BELL FINANCIAL GROUP LIMITED — Proxy Solicitation & Information Statement 2008

Aug 18, 2008

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19 August 2008

Company Announcements Office Australian Securities Exchange Limited 20 Bridge Street Sydney NSW 2000

Paul Vine Company Secretary

Phone: 03 9235 1961 Fax: 03 9235 1850

Dear Sir or Madam

Bell Financial Group Ltd – notice of general meeting

Further to the announcement by the company on 7 July 2008, I enclose a Notice of General Meeting and Explanatory Memorandum in relation to the proposed acquisition of 100% of the issued capital of Southern Cross Equities Ltd. These documents have been sent to shareholders. Details of the General Meeting are:

Date of meeting: 18 September 2008 Time of meeting: 10am Place of meeting: Harlequin Room, Shangri-La Hotel, 176 Cumberland Street, The Rocks NSW 2000

Yours faithfully

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Paul Vine Company Secretary

Bell Financial Group Ltd ACN 083 194 763 Tel 03 9256 8700 · Fax 03 9256 8787 · Toll Free 133 788 · www.bellfg.com.au Level 29, 101 Collins Street · Melbourne VIC 3000 GPO Box 4718, Melbourne VIC 3001

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BELL FINANCIAL GROUP LTD ABN 59 083 194 763

NOTICE OF GENERAL MEETING PROXY FORM AND EXPLANATORY MEMORANDUM

Date of Meeting 18 September 2008

Time of Meeting 10am

Place of Meeting

Harlequin Room, Shangri-La Hotel, 176 Cumberland Street, The Rocks NSW 2000

BELL FINANCIAL GROUP LTD ABN 59 083 194 763

Notice of General Meeting

Notice is given that the General Meeting of Bell Financial Group Ltd (“ BFG ” or the “ Company ”) ABN 59 083 194 763 will be held at the Harlequin Room, Shangri-La Hotel, 176 Cumberland Street, The Rocks NSW 2000 on 18 September 2008 at 10am Australian Eastern Standard Time for the purposes of transacting the following business.

The attached Explanatory Memorandum contains information in relation to each of the following resolutions and should be read in conjunction with this Notice of General Meeting.

BUSINESS

THE ISSUE OF SHARES AS PART OF THE ACQUISITION OF SOUTHERN CROSS EQUITIES LTD

1. Resolution 1 – Issue of New Classes of Shares

To consider, and if thought fit, to pass the following resolution as an ordinary resolution

“That approval be given to the Directors to issue A Class Shares, B Class Shares and C Class Shares in the capital of the Company having those rights and entitlements set out in the Explanatory Memorandum accompanying this Notice of General Meeting”.

2. Resolution 2 – Issue of Shares Equal to Greater than 15% of BFG’s Current Share Capital

To consider, and if thought fit, to pass the following resolution as an ordinary resolution

“That for the purpose of ASX Listing Rule 7.1 and for all other purposes, approval be given for the Directors to issue up to that number of Ordinary shares, and A, B and C Class shares in the capital of the Company, and to the conversion of those A, B and C Class shares to Ordinary shares, as set out in the Explanatory Memorandum accompanying this Notice of General Meeting”.

NOTES TO NOTICE OF MEETING

For the purposes of this General Meeting, persons holding BFG shares quoted on the ASX at 7:00pm Australian Eastern Standard Time on 16 September 2008 are taken to hold those shares at the time of the Meeting. A shareholder entitled to attend and vote at the meeting may appoint one or two proxies to attend and vote instead of the shareholder.

To appoint a proxy the shareholder must use the proxy form attached.

A proxy does not have to be a shareholder of BFG.

If a shareholder appoints two proxies, each proxy must be appointed to represent a specified number or proportion of the shareholder’s voting rights. If a number or proportion is not specified, then each proxy is entitled to exercise half of the voting rights. If a shareholder does not state a number or proportion of their voting rights on a proxy form, each proxy may exercise half of the votes regardless of any proportion stated on any other form.

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To be treated as valid, the proxy form and any authority under which the form is signed must be received by 10am Australian Eastern Standard Time on 16 September 2008 (i.e. 48 hours before the Meeting) at:

(a) BFG’s Share Registry	(b) BFG’s registered office:
Computershare Investor Services Pty Ltd or	Bell Financial Group Ltd
Yarra Falls, 452 Johnston Street	Level 29, 101 Collins Street,
Abbotsford, Victoria 3067, Australia	Melbourne, Victoria 3000, Australia
Fax number: (03) 9473 2555	Fax number: (03) 9235 1850
	Attention: Paul Vine

A copy of the signing authority certified as a true copy may be lodged with the proxy form instead of the original authority.

Please see the reverse of the attached proxy form for more information on the appointment of proxies.

Voting Exclusion Statement

In accordance with the ASX Listing Rules, the Company will disregard any votes cast on Resolution 2 by a person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of Ordinary securities, if the resolution is passed, and an associate of that person.

However, the entity need not disregard a vote if:

• it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

• it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

By order of the Board.

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Paul Vine Company Secretary Date: 19 August 2008

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Explanatory Memorandum

This Explanatory Memorandum is intended to provide shareholders with sufficient information to assess the merits of the resolutions contained in the accompanying Notice of General Meeting of Bell Financial Group Ltd (“ BFG ” or the “ Company ”).

1. Overview

On 7 July 2008, the Company announced to the Australian Securities Exchange (“ ASX ”) that it had signed a Heads of Agreement for the acquisition of all of the issued capital of Southern Cross Equities Ltd (“ Southern Cross ” or “ SCE ”) subject to a number of pre-conditions being satisfied, including shareholder approval pursuant to the ASX Listing Rules (“ Acquisition ”).

If the pre-conditions are satisfied, the Company will acquire the capital of Southern Cross for a purchase price calculated by reference to a multiple of normalised Southern Cross financial year 2008 net profit after tax.

Pro-forma accounts have been prepared for Southern Cross and its controlled entities which include a balance sheet as at 30 June 2008, an income statement for the year ended 30 June 2008 and accompanying notes which describe the basis of preparation, significant accounting policies applied, contingent liabilities and subsequent events. KPMG has completed an audit of the Pro-forma accounts of Southern Cross and have issued an unqualified audit opinion.

The purchase price is $145,800,000 (subject to performance benchmarks being met in 2009, 2010 and 2011) (“ Purchase Price ”).

The Purchase Price is subject to adjustment in following years if certain performance benchmarks are not met and is payable to Southern Cross shareholders as to 50% in cash, and as to 50% in BFG shares.

Completion of the Acquisition (“ Completion ”) will occur as soon as practicable following this General Meeting if shareholders approve the resolutions and the other Acquisition preconditions are satisfied.

The cash component of the Purchase Price will be payable in four instalments with the first payment of $18,225,000 to be made on Completion, with three further payments to be paid after the first, second and third anniversaries of Completion in 2009, 2010 and 2011 respectively, subject to certain performance benchmarks being met.

The scrip component of the consideration will be issued at $1.25 per BFG share. It will be satisfied by the issue to the Southern Cross shareholders of the following shares on Completion:

• (a) 14,580,000 Ordinary shares in the Company;

• (b) 14,580,000 A Class shares in the Company;

• (c) 14,580,000 B Class shares in the Company; and

• (d) 14,580,000 C Class shares in the Company.

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The A, B and C Class shares in the capital of the Company will convert into Ordinary BFG shares after the first, second and third anniversaries of Completion respectively, subject to the performance benchmarks being met. The A, B and C Class shares will have the rights and entitlements described below.

At Appendix 1 to this Explanatory Memorandum is an overview of how the performance benchmarks apply.

If the performance benchmarks are fully met then all A Class, B Class and C Class shares will be converted to Ordinary BFG shares on a one for one basis.

Immediately following Completion it is intended that one Southern Cross vendor shareholder, or a controller of an entity that is a Southern Cross vendor shareholder, be appointed as a Director of BFG. This person must be nominated by Southern Cross and approved by the BFG Board of Directors.

2. Resolution 1 – Issue of New Classes of Shares

Under ASX Listing Rule 6.2, the Company is only entitled to have one class of Ordinary shares unless the ASX approves the terms of an additional class.

ASX Listing Rule 6.1 states that the terms that apply to each class of shares must, in the opinion of ASX, be fair and reasonable.

The Company has sought and obtained confirmation from the ASX under Listing Rules 6.1 and 6.2 that the issue of the A, B and C Class shares, on the terms below, is, in the opinion of ASX, appropriate and equitable for the purposes of ASX Listing Rule 6.1. The ASX has required the Company to obtain shareholder approval for the issue of those shares.

The A, B and C Class shares in the capital of the Company will have the following rights and no other rights:

• (a) A, B and C Class shares will be converted to Ordinary shares over a three year period following Completion subject to certain performance benchmarks being met as described below;

• (b) in the event of a share consolidation, share subdivision or bonus issue of Ordinary shares, or other capital reorganisation with respect to Ordinary shares, each A, B and C Class share will be converted into such number of A, B and C Class shares as determined by BFG’s Directors as being fair and equitable to the holders of A, B and C Class shares in the particular circumstances;

• (c) if there is a change of control of the Company, as a result of takeover bid, scheme of arrangement or other analogous event, then A, B and C Class shares held by each shareholder will, on a date determined by the Directors, be converted into Ordinary BFG shares on a one for one basis; and

• (d) each holder will receive the amount of $0.0001 per share on a winding up, ranking equally with all other classes of shares in the capital of the Company.

The Company has also sought confirmation from the ASX that the A, B and C Class shares may be transferable only to an A, B or C Class shareholder. That confirmation has not yet been obtained but is expected prior to the General Meeting and will be announced once received.

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The A, B and C Class shares in the capital of the Company will:

• (a) have no voting rights in general meeting;

• (b) have no right to receive dividends of any kind;

• (c) not permit the holder to participate in new issues of capital such as bonus issues and entitlement issues;

• (d) have no right to receive any payment on winding up other than the sum of $0.0001 per share (ranking equally with all other classes of shares in the capital of the Company) and no right to participate in any return of capital;

• (e)

• not be quoted on ASX; and

• (f) not be transferable to anyone other than, subject to confirmation from the ASX, an A, B or C Class shareholder.

Performance Benchmarks

The A Class, B Class and C Class shares will convert to Ordinary shares following the first, second and third anniversaries of Completion respectively in 2009, 2010 and 2011 (“ Conversion Dates ”).

If all performance benchmarks described below are fully met, the maximum number of Ordinary shares resulting from conversion of all the A, B and C Class shares is 43,740,000. If after three years none of the performance benchmarks have been met, the A, B and C Class shares convert into a maximum of 4,374 Ordinary shares.

The performance benchmarks governing their conversion to Ordinary shares are as follows:

• (a) if Southern Cross group revenue (“ Revenue ”) for financial year 2009 exceeds $57,400,000 (“ Base Revenue ”) then all A Class shares will be converted to Ordinary shares on a one for one basis on the 2009 Conversion Date;

• (b) likewise, if Revenue for financial years 2010 and 2011 exceeds Base Revenue, all B and C Class shares will be converted to Ordinary shares on a one for one basis on the 2010 and 2011 Conversion Dates respectively;

• (c) if Revenue for financial years 2009, 2010 or 2011 does not exceed Base Revenue, a smaller number of A, B and C Class shares will convert to Ordinary shares on a one for one basis in accordance with the table in Appendix 1;

• (d) any excess in Base Revenue in financial years 2009 and 2010 can be carried forward to Revenue earned in 2010 and 2011. Further, any shortfall in Base Revenue in financial years 2009 and 2010 can be recouped in financial years 2010 and 2011 to the extent that the Revenue for those subsequent years exceeds Base Revenue. This is shown in Appendix 1; and

• (e) if the performance benchmarks have not been satisfied in full, any remaining A, B and C Class shares following conversion on the 2011 Conversion Date will each convert into 0.0001 Ordinary shares such that no A, B and C Class shares will remain on issue.

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The Company will immediately announce achievement of the performance benchmarks and details of the conversion of the A, B and C Class shares to Ordinary shares. BFG will also disclose in each annual report for the periods in which the A, B and C Class shares remain on issue or until they have been converted:

• (a) a summary of the terms and conditions of the A, B and C Class shares;

• (b) whether any of the A, B and C Class shares have been converted during the period; and

• (c) whether any of the performance benchmarks for A, B and C Class shares to be converted have been met during the period.

The Company therefore seeks shareholder approval:

• (a) to issue the A, B and C Class shares; and

• (b) of the terms of the A, B, and C Class shares described above.

3. Resolution 2 – Issue of Shares Equal to Greater than 15% of BFG’s Current Share Capital

Under ASX Listing Rule 7.1, without the approval of shareholders, the Company must not issue more “equity securities” than the number calculated according to a formula set out in Rule 7.1. In summary, this means that BFG shareholder approval is required where shares are issued which effectively comprise more than 15% of the Company’s capital on the date of first quotation by ASX of the Company’s Ordinary shares.

The ASX Listing Rule 7.1 formula to calculate the maximum number of shares which can be issued without shareholder approval is (X x Y) – Z , represented as follows:

X(Ordinary shares issued on date of first Quotation of Company’s Ordinary shares)	Y	Z(Equity Securities issued since date of first quotation of Ordinary shares)	Rule 7.1 Maximum	Number of Ordinary, A, B and C Class shares to be issued on Completion
227,630,523	15%	0	34,144,578	58,320,000

Shareholder approval of the issue of the Ordinary shares, A Class, B Class and C Class shares is required.

ASX Listing Rule 7.3

For the purposes of ASX Listing Rule 7.3, the following information is provided to shareholders:

1. The maximum number of securities the Company proposes to issue is: (i) 14,580,000 Ordinary Shares

2. (ii) 14,580,000 A Class Shares

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4. (iii) 14,580,000 B Class Shares

5. (iv) 14,580,000 C Class Shares

6. Subject to satisfaction of the Acquisition preconditions the Company will issue the securities as soon as possible following this meeting if the resolutions are passed, and in any event no later than one month after the date of this meeting.

7. The issue price of each of the securities is $1.25 per share.

8. The allottees of the securities are the Southern Cross shareholders on Completion or their nominees.

10. The terms of the securities are set out above.

11. There will be no funds raised by the issue of the securities, rather the securities will be issued as part of consideration for the Acquisition.

The Company seeks the approval of shareholders to issue the securities in the Company set out above.

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Appendix 1

Below is a summary of the way in which the Purchase Price for the Acquisition will be paid and satisfied.

For illustrative purposes there are two worked examples below. Figures have been rounded up or down to the nearest first decimal place.

Purchase Price	$145.8m subject to adjustment in accordance with the
	Performance Benchmarks.
Payment Method	50% cashpayable in 4 instalments over the next 3 years from
	Completion. The first instalment, payable on Completion will be
	$18.2m (“First Instalment Payment”), with future instalments
	subject to the Performance Benchmarks; and
	50% BFG scrip14.6m Ordinary, 14.6m A Class, 14.6m B Class
	and 14.6m C Class shares in BFG (based on a BFG share price
	of $1.25) will be issued on Completion. The A, B and C Class
	shares in the capital of BFG will convert into Ordinary shares in
	the capital of BFG after the first, second and third anniversaries
	of Completion respectively (“Conversion Dates”), subject to
	satisfaction of the Performance Benchmarks.
Performance	The amount of cash payable as a percentage of the First Cash
Benchmarks	Instalment, and the number of A, B and C Class shares to be
	converted to Ordinary Shares on a one for one basis will, as at
	a Conversion Date, vary according to the amount of Southern
	Cross Revenue earned during the immediately preceding
	financial year to that Conversion Date (FY 2009, FY 2010, and
	FY2011 respectively) according to the following table.

Southern Cross Revenue	Less than $37.4m	$37.4m up to but less than $47.4m	$47.4m up to but less than $57.4m	$57.4m or more
Cash Payment as a proportion of First Instalment Payment	0	1/3	2/3	1
Number of A, B and C Class shares to be converted to Ordinary shares as a proportion of the number of A, B and C Class shares on issue immediately following Completion.	0	1/3	2/3	1

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Any excess in Base Revenue ($57.4m) in financial years 2009 and 2010 can be carried forward to Revenue earned in 2010 and 2011.

Any shortfall in Base Revenue in financial years 2009 and 2010 can be recouped in financial years 2010 and 2011 to the extent that the Revenue for those subsequent years exceeds Base Revenue.

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Illustrative Example A – assumes Base Revenues are exceeded in FY09 and FY11 but not met in FY10

PERFORMANCE BENCHMARKS - ILLUSTRATIVE EXAMPLE A	PERFORMANCE BENCHMARKS - ILLUSTRATIVE EXAMPLE A	PERFORMANCE BENCHMARKS - ILLUSTRATIVE EXAMPLE A	PERFORMANCE BENCHMARKS - ILLUSTRATIVE EXAMPLE A
	FY08	FY09	FY10	FY11	Total
SCE Revenue Achieved Total Consideration Payable ($)	$57.4m $36.5m	$63.4m $36.5m	$51.4m $36.5m	$63.4m $36.5m	$145.8m
Cash Payable Shares Payable Ordinary Shares Issued Value of Ordinary Shares Issued ($) A C lass Shares Issued B C lass Shares Issued C C lass Shares Issued A C lass Shares C onverted to Ordinary Shares Value of A C lass Shares C onverted to Ordinary Shares ($) B C lass Shares C onverted to Ordinary Shares Value of B C lass Shares C onverted to Ordinary Shares ($) C C lass Shares C onverted to Ordinary Shares Value of C C lass Shares C onverted to Ordinary Shares ($) Total Ordinary Shares Issued/ Converted Total Value of Ordinary Shares Issued/ Converted	$18.2m 14.6m $18.2m 14.6m 14.6m 14.6m	$18.2m 14.6m $18.2m	$18.2m 14.6m $18.2m	$18.2m 14.6m $18.2m	$72.9m 14.6m $18.2m 14.6m $18.2m 14.6m $18.2m 14.6m $18.2m 58.3m $72.9m

Illustrative Example B – assumes that Base Revenues are not met in FY09 but exceeded in FY10 and FY11

PERFORMANCE BENCHMARKS - ILLUSTRATIVE EXAMPLE B	PERFORMANCE BENCHMARKS - ILLUSTRATIVE EXAMPLE B	PERFORMANCE BENCHMARKS - ILLUSTRATIVE EXAMPLE B	PERFORMANCE BENCHMARKS - ILLUSTRATIVE EXAMPLE B
	FY08	FY09	FY10	FY11	Total
SCE Revenue Achieved Consideration Payable	$57.4m $36.5m	$40.0m $12.2m	$70.0m $48.6m	$60.0m $36.5m	$133.7m
Cash Payable Shares Payable Ordinary Shares Issued Value of Ordinary Shares Issued ($) A C lass Shares Issued B C lass Shares Issued C C lass Shares Issued A C lass Shares C onverted to Ordinary Shares Value of A C lass Shares C onverted to Ordinary Shares ($) B C lass Shares C onverted to Ordinary Shares Value of B C lass Shares C onverted to Ordinary Shares ($) C C lass Shares C onverted to Ordinary Shares Value of C C lass Shares C onverted to Ordinary Shares ($) Total Ordinary Shares Issued/ Converted Total Value of Ordinary Shares Issued/ Converted	$18.2m 14.6m $18.2m 14.6m 14.6m 14.6m	$6.1m 4.9m $6.1m	$24.3m 4.9m $6.1m 14.6m $18.2m	$18.2m 0.0m(1) $0.0m 14.6m $18.2m	$66.8m 14.6m $18.2m 9.7m $12.2m 14.6m $18.2m 14.6m $18.2m 53.5m $66.8m

(1) Remaining A C lass Shares converted into Ordinary shares on a 1 to 0.0001 basis.

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