CORE ENERGY MINERALS LTD — Capital/Financing Update 2011

Feb 10, 2011

TEYS LIMITED

(Subject to Deed of Company Arrangement) ACN 009 118 861

NOTICE OF MEETING AND

EXPLANATORY STATEMENT

AND

INDEPENDENT EXPERT’S REPORT

General Meeting to be held at Level 2 230 Church Street Richmond Victoria 3121 On 14 March 2011 commencing at 10am (EST).

This Notice of Meeting, Explanatory Statement and Independent Expert’s Report should be read in its entirety.

If Shareholders are in doubt as to how to vote, they should seek advice from their accountant, solicitor or other professional adviser without delay.

2915220V2

RECAPITALISATION TEYS LIMITED

(Subject to Deed of Company Arrangement)

ACN 009 118 861

General Information

This Notice of Meeting and Explanatory Statement sets out information about the resolutions for the proposed recapitalisation by the Company.

Completion of the Proposed Recapitalisation will result in:

• (a) new shares being issued which will increase the Company’s capital base;

• (b) the appointment of a new board of directors; and

• (c) discharge of creditors' claims against the Company.

Further details of the Recapitalisation Proposal are provided in Sections 2 and 4 of the Explanatory Statement. Definitions of capitalised terms used in the Notice of Meeting and Explanatory Statement are set out in Section 7 of the Explanatory Statement.

In considering the Resolutions, Shareholders must bear in mind the current financial circumstances of the Company.

The directors have been advised by the Administrator that if the Proposed Recapitalisation does not proceed, it is likely that the Company will proceed into liquidation. In those circumstances, it is unlikely there will be any return to Shareholders.

The Resolutions are therefore important and affect the future of your Company. You are urged to give careful consideration to the Notice of Meeting and the contents of the Explanatory Statement.

NOTICE OF MEETING

TEYS LIMITED

(Subject to Deed of Company Arrangement)

ACN 009 118 861

Notice is given that a General Meeting of Shareholders of Teys Limited (Subject to Deed of Company Arrangement) will be held at Level 2 230 Church Street Richmond, Victoria on 14 March 2011 commencing at 10am (EST).

General Business

The business to be transacted at the General Meeting is the proposal of the Resolutions set out below.

Resolution 1: Election of Mr Hemant Amin

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

"Subject to Resolutions 2, 3 and 4 being passed, that Mr Hemant Amin, having been appointed by the Administrator, and being eligible and having signified his candidature and consented to act, be elected as a director of the Company.

Resolution 2: Election of Mr Constantine Andrew Scrinis

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

"Subject to Resolutions 1, 3 and 4 being passed, that Mr Constantine Andrew Scrinis, having been appointed by the Administrator, and being eligible and having signified his candidature and consented to act, be elected as a director of the Company.

Resolution 3: Election of Mr Gregory John Wood

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

"Subject to Resolutions 1, 2 and 4 being passed, that Mr Gregory John Wood, having been appointed by the Administrator, and being eligible and having signified his candidature, and consented to act, be elected as a director of the Company.

Resolution 4: Issue of New Shares to Boom Capital Pty Ltd or its nominees (excluding B2B Holdings Pty Ltd)

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

“That, subject to Resolutions 1 to 3 (inclusive) and 5 being passed and in accordance with Listing Rule 10.11 and sections 208 and 611 (item 7) of the Corporations Act and for all other purposes, approval be and is hereby given to the issue of up to 125,000,000 new shares in the capital of the Company to Boom Capital Pty Ltd or its nominees (excluding B2B Holdings Pty Ltd), as detailed in the accompanying Explanatory Statement.”

Resolution 5: Issue of New Shares to B2B Holdings Pty Ltd or its nominees

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

“That, subject to Resolutions 1 to 4 (inclusive) being passed and in accordance with Listing Rule 10.11 and sections 208 and 611 (item 7) of the Corporations Act and for all other purposes, approval be and is hereby given to the issue of up to 25,000,000 new shares in the capital of the Company to B2B Holdings Pty Ltd, as detailed in the accompanying Explanatory Statement.”

Voting Exclusion Statement

The following voting exclusion statement applies to the Resolutions under the Listing Rules or where applicable, the provisions of the Corporations Act to the following persons ( Excluded Persons ). The Company will disregard any votes on the following Resolutions cast by the following Excluded Persons:

Resolution No.	Title	Excluded Persons
4	Issue of New Shares to Boom Capital or its nominees	Boom Capital (or its nominees, excluding B2B Holdings Pty Ltd) and any of its Associates
5	Issue of New Shares to B2B Holdings Pty Ltd or its nominees	B2B Holdings Pty Ltd and any of its Associates

However, the Company need not disregard a vote if it is cast by:

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

• (b) 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.

Explanatory Statement

The accompanying Explanatory Statement forms part of this Notice of Meeting and should be read in conjunction with it.

The Explanatory Statement provides additional information on matters to be considered at the General Meeting.

This Notice of Meeting and Explanatory Statement have been prepared by the Company.

The Administrator has, in accordance with the DOCA, approved the preparation and dispatch of this Notice of Meeting and Explanatory Statement but takes no responsibility for any statements in or omissions from this Notice of Meeting and the Explanatory Statement.

The Administrator has had no past involvement in the management of the Company and takes no responsibility for any statements in or omissions from this Notice of Meeting and the Explanatory Statement in relation to the history of the Company.

As at the date of this Notice of Meeting the Company is suspended from trading on ASX and is subject to a DOCA.

You should seek independent professional advice in respect of any queries you have regarding the matters detailed in this Notice of Meeting and the Explanatory Statement.

The Resolutions are subject to and conditional upon each and every Resolution being passed. Accordingly, the Resolutions should be considered collectively as well as individually.

Shareholders are specifically referred to Section 6 of the Explanatory Statement which contains definitions of capitalised terms used in this Notice of Meeting and the Explanatory Statement.

Proxies

Please note that:

• (a) a Shareholder entitled to attend and vote at the general meeting is entitled to appoint a proxy;

• (b) a proxy need not be a member of the Company;

• (c) a Shareholder may appoint a body corporate or an individual as its proxy;

• (d) a body corporate appointed as a Shareholder’s proxy may appoint an individual as its representative to exercise any of the powers that the body may exercise as the Shareholder’s proxy; and

• (e) Shareholders entitled to cast two or more votes may appoint two proxies and may specify the proportion or number of votes each proxy is appointed to exercise, but where the proportion or number is not specified, each proxy may exercise half of the votes.

The enclosed proxy form provides further details on appointing proxies and lodging proxy forms. If a Shareholder appoints a body corporate as its proxy and the body corporate wishes to appoint an individual as its representative, the body corporate should provide that person with a certificate or letter executed in accordance with the Corporations Act authorising him or her to act as that company’s representative. The authority may be sent to the Company or its share registry in advance of the General Meeting or handed in at the General Meeting when registering as a corporate representative.

Voting Entitlements

In accordance with Regulations 7.11.37 and 7.11.38 of the Corporations Regulations 2001, the Company has determined that a person’s entitlement to vote at the General Meeting will be the entitlement of that person set out in the register of Shareholders as at 17:00 (EST) on 1 2 March 2011 . Accordingly, transactions registered after that time will be disregarded in determining Shareholders’ entitlement to attend and vote at the General Meeting.

DATED: 31 January 2011

BY ORDER OF THE BOARD

==> picture [65 x 82] intentionally omitted <==

---------------------------------Constantine Andrew Scrinis Director

EXPLANATORY STATEMENT TO SHAREHOLDERS

PROPOSAL FOR THE RECAPITALISATION OF

TEYS LIMITED

(Subject to Deed of Company Arrangement)

ACN 009 118 861

CONTENTS

		PAGE NO.
1.	Introduction	1
2.	Recapitalisation Proposal	1
3.	General Meeting	3
4.	Other Information	4
5.	Regulatory Requirements	7
6.	Definitions	13

Proxy Form

Independent Expert’s Report

EXPLANATORY STATEMENT

1. INTRODUCTION

This Explanatory Statement has been prepared for the information of Shareholders in relation to the business to be conducted at the Company’s General Meeting.

The purpose of this Explanatory Statement is to provide Shareholders with all information known to the Company which is material to a decision on how to vote on the resolutions in the accompanying Notice of Meeting.

This Explanatory Statement should be read in conjunction with the Notice of Meeting. Terms in the Notice of Meeting and this Explanatory Statement are defined in Section 6 of this Explanatory Statement.

2. THE RECAPITALISATION PROPOSAL

2.1 BACKGROUND

On 11 June 2010, the Shares were suspended from quotation on ASX. On 9 June 2010 Bradley Vincent Hellen and Ann Fordyce of Pilot Partners were appointed receivers and managers of certain property of the Company, pursuant to a charge held in favour of Macquarie Bank Limited. On 23 June 2010 the Company appointed Mr Ronald DeanWillcocks of Dean-Willcocks Insolvency Solutions as voluntary administrator of the Company. At a subsequent meeting of the Creditors on 17 September 2010 ( Second Meeting of Creditors ), the Creditors resolved to enter into a Deed of Company Arrangement ( DOCA ) including the Recapitalisation Proposal by Boom Capital . The DOCA was executed on 30 September 2010 and a copy of the DOCA is available for inspection at the office of DeanWillcocks Insolvency Solutions at Level 2 32 Martin Place Sydney 2000. The receivers and managers retired on 17 November 2010.

2.2 Proposal

As part of the Recapitalisation Proposal, subject to Shareholders resolving to approve the Resolutions, a total of up to 150,000,000 New Shares will be issued to Boom Capital and or its nominees (including B2B Holdings Pty Ltd) and a total payment of $220,000 ( Issue Sum ) (being an issue price of $0.0015 per share) will be made available to the Administrator. It is proposed that the New Shares will be issued within 3 days of the passing of the Resolutions.

The Issue Sum to be paid for the New Shares will be used to assist in satisfying costs, claims by the Secured Creditor and claims of the unsecured Creditors.

2.3 PROFORMA CAPITAL STRUCTURE

The proforma capital structure of the Company on completion of the Recapitalisation Proposal will be as follows:

Description	Resolution (Res)	Number of Shares	% of Shareholding	Number of Options	% of Voting Power
Existing Shares and Options		96,278,809	39.1%	-	39.1%
Issue to Boom Capital or its nominees (including B2B Holdings Pty Ltd)	Res 4	150,000,000	60.9%	-	60.9%
TOTAL		246,278,809	100%		100%

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2.4 QUOTATION OF NEW SHARES ON ASX

The Company is admitted to the official list of ASX; however, trading in the Existing Shares was suspended from quotation on 11 June 2010. Following completion of the Recapitalisation Proposal the Company will still have its shares suspended from quotation. Reinstatement to ASX is at the discretion of ASX and will be subject to compliance with ASX and Corporations Act regulatory requirements.

2.6 FORGIVENESS OF CREDITORS’ CLAIMS

Under the DOCA, the Claims of the Creditors against the Company will be released and extinguished on the payment of the above amount to the Administrator, the issue of the New Shares to Boom Capital and its nominees and the effectuation of the DOCA.

The DOCA will effectuate after all of the DOCA Conditions have been satisfied, and the obligations thereunder are performed. However, if any of the DOCA Conditions are not satisfied, then the DOCA may be terminated, and the Company may proceed to liquidation.

3. GENERAL MEETING

3.1 ACTION TO BE TAKEN BY THE EXISTING SHAREHOLDERS

In order to proceed with the Recapitalisation Proposal, the Company must convene a General Meeting of Existing Shareholders for the purposes of passing the Resolutions in compliance with the requirements of the Listing Rules and the Corporations Act.

The Notice convening the General Meeting is included at the front of this booklet. Existing Shareholders are encouraged to attend and vote in favour of each of the Resolutions to be put at the General Meeting.

If an Existing Shareholder is not able to attend and vote at the General Meeting, the Existing Shareholder is encouraged to complete the proxy form at the back of this booklet and return it to the Company at the address stated on the proxy form not later than 48 hours before the time specified for the commencement of the General Meeting.

3.2 GENERAL MEETING RESOLUTIONS

There are 5 Resolutions to be put to the General Meeting.

All Resolutions are ordinary resolutions.

All the Resolutions in the Notice of Meeting are conditional on the passing of each of the other Resolutions, so that those Resolutions will not have any effect unless all of the Resolutions are passed.

Certain voting restrictions are imposed in relation to some of the Resolutions as detailed in the accompanying Notice of Meeting under the heading “Voting Exclusion Statement”.

Further details of each Resolution is set out in Sections 4 and 5.

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4. OTHER INFORMATION

4.1 SCOPE OF DISCLOSURE

The Company is required to provide to shareholders all information which is known to the Company that is reasonably required by Existing Shareholders in order to decide whether or not it is in the Company’s interests to pass the Resolutions.

The Company is not aware of any relevant information that is material to the decision on how to vote on the Resolutions other than as is disclosed in this Explanatory Statement or previously disclosed to Existing Shareholders by the Deed Administrator or by the Company by notification to the ASX.

4.2 VOTING INTENTIONS AND INTERESTS OF DIRECTORS

Other than as described below, the directors of the Company have no existing interest in the Company, as at the date of this Explanatory Statement.

Each of Boom Capital and B2B Holdings Pty Ltd is a related party of the Company as defined by Section 228 of the Corporations Act.

Mr Constantine Andrew Scrinis, a director of the Company, has a financial interest in and controls Boom Capital. Boom Capital will receive a financial benefit from the Company should the New Shares be issued under the Proposed Recapitalisation.

Mr Gregory John Wood, a director of the Company, has a financial interest in and controls B2B Holdings Pty Ltd. B2B Holdings Pty Ltd will receive a financial benefit from the Company should the New Shares be issued under the Proposed Recapitalisation.

4.3 RECOMMENDATION BY DIRECTORS

The directors, including Mr Constantine Andrew Scrinis (noting his interest disclosed in section 4.2 above) recommend that in the context of the Company's current circumstances and given the Creditors’ approval of the DOCA, which includes the Recapitalisation Proposal, the Existing Shareholders should accept the Recapitalisation Proposal and approve the Resolutions to be put to the General Meeting. However, Existing Shareholders must decide how to vote based on the matters set out in the Explanatory Statement.

4.4 TAXATION

The Recapitalisation Proposal may give rise to income tax implications for the Company.

Existing Shareholders are advised to seek their own taxation advice on the effect of the Resolutions on their personal position and neither the Company, nor any of the existing directors, the Deed Administrator, the proposed directors or any adviser to the Company accepts any responsibility for any individual Existing Shareholder's taxation consequences on any aspect of the Recapitalisation Proposal.

4.5 EFFECT OF THE RECAPITALISATION PROPOSAL

For the purposes of this Explanatory Statement, the following information is provided for consideration by the Existing Shareholders.

The Company’s shares were suspended from ASX on 11 June 2010 and the Deed Administrator was appointed as voluntary administrator of the Company on 23 June 2010. Previous historic ASX share trading prices for the Existing Shares are not considered a reliable basis to assess the value of the New Shares.

As noted previously, the Company is subject to a DOCA with no further resources to satisfy unsecured Creditors. Due to the Company’s current state of affairs, the lack of profit history and the immediate lack of a reliable future cash flow from remaining assets, maintainable earnings are not considered a reliable basis to assess the New Shares.

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The Administrator estimates on a liquidation basis that there is a deficiency of funds and the Creditors will likely receive no return if the Recapitalisation Proposal does not proceed. Therefore, in the event of liquidation, there is likely to be no return to shareholders from the Company. Accordingly, the current implicit value of the Existing Shares at the date of this Explanatory Statement would be nil cents.

The advantages of passing the Resolutions and subsequent completion of the Recapitalisation Proposal and effectuation of the DOCA include:

• the Company would not proceed into liquidation on the basis of its current financial state (where the Existing Shareholders would receive no return on their investment);

• discharge the Secured Creditor's fixed and floating charge over the assets of the Company;

• appointment of the proposed directors with broad corporate experience;

• the Company will apply to have its shares re-quoted on the ASX. On 11 June 2010 the Company was suspended from quotation. Shortly after, the Company went into voluntary administration. On 24 August 2010, ASX suspended the Company from official quotation under ASX Listing Rule 17.6 for failing to pay its annual listing fee. As the Company had not paid its annual fee by 30 August 2010, in accordance with ASX Listing Rule 16.5 the Company was removed from the official list. Therefore, in applying to have its shares re-quoted on ASX, the Company will need to re-comply with the listing and quotation requirements of Chapters 1 and 2 of the ASX Listing Rules. In particular, it is likely that the Company would need to satisfy the assets test. In general terms, the Company would need to have at least $2 million of net tangible assets in order to satisfy the test. It is likely that the Company will need to conduct a capital raising to satisfy this test. The Company is also likely to need to conduct a capital raising in order to satisfy ASX's spread requirements for re-quotation.

If the Company's shares are successfully re-quoted on the ASX, it will create a market in which the Existing Shareholders may seek to dispose their shares; and

• the Company may acquire a new business. Shareholders should note that if the Company does acquire a new business, and such acquisition amounts to a change in the nature of the Company's operations for the purposes of ASX Listing Rule 11, shareholder approval will be sought and the Company may be required to re-comply with the listing and quotation requirements of Chapters 1 and 2 of the ASX Listing Rules.

The principal disadvantage to Existing Shareholders is that their existing shareholdings will be significantly diluted if the issue of New Shares is approved under Resolution 4 and Resolution 5. However, this must be balanced with the fact that their existing shareholdings currently have nil value and the fact that, should the Recapitalisation Proposal not proceed, the Company would most likely be placed into liquidation. Following completion of the Recapitalisation Proposal, the shareholdings of the Existing Shareholders, although proportionally reduced, would have positive value given the cash injection to the Company.

4.6 INDICATIVE VALUE OF SHARES IF THE RECAPITALISATION PROPOSAL IS APPROVED

The quantum of benefit to be received by the holders of Shares if the Recapitalisation Proposal is approved under Resolution 4 and Resolution 5 will depend in part on the price at which the underlying Shares may trade on ASX.

As the Company is currently suspended from ASX, there is no readily available market price for the Company’s Shares.

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4.7 RECAPITALISATION AGREEMENT

The Administrator, the Company, Boom Capital and Middletons Lawyers entered into a recapitalisation agreement dated 27 August 2010 to recapitalise the Company and the Creditors voted in favour of the DOCA at a creditors meeting on 17 September 2010. The principal terms of the Recapitalisation Agreement are as follows:

• (a) Boom Capital to contribute $220,000.00, payable as to $25,000.00 on execution of the DOCA and $195,000.00 following Boom Capital or its nominees (including B2B Holdings Pty Ltd) being issued 150,000,000 fully paid ordinary shares in the Company (approximately 60 days after the execution of the Deed);

• (b) the existing director of the Company resign and be replaced by 3 directors and a Company Secretary nominated by Boom Capital;

• (c) Boom Capital pay the ASX fees of $10,989.00 (this obligation has been satisfied); and

• (d) that the Administrator will use:

• (i) all reasonable endeavors to procure that Macquarie Bank Limited, discharges the fixed and floating charge ASIC No. 1744440 prior to execution of the DOCA; and

• (ii) his best endeavors to ensure that under the DOCA, the claims of the Creditors will be released after they receive their entitlements under the DOCA; and

• (e) the contribution of $220,000.00 by Boom Capital under the Deed of Company Arrangement will be used, inter alia, to assist in satisfying costs and creditors' claims against the Company.

4.8 DEED OF COMPANY ARRANGEMENT

On 17 September 2010, pursuant to section 439A of the Corporations Act, a meeting of the Company’s creditors was held at which it was resolved that the Company should execute a DOCA. The Company entered into the DOCA with the Administrator, on 30 September 2010.

The DOCA approved by Creditors of the Company provided the following:

• (a) that it is subject to the following conditions (collectively referred to as “the DOCA Conditions”);

• (i) Boom Capital pay to the Deed Administrator the sum of $220,000.00 in respect of the Recapitalisation Proposal;

• (ii) the Deed Administrator pay to the Deed Fund the sum of $220,000.00; and

• (iii) releases are obtained from Michael Teys, Bruce Burrell, Dean Gallegos, Andrew Dyer and Peter Warne with respect to any claims they may have against the Company.

• (b) the debts of the Company to Creditors are to be extinguished upon compliance with the DOCA;

• (c) the Deed Fund shall comprise the following (collectively referred to as “the Contributions”):

• (iv) all cash-on-hand or at bank held by the Deed Administrator or the Company;

• (v) the sum of $220,000.00 referred to in paragraph (a) (ii) above;

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• (d) the DOCA will effectuate after all the DOCA Conditions have been satisfied and the obligations under the DOCA performed (including distribution of the Deed Fund to participating Creditors);

• (e) if any DOCA Conditions are not satisfied, then the DOCA may be terminated and the Company may proceed into liquidation;

• (f) after payment of the payment of all of the Administrator/Deed Administrator remuneration, costs and disbursements, the Secured Creditor will be paid $77,000 from the Deed Fund. Thereafter any Priority Creditors will be paid and the balance of the Deed Fund will be paid to Admitted Creditors on a pro rata basis;

• (g) all costs incurred by the Deed Administrator are to be paid out of the Deed Fund.

5. REGULATORY REQUIREMENTS

The General Meeting has been called to approve specific aspects of the Recapitalisation Proposal in accordance with the Listing Rules and the Corporations Act which are summarised below.

5.1 CHANGE OF BOARD

The Administrator appointed Constantine Andrew Scrinis, Hemant Amin and Gregory John Wood to the Board on 22 September 2010. The appointment of the new directors will be ratified on approval of Resolutions 1 to 3. Brief profiles of the proposed directors are set out below:

Constantine Andrew Scrinis - Director

Constantine was the founder and managing director of commercial and industrial lighting manufacturer Moonlighting Pty Ltd, a business which was acquired by Gerard Lighting Pty Ltd in February 2004. Constantine then established and was joint managing director of publicly listed Traffic Technologies Limited (TTI) until his resignation in August 2007. To that time Constantine played a dominant role in building up TTI to become Australia’s largest traffic products company with about $100m in annual revenues. Constantine is currently the Managing Director of ASX listed Computronics Holdings Limited.

Hemant Amin - Director

Hemant Amin is a certified practicing accountant.

Hemant has over 20 years of accounting and business experience and has worked for both large multi national/public companies as well as smaller family owned operations. Hemant now works as a management consultant. His most recent role was as CFO to The Traffic Group and before that as a Group Treasurer at Primelife for 4yrs.

Gregory John Wood - Director

Greg Wood has an extensive history in the corporate advisory, merchant banking and financial services industries. He is currently Managing Director of K S Capital Pty Limited, licensed dealer in securities, and specialises in capital raisings, mergers and acquisitions advice, public company takeovers and financial reconstructions. Mr Wood is a Chartered Accountant by background.

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5.2 LISTING RULE 10.11

Shareholder approval is being sought for Resolution 4 in relation to the issue of New Shares to Boom Capital or its nominees and Resolution 5 in relation to the issue of New Shares to B2B Holdings Pty Ltd (as set out below) for the purposes of Listing Rule 10.11.

Shareholders should note that under Exception 14 of Listing Rule 7.2, if shareholder approval of the issue of New Shares is obtained under Listing Rule 10.11, approval under Listing Rule 7.1 is not required. Accordingly, if shareholders approve Resolution 4 (in relation to the New Share issue to Boom Capital or its nominees) and Resolution 5 (in relation to the New Shares issued to B2B Holdings Pty Ltd) under Listing Rule 10.11, approval under Listing Rule 7.1 will not be required.

Chapter 10 of the Listing Rules contains certain provisions in relation to transactions between a company and ‘persons in a position of influence’. Listing Rule 10.11 provides that a company must not issue equity securities to a ‘related party’ without the approval of holders of ordinary securities by ordinary resolution. The term ‘related party’ is defined for these purposes to include a related party within the meaning of section 228 of the Corporations Act and a person whose relationship with the entity or a related party is, in ASX’s opinion, such that approval should be obtained.

The directors have determined to seek Shareholder approval under Listing Rule 10.11 to permit the issue of New Shares to Boom Capital or its nominees and B2B Holdings Pty Ltd (as set out below). Boom Capital is an entity controlled by a director of the Company, Mr Constantine Andrew Scrinis, and is therefore a related party. B2B Holdings Pty Ltd is an entity controlled by a director of the Company, Mr Gregory John Wood, and is therefore a related party.

Although the recipients of the New Shares (other than Boom Capital and B2B Holdings Pty Ltd) may not technically be related parties, since those parties are receiving New Shares as nominees of Boom Capital, the Company seeks shareholder approval under Listing Rule 10.11 out of an abundance of caution.

Following the approval of the issue of the New Shares under Resolution 4 and Resolution 5 the Company will still have the capacity to issue 15% of its expanded share capital over the next 12 months as those New Shares once issued will be excluded from the calculation under Listing Rule 7.1.

Listing Rule 10.13 contains certain requirements as to the contents of a notice sent to shareholders for the purposes of ASX Listing Rule 10.11 and the following information is included in this Explanatory Statement for that purpose:

Name of person The following nominees of Boom Capital: 50,000,000 Boom Capital 25,000,000 B2B Holdings Pty Ltd 9,375,000 Barry Cheyney 9,375,000 Les Szancer Scott Griffin as trustee of the Griffin 18,750,000 Family Trust A/C 18,750,000 Petard Pty Ltd 9,375,000 Vallelonga International Pty Ltd 9,375,000 Trenchstones Pty Ltd

Maximum number of securities 150,000,000 to be issued

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Date by which securities will be Within 3 days of the passing of the Resolutions issued but in any event within one month after the date of the meeting

Issue price $0.0015 per share Intended use of funds The funds raised will be used to assist in satisfying costs, claims by the Secured Creditor and claims of the unsecured Creditors.

5.3 SECTION 208 OF THE CORPORATIONS ACT

Under Chapter 2E of the Corporations Act, a public company cannot give a “financial benefit” to a “related party” unless one of the exceptions set out in sections 210 to 216 of the Corporations Act apply or shareholders have in a general meeting approved the giving of that financial benefit to the related party.

Boom Capital is a related party as defined by section 228 of the Corporations Act. Constantine Andrew Scrinis, has a financial interest and controls Boom Capital. Boom Capital will be receiving a financial benefit from the Company should it acquire the New Shares and thus requires Existing Shareholders' approval under section 208(1).

B2B Holdings Pty Ltd is also a related party as defined by section 228 of the Corporations Act. Greg Wood has a financial interest in and controls B2B Holdings Pty Ltd. B2B Holdings Pty Ltd will be receiving a financial benefit from the Company should it acquire New Shares and thus requires Existing Shareholders' approval under section 208(1).

The directors have determined to seek Shareholder approval under Section 208 of the Corporations Act to permit the issue of the securities on the terms of Resolution 4 (in relation to the New Shares to issue to Boom Capital) and Resolution 5 (in relation to the New Shares to be issued to B2B Holdings Pty Ltd).

Section 219 of the Corporations Act sets out certain requirements as to the contents of an explanatory statement sent to shareholders for the purposes of Ch 2E and the following information is included in this Explanatory Statement for that purpose:

Names of Related Parties to whom financial Boom Capital and Mr Constantine Andrew benefits will be given Scrinis B2B Holdings Pty Ltd and Mr Gregory John Wood Nature of financial benefits Boom Capital has the right to nominate the recipients of the New Shares in the Company to be issued under the DOCA. Boom Capital will also be issued with 50,000,000 of those shares. B2B Holdings Pty Ltd will receive 25,000,000 New Shares as a nominee of Boom Capital.

In relation to each director, that director's All of the directors recommend that in the recommendation regarding the resolution to context of the Company's current approve the Proposed Recapitalisation and circumstances and given the Creditors' the reasons for that recommendation. approval of the DOCA, which includes the Recapitalisation Proposal, the Existing Shareholders should approve the Resolutions.

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In relation to each director, whether that director had in interest in the outcome of the Proposed Recapitalisation.

Mr Constantine Andrew Scrinis has a financial interest in and controls Boom Capital.

Mr Gregory John Wood has a financial interest in and controls B2B Holdings Pty Ltd.

The other persons to be issued New Shares are not related parties of the Company.

5.4 SECTION 611 (ITEM 7) OF THE CORPORATIONS ACT

Section 606(1) of the Corporations Act prohibits the acquisition by a person, of voting shares in a company, where because of the acquisition, that person's or someone else's voting power in the company:

• increases from 20% or below to more than 20%; or

• increases from a starting point that is above 20% and below 90%,

unless an exception in section 611 applies.

If the Proposed Recapitalisation occurs, the voting power of Boom Capital and its associates will increase above 20%. Boom Capital and its nominees voting interest in the Company after the Recapitalisation Proposal will be approximately 60.9%. Item 7 of section 611 contains an exception to the section 606(1) prohibition where there is an approval by resolution of the target.

It is a requirement of item 7 of section 611 that Boom Capital make the following disclosures regarding the Proposed Recapitalisation:

Identity of purchaser	Identity of purchaser		Boom Capital
Full particulars of shares to be			150,000,000 ordinary shares, comprising 60.9% of the
issued to purchaser			Company's issued capital, to be issued to Boom Capital
			and its nominees as follows:
			50,000,000 Boom Capital
			25,000,000 B2B Holdings Pty Ltd
			9,375,000 Barry Cheyney
			9,375,000 Les Szancer
			Scott Griffin as trustee of the Griffin
			18,750,000 Family Trust A/C
			18,750,000 Petard Pty Ltd
			9,375,000 Vallelonga International Pty Ltd
			9,375,000 Trenchstones Pty Ltd
Identity,	associations	and	Refer section 5.1 of the Explanatory Memorandum for
qualifications of person who is			profiles of the proposed directors.
intended to become a director of
the Company.			As detailed in their respective profiles, if elected the
			directors will bring significant background and experience
			to the Company's board.

While they each have various professional interests and responsibilities, each is committed to the Company and to pursuing opportunities that will create shareholder wealth.

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If the Recapitalisation Proposal is approved, the directors have agreed to act without remuneration in the short term while the Company undergoes this rebuilding phase.

Statement	of	intentions	•	Business of the Company: Following the
regarding	the future	of the		Proposed Recapitalisation, the directors of the
Company:				Company will undertake a strategic review of the
				business of the Company. While the specific
				parameters within which the Company will operate
				in the future are not yet known, the directors will be
				actively seeking business and investment
				opportunities that will benefit shareholders.
			•	Injection of capital:The Directors of the Company
				will review the capital requirements of the Company
				following the strategic review of its business
				operations. At this stage, it is anticipated that if the
				Recapitalisation Proposal is approved, a further
				private placement will be undertaken to raise the
				funds necessary to enable the Company to pursue
				its future endeavors. At this stage, the likely
				recipient of the placement is unknown.
			•	Future employment prospects:Following the
				Proposed Recapitalisation, the Directors will
				undertake a review of the employment requirements
				of the Company following the strategic review of its
				business operations.
			•	Intended property transfers:As at the date of this
				Notice, the Company does not intend to transfer
				any property.
			•	Intention to redeploy fixed assets: The
				redeployment of fixed assets will be considered by
				the Company following the strategic review of its
				business operations.

Terms of the Proposed Refer to section 5.3 of this Explanatory Memorandum Recapitalisation

Date for completion of Proposed Within 3 business days of the passing of the Resolutions Recapitalisation

Reasons for Proposed Refer to section 4 of this Explanatory Memorandum Recapitalisation

Interests of directors Constantine Andrew Scrinis 50,000,000 Gregory John Wood 25,000,000 Intention to change dividend or Following the Proposed Recapitalisation, the dividend and other financial policies financial policies of the Company will be considered by the Board during its strategic review.

The directors have determined to seek Shareholder approval under Section 611 (Item 7) of the Corporations Act to permit the issue of the securities on the terms of Resolution 4 (in relation to the New Shares to issue to Boom Capital) and Resolution 5 (in relation to the New Shares to be issued to B2B Holdings Pty Ltd).

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5.5 ASIC AND ASX’S ROLE

Under section 218(1) of the Corporations Act, the Company must lodge with ASIC the Notice of Meeting and the Explanatory Statement at least 14 days before the notice convening a general meeting is given. Under section 218(2) of the Corporations Act, the Company has applied for a review period of less than 14 days.

Under Listing Rule 15.1, the Company must not lodge the Notice of Meeting and the Explanatory Statement with ASX before finalising it.

The fact that the accompanying Notice of Meeting, this Explanatory Statement and other relevant documentation has been received by ASX and ASIC is not to be taken as an indication of the merits of the Recapitalisation Proposal or the Company. ASIC, ASX and its respective officers take no responsibility for any decision an Existing Shareholder may make in reliance on any of that documentation.

6. EXPERT’S REPORT

Part of the purpose of Resolution 4 and Resolution 5 is to enable Shareholders to consider this Resolution in accordance with Section 611 Item 7 of the Corporations Act which, if passed, will permit Boom Capital to acquire the New Shares, thereby increasing its voting power in the Company to the maximum extent specified in section 5.4 of this Explanatory Memorandum, without contravening Section 606 of the Corporations Act.

ASIC requires that Shareholders who are being asked to consider a proposal to pass a resolution under Section 611 Item 7 of the Corporations Act be provided with an analysis of whether the proposal is fair and reasonable when considered from the perspective of the Shareholders of the Company other than Boom Capital (and its Associates).

For the purpose of Part 2E of the Corporations Act, the nature of the financial benefit being given to a related party be disclosed to Shareholders.

Directors may satisfy their obligations to provide an analysis and a valuation by those directors, not associated with the proposal, by commissioning an independent expert’s report.

The directors have commissioned the Independent Expert to prepare the Expert’s Report to analyse the Recapitalisation Proposal.

The purpose of the Expert’s Report is to analyse whether the Recapitalisation Proposal set out in Resolution 4 and Resolution 5 is fair and reasonable when considered from the perspective of Shareholders other than Boom Capital and its Associates and to value the benefit comprising the New Shares given to Boom Capital as a related party.

The Independent Expert is required to determine whether the Recapitalisation Proposal is fair and reasonable to non-participating Shareholders.

For the purpose of valuation of the benefit the Independent Expert is required to set out the principal assumptions behind the valuation.

The Expert’s Report, prepared by the Independent Expert is set out in full attached to this Explanatory Memorandum. Shareholders should read the full text of the Expert’s Report to assist them in determining how they wish to vote in respect of Resolution 4 and Resolution 5.

In summary, the Expert’s Report concludes that:

• (a) the Company presently has a deficiency of net assets in the range of $1,685,371 to $1,735,371;

• (b) the shares of the Existing Shareholders' presently have nil value;

• (c) following completion of the Recapitalisation Proposal, the Company will be valued in the range of $350,000 to $400,000;

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• (d) given that the Existing Shareholders will hold 39.1% of the Company following completion of the Recapitalisation Proposal, the interest of the Existing Shareholders will be valued in the range of $136,800 to $156,400;

• (e) Constantine Andrew Scrinis, through Boom Capital, will receive a financial benefit up to $243,600;

• (f) Gregory John Wood, through B2B holdings Pty Ltd, will receive a financial benefit of up to $40,600;

• (g) as the value of the Existing Shareholders' interests after completion of the Recapitalisation Proposal will be greater than before, the Recapitalisation Proposal is fair; and

• (h) on the basis of various advantages to the Company and the Existing Shareholders if the Recapitalisation Proposal proceeds, the Recapitalisation Proposal is reasonable.

7. DEFINITIONS

In the Notice of Meeting and this Explanatory Statement:

Administration Date means 23 June 2010, the date on which the Administrator was appointed, or taken to be appointed, as administrator of the Company pursuant to section 436A of the Corporations Act.

Administrator means Ronald Dean-Willcocks of Dean-Willcocks Insolvency Solutions ABN 49 379 677 280 Level 2 32 Martin Place Sydney 2000.

Admitted Claim means the amount of a Creditor’s claim admitted by the Deed Administrator in accordance with the DOCA.

Admitted Creditor means a Creditor, whose claim has been admitted by the Deed Administrator in accordance the DOCA.

ASIC means the Australian Securities and Investments Commission.

Associate has the meaning set out in sections 11 to 17 of the Corporations Act.

Boom Capital means Boom Capital Pty Ltd (ACN 136 961 316) of Level 2 230 Church Street Richmond Victoria 3121, a Related Party of Constantine Andrew Scrinis, a director of the Company.

ASX means ASX Limited ACN 008 624 691.

Business Day means Monday to Friday inclusive, except New Year’s Day, Good Friday, Easter Monday, Christmas Day, Boxing Day, and any other day that ASX declares is not a business day.

Claim means a debt owing (whether now, in the future or contingently) by, or a claim subsisting against or alleged to be subsisting against, the Company in favour of a person, which arose on or before the Administration Date irrespective of whether the debt or claim arose by virtue of contract, at law, in equity or otherwise and including (without limitation) a claim sounding only in damages, a debt or a claim arising under a guarantee.

Company means Teys Ltd (Subject to Deed of Company Arrangement) ACN 009 118 861.

Corporations Act means the Corporations Act 2001(Cth) .

Creditor means any creditors of the Company having a claim against the Company as at the Administration Date.

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Deed Administrator means the Administrator of the DOCA.

Deed Fund means the fund comprising of the monies to be paid to and/or collected and/or retained by the Deed Administrator under the DOCA.

DOCA means the Deed of Company Arrangement executed on 30 September 2010 between the Deed Administrator, the Company, Boom Capital and the Secured Creditor.

DOCA Conditions means the DOCA conditions referred to in Section 4.8.

Existing Shares means the 96,278,809 issued fully paid shares in the Company before the issue of New Shares to Boom Capital or its nominee (including B2B Holdings Pty Ltd, being the subject of Resolution 4 and Resolution 5.

Existing Shareholder means the holder of an Existing Share.

Independent Expert means DMR Corporate Pty Ltd of 470 Collins Street, Melbourne, Victoria 3000

Expert’s Report means the report of the expert attached to and forming part of the Explanatory Statement.

Explanatory Statement means the explanatory statement accompanying the Notice of Meeting.

General Meeting means the general meeting of the Existing Shareholders convened for the purposes of considering the Resolutions.

Listing Rules means the Listing Rules of ASX.

New Share(s) means a fully paid ordinary share in the Company that is not an Existing Share.

Notice of Meeting means the notice convening the General Meeting.

Recapitalisation Proposal means the proposal for the recapitalisation of the Company as described in Section 2 of this Explanatory Statement.

Reconstruction Deed means the Reconstruction Deed executed on 27 August 2010 between the Deed Administrator, the Company, Middletons Lawyers and Boom Capital.

Related Party means a party so defined by section 228 of the Corporations Act.

Resolution means a resolution to be considered at the General Meeting as contained in the Notice of Meeting.

Section means a section of this Explanatory Statement.

Secured Creditor means Macquarie Bank Limited ACN 008 583 542.

Share means an ordinary fully paid share in the capital of Teys.

Shareholder means a shareholder of the Company.

Teys means the Company.

EST means Eastern Summer Time in Australia.

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DMR CORPORATE

DMR ___ ________

DMR Corporate Pty Ltd A.C.N. 063 564 045 470 Collins Street Melbourne Telephone (03) 9629 4277 Victoria 3000 Facsimile (03) 9629 4598 Australia Web www.dmrcorporate.com.au

10 January 2011 The Directors Teys Limited (Subject to Deed of Company Arrangement) c/- Dean-Willcocks Insolvency Solutions Level 2, 32 Martin Place Sydney NSW 2000

Dear Sirs,

Re: Independent Expert’s Report

1. Introduction

You have requested DMR Corporate Pty Ltd (“DMR Corporate”) to prepare an independent expert’s report in respect of a proposal under which the shareholders of Teys Limited (Subject to Deed of Company Arrangement) (“Teys” or the “Company”) approve the issue of new shares as part of the recapitalization of the Company.

150,000,000 new shares will be issued to Boom Capital Pty Ltd (“Boom Capital”) or its nominees, in accordance with the terms of a Deed of Company Arrangement (“DOCA”) approved by creditors at a meeting held on 17 September 2010.

If the Teys shareholders approve the resolutions that are proposed, the conditions precedent as specified in the DOCA are met and the proposed recapitalization is completed, then Teys will seek the reinstatement of the quotation of its securities on the ASX.

The Boom Capital transaction, as set out in Section 2 below, is permitted by Section 611 and by Chapter 2E of the Corporations Act 2001 (“the Act”) provided it is agreed to by shareholders, other than those involved in the proposed transaction or persons associated with such persons (i.e. the Non-Associated Shareholders).

The Directors of Teys have requested DMR Corporate to prepare an independent expert’s report in accordance with ASIC Regulatory Guide 111 – Content of expert reports. ASIC Regulatory Guide 111 requires the Independent Expert to advise shareholders whether the Proposed Transaction is fair and reasonable, when considered in the context of the interests of the Non-Associated Shareholders.

A copy of our report will accompany the Notice of Meeting and will be included as part of the Explanatory Statement to be sent by Teys to its shareholders.

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2. The Proposed Transaction

The shareholders are being asked to vote on the following resolutions:

Resolution 1 – Election of Mr. Hemant Amin as a director

Resolution 2 – Election of Mr. Constantine Andrew Scrinis as a director

Resolution 3 - Election of Mr. Gregory John Wood as a director

• Resolution 4 - Approval of issue of 150,000,000 new shares to Boom Capital or its nominees

The Non-Associated Shareholders are being asked to approve the issue of 150,000,000 new fully paid ordinary shares in the capital of the Company to Boom Capital or its nominees, in accordance with the terms of the Deed of Company Arrangement following the payment of $220,000 to Teys.

All of the above resolutions are interdependent, however we are only required to report on Resolution 4 and consequently the issue of 150,000,000 shares to Boom Capital or its nominees, is hereinafter referred to as the “Proposed Transaction”.

If the Proposed Transaction is approved by shareholders then the shareholding interests of Boom Capital, its nominees and the Non-Associated Shareholders will change as follows:

==> picture [415 x 226] intentionally omitted <==

The directors have requested DMR Corporate to independently assess whether the Proposed Transaction is fair and reasonable to the Non-Associated Shareholders.

3. Summary Opinions

3.1 Fairness

In our opinion, the Proposed Transaction set out in Section 2 above is fair and reasonable to the Non-Associated Shareholders .

3.1.1

Our principal reasons for reaching the above opinion are:

• in Section 7.8 we have assessed the value of the Non-Associated Shareholders’ interests in Teys to be greater than nil but less than $400,000 before the Proposed Transaction.

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• in Section 8.4 we assessed the value of Teys to be $360,000 after the Proposed Transaction. This values the Non-Associated Shareholders 39.1% interest in Teys after the Proposed Transaction at $140,760.

As the value of the Non-Associated Shareholders’ interests after the Proposed Transaction is within the value range ascribed to the Non Associated Shareholders’ interests before the Proposed Transaction, we have concluded that the Proposed Transaction is fair.

3.1.2

3.2

• We have also reviewed the other significant considerations referred to in Section 11 of this report and we consider that the Proposed Transaction is reasonable.

Financial Benefits

In accordance with Chapter 2E of the Act, Boom Capital and its nominees, will receive a financial benefit of up to $219,300 and B2B Holdings Pty Ltd (“B2B”) will receive a financial benefit of up to $36,500 if the Non-Associated Shareholders approve the Proposed Transaction – refer to Section 12 below.

4. Structure of this Report

This report is divided into the following Sections:

Section 5 Purpose of the Report 6 Teys - Key Information 7 Valuation of Teys Before the Proposed Transaction 8 Valuation of Teys After the Proposed Transaction 9 Control Premium 10 Assessment as to Fairness 11 Other Significant Considerations 12 Related parties – Financial Benefits 13 Financial Services Guide Appendix A-1 Teys – 20 Largest Shareholders – 24 June 2010 B-1 Teys – Income Statements B-2 Teys – Balance Sheets B-3 Teys – Cash Flow Statements C Sources of Information D Declarations, Qualifications and Consents

Page

3 6 8 11 12 12 12 13 14 16 17 18 19 20 21

5.

Purpose of the Report

This report has been prepared to meet the following regulatory requirements:

• Corporations Act 2001

Section 606 of the Act contains a general prohibition on the acquisition of shares in a company if, as a result of the acquisition, any person increases his or her voting power in the company from 20% or below to more than 20%.

Section 611 of the Act contains an exception to the Section 606 prohibition. For an acquisition of shares to fall within the exception, the acquisition must be approved in advance by a resolution passed at a general meeting of the company in which shares will be acquired.

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Teys is seeking shareholder approval for the Proposed Transaction under Section 611 of the Act as Boom Capital and its associates, will increase their interests in Teys from less than 20% to above 20% as a result of the issue of shares.

• ASIC Regulatory Guides

This report has been prepared in accordance with the ASIC Regulatory Guides and more particularly:

RG 111 – Content of Expert Reports (“RG111”)

• RG 111.21 An issue of shares by a company otherwise prohibited under S606 may be approved under item 7 of S611 and the effect on the company’s shareholding is comparable to a takeover bid. Examples of such issues approved under item 7 of S611 that are comparable to takeover bids under Ch 6 include:

• (a) a company issues securities to the vendor of another entity or to the vendor of a business and, as a consequence, the vendor acquires over 20% of the company incorporating the merged businesses. The vendor could have achieved the same or a similar outcome by launching a scrip takeover for the company …….

• RG111.24 There may be circumstances in which the allottee will acquire 20% or more of the voting power of the securities in the company following the allotment or increase an existing holding of 20% or more, but does not obtain a practical measure of control or increase its practical control over that company. If the expert believes that the allottee has not obtained or increased its control over the company as a practical matter, then the expert could take this outcome into account in assessing whether the issue price is ‘reasonable’ if it has assessed the issue price as being ‘not fair’ applying the test in RG111.10.

• RG111.9 It has long been accepted in Australian mergers and acquisitions practice that the words ‘fair and reasonable’ in S640 established two distinct criteria for an expert analysing a control transaction:

(a) is the offer ‘fair’; and (b) is it ‘reasonable’?

That is, ‘fair and reasonable’ is not regarded as a compound phrase.

• RG111.10 Under this convention, an offer is ‘fair’ if the value of the offer price or consideration is equal to or greater than the value of the securities the subject of the offer. This comparison should be made assuming 100% ownership of the ‘target’ and irrespective of whether the consideration is scrip or cash. The expert should not consider the percentage holding of the ‘bidder’ or its associates in the target when making this comparison. For example, in valuing securities in the target entity, it is inappropriate to apply a discount on the basis that the shares being acquired represent a minority or ‘portfolio’ parcel of shares.

• RG111.11 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 security holders to accept the offer in the absence of any higher bid before the close of the offer.

ASIC Regulatory Guide 111 requires that the Proposed Transaction be assessed as if it was a takeover of Teys.

In assessing a takeover bid Regulatory Guide 111 states that the expert should consider whether the Proposed Transaction is both “fair” and “reasonable”.

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• General

The terms “fair” and “reasonable” are not defined in the Act, however guidance as to the meaning of these terms is provided by ASIC in Regulatory Guide 111. For the purpose of this report, we have defined them as follows:

• Fairness - the Proposed Transaction is “fair” if the value of the NonAssociated Shareholders’ interests after the Proposed Transaction is equal to or greater than the value of their interests before the Proposed Transaction after considering the adequacy of the premium for control.

• Reasonableness - the Proposed Transaction is “reasonable” if it is fair. It may also be “reasonable” if, despite not being “fair” but after considering other significant factors, shareholders should vote in favour of the Proposed Transaction in the absence of a superior proposal being received.

In determining whether the Proposed Transaction is fair, we have:

• valued the Non-Associated Shareholders’ interests in Teys before the Proposed Transaction;

• valued the Non-Associated Shareholders’ interests in Teys after the Proposed Transaction; and

• compared the values before and after the Proposed Transaction and assessed the quantum of the control premium.

In determining whether the Proposed Transaction is reasonable we have analysed other significant factors, which the Non-Associated Shareholders should consider prior to accepting or rejecting the Proposed Transaction.

Corporations Act – Chapter 2E

Section 208 of the Act states that a public company must obtain approval from the company’s members if it gives a financial benefit to a related party unless the benefit falls within the scope of an exception to the Act as set out in Sections 210 to 216 of the Act.

Section 210 of the Act states that member approval is not needed to give a financial benefit on terms that:

• (a) would be reasonable in the circumstances if the public company or entity and the related party were dealing at arm’s length; or

• (b) are less favourable to the related party than the terms referred to in paragraph (a) above.

Section 228 of the Act defines ‘related parties’ as:

• (a) directors of the public company;

• (b) directors (if any) of an entity that controls the public company;

• (c) if the public company is controlled by an entity that is not a body corporate – each of the persons making up the controlling entity;

• (d) spouses and de facto spouses of the persons referred to in paragraphs (a) to (c) above.

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The issuance of the Teys shares to Boom Capital and its nominees, including B2B, is permitted by the Act however Section 208 provides that prior shareholder approval is required before a public company can provide a financial benefit to a related party unless the benefit falls within the scope of an exception to the Act. Shareholders must be provided with all the information that is reasonably required in order for them to decide whether or not it is in the company’s interests to approve the giving of the financial benefit.

Section 229(1)(c) of the Act states:

“In determining whether a financial benefit is given you must disregard any consideration that is or may be given for the benefit, even if the consideration is adequate.”

The ASIC media release issued on 10 August 2004 has expressed the view that the financial benefit must be adequately valued. ASIC has gone on to state:

“An adequate valuation requires the basis of the valuation and the principal assumptions behind the valuation to be disclosed, and in some circumstances it may be necessary to provide a valuation by an independent expert.”

Boom Capital is a related party as Mr. Constantine Andrew Scrinis (“Scrinis”), has a financial interest in and controls Boom Capital.

B2B is also a related party as Mr. Greg Wood (“Wood”) has a financial interest in and controls B2B.

The Directors of Teys have requested DMR Corporate to independently assess the value of the financial benefit, if any, that may be given to Boom Capital and B2B pursuant to the allotment of shares in the Proposed Transaction.

6. Teys - Key Information

6.1 Background

The background to the proposed restructure of Teys has been as follows:

• A. On 9 June 2010, Bradley Vincent Hellen and Ann Fordyce of Pilot Partners were appointed receivers and managers of certain property of the Company;

• B. On 11 June 2010, trading in the Company’s shares was suspended on the ASX;

• C. On 23 June 2010, the Administrator was appointed voluntary administrator of the Company;

• D. At a meeting of creditors of the Company, convened pursuant to section 436E(1) of the Act and held on 5 July 2010, the Administrator Ronald Dean-Willcocks of Dean-Willcocks Insolvency Solutions (“Dean-Willcocks”) was retained as the administrator of the Company for the purposes of Part 5.3A of the Act;

• E. A Second Meeting of creditors, convened pursuant to section 439A of the Act, was held on 28 July 2010 and adjourned for up to 45 business days to progress and finalise the terms and conditions of the recapitalization of the Company in the form of a DOCA.

• F. In early August 2010, the Administrator received a proposal from Boom Capital for the recapitalisation of the Company’s corporate shell.

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• G. At the adjourned meeting of creditors of the Company held on 17 September 2010 creditors in attendance approved a proposal from Boom Capital and resolved that the Company execute a DOCA. The key points included:

• Boom Capital or its nominees to contribute $220,000, payable as to $25,000 on execution of the Deed of Company Arrangement and $195,000 following Boom Capital being issued 150,000,000 fully paid ordinary shares in the company (approximately 60 days after the execution of the Deed);

• The existing Director of the Company resign and be replaced by 3 Directors and a Company Secretary nominated by Boom Capital;

• Boom Capital pay the ASX fees of $10,989.00 (this obligation has been satisfied); and

• The contribution of $220,000.00 by Boom Capital under the DOCA will be used, inter alia, to satisfy costs and creditors claims’ against the Company.

• H. On 30 September 2010 the DOCA was executed.

• I. Pursuant to the terms of the DOCA Mr. M. Teys resigned as a director on 22 September 2010 and the Administrator appointed 3 directors nominated by Boom Capital, to the board of the Company – Mr. Constantine Andrew Scrinis (“Scrinis”), Mr. Hemant Amin and Mr. Gregory John Wood.

6.2 Share Capital

As at 24 June 2010 Teys had 96,278,809 fully paid ordinary shares on issue and the 20 largest shareholders are presented in Appendix A-1. The top 20 shareholders held 73.67% of Teys’ issued fully paid shares.

In addition to the shares on issue the share register also records a total of 4,413,860 options held by Mr. M. Teys with an exercise price of $0.20 and an expiry date of 1 March 2011.

6.3 Financial Performance

Teys’ reviewed half yearly income statements for the six months to 31 December 2009 are presented in Appendix B-1.

6.4 Financial Position

The reviewed net assets attributable to the members of Teys as at 31 December 2009 are presented in Appendix B-2.

6.5 Cash Flow Statements

Teys’ reviewed Cash Flow Statements for the six months to 31 December 2009 are presented in Appendix B-3.

6.6 Taxation Losses

Tey’s has significant taxation losses however the extent of these losses cannot be quantified as taxation returns have not been prepared since the 2008 financial year. Following the DOCA and the completion of the Proposed Transaction we consider that Tey’s will be unable to satisfy either the ‘continuity of ownership’ test or the ‘same business’ test to be able to benefit from the carry forward taxation losses in the future. For this reason we have not placed any value on Tey’s carry forward taxation losses.

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7. Valuation of Teys Before the Proposed Transaction

7.1

Value Definition

DMR Corporate’s valuation of Teys has been made on the basis of fair market value, defined as the price that could be realized in an open market over a reasonable period of time given the current market conditions and currently available information, assuming that potential buyers have full information, in a transaction between a willing but not anxious seller and a willing but not anxious buyer acting at arm’s length.

7.2 Valuation Methodologies

In selecting appropriate valuation methodologies, we considered the applicability of a range of generally accepted valuation methodologies. These included:

• share price history;

• capitalisation of future maintainable earnings;

• net present value of future cash flows;

• asset based methods; and

• alternate acquirer.

7.3 Share Price History

• 7.3.1 The share price history valuation methodology values a company based on the past trading in its shares. We normally analyse the share prices up to a date immediately prior to the date when a takeover, merger or other significant transaction is announced to remove any price speculation or price escalations that may have occurred subsequent to the announcement of the proposed transaction.

• 7.3.2 This analysis is not required in this report as the Teys shares were suspended from trading on the ASX on 11 June 2010 following a trading halt on 9 June 2010. Trading has not resumed since that time.

7.3.3 Summary – Share Price History

As Teys is subject to a Deed of Company Arrangement and its shares have been suspended since 11 June 2010, we consider that this valuation methodology is not an appropriate methodology to use to value Teys.

7.4 Capitalization of Future Maintainable Earnings

This methodology involves capitalizing the estimated future maintainable earnings of a business at a multiple which reflects the risks of the business and its ability to earn future profits.

There are different definitions of earnings to which a multiple can be applied. The traditional method is to use net profit after tax – Price Earnings or PE. Another common method is to use Earnings Before Interest and Tax, or EBIT. One advantage of using EBIT is that it enables a valuation to be determined which is independent of the financing and tax structure of the business. Different owners of the same business may have different funding strategies and these strategies should not alter the fundamental value of the business.

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Other variations to EBIT include ‘Earnings Before Interest, Tax, Depreciation and Amortization’ – EBITDA and ‘Earnings Before Interest, Tax, and Amortization’ – EBITA.

As Teys is presently subject to a Deed of Company Arrangement and it does not have an operating business generating profits, we consider that the capitalization of future maintainable earnings valuation methodology is not an appropriate methodology to use to value Teys.

7.5 Net Present Value of Future Cash Flows

An analysis of the net present value of the projected cash flows of a business (or discounted cash flow technique) is based on the premise that the value of the business is the net present value of its future cash flows. This methodology requires an analysis of future cash flows, the capital structure, the costs of capital and an assessment of the residual value of the business remaining at the end of the forecast period.

As Teys is presently subject to a Deed of Company Arrangement and does not have an operating business generating cash flows, we consider that the capitalisation of future cash flows is not an appropriate valuation methodology to use to value Teys.

7.6 Asset Based Methods

• 7.6.1 These methodologies are based on the realisable value of a company’s identifiable net assets. Asset based valuation methodologies include:

(a) Net Assets

The net asset valuation methodology involves deriving the value of a company or business by reference to the value of its assets. This methodology is likely to be appropriate for a business whose value derives mainly from the underlying value of its assets rather than its earnings, such as property holding companies and investment businesses that periodically revalue their assets to market. The net assets on a going concern basis method estimates the market values of the net assets of a company but does not take account of realization costs.

(b) Orderly Realisation of Assets

The orderly realisation of assets method estimates the fair market value by determining the amount that would be distributed to shareholders, after payment of all liabilities including realisation costs and taxation charges that arise, assuming the company is wound up in an orderly manner.

(c) Liquidation of Assets

The liquidation method is similar to the orderly realisation of assets method except the liquidation method assumes that the assets are sold in a short time frame.

• 7.6.2 Teys is presently subject to a DOCA and the Deed Administrator considered both the orderly realisation of assets valuation methodology (via the DOCA) and the liquidation of assets valuation methodology. The Administrator has advised us that if the shareholders do not approve the Proposed Transaction then Teys will be liquidated. In the Administrator’s Report under Section 439A of the Act the Administrator stated that there would be no dividend to creditors in the event of a liquidation[1] .

1 Administrators Report dated 8 September 2010 – paragraph 4.

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An estimated summary of the residual liabilities under a liquidation scenario is as follows:

	Estimated Liabilities
	On Liquidation
	$
Secured liability to Macquarie Bank Limited	1,233,491
Related party priority creditors	8,824
Loan from Mr. M. Teys to the Administrator	10,000
Administrators disbursements – estimated	50,000
Administrators remuneration	149,427
Liquidator’s/Deed Administrators disbursements	5,000
Liquidator’s/Deed Administrators disbursements	40,000
Related party unsecured creditors	295,148
Trade creditors	293,481
	__
Total	2,085,371

At the present date the Non-Associated Shareholders own 100% of Teys. The Administrator estimates that Teys has a deficiency of net assets of approximately $2,085,371, as per his report to creditors.

On this basis, we have concluded that the equity in Teys has a nil value.

7.7 Alternate Acquirer

The value that an alternative offeror may be prepared to pay to acquire Teys is a relevant valuation methodology to be considered.

Teys is a listed entity on the ASX and generally a residual value can be ascribed to the listed shell that remains after the existing business has stopped operating. This value can only be realised via the backdoor listing of a new business into the existing shell. In our experience, the value ascribed to an ASX listed shell, which has no debts, is in the range of $350,000 to $400,000.

Prospective buyers of ASX listed shells will generally offer to settle creditors' claims in exchange for a proportion of the equity in the company. The extent of the dilution tends to vary with each individual transaction and for this reason we cannot estimate the extent of the dilution that may be anticipated in a recapitalization of Teys prior to the Proposed Transaction.

The Non-Associated Shareholders will retain an equity interest in any recapitalization proposal, however we are unable to determine the extent of this interest.

Without the ability to determine the residual value that the Non-Associated Shareholders may retain, we can merely conclude that before the Proposed Transaction the value of that interest is greater than nil but less than $400,000.

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7.8 Conclusion

In our opinion, based on the alternate acquirer methodology, the value of the NonAssociated Shareholders’ interests before the Proposed Transaction has a value greater than nil but less than $400,000.

8. Valuation of Teys After the Proposed Transaction

8.1 Value Definition

We have used the same definition of value in this Section as was applied in Section 7.1 above when we assessed the value of Teys before the Proposed Transaction.

8.2 Valuation Methodologies

In selecting appropriate valuation methodologies, we considered the applicability of the same generally accepted valuation methodologies as detailed in Section 7.2 above and we determined that the appropriate methodology to use to value Teys after the Proposed Transaction was the net assets on a going concern basis.

8.3 Net Assets on a Going Concern Basis

• 8.3.1 The DOCA appears to have been the preferred course of action as it will extinguish the secured creditor, pay the agreed sums for legal fees and the Administrator’s costs and pay the balance on a pro-rata basis to the remaining creditors. The DOCA was approved by the creditors on 17 September 2010 and is now only subject to the shareholders approving the issue of 150,000,000 Teys shares to Boom Capital or its nominees and payment of the balance of monies to the Deed Administrator by Boom Capital.

If the shareholders approve the Proposed Transaction then the financial position of Teys will become:

Secured liability to Macquarie Bank Limited Related party priority creditors Loan from Mr. M. Teys to the Administrator Administrators disbursements – estimated Administrators remuneration Liquidator’s/Deed Administrators disbursements Liquidator’s/Deed Administrators disbursements Related party unsecured creditors Trade creditors Total Less: Proceeds from implementation of DOCA Proceeds from Agreement with Boom Capital Loan from Mr. M. Teys to the Administrator – Forgiven Net Assets/(Deficiency of Assets) Note 1 – Liabilities forgiven

Estimated Liabilities Proposed Settlement On Liquidation Under DOCA $ $ 1,233,491 77,000 8,824 Note 1 10,000 - 50,000 45,000 149,427 75,000 5,000 3,000 40,000 5,000 295,148 Note 1 293,481 25,000 _ _ 2,085,371 230,000 - 220,000 - 10,000 _ _ - 230,000 ___ _ (2,085,371) -

8.3.2 Following approval of the Proposed Transaction Teys will have net assets of nil.

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• 8.3.3 The value of the corporate shell referred to in Section 7.7 ($350,000 to $400,000) above stills exists. Boom Capital offered $220,000 for a 60.9% interest in Teys this effectively values the Teys corporate shell at $361,248 – say $360,000.

8.4 Conclusion

In our opinion Teys is valued $360,000 after the Proposed Transaction has been approved by the Non-Associated Shareholders.

9. Control Premium

A control premium represents the difference between the price that would have to be paid for a share to which a controlling interest attaches and the price at which a share which does not carry with it control of the company could be acquired. Control premiums are normally in a range of 20% to 30%[2] above the value of a minority share. The actual control premium paid is transaction specific and depends on a range of factors, such the level of synergies available to the purchaser, the level of competition for the assets and strategic importance of the assets. In this instance there are no synergies to be gained by Boom Capital from an acquisition of Teys.

In Section 8.4 above we valued Teys at $360,000 after the Proposed Transaction has been approved by the Non-Associated Shareholders. Boom Capital will have a 60.9% interest in the issued capital after the Proposed Transaction so their interests will be valued at approximately $220,000.

As Boom Capital paid $220,000 for their 60.9% interest in Teys this effectively means that they have not paid a premium to obtain control of Teys.

10. Assessment as to Fairness

In Section 7.8 we assessed the Non-Associated Shareholders’ interests in Teys to be greater than nil but less than $400,000 before the Proposed Transaction.

In Section 8.4 we valued Teys at $360,000. As the Non-Associated Shareholders’ interests in Teys will be diluted to 39.1% after the Proposed Transaction, this values their interests in Teys at $140,760 after the Proposed Transaction.

As the value of the Non-Associated Shareholders’ interests after the Proposed Transaction ($140,760) is within the expected valuation range prior to the Proposed Transaction, we have concluded that the Proposed Transaction is fair.

11. Other Significant Considerations

Prior to deciding whether to approve or reject the Proposed Transaction the NonAssociated Shareholders should also consider the following factors:

• In Section 10 above we concluded that the Proposed Transaction is fair.

• Shortly after being appointed as Administrators, Dean-Willcocks sought urgent expressions of interest from parties interested in participating in a financial reorganisation of Teys through a DOCA. The Administrators selected Boom

2 RSM Bird Cameron Control Premium Study – September 2010.

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Capital as the company that lodged the best proposal to reorganise and recapitalise Teys and the Boom Capital proposal was agreed to by the Teys creditors when they approved the DOCA. We can see no reason as to why a superior offer would be initiated prior to the Proposed Transaction taking place.

• If the Proposed Transaction is approved, and the other conditions precedent contained in the DOCA are met, then Boom Capital and its nominees will assume control of Teys and there will be no outstanding creditors or claims against the Company. This will enable Boom Capital to locate a new business to inject into the Company.

• If the Proposed Transaction is approved, and the other conditions precedent are met, then Teys will apply to have its shares requoted on the ASX. This may create a market for the Teys shares and this would enable shareholders to crystalise their losses for taxation purposes.

• Following the approval of resolutions 1, 2 and 3 the three newly appointed directors of Teys will assume full responsibility for the Company.

• When a new business is acquired it will further dilute the interests of the NonAssociated Shareholders in Teys.

• Boom Capital is not paying a premium for its 60.9% control of Teys.

• If the Non-Associated Shareholders reject the Proposed Transaction then the Company will proceed into liquidation and the Non-Associated Shareholders and the creditors will receive nothing.

After reviewing the above significant factors we consider that the Proposed Transaction is reasonable.

12. Related Parties – Financial Benefits

• 12.1 On 22 September 2010 Scrinis was appointed a director of Teys and for the purposes of Chapter 2E, Boom Capital is deemed to be a related party to the Proposed Transaction as Scrinis and his associates beneficially own 100% of Boom Capital.

In Section 8.4 above we valued Teys at $360,000 after the Proposed Transaction and this represents a value of $0.0015 per share.

As Boom Capital and its nominees will receive 150,000,000 Teys shares under the Proposed Transaction, Scrinis will receive a financial benefit of up to $219,300 (150,000,000 x $0.0015 per share).

• 12.2 On 22 September 2010 Wood was appointed a director of Teys and for the purposes of Chapter 2E, B2B is deemed to be a related party to the Proposed Transaction as Wood has a financial interest in and controls B2B. As B2B will receive 25,000,000 Teys shares under the Proposed Transaction, Wood will receive a financial benefit of up to $36,500 (25,000,000 x $0.0015 per share).

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13. Financial Services Guide

13.1 Financial Services Guide

This Financial Services Guide provides information to assist retail and wholesale investors in making a decision as to their use of the general financial product advice included in the above report.

13.2 DMR Corporate

DMR Corporate holds Australian Financial Services Licence No. 222050, authorizing it to provide general financial product advice in respect of securities to retail and wholesale investors.

13.3 Financial Services Offered by DMR Corporate

DMR Corporate prepares reports commissioned by a company or other entity (“Entity”). The reports prepared by DMR Corporate are provided by the Entity to its members.

All reports prepared by DMR Corporate include a description of the circumstances of the engagement and of DMR Corporate’s independence of the Entity commissioning the report and other parties to the transactions.

DMR Corporate does not accept instructions from retail investors. DMR Corporate provides no financial services directly to retail investors and receives no remuneration from retail investors for financial services. DMR Corporate does not provide any personal retail financial product advice directly to retail investors nor does it provide market-related advice to retail investors.

13.4 General Financial Product Advice

In the reports, DMR Corporate provides general financial product advice. This advice does not take into account the personal objectives, financial situation or needs of individual retail investors.

Investors should consider the appropriateness of a report having regard to their own objectives, financial situation and needs before acting on the advice in a report. Where the advice relates to the acquisition or possible acquisition of a financial product, an investor should also obtain a product disclosure statement relating to the financial product and consider that statement before making any decision about whether to acquire the financial product.

13.5 Independence

At the date of this report, none of DMR Corporate, Derek M Ryan nor Mr Paul Lom has any interest in the outcome of the Proposed Transaction, nor any relationship with the Deed Administrator, Teys, Boom Capital and its nominees.

Drafts of this report were provided to and discussed with the Administrator of Teys and a director of Boom Capital. Certain changes were made to factual statements in this report as a result of the reviews of the draft reports. There were no alterations to the methodology, valuations or conclusions that have been formed by DMR Corporate.

DMR Corporate and its related entities do not have any shareholding in or other relationship with Teys or Boom Capital that could reasonably be regarded as capable of

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affecting its ability to provide an unbiased opinion in relation to the Proposed Transaction. DMR Corporate had no part in the formulation of the Proposed Transaction. Its only role has been the preparation of this report.

DMR Corporate considers itself to be independent in terms of Regulatory Guide 112 issued by ASIC on 30 October 2007.

13.6 Remuneration

DMR Corporate is entitled to receive a fee of approximately $17,500 for the preparation of this report, plus out of pocket expenses. With the exception of the above, DMR Corporate will not receive any other benefits, whether directly or indirectly, for or in connection with the making of this report.

Except for the fees referred to above, neither DMR Corporate, nor any of its directors, employees or associated entities receive any fees or other benefits, directly or indirectly, for or in connection with the provision of any report.

13.7 Compensation Arrangements and Complaints Process

As the holder of an Australian Financial Services Licence, DMR Corporate is required to have suitable compensation arrangements in place. In order to satisfy this requirement DMR Corporate holds a professional indemnity insurance policy that is compliant with the requirements of Section 912B of the Act.

DMR Corporate is also required to have a system for handling complaints from persons to whom DMR Corporate provides financial services. All complaints must be in writing and sent to DMR Corporate at the above address.

DMR Corporate will make every effort to resolve a complaint within 30 days of receiving the complaint. If the complaint has not been satisfactorily dealt with, the complaint can be referred to the Financial Ombudsman Service Limited – GPO Box 3, Melbourne Vic 3000.

Yours faithfully

DMR Corporate Pty Ltd

==> picture [77 x 30] intentionally omitted <==

Paul Lom - Director

==> picture [77 x 25] intentionally omitted <==

Derek Ryan - Director

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Appendix A-1

Teys Limited

(Subject to Deed of Company Arrangement)

20 Largest Shareholders as at 24 June 2010

Name	Number of
	Ordinary
	Shares
Mr. Michael John Teys	12,375,000
Mrs. Michelle Anne Teys	12,375,000
Resort Brokers Pty Ltd	6,256,250
RFA Management Limited	5,000,000
CAS Fiduciary Services Pty Ltd	4,751,000
Capital and Administration Services Pty Ltd	4,125,000
Mr. Peter Hastings Warne	4,125,000
Mr. Alexander John Peden & Mrs. Mary Louisa Peden	3,150,568
Berpaid Pty Ltd	2,999,650
Mr. Alexander John Peden & Mrs. Mary Louisa Peden	2,500,000
Hampton Pty Ltd	2,470,000
Mr. Shaun Reginald May	2,000,000
Talbot Group Holdings Pty Ltd	1,592,792
Neville Arthur Sanders	1,500,000
Duncan Alfred Lee	1,500,000
Mrs. Juanita Davies	1,250,000
Beachhouse Investments Pty Ltd	887,500
Mr. Philip Alexander Steel	800,000
Mr. Earl Evans & Mrs. Katie Alexandra Evans	750,000
Removale Pty Ltd	525,000
	____
Total number of shares held by the twenty largest holders	70,932,760
The percentage of the total holding of the twenty largest holders of ordinary shares was	73.67%
Source:Teys’ share register – 24 June 2010

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Appendix B-1

Teys Limited

(Subject to Deed of Company Arrangement)

Income Statements

Revenue from operating activities Other revenues Employee benefits expense Administration expenses Marketing expenses Occupancy expenses Depreciation and amortisation Impairment charge Finance costs Shareholder and share registry costs Other expenses Share of net profits of associates (Loss) from ordinary activities before income tax Income tax expense Loss from continuing operations Profit from discontinued operations Loss attributable to minority equity interests (Loss) for the period Source: Teys 30 June and 31 December 2009 financial statements	Financial Year Ended Half Year Ended 30/6/2009 Audited 31/12/2009 Reviewed $ $ 9,554,020 568,465 631,823 - (6,836,009) (323,553) (4,171,607) (595,856) (131,153) (8,191) (824,327) (126,450) (271,490) (24,562) (3,869,664) (166,000) (705,209) (141,586) (199,132) (31,264) (40,836) (85,000) 151,221 59,170 _ _ (6,712,363) (874,827) (677,492) - _ _ (7,389,855) (874,827) - 505,845 (106,726) - _ _____ (7,496,581) (368,982)	Financial Year Ended Half Year Ended 30/6/2009 Audited 31/12/2009 Reviewed $ $ 9,554,020 568,465 631,823 - (6,836,009) (323,553) (4,171,607) (595,856) (131,153) (8,191) (824,327) (126,450) (271,490) (24,562) (3,869,664) (166,000) (705,209) (141,586) (199,132) (31,264) (40,836) (85,000) 151,221 59,170 _ _ (6,712,363) (874,827) (677,492) - _ _ (7,389,855) (874,827) - 505,845 (106,726) - _ _____ (7,496,581) (368,982)

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Appendix B-2

Teys Limited (Subject to Deed of Company Arrangement)

Balance Sheets

CURRENT ASSETS Cash and cash equivalents Trade and other receivables Other assets Non current assets classified as held-for-sale TOTAL CURRENT ASSETS NON CURRENT ASSETS Investments accounted for using equity method Investment property Plant and equipment Intangible assets TOTAL NON CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Financial liabilities Current tax liabilities Provisions Non current assets classified as held-for-sale TOTAL CURRENT LIABILITIES NON CURRENT LIABILITIES Financial liabilities Provisions TOTAL NON CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Share based payment reserves Accumulated losses Parent interest Minority equity interest TOTAL EQUITY	30/6/2009 31/12/2009 Audited Reviewed $ $ 398,684 244,459 338,903 1,610,956 153,694 148,983 _ _ 891,281 2,004,398 - 6,412,404 _ _ 891,281 8,416,802 236,528 808,650 1,200,000 - 705,330 75,486 7,367,158 - _ __ 9,509,016 884,136 _ _ 10,400,297 9,300,938 2,560,857 1,998,674 926,886 8,045,467 90,287 131,268 363,964 271,629 _ _ 3,941,994 10,447,038 - 137,246 __ _ 3,941,994 10,584,284 7,655,398 50,160 124,230 35,792 _ _ 7,779,628 85,952 _ _ 11,721,622 10,670,236 _ _ (1,321,325) (1,369,300) 8,517,232 8,662,232 116,900 175,350 (9,821,480) (10,206,883) _ _ (1,187,348) (1,369,300) (133,977) - _ _ (1,321,325) (1,369,300)	_	31/12/2009 Reviewed $ 244,459 1,610,956 148,983 _ 2,004,398 6,412,404 _ 8,416,802
			808,650 - 75,486 - _ 884,136 _ 9,300,938
			1,998,674 8,045,467 131,268 271,629 _ 10,447,038 137,246 _ 10,584,284 50,160 35,792 _ 85,952 _ 10,670,236 ___ (1,369,300)

Source: Teys 30 June and 31 December 2009 financial statements

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Appendix B-3

Teys Limited

(Subject to Deed of Company Arrangement)

Cash Flow Statements

	Financial Year	Half Year
	Ended	Ended
	30/6/2009	31/12/2009
	Audited	Reviewed
	$	$
Cash Flows from Operating Activities
Receipts from customers	11,067,125	4,039,070
Payments to suppliers and employees	(11,422,324)	(4,503,747)
Interest received	15,877	808
Dividends received	169,033	89,105
Finance costs	(657,900)	(423,510)
Dividends paid	(48,823)	-
	___	___
Net cash used in operating activities	(877,012)	(798,273)
Cash Flows from Investing Activities
Purchase of plant and equipment	(353,085)	-
Proceeds from sale of plant and equipment	-	86,344
Proceeds from the disposal of the subsidiary	46,876	977,390
Payment for the acquisition of management contracts	(551,175)	-
Payment for acquisition of additional interest in a
subsidiary, less net assets acquired	(3,365,437)	-
Payment for the cost of reverse acquisition	(367,735)	-
Payment for the acquisition of investment property	(69,020)	-
Loans provided to related parties	62,649	-
	____	___
Net cash used in investing activities	(4,596,927)	1,063,734
Cash Flows from Financing Activities
Proceeds from issue of shares	5,000,000	-
Proceeds from loyalty option	201,496	-
Cost of capital raising	(921,268)	-
Proceeds from borrowings	2,775,141	433,739
Repayment of borrowings	(1,541,626)	(853,426)
	___	___
Net cash from financing activities	5,513,743	(419,684)
Net Increase/(Decrease) in cash and cash equivalents	39,804	(154,225)
Cash at the beginning of the period	358,881	398,684
	__	__
Cash and cash equivalents at the end of the period	398,684	244,459
Source: Teys 30 June and 31 December 2009 financial statements

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Appendix C

Teys Limited

(Subject to Deed of Company Arrangement)

Sources of Information

The following sources of information have been utilised and relied upon, without independent verification, in the course of preparing this report:

• Audited financial statements of Teys for the financial year ended 30 June 2009 and the reviewed financial statements for the half-year ended 31 December 2009;

• Administrator Reports dated 20 July 2010 and 8 September 2010;

• Draft Notice of Meeting and Explanatory Statement prepared in November 2010;

• Listing of Teys shareholders and option holders as at 24 June 2010;

• Teys ASX releases, public announcements and other public filings;

• Discussions with the Deed Administrator and a director.

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Appendix D

Declarations, Qualifications and Consents

1. Declarations

This report has been prepared at the request of the directors of Teys pursuant to Section 611 and Chapter 2E of the Act to accompany the notice of meeting of shareholders to approve the Proposed Transaction. It is not intended that this report should serve any purpose other than as an expression of our opinion as to whether or not the Proposed Transaction is fair and reasonable for the Teys shareholders.

This report has also been prepared in accordance with the Accounting Professional and Ethical Standards Board professional standard APES 225 – Valuation Services.

The procedures that we performed and the enquiries that we made in the course of the preparation of this report do not include verification work nor constitute an audit in accordance with Australian Auditing Standards, nor do they constitute a review in accordance with AUS 902 applicable to review engagements.

2. Qualifications

Mr Derek M Ryan and Mr Paul Lom, directors of DMR Corporate prepared this report. They have been responsible for the preparation of many expert reports and are involved in the provision of advice in respect of valuations, takeovers and capital reconstructions and reporting on all aspects thereof.

Mr Ryan has had over 35 years experience in the accounting profession and he is a Fellow of the Institute of Chartered Accountants in Australia. He has been responsible for the preparation of many expert reports and is involved in the provision of advice in respect of valuations, takeovers and capital reconstructions and reporting on all aspects thereof.

Mr Lom is a Chartered Accountant and a Registered Company Auditor with more than 30 years experience in the accounting profession. He was a partner of KPMG and Touche Ross between 1989 and 1996, specialising in audit. He has extensive experience in business acquisitions, business valuations and privatisations in Australia and Europe.

3.

Consent

DMR Corporate consents to the inclusion of this report in its current form and context in the Teys Explanatory Statement.

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