AMA GROUP LIMITED - Merger & Acquisition 2017

THIS IS AN IMPORTANT DOCUMENT AND REQUIRES YOUR IMMEDIATE ATTENTION If you do not understand it or are in doubt as to its contents or how to act, please contact your professional adviser immediately.

TARGET’S STATEMENT

This Target’s Statement has been issued by Automotive Solutions Group Limited ACN 613 474 089 , in response to the bid by AMA Group Limited ACN 113 883 560

to acquire the Shares in Automotive Solutions Group Limited.

ACCEPT THE OFFER

Your Directors unanimously recommend that ACCEPT the Offer you

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LEGAL ADVISER

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Dr Ken Carr Chairman Automotive Solutions Group Limited

28 November 2017

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IMPORTANT NOTICES

This Target’s Statement, dated 28 November 2017, is given by Automotive Solutions Group Limited ACN 613 474 089 (“ASGL”) under Part 6.5 of the Corporations Act in response to the Offer made pursuant to the Bidder’s Statement dated 10 November 2017 which was delivered to ASGL Shareholders by the Bidder on or around 17 November 2017.

Defined terms

A number of defined terms are used in this Target’s Statement. Defined terms have been capitalised. These terms are explained in the glossary in Section 8.

Financial Data

All dollar values are in Australian dollars unless stated otherwise.

ASIC and ASX disclaimer

A copy of this Target’s Statement has been lodged with ASIC and sent to ASX. None of ASIC, ASX or any of their respective officers takes any responsibility for the content of this Target’s Statement.

No account of personal circumstances

This Target’s Statement does not take into account the individual investment objectives, financial or tax situation or particular needs of each ASGL Shareholder. This document does not contain personal financial or taxation advice. Before making a decision in relation to the Offer, you may wish to seek independent financial, taxation and other professional advice.

Disclaimer regarding forward looking statements

This Target’s Statement contains various forward looking statements. You should be aware that these statements are predictions only and are subject to inherent risks and uncertainties in that they may be affected by a variety of known and unknown risks, variables and other factors. Those risks and uncertainties include factors and risks specific to the industry in which ASGL operates as well as general economic conditions and conditions in the financial markets. Many of these risks are beyond the control of ASGL. Actual events or results may differ materially from the events or results expressed or implied in any forward looking statement and deviations are both normal and to be expected.

None of ASGL, any of its officers, or any person named in this Target’s Statement with their consent or any person involved in the preparation of this Target’s Statement makes any representation or warranty (either express or implied) as to the accuracy or likelihood of fulfilment of any forward looking statement, or any events or results expressed or implied in any forward looking statement. You are cautioned not to place undue reliance on those statements. The forward looking statements in this Target’s Statement reflect views held as at the date of this Target’s Statement.

Notice to Foreign Shareholders

The release, publication or distribution of this Target’s Statement in jurisdictions other than Australia may be restricted by law or regulation in such other jurisdictions and persons who come into possession of it should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable laws or regulations. This Target’s Statement has been prepared in accordance with Australian law and the information contained in this Target’s Statement may not be the same as that which would have been disclosed if the Target’s Statement had been prepared in accordance with the laws and regulations outside Australia.

Privacy Statement

ASGL has collected your information from the register of ASGL Shareholders for the purpose of providing you with this Target’s Statement. The type of information ASGL has collected about you includes your name, contact details and information of on your shareholding (as applicable) in ASGL. Without this information, ASGL would be hindered in its ability to issue this Target’s Statement. The Corporation Act requires the name and address of Shareholders to be held in a public register. Your information may be disclosed on a confidential basis to external service providers (Including ASGL Share Registry and print and mail service providers) and may be required to be disclosed to regulators such as ASIC. If you would like details of information about Shares you hold by ASGL, please contact:

Link Market Services Limited Level 15, 324 Queen Street, Brisbane QLD 4000 Phone: 1800 502 355

Information on Bidder in this Target's Statement

Except where disclosed otherwise, the information on the Bidder in this Target's Statement has been obtained from the Bidder's Statement. ASGL and its Directors are unable to verify the accuracy or completeness of the information on the Bidder.

Subject to the Corporations Act, neither ASGL, nor its officers make any representation or warranty, express or implied, regarding such information and disclaim any responsibility in respect of that information.

ASGL Shareholder Information Line

ASGL has established a Shareholder Information Line which ASGL Shareholders should call if they have any queries in relation to the Offer. The telephone number for the Shareholder Information Line is:

within Australia: (07) 3607 3836
outside Australia: +61 7 3607 3836

The Shareholder Information Line is available Monday to Friday between 9am and 5pm (AEST - Brisbane).

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Section 1 ............................................................................................................................................................ 6 REASONS TO ACCEPT THE OFFER .................................................................................................................. 6 Section 2 ............................................................................................................................................................ 9 KEY INFORMATION ........................................................................................................................................ 9 Section 3 .......................................................................................................................................................... 12 YOUR CHOICES AS AN ASGL SHAREHOLDER ................................................................................................ 12 Section 4 .......................................................................................................................................................... 13 INFORMATION ABOUT THE OFFER AND OTHER IMPORTANT ISSUES ......................................................... 13 Section 5 .......................................................................................................................................................... 16 ABOUT ASGL ................................................................................................................................................ 16 Section 6 .......................................................................................................................................................... 19 INTERESTS OF DIRECTORS ........................................................................................................................... 19 Section 7 .......................................................................................................................................................... 20 ADDITIONAL INFORMATION ........................................................................................................................ 20 Section 8 .......................................................................................................................................................... 23 GLOSSARY .................................................................................................................................................... 23 Section 9 .......................................................................................................................................................... 25 CORPORATE DIRECTORY .............................................................................................................................. 25 Annexure A ...................................................................................................................................................... 26 LIST OF MATERIAL ANNOUNCEMENTS ........................................................................................................ 26 Annexure B ...................................................................................................................................................... 28 INDEPENDENT EXPERT’S REPORT ................................................................................................................ 28

KEY DATES

Date of the Bidder’s Statement	10 November 2017
Offer Period officially commences	17 November 2017
Date of this Target’s Statement	28 November 2017
Close of the Offer Period (unless extended or withdrawn)	18 December 2017

KEY POINTS

The Bidder is offering $0.35 in cash for each ASGL Share you hold.

The Independent Expert considers that the offer is fair and reasonable.

The Directors unanimously recommend that you ACCEPT the Offer.

The Offer provides certainty of value and there is no guarantee that ASGL Shares will 4 trade at or above the Offer Price if the Offer is not successful.

No Superior Offer has been made or is anticipated by the Directors.

6 Shareholders should carefully consider both the Bidder’s Statement and this Target’s Statement in their entirety.

The Offer will expire 18 December 2017, 7:00pm AEDT (unless extended or withdrawn in accordance with the Corporations Act).

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CHAIRMAN’S LETTER

28 November 2017

Dear Shareholder,

ACCEPT AMA Group Limited’s Offer

You should have recently received an offer from AMA Group Limited ( AMA ) to purchase the shares you own in Automotive Solutions Group Limited ( ASGL ) at an Offer Price of $0.35 per ASGL Share.

The current Board were all appointed about one month ago. Since our appointment, we have spent time reviewing ASGL’s business and prospects and considering the current turnaround efforts of management and the likely benefits of those efforts.

It is the view of the Directors that the Offer Price of $0.35 per ASGL Share is fair and reasonable based on current status of the company and its future prospects.

Directors believe the key reasons you should ACCEPT THE OFFER are:

The Offer has been considered by an Independent Expert appointed by the Board, who has concluded that the offer is fair and reasonable.
The Offer represents an attractive premium on the recent trading performance of ASGL’s Shares.
The future value of the ASGL Shares is uncertain and any returns from current turnaround activities are unlikely to result in a material change in performance in the near term.
The company will need ongoing access to financial support to meet its needs over the coming months.
No Superior Offer has materialised and, to the knowledge of the Directors, no such offer is likely (noting also that as at the date of this Target’s Statement, the Bidder already has acceptances in excess of 50.1%, which severely diminishes the prospect of any alternative bidder emerging).

This Target's Statement contains the formal response of your Board to the Offer. We strongly encourage you to read all the information contained in this Target's Statement (including the Independent Expert's Report) carefully and to seek independent advice. You are also strongly encouraged to read the Bidder's Statement which you should have received by now.

The Offer is currently scheduled to close at 7.00pm (AEDT) 18 December 2017, unless further extended.

Your Board will continue to keep you informed of any further developments relating to the Offer. If you have any questions about the information contained in this Target's Statement, please contact the ASGL Shareholder information line on +61 7 3607 3836. We will also post updates on our website at www.asgl.com.au.

Yours sincerely

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Dr Ken Carr Chairman Automotive Solutions Group Limited

Section 1 REASONS TO ACCEPT THE OFFER

THE OFFER OF $0.35 PER ASGL SHARE IS FAIR AND REASONABLE

1.1 Reasons to accept the Offer

a. The Independent Expert has concluded that the Offer is fair and reasonable

The Directors appointed BDO Corporate Finance (East Coast) Pty Ltd, as the Independent Expert, to evaluate the Offer and prepare an Independent Expert’s Report. The Independent Expert has concluded that the Offer of $0.35 per Share is fair and reasonable to ASGL Shareholders.

The Independent Expert has assessed the range of fair market value for an ASGL Share, including a premium for control, as between $0.06 and $0.32 per ASGL Share.

On the basis that the Offer Price exceeds the range of estimated fair market values for ASGL Shares, the Independent Expert has concluded that the Offer is fair and reasonable.

The Directors of ASGL encourage you to read the Independent Expert’s Report in its entirety. The Independent Expert's Report is attached at Appendix 2 of this Target's Statement.

b. Offer Price represents an attractive premium on recent trading prices

At the time the Offer was announced, ASGL’s Shares were trading at $0.22 each. The Independent Expert’s Report notes that over the three month period concluding on 31 October 2017, ASGL Shares traded at a largely stable volume weighted average price ranging between $0.22 and $0.25 per ASGL Share.

The Independent Expert concluded that an appropriate control premium for ASGL Shares is between 20% to 25% and that a price of between $0.26 and $0.32 per ASGL Share, reflects that control premium using the volume weighted average price range referred to above.

The Offer, of $0.35 per ASGL Share, represents a 40% to 59% premium over a quoted market valuation range of between $0.22 and $0.25 per ASGL Share.

c. Certainty of price of $0.35 per ASGL Share

ASGL Shareholders who accept the Offer will, subject to the remaining Offer conditions being satisfied, have certainty of receiving the Offer Price of $0.35 per ASGL Share.

The Offer Price of $0.35 cash per ASGL Shares provides ASGL Shareholders with certainty of value. You will cease to be exposed to the risks associated with an investment in ASGL, including potential security price volatility due to general market conditions and business performance.

In contrast, if the Offer lapses, the amount which ASGL Shareholders will be able to realise for their ASGL Shares will be uncertain and subject to, amongst other things, the performance of ASGL's business from time to time and the vagaries of security market conditions.

d. Liquidity of minority interest in ASGL Shares

There are also risks to ASGL Shareholders who do not accept the Offer arising from being minority shareholders in a company controlled by a single large shareholder. A single large shareholder will have control of the company and may reduce the liquidity of shares. This may result in downward pressure on the trading price of remaining ASGL Shares and make it more difficult for remaining ASGL Shareholders to sell their shares. See Section 4.3 of this Target’s Statement for further details.

e. There will be a disadvantage for ASGL Shareholders if ASGL is delisted in the future

There is a possibility of ASGL being delisted following the Offer depending on the level of acceptances. AMA has stated in its Bidder’s Statement that if it acquires 90% or more of ASGL’s Shares it may seek to remove ASGL from the official list of ASX and obtain the remaining shares through compulsory acquisition procedures. This may add delay to the remaining ASGL Shareholders receiving consideration for their ASGL Shares. See Section 4.5 of this Target’s Statement for further details.

f. No Superior Offer has emerged

As at the date of this Target's Statement, no proposals have been put to ASGL or are currently under consideration by ASGL which are alternatives to the Offer, and the Directors are not aware of any other proposal that might be made as an alternative to the Offer. There can be no assurances that any Superior Offer will emerge. The likelihood of an alternative offer reduces significantly where a Bidder has acceptances which provide it with control of a company, as is the case here (as at the date of this Target’s Statement, the Bidder has acceptances which will give it 60.99% of ASGL’s Shares should the Offer complete).

g. No guarantee of the future performance of ASGL

The Directors acknowledge that considerable work has been undertaken in recent times by the management of ASGL to improve its operations. However, the Directors, in their review of the ASGL’s business following their appointment a month ago, have not identified any quick means of fixing ASGL’s current performance issues. The turnaround strategy being implemented by management involves many incremental adjustments to ASGL’s performance. Such strategies have cost implications can take many months of implementation before the results of those measures are evident and there is always a risk that the anticipated benefits will not materialise.

ASGL also has cash flow requirements which are likely to require additional funding for the group over the next six months. As announced on 24 November 2017, ASGL has had to borrow funds from AMA to pay pending tax liabilities. ASGL’s further cash requirements are anticipated to arise from the following:

implementation of new ERP and Financial systems to assist in control;
inventory planning and purchase/manufacture to maximise throughput of product via each channel;
additional training for each channel to take on a range of new products, and the associated marketing cost and stocking for new product releases;
further legal costs anticipated in dealing with potential claims by ASGL.

There are a number of risks, general and specific, associated with being a shareholder in ASGL including:

integration taking longer and being more costly than anticipated
availability of funding
maintaining key customers
competitive industry pressures from alternative suppliers and manufacturers
increased bargaining power of customers
maintaining contractual relationships with manufacturers and distributors
interruption of the supply of automotive parts

There is no guarantee that any improvement in performance will materialise or be enough to justify a share price higher than the Offer Price.

1.2 Disadvantages associated with accepting the Offer

a. Shareholders will lose the benefit of any potential upside in ASGL

ASGL Shareholders who accept the Offer will not be able to participate in any potential increase in the ASGL Share price in the future.

b. Shareholders will not have the benefit of any subsequent higher offer from any third party

ASGL Shareholders who accept the Offer will not be able to accept a potential higher offer from a third party in the future. The Board is not aware of any competing proposal or Superior Offer to the Offer. The Board will keep ASGL Shareholders informed of any material developments.

If ASGL Shareholders accept the Offer and AMA subsequently increases the Offer Price, ASGL Shareholders will be entitled to receive the higher price.

c. The tax consequences of accepting the Offer may not be suitable to your financial position

There may be tax consequences of accepting the Offer and ASGL Shareholders should consult with their tax adviser regarding the tax implications of accepting the Offer, given their own particular circumstances.

1.3 Other considerations

In considering whether to accept the Offer, your Directors encourage you to:

read the whole of this Target’s Statement and the Bidder’s Statement;
have regard to your individual risk profile, portfolio strategy, tax position and financial circumstances;
consider the choices available to you as outlined in this Target’s Statement; and
obtain independent financial, legal, taxation or other professional advice before making a decision as to whether or not to accept the Offer.

Section 2 KEY INFORMATION

This Section is not intended to address all issues that may be relevant to you.

This Section should be read together with the rest of this Target's Statement.

2.1 What is the Offer?	The Bidder is offering $0.35 for each ASGL Share you hold.
2.2 What choices do I have as an ASGL Shareholder?	As an ASGL Shareholder you have the choice to: • ACCEPT the Offerfor some or all of your ASGL Shares; or • Reject the Offer/do nothing and remain an ASGL Shareholder, subject to your ASGL Shares being compulsorily acquired by the Bidder; • Sell your ASGL Shares on market, which may be at a higher or lower price than the Offer Price. ASGL Shareholders should carefully consider the Directors’ recommendation and other important issues set out in this Target’s Statement before making a decision.
2.3 What do your Directors recommend?	Your Directors recommend that youACCEPT the OFFER. The reasons for your Directors’ recommendation are detailed in Section 1. If there is a change in this recommendation or any material developments in relation to the Offer, ASGL will lodge a supplementary target’s statement.
2.4 What should I do?	To follow the Directors’ recommendation toACCEPT the Offer. If you do not understand the Offer or are in doubt as to how to act, you should seek independent financial and taxation advice from your professional adviser in relation to the action that you should take.
2.5 What do the Directors intend to do with their ASGL Shares?	None of the Directors hold ASGL Shares.
2.6 How do I ACCEPT the Offer?	ToACCEPT the Offer, you must follow the instructions in Section 1.2 of the Bidder’s Statement.
2.7 How do I reject the Offer?	ASGL Shareholders who do not wish to accept the Offer or sell their ASGL Shares on market should do nothing.
2.8 If I accept the Offer now, can I withdraw my acceptance?	No, once you have accepted the Offer, you will be legally bound to sell those Shares to the Bidder and you cannot later withdraw your acceptance.
2.9 Can the Bidder vary the Offer?	Yes. The Bidder can vary the Offer by extending the Offer Period or increasing the Offer Price.

2.10 When does the Offer finish?	The Bidder has stated that the Offer remains open until 7:00pm (AEDT) on 18 December 2017. It is possible that the Bidder may choose to extend the Offer Period in accordance with the Corporations Act. The Offer Period may also be automatically extended in certain circumstances. If you wish to follow the Directors’ recommendation andACCEPT the Offer, you need to do so before its scheduled closing date.
2.11 What will happen if the Bidder raises its Offer Price?	If you have already accepted the Offer and subsequent to your acceptance the Offer Price is increased, then you will be entitled to any increase in the Offer Price. However, the increase in the Offer Price will not be available to ASGL Shareholders that have already sold their ASGL Shares on the ASX.
2.12 What happens if I accept the Offer and a Superior Offer is made for my ASGL Shares after I accept?	If there is a Superior Offer, the Directors will reconsider their recommendation in relation to the Offer and advise ASGL Shareholders accordingly. If you accept the Offer, you will be unable to accept a Superior Offer if one is made.
2.13 What happens if I do nothing?	You will remain an ASGL Shareholder. If the Bidder acquires 90% or more of the ASGL Shares, the Bidder intends to compulsorily acquire your ASGL Shares. See Section 8.4 of the Bidder’s Statement for more details. If the Bidder acquires between 50% and 90% of ASGL Shares, you will be a minority shareholder in ASGL. The implications of this are described in Section 1.1(c) of this Target’s Statement and Section 8.5 of the Bidder’s Statement.
2.14 Can I be forced to sell my ASGL Shares?	You cannot be forced to sell your ASGL Shares unless the Bidder proceeds to compulsory acquisition of ASGL Shares. The Bidder and their associates will need to acquire at least 90% (by number) of ASGL Shares (under the Offer or otherwise) and 75% (by number) of ASGL Shares the Bidder offered to acquire under the Offer, in order to exercise compulsory acquisition rights. If the Bidder achieves this and proceeds to compulsory acquisition, then you will be paid the same consideration as is payable by the Bidder under the Offer and you will be forced to sell your ASGL Shares.
2.15 Will there be any costs associated with accepting the Offer?	By accepting the Offer you will not pay the Bidder’s brokerage costs. You may incur brokerage to your broker if you choose to accept the Offer. There may also be taxation consequences specific to your circumstances. You should confirm the fees, taxes and costs with your broker, accountant, taxation specialist and/or financial adviser.

2.16 What are the tax implications of accepting the Offer?	A general description of the taxation treatment for certain Australian resident ASGL Shareholders accepting the Offer is set out in Section 10 of the Bidder’s Statement. Shareholders who are resident in a jurisdiction other than Australia should seek their own professional tax advice. Because this advice is general in nature and does not take into account your individual circumstances, you should not rely on those descriptions as advice for your own affairs. You should consult your taxation adviser for detailed taxation advice before making a decision as to whether or not to accept the Offer for your ASGL Shares. You may, for example, be liable for CGT if you sell your ASGL Shares.
2.17 Can I sell my ASGL Shares on market?	Yes, unless you have accepted the Offer you can sell your ASGL Shares on market. If you sell your ASGL Shares on market: • you will not benefit from any possible increase in the value of ASGL Shares; and • you will not benefit from any possible increase in the consideration that may be provided under the Offer or a Superior Offer, if one is made.
2.18 Can Foreign Shareholders accept the Offer?	Foreign Shareholders can accept the Offer by selling their Shares to the Bidder like any other Shareholder.
2.19 If I ACCEPT the Offer, when will I be paid?	Generally, payment must be made by the Bidder on or before the earlier of:  one month after the Offer become unconditional or, if the Offer is unconditional when accepted, one month after that acceptance; or  21 days after the end of the Offer Period See Section 12.8 of the Bidder’s Statement for further detail.
2.20 How can I get updates on the ASGL Share price?	If you have access to the internet, you can receive updates by visiting the ASX website atwww.asx.com.au.
2.21 Who should I call if I have any questions on the Offer?	ASGL has established a Shareholder Information Line for ASGL Shareholders in relation to the Offer. The telephone number is (07) 3607 3836 (within Australia), and +61 7 3607 3836 (outside of Australia). It is available Monday to Friday between 8.30am and 5.30pm (AEST). Announcements made to ASX by ASGL and other information relating to the Offer can be obtained from ASGL’s website at www.asgl.com.au. Alternatively, you should obtain independent advice from your professional adviser, as necessary.

Section 3 YOUR CHOICES AS AN ASGL SHAREHOLDER

The Directors unanimously recommend that you ACCEPT the Offer

3.1 As an ASGL Shareholder you have the following choices available to you:

a) ACCEPT the Offer

ASGL Shareholders who accept the Offer:

will receive the Offer Price; and,
will not be able to withdraw their acceptance and sell their ASGL Shares (even if a Superior Offer eventuates).

ASGL Shareholders who wish to accept the Offer should refer to the Bidder’s Statement for instructions on how to do so.

b) Reject the Offer

ASGL Shareholders who do not wish to accept the Offer or sell their ASGL Shares on market should do nothing.
If you do not wish to accept the Offer, do not take any action in relation to the documents sent to you by the Bidder.
c) Sell your ASGL Shares on market

If you have not already accepted the Offer, you can still sell your ASGL Shares on market for cash. The latest price of ASGL Shares may be obtained from ASX website www.asx.com.au. ASGL Shareholders who sell their ASGL Shares on market:

may incur a brokerage charge;
will not receive the benefits of any Superior Offer.

ASGL Shareholders who wish to sell their ASGL Shares on market should contact their broker.

3.2 In considering your choices, the Directors encourage you to read this Target’s Statement in its entirety and seek professional advice if you are unsure of whether accepting or rejecting the Offer is in your best interests, taking into account your individual circumstances.

Section 4 INFORMATION ABOUT THE OFFER AND OTHER IMPORTANT ISSUES

4.1 Summary of the Offer

The Bidder is offering $0.35 cash for each of your ASGL Shares. The full terms of the bid are set out in the Bidder’s Statement.

An Independent Expert has been appointed to assess the Offer, as at the date of the Offer the Bidder owned more than 30% of ASGL’s Shares. The Independent Expert has concluded that the Offer is fair and reasonable (refer to Annexure B to this Target’s Statement).

4.2 The Bidder’s voting power in ASGL

As at the date of this Target’s Statement, the Bidder has acceptances for the Offer which when completed, will give it control of ASGL.

The Bidder’s voting power in ASGL and the number of Shares held in ASGL (as at the dates specified) is shown below:

	At the date of the Bidder’s Statement	At the date of this Target’s Statement
Voting power in ASGL	31.29%	60.99%
Number of ASGL Shares	15,755,471	30,706,944

4.3 Consequences of the Bidder acquiring less than 90% of ASGL

If the Bidder acquires more than 50% but less than 90% of the ASGL Shares, then the Bidder will acquire a majority shareholding in ASGL.

In this case, ASGL Shareholders who retain their ASGL Shares will be minority shareholders in ASGL. This has a number of possible implications, including:

The Bidder will be in a position to cast the majority of votes at a general meeting of ASGL. This will enable the Bidder to control the appointment of the Directors of ASGL. Any nominee director would continue to be subject to a duty to act in the best interests of ASGL as a whole.
The liquidity of ASGL Shares may be lower than at present, and there may be a downward pressure on the price of ASGL’s Shares due to a lack of free float and/or liquidity.

In addition, if the Bidder acquires 75% or more of the ASGL Shares it will be able to pass a special resolution of ASGL. This will enable the Bidder, among other things, to change the ASGL constitution.

4.4 Superior Offer

If you accept the Offer, you may be unable to accept a Superior Offer, if one is made. At this time, the Bidder has acquired more than 50% of ASGL Shares which discourages other potential bidders from making a bid for the Company. No Superior Offer has materialised to date and the Directors do not anticipate a Superior Offer.

4.5 Compulsory acquisition

The Bidder has indicated in its Bidder’s Statement that if it becomes entitled under the Corporations Act to proceed to compulsorily acquire outstanding ASGL Shares at the end of the Offer Period, it intends to do so.

Under Part 6A.1 of the Corporations Act, the Bidder will be able to compulsorily acquire any outstanding ASGL Shares for which it has not received acceptances, on the same terms as the Offer, if during or at the end of, the Offer Period, the Bidder (taken together with its associates) has:

a relevant interest in at least 90% (by number) of the ASGL Shares; and
acquired at least 75% (by number) of the ASGL Shares offered to be acquired.

If this threshold is met, the Bidder will have one month from the end of the Offer Period within which to give compulsory acquisition notices to ASGL Shareholders who have rejected the Offer. The consideration payable by the Bidder will be the Offer Price last offered under the Offer. In certain circumstances if the threshold is not met, the Bidder may still compulsory acquire all outstanding ASGL Shares with court approval.

It is important to also be aware that if the Bidder does not become entitled to compulsorily acquire ASGL Shares in accordance with the above procedures, it may nevertheless become entitled to exercise general compulsory acquisition rights under Part 6A.2 Division 1 of the Corporations Act, should the Bidder subsequently acquire sufficient ASGL Shares to give it a relevant interest in 90% (by number) of ASGL Shares. This may occur, for example, by way of item 9 of section 611 of the Corporations Act which would permit the Bidder to acquire 3% of ASGL Shares on issue in any 6 month period after it has held a stake of greater than 19% for 6 months, without contravening the Corporations Act.

If ASGL Shares are compulsorily acquired, ASGL Shareholders whose ASGL Shares are compulsorily acquired are not likely to receive any payment until at least one month after the compulsory acquisition notices are sent.

ASGL Shareholders may challenge any compulsory acquisition, but this would require the relevant ASGL Shareholders to establish to the satisfaction of a court that the terms of the Offer do not represent fair value for the ASGL Shares.

4.6 Market trading

ASGL Shareholders who accept the Offer will be giving up their rights to sell or otherwise deal with their ASGL Shares.

4.7 Taxation

This Section sets out general information about the tax implications of the Offer for ASGL Shareholders. This information is of a general nature only.

ASGL Shareholders should seek their own taxation advice, having regard to their own circumstances. ASGL Shareholders should also refer to Section 10.1 of the Bidder’s Statement for a full description of the tax implications of accepting the Offer.

Importantly, depending on the individual circumstances, ASGL Shareholders who are Australian residents and hold their ASGL Shares on capital account may realise a gain or a loss and may incur a liability for taxation by selling their ASGL Shares to the Bidder. The extent of any tax liability will depend on each ASGL Shareholder’s individual circumstances.

ASGL Shareholders who are individuals, certain trusts or superannuation funds may be eligible to claim a CGT discount on any net gains arising on ASGL Shares acquired at least 12 months before disposal.

No discount is available on any capital gain made on acceptance of the Offer if that acceptance is made within 12 months of the date of acquisition of those ASGL Shares.

4.8 How to accept the Offer

Instructions on how to accept the Offer are set out on Section 1.2 of the Bidder’s Statement.

Section 5 ABOUT ASGL

5.1 Background information on ASGL

ASGL was incorporated in 2016 and listed on the ASX in December 2016. On listing, it acquired eight (8) cornerstone businesses providing automotive solutions in the 4x4/SUV market. These businesses each have a long standing presence in their respective local communities and the industry (including in some cases across three generations of family ownership) and provide an automotive retail and distribution network spanning across Australia.

ASGL’s key business areas are designing, manufacturing, distributing and retailing parts, accessories, and performance technology. ASGL also services private and fleet vehicle owners through its retail and trade outlets, and has business located in Queensland, New South Wales, Victoria and Western Australia.

The characteristics of the Company’s businesses are summarised as follows:

all established operations in the automotive retail and distribution industry;
providing products and services to a broad sector of the automotive industry;
businesses with established long term relationships with clients and suppliers; and
recognised existing branding for each of the businesses.

5.2 Business activities

The ASGL strategy has been to create an automotive solutions Company focused on the 4x4/SUV market, through the design, manufacturing, distribution and retail of:

parts;
accessories;
vehicle performance and technology enhancements;
body modification; and
fitment and servicing,

to private and fleet vehicle owners through retail and trade outlets.

5.3 History since listing

ASGL has had a challenging time since it was listed in December 2016.

On 26 April 2017, ASGL issued an updated profit guidance which revised forecasts for its second half FY17 performance. The EBIT forecast was revised from $3.3 million down to $0.8 to $0.9 million and revenue forecasts downgraded from $21 million to $15 to 16.5 million. The reasons for the forecast related to adverse trading conditions and lower levels of performance by the newly amalgamated businesses than had been anticipated.

The FY17 results of ASGL were in line with the revised profit guidance and performance for the year to date suggests limited improvement. Improvements as outlined can take time to materialise, have integration risk and generally cost more than anticipated. On a year to date basis, and as reflected in ASGL’s Appendix 4C Quarterly Report lodged on 1 November 2011, the performance without these efforts and increased cash requirement will be on a par with previous activity.

The ASGL Share price on listing was $1 per share. This fell to $0.26 per ASGL Share after the updated profit guidance was announced in April 2017 and has traded at a volume weighted average price ranging between $0.22 and $0.25

per ASGL Share over the three month period concluding on 31 October 2017. When the Offer was announced, ASGL’s Shares were trading at $0.22 each.

The April 2017 announcement also marked a period of instability in the management of the Company, which has seen a complete change of Board and senior managers, and has only been resolved less than a month ago with the resignation of the entire board and the appointment of the current Directors.

5.4 Directors and management

5.3.1 Board of Directors

Dr Ken Carr was appointed as Non-Executive Chairman on 27 October 2017, and Charles Chapman and Matt Ranawake were appointed as Non-Executive Directors on 2 November 2017. The new board of Directors are all independent and do not hold any ASGL Shares. The new appointments have brought significant governance, finance and acquisition implementation experience to the leadership of the Company, while also removing the issues affecting the Board’s recent focus.

Since their appointment, the new Directors have been intensely reviewing the Company’s position, its financial accounts and business operations to assess and assist with the turnaround efforts being made to improve ASGL’s performance.

KEN CARR - Independent Executive Chairman

Dr Carr was appointed independent Non-Executive Chairman on 27 October 2017.

Dr Carr is a seasoned Non Executive and Chair, having been CEO/MD of 5 ASX listed companies primarily in the Banking, Health, and Technology Sectors and a NED of 5 others, including 3 as Chair. Dr Carr has also been Director of both public and private companies in Australia, USA, Canada, India, and UK. He is currently Chair of Field Solutions Holdings Limited (ASX: FSG) and on the boards of Bulletproof Limited (ASX:BPF), Murry River Organics (ASX:MRG) and Wakenby Limited (ASX:WAK). His previous Executive roles were primarily in recovery positions of Public Companies, where his record on increasing shareholder return is enviable. The companies he managed collectively increased shareholder value by over $200m during his tenure or by sale afterwards. Dr Carr has strong Governance skills and with much experience and expertise in Strategy, Audit and Compliance, IT/Digital Strategy and Loyalty Marketing.

MITHILA RANAWAKE – Non-Executive Director

Mr Ranawake was elected to the ASGL board on 2 November 2017. Mr Ranawake has over 20 years of experience in the IT and telecommunications industries in Asia Pacific, Australia, India and China, combined with a strong background in finance, mergers and acquisitions, corporate governance and risk management, change management, information systems, sales, strategy and business development acquired across a number of industries. He is currently a director of Field Solutions Holdings Limited (ASX: FSG).

In his most recent role Mr Ranawake was the chief financial officer of Konekt Limited, a ASX listed (ASX: KKT) workplace health solutions provider. Prior to that he was the CFO of Consistel Group in Singapore where he was instrumental in raising funds from Intel Capital and JAFCO Asia. Prior to joining Consistel, Mr Ranawake was the CFO of LongReach Group Limited, a ASX listed Australian telecommunications equipment manufacturer and vendor, where he was involved in raising capital and managing its merger. He has held senior management positions in Telstra Corporation Limited, British Telecom plc and Marconi plc. Mr Ranawake also has several years of experience in gas, electric and petroleum industries.

CHARLES CHAPMAN - Non-Executive Director

Mr Chapman was elected to the ASGL board on 2 November 2017. Mr Chapman has over 6 years extensive ASX listed experience as CFO, CIO and Company Secretary for the BigAir Group with 12 successfully completed acquisitions.

Mr Chapman is an organised, energetic finance and information technology professional accustomed to delivering timely outcomes with a track record in understanding financial and information technology systems. His automotive experience dates back to 1990 when he worked on the Nissan South Africa account for Coopers & Lybrand (now PwC). Mr Chapman is the Managing Director of CFO Consult Pty Ltd and an avid 4x4 and camping enthusiast.

5.3.2 Executive Management Team

BRYAN GRANZIEN – Chief Executive Officer

Mr Granzien was appointed as Chief Executive Officer in August 2017.

Mr Granzien is an experienced executive having held GM or CEO roles in the Mining, Manufacturing and Agribusiness Industries over a career spanning 30+ years with international experience gained through postings in England and Singapore. Prior to commencing as CEO with Automotive Solutions Group Limited, Mr Granzien was a Director of his own private consulting firm. He has held executive leadership roles at Tata Steel Australia, Neumann Steel, Grainco Australia, and MIM Holdings.

Company restructuring and turnaround has been a main focus in many of the leadership roles he has undertaken. Mr Granzien has a Bachelor of Business, is a graduate of the AICD, a previous fellow of the CEO Institute of Australia, and has held numerous industry and Company Director positions.

LAILA GREEN – Company Secretary and Chief Financial Officer

Ms Green is a Chief Financial Officer with 25 years plus experience extending across multiple sectors (Mining, FMCG, Digital Media, Publishing and Direct Marketing,) also through several regions (Australia, New Zealand, Japan, Dubai, UK, Belgium and Africa).

She has an established record of providing strategic support to Chief Executive Officers and Boards of Directors. Ms Green has been accountable for multi-million dollar budgets and raising necessary funding through both capital and debt initiatives.

Ms Green has led multiple business units outside of Finance including; IT, Legal, Human Resources, Payroll and Procurement. She is particularly adept at streamlining, reorganising and driving staff productivity. Ms Green is an accomplished executive (Company Secretary and Board Director) and experienced with local ASX, US and UK Global Multinationals and wholly owned subsidiaries. She has also had extensive involvement in joint venture based ownership structures.

Section 6 INTERESTS OF DIRECTORS

6.1 Interests of Directors in ASGL securities

None of the Directors hold any ASGL Shares or have any Relevant Interests in any securities issued by ASGL.

6.2 Dealings by Directors in ASGL securities

No Directors have acquired or disposed of any ASGL Shares at any time prior to the date of this Target’s Statement.

6.3 Interests and dealings in the Bidder

Neither ASGL nor any of the Directors has a relevant interest in securities of the Bidder or any Related Body Corporate of the Bidder.

6.4 Benefits to Directors

As a result of the Offer, no benefit (other than a benefit permitted by section 200F or section 200G of the Corporations Act and compulsory superannuation entitlements) has been paid or will be paid to any Director, secretary or executive officer in connection with the loss of, or their resignation from, their office.

6.5 Conditional agreements

No agreement has been made between any of the Directors and any other person in connection with or conditional upon the outcome of the Offer.

6.6 Interests in contracts with the Bidder

No Director has any interest in any contract entered into by the Bidder.

Section 7 ADDITIONAL INFORMATION

7.1 Other material information

This Target’s Statement is required under the Corporations Act to include all the information that ASGL Shareholders and their professional advisers would reasonably require to make an informed assessment of whether to accept the Offer, but:

only to the extent to which it is reasonable for ASGL Shareholders and their professional advisers to expect to find this information in this Target’s Statement; and
only if the information is known to any Director.

In this context, the Directors are of the opinion that the information that ASGL Shareholders and their professional advisers would reasonably require to make an informed assessment whether to accept the Offer is the information contained in:

this Target’s Statement;
ASGL’s releases to ASX prior to the date of this Target’s Statement; and
the Bidder’s Statement.

The Directors have assumed, for the purposes of preparing this Target’s Statement, that the information in the Bidder’s Statement is accurate (unless they have expressly indicated otherwise in this Target’s Statement). However, the Directors do not take any responsibility for the contents of the Bidder’s Statement and are not to be taken to be adopting or endorsing, in any way, any of the statements contained in it.

In deciding what information should be included in this Target’s Statement, the Directors have had regard to:

the nature of the ASGL Shares;
the matters that ASGL Shareholders may reasonably be expected to know;
the fact that certain matters may reasonably be expected to be known to ASGL Shareholders’ professional advisers; and
the time available to ASGL to prepare this Target’s Statement.

7.2 Issued securities

The total number of ASGL Shares on 27 November 2017 (being the last Business Day before this Target’s Statement was printed) was 50,345,622.

7.3 Potential impact of Offer on financing arrangements and material contracts

The information below has been included in this Target’s Statement because it may impact the future prospects of the ASGL Group, which would be relevant to those ASGL Shareholders who may remain as shareholders in ASGL.

On 23 November 2017, the Bidder and ASGL entered into a loan agreement under which the Bidder has made available a facility of $3.5 million to ASGL, for the purposes of ASGL paying its tax liabilities. The term of the loan is for 6 months and will need to be fully repaid at the end of the term. There is no right under the loan agreement for ASGL to extend the term of the loan and whether the Bidder is prepared to extend the loan term or offer any further facility to ASGL is a matter for the Bidder.

In agreeing the loan facility with the Bidder, ASGL terminated loan facilities with Westpac, with credit lines of around $2 million. Other than the loan facility from the Bidder, ASGL has no other material credit facilities.

The Offer will result in ASGL incurring expenses that ASGL would not have otherwise incurred. These expenses include legal and financial expenses from ASGL’s advisers engaged to assist in this transaction and other transaction related expenses.

7.4 Consents

The Directors have given and have not, before the lodgement of this Target's Statement with ASIC, withdrawn their consent to be named in this Target's Statement in the form and context in which they are named.

BDO Corporate Finance (East Coast) Pty Ltd, as the Independent Expert, has given and before lodgement of this Target’s Statement has not withdrawn its written consent to be named as the Independent Expert in the form and context in which it is so named.

GRT Lawyers Pty Ltd has given and before lodgement of this Target’s Statement has not withdrawn its written consent to be named as the legal advisor to the Offer in the form and context in which it is so named.

Neither BDO Corporate Finance (East Coast) Pty Ltd nor GRT Lawyers Pty Ltd:

(a) has authorised or caused the issue of the Target’s Statement;
(b) makes, or purports to make, any statement in this Target’s Statement other than as specified in this Section.

BDO Corporate Finance (East Coast) Pty Ltd and GRT Lawyers Pty Ltd each separately to the maximum extent permitted by law, expressly disclaim all liability in respect of, make no representation regarding and take no responsibility for, any part of this Target’s Statement.

7.5 Miscellaneous and publicly available information

Shareholders should have regard to material announcements that have been lodged with ASX prior to the date of this Target’s Statement. A list of the announcements released by ASGL in the period 1 July 2017 to 28 November 2017, being the most recent market announcements released by ASGL as at midday AEDT of the day this Target’s Statement was lodged with ASIC, is set out in Annexure A.

This Target’s Statement also contains statements which are made in, or based on statements made in, documents lodged with ASIC or given to ASX by the Bidder and ASGL.

You should consider publicly available information regarding ASGL including information available on its website, (www.asgl.com.au), announcements made to ASX by ASGL and this Target’s Statement that ASGL is required to provide to you under the Corporations Act.

7.6 Date of Target’s Statement

This Target’s Statement is dated 28 November 2017, which is the date on which it was lodged with ASIC.

7.7 Approval of Target’s Statement

This Target’s Statement has been approved by a resolution passed by the Directors of ASGL on 28 November 2017.

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Dr Ken Carr Chairman Automotive Solutions Group Limited

Section 8 GLOSSARY

8.1 Definitions

ASGL or Company	Automotive Solutions Group Limited ACN 613 474 089.
ASGL Group	ASGL and its Related Bodies Corporate.
ASGL Share	an ordinary fully paid share in ASGL.
ASGL Shareholder or Shareholder	a registered holder of ASGL Shares.
ASIC	the Australian Securities and Investments Commission.
ASX	ASX Limited (ACN 008 624 691).
Bidder	AMA Group Limited ACN 113 883 560.
Bidder’s Statement	means the Replacement Bidder’s Statement in relation to the Offer, prepared by the Bidder and dated 10 November 2017 and supplemented by the Second Supplementary Bidder’s Statement dated 24 November 2017.
Board	the board of Directors of ASGL.
Business Day	a day on which: a) ASX is open for trading in securities; and b) banks are open forgeneral bankingbusiness in Brisbane.
CGT	capital gains tax.
Competing Proposal	any proposal or transaction, which, if completed, would mean a person (other than the Bidder or any associate of the Bidder) would: a) acquire control of ASGL, within the meaning of section 50AA of the Corporations Act, or a material part of ASGL’s business; or b) otherwise acquire or merge (including by a reverse takeover bid or dual listed ASGL structure)with ASGL.
Corporations Act	Corporations Act 2001 (Cth).
Directors	the current directors of ASGL.
EBIT	earnings before interest and tax.
Foreign Shareholder	any ASGL Shareholder whose registered address as noted in the ASGL register, is outside of Australia.
Independent Expert	BDO Corporate Finance (East Coast) Pty Ltd.
Independent Expert’s Report	The report of the Independent Expert dated 24 November 2017, which is attached as Annexure B to this Target’s Statement.
Offer	the takeover offer by the Bidder for ASGL Shares under Chapter 6 of the Corporations Act as described in the Bidder’s Statement.
Offer Period	has the meaning it is given in the Bidder’s Statement.
Offer Price	has the meaning it is given in the Bidder’s Statement.
Related Body Corporate	has the same meaning as in the Corporations Act.
Relevant Interest	has the same meaning as in the Corporations Act.
Superior Offer	a) a Competing Proposal; or b) a variation to the Offer by the Bidder, which ASGL determines to be more favourable to Shareholders than the Offer, taking into account all terms and conditions of the Competing Proposal or variation to the Offer bythe Bidder.
Target’s Statement	this booklet.

8.2 Interpretation

Unless the context otherwise requires:

headings used in this Target’s Statement are inserted for convenience and do not affect the interpretation of this Target’s Statement;
words or phrases defined in the Corporations Act have the same meaning in this Target’s Statement;
a reference to a “Section” is a reference to, as relevant, a section of this Target’s Statement or the Bidder’s Statement;
a reference to a statute, ordinance, code or other law includes regulations and other instruments under it and consolidations, amendments, re-enactments or replacements of any of them;
the singular includes the plural and vice versa;
the word “person” includes an individual, a firm, a body corporate, a partnership, a joint venture, an unincorporated body or association, or any government agency; and
Australian dollars, dollars, A$ or $ is a reference to the lawful currency of Australia.

Section 9 CORPORATE DIRECTORY

BOARD OF DIRECTORS Non-Executive Chairman

Dr Ken Carr

Non-Executive Directors

Mr Charles Chapman Mr Mithila Ranawake

REGISTERED OFFICE

6-8 Geonic Street Woodridge QLD 4114Phone: +61 7 3607 3836

SHARE REGISTRY

Link Market Services Limited Level 15, 324 Queen Street Brisbane QLD 4000

SHAREHOLDER INFORMATION LINE

07 3607 3836 (within Australia) +61 7 3607 3836 (outside of Australia) Available Monday to Friday between 9am and 5pm (AEST - Brisbane)

LEGAL ADVISERS

GRT Lawyers Level 2, 400 Queen Street Brisbane QLD 4000 Phone: +61 7 3309 7000 Fax: +61 7 3309 7099

Annexure A LIST OF MATERIAL ANNOUNCEMENTS

The following table contains a list of all announcements released by ASGL in the period 1 July 2017 to 12:00pm (AEDT) 28 November 2017 (being the most recent market announcements released by ASGL as at midday (AEDT) of the day this Target’s Statement was lodged with ASIC).

No.	Title of Announcement	Date of Announcement
1	Ceasing to be a substantial holder	28/11/2017
2	Change in substantial holding from AMA	28/11/2017
3	Change in substantial holding from AMA	27/11/2017
4	AMA: Minimum voting shares condition met in ASGL takeover	24/11/2017
5	AMA: Company Update Off Market Bid for ASGL	24/11/2017
6	AMA: Second Supplementary Bidders Statement ASGL	24/11/2017
7	Loan Agreement with AMA	24/11/2017
8	Change in substantial holding from AMA	24/11/2017
9	Change in substantial holding from AMA	23/11/2017
10	Change in substantial holding from AMA	22/11/2017
11	Change in substantial holding from AMA	20/11/2017
12	AMA: ASGL Off Market Takeover Bid Update	17/11/2017
13	AMA: Dispatch of Replacement Bidders Statements	17/11/2017
14	AMA: Timetable for off market bid for ASGL	15/11/2017
15	AMA: First Supplementary Bidder's Statement	10/11/2017
16	IER Engagement	8/11/2017
17	Letter to Shareholders	3/11/2017
18	Response to Takeover Bid	3/11/2017
19	Initial Director's Interest Notice	3/11/2017
20	Resolution of Director and Shareholder Issues	2/11/2017
21	Initial Director's Interest Notice	2/11/2017
22	Initial Director's Interest Notice	2/11/2017
23	Change in substantial holding from AMA	2/11/2017
24	AMA: Off Market Take Over Bid for 4WD, Automotive Solutions	1/11/2017
25	Receipt of Court Application	1/11/2017

No.	Title of Announcement	Date of Announcement
26	Appendix 4C - quarterly	1/11/2017
27	Director Appointment/Resignation	27/10/2017
28	Statement to Shareholders by Vendors	17/10/2017
29	Notice of General Meeting/Proxy Form	12/10/2017
30	Amended Notice of General Meeting/Proxy Form	12/10/2017
31	Notice of General Meeting/Proxy Form	10/10/2017
32	Receipt of Shareholder Meeting Requisition	10/10/2017
33	Full Year Statutory Accounts	02/10/2017
34	Appendix 4G-Corporate Governance Principals & Recommendation	29/09/2017
35	Appendix 4E and Preliminary Final Report	31/08/2017
36	Market Update	28/08/2017
37	Quarterly Cash Flow Report Appendix 4C	31/07/2017
38	Change in substantial holding from AMA	10/07/2017
39	Change in substantial holding from AMA	07/07/2017
40	Supplementary Target's Statement	04/07/2017
41	Change in substantial holding from AMA	03/07/2017

Annexure B

INDEPENDENT EXPERT’S REPORT

INDEPENDENT EXPERT’S REPORT Automotive Solutions Group Limited

In relation to an off-market takeover offer to acquire all the ordinary shares of Automotive Solutions Group Limited at an Offer price of $0.35 per share by AMA Group Limited.

24 November 2017

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Level 11, 1 Margaret St SYDNEY NSW 2000 Australia

Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au

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This Financial Services Guide is issued in relation to an independent expert’s report ( Report or IER ) prepared by BDO Corporate Finance (East Coast) Pty Ltd (ABN 70 050 038 170) ( BDOCF ) at the request of the independent directors ( Directors ) of Automotive Solutions Group Limited ( ASGL ).

Engagement

The IER is intended to accompany the Target’s Statement that is to be provided by the Directors of ASGL to assist the Shareholders of ASGL in determining whether to accept the proposed offer by AMA Group Limited ( AMA ) for all the securities of ASGL ( Offer ).

Financial Services Guide

BDOCF holds an Australian Financial Services Licence (License No: 247420) ( Licence ). As a result of our IER being provided to you BDOCF is required to issue to you, as a retail client, a Financial Services Guide ( FSG ). The FSG includes information on the use of general financial product advice and is issued so as to comply with our obligations as holder of an Australian Financial Services Licence.

Financial services BDOCF is licensed to provide

The Licence authorises BDOCF to provide reports for the purposes of acting for and on behalf of clients in relation to proposed or actual mergers, acquisitions, takeovers, corporate restructures or share issues, to carry on a financial services business to provide general financial product advice for securities and certain derivatives (limited to old law securities, options contracts and warrants) to retail and wholesale clients.

BDOCF provides financial product advice by virtue of an engagement to issue the IER in connection with the acquisition of securities by another person.

Our IER includes a description of the circumstances of our engagement and identifies the party who has engaged us. You have not engaged us directly but will be provided with a copy of our IER (as a retail client) because of your connection with the matters on which our IER has been issued.

Our IER is provided on our own behalf as an Australian Financial Services Licensee authorised to provide the financial product advice contained in the IER.

General financial product advice

Our IER provides general financial product advice only, and does not provide personal financial product advice, because it has been prepared without taking into account your particular personal circumstances or objectives (either financial or otherwise), your financial position or your needs.

Some individuals may place a different emphasis on various aspects of potential investments.

An individual’s decision in relation to voting on the Offer described in the Target’s Statement may be influenced by their particular circumstances and, therefore, individuals should seek independent advice.

Benefits that BDOCF may receive

BDOCF will receive a fee based on the time spent in the preparation of the IER in the amount of approximately $50,000 (plus GST and disbursements). BDOCF will not receive any fee contingent upon the outcome of the Offer, and accordingly, does not have any pecuniary or other interests that could reasonably be regarded as being capable of affecting its ability to give an unbiased opinion in relation to the Offer.

Remuneration or other benefits received by our employees

All our employees receive a salary. Employees may be eligible for bonuses based on overall productivity and contribution to the operation of BDOCF or related entities but any bonuses are not directly connected with any assignment and in particular are not directly related to the engagement for which our IER was provided.

Referrals

BDOCF does not pay commissions or provide any other benefits to any parties or person for referring customers to us in connection with the reports that BDOCF is licensed to provide.

Associations and relationships

BDOCF is the licensed corporate finance arm of BDO East Coast Partnership, Chartered Accountants and Business Advisers. The directors of BDOCF may also be partners in BDO East Coast Partnership, Chartered Accountants and Business Advisers.

BDO East Coast Partnership is comprised of a number of related entities that provide audit, accounting, tax and financial advisory services to a wide range of clients.

BDOCF’s contact details are as set out on our letterhead.

BDOCF is unaware of any matter or circumstance that would preclude it from preparing the IER on the grounds of independence under regulatory or professional requirements. In particular, BDOCF has had regard to the provisions of applicable pronouncements and other guidance statements relating to professional independence issued by Australian professional accounting bodies and the Australian Securities and Investments Commission ( ASIC ).

Complaints resolution

As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. All complaints must be in writing, addressed to The Complaints Officer, BDO Corporate Finance (East Coast) Pty Ltd, Level 11, 1 Margaret Street, Sydney NSW 2000.

On receipt of a written complaint we will record the complaint, acknowledge receipt of the complaint and seek to resolve the complaint as soon as practical. If we cannot reach a satisfactory resolution, you can raise your concerns with the Financial Ombudsman Service Limited ( FOS ). FOS is an independent body established to provide advice and assistance in helping resolve complaints relating to the financial services industry. BDOCF is a member of FOS. FOS may be contacted directly via the details set out below.

Financial Ombudsman Service Limited GPO Box 3, Melbourne VIC 3001 Toll free: 1300 78 08 08 Email: [email protected]

BDO Corporate Finance (East Coast) Pty Ltd ABN 70 050 038 170 AFS Licence No. 247 420 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Corporate Finance (East Coast) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability is limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.

Level 11, 1 Margaret St SYDNEY NSW 2000 Australia

Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au

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The Independent Directors Automotive Solutions Group Limited 6-8 Geonic Street WOODRIDGE QLD 4114

24 November 2017

Dear Sirs

INDEPENDENT EXPERT’S REPORT IN RELATION TO AN OFF-MARKET TAKEOVER BID BY AMA GROUP LIMITED FOR AUTOMOTIVE SOLUTIONS GROUP LIMITED

1. INTRODUCTION

Automotive Solutions Group Limited (“ ASGL ”, the “ Group ” or the “ Target ”) is a designer, manufacturer, distributor and retailer of parts, accessories, and performance technology for 4x4/SUV vehicles to end users and fleet owners. ASGL was incorporated on 5 August 2016 and listed on the Australian Securities Exchange (“ ASX ”) in December 2016. ASGL raised $30.9 million in capital on the initial public offering primarily in order to execute acquisition of an initial portfolio of eight businesses (“ Initial Portfolio ”) within the automotive aftermarket parts, accessories and performance technology industries.

On 26 April 2017, ASGL downgraded its profit guidance for the second half of FY17 from EBIT of $3.3 million to EBIT in the range of $0.8 million to $0.9 million. Subsequently, ASGL’s share price fell 66% to $0.26 per share.

On 9 May 2017, AMA Group Limited (“ AMA ” or the “ Bidder ”) announced that it had become a substantial shareholder holding a 17.77% interest in ASGL, with the latest purchase being completed on 8 May 2017 for $0.31 per share.

On 23 May 2017, AMA announced an on-market takeover bid for ASGL, pursuant to Section 635 of the Corporations Act 2001 (“ Corporations Act ”), at a price of $0.35 per share for all of the fully paid ordinary ASGL shares existing during the offer period. The 23 May 2017 offer was not accepted and expired on 7 July 2017. On 10 July 2017, AMA announced an increase in its ASGL shareholding to 31.29%.

On 1 November 2017, AMA announced an off-market takeover bid for all of the ordinary shares of ASGL for $0.35 per share (“ Offer Price ”) (the “ Offer ”). Pursuant to a takeover bid update on 17 November 2017, the Offer expires on 18 December 2017 and is conditional upon a minimum acceptance of 50.1% of the voting shares. Other conditions of the offer such as the no prescribed occurrences, no material transactions and the non-existence of change of control rights are noted in further detail within the Bidder’s statement.

Further details of the Offer are set out in the Target’s Statement to be sent to shareholders.

BDO Corporate Finance (East Coast) Pty Ltd (ABN 70 050 038 170) (“ BDOCF ”, “ we ”, “ us ” or “ our ”) has been engaged by the Independent Directors (“ Directors ”) of ASGL to prepare an independent expert’s report (“ Report ” or “ IER ”) setting out our opinion as to whether the Offer is fair and reasonable to ASGL shareholders (“S hareholders ”).

2. APPROACH

In preparing our IER, we have considered the requirements of:

ASIC Regulatory Guide 111 Content of expert reports (“ RG 111 ”); and
ASIC Regulatory Guide 112 Independence of experts (“ RG 112 ”).

RG 111 establishes guidelines in respect of independent expert reports under the Corporations Act. This regulatory guide provides guidance as to what matters an independent expert should consider to assist Shareholders to make informed decisions about transactions.

RG 111 states that there should be a separate assessment of fairness and reasonableness.

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Fairness

A proposed transaction is ‘fair’ if the value of the financial benefit offered by the bidder entity (AMA) to the target entity (ASGL) is equal to or greater than the value of the asset being acquired.

The fairness assessment should assume a knowledgeable and willing, but not anxious, buyer and a knowledgeable and willing, but not anxious seller, acting at arm’s length.

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Reasonableness

In accordance with paragraph 60 of RG111, an offer is ‘reasonable’ if it is ‘fair’. It might also be ‘reasonable’ if, despite being ‘not fair’, the expert believes there are sufficient reasons to accept the offer.

When deciding whether an offer is ‘reasonable’, factors an expert might consider include:

the financial situation and solvency of the entity;
the alternative options available to the entity;
the entity’s bargaining position;
whether there is selective treatment of any Shareholder;
any special value of the transaction to the purchaser.

3. PURPOSE OF REPORT

Section 640 of the Corporations Act (“ Section 640 ”) requires an expert opinion to be provided for inclusion within the target’s statement where the bidder is connected with the target company. Specifically, Section 640 requires an expert’s report if:

the bidder’s voting power in the target is 30% or more; or
the bidder is a director of the target or a director of the bidder is a director of the target.

AMA’s voting power in ASGL at the time of the Offer was 31.29%. Consequently, this Report has been prepared in accordance with the requirements of Section 640 outlined above for inclusion in ASGL’s target statement (“ Target Statement ”) to be provided to Shareholders to assist in their considerations of whether or not to accept the Offer.

This IER provides an opinion as to whether the Offer is fair and reasonable to Shareholders.

4. SUMMARY OF OPINIONS

We have considered the terms of the Offer, as outlined in the body of this Report, and have concluded that the Offer is fair and reasonable to Shareholders.

A summary of our analysis in forming the above opinion is provided below.

The Offer is Fair and Reasonable to ASGL Shareholders

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The Offer is Fair to AGSL Shareholders

In undertaking our fairness opinion, we have had regard to the Australian Securities and Investments Commission’s (“ ASIC” ) RG 111.

RG 111.11 indicates 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. The comparison must be made assuming:

A knowledgeable and willing, but not anxious, buyer and a knowledgeable and willing, but not anxious, seller acting at arm’s length.
100% ownership of the target company, irrespective of the percentage holding of the bidder or its associates in the target company.

In relation to the interpretation of RG111.11, ASIC has advised that the appropriate assessment is to compare:

The fair market value of a share pre-transaction on a control basis (being the value of the securities the subject of the offer, per RG111.11); and

BDO Corporate Finance (East Coast) Pty Ltd

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The fair market value of the offer price.

The basis for the above form of comparison is to ensure our analysis is in line with RG111.5 to RG111.7 which include statements as follows:

The main purpose of the report is to adequately deal with the concerns that could reasonably be anticipated of those persons affected by the Offer; and
The form of analysis an expert uses to evaluate a transaction should address the issues faced by Shareholders.

We have formed our opinion in relation to fairness by comparing the:

Fair market value of an ASGL share before the Offer (including a premium for control); and
The cash consideration of $0.35 per share offered by AMA.

The Offer will be fair if the consideration offered by AMA is equal to or greater than the fair market value of an ASGL share before the Offer (including a premium for control).

Accordingly, to undertake this comparison we have undertaken an assessment of the value of a ASGL share before the Offer.

The result of our fairness analysis is summarised below.

Table 1: Fairness assessment

A$	Low	High
Net asset value(NAV)valuation method	0.057	0.060
Quoted marketprice(QMP)valuation method	0.260	0.317
Value range of ASGLper share(control)	0.057	0.317
Offerprice	0.350	0.350
Source: BDOCF analysis

Figure 1: Adopted value range per ASGL share and comparison to Offer Price

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Source: BDOCF analysis

We have adopted a wide valuation range of an ASGL share using both the NAV and QMP methods. Our rationale for selecting this approach is as follows:

We valued a share in ASGL on a controlling interest basis using the NAV method in the range of $0.057 to $0.060. As discussed in Section 7, in determining this range we have attributed $nil value to goodwill reported on ASGL’s balance sheet at FY17. Goodwill of $11.3m is reported in AGSL’s balance sheet as at 30 June 2017. In our opinion, this goodwill is not supported by ASGL’s historical results and there is insufficient forecast financial information to support a goodwill value. We have not included goodwill in our NAV analysis. In all likelihood, the value of ASGL’s goodwill lies somewhere between $nil and the $11.3m as reported. However, we have not been provided with sufficient information to refine the goodwill valuation further
Given the limited nature of ASGL’s historical financial information, significant changes currently being undertaken by the business, poor recent financial results and uncertainty regarding forecast financial information, we have not been able to determine a level of maintainable earnings greater than $nil and

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consequently, did not consider valuation of AGSL based on capitalisation of maintainable earnings to be appropriate.

Our QMP valuation provides another reference point for the fair market value of a share in ASGL prior to the Offer. The short available timeframe for our volume weighted average price (“ VWAP ”) analysis and low trading volumes for ASGL in the period from 31 July 2017 to 31 October 2017 prevented us from relying on our QMP valuation as our primary valuation methodology. However, our analysis indicated that trading in ASGL was sufficiently liquid for a QMP valuation of ASGL to be incorporated into our opinion.
ASGL’s VWAP in the period between 31 July 2017 and 31 October 2017 appears broadly to reflect ASGL’s net asset backing per share, based on reported net assets including intangible assets at FY17. ASGL reported net assets of $17.5m at FY17 which equates to approximately $0.345 per share based on 50,345,622 issued shares. As discussed in Section 8, ASGL traded below this value for most of the period we reviewed, indicating market uncertainty regarding the outlook for ASGL and potentially the carrying value of goodwill.

On the basis of the discussion above, we have adopted a valuation for ASGL on a controlling interest basis in the range of $0.057 to $0.317 per share, reflecting both our NAV and QMP valuation methodologies and in particular, uncertainty regarding the carrying value of goodwill in ASGL’s balance sheet.

The Offer Price of $0.35 exceeds our valuation of an ASGL share on a control basis under all adopted valuation methodologies. As a result, we have concluded that the Offer is fair to Shareholders in the absence of a superior offer.

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The Offer is Reasonable to ASGL Shareholders

In accordance with RG 111 an offer is reasonable if it is fair. It might also be reasonable if, despite being not fair, the expert believes that there are sufficient reasons for ASGL Shareholders to accept the offer in the absence of a superior offer.

Whilst the Offer is fair, as set out below, we have assessed the reasonableness of the Offer by considering a range of other factors in our assessment.

Table 2: Summary of factors considered in the reasonableness assessment

Advantages
The Offer is fair	The offer is Fair in the absence of a superior offer. The Offer is above our adopted value
	range of an ASGL share on a controlling interest basis (Section 9).
Certainty of cash	If you accept the Offer you will receive cash of $0.35 per ASGL share which has a fixed
	value. If you continue to hold ASGL securities, the is no guarantee of future performance
	and therefore the movements in the value of the shares may be positive or negative.
Opportunity for	Shareholders that accept the Offer can reinvest the proceeds in similar investment
Shareholders to reinvest in	opportunities.
similar investment
opportunities
Disadvantages
No exposure to potential	Shareholders who accept the Offer will no longer own shares and therefore will not
upside on ASGL	benefit from any potential future profits and capital growth.
Taxation implications	There may be tax consequences arising from accepting the Offer (or selling your securities
	on the ASX). ASGL Shareholders should consult with their own independent taxation
	advisers regarding the taxation implications of accepting the Offer given their own
	particular circumstances.

Source: BDOCF analysis

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Situation If You Reject The Offer

At the end of the Offer Period, any Shareholders who do not accept the Offer may be subject to the following risks:

If a Shareholder rejects the offer and if no superior proposal emerges, there is a risk that the price of ASGL shares may trade below the Offer Price of $0.35 per ASGL share offered by AMA. As at the date of this Report, no superior offer has been announced;

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As there are fewer shares on issues held by parties other than AMA, the liquidity of ASGL shares may be lower than at present, potentially impacting upon Shareholders’ ability to dispose of ASGL shares. AMA has stated in the Bidder's Statement that, subject to continued compliance by ASGL with the ASX Listing Rules and AMA not acquiring a relevant interest in 90% or more of the ASGL shares, ASGL's listing on the ASX is intended to be maintained;
AMA has stated in the Bidder's Statement that if it acquires at least 90% of ASGL shares, it intends to arrange for ASGL to be removed from the official list of the ASX and acquire 100% of ASGL shares through the implementation of compulsory acquisition procedures in accordance with the Corporations Act, in which case Shareholders will be compelled to sell their ASGL shares to AMA but may not receive consideration for a number of weeks;
If AMA does not acquire at least 90% of ASGL shares but is in a position to cast the majority of votes at a general meeting of Shareholders, AMA’s stated intentions are to:
(A) assist ASGL management in their operating activities to grow and expand the size and profitability of ASGL’s businesses;
(B) consider Board appointments at the relevant time with the view of seeking stability;
(C) undertake a strategic review, assessing operations and potentially altering some elements of these activities depending on the findings of the review;
(D) maintain ASGL’s listing on the ASX, subject to continued satisfaction of listing requirements including shareholder spread; and
(E) meet with key partners where, for example, consent is required under a material contract; and
If AMA does not acquire at least 50% of ASGL shares it will consider acquiring additional Shares under Item 9 of Section 611 of the Corporations Act.

Based on the above, we are of the opinion that the Offer is reasonable to the ASGL Shareholders.

5. OTHER MATTERS

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Shareholders’ individual circumstances

Our analysis has been undertaken, and our conclusions are expressed at an aggregate level. Accordingly, BDOCF has not considered the effect of the Offer on the particular circumstances of individual Shareholders. Some individual Shareholders may place a different emphasis on various aspects of the Offer from that adopted in this IER. Accordingly, individual Shareholders may reach different conclusions as to whether or not the Offer is fair and reasonable in their individual circumstances.

The decision of an individual Shareholder in relation to the Offer may be influenced by their particular circumstances and accordingly individual Shareholders are advised to seek their own independent advice.

Acceptance or rejection of the Offer is a matter for individual Shareholders based on their expectations as to the expected value, future prospects and market conditions together with their particular circumstances, including risk profile, liquidity preference, portfolio strategy and tax position. Shareholders should carefully consider the Target’s Statement. Individual Shareholders who are in doubt as to the action they should take in relation to the Offer should consult their professional adviser.

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General requirements in relation to the IER

In preparing the IER, ASIC requires the independent expert when deciding on the form of analysis for a report, to bear in mind that the main purpose of the report is to adequately deal with the concerns that could reasonably be anticipated by those persons affected by the Offer. In preparing the IER we considered ASIC regulatory guides and commercial practice.

The IER also includes the following information and disclosures:

Particulars of any relationship, pecuniary or otherwise, whether existing presently or at any time within the past, between BDO East Coast Partnership or BDOCF and any of the parties to the Offer;
The nature of any fee or pecuniary interest or benefit, whether direct or indirect, that we have received or will or may receive for or in connection with the preparation of the IER;

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We have been appointed as independent expert for the purposes of providing an IER in relation to the Offer for the Directors;
That we have relied on information provided by the Directors and Management of ASGL and that we have not carried out any form of audit or independent verification of the information; and
That we have received representations from the Directors in relation to the completeness and accuracy of the information provided to us for the purpose of our IER.

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Current Market Conditions

Our opinion is based on economic, market and other conditions prevailing at the date of this IER. Such conditions can change significantly over relatively short periods of time.

Changes in those conditions may result in any valuation or other opinion becoming quickly outdated and in need of revision. We reserve the right to revise any valuation or other opinion, in the light of material information existing at the valuation date that subsequently becomes known to us.

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Glossary

Capitalised terms used in this IER have the meanings set out in the glossary. A glossary of terms used throughout this IER is set out in Appendix 1 .

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Sources of Information

Appendix 2 to the IER sets out details of information referred to and relied upon by us during the course of preparing this IER and forming our opinion.

The statements and opinions contained in this IER are given in good faith and are based upon our consideration and assessment of information provided by ASGL.

Under the terms of our engagement, ASGL agreed to indemnify the partners, directors and staff (as appropriate) of BDO East Coast Partnership and BDOCF and their associated entities, against any claim, liability, loss or expense, costs or damage, arising out of reliance on any information or documentation provided by ASGL which is false or misleading or omits any material particulars, or arising from failure to supply relevant information.

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Limitations

This IER has been prepared at the request of the Directors for the sole benefit of the Directors and Shareholders to assist them in their decision to accept or reject the Offer. This IER is to accompany the Target’s Statement to be sent to Shareholders to consider the Offer and was not prepared for any other purpose.

Accordingly, this IER and the information contained herein may not be relied upon by anyone other than the Directors and Shareholders without our written consent. We accept no responsibility to any person other than the Directors and Shareholders in relation to this IER.

This IER should not be used for any other purpose and we do not accept any responsibility for its use outside this purpose. Except in accordance with the stated purpose, no extract, quote or copy of our IER, in whole or in part, should be reproduced without our written consent, as to the form and context in which it may appear.

We have consented to the inclusion of the IER within the Target’s Statement. Apart from this IER, we are not responsible for the contents of the Target’s Statement or any other document associated with the Offer. We acknowledge that this IER may be lodged with regulatory authorities.

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Summary

This summary should be read in conjunction with our full IER that sets out in full the purpose, scope, basis of evaluation, limitations, information relied upon, analysis and our findings.

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Financial Service Guide

BDOCF holds an Australian Financial Services Licence which authorises us to provide reports for the purposes of acting for and on behalf of clients in relation to proposed or actual mergers, acquisitions, takeovers, corporate restructures or share issues. A financial services guide is attached to this IER.

Yours faithfully BDO CORPORATE FINANCE (EAST COAST) PTY LTD

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Daniel Coote Director

David McCourt Director

BDO Corporate Finance (East Coast) Pty Ltd

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1.	PURPOSE AND BACKGROUND ...................................................................................................... 2
	Corporations Act ...................................................................................................................... 2
	Purpose .................................................................................................................................... 2
2.	SCOPE AND LIMITATIONS .............................................................................................................. 2
	Scope ....................................................................................................................................... 2
	Basis of Assessment ................................................................................................................ 3
	Reliance on Information ........................................................................................................... 3
	Prospective financial information ............................................................................................. 4
	Current market conditions ........................................................................................................ 4
	Sources of information ............................................................................................................. 4
	Assumptions ............................................................................................................................. 5
3.	OVERVIEW OF THE OFFER ............................................................................................................ 5
	Background .............................................................................................................................. 5
	Offer terms ............................................................................................................................... 5
	Defeating Conditions ................................................................................................................ 6
4.	PROFILE OF ASGL ........................................................................................................................... 6
	Overview of ASGL.................................................................................................................... 6
	Overview of portfolio companies .............................................................................................. 6
	Corporate Structure ................................................................................................................. 7
	Directors and management ...................................................................................................... 7
	Ownership ................................................................................................................................ 8
	Historical financial information ................................................................................................. 9
	Sources of funding ................................................................................................................. 13
	Off balance sheet and contingent liabilities ........................................................................... 13
5.	INDUSTRY OVERVIEW................................................................................................................... 14
	Key industry drivers ............................................................................................................... 14
	Motor parts manufacturing overview ...................................................................................... 14
	Motor parts retailing overview ................................................................................................ 14
	Key competitors to ASGL ....................................................................................................... 14
6.	FAIRNESS ASSESSMENT AND VALUATION METHODOLOGY .................................................. 15
	Fairness assessment overview .............................................................................................. 15
	Valuation methods ................................................................................................................. 15
	Selected valuation methods for ASGL ................................................................................... 15
	Other valuation considerations .............................................................................................. 17
7.	NAV VALUATION OF ASGL BEFORE THE OFFER ...................................................................... 17
	Net asset value of ASGL prior to the Offer ............................................................................ 17
	Selection of the net tangible asset value ............................................................................... 17
	Net asset valuation ................................................................................................................ 18
	Control premium..................................................................................................................... 19
8.	QMP VALUATION OF ASGL BEFORE THE OFFER ...................................................................... 19
	Trading price .......................................................................................................................... 19
	VWAP per ASGL share .......................................................................................................... 20
	Premium for control ................................................................................................................ 21

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	QMP value of ASGL securities on a control basis ................................................................. 22
9.	ASSESSMENT OF FAIRNESS ........................................................................................................ 23
	Fair market value of ASGL prior to the Offer ......................................................................... 23
	Adopted equity value of an ASGL share (controlling interest basis) ..................................... 23
	Fairness conclusion ............................................................................................................... 24
10.	ASSESSMENT OF REASONABLENESS ....................................................................................... 24
	Advantages ............................................................................................................................ 25
	Disadvantages ....................................................................................................................... 25
	Situation If You Reject the Offer ............................................................................................ 25
	Other factors .......................................................................................................................... 26
	Conclusion on "Reasonable" ................................................................................................. 26
11.	OVERALL OPINION......................................................................................................................... 26
12.	QUALIFICATIONS, DECLARATIONS AND CONSENTS ............................................................... 26
	Qualifications .......................................................................................................................... 26
	Independence ........................................................................................................................ 26
	Disclaimer .............................................................................................................................. 27

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1. PURPOSE AND BACKGROUND

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Corporations Act

The Offer is subject to Section 640 of the Corporations Act. Section 640 requires an expert opinion to be provided where the bidder is connected with the target company. Specifically, Section 640 requires an expert’s report if:

the bidder’s voting power in the target is 30% or more; or
the bidder is a director of the target or a director of the bidder is a director of the target.

AMA’s voting power in ASGL at the time of the Offer was 31.29%. Consequently, this Report has been prepared in accordance with the requirements of Section 640 outlined above.

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Purpose

BDOCF has been appointed by the independent directors of ASGL to prepare an independent expert’s report expressing our opinion as to whether or not the Offer is “fair” and “reasonable” to the Shareholders of ASGL. The report is required to be provided to the Shareholders as part of the Target’s Statement and has been prepared to assist them in making an informed assessment whether to accept the Offer under the bid.

This report should not be used for any other purpose and BDOCF does not accept any responsibility for use outside this purpose. Except in accordance with the stated purpose, no extract, quote or copy of our report, in whole or in part, should be reproduced without the written consent of BDOCF, as to the form and context in which it may appear.

2. SCOPE AND LIMITATIONS

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Scope

The Act requires that the target prepare a target statement. Section 638 of the Act requires that the target statement must include all the information that holders of bid securities and their professional advisers would reasonably require to make an informed assessment whether to accept the offer under the bid.

An independent expert’s report accompanying a target’s statement must state whether, in the expert’s opinion, the takeover offer is fair and reasonable and give the reasons for forming that opinion.

The scope of the procedures we have undertaken of forming our opinion on whether the Offer is fair and reasonable has been limited to those procedures we believed were required in order to form our opinion. Our procedures, in the preparation of this report, do not include verification work nor constitute an audit or assurance engagement in accordance with Australian Auditing and Assurance Standards issued by the Australian Auditing and Assurance Standards Board (“ AUASB ”) or its predecessors.

The assessment of whether the Offer is fair and reasonable will necessarily involve the determining the “fair market value” of various securities, assets and interests.

For the purposes of our opinion, the term “fair market value” is defined as the price that would be negotiated in an open and unrestricted market between a knowledgeable, willing, but not anxious purchaser and a knowledgeable, willing, but not anxious vendor, acting at arm’s length.

By its very nature, the formulation of a valuation assessment necessarily contains significant uncertainties and the conclusions arrived at in many cases will be subjective and dependant on the exercise of individual judgement. There is therefore no indisputable value, and we normally express our opinion as falling within a likely range.

We have not considered the effect of the Offer on the particular circumstances of individual Shareholders. Some individual Shareholders may place a different emphasis on various aspects of the Offer from the one adopted in this Report. Accordingly, individuals may reach different conclusions on whether or not the Offer is fair and reasonable to them.

An individual Shareholder’s decision in relation to the Offer may be influenced by their particular circumstances and, therefore, Shareholders should seek independent advice.

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Basis of Assessment

The Corporations Act does not define the expressions “fair” and “reasonable”. However, guidance is provided by the Regulatory Guides (“ RG ”) issued by the ASIC, which establish certain guidelines in respect of independent expert’s reports required under the Act. In particular, RG 75 “Independent Expert Reports to Shareholders” has been considered. RG 75 relates to the assessment of takeover offers pursuant to Section 640 of the Act.

RG 75 draws a distinction between “fair” and “reasonable”. An offer is fair if the consideration is equal to or greater than the value of the securities subject to the offer. The comparison must be made assuming 100% ownership of the target company irrespective of the percentage holding of the bidder or its associates in the target company.

RG 75 considers an offer to be reasonable if:

the offer is fair; or
despite not being fair, but considering other significant factors, shareholders should accept the offer in the absence of any higher bid before the close of the offer.

Fairness is a more demanding criterion. A “fair” offer will always be “reasonable” but a “reasonable” offer will not necessarily be “fair”.

RG 75 sets out some of the “other significant factors” that should be considered by an expert in assessing the reasonableness of the offer including:

the bidder’s pre-existing entitlement to shares in the target company or any other significant shareholding blocks in the target company;
the liquidity of the market in the target company’s shares or the probability that an alternative offer might be made;
taxation losses, cash flow or other benefits through achieving 100% ownership of the target company;
any special value of the company to the bidder;
the value to an alternative bidder; and
other advantages and disadvantages for the shareholder in accepting the bidder’s offer.

In our opinion, the Offer will be fair if the value of the Offer is greater than the market value of the securities in ASGL, inclusive of an appropriate premium for control.

In considering whether the Offer is reasonable, other factors that have been considered include:

the estimated value of ASGL;
the existing shareholding structure of ASGL;
the likelihood of an alternative offer and alternative transactions that could realise fair value;
the likely market price and liquidity of ASGL’s shares in the absence of the Offer; and
other advantages and disadvantages for Shareholders of accepting the Offer.

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Reliance on Information

This report is based upon financial and other information provided by ASGL. BDOCF has considered and relied upon this information. BDOCF believes the information provided to be reliable, complete and not misleading, and has no reason to believe that any material facts have been withheld. The information provided was evaluated through analysis, inquiry and review for the purpose of forming an opinion as to whether the Offer is fair and reasonable.

BDOCF does not warrant that it’s inquiries have identified or verified all of the matters which an audit, extensive examination or “due diligence” investigation might disclose. In any event, an opinion as to whether

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a corporate transaction is fair and reasonable is in the nature of an overall opinion rather than an audit or detailed investigation.

It is understood that the accounting information provided to BDOCF was prepared in accordance with generally accepted accounting principles and except where noted, prepared in a manner consistent with the method of accounting used by ASGL, in previous accounting periods.

Where BDOCF has relied on the views and judgement of management the information was also evaluated through analysis, inquiry and review to the extent practical. However, such information is often not capable of direct external verification or validation. In the context of this Report, the views not capable of direct external verification or validation related principally to matters such as the likely future actions of management and/or the likely future behaviour of competitors.

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Prospective financial information

The information provided to BDOCF includes limited prospective financial information for ASGL, including forecast financial information which was used by ASGL and its auditor in determining the value of goodwill as at 30 June 2017 and the resulting goodwill impairment charge included in ASGL’s 30 June 2017 Financial Report.

BDOCF has not been engaged to undertake an independent review of the prospective financial information. However, we have reviewed the prospective information provided as noted in Section 7.2 of this Report. We have considered the prospective financial information in reviewing the prospects of ASGL for the purpose of forming our opinion.

The achievability of the prospective financial information is not warranted or guaranteed by the management of ASGL or BDOCF.

Prospective information is dependent on the outcome of many assumptions, some of which are outside the control of ASGL. Assumptions relating to prospective financial information can be reasonable at the time of their preparation, but can change materially over a relatively short time. Accordingly, whilst BDOCF has reviewed the prospective financial information to assure itself that it is reasonable for the purpose of preparing this Report, there can be no warranty or guarantee the prospective financial information will continue to be reasonable in the light of conditions after the date of this Report. BDOCF reserves the right to, and will, bring to the attention of ASGL any changes in conditions occurring between the date of this Report and the expiry of the Offer term that, in its opinion, adversely affect the reasonableness of any material assumptions underlying information used in forming our opinion in this Report. We reserve the right to update our opinion should any such matters arise.

In our consideration of the prospective financial information we have had regard to RG 170 and RG 12. BDOCF notes that RG 170 relates to the use of prospective financial information in disclosure documents and product disclosure statements.

The prospective financial information contains assumptions which are largely hypothetical. Accordingly, in line with the guidance expressed in RG 170 there are insufficient grounds for disclosing specific details of ASGL’s prospective financial information. For this reason, we have not included a detailed disclosure of any prospective financial information with respect to ASGL in this report.

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Current market conditions

Our opinion is 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. Accordingly, changes in those conditions may result in any valuation opinions becoming quickly outdated and in need of revision. BDOCF reserves the right to revise any valuation, or other opinion, in the light of material information existing at the valuation date that subsequently becomes known to BDOCF

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Sources of information

Appendix 2 to this report sets out details of information referred to and relied upon by BDOCF during the course of preparing this report and forming our opinion.

ASGL has agreed to indemnify BDOCF, and BDO East Coast Partnership, and their partners, directors, employees, officers and agents (as applicable) against any claim arising out of misstatements or omissions in any material supplied by ASGL, its subsidiaries, directors or employees, on which BDOCF has relied.

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Assumptions

In forming BDOCF’s opinion, the following has been assumed:

all relevant parties have complied, and will continue to comply, with all applicable laws and regulations and existing contracts and there are no alleged or actual material breaches of the same or disputes (including, but not limited to, legal proceedings), other than as publicly disclosed and that there has been no formal or informal indication that any relevant party wishes to terminate or materially renegotiate any aspect of any existing contract, agreement or material understanding, other than as publicly disclosed;
that matters relating to title and ownership of assets (both tangible and intangible) are in good standing, and will remain so, and that there are no material legal proceedings, or disputes, other than as publicly disclosed;
information in relation to the Offer provided to the ASGL Shareholders or any statutory authority by the parties as part of the bidder’s statement or the target’s statement is complete, accurate and fairly presented in all material respects;
if the Offer is accepted, it will be implemented in accordance with its disclosed terms; and
the legal mechanisms to implement the Offer are correct and effective.

3. OVERVIEW OF THE OFFER

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Background

ASGL was incorporated on 5 August 2016 and listed on the ASX in December 2016. ASGL raised $30.9 million in capital on the initial public offering primarily to execute acquisition of the Initial Portfolio businesses within the automotive aftermarket parts, accessories and performance technology industries.

On 9 May 2017, AMA announced that it had become a substantial shareholder holding a 17.77% interest in ASGL, with the latest purchase being completed on 8 May 2017 for $0.31 per share.

On 23 May 2017, AMA announced an on market takeover bid for ASGL, pursuant to Section 635 of the Act, at a price of $0.35 per share for all of the fully paid ordinary ASGL shares existing during the offer period. The 23 May 2017 offer was unsuccessful and expired on 7 July 2017. On 10 July 2017, AMA announced an increase in its ASGL shareholding to 31.29%.

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Offer terms

On 1 November 2017, AMA announced an off-market takeover offer for all of the ordinary shares of ASGL. On 10 November 2017, AMA issued its first supplementary bidders statement and a replacement bidders statement. The replacement bidder’s statement provided an update in relation to the change in Board members of ASGL and key market announcements.

Key terms of the offer, as outlined in the Bidder's statement dated 1 November 2017, are:

The Offer is a cash offer at a price of $0.35 per share.
The Offer also extends to all ASGL shares which come into existence upon the conversion of or exercise of rights attached to other ASGL securities from 2 November 2017 to the end of the Offer.
The Offer is conditional upon a minimum acceptance of 50.1% of the voting shares.

On 15 November 2017, AMA confirmed the timetable for the Offer as follows:

Date of the Offer: 17 November 2017

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Date Offer Opens: 17 November 2017
Date Offer Closes: 18 December 2017
Date AMA must advise of status of Defeating Conditions: 11 December 2017

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Defeating Conditions

The Offer is subject to the following Defeating Conditions:

that at or before the end of the Offer Period, AMA has a relevant interest in not less than 50.1% of the voting Shares in ASGL, and
Other defeating conditions, including no material transactions, no prescribed occurrences, no material transactions and the non-existence of change of control rights

Conditions of the Offer are noted in further detail within the Bidder’s Statement.

4. PROFILE OF ASGL

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Overview of ASGL

ASGL is a designer, manufacturer, distributor and retailer of parts, accessories, and performance technology for 4x4/SUV vehicles to end users and fleet owners.

The Initial Portfolio businesses were purchased on 16 December 2017 and are located in Queensland, New South Wales, Victoria and Western Australia. The Initial Portfolio businesses are focused on the four-wheel drive and SUV market. We have commented on their operations in further detail below.

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Overview of portfolio companies

Table 3: ASGL Portfolio Businesses

Company	Description
Alloy Motor	AMAG is a 38-year-old business, a leader in the field of professional vehicle fit-out accessories and
Accessories	a prominent supplier to the original equipment, commercial service and special vehicle sectors.
(“AMAG”)	AMAG’s customers include retail, fleet, trade, government, car dealerships and OEM supply.
	AMAG produces heavy duty tray bodies, bull bars, nudge bars and various other vehicle accessories
	to cater for the 4x4 and transport sectors.
	Main services offered by AMAG include accessory fitment, mechanical / auto electrical services,
	vehicle / engine performance and full vehicle fit-out. AMAG provides in-house and offsite fitting
	services.
TransSpec 4x4	TransSpec 4x4 specialises in customising and converting four-wheel drive vehicles. The main
	product line is the conversion of the 200 series Toyota Landcruiser for mining operations which has
	been fully engineered and approved by the relevant federal government department.
	ASGL is focussed on increasing capacity, which increased by 30% by June 2017.
Barden	Barden is a 25-year-old business and is a leading metals fabricator in Victoria, offering services to
Fabrications	industries including marine, hospitality, automotive and defence.
(“Barden”)	Barden is involved in product design and provides a comprehensive sheet metal fabrication service
	including automated manufacturing with computer numerical control (“CNC”) laser cutting, CNC
	turret punching, robotic welding, brake press forming and powder coating services
	Barden provides a vertically integrated supply chain model for the design, manufacture and
	distribution of metal products to the automotive market through ASGL’s network. Local
	manufacturing enables faster response to market and industry automotive model changes and
	control of manufacturing product quality.
	Barden has its own retailer, Uneek 4x4 Offroad Accessories (“Uneek”), which provides a wide
	range of automotive accessories, including those manufactured by Barden and other third party
	suppliers.
Deering	Deering has operated from 1952 and is one of Perth’s leading automotive electrical and air-
Autronics	conditioning specialists. Deering operates from two locations in Western Australia.
(“Deering”)	Deering offers accessory fitting services and supplies parts / accessories for Western Australia’s
	mining, agriculture and retail sectors.

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Table 3: ASGL Portfolio Businesses

Company	Description

Dolium Pty Ltd	Dolium entered the 4x4 accessory aftermarket industry with the opening of a retail store in
(“Dolium”)	Western Australia in 1985.
	Dolium is a niche wholesaler to the 4x4 aftermarket industry, specialising in select product lines
	which Dolium has had some design or conceptual role in developing.
JDR Motor	JDR was established in 2012 and provides auto and 4x4 enhancement services. It’s main brand /
Sports	product line is Walkinshaw Performance, under which are various sub-brands such as VCM
(“JDR”)	performance, Harrop Performance and Flash Diesel.
	JDR services include accessory fitment, mechanical/auto electrical services, vehicle/engine
	performance, power upgrades, brake upgrades, auto electrical work, engine building and
	reconditioning and custom dyno tuning for both petrol and diesel vehicles.
	JDR has a mix of both trade and retail customers with the addition of the Walkinshaw reseller
	network licence and dealer network.
Roo Systems	Roo Systems is a 21-year-old business and designs, manufactures and sells parts and accessories for
	mainly 4x4 / SUV vehicles.
	Products include Roo Systems Diesel 4x4 ECU Remapping and Roo Systems Proprietary 4x4
	Performance Exhausts. Roo Systems is also a key Australian distributor for USA made Baja Designs
	offroad LED light bars.
	Roo Systems has a nationwide dealer network exceeding 45 dealers offering warranty support for
	its diesel ASG upgrades products and services. Services offered are accessory fitment,
	mechanical/auto electrical services and vehicle/engine performance with customers coming from
	retail, fleet, trade and government.
	The core target market of Roo Systems is retail customers including diesel 4x4 owners segmented
	into grey nomads, 4x4 off-roaders and recreational tow vehicles for boats, caravans, camper
	trailers and the like.
Umhauers	Historically, Umhauers had retail stores and service workshops in Geelong and Warrnambool
	specialising in the sale and fitment of parts and accessories for RV, Ute, Van & four-wheel drive
	vehicles.
	Umhauers experienced significant trading issues post acquisition by ASGL due to management
	issues and issues with supply arrangements with major suppliers ARB and Opposite Lock.
	Following an extensive review process, ASGL closed the Warrnambool retail site in October 2017
	and will continue to service the region from the Geelong site.
	ASGL is currently considering legal options in relation to this acquisition of Umhauers, including
	recovery of acquisition monies.
	ASGL plan to improve the Geelong site’s supply of product through group companies, Alloy Motor
	Accessories, Barden and Uneek, to replace previous suppliers. This approach is in implementation
	stage, and is expected to take effect from December 2017.

Source: Management information and 7 December 2016 Replacement Prospectus (“ Prospectus ”)

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Corporate Structure

ASGL has one wholly owned subsidiary, Fleet Alliance Pty Ltd.

On 5 August 2016, a business restructure was undertaken with respect to the share ownership of Fleet Alliance Pty Ltd in that a new holding company was established, Automotive Solutions Group Limited and it acquired 100% of the shares of Fleet Alliance Pty Ltd as part of an internal business restructure.

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Directors and management

ASGL has experienced significant change in the composition of its Board of Directors (“ Board ”) and Executive Management team since it listed in December 2016.

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The current Board of Directors consists of three members as listed below.

Table 4: ASGL Board of Directors

Director’s name	Capacity	Appointed
Carr,Kenneth	Independent Chairman	27 October 2017
Chapman,Charles	Non-Executive Director	2 November 2017
Ranawake,Mithila Nath	Non-Executive Director	2 November 2017

Source: Management information and organisational structure

ASGL had six directors in December 2016 when it listed on the ASX: Tanya Mason, Bryce Wedemeyer, Glenn Gaudet, Thomas Phillips, Mark Larkham and Peter Alexander. Each of these directors resigned in the period between 3 May 2017 and 2 November 2017.

AGSL’s current Executive Management team is set out below. Each of the portfolio businesses acquired have their own general manager in charge of operations.

Table 5: ASGL Executive Management

Director’s name	Capacity
Granzien,Bryan	Chief Executive Officer
Green,Laila	CFO & CompanySecretary
Hadden,Glen	General Manager of Roo Systems
Jauncey,James	General Manager of Transspec 4X4
Konstantinou,Steve	General Manager of AlloyMotor Accessories
Robert,John	General Manager of JDR Motor Sport
Stafford,Adrian	General Manager of Dolium
Stokes,Brett	General Manager of Barden
Swanson,Russell	General Manager of DeeringAutronics
Fitzpatrick,David	General Manager of Uneek
Simpson,Gary	General Manager of Umhauers

Source: Management information and organisational structure

Bryan Granzien and Laila Green joined ASGL on 28 August 2017. Portfolio business general managers have been in place since ASGL’s ASX listing.

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Ownership

As of 3 November 2017, ASGL had 50,345,622 shares on issue. The top 10 Shareholders as at that date are as follows:

Table 6: Top 10 Shareholders

Rank	Shareholder	Securities
		Outstanding	% ownership
1	AMA GroupLimited	15,755,471	31%
2	J P Morgan Nominees Australia	7,054,252	14%
3	Code Corporation PtyLtd	2,500,000	5%
4	John Brett Stokes	2,130,384	4%
5	Turner Commercial Holdings Pty	1,350,000	3%
6	Tanya Mason	1,000,000	2%
7	Powerboss Qld PtyLtd	820,003	2%
8	Nautical RoofingPtyLtd	800,000	2%
9	Mr Stuart McClure	718,750	1%
10	Mr Campbell McClure	675,000	1%
Top ten	subtotal	32,803,860	65%
Other Shareholders		17,541,762	35%
Total securities outstanding		50,345,622	100%
Source: ASGL Shareholder Register as at 3 November 2017

The top 10 Shareholders own a total equity interest of approximately 65%. AMA holds approximately 31%.

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Historical financial information

4.6.1. Financial performance

The historical audited income statements for FY16 and FY17 as well as the unaudited management accounts for the three months ended 30 September 2017 (“ 3M18 ”) are set out in the table below. FY17 represents 6.5 months of operations.

Table 7: Summary of Financial Performance

$	Notes	FY16	FY17	3M18
Revenue	1	-	17,005,184	8,803,526
Cost of sales	3	-	(7,364,258)	(3,923,187)
Gross profit		-	9,640,926	4,880,339

Operating expenses	4	(128,772)	(10,787,114)	(5,575,291)
EBITDA		(128,772)	(1,146,188)	(694,952)

Non-operating costs	2	(1,021,066)	(18,116,719)	-
Depreciation		-	(80,310)	(79,084)
EBIT		(1,149,838)	(19,343,217)	(774,036)

Interest income		-	5,269	-
Tax expense	5	-	702,436	-
Net Income		(1,149,838)	(18,635,512)	(774,036)
		FY16	FY17	3M18
Sales growth		NA	NA	(48.2%)
Gross profit margin		NA	56.7%	55.4%
EBITDA margin		NA	(6.7%)	(7.9%)

Source: Audited financial statements for the periods ended 30 June 2017 and 30 June 2016, BDO analysis and the management accounts as at 30 September 2017.

We note the following regarding ASGL’s historical financial performance:

ASGL’s Prospectus reported an FY17 statutory forecast (“ FY17 Forecast ”) including revenue of $23.8m and (“ EBITDA ”) (before acquisition expenses) of $1.6m. As set out above, ASGL achieved FY17 revenue of $17.0m (-28.6% against FY17 Forecast) and normalised EBITDA of -$1.1m (-169% against FY17 Forecast). ASGL’s poor FY17 trading performance prompted review of the carrying value of goodwill at 30 June 2017.
FY17 non-operating costs relate to goodwill impairment ($13.9m), Initial Portfolio acquisition costs ($4.0m) and other acquisition costs, ASX listing fees and consulting fees ($0.2m).
Goodwill impairment of $13.9m arose due to a decline in the operating results of ASGL’s cash generating units and was attributable to the following businesses:

Table 8: Goodwill allocation at 30 June 2017

Business	Goodwill	Impairment charge	Residual goodwill
Roo Systems	5,066,548	(4,268,708)	797,840
Barden Fabrications	9,732,564	(2,592,178)	7,140,386
AlloyMotor Accessories	3,989,509	(2,431,478)	1,558,031
JDR Motorsports	1,167,828	-	1,167,828
Dolium	634,471	-	634,471
TranSpec 4x4	1,397,113	(1,397,113)	-
DeeringAutronics	794,160	(794,160)	-
Umhauers	2,384,043	(2,384,043)	-
	25,166,236	(13,867,680)	11,298,556

Source: Audited financial statements for the periods ended 30 June 2017 and BDO analysis

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The recoverable amounts of the cash-generating units were determined based on value-in-use calculations, using annualised FY17 actual results, followed by an extrapolation of expected cash flows for the units’ remaining useful lives using the growth rates determined by Management. The present value of the expected cash flows of each segment was determined by Management’s estimate of suitable discount rates.

Other acquisition costs of $4.0m were incurred in FY17 in connection with the acquisition of the eight portfolio businesses on 16 December 2016.

ASX listing fees and consulting fees of $0.2m were incurred in FY17 (FY16: $1.0m) as a result of the ASGL listing on the ASX in December 2016.

Cost of sales in FY17 included a one-off increase of $431,575. The adjustment related to the removal of WIP due to errors noted by Grant Thornton Audit Pty Ltd (“ Grant Thornton ”) within the cost calculations.
FY17 operating expenses relate primarily to employment costs ($7.3m), occupancy expenses ($1.2m), and advertising and marketing expenses ($0.3m).
The major components of tax expense comprise current tax of $103,641 and deferred tax of ($806,077).

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4.6.2. Historical statements of financial position

The historical audited statements of financial position as at 30 June 2016 (“ FY16 ”) and 30 June 2017 (“ FY17 ”) as well as the unaudited management accounts as at 30 September 2017 of ASGL are set out in the table below.

ASGL is audited by Grant Thornton. Grant Thornton’s audit opinion in ASGL’s 30 June 2017 Financial Report was qualified on the basis that the Group’s inventory balance with a carrying value of $4.4m was held at numerous locations. Grant Thornton was unable to obtain sufficient appropriate audit evidence regarding inventory unit prices at two locations, representing inventory of $1.1m and consequently, was unable to determine whether any adjustment to that amount was necessary.

Table 9: Summary of Financial Position

AU$ Notes	FY16 FY17 3M18
Cash and cash equivalents 1	- 1,863,220 1,196,799
Trade and other receivables 2	- 2,734,078 3,716,711
Inventories 3	- 4,168,680 4,287,332
Other assets 4	2 121,353 297,512
Total current assets	2 8,887,331 9,498,353

Trade and other receivables 5	- 603,699 633,699
Property, plant and equipment 6	- 2,211,598 2,190,193
Intangible assets 7	- 11,298,556 11,298,556
Deferred tax assets 8	- 1,893,405 1,893,405
Total non-current assets	- 16,007,258 16,015,852
Total assets	2 24,894,589 25,514,205

Trade and other payables 9	1,149,838 5,845,582 7,191,172
Borrowings	- 14,897 14,897
Current tax liabilities 10	- 103,641 103,641
Provisions	- 18,805
Employee benefits 11	- 1,159,143 1,226,009
Total current liabilities	1,149,838 7,142,068 8,535,720

Trade and other payables 9	- 6,020 6,020
Borrowings	- 34,451 34,451
Deferred tax liabilities	- 768 768
Provisions	- 131,195 131,195
Employee benefits 11	- 105,069 105,069
Total non-current liabilities	- 277,503 277,503
Total liabilities	1,149,838 7,419,571 8,813,223

Net assets	(1,149,836) 17,475,018 16,700,983

Issued capital	2 37,260,368 37,260,368
Retained earnings	(1,149,838) (19,785,350) (20,559,385)
Total equity	(1,149,836) 17,475,018 16,700,983

Source: Audited financial statements for the periods ended 30 June 2017 and 30 June 2016, and the management accounts as at 30 September 2017.

We note the following regarding ASGL’s historical financial position:

ASGL’s cash balance has reduced from $1.8m (FY17) to $1.2m (3M18) due to net cash outflows of $0.6m for the quarter (comprising $0.579m operating cash outflows and $0.088m in investing outflows).

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FY17 current trade and other receivables comprise of trade receivables ($2.6m) and other receivables ($0.1m). Only 3% of trade receivables at FY17 were aged over 60 days. Management note that the Group does not have high customer concentration. As the Group are in the process of integrating its portfolio companies, each provides varying payment terms to customers.
The 3M18 inventories balance is comprised of: Finished goods - $4,218,299 (FY17: $4,144,107); Raw materials and Work in Progress (“ WIP ”) - $693,625 (FY17: $609,870); Goods in transit - $95,390 (FY17: $134,686); and an allowance for inventory obsolescence - $719,983 (FY17: $719,983).

As noted above, Grant Thornton qualified its 30 June 2017 audit opinion in relation to pricing of inventory at two locations that could not be verified (value $1,121,441). Management confirmed that the stock quantities could be verified but there was insufficient evidence to support the cost price per unit. Without evidence to support the true cost price, no stock valuation adjustment could be quantified and the potential error remains unadjusted.

3M18 other assets relate to prepayments of $350,678 (FY17: $113,307) and security deposits of -$53,167 (FY17: $8,046).
FY17 and 3M18 non-current trade and other receivables relate to term deposits held as rental bond guarantees.
FY17 property, plant and equipment relates to plant and equipment of $1,341,866, motor vehicles of $383,702, total computer equipment of $169,264, leasehold improvements of $189,835, and furniture, fixtures and fittings of $126,931.
As discussed above, intangible assets relate to goodwill cost of $25.2m and accumulated impairment charges of $13.9m.
Deferred tax assets largely relate to provisions, acquisitions and blackhole expenses deductible in future periods. We are of the view that the carrying value of ASGL’s deferred tax assets by require review based on ASGL’s recent poor financial performance.
FY17 current trade and other payables relate primarily to trade payables ($2.5m), payroll tax, Pay As You Go (“ PAYG ”), superannuation and Goods and Services Tax (“ GST ”) payable ($1.8m), and deferred consideration payable ($0.6m).

Current trade and other payables increased by $1.3m between FY17 and 3M18, primarily due to an increase in GST payable of c. $0.6m and increase in trade payables $1.0m. Management has informed us that the increase in GST liabilities resulted from delays caused by formation of a consolidated group for taxation purposes

The Group arranged to consolidate for tax purposes following acquisition of the initial Portfolio businesses. This process has delayed lodgement of the BAS returns and as a result, ASGL anticipates late lodgement penalties and fines imposed by the Australian Tax Office (“ ATO ”). As at the date of signing this Report, ASGL cannot quantify the potential penalties.

Current employee benefits relate to annual leave of $667,055 and long service leave of $492,089. Noncurrent employee benefits relate to long service leave of $105,069.
Voluntary escrow applies to 5,261,686 shares for the purchase of the portfolio companies, constituting 10.45% of the Shares on issue. In relation to the voluntary restriction agreements entered into with the Initial Portfolio vendors, the shares which are subject to escrow will be released depending on whether the initial portfolio sold to ASGL by those vendors has achieved specified Earnings Before Interest and Tax (“ EBIT ”) thresholds during the 2017 and 2018 financial periods, following Completion.

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Sources of funding

4.7.1. Finance lease liabilities

ASGL Trust has a four-year finance lease on motor vehicles with Toyota Finance Australia Limited. Key terms of the interest bearing debt facilities are as follows:

Table 10: Finance lease terms

Terms
Finance lease commitments
- within one year	$14,897
- between one and fiveyears	$39,725
Lease term	48 months startingFebruary2017
Repayment	$1,241.40per month fixed
Security	The lease liabilities are secured bythe related leased assets.
Source: 30 June 2017 financial statements

4.7.2. Business finance agreement

Subsequent to 30 June 2017, ASGL finalised an agreement with Westpac to provide banking facilities, including a $1,000,000 bank bill business loan, a $580,000 revolving limit for rental bonds, a $400,000 trade facility and other minor facilities.

4.7.3. Loan with AMA

ASGL obtained a $3.5m loan facility from AMA on 22 November 2017. The loan facility will be used to meet the cash flow requirements for payment to the ATO for GST, PAYG and payroll tax. The total payments are estimated to be around $3 million. The tax due is already provided for in ASGL’s accounts.

Key terms of the loan agreement are:

Table 11: Loan with AMA terms

Terms
Facility limit	$3,500,000
Interest rate	5.3%
Facility fee	A line fee of 1.4% on the unused amount in the facility
Establishment fee	$50,000
Term	6 month repayment term
Security	Security to be registered in the Personal Property Securities Register
	over all present and after-acquired property of ASGL and its wholly
	owned subsidiary,Fleet Alliance PtyLtd.
Default interest rate	10%(on overduepayments)
Source: ASGL’s 22 November 2017 ASX announcement

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Off balance sheet and contingent liabilities

Management has informed us that ASGL is aware of the following off balance sheet and contingent items:

1. Onerous leases

ASGL has closed their Warrnambool site, however a five year operating lease is currently in place. ASGL have employed a letting agent in order to sublease the premises. As of the date of this report the expected vacancy period cannot be quantified. The premises are leased for c. $10k per month.

2. Potential Umhauers litigation

ASGL is considering options in relation to the acquisition of Umhauers. An accurate estimation of potential litigation costs is not known at this time.

3. Deferred consideration

Management expects minimal deferred consideration to be payable in relation to the acquisition of the Initial Portfolio given the recent poor performance of these businesses. ASGL expects deferred consideration, being $228,509 in shares, to be paid only in relation to the acquisition of JDR.

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5. INDUSTRY OVERVIEW

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Key industry drivers

Key factors driving demand for motor parts are consumers’ income, disposable income and the number of motor vehicles. In the case of ASGL, the number of four-wheel drive and Sport utility vehicle (“ SUV ”) vehicles specifically drives demand for the Group’s products.

Per IBISWorld, there is an expected growth of c. 2% in disposable income for the period ending 2024 and the consumer sentiment index is forecast to improve over the next five years.

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Motor parts manufacturing overview

The motor vehicle parts and accessories manufacturing industry has experienced a difficult operating environment for manufacturing over the past five years as demand has shifted away from locally manufactured cars in favour of imported cars. Rising environmental concerns and high vehicle operating costs have led to consumers choosing smaller and more fuel-efficient cars over large cars.

According IBISWorld, the manufacturing industry revenue is expected to decline at a compounded annual growth rate (“ CAGR ”) of 10.4% over the next five years from 2018 to 2022. Factors contributing to this decline include the exit of local vehicle manufacturers, changing consumer preferences, rising environmental awareness and rising trend towards export development.

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Motor parts retailing overview

Motor vehicle parts retailing has grown steadily over the past five years (ended 2017). Analysts attribute this to increased economic uncertainty resulting in consumers becoming more likely to buy new or used parts instead of purchasing a new motor vehicle.

IBISWorld expects the sector to grow at an annualised 2.5% over the next five years supported by the anticipated rise in disposable income which should drive demand for parts and accessories in the automotive aftermarket. Other factors which are expected to contribute to this growth are the increasing number of motor vehicles in Australia and population growth.

However, projected volatility in consumer sentiment will likely weigh on the industry’s expansion, reducing the anticipated growth rate over the period. According to IBISWorld, government policies may also influence consumer preference towards public over private transport.

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Key competitors to ASGL

Management has identified the following companies as key competitors to the operations of ASGL:

Opposite Lock

Opposite Lock is an Australia-wide chain of four-wheel drive specialist accessory stores based in Mitcham, Australia. Operating across Australia and New Zealand, Opposite Lock offers a comprehensive range of products and services including bull bars & protection, recovery gear, suspension, electrical products, communication products, exhaust systems and fridges.

Ironman 4x4 Pty Ltd

Ironman 4x4 Pty Ltd is a manufacturer and supplier of suspension parts all around the world, offering a wide range of products such as winches, recovery equipment, protective bars, canopies, lighting and electrical upgrades. Originally established in Melbourne, Ironman 4x4 now has warehouses located in Newcastle, Brisbane, Townsville, South Australia and Perth.

 Arrowcrest Group Pty Ltd

Arrowcrest Group Pty Ltd is a locally-owned private company that manufactures and distributes automotive products and farming machinery. The company is headquartered in Woodville North, South Australia.

ARB Limited

ARB Limited is a manufacturer and distributor of 4x4 accessories with an international presence across more than 100 countries. ARB Limited has a wide product range including protection equipment, vehicle lighting & rear vision, suspension equipment, canopies, ute lids, air lockers, compressors, fridges, camping accessories, battery, safari snorkels and general accessories. It has a retail dealer network of over 150 stores across Australia.

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 Bapcor Limited (Previously Burson Group Limited)

Bapcor Limited is a trade focused automotive aftermarket parts distributor, providing automotive aftermarket parts, accessories, automotive equipment and services in Australasia. The entity’s core business segment is the automotive aftermarket, covering trade, retail & service, and specialist wholesale businesses. Based in Victoria, Bapcor Limited has an international presence across more than 800 locations worldwide.

 Chassis Brakes International Pty Ltd

Chassis Brakes International is one of the world’s largest manufacturers of automotive braking solutions with a product range that includes disk brakes, drum brakes, electro-mechanical parking brakes and rotors. Chassis Brakes International operates in Europe, Asia, South Africa, North and South America.

 TJM Products Pty (Limited)

Established in Australia, TJM’s product range includes steel & alloy bull bars, nudge bars, side & rear protection bars, side steps, trade racks, roof racks, TJM recovering equipment, TJM winches, TJM XGS suspension, Airtec snorkels, TJM Pro Lockers and TJM roof top tents & awnings.

 4WD Supacentre

4WD Supacentre is an Australian online retailer offering a range of automotive products and camping gear across Queensland, Victoria, New South Wales, South Australia, Western Australia and Northern Territory.

 AMA Group Limited

Based in Australia, AMA operates in the wholesale vehicle aftercare and accessories market including automotive component remanufacturing, automotive electrical & cable accessories, vehicle panel repair and vehicle protection products & accessories.

6. FAIRNESS ASSESSMENT AND VALUATION METHODOLOGY

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Fairness assessment overview

The Offer is fair if the fair market value of the cash consideration offered by AMA is equal to or greater than the fair market value of an ASGL share before the Offer (on a controlling interest basis).

Accordingly, to undertake this comparison we have undertaken an assessment of the value of an ASGL share before the Offer.

The valuation methods commonly used for the above analyses are considered below.

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Valuation methods

Details of common methodologies for valuing businesses and assets are included at Appendix 3 . The principal methodologies which can be used are as follows:

Discount cash flow (“ DCF ”)
Capitalisation of maintainable earnings (“ COE ”)
Net asset value (“ NAV ”)
Quoted market price basis (“ QMP ”).

Set out below is a discussion around the valuation methods we consider appropriate for the purposes of undertaking our valuation assessment of ASGL.

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Selected valuation methods for ASGL

In accordance with RG 111.15, we have considered the fair market value of an ASGL share on the basis of a knowledgeable and willing, but not anxious, seller that is able to consider alternative options to the bid.

We have assessed the equity value of an ASGL share using the NAV method and QMP method for the following reasons:

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DCF considered inappropriate

DCF valuation is appropriate where a business is operating within the early stages of its life cycle and expects variation in cash flows from year to year. This method would typically be our preferred approach given that ASGL is a newly formed entity, is currently loss making and is in the process of implementing a group wide enterprise resource planning (“ ERP ”) system; which all increase the variation of cash flows within the near to medium term until ASGL reaches maturity.

However, ASGL has not demonstrated an ability to produce accurate forecasts of earnings on a consolidated basis. In April 2017, ASGL downgraded its profit guidance for the second half of FY17 from EBIT of $3.3 million to EBIT in the range of $0.8 million to $0.9 million. The Group is in the process of integrating its operating segments (each of eight businesses acquired) and formalising a central financial reporting function. Further, there is a lack of consolidated historical financial information against which reasonableness of its forecasts can be assessed. Therefore, this method is not considered appropriate.

COE considered inappropriate

The capitalisation of maintainable earnings is most appropriate for entities which exhibit stable earnings and are expected to have an indefinite life.

It is likely that ASGL’s future earnings are likely to differ from the current or historical earnings on the basis that ASGL is currently implementing a turnaround strategy, is in the process of operationally integrating the initial portfolio business through vertical integration strategies, implementation of a new ERP system and implementing new financial reporting systems and controls.

Given the limited nature of ASGL’s historical financial information, significant changes currently being undertaken by the business, poor recent financial results and uncertainty regarding forecast financial information, we have not been able to determine a level of maintainable earnings greater than $nil and consequently, did not consider valuation of AGSL based on capitalisation of maintainable earnings to be appropriate.

NAV method considered appropriate

The assets and liabilities of the relevant entity under this approach are valued at fair market value and the net value forms the basis for the entity's value. This methodology is deemed appropriate in instances where reliable cash flow forecasts cannot be supplied.

The net asset value can be calculated through various methods such as the orderly realisation method, the liquidation of assets method and on a going concern basis. As management has confirmed that ASGL does not plan to close any further retail outlets or operating segments, the orderly realisation and liquidation methods are not considered appropriate.

We have assessed the fair market value of ASGL’s net assets based on a “sum-of-parts” approach starting with the assets and liabilities set out in ASGL’s audited statement of financial position as at 30 September 2017 and adjusting for expected movements to 18 December 2017, being the date the Offer closes.

The assets and liabilities have been assessed independently and then aggregated to arrive at the equity value of ASGL (on a controlling interest basis). We have assessed the fair market value of assets and liabilities of ASGL (using a book value, DCF or COE valuation to determine the market value as appropriate). Where applicable, ASGL’s balance sheet as at 30 September 2017 has been adjusted to reflect material movements.

QMP analysis considered appropriate

We have selected QMP valuation methodology as appropriate given that ASGL shares are listed on the ASX. This means that there is a regulated and observable market, in which the shares of ASGL are traded.

In assessing ASGL's share price performance on the ASX we have had particular regard to the following:

The level of trading activity of the ASGL securities (i.e. the volume of trades in the market as a percentage of the total securities and the frequency of the trades);
The value of the trading activity and number of days of trading activity; and
Recent key developments, market announcements and the timing and level of dissemination of information to the market.

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We have reviewed the following factors relating to the trading activity of ASGL securities on the ASX:

The daily high, low and closing share price of trades;
The daily volume of the trades;
The volume weighted average price; and
The total value of securities traded.

We have assessed the liquidity and level of free float and have found that there is sufficient trading to provide a guide of the market value of a share. Further, the level of dissemination of information for shares listed on the ASX is high and we have observed its impact on price within our analysis of the historic share price analysis in Section 8.1 below.

After analysis of the ASX quoted market price we derived a fair market value range, which reflects a minority interest price for a ASGL share. A control premium is applied to the minority value to arrive at a controlling interest value. A detailed presentation of the daily movement in ASGL's share price and volumes traded during the past year is outlined in Section 8.1.

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Other valuation considerations

Future events

The business of ASGL assumed in this valuation, is that which exists at the current date. Future growth which could arise from an increase of income generated by the business has not been considered in this valuation as forecasts for the Group lacked sufficient support to be relied upon for the purposes of our analysis and, given ASGL’s short history and recent poor financial performance, a level of maintainable earnings could not be reliably determined.

Other growth potential, which may result from new activities, business initiatives, acquisitions and the like (which are not capable of estimation), is not within the scope of this valuation.

Control premium

We note that the NAV method is inherently a control based valuation while the QMP valuation method assesses the value of minority interest. Therefore, we have applied a premium for control in the QMP method only. Refer to Section 8 where this has been discussed in further detail.

Valuation in accordance with APES 225

This engagement has been conducted in accordance with professional standard APES 225 Valuation Services, as issued by the Australian Professional and Ethical Standards Board.

7. NAV VALUATION OF ASGL BEFORE THE OFFER

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Net asset value of ASGL prior to the Offer

The fair market value of ASGL’s net assets is primarily based on a “sum-of-parts” assessment of ASGL’s assets and liabilities set out in ASGL’s unaudited statement of financial position as at 30 September 2017. The assets and liabilities of ASGL have been assessed independently, and then aggregated to arrive at the equity value (on a controlling interest basis) of ASGL.

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Selection of the net tangible asset value

Intangible assets, being goodwill on acquisition of the Initial Portfolio businesses less impairment charges, represent 65% and 68% of reported net assets at FY17 and 3M18, respectively.

As discussed in Section 4, ASGL’s FY17 accounts reflect significant goodwill impairment charges based on value-in-use calculations in respect of ASGL’s cash-generating units.

We have performed a high level review of ASGL’s FY17 goodwill impairment testing which supports the current book value of goodwill. We note the following based on our review of the value-in-use calculations performed:

BDO Corporate Finance (East Coast) Pty Ltd

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The calculations assume that earnings for the period ended 30 June 2017 represent a “maintainable” level of EBIT. As ASGL is a newly formed entity in the process of implementing a turnaround plan, this assumption may not be reasonable;
High level growth rate assumptions were applied uniformly across all of the portfolio businesses; and
The calculations reflect simplified DCF analysis which assumes EBIT is a proxy for cash, and does not take into account any future requirements for capital expenditure or changes in working capital;

We also note that:

ASGL’s book value of goodwill at FY17 represents approximately 6.3 times forecast FY18 profits, even after excluding the three initial portfolio businesses that are forecast to be loss making. This implied goodwill multiple appears extremely high given ASGL’s recent poor financial performance;
ASGL achieved EBITDA losses before non-operating costs for FY17 and 3M18 of $1.1m and $0.8m, respectively. Consequently, we are unable to identify historical profitability which might support the carrying value of intangible assets;
ASGL’s current earnings are significantly below the level of maintainable EBIT ($5.9m per the purchase price summary provided by Management) on which the purchase price of the Initial Portfolio was based.

On the basis of the foregoing discussion, we do not consider the carrying value of goodwill in the accounts of ASGL to be supported by the level of historical or forecast earnings. Consequently, our NAV valuation of ASGL focuses on reported net tangible assets (“ NTA ”), excluding goodwill.

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Net asset valuation

To assist our analysis, ASGL has provided unaudited management accounts for the three-month financial period ended 30 September 2017.

We have made the following adjustments as part of the NAV valuation, based on our review of the available financial information:

Adjustment for costs expected to be incurred in relation to the Offer and preparation of the Target Statement;
Removal of intangible assets (as explained in Section 7.2 above);
Adjustment of various assets and liabilities to their fair market value based on the available financial information; and
Recognition of the additional losses expected to incurred by ASGL as a result of its ongoing trading between 30 September 2017 and the closing date of the Offer.

Our assessment of the fair market value of ASGL on a controlling interest basis, prior to the Offer, is set out below:

Table 12: ASGL NAV valuation summary prior to the Offer

$	Notes	Low	High
Unaudited NTA value as at 30 September 2017		16,700,983	16,700,983
Professional fees in relation to the Offer	1	(115,000)	(115,000)
Elimination of intangible assets	2	(11,298,556)	(11,298,556)
Elimination of deferred tax	3	(1,892,637)	(1,892,637)
Expected tradinglosses	4	(500,000)	(375,000)
Adjustment to inventory	5	-	-
Taxpenalties and fines	6	-	-
Equity value - 100% controlling interest		2,894,790	3,019,790

*Per share*
Securities on issue		50,345,622	50,345,622
Valueper share($) - 100% controlling interest		0.057	0.060

Sources: Unaudited management accounts as at 30 September 2017, BDOCF analysis, discussion with management and supporting financial information.

BDO Corporate Finance (East Coast) Pty Ltd

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We note the following regarding ASGL’s 30 September 2017 financial position:

Management expects to incur around $115,000 in professional fees in relation to the Offer comprising $50,000 in legal fees, $15,000 in accounting costs and $50,000 in independent expert report fees.
We have adjusted for the full carrying value of intangible assets in order to determine the NTA value, in line with the approach discussed in Section 7.3, above.
We have adjusted for the balance of deferred tax assets as value is dependent on future profitability of the business against which to offset the losses.
The Group incurred unaudited losses at EBIT level of $155,139, $422,908 and $195,988 in July 2017, August 2017 and September 2017, respectively. Management expects losses in the range of $150,000 to $200,000 per month for the two and a half month period from 1 October 2017 to 17 December 2017 (the day prior to the closure of the Offer). Consequently, we have adjusted unaudited NTA in range of $375,000 ($150,000 x 2.5) to $500,000 ($200,000 x 2.5) to reflect expected additional losses up to the end of the Offer Period.
As previously discussed, Grant Thornton qualified its 30 June 2017 audit opinion in relation inventory values which could not be substantiated. As the required adjustment cannot be quantified, no adjustment to the NAV has been made above.
Management could not confirm the potential value of fines and penalties which may be incurred due to the delay in the lodgement of the BAS returns. However, Management has informed us that ASGL will apply to have any fines and penalties waived due to ATO delay in processing the Group’s tax consolidation.

There are currently 50,345,622 shares on issue in ASGL (refer to Section 4.5). Based on the above, we have estimated the fair market value of an ASGL share, using a NTA valuation methodology on a controlling interest basis, to be between $0.057 and $0.060 per share.

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Control premium

The NAV method is inherently a control based valuation as it reflects the market values of the assets held by the Group. Therefore, no further adjustment to the value per share is required in order to calculate the value of ASGL on a controlling interest basis.

8. QMP VALUATION OF ASGL BEFORE THE OFFER

ASGL is listed on the ASX and has sufficient market history for an ASX market price based valuation. In order to assess the fair value, we have considered the movement in ASGL's share price, volume weighted average price (“ VWAP ”) and volumes traded since ASGL’s date of listing.

After the analysis of the ASX quoted market price we have derived a fair market value range, which reflects a price for an ASGL share on a minority interest basis. This is then adjusted for a control premium in order to determine ASGL’s equity value on a controlling interest basis.

In assessing ASGL's share price performance on the ASX we have had particular regard to the following:

The value and volume of trading activity of the ASGL securities;
The free float of ASGL shares; and
Recent key developments and market announcements.

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Trading price

We have analysed the share price movements of ASGL since 1 March 2017. The significant decline in share price on the 26 April 2017 was driven by ASGL profit guidance downgrade for the second half of FY17 from EBIT of $3.3 million to EBIT in the range of $0.8 million to $0.9 million.

BDO Corporate Finance (East Coast) Pty Ltd

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Figure 2: Daily closing share price and trading volume

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----- Start of picture text -----

1.200 3,000,000
1.000 2,500,000
0.800 2,000,000
0.600 1,500,000
0.400 1,000,000
0.200 500,000
- -
Volume Share Price
Volumne
Share Price
----- End of picture text -----

Source: CapitalIQ

Table 13: ASGL last key developments/announcements

		Share price -	Share price - 1
Date	Announcement	1 day before	day after	Change ($)	Change (%)
17-Nov-17	AMA: Dispatch of Replacement Bidders Statements	0.34	0.34	-	0.0%
10-Nov-17	AMA: First Supplementary Bidder's Statement	0.34	0.34	-	0.0%
3-Nov-17	Response to Takeover Bid	0.34	0.34	-	0.0%
1-Nov-17	AMA: Off Market Take Over Bid for 4WD, Automotive Solutions	0.24	0.34	0.10	42.6%
31-Aug-17	Appendix 4E and Preliminary Final Report	0.28	0.28	-	0.0%
28-Aug-17	Market Update	0.27	0.27	0.01	1.9%
31-Jul-17	Quarterly Cash Flow Report Appendix 4C	0.33	0.30	(0.03)	(9.2%)
4-Jul-17	Supplementary Target's Statement	0.35	0.35	-	0.0%
14-Jun-17	AMA: Second Supplementary Bidder's Statement	0.36	0.36	0.01	1.4%
13-Jun-17	4WD Response to AMA Bidders Statement	0.36	0.36	-	0.0%
9-Jun-17	AMA: Response to Target's Statement	0.38	0.36	(0.02)	(4.0%)
8-Jun-17	Supplementary Bidder's Statement	0.37	0.36	(0.01)	(2.7%)
6-Jun-17	4WD Earnings Guidance	0.37	0.37	0.01	1.4%
6-Jun-17	4WD Target's Statement	0.37	0.37	0.01	1.4%
24-May-17	ASX Announcement - Response to Takeover Offer	0.36	0.38	0.02	5.6%
23-May-17	AMA: Bidders Statement	0.35	0.38	0.03	8.6%
23-May-17	AMA: Bell Potter to act for AMA in 4WD Takeover	0.35	0.38	0.03	8.6%
19-May-17	Market Update	0.39	0.38	(0.02)	(3.8%)
8-May-17	AMA: Equity Interest in Automotive Solutions Group Ltd	0.32	0.39	0.07	22.2%
4-May-17	Updated Quarterly Cash Flow Report Appendix 4C	0.31	0.32	0.01	3.3%
28-Apr-17	Quarterly Cash Flow Report Appendix 4C	0.26	0.28	0.02	7.7%
26-Apr-17	ASGL Trading and Profit Guidance Update	0.77	0.26	(0.51)	(66.0%)

Source: CapitalIQ and BDO analysis Note: Shaded data represents tainted periods

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VWAP per ASGL share

We have considered the ASX quoted market price for ASGL which reflects a minority interest price per share. The table below summarises trading over the three-month period to 31 October 2017. The VWAP analysis has been performed for the three months to 31 October 2017 to exclude the impact of the following:

The Offer announced 1 November 2017 in order to exclude any impact the Offer may have had on the price;
The previous offer by AMA announced on the 23 May 2017 which expired on the 7 July 2017 to exclude any impact of this offer on the share price; and
To exclude trading prior to the trading and profit announcement guidance update provided on 26 April 2017 as trading prior to this date is not considered comparable to the revised business operations.

BDO Corporate Finance (East Coast) Pty Ltd

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Table 14: VWAP history

				Average	Cumulative	Annualised
	Low	High		daily	shares	shares traded
Time period	price	price	VWAP	volume	traded	(% of total)	Free float
As at 31 October 2017	0.24	0.24	0.24	22,610	22,610	16.39%	44.18%
One month prior to 31 Oct 2017	0.20	0.25	0.22	18,165	581,270	13.17%	44.18%
Two months prior to 31 Oct 2017	0.20	0.28	0.24	20,967	1,299,970	15.20%	44.18%
Three monthsprior to 31 Oct 2017	0.20	0.30	0.25	19,450	1,808,830	14.10%	44.18%
Sources: Capital IQ; BDOCF analysis
Note 1: Annualised turnover is calculated as daily		turnover annualised		and divided by total shares.
Note 2: Free float represents the shares	available for trading as a percentage of total after excluding insiders (such as employees)
and strategic corporate investors (such as		AMA, Powerboss, Nautical Roofing etc) as defined				by CapitalIQ.
Note 3: VWAP denotes volume weighted average share price			as per CapitalIQ.

We note the following with respect to the trading in ASGL securities during the three months to 31 October 2017:

ASGL securities traded between a low of $0.20 per share on 11 October 2017 and a high of $0.30 per share on 31 July 2017. The VWAP of ASGL securities remained largely stable, ranging between $0.22 and $0.25 for the period observed.
We note that ASGL has a low free float with 44.18% (or 22.2 million shares) of the total shares in issue available for trading. This is also seen in the annualised shares traded as a percentage of total shares on issue which ranged between 13.17% and 16.39% (or 29.8% to 31.9% of the free float) during the period reviewed. Although the free float is low it is considered sufficient to provide a guide as to the value of an ASGL share.
Securities with a low free float are often more exposed to volatile stock prices due to the lower supply of shares available for trading. Shareholders may apply a discount to securities with a lower free float to compensate for the such risk and lower liquidity. We consider this discount to already be reflected within ASGL’s share price trading history.
Over the period analysed, there were a total of 67 trading days. ASGL securities were actively traded for 48 of those days (72%).

We are satisfied that it is appropriate to use the VWAP prices observed historically as a comparison to the Offer price of $0.35.

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Premium for control

Investment fundamentals dictate that the value of 100% of an entity is normally greater than the sum of values attributable to the individual securities of that entity based on transactions of minority holdings.

The difference between the value of 100% of an entity and the total value of minority interests is referred to as a premium for control taking into account control and synergistic benefits for the acquirer.

Control of an entity by a shareholder gives that shareholder rights to which minority shareholders are not entitled, including control of the entity’s policies and strategies, and use of cash flows.

A premium for control is applicable when an acquisition would give rise to benefits such as:

The ability to realise synergistic benefits;
Access to cash flows;
Access to tax benefits; and
Control of the board of directors of the company.

Therefore, a control premium would typically include a premium for control as well as potential buyer specific synergies.

Evidence from studies indicates that premiums for control on successful takeovers have frequently been in the range of 20% to 40% in Australia and that the premiums vary significantly by transaction. We have analysed the average premiums paid for completed acquisitions since 1 January 2010 (cash consideration only), in order to assess the average control premium paid.

BDO Corporate Finance (East Coast) Pty Ltd

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Table 15: Control premium on completed takeovers relative to the share price one day prior to the offer

	Number of	Average Deal Value	Average control
Year	Transactions	(AUD$m)	premium(%)
2017	12	1482	15%
2016	33	784	28%
2015	36	782	34%
2014	35	673	22%
2013	37	701	26%
2012	43	302	30%
Mean		787	26%
Median		742	27%

Source: MergerMarket and BDO analysis

Table 16: Control premium on completed takeovers relative to the share price one month prior to the offer

	Number of	Average Deal Value	Average control
Year	Transactions	(AUD$m)	premium(%)
2017	11	1609	10%
2016	34	762	34%
2015	37	762	38%
2014	35	673	29%
2013	37	706	32%
2012	43	302	34%
Mean		802	30%
Median		734	33%

Source: MergerMarket and BDO analysis

In arriving at an appropriate premium for control to apply, we note that buyers would generally assess the following considerations:

Level of liquidity in the trade of the target’s securities;
Synergistic value;
Nature and magnitude of non-operating assets;
Nature and magnitude of discretionary expenses;
Perceived quality of existing management;
Nature and magnitude of business opportunities not currently being exploited; and
Ability to integrate the target into the acquirer’s business.

An acquirer of ASGL could potentially reduce corporate overheads and realise synergies through the integration of ASGL into their business while, at the same time incurring one off integration expenses.

Having considered the market evidence of control premium ranges, we note that the control premiums paid prior to 2017 ranged between 22% and 38%. The number of transactions observed within 2017 are a lot lower and therefore more susceptible to bias by outliers. Therefore, the median values covering 2012 to 2017 are considered to be the best representation of the average control premium paid.

The above data, together with the fact that the exhibited premiums include both a control premium and synergy premium, we have considered a control premium of 20% to 25% to be appropriate to apply in the QMP valuation methodology as a level of synergies are expected to be realised by a buyer within the automotive industry.

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QMP value of ASGL securities on a control basis

Per the share price analysis performed in Section 8.1, we consider the historical share prices and level of trading to be sufficient to support an assessment of the fair market value of an ASGL share on a minority basis.

BDO Corporate Finance (East Coast) Pty Ltd

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When assessing the fair market value of an ASGL share, based on the above analysis, we consider a trading price range of between a low of $0.22 and a high of $0.25, based on the VWAP, per ASGL share to best reflect the ASX pricing for a minority interest.

As the trading price for a share traded on the ASX represents a minority interest, we have applied a control premium in the range of 20% to 25% based on our assessment of the offer prices for mergers and acquisitions (refer to Section 8.3 above).

Our assessed value of an ASGL share on a controlling interest basis using the QMP valuation is from $0.26 to $0.32 per share. We have calculated this as follows:

Table 17: ASGL share value – QMP Method

	Ref	Low	High
ASGL share - ASX Pricing (minority interest) per share ($)	8.1	0.22	0.25
Control premium (%)	8.3	20%	25%
ASGL share - ASX Pricing (control basis) per share ($)		0.26	0.32
Source: BDOCF analysis

9. ASSESSMENT OF FAIRNESS

RG 111 states that a transaction is ‘fair’ if the value of the offer price or consideration is equal to or greater than the value of the securities subject to the offer. This comparison should be made assuming a knowledgeable and willing, but not anxious, buyer and a knowledgeable and willing, but not anxious, seller acting at arm’s length. When considering the value of the securities subject to an offer in a control transaction the expert should consider this value inclusive of a control premium and assume a 100% ownership interest.

In accordance with the requirements of RG 111, the Offer can be considered ‘fair’ to the Shareholders if the consideration is equal to or greater than the value of the securities subject to the offer. The comparison must be made assuming 100% ownership of the target company irrespective of the percentage holding of the bidder or its associates in the target company.

Table 18 sets out a comparison of our valuation of an ASGL share on a controlling interest basis prior to the Offer with the Offer Price of $0.35 per ASGL share.

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Fair market value of ASGL prior to the Offer

We have assessed the equity value of ASGL using both the NAV method and QMP method. The results of our analysis are summarised below:

Table 18: Adopted equity value of ASGL and comparison to the Offer Price

A$	Low	High
Net asset value (NAV) valuation method	0.057	0.060
Quoted market prices (QMP) valuation method	0.264	0.317
Adopted Value range of ASGL per share (controlling interest basis)	0.057	0.317

Offer price	0.350	0.350

Offer price - premium or discount to Adopted Value	509%	10%

Source: BDOCF analysis

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Adopted equity value of an ASGL share (controlling interest basis)

We have adopted a wide valuation range of an ASGL share using both the NAV and QMP methods. Our rationale for selecting this approach is as follows:

We valued a share in ASGL on a controlling interest basis using the NAV method in the range of $0.057 to $0.060. As discussed in Section 7, in determining this range we have attributed $nil value to goodwill reported on ASGL’s balance sheet at FY17. Goodwill of $11.3m is reported in AGSL’s balance sheet as at

BDO Corporate Finance (East Coast) Pty Ltd

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30 June 2017. In our opinion, this goodwill is not supported by ASGL’s historical results and there is insufficient forecast financial information to support a goodwill value. We have not included goodwill in our NAV analysis. In all likelihood, the value of ASGL’s goodwill lies somewhere between $nil and the $11.3m as reported. However, we have not been provided with sufficient information to refine the goodwill valuation further

Given the limited nature of ASGL’s historical financial information, significant changes currently being undertaken by the business, poor recent financial results and uncertainty regarding forecast financial information, we have not been able to determine a level of maintainable earnings greater than $nil and consequently, did not consider valuation of AGSL based on capitalisation of maintainable earnings to be appropriate.
Our QMP valuation provides another reference point for the fair market value of a share in ASGL prior to the Offer. The short available timeframe for our VWAP analysis and low trading volumes for ASGL in the period from 31 July 2017 to 31 October 2017 prevented us from relying on our QMP valuation as our primary valuation methodology. However, our analysis indicated that trading in ASGL was sufficiently liquid for a QMP valuation of ASGL to be incorporated into our opinion.
ASGL’s VWAP in the period between 31 July 2017 and 31 October 2017 appears broadly to reflect ASGL’s net asset backing per share, based on reported net assets including intangible assets at FY17. ASGL reported net assets of $17.5m at FY17 which equates to approximately $0.345 per share based on 50,345,622 issued shares. As discussed in Section 7, ASGL traded below this value for most of the period we reviewed, indicating market uncertainty regarding the outlook for ASGL and potentially the carrying value of goodwill.

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Fairness conclusion

The Offer price is above the adopted equity value range for an ASGL share on a controlling interest basis. As such, we consider the Offer to be fair.

Figure 3: Adopted equity value range of an ASGL share and comparison to Offer price

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----- Start of picture text -----

Adopted Valuation Range 0.057 0.317
Offer Price 0.350
0.000 0.100 0.200 0.300 0.400
$ per share
Source: BDOCF analysis
----- End of picture text -----

10. ASSESSMENT OF REASONABLENESS

In accordance with RG 111 an offer is reasonable if it is fair. It might also be reasonable if, despite being not fair, the expert believes there are sufficient reasons for the Shareholders to accept the offer in the absence of a superior offer.

BDO Corporate Finance (East Coast) Pty Ltd

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Whilst we have concluded that the Offer is fair, we have assessed the reasonableness of the Offer by considering the factors relevant for an ASGL Shareholder to consider. Set out below is a summary of factors we have considered in our reasonableness assessment.

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Advantages

The Offer is Fair

The offer is Fair in the absence of a superior offer. The Offer is above our adopted value range of an ASGL share on a controlling interest basis (Section 9).

Certainty of cash

If you accept the Offer you will receive cash of $0.35 per ASGL share which has a fixed value. If you continue to hold ASGL shares, the is no guarantee of future performance and therefore the movements in the value of the shares which may be positive or negative.

Opportunity to reinvest in similar investment opportunities

Shareholders that accept the Offer can reinvest the proceeds in similar investment opportunities.

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Disadvantages

No exposure to the potential upside of ASGL

Shareholders who accept the Offer will no longer own shares and therefore will not benefit from any potential future profits and capital growth.

Taxation implications

There may be tax consequences arising from accepting the Offer (or selling your securities on the ASX). ASGL Shareholders should consult with their own independent taxation advisers regarding the taxation implications of accepting the Offer given their own particular circumstances.

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Situation If You Reject the Offer

At the end of the Offer Period, any Shareholders who do not accept the Offer may be subject to the following risks:

If a Shareholder rejects the offer and if no superior proposal emerges, there is a risk that the price of ASGL shares may trade below the Offer Price of $0.35 per ASGL share offered by AMA. As at the date of this Report, no superior offer has been announced;
As there are fewer shares on issues held by parties other than AMA, the liquidity of ASGL shares may be lower than at present, potentially impacting upon Shareholders’ ability to dispose of ASGL shares. AMA has stated in the Bidder's Statement that, subject to continued compliance by ASGL with the ASX Listing Rules and AMA not acquiring a relevant interest in 90% or more of the ASGL shares, ASGL's listing on the ASX is intended to be maintained;
AMA has stated in the Bidder's Statement that if it acquires at least 90% of ASGL shares, it intends to arrange for ASGL to be removed from the official list of the ASX and acquire 100% of ASGL shares through the implementation of compulsory acquisition procedures in accordance with the Corporations Act, in which case Shareholders will be compelled to sell their ASGL shares to AMA but may not receive consideration for a number of weeks;
if AMA does not acquire at least 90% of ASGL shares but is in a position to cast the majority of votes at a general meeting of Shareholders, AMA’s stated intentions are to:
(A) assist ASGL management in their operating activities to grow and expand the size and profitability of ASGL’s businesses;
(B) consider Board appointments at the relevant time with the view of seeking stability;
(C) undertake a strategic review, assessing operations and potentially altering some elements of these activities depending on the findings of the review;
(D) maintain ASGL’s listing on the ASX, subject to continued satisfaction of listing requirements including shareholder spread; and

BDO Corporate Finance (East Coast) Pty Ltd

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(E) meet with key partners where, for example, consent is required under a material contract; and
If AMA does not acquire at least 50% of ASGL shares it will consider acquiring additional Shares under Item 9 of Section 611 of the Corporations Act.

Based on the above, we are of the opinion that the Offer is reasonable to the ASGL Shareholders.

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Other factors

Shareholder’s individual circumstances

BDOCF has not considered the effect of the Offer on the particular circumstances of individual Shareholders. Some individual Shareholders may place a different emphasis on various aspects of the Offer from that adopted in this IER. Accordingly, individuals may reach different conclusions as to whether or not the Offer is in their individual best interest. Shareholders are advised to seek their own independent advice.

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Conclusion on "Reasonable"

Based on the above, we are of the opinion that the Offer is reasonable to the Shareholders.

11. OVERALL OPINION

We have considered the terms of the Offer, as outlined in this Report, and have concluded that the Offer is fair and reasonable to Shareholders.

12. QUALIFICATIONS, DECLARATIONS AND CONSENTS

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Qualifications

BDOCF is the licensed corporate advisory arm of BDO East Coast Practice, Chartered Accountants and Business Advisers. BDOCF provides advice in relation to all aspects of valuations and has extensive experience in the valuation of corporate entities and provision of expert’s reports.

Mr Daniel Coote, B.Com, CA, MAppFin is a Director of BDOCF. Mr Coote is also a partner of BDO East Coast Practice.

Mr Coote is the Director responsible for the preparation of this IER. Mr Coote has over 10 years of experience in a number of specialist corporate advisory activities including company valuations advising on independent expert reports, due diligence investigations, preparation and review of business feasibility studies, public company floats, advising on mergers and acquisitions, preparation of information memoranda and other corporate investigations. Accordingly, Mr Coote is considered to have the appropriate experience and professional qualifications to provide the advice offered.

Mr David McCourt, B.Bus, CA, is a Director of BDOCF. Mr McCourt is also a Partner of BDO East Coast Practice. Mr McCourt has been responsible for the review of this IER.

Mr McCourt has over 17 years of experience in the chartered accountancy profession and has undertaken numerous corporate finance assignments involving acquisitions, divestments and valuations.

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Independence

BDOCF is not aware of any matter or circumstance that would preclude it from preparing this IER on the grounds of independence either under regulatory or professional requirements. In particular, we have had regard to the provisions of applicable pronouncements and other guidance statements relating to professional independence issued by Australian professional accounting bodies and ASIC.

BDOCF considers itself to be independent in terms of RG 112 independence of experts, issued by ASIC. In May 2017, BDO (QLD) Pty Ltd provided independent advice for consideration by ASGL’s directors at that time (each of whom is no longer a director of ASGL) in drafting of a target statement regarding AMA’s 23 May 2017 offer. This matter has not had any impact on our independence.

BDOCF was not involved in advising on, negotiating, setting, or otherwise acting in any capacity for ASGL in relation to the Offer. Further, BDOCF has not held and, at the date of this IER, does not hold any shareholding

BDO Corporate Finance (East Coast) Pty Ltd

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in, or other relationship with AMA or ASGL that could be regarded as capable of affecting its ability to provide an unbiased opinion in relation to the Offer.

BDOCF will receive a fee of up to $50,000 plus Goods and Services Tax for the preparation of this IER. BDOCF will not receive any fee contingent upon the outcome of the Offer, and accordingly, does not have any pecuniary or other interests that could reasonably be regarded as being capable of affecting its ability to give an unbiased opinion in relation to the Offer.

A draft of this IER was provided to the Directors and their advisors for review of factual accuracy. Certain changes were made to the IER as a result of the circulation of the draft IER. However, no changes were made to the methodology, conclusions, or recommendations made to the Shareholders as a result of issuing the draft IER.

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Disclaimer

This IER has been prepared at the request of the Directors and was not prepared for any purpose other than that stated in this IER. This IER has been prepared for the sole benefit of the Directors and Shareholders. Accordingly, this IER and the information contained herein may not be relied upon by anyone other than the Directors and Shareholders without the written consent of BDOCF. BDOCF accepts no responsibility to any person other than the Directors and Shareholders in relation to this IER.

The statements and opinions contained in this IER are given in good faith and are based upon BDOCF’s consideration and assessment of information provided by the Directors, executives and Management of all the entities.

BDO Corporate Finance (East Coast) Pty Ltd

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APPENDIX 1: GLOSSARY

Term	Definition
*3M18*	Unaudited management accounts for the three months ended 30 September 2017
*AMAG*	Alloy Motor Accessories
*AUASB*	*Australian Auditing and Assurance Standards Board*
	*Accounting Professional & Ethical Standards Board Limited issued professional standard APES 225*
*APES 225*	*on valuation services*
*AMA, Bidder*	*AMA Group Limited*
*ASGL, Target, the Group*	*Automotive Solutions Group Limited*
*ASIC*	*Australian Securities & Investments Commission*
*ASX*	*Australian Securities Exchange*
*Barden*	*Barden Fabrications*
*BDOCF, we, our or us*	*BDO Corporate Finance (East Coast) Pty Ltd (ABN 70 050 038 170)*
*Board*	*The board of directors of ASGL*
*CAGR*	*Compounded annual growth rate*
*CNC*	*Computer Numerical Control*
*COE*	*Capitalisation of maintainable earnings*
*Corporations Act*	*Corporations Act 2001*
*DCF*	*Discounted cash flow method*
*Deering*	*Deering Autronics*
*Directors*	*The independent directors of ASGL*
*Dolium*	*Dolium Pty Ltd*
*ERP*	*Enterprise resource planning*
*EBIT*	*Earnings Before Interest and Tax*
*EBITDA*	*Earnings Before Interest, Tax, Depreciation and Amortisation*
*FOS*	*Financial Ombudsman Service Limited*
*FY17 Forecast*	*FY17 statutory forecast included within ASGL’s Prospectus*
*FYxx*	*Financial year ended/ending 30 June 20xx*
*Grant Thornton*	*Grant Thornton Audit Pty Ltd*
*GST*	*Goods and Services Tax*
*JDR*	*JDR Motor Sports*
*Licence*	*Australian Financial Services Licence No: 247420*
*NAV*	*Net asset value*
*NPV*	*Net present value*
*NTA*	*Net tangible assets*
*Offer*	*AMA’s offer of $0.35 per ASGL share*
*Offer Price*	*The offer price of $0.35 per share*
*QMP*	*Quoted market price basis*
*Report or IER*	*Independent expert’s report*
RG	*Regulatory Guides*
*RG 111*	*ASIC Regulatory Guide 111 Content of expert reports*
*RG 112*	*ASIC Regulatory Guide 112 Independence of experts*
*Target Statement*	*ASGL’s target statement in relation to the Offer*
*Shareholders*	*An individual who owns an interest in an organisation*
*PAYG*	*Pay as you go*
*Section 640*	*Section 640 of the Corporations Act*
*SUV*	*Sport utility vehicle*
*ATO*	*Australian Tax Office*
*Uneek*	*Uneek 4x4 Offroad Accessories*
*VWAP*	*Volume weighted average price*
*WIP*	Work in progress

Source: BDOCF

BDO Corporate Finance (East Coast) Pty Ltd

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APPENDIX 2: SOURCES OF INFORMATION

In preparing this IER, we had access to and relied upon the following principal sources of information:

ASGL annual financial reports for the full years ended 30 June 2016 and 30 June 2017
Unaudited ASGL management accounts for the quarter ended 30 September 2017
ASGL ASX Listing Prospectus
ASGL Shareholder Register dated 3 November 2017
AMA’s Bidder's Statement dated 1 November 2017
ASX announcements
Various discussions with and information supplied by the Directors and Management of ASGL
BDOCF analysis
IBISWorld research reports
Connect 4
Mergermarket
Capital IQ
Other generally available public information

BDO Corporate Finance (East Coast) Pty Ltd

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APPENDIX 3: VALUATION METHODS - BUSINESSES AND ASSETS

In conducting our assessment of the fair market value of ASGL securities, the following commonly used business valuation methods have been considered:

Discounted Cash Flow Method

The discounted cash flow ( DCF ) method is based on the premise that the value of a business or any asset is represented by the present value of its future cash flows. It requires two essential elements:

the forecast of future cash flows of the business asset for a number of years (usually five to 10 years); and
the discount rate that reflects the riskiness of those cash flows used to discount the forecast cash flows back to net present value (NPV).

DCF is appropriate where:

the businesses’ earnings are capable of being forecast for a reasonable period (preferably 5 to 10 years) with reasonable accuracy;
earnings or cash flows are expected to fluctuate significantly from year to year;
the business or asset has a finite life;
the business is in a 'start up' or in early stages of development;
the business has irregular capital expenditure requirements;
the business involves infrastructure projects with major capital expenditure requirements; or
the business is currently making losses but is expected to recover.

Capitalisation of Earnings Method

This method involves the capitalisation of normalised earnings by an appropriate multiple. Normalised earnings are the assessed sustainable profits that can be derived by the vendor’s business and exclude any one off profits or losses. An appropriate earnings multiple is assessed by reference to market evidence as to the earnings multiples of comparable companies.

This method is suitable for the valuation of businesses with indefinite trading lives and where earnings are relatively stable or a reliable trend in earnings is evident.

Net Asset Value Methods

Asset based valuations involve the determination of the fair market value of a business based on the net realisable value of the assets used in the business.

Valuation of net realisable assets involves:

separating the business or entity into components which can be readily sold, such as individual business securities or collection of individual items of plant and equipment and other net assets; and
ascribing a value to each based on the net amount that could be obtained for this asset if sold.

The net realisable value of the assets can be determined on the basis of:

orderly realisation (NRV): this method estimates fair market value by determining the net assets of the underlying business including an allowance for the reasonable costs of carrying out the sale of assets, taxation charges and the time value of money assuming the business is wound up in an orderly manner. This is not a valuation on the basis of a forced sale where the assets might be sold at values materially different from their fair market value;
liquidation: this is a valuation on the basis of a forced sale where the assets might be sold at values materially different from their fair market value; or
continuing operations (NAV): this is a valuation of the net assets on the basis that the operations of the business will continue. It estimates the market value of the net assets but does not take into account any realisation costs. This method is often considered appropriate for the valuation of an investment or property holding entity. Adjustments may need to be made to the book value of assets and liabilities to reflect their value based on the continuation of operations.

BDO Corporate Finance (East Coast) Pty Ltd

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The net realisable value of a trading entity’s assets will generally provide the lowest possible value for the business. The difference between the value of the entity’s identifiable net assets (including identifiable intangibles) and the value obtained by capitalising earnings is attributable to goodwill.

The net realisable value of assets is relevant where an entity is making sustained losses or profits but at a level less than the required rate of return, where it is close to liquidation, where it is a holding entity, or where all its assets are liquid. It is also relevant to businesses which are being segmented and divested and to value assets that are surplus to the core operating business. The net realisable assets methodology is also used as a check for the value derived using other methods.

These approaches ignore the possibility that the entity’s value could exceed the realisable value of its assets.

Quoted Market Prices

The price that an entity’s share trades on an exchange can be an appropriate basis for valuation where:

the share trades in an efficient market place where ‘willing’ buyers and sellers readily trade the entity’s share; and
the market for the entity’s share is active and liquid.

BDO Corporate Finance (East Coast) Pty Ltd

AI assistant

AMA GROUP LIMITED — Merger & Acquisition 2017

64372_rns_2017-11-27_c7290e8c-1b3c-4152-9943-bfc2ab741ea7.pdf

TARGET’S STATEMENT

ACCEPT THE OFFER

IMPORTANT NOTICES

Defined terms

Financial Data

ASIC and ASX disclaimer

No account of personal circumstances

Disclaimer regarding forward looking statements

Notice to Foreign Shareholders

Privacy Statement

Information on Bidder in this Target's Statement

ASGL Shareholder Information Line

CONTENTS

KEY DATES

KEY POINTS

CHAIRMAN’S LETTER

ACCEPT AMA Group Limited’s Offer

Section 1 REASONS TO ACCEPT THE OFFER

THE OFFER OF $0.35 PER ASGL SHARE IS FAIR AND REASONABLE

1.1 Reasons to accept the Offer

a. The Independent Expert has concluded that the Offer is fair and reasonable

b. Offer Price represents an attractive premium on recent trading prices

c. Certainty of price of $0.35 per ASGL Share

d. Liquidity of minority interest in ASGL Shares

e. There will be a disadvantage for ASGL Shareholders if ASGL is delisted in the future

f. No Superior Offer has emerged

g. No guarantee of the future performance of ASGL

1.2 Disadvantages associated with accepting the Offer

a. Shareholders will lose the benefit of any potential upside in ASGL

b. Shareholders will not have the benefit of any subsequent higher offer from any third party

c. The tax consequences of accepting the Offer may not be suitable to your financial position

1.3 Other considerations

Section 2 KEY INFORMATION

This Section is not intended to address all issues that may be relevant to you.

This Section should be read together with the rest of this Target's Statement.

Section 3 YOUR CHOICES AS AN ASGL SHAREHOLDER

The Directors unanimously recommend that you ACCEPT the Offer

3.1 As an ASGL Shareholder you have the following choices available to you:

a) ACCEPT the Offer

b) Reject the Offer

Section 4

INFORMATION ABOUT THE OFFER AND OTHER IMPORTANT ISSUES

4.1 Summary of the Offer

4.2 The Bidder’s voting power in ASGL

4.3 Consequences of the Bidder acquiring less than 90% of ASGL

4.4 Superior Offer

4.5 Compulsory acquisition

4.6 Market trading

4.7 Taxation

4.8 How to accept the Offer

Section 5 ABOUT ASGL

5.1 Background information on ASGL

5.2 Business activities

5.3 History since listing

5.4 Directors and management

5.3.1 Board of Directors

KEN CARR - Independent Executive Chairman

MITHILA RANAWAKE – Non-Executive Director

CHARLES CHAPMAN - Non-Executive Director

5.3.2 Executive Management Team

BRYAN GRANZIEN – Chief Executive Officer

LAILA GREEN – Company Secretary and Chief Financial Officer

Section 6 INTERESTS OF DIRECTORS

6.1 Interests of Directors in ASGL securities

6.2 Dealings by Directors in ASGL securities

6.3 Interests and dealings in the Bidder

6.4 Benefits to Directors

6.5 Conditional agreements

6.6 Interests in contracts with the Bidder

Section 7 ADDITIONAL INFORMATION

7.1 Other material information

7.2 Issued securities

7.3 Potential impact of Offer on financing arrangements and material contracts

7.4 Consents

7.5 Miscellaneous and publicly available information

7.6 Date of Target’s Statement

7.7 Approval of Target’s Statement

AMA GROUP LIMITED Merger & Acquisition 2017