III Pty Limited, or an entity Proposal nominated by it intends to make a takeover bid for 100% of the fully paid ordinary shares in The Agency Group at $0.04 per Share. Refers to the proposed potential issue of AU1 Shares to Peters Investments upon Peters Investments’ conversion of the Convertible Notes and/or upon Proposed Transaction Peters Investments’ exercise of the Peters Investments Options, which is subject to shareholder approval and is the subject of Resolution 6 of the NoM for the AGM which will be held on or around 23 December 2020. QMP Quoted Market Price methodology. Refers to the 3,170,441 of the October 2020 Options which are yet to be Remainder Options issued and part of the Proposed Transaction (see details in sections 1.1 and 1.3). Report Independent Expert’s Report RG 74 ASIC Regulatory Guide 74: Acquisitions approved by members RG 111 ASIC Regulatory Guide 111: Content of expert reports RG 112 ASIC Regulatory Guide 112: Independence of experts Refers to the Group’s loan and related borrowing facilities with Macquarie Senior Debt Bank. SLP Sell Lease Property Takeover Event A trade sale, scheme of arrangement or takeover TAPM The Agency Property Management WA Pty Ltd The Agency Refers to one of the Group’s brands. TLRE Top Level Real Estate Refers to the 8,829,559 of the October 2020 Options which were issued on Upfront Options 4 November 2020 (see details in sections 1.1 and 1.3). VWAP Volume Weighted Average Price of AU1 Shares.

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APPENDIX B – SOURCES OF INFORMATION

In making our assessment as to whether the Proposed Transaction is fair and reasonable to the Non- Associated Shareholders, we have reviewed relevant published available information and other unpublished information of the Company which is relevant in the circumstances. In addition, we have held discussions with representatives of the Company’s Board. Information we have received includes, but is not limited to the following:  APES 225 Valuation Services  ASIC and ASX databases  Reserve Bank of Australia database  Recent ASX announcements lodged by AU1  Audited financial statements of The Agency Group for FY 2017, FY 2018, FY 2019 and FY 2020 (as included in the annual reports lodged by AU1 for those years).  Unaudited income statement of AU1 for the 3 months ended 30 September 2020  Unaudited balance sheet of AU1 as at 30 September 2020  Real Estate Services in Australia, Industry Report by IBISWorld (published on August 2020)  AU1’s share and option registries at 4 November 2020  The Agency Group’s website at https://investors.theagency.com.au/  AU1’s group structure a provided by management.  Draft October 2020 Convertible Note Agreement  Draft Notice of Annual General Meeting and Explanatory Memorandum prepared by The Agency Group  ASIC Regulatory Guide 74: Acquisitions approved by members  ASIC Regulatory Guide 111: Content of expert reports  ASIC Regulatory Guide 112: Independence of experts  Intelligent Investor database  Yahoo! Finance database  Real Estate Services in Australia, Industry Report by IBISWorld (published on August 2020)  S&P Capital IQ  Management information

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APPENDIX C – STATEMENT OF DECLARATION & QUALIFICATIONS

Confirmation of Independence

Prior to accepting this engagement Nexia Perth Corporate Finance Pty Ltd (“NPCF”) determined its independence with respect to The Agency Group Australia Limited (“The Agency Group”), Peters Investments Pty Ltd (“Peters Investments”), and their associates with reference to ASIC Regulatory Guide 112: Independence of experts (“RG 112”). NPCF considers that it meets the requirements of RG 112 and that it is independent of The Agency Group, Peters Investments, and their associates.

Also, in accordance with section 648(2) of the Corporations Act we confirm we are not aware of any business relationship or financial interest of a material nature with The Agency Group, Peters Investments, and their related parties or associates that would compromise our impartiality.

Mrs Muranda Janse Van Nieuwenhuizen, authorised representative of NPCF, has prepared this Report. Neither she nor any related entities of NPCF have any interest in the promotion of the Proposed Transaction nor will NPCF receive any benefits, other than normal professional fees, directly or indirectly, for or in connection with the preparation of this Report. Our fee is not contingent upon the success or failure of the Proposed Transaction, and has been calculated with reference to time spent on the engagement at normal professional fee rates for work of this type. Accordingly, NPCF does not have any pecuniary interests that could reasonably be regarded as being capable of affecting our ability to give an unbiased opinion under this engagement.

NPCF provided a draft copy of this Report to the Directors and management of The Agency Group for their comment as to factual accuracy, as opposed to opinions, which are the responsibility of NPCF alone. Changes made to this Report, as a result of the review by the Directors and management of The Agency Group, have not changed the methodology or conclusions reached by NPCF.

Reliance on Information

The statements and opinions given in this Report are given in good faith and in the belief that such statements and opinions are not false or misleading. In the preparation of this Report NPCF has relied upon information provided on the basis it was reliable and accurate. NPCF has no reason to believe that any information supplied to it was false or that any material information (that a reasonable person would expect to be disclosed) has been withheld from it. NPCF evaluated the information provided to it by The Agency Group as well as other parties, through enquiry, analysis and review, and nothing has come to its attention to indicate the information provided was materially misstated or would not afford reasonable grounds upon which to base its Report. Accordingly, we have taken no further steps to verify the accuracy, completeness or fairness of the data provided.

Our procedures and enquiries do not include verification work, nor constitute an audit or review in accordance with Australian Auditing Standards. NPCF does not imply and it should not be construed that it has audited or in any way verified any of the information provided to it, or that its enquiries could have verified any matter which a more extensive examination might disclose.

The sources of information that we relied upon are outlined in Appendix B of this Report.

Qualifications

NPCF carries on business at Level 3, 88 William Street, Perth WA 6000. NPCF holds Australian Financial Services Licence No 289358 authorising it to provide financial product advice on securities to retail and wholesale clients. NPCF’s representatives are therefore qualified to provide this Report.

Mrs Muranda Janse Van Nieuwenhuizen specifically was involved in the preparing and reviewing this Report. Mrs Janse Van Nieuwenhuizen is a member of both the Chartered Accountants Australia and New Zealand (“CAANZ”) and the South African Institute of Chartered Accountants. She is also a Registered Company Auditor and an AFSL Authorised Representative for NPCF.

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Consent and Disclaimers

The preparation of this Report has been undertaken at the request of the Directors of The Agency Group. It also has regard to relevant ASIC Regulatory Guides. It is not intended that the Report should be used for any other purpose than to accompany the Notice of Annual General Meeting (“NoM” or “Document”) to be sent to The Agency Group shareholders. In particular, it is not intended that this Report should be used for any purpose other than as an expression of NPCF’s opinion as to whether or not the Proposed Transaction is fair and reasonable to The Agency Group shareholders.

NPCF consent to the issue of this Report in the form and context in which it is included in the NoM to be sent to The Agency Group shareholders.

Shareholders should read all documents issued by The Agency Group that consider the Proposed Transaction in its entirety, prior to proceeding with a decision. NPCF had no involvement in the preparation of these documents, with the exception of our Report.

This Report has been prepared specifically for the Non-Associated Shareholders of The Agency Group. Neither NPCF, nor any member or employee thereof undertakes responsibility to any person, other than a shareholder of The Agency Group, in respect of this Report, including any errors or omissions howsoever caused. This Report is “General Advice” and does not take into account any person’s particular investment objectives, financial situation and particular needs. Before making an investment decision based on this advice, you should consider, with or without the assistance of a securities advisor, whether it is appropriate to your particular investment needs, objectives and financial circumstances.

Our procedures and enquiries do not include verification work, nor constitute an audit or review in accordance with Australian Auditing Standards.

Certain numbers included in tables throughout this Report have been rounded and therefore may not add exactly and, unless stated otherwise, all amounts are in Australian dollars.

Our opinions are based on economic, market and other conditions prevailing at the date of this Report. Such conditions can change significantly over relatively short periods of time. Furthermore, financial markets have been particularly volatile in recent times. Accordingly, if circumstances change significantly, subsequent to the issue of this Report, our conclusions and opinions may differ from those stated herein. There is no requirement for NPCF to update this Report for information that may become available subsequent to its date.

APES 225 Valuation Services

Our Report has been prepared in accordance with APES 225 Valuation Services.

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APPENDIX D – VALUATION METHODOLOGIES

In preparing this Report we have considered valuation methods commonly used in practice and those recommended by RG 111. These methods include:  the discounted cash flow method;  the capitalisation of earnings method;  asset based methods; and  analysis of share market trading.

Discounted Cash Flow Method

Description Of the various methods noted above, the discounted cash flow method has the strongest theoretical standing. It is also widely used in practice by corporate acquirers and company analysts. The discounted cash flow method estimates the value of a business by discounting expected future cash flows to a present value using an appropriate discount rate. A discounted cash flow valuation requires:  a forecast of expected future cash flows;  an appropriate discount rate; and  an estimate of terminal value. It is necessary to project cash flows over a suitable period of time (generally regarded as being at least five years) to arrive at the net cash flow in each period. For a finite life project or asset this would need to be done for the life of the project. This can be a difficult exercise requiring a significant number of assumptions such as revenue growth, future margins, capital expenditure requirements, working capital movements and taxation. The discount rate used represents the risk of achieving the projected future cash flows and the time value of money. The projected future cash flows are then valued in current day terms using the discount rate selected. A terminal value reflects the value of cash flows that will arise beyond the explicit forecast period. This is commonly estimated using either a constant growth assumption or a multiple of earnings (as described under capitalisation of future maintainable earnings below). This terminal value is then discounted to current day terms and added to the net present value of the forecast cash flows. The discounted cash flow method is often sensitive to a number of key assumptions such as revenue growth, future margins, capital investment, terminal growth and the discount rate. All of these assumptions can be highly subjective sometimes leading to a valuation conclusion presented as a range that is too wide to be useful.

Use of the Discounted Cash Flow Method A discounted cash flow approach is usually preferred when valuing:  early stage companies or projects;  limited life assets such as a mine or toll concession;  companies where significant growth is expected in future cash flows; or  projects with volatile earnings. It may also be preferred if other methods are not suitable, for example if there is a lack of reliable evidence to support a capitalisation of earnings approach. However, it may not be appropriate if reliable forecasts of cash flow are not available and cannot be determined.

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Capitalisation of Earnings Method

Description The capitalisation of earnings method is a commonly used valuation methodology that involves determining a future maintainable earnings figure for a business and multiplying that figure by an appropriate capitalisation multiple. This methodology is generally considered a short form of a discounted cash flow, where a single representative earnings figure is capitalised, rather than a stream of individual cash flows being discounted. The capitalisation of earnings methodology involves the determination of:  a level of future maintainable earnings; and  an appropriate capitalisation rate or multiple. A multiple can be applied to any of the following measures of earnings: Revenue – most commonly used for companies that do not make a positive EBITDA or as a cross-check of a valuation conclusion derived using another method. EBITDA – most appropriate where depreciation distorts earnings, for example in a company that has a significant level of depreciating assets but little ongoing capital expenditure requirement. EBIT – in most cases EBIT will be more reliable than EBITDA as it takes account of the capital intensity of the business. NPAT – relevant in valuing businesses where interest is a major part of the overall earnings of the group (e.g. financial services businesses such as banks). Multiples of EBITDA, EBITA and EBIT value the whole businesses, or its enterprise value irrespective of the gearing structure. NPAT (or P/E) values the equity of a business The multiple selected to apply to maintainable earnings reflects expectations about future growth, risk and the time value of money all wrapped up in a single number. Multiples can be derived from three main sources. Using the guideline public company method, market multiples are derived from the trading prices of stocks of companies that are engaged in the same or similar lines of business and that are actively traded on a free and open market, such as the ASX or the NSX. The merger and acquisition method is a method whereby multiples are derived from transactions of significant interests in companies engaged in the same or similar lines of business. In Australia this has been called the comparable transaction methodology.

Use of the Capitalisation of Earnings Method The capitalisation of earnings method is widely used in practice. It is particularly appropriate for valuing companies with a relatively stable historical earnings pattern which is expected to continue. This method is less appropriate for valuing companies or assets if:  there are no suitable listed company or transaction benchmarks for comparison;  the asset has a limited life;  future earnings or cash flows are expected to be volatile; or  there are negative earnings or the earnings of a business are insufficient to justify a value exceeding the value of the underlying net assets.

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Asset Based Methods

Description Asset based valuation methods estimate the value of a company based on the realisable value of its net assets, less its liabilities. There are a number of asset based methods including:  orderly realisation;  liquidation value;  net assets on a going concern basis;  replacement cost; and  reproduction cost. The orderly realisation of assets method estimates Fair Market Value by determining the amount that would be distributed to shareholders, after payment of all liabilities including realisation costs and taxation charges that arise, assuming the company is wound up in an orderly manner. The liquidation method is similar to the orderly realisation of assets method except the liquidation method assumes the assets are sold in a shorter time frame. Since wind up or liquidation of the company may not be contemplated, these methods in their strictest form may not necessarily be appropriate. The net assets on a going concern basis method estimate the market values of the net assets of a company but do not take account of realisation costs. The asset / cost approach is generally used when the value of the business’s assets exceeds the present value of the cash flows expected to be derived from the ongoing business operations, or the nature of the business is to hold or invest in assets. It is important to note that the asset approach may still be the relevant approach even if an asset is making a profit. If an asset is making less than an economic rate of return and there is no realistic prospect of it making an economic return in the foreseeable future, an asset approach would be the most appropriate method. Use of Asset Based Methods An asset-based approach is a suitable valuation method when:  an enterprise is loss making and is not expected to become profitable in the foreseeable future;  assets are employed profitably but earn less than the cost of capital;  a significant portion of the company’s assets are composed of liquid assets or other investments (such as marketable securities and real estate investments); or  it is relatively easy to enter the industry (for example, small machine shops and retail establishments). Asset based methods are not appropriate if:  the ownership interest being valued is not a controlling interest, has no ability to cause the sale of the company’s assets and the major holders are not planning to sell the company’s assets; or  a business has (or is expected to have) an adequate return on capital, such that the value of its future income stream exceeds the value of its assets.

Analysis of Share Trading

The most recent share trading history provides evidence of the Fair Market Value of the shares in a company where they are publicly traded in an informed and liquid market. There should also be some similarity between the size of the parcel of shares being valued and those being traded. Where a company’s shares are publicly traded then an analysis of recent trading prices should be considered, at least as a cross-check to other valuation methods.

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