ASF GROUP LIMITED — Capital/Financing Update 2017

May 25, 2017

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ASF GROUP LIMITED

ACN 008 924 570 Bennelong, 2/3B Macquarie Street Sydney NSW 2000 Telephone: (61 2) 9251 9088 Facsimile: (61 2) 9251 9066 www.asfgroupltd.com

26 May 2017

The Manager Company Announcements Australian Stock Exchange Ltd 20 Bridge Street Sydney 2000 via: www.asxonline.com

Dear Sir/Madam

Cleansing Notice Notice under Section 708AA(2)(f) of the Corporations Act

This Notice is given by ASF Group Limited ACN 008 924 570 (ASX: AFA) ( Company ) under section 708AA(2)(f) of the Corporations Act 2001 (Cth) ( Act ), as notionally modified by ASIC Corporations (NonTraditional Rights Issues) Instrument 2016/84.

On the date of this notice, the Company announced a non-renounceable pro-rata rights issue ( Rights Issue ) of one (1) fully paid ordinary share ( New Share ) for every eight (8) fully paid ordinary shares held at the record date to eligible investors.

Pursuant to the Rights Issue, the Company may issue up to 75,399,252 New Shares at an issue price of $0.16 each, to raise up to $12,063,880 (before costs).

The Company states that:

• 1 it will offer the New Shares for issue without disclosure to investors under Part 6D.2 of the Act (as notionally modified by as by ASIC Corporations (Non-Traditional Rights Issues) Instrument 2016/84);

• 2 it is providing this notice under section 708AA(2)(f) of the Act (as notionally modified by as by ASIC Corporations (Non-Traditional Rights Issues) Instrument 2016/84);

• 3 as at the date of this notice, the Company has complied with:

  • (a) the provisions of Chapter 2M of the Act as they apply to the Company; and

  • (b) section 674 of the Act.

• 4 as at the date of this notice, there is no information:

  • (a) that has been excluded from a continuous disclosure notice in accordance with the ASX Listing Rules; and

  • (b) that investors and their professional advisors would reasonably require for the purpose of making an informed assessment of:

    • (i) the assets and liabilities, financial position and performance, profits and losses and prospects of the Company; or

    • (ii) the rights and liabilities attaching to the New Shares.

• 2 -

Set out below is information on the potential effect that the Rights Issue may have on the control of the Company:

• 1 if all Eligible Shareholders take up their entitlement under the Rights Issue, the Rights Issue will have no effect on the control of the Company;

• 2 the proportional shareholdings of shareholders who are not residents in Australia, New Zealand, Hong Kong, Macau and the People's Republic of China may be diluted as those shareholders are not entitled to participate in the Rights Issue; and

• 3 if an Eligible Shareholder does not take up their entitlement in full it may have the effect of diluting that shareholder’s proportionate shareholding.

In the event of a shortfall, Eligible Shareholders may subscribe for shortfall shares and the Directors reserve the right to allocate the shortfall at their sole discretion. Acceptance of entitlements or the placement of any shortfall may also result in existing shareholders significantly increasing their interest in the Company or obtaining a substantial interest in the Company. However, the shortfall will only be placed to the extent that such placement is in compliance with the takeover provisions of the Corporations Act, which restrict a person from having a relevant interest in voting shares in the Company where they would have voting power in the Company of 20% or more, subject to a number of exemptions, and ASX Listing Rules, which restrict allocation of shortfall shares to a related party of the Company.

Further information

1 On completion of the Rights Issue, and assuming it is fully subscribed, the issued capital of the Company will comprise approximately 678,593,264 shares.

• 2 The New Shares will rank equally in all respects with the Company’s existing shares. If an Eligible Shareholder's entitlement results in a fraction of a New Share, the entitlement will be rounded up to the nearest whole number.

• 3 The Company will use the proceeds raised under the Rights Issue to:

  • (a) fund investments in current portfolio assets, including engaging property development consultants;

  • (b) fund future investment opportunities; and

  • (c) provide working capital to the Company generally.

• 4 Trading in the New Shares is expected to commence on 29 June 2017.

• 5 An Appendix 3B applying for quotation of the New Shares will be released to the ASX separately to this letter.

Directors' Recommendation

The Directors of the Company encourage all Eligible Shareholders to participate in the Rights Issue.

William Kuan

Company Secretary Ph: +612 9251 9088 Fax: +612 9251 9066