EML PAYMENTS LIMITED — Capital/Financing Update 2011

Jun 21, 2011

Suite 4, 213 Balcatta Road BALCATTA WA 6021

PO Box 572 BALCATTA WA 6914

Tel: (08) 9240 4111 Fax: (08) 9240 4054

admin@australasiaconsolidated.com.au www.australasiaconsolidated.com.au

AUSTRALASIA LODGES PROSPECTUS FOR \$10M CAPITAL RAISING

21 June 2011

Australasia Consolidated Ltd (ASX: AAO, Australasia) is pleased to announce the lodgement of a Prospectus in relation to the proposed acquisition of Emerchants Limited (Emerchants).

Pursuant to the Prospectus, a \$10 million capital raising will be completed as part of the proposed acquisition. The Prospectus also contains details of the new business structure and operations, in order to comply with ASX Listing Rules Chapters 1, 2 and 11.

Australasia has already received firm commitments for the full \$10 million capital raising.

The capital raising and acquisition are subject to a shareholder vote at the Extraordinary General Meeting on 29 June 2011 and completion of the acquisition is on target for early July 2011.

The proceeds of the capital raising will be used to fund the acquisition of Emerchants and its growth opportunities, provide funds for capital expenditures associated with software modifications to support incremental business opportunities, expansion of the sales and marketing team, and implementation of a robust marketing and promotional program. On completion of the raising and acquisition, Australasia will have a balance sheet with no net borrowings and a strong platform to pursue growth opportunities.

An indicative timetable for completion of the acquisition and capital raising is below.

Australasia's Managing Director Bob Browning commented on this important step in the Company's evolution.

"While we have already received firm commitments for the full \$10 million capital raising, lodging the Prospectus with the ASIC today marks an important step towards completing the acquisition of Emerchants and the resulting change in direction it offers our shareholders," Mr Browning said.

"The decision to acquire Emerchants was the result of an extensive due diligence process and I am personally very excited by this unique opportunity – it gives us an extremely strong platform to enter this growing market from which we can drive revenue growth and returns for all shareholders.

"The Board of Directors unanimously recommends that shareholders vote in favour of the acquisition, capital raising and other resolutions at the EGM on 29 June."

A copy of the Prospectus lodged with the ASIC today is attached.

-ENDS-

Timetable

Event	Anticipated Date
Lodgement of Prospectus with ASIC and ASX	21 June 2011
Despatch of Prospectus and Opening Date	21 June 2011
General Meeting of Shareholders	29 June 2011
Closing Date for the Capital Raising	29 June 2011
Completion of the Emerchants Acquisition	30 June 2011
Allotment and issue of New Shares pursuant to the Prospectus	8 July 2011
Despatch of holding statements	14 July 2011
Reinstatement to official quotation	18 July 2011

These dates are indicative only and subject to change. Subject to the Corporations Act and ASX Listing Rules, the Company reserves the right to vary the above dates and to close the Prospectus early.

- ENDS -

For more information, please contact:

Bob Browning	Bryant Plavsic	Gemma Young
Managing Director	Executive Director and CFO	FD
Australasia Consolidated	Australasia Consolidated	D +61 (0)8 9386 1233
D +61 (0)8 9240 4111	D +61 0417 461 890	M +61 0412 349 345
		gemma.young@fd.com

About Australasia Consolidated

Australasia is led by Managing Director Bob Browning and once shareholder approval is received, and various conditions precedents met, Australasia will be a financial services company that specialises in the pre-paid financial card market. Australasia has an agreement to acquire Emerchants, a leading provider of pre-paid financial cards. Australasia is focused on the twin goal of delivering high quality payment systems to its customers and superior returns to its shareholders.

About Emerchants Limited

Emerchants is a leading provider of pre-paid financial cards with a number of high profile clients including NRMA, Cabcharge, Monadelphous, Palace Cinemas and Harley Davidson.

Emerchants has established a proven payments platform that provides customers with a unique combination of flexible payments, high levels of security and unprecedented levels of reporting and oversight. Emerchants has 'market ready' technology that has been established over the last 9 years that is fully scalable to support significant volume growth and is fully integrated into the EFTPOS system.

Prospectus 2011

Prospectus

Australasia Consolidated Limited ABN 93 104 757 904

To be renamed Adept Solutions Limited

For an offer by way of placement of 11,764,706 New Shares at \$0.85 each (on a post-Consolidation basis) to raise \$ 10,000,000. The Offer described in this Prospectus is conditional on Shareholder approval of various matters at a general meeting of the Company's Shareholders to be held on 29 June 2011.

ASX code: AAO

IMPORTANT NOTICE

This document is important and should be read in its entirety. If you do not understand it or are in doubt as to the course you should follow, you should consult your stockbroker, accountant or professional adviser. The Shares offered under this Prospectus should be considered as a speculative investment.

IMPORTANT INFORMATION

This Prospectus is dated 21 June 2011 (Prospectus Date) and was lodged with the Australian Securities and Investment Commission (ASIC) on 21 June 2011. ASIC and ASX Limited (ASX) take no responsibility for the contents of this Prospectus or the merits of the investment to which this Prospectus relates. Australasia Consolidated Limited (AAO or Company) will apply for the Shares offered by this Prospectus to be listed for quotation by ASX within 7 days following the date of this Prospectus. No Shares will be issued on the basis of this Prospectus later than 13 months after the date of this Prospectus.

This is an important document that should be read in its entirety. If you do not understand it you should consult your professional adviser without delay. Any investment in the Shares offered by this Prospectus should be considered speculative.

Risk factors

Before deciding to invest in the Company, potential investors should read the entire Prospectus. In considering the prospects for the Company, potential investors should consider the assumptions underlying the prospective financial information and the risk factors that could affect the performance of the Company. Potential investors should carefully consider these factors in light of personal circumstances (including financial and taxation issues) and seek professional advice from a stockbroker, accountant or other independent financial adviser before deciding to invest.

Electronic prospectus

This Prospectus may be viewed in electronic form at www.australasiaconsolidated.com.au. The electronic version of this Prospectus is provided for information purposes only. A paper copy of the Prospectus may be obtained free of charge on request during the Offer Period by contacting the Company. The information on www.australasiaconsolidated.com.au does not form part of this Prospectus.

Applications

Applications may only be made on an Application Form attached to or accompanying a printed copy of the Prospectus, unless otherwise directed by the Broker. The Corporations Act prohibits any person from passing an Application Form to any other person unless it is attached to, or accompanied by, a hard copy of the Prospectus or a complete and unaltered electronic copy of the Prospectus.

The Company will not accept a completed Application Form if it has reason to believe that the Applicant has not received a Prospectus or if it has reason to believe that the Application Form has been altered or tampered with in any way.

Disclaimer

No person is authorised to give any information or make any representation in connection with the Placement which is not contained in this Prospectus. Any information or representation not contained in this Prospectus may not be relied on as having been authorised by the Company or the Directors.

Privacy

If you apply for Shares, you will provide personal information to the Company and the Share Registry. The Company and the Share Registry collect, hold and use your personal information in order to assess your Application, service your needs as an investor, provide

facilities and services that you request and carry out appropriate administration.

Corporations and tax laws require some of the information to be collected. If you do not provide the information requested, your Application may not be able to be processed efficiently, or at all.

The Company and the Share Registry may disclose your personal information for purposes related to your investment to their agents and service providers including those listed below or as otherwise authorised under the Privacy Act 1988 (Cth) (Privacy Act):

• the Company in order to assess your Application;
• the Share Registry for ongoing administration of the register; and
• the printers and the mailing house for the purposes of preparation and distribution of Holding Statements and for handling of mail.

Under the Privacy Act, you may request access to your personal information held by (or on behalf of) the Company or the Share Registry. You can request access to your personal information by writing to the Company through the Share Registry at:

Link Market Services Limited Ground Floor 178 St Georges Terrace Perth WA 6000

Offer restrictions

The Offer contained in this Prospectus is available to Australian residents only. The distribution of this Prospectus (including in electronic form) in jurisdictions outside Australia may be restricted by law and therefore persons who obtain this Prospectus should seek advice on, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of applicable securities laws. This Prospectus does not constitute an offer or invitation in any jurisdiction in which, or to any person whom, it would be unlawful to make such an offer or invitation.

No action has been taken to register or qualify the Offer or otherwise to permit a public offering of the New Shares in any jurisdiction outside Australia. In particular, the New Shares have not been, and will not be, registered under the US Securities Act of 1993 as amended (US Securities Act), and may not be offered, sold or resold:

• (a) in the United States or to, or for the account or benefit of , US Persons (as defined in Rule 902 under the US Securities Act) except in a transaction exempt from the registration requirements of the US Securities Act and applicable United States state securities laws; and
• (b) outside the United States, except to non-US persons in offshore transactions in compliance with Regulation S under the US Securities Act.

Forward looking statements

This Prospectus includes, or may include, forwardlooking statements including, without limitation, forwardlooking statements regarding the Company's revenues, financial position, business strategy, and plans and objectives which have been based on the Company's current expectations about future events.

These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that could cause actual results, performance or achievements to differ materially from future results, performance or achievements expressed or implied by such forwardlooking statements. Matters not yet known to the Company or not currently considered material to the Company may affect these forward-looking statements. The statements reflect views held only as at the Prospectus Date. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this Prospectus might not occur.

Investors are cautioned not to place undue reliance on the forward looking statements contained in this Prospectus.

Defined terms

Capitalised terms and certain other terms used in this Prospectus are defined in the Glossary in Section 14.

Miscellaneous

All references in this Prospectus to "\$", "AUD", or "dollar" are references to Australian currency, unless otherwise stated.

All references in this document to time relate to the time in Perth, Western Australia.

The people and assets depicted in photographs in this Prospectus are not employees or assets of the Company unless specifically stated.

	Investment highlights and risks2
	Chairman's letter3
1.	Investment overview 4
2.	Details of the Offer8
3.	Pre-paid financial cards industry overview 12
4.	Overview of Emerchants16
5.	Summary of existing mineral exploration interests 24
6.	Proposed composition of Board and senior management26
7.	Corporate governance28
8.	Financial information 31
9.	Investigating Accountant's Report50
10.	Investment risks 58
11.	Summary of material contracts 62
12.	Additional information75
13.	Director's statement 87
14.	Glossary 88
	Corporate Directory 91
	Schedule 1 Summary of Consideration Provisions of EML Share Purchase Deed 92

Investment highlights and risks

Key highlights

• Australasia Consolidated Limited (AAO or Company) has signed an agreement to acquire Emerchants Limited (Emerchants or EML)
• EML provides a strong platform for both organic and acquisitive growth
• EML is a leading issuer of pre-paid financial cards in Australia and operates within the highgrowth Australian pre-paid financial card market
• EML has established a competitive advantage through its robust and scalable technology
• Barriers to entry are driven by regulatory approval and software development requirements
• Acquisition funded by equity raising on firm commitments
• EML management has significant experience in the pre-paid financial card industry and key personnel have agreed to multi-year employment contracts

Key risks

On Completion of the EML Acquisition the Company will be subject to a number of risks, both specific and general, which may affect its business and future financial performance. Key risks specific to the EML business include:

• Lower growth in the pre-paid financial card market than anticipated
• EML achieving lower market share than anticipated
• Access to growth funding may be limited
• Unauthorised disclosure of client information
• Disruption of EML's relationships with customers and service providers
• Regulatory changes in the pre-paid financial card industry
• EML not obtaining an Australian Financial Service Licence (AFSL)
• Emerchants Holdings Pty Ltd's (EMH) AFSL being suspended or revoked

These key risks and other risks that should be considered by investors are detailed in Investment Risks at Section 10.

Chairman's letter

Dear Investor

On behalf of the Board, I am pleased to present this opportunity to participate in the extraordinary transformation of the Company.

In late 2010, AAO commenced a process to identify opportunities to enhance shareholder value and transform the Company. The process has focused on identifying businesses with national and international growth potential and the Company assessed many opportunities.

The search has culminated in the Company agreeing, subject to Shareholder approval, to purchase all of the shares in Emerchants Limited. The consideration will comprise of \$2,500,000 in cash and the issuance of AAO shares to the EML Vendors.

As part of its transformation, AAO has also commenced a number of additional initiatives, including:

• a consolidation of the Company's Shares and Options on a 5:1 basis;
• a capital raising of \$10,000,000 to support the anticipated growth in EML;
• changes to the Board of Directors appropriate to the new business direction; and
• a change in the Company's name to Adept Solutions Limited.

Your Board believes that the EML business is highly attractive. It has a strong management team of experienced industry personnel. Upon completion of the acquisition of EML all key managers have committed to multi-year employment contracts and tied a significant portion of their future potential wealth to achieving specific profit targets.

The business has considerable growth opportunities:

• through further expansion of EML's core products and services;
• new applications of EML's capabilities in the adjacent pre-paid financial card market segments;
• strategic alliances with firms which possess a strong relationship with large numbers of clients and consumers; and
• acquisitive growth opportunities in both Australia and overseas.

To fund the cash element of the acquisition of EML and its growth opportunities, AAO is undertaking an equity capital raising to raise \$10,000,000 by a Placement pursuant to this Prospectus. EML has a growing number of contracts and requires funds for capital expenditures associated with software modifications to support incremental business opportunities, expansion of the sales and marketing team, and implementation of a robust marketing and promotional program.

AAO has already received firm commitments to the Placement from professional and sophisticated investors in respect of the \$10,000,000 to be raised under this Prospectus.

On completion of the Placement and EML Acquisition, AAO will have a statement of financial position with no net borrowings and a strong platform to pursue multiple opportunities in support of the EML business.

Your Board is excited about the new direction offered by the EML Acquisition and the growth potential offered by EML.

Yours faithfully

John Terpu Chairman

1. Investment overview

1.1 Overview of the transaction

On 9 May 2011, the Company announced that it was seeking to change the activities of the Company from its current minerals exploration based operations to enter the financial services industry as an issuer of pre-paid financial cards in Australia.

The proposed change in activities is to be undertaken by the purchase of 100% of the share capital of Emerchants Limited (EML Acquisition).

In conjunction with the EML Acquisition, the Company proposes to undertake a Placement of 11,764,706 New Shares at an issue price of \$0.85 each (on a post-Consolidation basis) to raise \$10,000,000.

Completion of the EML Acquisition and associated Placement are inter-dependent and will involve the following matters:

• a consolidation of the Company's securities on a 5 to 1 basis;
• a capital raising of \$10,000,000;
• EML becoming a wholly-owned subsidiary of the Company;
• a change in the Company's business from minerals exploration to a financial services provider;
• the appointment to the Board of new Directors, being Mr John Battley (who is a director of EML), and Messrs Mark Barnaba, John Toms and John Willinge; and
• the issue of Shares and Options to Directors and Proposed Directors.

1.2 Overview of AAO strategy

The proposed EML Acquisition and Placement are key steps in AAO's strategic transformation, representing a decisive transition from the Company's historical minerals exploration activities into financial services, and specifically the high-growth pre-paid financial cards sector.

AAO intends to drive growth in the Emerchants business through acceleration of core product sales, product line expansion, establishing strategic alliances and acquisition of complementary businesses.

To facilitate this growth strategy, the Directors plan to structure the relationship between AAO and EML such that AAO is the non-operating holding company (NOHC) of EML, the operating company. The NOHC will be responsible for strategic planning, investor relations, treasury, corporate governance, regulatory compliance, risk management, capital planning and raising, and acquisition management and integration, while the operating company will be responsible for sales, marketing, customer relations, information technology management, accounting and general business administration.

This structure provides the platform from which AAO may undertake complementary acquisitions in the financial services sector.

1.3 Overview of EML

Emerchants is a broad-based provider of pre-paid financial cards, ranging from reloadable cards through to traditional, single-store gift cards.

Emerchants operates in a burgeoning market, with reloadable pre-paid financial cards in Australia growing at a rate of nearly 20% per annum over the past five years. Furthermore, closed loop cards, such as gift cards, grew by over 60% in the same period.

Usage of pre-paid financial cards in Australia has lagged behind comparable markets in the United States and United Kingdom, indicating significant potential for rapid growth over the next five years.

Meanwhile, Emerchants has expanded to be the largest issuer of reloadable pre-paid financial cards in Australia (cards operating over the Australian payments system).

EML and the former proprietors of the Emerchants business have spent the past nine years developing and refining its technology to provide maximum flexibility and scalability, while it has been integrated with other systems, such as Electronic Funds Transfer at Point of Sale (EFTPOS) and MasterCard.

Emerchants' clients include Edge Loyalty, TRUenergy, Save the Children, Bayer, Cardno, Monadelphous, Harley-Davidson Motor Cycles and Bupacare.

Emerchants can also provide other applications for cashless mine sites, disbursement of Government social security payments and corporate expense management.

The key management personnel of Emerchants are John Richard Battley, Anthony Thomas Ferguson and Donna Marie Ferguson. Further details of the experience and qualifications of Emerchants' management are set out in Section 6.1.

The shareholders of EML are Globetrotter Group Pty Ltd (Globetrotter) and EMH.

Please refer to Section 4 for more details of EML and its activities.

1.4 Financial summary

The following illustrates the pro-forma combined entity for the year ending 30 June 2010 and the six months ended 31 December 2010.

This information is intended to provide investors with an indication of what the combined entity's financial performance would have been had AAO's acquisition of EML been effective from 1 July 2009. No other pro-forma adjustments have been made in calculating the pro-forma combination figures.

	FY2010	H1 FY2011
\$'000	Pro forma	Pro forma
Total revenue	1,182	903
EBITDA	(1,576)	(1,677)
EBIT	(2,078)	(1,943)
NPAT	(1,590)	(1,773)

1.5 AAO's current activities and financial position

AAO is currently a minerals exploration company focussed on gold and associated metals.

The Company's projects are located in the Pine Creek region of the Northern Territory, in South Australia's Gawler Craton, Mt Carlton area in the northern end of the Bowen Basin in Queensland and Mt Lucky in the Laverton Goldfields of Western Australia.

Each of these project areas is centrally located in a region with recognised gold and metals endowment, and both historic or more recent production facilities. Each of the Company's project areas includes known gold and base metal mineralisation and exploration potential.

Further details of AAO's activities to date and financial position are contained in AAO's half year report and financial statements for the period ended 31 December 2010 released to ASX on 14 March 2011, a copy of which is available on AAO's website at www.australasiaconsolidated.com.au.

The intention is to maximise the value of the mineral assets and, as part of that process, investigate options to exit or spin-off any of the assets if that is in the best interests of the Company.

Further details on AAO's existing activities can be found at Section 5.

1.6 Use of funds

In the two years after reinstatement of the Company's securities to quotation on ASX, the Company intends to apply its funds, including the funds raised from the Placement, as follows:

	Amount
Sources and uses of funds	(\$)

Sources

Cash reserves (pro forma 30 June 2011 forecast) 2,200,000

Cash from Placement	10,000,000
Total funds available	12,200,000
Uses
Cash consideration to EML Vendors	2,500,000
Transaction and capital raising costs	1,400,000
Funds for working capital and growth activities:
Systems development	2,500,000
Expansion of administration	1,000,000
Expansion of sales and marketing	1,500,000
Repayment of current obligations of EML	600,000
Working capital:
Current working capital needs	500,000
Working capital to fund growth	2,200,000
Total funds applied	12,200,000

The above table represents statements of the intended use of the funds raised by the Company as at the Prospectus Date. Budgets will be reviewed and may change as performance is reviewed and/or as new opportunities are identified.

Approximately 60% of the uses of the funds are committed to being applied to items that are not related to staff costs or working capital requirements.

The cash consideration to EML Vendors and the transaction and capital raising costs jointly account for \$3.9 million of the uses of funds and these costs will paid at, or soon after, Completion of the EML Acquisition and the Placement.

The systems development expenditure, which will be spent over the following two years, consists of two main projects. One project will further enhance the disaster recovery capability of Emerchants (e.g. moving the data centre offsite and to two separate centres). The other project is the development of a new application for point of sale (POS) rebating aimed at expanding Emerchants' presence in new market segments.

The expansion of sales and marketing expenditure consists of expenditure for additional sales and marketing staff to drive the growth of Emerchants, as well as additional advertising promotional expenditure of approximately \$0.2 million to stimulate demand for Emerchants' products and services.

The repayment of current obligations includes approximately \$0.3 million to settle loans owed by EML to related parties of EML and other current loan obligations and a further \$0.3 million as a security deposit for a supplier contract.

Following completion of the Placement, the Directors believe that the Company will have sufficient working capital to carry out its objectives as stated in Section 4.3.

For further details of the Company's business objectives, strategy and growth plans refer to Section 4.

1.7 Dividend policy

Due to the capital requirements anticipated to grow the EML business, it is not considered likely that dividends will be paid by AAO for at least the year ending 30 June 2012. It should also be noted that to the extent that AAO's carried forward income tax losses are available to be recouped against future taxable income, any dividends paid by AAO would be unfranked.

Any future determination as to the payment of dividends by the Company will be at the discretion of the Directors and will depend upon the availability of distributable earnings, the operating results and financial condition of the Company, future capital requirements, general business and other factors considered relevant by the Directors. No assurances in relation to the payment of dividends, or the franking credits attached to such dividends, can be or are given.

1.8 Escrow arrangements

The EML Vendors entered into escrow arrangements with the Company under which they will be restricted from transferring any of the New Shares issued to them at Completion of the EML Acquisition for a period of 3 years, ending 30 June 2014.

Further details of the escrow arrangements are set out in Section 11.3.

1.9 Risk factors

Prospective investors in the Company should be aware that subscribing for New Shares involves a number of risks. These risks are set out in Section 10 and investors are urged to consider those risks carefully (and if necessary, consult their professional adviser) before deciding whether to invest in the Company.

The risk factors set out in Section 10, and other general risks applicable to all investments in listed securities not specifically referred to, may in the future affect the value of the New Shares.

1.10 Enquiries

This Prospectus provides information for potential investors in the Company and should be read in its entirety. If after reading this Prospectus you have any questions about any aspect of an investment in the Company, please contact your stockbroker, accountant or financial advisor.

2. Details of the Offer

2.1 Overview

The Placement pursuant to this Prospectus is conditional on receipt of Shareholder approval at the General Meeting.

Investors should note that the Company is also seeking Shareholder approval at the General Meeting for a consolidation of its capital on a 5 to 1 basis. All New Shares issued pursuant to this Prospectus are to be issued on a post-Consolidation basis.

2.2 Key dates

Event	Anticipated Date
Lodgement of Prospectus with ASIC and ASX	21 June 2011
Despatch of Prospectus and Opening Date	21 June 2011
General Meeting of Shareholders	29 June 2011
Closing Date for the Placement	29 June 2011
Completion of the EML Acquisition	30 June 2011
Allotment and issue of New Shares pursuant to the Placement	8 July 2011
Despatch of holding statements	14 July 2011
Reinstatement to official quotation	18 July 2011

These dates are indicative only and subject to change. Subject to the Corporations Act and ASX Listing Rules, the Company reserves the right to vary the above dates and to close the Placement early. Investors who wish to submit an Application are encouraged to do so as soon as practicable.

2.3 Anticipated capital structure on reinstatement of ASX quotation

The table below shows the capital structure of the Company on completion of the Placement assuming Completion of the EML Acquisition and that all Resolutions to be considered at the General Meeting are approved and the maximum number of securities approved pursuant to those Resolutions are issued:

Shares	Number
Current Shares on issue (pre-Consolidation)	189,396,800
Post-Consolidation Shares on issue (after 5:1 Consolidation)	37,879,3601
New Shares to be issued to EML Vendors at Completion of the EML Acquisition	11,500,0002
New Shares issued under the Placement	11,764,706
New Shares to be issued to Directors and Proposed Directors	1,323,217
Total Shares on issue on reinstatement of quotation on ASX (on a post Consolidation basis)	62,467,283
Maximum number of additional New Shares that may be issued to the EML Vendors under the EML Share Purchase Deed after Completion subject to EML financial performance2	19,000,000

Listed Options3	Number
Listed Options on issue (pre-Consolidation)	130,448,128
Post-Consolidation Options on issue (after 5:1 consolidation)	26,089,6261

Total Listed Options on issue on reinstatement of quotation on ASX (on a post-Consolidation basis)

26,089,626¹

Unlisted Options	Number
Existing Unlisted Options on issue (pre-Consolidation)	8,495,000
Post-Consolidation Existing Unlisted Options on issue (after 5:1 consolidation)3	1,699,000
New Unlisted Options to be granted under ESOP to Messrs Browning, Plavsic and Toms and Ms Broughton (after 5:1 consolidation)4	6,000,000
Total Unlisted Options on issue on reinstatement of quotation on ASX (on a post-Consolidation basis)	7,699,000

Notes:

• 1. Subject to rounding up adjustments and based on the number of Shares and Listed Options on issue as at 18 May 2011.
• 1. Pursuant to the terms of the EML Share Purchase Deed, further New Shares may be issued to the EML Vendors after Completion and subject to EML meeting specified financial performance targets. Refer to Section 11.2 and Schedule 1 for details.
• 1. 1,600,000 Options exercisable at \$1.30 on or before 1 June 2014; 20,000 Options exercisable at \$0.95 on or before 13 March 2012; 15,000 Options exercisable at \$0.60 on or before 31 October 2012; 30,000 Options exercisable at \$0.55 on or before 31 December 2012; and 34,000 Options exercisable at \$0.65 on or before 31 December 2011 (all exercise prices are on a post-Consolidation basis).
• 1. Exercisable at \$1.45 (on a post-Consolidation basis) on or before 18 July 2014.

2.4 Placement

The Company offers for subscription by way of placement 11,764,706 New Shares at \$0.85 each to raise \$10,000,000. The Placement is to be made to professional and sophisticated investors by arrangement with the Broker. This Prospectus does not include a public offer of New Shares.

The minimum subscription for the Placement is \$10,000,000. The Broker has received commitments from professional and sophisticated investors in respect of \$10,000,000 to be raised under this Prospectus.

The maximum amount that may be raised pursuant to the Placement and this Prospectus is \$10,000,000.

The Placement is conditional on receipt of Shareholder approval of various Resolutions at the General Meeting. Refer to Sections 2.8 and 10.5 for further details.

The Company is seeking Shareholder approval at the General Meeting for a consolidation of its capital on a 5 to 1 basis. All New Shares offered and issued pursuant to this Prospectus are offered and will be issued on a post-Consolidation basis.

2.5 Allocation of Shares under Placement

The Company, in consultation with the Broker, has an absolute discretion regarding the allocation of New Shares under the Placement and may reject an Application or allocate fewer New Shares than applied for.

No Applicant under the Placement has any assurance of being allocated all or any New Shares applied for (other than any firm allocation of New Shares offered by arrangement with the Broker).

2.6 Opening Date and Closing Date of the Offer

The Placement will open for receipt of applications on 21 June 2011 (Opening Date) and will close at 5.00pm WST on 29 June 2011 (Closing Date), subject to the right of the Company to vary these dates.

Refer to Section 2.2 for other key dates.

2.7 Conditions of the Placement – Shareholder approval

The Placement is conditional on Shareholders passing Resolutions at the General Meeting for approval of, among other things:

• (a) the EML Acquisition and a change in the nature and scale of the Company's activities;
• (b) the payment of \$2,500,000 and the issue of a minimum of 11,500,000 New Shares to the EML Vendors in consideration for the acquisition of 100% of the issued capital of EML;
• (c) the change of the Company's name from Australasia Consolidated Limited to Adept Solutions Limited;
• (d) a consolidation of the Company's issued capital on a 5 to 1 basis; and
• (e) the allotment and issue of 11,764,706 New Shares at an issue price of \$0.85 each pursuant to the Placement.

If any of these matters referred to in paragraphs (a), (b), (d) or (e) are not approved at the General Meeting then the Placement and the EML Acquisition will not proceed and no New Shares will be issued. Until such time as the EML Share Purchase Deed is unconditional and the Company is in a position to complete that agreement, none of the New Shares offered by this Prospectus will be issued.

The Placement is also conditional on the conditions precedent to Completion of the EML Acquisition under the EML Share Purchase Deed being satisfied. Refer to Section 11.2 for further details.

If the Placement is not able to be completed then all Applications will be dealt with in accordance with the Corporations Act and Application Monies will be refunded without interest.

Refer to Section 12.10 for further details of the Resolutions to be considered at the General Meeting.

A copy of the Notice of General Meeting is available on the Company's website at www.australasiaconsolidated.com.au.

2.8 Rights and liabilities attaching to New Shares

The New Shares issued under this Prospectus will rank equally in all respects with Shares currently on issue.

A summary of the rights and liabilities attaching to the New Shares is set out in Section 12.1.

2.9 Allotment

The New Shares offered under the Placement are expected to be allotted by no later than 8 July 2011. Holding Statements will be mailed after allotment occurs.

No allotment of New Shares under the Placement will occur until ASX grants permission to quote the New Shares.

2.10 ASX quotation and reinstatement

Application for official quotation on ASX of the New Shares issued pursuant to this Prospectus will be made within seven (7) days after the date of this Prospectus.

If the New Shares offered pursuant to the Placement are not admitted to official quotation within three (3) months after the date of this Prospectus, the Company will not allot or issue any New Shares and all Application Monies received pursuant to this Prospectus will be repaid as soon as practicable, without interest.

The fact that ASX may agree to grant official quotation of the New Shares is not to be taken in any way as an indication of the merits of the Company or the Shares.

2.11 CHESS

The Company participates in the Clearing House Electronic Sub-register System (CHESS). ASX Settlement, a wholly owned subsidiary of ASX, operates CHESS in accordance with ASX Listing Rules and ASX Settlement Operating Rules.

Under CHESS, applicants will not receive a certificate but will receive a statement of their holding of New Shares (CHESS Statement or Holding Statement).

If you are broker sponsored, ASX Settlement will send you a CHESS Statement.

The CHESS Statement will set out the number of New Shares issued under this Prospectus, provide details of your holder identification number and give the participation identification number of the sponsor.

If you are registered on the issuer sponsored sub-register, your statement will be dispatched by the Company's share register and will contain the number of New Shares issued to you under this Prospectus and your security holder reference number.

A CHESS Statement or issuer sponsored statement will routinely be sent to Shareholders at the end of any calendar month during which the balance of their shareholding changes. Shareholders may request a statement at any other time, however a charge may be made for additional statements.

2.12 Foreign investors

The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

Furthermore, this Prospectus does not constitute an offer of securities in any jurisdiction where, or to any person to whom, it would not be lawful to issue the Prospectus or make the Placement. Return of a duly completed Application Form will constitute a representation and warranty that there has been no breach of such regulations.

Residents of countries outside Australia should consult their professional adviser as to whether any government or other consents are required, or whether any formalities need to be observed should they wish to make an application for securities on the basis of this Prospectus. No action has been taken to register or qualify the securities or the Issue or otherwise to permit an offering of the securities in any jurisdiction outside Australia.

2.13 Taxation implications

The Directors do not consider that it is appropriate to give potential applicants advice regarding the taxation consequences of applying for New Shares under this Prospectus, as it is not possible to provide a comprehensive summary of the possible taxation positions of potential applicants. The Company, its advisers and officers, do not accept any responsibility or liability for any taxation consequences to investors. Potential applicants should, therefore, consult their own tax adviser in connection with the taxation implications of the Placement.

2.14 Privacy disclosure

The Company collects information in relation to each Applicant as provided in the Application Form (Information) for the purposes of processing the Application Form and, should the Application be successful, to administer the Applicant's security holding in the Company (Purposes).

By submitting an Application Form, each Applicant agrees that the Company may use the Information for the Purposes and the Company may disclose the Information for the Purposes to the Share Registry, the Company's related bodies corporate (as that term is defined in the Corporations Act), agents, contractors and third party service providers, and to ASX, ASIC and other regulatory authorities.

The Information may also be used and disclosed to persons inspecting the register, including bidders for your securities in the context of takeovers, licensed securities dealers, mail houses, and regulatory bodies including the Australian Taxation Office.

3. Pre-paid financial cards industry overview

3.1 Electronic card payments market size and development

The Australian market for electronic card transaction values was \$390 billion for 2010. The market for electronic card transactions has grown consistently over the past 5 years rising from \$250 billion in 2005 to \$390 billion in 2010. This consistent growth illustrates the resilience of the market even through the Global Financial Crisis which occurred during that period.

Importantly, the Company's research has determined that credit card growth has slowed and pre-paid financial and debit cards transaction values have been growing more rapidly than credit and store cards. This change in behaviour is believed to be driven by consumers desire to decrease their personal leverage and the greater functionality and convenience that pre-paid financial cards provide.

3.2 Pre-paid financial card market taxonomy

The pre-paid financial card market can best be broken into "open" versus "closed loop", and "reloadable" versus "pre-denominated" programs:

• Closed loop cards can only be used to make payments with a specified vendor whereas open loop cards can be used with any vendor who offers access to the appropriate payment system network (e.g. EFTPOS, Visa, MasterCard).
• Pre-denominated cards are "used up" once the initial funds attaching to them upon issue have been spent, whereas reloadable cards can have additional funds added to them, facilitating ongoing card usage.

Examples of different program types are summarised in the figure below.

	Open loop/ branded	Closed loop/ private label
Reloadable	• General purpose pre-paid financial cards • Applicable to payroll, benefits, insurance schemes • Useful in government payment systems • Sample of Emerchants customers today: ABC Learning, Monadelphous, Cardno, Contura Mining, ME Bank, Save the Children, City Finance, Telechoice	• Customer loyalty and gift cards • Top-up phone cards and transport cards • Sample of Emerchants customers today: Taxis, Isuzu, Orient Express
Pre denominated (not reloadable)	• Financial institution issued cards including credit card general use gift cards • Sample of Emerchants customers today: Edge Loyalty, Harley Davidson	• Traditional single-store gift card • Cannot be recharged • Sample of Emerchants customers today: Laura Ashley, Palace Cinemas, Wiggles

Emerchants operates across the complete market taxonomy, however, it is primarily a niche player in the traditional single-store gift card market at present. Most of the transactions in the pre-denominated gift card market do not execute over the Australian payments system and, as discussed in Section 3.5.3, are not subject to the same regulatory oversight. These types of gift cards tend to fall in closed loop quadrants of the above chart.

3.3 Pre-paid financial card market size and development

The Company estimates that Australian pre-paid financial cards, especially closed loop, have exhibited high rates of growth, with transaction values more than doubling between 2005 and 2010. The growth rate has consistently been approximately 20% per annum over the past five years. The Company's research indicates this trend will continue into the foreseeable future, based on growth rates exhibited in other countries that are experiencing higher penetration rates of these types of cards.

3.4 Pre-paid financial card market penetration levels

Despite such strong growth in the electronic card payment market and the pre-paid segment within it, Australia lags behind most other developed countries in the penetration rate of pre-paid financial cards relative to total transaction values. For instance, the Company's research indicates the pre-paid penetration level, in 2009-2010, of the UK is over 6 times that of Australia and the US is 4 times compared to Australia's rather low penetration rate.

3.4.1 Pre-paid penetration experience in international markets and implications for Australian pre-paid financial card market

If Australia was to reach the Company's estimated pre-paid penetration levels attained in comparable countries in recent years that would suggest Australia is likely to experience very high rates of growth in the pre-paid financial card market over the medium term.

As an historic case study, the UK has experienced high growth in pre-paid financial card transaction volumes and penetration levels in recent years. The Company's research indicates that between 2004 and 2009, transaction values more than doubled.

If Australia, for example, were to reach the Company's estimated current UK penetration rate of 1.3% by 2015 then the Australian market would be valued at \$13 billion and would have grown at a rate of 60% per annum. Some of the UK's penetration can be attributable to the country's well-developed transport sector; even if that proportion is eliminated, the Australian pre-paid financial card penetration would grow to a penetration of 1.1% by 2015, implying a market size of \$11 billion and a growth rate of 55% per annum. Similarly, using the US penetration rate experience, if Australian pre-paid financial card market penetration grows to the Company's estimate of the current US rate of 0.8% by 2015, this implies a market size of \$8 billion and a growth rate of 45% per annum.

Emerchants is well positioned with its existing product range, service capability and scalable platforms to take advantage of these substantial growth rates with limited incremental investment.

3.5 Industry regulation

In addition to the general requirements of company law, companies issuing financial products in Australia are subject to a range of additional legislation and requirements which are overseen and enforced by a number of different bodies.

EML's core business is the issue of stored value cards. A facility that issues stored value cards is:

• (a) for the purposes of the Payment Systems (Regulation) Act 1998 (PSR Act), potentially regulated as a "purchased payment facility" (PPF); and
• (b) for the purposes Chapter 7 of the Corporations Act (Chapter 7), potentially regulated as a non-cash payment facility (NCP facility).

3.5.1 Regulation of PPFs

The PSR Act is now effectively administered by the RBA. Subject to various exemptions, the PSR Act is currently administered so as to require a regulated "holder of stored value" in respect of a PPF to be an ADI. ADIs are required to comply with the Australian Prudential Regulation Authority's (APRA) prudential standards. The "holder of the stored value" under a PPF is the person who is to make the payments under the PPF. The holder of the stored value may be someone other than the issuer of the PPF. For example, the issuer may arrange for an ADI to make the payments under the PPF on behalf of the issuer of the PPF. Certain types of PPFs are exempt from the operation of the PSR Act. Subject to various conditions, there are exemptions applicable to the following types of PPFs:

• (a) gift card facilities;
• (b) loyalty schemes;
• (c) limited value facilities, being facilities where the total amount of obligations to make payments under the facility does not exceed \$10 million; and
• (d) limited participant facilities, being facilities where the number of people to whom payments may be made using such a facility does not exceed 50 persons.

3.5.2 Regulation of NCP facilities

Under Chapter 7, NCP facilities are "financial products". As a consequence, entities that deal in, or give advice in relation to, NCP facilities may be subject to the licensing, compliance and disclosure regime set out in Chapter 7 (and administered by ASIC).

Subject to various conditions, ASIC has provided class order relief from licensing and various other requirements of the Chapter 7 regime in relation to the following types of NCP facilities:

• (a) gift facilities;
• (b) loyalty schemes; and
• (c) low value NCP facilities, being facilities through which, or through the acquisition of which, a person makes non-cash payments and in relation to which the following are satisfied:
• (i) the total amount available for the making of non-cash payments under all facilities of the same class held by any person at any one time does not exceed \$1000;
• (ii) the total amount available for making non-cash payments under all facilities of the same class does not exceed \$10 million at any time; and
• (iii) the facility is not a component of another financial product.

3.5.3 Potential licensing requirements under Chapter 7 and the PSR Act

For larger providers of pre-paid payment services (including for facilities where the total amount available for making non-cash payments under all facilities of the same class exceeds entities with \$10 million), the providers of those facilities will usually need to hold an appropriate AFSL from ASIC.

Separately, where the total amount of the obligations to make payments under a PPF exceed \$10 million, the person that will actually make the payments under the PPF (who is treated as the 'holder of the stored value" under the facility) will usually need to be authorised as an ADI by APRA. It is possible for the issuer of the PPF to appoint a separate and existing ADI as the holder of stored value under that facility.

A holder of stored value may apply for an ADI authority as a "purchased payment facility provider" (PPF Provider). If it does so, any holding company of that PPF provider is likely to need to separately apply under section 11AA of the Banking Act 1959 for authorisation as a Non-Operating Holding Company (NOHC). On achieving authorisation, each of the PPF Provider and the holding company would be respectively regulated by APRA as an ADI and a NOHC.

The implications of becoming regulated by APRA are that a range of prudential standards and requirements will become applicable on an on-going basis:

• NOHCs are primarily impacted by prudential standards relating to capital, governance and risk management;
• PPF providers are regulated as a special class of ADI and ADIs are subject to a range of prudential standards made under the Banking Act.

A PPF Provider may elect to hold value from customers on balance sheet (termed "at risk') or "not at risk" (where the value is held with a separate ADI on terms designed to protect that value until it is used to settle a payment transaction). Holding value at risk requires a higher level of regulatory compliance but may provide other potential business advantages.

The APRA regime also allows sufficient flexibility that a NOHC can own non-ADI subsidiaries, to which prudential standards are not applied, other than certain badging and disclaimer requirements.

4. Overview of Emerchants

4.1 Introduction to Emerchants

Located in Brisbane, Queensland, with an office in Perth, Emerchants was formed in 2001 after witnessing the emergence of the electronic pre-paid industry in the US. The significant proportion (in excess of 25%¹ ) of US households classified as "un-banked" or "under-banked" has been one of the key drivers of growth in the electronic pre-paid industry in the US, which was primarily created to target those unable or unwilling to hold a bank account. Illegal immigrant workers, paid by cheque, were forced to engage with pawnbrokers who would convert their payroll cheques for cash for an uncommercial fee. The Board of Governors of the US Federal Reserve System, concerned with this issue, allowed technically competent companies to process cards that worked on local networks as long as the funds held were not deemed at risk.

Comparing US figures to Australian unbanked statistics did not present a very positive business case for starting a pre-paid financial card business in Australia as there were a smaller proportion of unbanked households. However, Emerchants saw an opportunity to develop a business case based on services, products and entire processes generated by an Electronic Pre-paid Infrastructure. These services/products were only offered at financial institutions that normally dealt in this space (i.e. banks). By providing another option to customers it would allow for greater choice, flexibility and lower cost.

Emerchants' business model is based on providing host-based stored value services over existing infrastructure. The established Electronic Funds Transfer (EFT) network in Australia is EFTPOS. Emerchants has direct connectivity to this network and authorises its transactions through this facility. To satisfy regulatory bodies that a cardholder's funds are not at risk, Emerchants does not hold the funds in its name nor is it a signatory to the account. All settlements with interchange partners are performed by Cuscal, or Bankwest in the case of MasterCard transactions.

4.2 Overview of the Emerchants business

Emerchants is a leading participant in the Australian pre-paid financial card industry and benefits from key competitive advantages, high barriers to entry for competitors, and significant future growth opportunities. Having invested substantially in software development and information technology infrastructure, Emerchants is positioned to take advantage of the rapidly expanding Australian prepaid financial card market.

Emerchants' key competitive advantage is the flexibility of its software which enables the business to tailor open loop and closed loop cards to its clients' needs. Specifically, Emerchants' proprietary software can be used to black-list or limit the utilisation of the clients' cards to specific types of merchants, specific stores, the value of transactions, number of times used per day and in many other ways.

In addition, EML and EMH have cleared a significant barrier to entry in Australia by developing regulatory and commercial relationships with ASIC, APCA, Austrac and EPAL.

Trends indicate high growth potential for the pre-paid and debit card markets in Australia, exhibiting historic growth of approximately 20% per annum, despite the recent effects of the global financial crisis. Australia's experience with penetration rates of pre-paid financial cards is well behind that of many other developed countries, but is expected to follow markets such as that of the US and UK in the future. In doing so, Australia will achieve substantial increase in penetration rates of pre-paid and, as a result, high rates of growth in the industry.

Emerchants has, to-date, put limited effort into the sales and marketing efforts that will drive revenue growth and, ultimately, profit, focusing instead on the development of its infrastructure and software to support the products and services it is capable of offering. Nevertheless, the Company has issued the largest number of pre-paid financial cards, which operate on Australia's payment system. Emerchants has developed a diversity of revenue streams including management fees for program portal set-up, transaction fees, card load fees, income earned on stored value and breakage.

Initial financial success for Emerchants will be facilitated by a number of factors. First, the Company will invest in a larger, more geographically dispersed sales force. This sales force will be trained to

1 Source: Federal Deposit Insurance Corporation 2010

focus on specific market segments and tailor their sales presentations accordingly based on the types of clients in their specific segment.

Secondly, the Company will immediately prepare for submission to the regulatory authorities for a broader authority to enable total stored value to exceed \$10 million and to position the Company to ultimately become a participant in the mainstream payments market in Australia.

As a result of the preceding actions, a strong emphasis will be placed on governance and regulatory compliance, thus positioning Emerchants to become a member of the mainstream payments industry.

4.3 Business strategy and growth plans for Emerchants

Plans to grow EML in the near term fall into four basic strategies as follows:

4.3.1 Accelerate sales from existing products and services

Management intends to invest in and expand EML's existing operations, focussing on expansion of the sales and marketing team, provision of development capital and infusion of sufficient balance sheet funding necessary to support EML's application for an ADI authority. To date, sales have been generated largely by one individual in EML.

The sales force will be significantly expanded and will be focused on specific market segments, geographies and products with the goal of maximising card issuance, revenue and profitability. As new clients are contracted, it is anticipated that some degree of software programming and modifications will be necessary to support card functionality as required by the client. Such modifications will be capitalised and will be funded through capital obtained through the Placement.

EML will be required to hold an ADI PPF in order to support stored value levels in excess of \$10 million.

4.3.2 Pursue opportunities in adjacent market segments and channels

A number of large market segments are available to EML, but as yet have not been actively pursued to date. One example includes the large opportunity in facilitating government benefit disbursements. The acquisition of an ADI PPF is strategically important as it further strengthens EML's standing in the financial sector and payments system industry. The addition of sales staff, when combined with AAO's senior management team and Board, will facilitate EML's ability to pursue these new markets.

4.3.3 Develop key strategic alliances to access substantial numbers of card users

The development of key strategic alliances will provide access to much larger numbers of card end-users. EML intends to identify organisations which have existing relationships with large numbers of customers and leverage EML's pre-paid financial card functionality to enhance that customer relationship.

4.3.4 Identify, acquire and integrate complementary businesses

AAO's Board and management team have significant experience in acquiring, integrating and managing companies in a variety of industries. It is the intent of management to seek out acquisition opportunities of complementary businesses to expand the scope of EML's reach in the pre-paid financial card industry and to create additional income streams for the overall business.

4.4 Technology platform

Emerchants' Electronic Pre-paid Cards Management System is an integrated platform for processing and administration of electronic payments.

This platform facilitates issuing, registration and enrolment, transaction authorisation, reloading and balance control and monitoring of cards based on an open, multi-product/application. The system is built on a multi-currency, multi-company and multi-language architecture, enabling issuing, managing and marketing of pre-paid financial card programs with public or private brands on an open or closed, individual or multiple distribution basis, according to the needs of each customer and project.

The core application has been developed by a skilled technical team, highly experienced in the development of payment processing platforms. Emerchants' software has the capability to re-brand its core systems with the customer's look and feel. The result is a fully functional cardholder web portal with the customer's own unique branding with unmatched speed to market; avoiding lengthy development/testing time and the need to work with third parties to integrate with their functionality and web services. Importantly, the software to facilitate this capability was built by Emerchants' personnel and is not available for sale in the general market. This software frames Emerchants' competitive advantage.

Emerchants has invested in developing a robust and scalable platform. The client-facing applications and Core Card Management System are built to industry security best practice. Emerchants undertakes regular PCI DSS compliance reviews to ensure the platform and data are secure. The hardware currently in place is capable of supporting many times the number of transactions currently being processed by Emerchants with no additional capital investment required.

4.5 EML product and service offering

EML offers a variety of products and services and, in the context of the broader growth strategy for the Company, will more aggressively promote these offerings in the future:

• gift cards promotional gift cards for retailers and consumer goods companies via EFTPOS, and MasterCard. These cards may be either open loop or closed loop in nature. Additionally, these cards may be pre-denominated or reloadable;
• loyalty and rewards cards promotional loyalty cards for retailers and consumer goods companies. These cards may be either open loop or closed loop in nature. Additionally, these cards may be pre-denominated or reloadable;
• corporate expense management pre-paid and/or reloadable general purpose cards for employees. Management and usage tracking may be controlled directly by the client;
• point of sale rebate Emerchants' technology gives its clients the ability to offer promotional discounts to their customers at the point of sale;
• government programs cards facilitating disbursement of funds to individuals for a wide variety of purposes from pension to health rebates to support payments. This allows governments to reduce their payment costs as well as better control the expenditure of social welfare recipients; and
• broad application general purpose pre-paid and debit cards capable of being configured for use by parent/child, international students, non-residents of Australia and travellers.

With each of the preceding offerings, a variety of services are available from Emerchants to further improve the customer and client experience, and which represent in many cases a distinct competitive advantage:

• real-time reporting to the client through a private, on-line portal enabling the client to track card utilisation in terms of what has been purchased, the time of the purchase and the location;
• easy reconciliation for retailers;
• customised branding;
• control over merchant spend, velocity and balances;
• instant issuance of a large number of cards;
• instant access to the payment system;
• instant loading on an as-needed basis;
• immediate lock-down of lost cards capable of being performed by the client;
• point-of-sale rebate;
• parental control over the type of expenditure, velocity and balances; and
• fraud monitoring.

4.6 Emerchants' competitors

There are a number of organisations competing in the broad pre-paid card market. Some of these organisations focus on the consumer and travel markets such as the major banks. For example, the bank-issued Visa pre-paid financial card is a major competitor in this market.

On the other hand, Emerchants currently focuses on the business market where there are fewer and typically smaller competitors.

Emerchants operates today in four distinct elements of the pre-paid financial card value chain: Card Issuing, Program Management, Transaction Processing and Reload Network. The following is a discussion of the competitors in these four elements of the value chain and Emerchants' relative strengths or weaknesses as compared to these competitors.

4.6.1 Card issuing

This activity involves the production and programming of the actual debit or pre-paid financial card. Other organisations in this market include Indue, Travelex, and the major four banks in the Australian market.

The major banks predominantly offer pre-paid financial cards direct to consumers, often for overseas travel purposes. Emerchants does not currently directly compete in this market focusing instead on the business-to-business market.

In the business-to-business market, the main competitors are Indue and several other smaller organisations (e.g. Vii, Givex). The cards offered by competitors are configured to either function only in a specific retail outlet, within which anything can be purchased, or are configured to be used in any outlet. In contrast, Emerchants is capable of programming their cards to not only function in any particular outlet, but the client is able to dictate how often the card can be used within a specific period of time and/or the maximum value of each transaction. All of the data collected as the card is utilised may be viewed, real-time, by the client through a private on-line portal, enabling the client to judge the effectiveness of marketing programs or buying patterns of card users.

4.6.2 Program management

Program management is the act of determining how the client wants to use the pre-paid financial card and, therefore, how the cards should be configured. Emerchants works with each client to determine their individual needs and tailors the programming of the cards to fit that need.

Emerchants typically competes with Pinpoint, Rev and Indue in this area. In some cases, however, organisations in the promotional marketing sector have recognised that they do not have the functionality of Emerchants' system and have partnered with Emerchants. The Edge Loyalty Systems Pty Ltd agreement is an example.

4.6.3 Transaction processing

Transaction processing involves the actual utilisation of the card by the end-use consumer. Each transaction is initially managed through Emerchants' software. Emerchants maintains the connection with the bank within which the stored value supporting the card is retained. In addition, Emerchants' software populates the database behind each card so that the client can view card utilisation, real-time, on their private, on-line web portal.

Each company issuing a pre-paid financial card operates in this segment of the value chain. Competitors include ReD (Wright Express), FIS, CBA, and AMEX. However, the cards issued by these companies vary widely in functionality and many of the competitors are not capable of offering a card with the flexibility of Emerchants. Additionally, many of the competitors do not offer on-line, real-time reporting of card utilisation.

4.6.4 Reload network

Emerchants' proprietary software enables the client to reload in bulk or down to the individual card level. While competitors have some of this element of the value chain, very few provide all of the options that Emerchants make available to it's customers.

4.7 Sources of income

Diversity of income streams from a client relationship is a key strength of Emerchants' business model. Revenue is derived from a number of sources and, as it relates to each pre-paid financial card, changes during the life cycle of the card. Following, is a summary of these sources of revenue and, ultimately, income.

4.7.1 Program management

Emerchants charges a fee associated with the card program set-up. In addition, a monthly administration fee is charged which supports Emerchants' management of the client's account and private web portal.

4.7.2 Card issuing

A fee is charged for production and distribution of the actual plastic card. In addition, the client is charged for activation of each pre-paid financial card and a card load fee.

4.7.3 Transaction processing

As the card is used, a transaction fee is charged. A proportion of the value of pre-paid financial cards is never used by the end-use customer. This unused value left on the card is known as "breakage". Breakage is split between Emerchants and the client on a prenegotiated basis.

4.7.4 Card reload

A feature of Emerchants' product and service offering is the ability for clients to reload value onto an existing card. When value is reloaded onto a card, Emerchants' receives a fee. Also, Emerchants earns income on the stored value held on behalf of the customer.

4.8 Sales and marketing plan

Historically, marketing and sales has not been the focus of the business as it was developing its IT infrastructure and operations as a platform for future growth opportunities. However, the business is now in a position with a robust and scalable platform from which it can accelerate its growth. The marketing and sales plan is designed to achieve the accelerated growth targets that have been set for the business.

4.8.1 Sales and marketing objectives

The following table represents the products currently offered by Emerchants, by market segment.

		Product offering
Market segment	Gift cards	Loyalty cards	Corporate expense	General purpose pre-paid financial cards	Point-of sale rebate cards
Retail outlets	X	X	X	X	X
Consumer goods companies	X	X		X	X
Individual consumers				X
- students				X
- families				X
- travellers				X
- Internet security				X
Government Agencies			X	X

Large industrials			X	X
Real estate				X
Charity	X		X	X
Education			X	X
Discount voucher organisations	X	X		X	X
Accommodation & travel	X	X	X	X	X

The sales and marketing objectives for the first year following the transaction are:

• Generate sales growth within the various product groups in line with the overall business targets through the use of an expanded sales and marketing team. Post-Completion EML intends to develop a new sales structure that can more effectively sell to the markets that offer the greatest rate of growth in revenue and greatest profitability. This will require a matrix structure that allows for the development of product specialisations as well as an in-depth understanding of industry groups in order to best serve customer needs.
• Design and implement a more robust marketing, advertising and promotional campaign to create greater awareness and interest in EML and its products and services.
• Pursue strategic alliance partners that have large customer bases and would value EML's payments solutions to enhance their customer relationship.
• Develop and implement a plan to build on the existing product and service portfolio including, but not limited to, pursuit of the government and transport sectors (recognising they are longer term propositions).

In addition, the Company intends to expand its product and service offering into adjacent markets. The most significant of these are:

• Point of sale rebate expansion of Emerchants' point of sale rebate position is a high priority given its strong technological position in the market.
• Government payment solutions utilising Emerchants pre-paid financial cards to deliver payments to citizens across the country. Currently a substantial sum of money is distributed annually from various government instrumentalities using often extremely inefficient and costly methods.
• Transport potentially partnering with other ticketing providers to support their payment system requirements.
• Internet Web Portal interactive website designed for use by prospective clients in configuring their own pre-paid financial cards.
• On-Line product that provide the cardholder with a method of payment when the cardholder is not physically present at the point of sale.

To achieve Emerchants' sales growth targets it is intended that management and staffing will be augmented to support the expanded operations.

4.9 Regulatory framework of EML operations

4.9.1 Current regulatory basis of operation of the EML business

To date, given the relatively smaller scale of EML's payment systems business, it is understood that EML has sought to operate under the protection of the ASIC Class Order [CO 05/738] which deals with gift facilities and within the ASIC Class Order [CO 05/736] which deals with "low value non-cash payment facilities".

Separately, as EML is not an ADI, it has ensured that it is not the "holder of the stored value" under a PPF by ensuring that at any one time, the total amount of its obligations to make

payments under a PPF that it issues does not exceed \$10 million. This allows EML to rely on the RBA's Declaration No. 2, 2006 regarding PPFs.

4.9.2 Regulatory strategy

Given the expected growth of EML's business and the potential to exceed a relevant low value threshold, EML has applied for an appropriate AFSL from ASIC and that AAO and EML will seek the following authorisations from APRA:

• AAO intends to apply under section 11AA of the Banking Act 1959 for authorisation as a NOHC; and
• it is intended that EML, as a wholly owned subsidiary of AAO, will apply for authorisation as an ADI, but within the limited class of a PPF provider.

On achieving such authorisations, both AAO and EML will become regulated under APRA's prudential framework. Separately, as an AFSL holder, EML will be subject to the financial services regime under Chapter 7.

4.9.3 Proposed corporate structure

Following such authorisations and licensing, it is intended that AAO, EML and any other businesses that might in the future be acquired by AAO (whether operating within or outside of APRA supervisory requirements) will be structured as shown in the diagram below. Additional non-regulated business may be undertaken by subsidiaries not regulated by APRA.

The AAO Group will be regulated by APRA as follows:

• as an authorised NOHC, AAO will be a regulated entity for APRA purposes and subject to a range of prudential standards primarily around its capital, governance and risk management; and
• as an authorised ADI, EML will be subject to the full range of APRA regulations applicable to PPF providers; but
• no prudential standards will apply to any subsidiaries in the Non-ADI Group, other than certain badging and disclaimer requirements.

4.9.4 Benefits of corporate structure and regulation under APRA regime

The proposed structure is intended to position AAO to pursue strategies to deliver strong growth while meeting its obligations to APRA. The NOHC structure will also provide flexibility to adapt to changing directions in business.

Authorisation as an ADI can provide the AAO Group with a number of strategic advantages, including:

• entry to mainstream payments systems in Australia including Automated Teller Machine (ATM) and EFTPOS networks;
• a "status" that will benefit marketing to larger organisations and government who will view EML as a substantive member of the payments system; and
• an ability to better control costs and avoid relying on competitors to provide supporting services.

There are no significant disadvantages of the structure although there will be certain one-off costs for establishing AAO as a NOHC and EML as an ADI, and an ongoing cost of compliance as regulated entities. This will include the need to maintain the required level of capital adequacy.

4.9.5 Optimal timing for qualification as ADI

Preparations to apply to APRA for the authorisations discussed above are being progressed well in advance of ADI status being required. AAO has engaged personnel with extensive experience and expertise in developing compliance frameworks and working with regulators in both financial services and in the payments system to lead the authorisation process.

5. Summary of existing mineral exploration interests

AAO is currently a minerals exploration company focussed on gold and associated metals. At the General Meeting the Company is seeking Shareholder approval to for the Company to make a significant change in the nature and scale of its activities by the acquisition of all of the shares in Emerchants Limited.

The Company has interests in mining exploration projects located in the Pine Creek region of the Northern Territory, in South Australia's Gawler Craton and at Mt Lucky in the Laverton Goldfields of Western Australia.

Each of these project areas is centrally located in a region with recognised gold and metals endowment, and both historic or more recent production facilities. Each of the Company's project areas includes known gold and base metal mineralisation and exploration potential.

5.1 Murninnie Uranium Joint Venture, Gawlor Craton, South Australia

The Murninnie Uranium Joint Venture Ground is located within UraniumSA Limited's (USA) Mullaquana project area, 20km south of Whyalla on the eastern Eyre Peninsula. The project area contains USA's Blackbush Prospect on which USA has reported an inferred mineral resource of 12Mt at 0.02% U3O8 with an estimated 2,700 tonnes contained U3O8.

Under the joint venture agreement USA is required to fund exploration on the Pirie Basin sediments occurring within the eastern half of EL 3542, to earn a 70% interest in uranium within the sediments. The 70% earn-in requires USA to explore to the point of declaration of an inferred resource including, as a minimum, airborne electro-magnetic survey and drilling of 12 holes in the first 12 months. Stage 1 regional drilling commenced in 2010 with five holes being completed by early August 2010 on the south eastern boundary of EL 3542 which targeted sedimentary uranium mineralisation interpreted from geological and geophysical interpretation.

Ongoing landowner access negotiations have resulted in difficulties in continuing regional joint venture drilling. Accordingly, exploration has been suspended until the access issue is resolved.

5.2 Glencoe Gold Deposit, Northern Territory

The Company's main asset in the Northern Territory is the Glencoe gold deposit which comprises four steeply dipping shoots of gold mineralisation, 100-250 meters in length, within an area of 600 x 300 metres. Each shoot plunges to the south east, and is controlled by fracture zones associated with quartz veining, sulphides, graphite and chlorite alteration around the hinge zone of a major anticline.

The intersection of these structures with the underlying strata is considered to be more prospective than the shallow and outcropping mineralisation, and is the focus of exploration for potential depth extensions.

A 2006 estimate of indicated and inferred resources totalled 43,000 contained ounces at shallow depth. The deposit remains open along strike and at depth – few of the 347 drill intersections included in the resource estimate exceed 60 metres below surface, and only one extends to more than 100 meters below surface.

No drilling was undertaken on the Northern Territory assets during the previous year. The Company is presently considering its options with regard to this parcel of tenements.

5.3 Laverton Gold Project, Western Australia

The Company has an option to purchase prospecting licence P38/3313 located in the Laverton Goldfields (Mt Lucky Tenement).² Pursuant to that agreement the Company has undertaken a drilling program of 19 holes for a total of 2,019 metres.

An evaluation of drilling results and other studies to more reliably test continuity of gold mineralisation progressed during the year.

2 Please refer to Section 11.19 for further details

5.4 Future intentions for the Company's exploration projects

AAO intends to maximise the value of the mineral assets for Shareholders while focussing on the Emerchants business. Therefore, it will investigate all strategic options including exploring the divestment or spin-off of the mineral assets.

5.5 Competent person's statement

The information in this Section that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Nicholas Revell, who is a member of the Australasian Institute of Mining & Metallurgy.

Mr Revell is a consultant to the Company and has sufficient experience relevant to the styles of mineralisation under consideration and to the subject matter of the report to qualify as a Competent Person as defined in the 2004 edition of the Australasian Code for the Reporting of Exploration Results, Mineral Resources or Ore Reserves (JORC Code).

Mr Revell consents to the inclusion in this Prospectus of the matters based on his information in the form and context in which they appear.

6. Proposed composition of Board and senior management

6.1 Proposed Board

On Completion of the EML Acquisition, Mr John Battley will become a Director of the Company.

The Company also proposes to appoint Messrs Mark Barnaba, John Toms and John Willinge as Non-Executive Directors prior to reinstatement of the Company's securities to quotation on ASX.

As at the date of this Prospectus, Mr Bruno Firriolo is a Director. Mr Firriolo proposes to resign at the General Meeting subject to approval by Shareholders of the EML Acquisition and the Placement.

On Completion of the EML Acquisition and the Placement the Board will comprise:

John Terpu Non-Executive Chairman

Bob Browning Managing Director

Bryant Plavsic Executive Director

John Battley Executive Director

Mark Barnaba Non-Executive Director

John Willinge Non-Executive Director

John Toms Non-Executive Director

6.2 Directors and Proposed Directors

Profiles of the Directors and Proposed Directors are set out below:

John Terpu – Non-Executive Chairman

Mr Terpu has over 15 years of commercial and management expertise gained in a broad range of business and investment activities. He has been involved in the mining and exploration industry through the acquisition and investment in a number of strategic exploration and mining projects. Mr Terpu has a wide range of contacts in the exploration and mining investment community. He was formerly the managing director of Conquest Mining Limited and is currently non-executive chairman of Forte Consolidated Limited.

Bob Browning - Managing Director and Chief Executive Officer

Mr Browning is a seasoned executive with recent roles including managing director and chief executive officer of Austal Ltd (3 yrs), chief executive officer and director of Alinta Ltd (6+ yrs), vicepresident, human resources of UtiliCorp United Inc (3+ yrs) and director, organisation effectiveness, Coca-Cola Enterprises Inc. (4+ yrs).

Bryant Plavsic – Executive Director and Chief Financial Officer

Mr Plavsic has extensive experience in the financial services sector with recent roles as a partner of the international management consulting firm Bain and Company, executive of Perpetual Limited, director of Poynton and Partners/GEM Consulting and manager at McKinsey and Company.

John Battley - Executive Director and Chief Operations Officer

Mr Battley is an internationally experienced executive and entrepreneur who is currently the chief executive officer and managing director of EML.

He is the founder of Globetrotter Corporate Travel (one of the largest Australian corporate travel management companies), and has held senior international sales and marketing roles based in Frankfurt, Germany, with a leading global pharmaceutical company.

Mark Barnaba - Non-Executive Director

Mr Barnaba is a highly experienced executive who is currently a non-executive director of Fortescue Metals Group Limited, chairman of Western Power and chairman of UWA Business School.

His experience includes being co-founder and executive chairman of Azure Capital, co-founder and managing director of GEM Consulting/Poynton and Partners, chairman of Alinta Infrastructure Holdings, chairman of the West Coast Eagles and manager with McKinsey.

John Willinge - Non-Executive Director

Mr Willinge is a highly experienced executive and founder of Alverstoke Group LLC, an investment management firm based in New York.

He previously worked at several leading global financial services firms including Thomas Weisel Partners (as a partner in San Francisco), Goldman Sachs and Co (New York), and Rothschild (Australia) and has served on the Board of Directors of public and private companies across a variety of industries.

John Toms - Non-Executive Director

Mr Toms is currently consulting director - Head of Governance, Risk & Compliance of Oakton Limited.

His previous experience includes chief executive officer (for 17 years) of an ADI, non-executive director (for 17 years) of Australian Payments Clearing Association, non-executive director of Mercer Nominees, executive director of Insurance Agents Association of Australia, and a commonwealth public servant.

6.3 Company Secretary

Yasmin Broughton – General Counsel and Company Secretary

Ms Broughton is an experienced corporate lawyer and company secretary with recent roles as the general counsel and company secretary of Atlantic Ltd, general counsel and company secretary of Jemena Limited, and acting general counsel and company secretary of Alinta Limited.

6.4 Proposed senior management of EML

The proposed management structure of EML will include Bob Browning as the Chief Executive Officer, John Battley as the Chief Operating Officer and Bryant Plavsic as the Chief Financial Officer.

In addition, reporting to Mr Battley will be the following senior management members which will be employed by the AAO Group pursuant to multi-year employment contracts:

Anthony Ferguson – Chief Information Officer

Mr Ferguson is currently chief information officer of EML, having been a founder and former managing director of EMH.

Mr Ferguson has extensive high-tech industry experience and has held several senior positions in high-tech companies during his 20 year career prior to founding EML.

Donna Ferguson – General Manager, Sales and Marketing

Donna is currently business development manager of EML.

Ms Ferguson has over 15 years of professional business experience covering finance, manufacturing and strategic and product development. She has held senior operational positions in a number of successful business-to-consumer and business-to-business commerce ventures.

Prior to joining EML, Mrs Ferguson was operations manager of Omo Pty Ltd.

7. Corporate governance

The Company is committed to implementing the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations (Second Edition) (Recommendations) to the extent considered appropriate by the Company, considering the nature and size of its operations.

The Company's corporate governance policies and procedures are summarised below with reference to the principles set out in the Recommendations.

It should be noted that, if subsequently required by APRA, AAO's governance policies and procedures will be revised as necessary.

7.1 Principle 1: Lay solid foundations for management and oversight

The Board's responsibilities are encompassed in a charter which is published on the Company's website. The major roles it has defined to fulfil its responsibilities to Shareholders and the community are set out in the charter.

To assist it in carrying out its responsibilities, the Board has established a Risk Management Committee. The Board currently undertakes the responsibilities normally provided by an Audit Committee, and a Remuneration and Nomination Committee.

The Board delegates responsibility for day-to-day activities to the Executive Directors and other senior executives and management. The Board may appoint a managing director or a chief executive with overall managerial responsibility or appoint a number of executive directors and/or senior managers to fulfil the delegated functions. However constructed, those personnel implement the Board's directions and delegations, and are accountable to the Board.

The Board ensures that there are appropriate reporting systems and controls in place so that there are proper operational, financial, compliance, risk management and internal control processes.

7.2 Principle 2: Structure the Board to add value

The Board determines Board size and composition, subject to limits imposed by the Constitution. The Constitution provides that the Company must have at least four Directors, or the number of Directors that are in office at the relevant time, whichever is greater.

If the EML Acquisition proceeds, the Board will be reconstituted to consist of a majority of nonexecutive directors. The Board believes the Proposed Directors have the appropriate technical and commercial skills relevant to the financial services industry. The Board receives detailed Board papers and a management report on a monthly basis showing the monthly and year to date performance of all aspects of the Company, compared to budget. The Board may request further information from senior executives from time to time on any issue. In addition, each Director and each Board Committee has the right to seek external professional advice as considered necessary, subject to relevant approvals, at the Company's expense.

7.3 Principle 3: Promote ethical and responsible decision making

The Company wishes to conduct all its business ethically and responsibly. It has a Securities Trading Policy which is available on the Company's website. It also has a Code of Conduct, which applies to Directors as well as employees.

Equally important is the encouragement of ethical conduct, not only by edict, but also by example from all involved in the Company. It is the Board's objective that all dealings with staff, customers, regulatory authorities and the community should be conducted honestly, fairly, diligently and in accordance with all applicable laws. Any departure from such practice is treated very seriously.

The Securities Trading Policy provides that Directors and employees may not deal in the Company's securities when they have price-sensitive information that has not been published or is not otherwise generally available. The Securities Trading Policy also prohibits trading by Directors and senior executives and their families and related entities during the period of time between the end of a reporting quarter and the release of the Company's quarterly activities and cash-flow statements, and other periods as determined and announced by the Board, including the period 72 hours before and 24 hours after the release of price sensitive information, and the periods during which it is considered that certain information is generally known within the Company but is not known to the market.

In any case, Directors and senior executives may only trade in the Company's securities with the prior written consent of the Chairman. Other employees may trade in the Company's securities at any time, but must notify the Company Secretary in writing before commencing the transaction. Other employees are encouraged to limit their dealing in the Company's securities in accordance with the restrictions on Directors and senior executives, outlined above.

A copy of the Company's Securities Trading Policy and its Code of Conduct are available on the Company's website.

7.4 Principle 4: Safeguard integrity in financial reporting

The Board has the responsibility of satisfying itself that the financial statements of the Company fairly and accurately set out the financial position and performance of the Company for each period.

The Chief Executive Officer and the Chief Finance Officer provide written undertakings to the Board that the Group's financial reports present a true and fair view and are in accordance with relevant accounting standards and ASX Listing Rules.

The Code of Conduct provides that personnel must fully co-operate with internal and external auditors of the Company, must not give false or misleading statements and must not conceal information from those auditors.

7.5 Principle 5: Make timely and balanced disclosure

The Company has a continuous disclosure regime outlined in a Continuous Disclosure Policy. That policy sets out the procedures for identifying material information, reporting that information to the person/s performing a chief executive function and/or the Company Secretary for review, ensuring the Company complies with its continuous disclosure obligations and ensuring that neither the Company nor its employees contravene the ASX Listing Rules or the Corporations Act.

In the event a decision is made not to notify the ASX of a particular event or development, the reasons for non-notification are advised to the Board.

Written policies to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance are available on the Company's website.

7.6 Principle 6: Respect the rights of Shareholders

The Company adopts three main forms of information disclosure:

• (a) continuous disclosure the Company's primary disclosure obligation and method of informing the market and Shareholders;
• (b) periodic disclosure in the form of full-year and half-year reporting and the quarterly reporting of exploration, production and development information together with corporate activities; and
• (c) specific information disclosure administrative and corporate details, usually in the form of ASX releases, as and when required.

Details of the Company's policies and procedures for communicating with Shareholders are available on the Company's website.

7.7 Principle 7: Recognise and manage risk

The Company is committed to the identification, understanding and managing of material business risks to ensure that the Company's business plans are delivered and that growth and the creation of Shareholder value is obtained.

The Risk Management Committee is responsible for reporting to the Board on the Company's oversight and management of material business risks, overseeing management's responsibilities in relation to risk management and advising on the Company's risk management systems, policies, practices and plans.

Details of all risks that the Risk Management Committee identifies are recorded on the Company's Risk Register. The Risk Management Committee re-assesses each of the recorded risks in accordance with a timetable it has established. Members of the Risk Management Committee report periodically to the Company Secretary, all relevant factors in the Risk Register.

The Board is ultimately responsible for satisfying itself that management has developed sound systems of risk management and internal control. The Board may require the Risk Management Committee to investigate and report on its management of risks.

The policy on risk oversight and the management of material business risks is available on the Company's website.

7.8 Principle 8: Remunerate fairly and responsibly

The Board currently undertakes the responsibilities normally provided by a Remuneration and Nomination Committee. The Board has issued a Remuneration and Nomination Policy that aims to ensure that appropriate remuneration and employment policies, procedures and programs are in place.

To assist in determining the appropriate compensation levels for the Directors and employees, the executive remuneration policy and equity based remuneration plans, the Company has a performance evaluation process.

The Remuneration and Nomination Policy and the Performance Evaluation Process are both available on the Company's website.

7.9 Corporate governance – exceptions to ASX recommendations

The Company sets out below its "if not why not" report in relation to those matters of corporate governance where the Company's practice departs from the Recommendations to the extent that they are currently applicable to the Company.

Recommendations 2.1 and 2.2 (independent directors)

At present the Board does not comprise a majority of "independent directors". However, once the EML Acquisition is completed, the Board will comprise a majority of "independent directors".

The Chairman of the Company, Mr John Terpu, is not an independent director in accordance with the criteria for independence as outlined in Recommendation 2.1. However, given the historical size, scope and nature of the Company's operations, the Board considered that Mr Terpu had the requisite experience in the exploration and mining industry and his appointment as Chairman was and still is in the best interests of the Company and its Shareholders.

Recommendation 2.4 (nomination committee)

Currently, there is no nomination committee. The full Board considers the matters and issues that would fall to the nomination committee. Historically, the Board considered that, given the Board's size and the scope of the Company's operations, no efficiencies or other benefits would be gained by establishing a separate nomination committee.

As the Company's operations grow and evolve, the Board will reconsider the appropriateness of forming a separate nomination committee.

Recommendations 4.1, 4.2, 4.3 and 4.4 (audit committee)

Currently, there is no audit committee. The role of the audit committee is undertaken by the full Board. Historically, the Board considered that, given Board's size and the scope of the Company's operations, no efficiencies or other benefits would be gained by establishing a separate audit committee.

On Completion of the EML Acquisition, the Board will establish a separate audit committee.

Recommendations 8.1 (remuneration committee)

The Company has not established a separate remuneration committee. The role of the remuneration committee is undertaken by the full Board. The Board considers that, given the Board's size and the current size and scope of the Company's operations, no efficiencies or other benefits would be gained by establishing a separate remuneration committee.

As the Company's operations grow and evolve, the Board will reconsider the appropriateness of forming a separate remuneration committee.

8. Financial information

8.1 Introduction

This Section contains a summary of the historical and forecast financial information of the AAO Group (comprising the Company and its subsidiaries, including EML) (Financial Information).

The "Historical Financial Information" comprises:

• pro forma consolidated income statement of the AAO Group for FY2010, together with a reconciliation to the audited AAO Group NPAT (see Sections 8.3 and 8.3.1);
• consolidated historical statement of financial position and the pro forma consolidated statement of financial position of the AAO Group as at 31 December 2010 (see Section 8.4); and
• pro forma consolidated cash flow statements of the AAO Group for FY2010 (see Section 8.5).

The "Forecast Financial Information" comprises:

• pro forma consolidated forecast income statement of the AAO Group for FY2011 (see Section 8.3), together with a reconciliation to the statutory consolidated forecast NPAT of the AAO Group for FY2011 (see Sections 8.3 and 8.3.1); and
• pro forma consolidated cash flow statement of the AAO Group for FY2011 (see Section 8.5).

Also included in this Section are:

• the basis of preparation of the Financial Information (see Section 8.8);
• the Directors' best estimate assumptions underlying the pro forma and the Forecast Financial Information, and sensitivity analysis around the Forecast Financial Information (see Section 8.7); and
• significant accounting policies relevant to the Financial Information (see Section 8.8).

The Financial Information has been prepared by the Directors and reviewed by PricewaterhouseCoopers Securities Ltd, whose Investigating Accountant's Report is contained in Section 9. The Financial Information presented in this Prospectus is the responsibility of the Directors. The information in this Section should also be read in conjunction with the risk factors set out in Section 10 and other information contained in this Prospectus.

Investors should note that the pro forma financial information is prepared on the assumption that the businesses that will comprise the AAO Group going forward were wholly owned by the AAO Group for all of the years noted, including FY2011. No other pro-forma adjustments have been made. The statutory results are reconciled to the pro forma financial information in Section 8.3.1.

8.2 Basis of preparation and presentation of financial information

The Financial Information included in this Section has been prepared and presented in accordance with the recognition and measurement principles prescribed in Australian Accounting Standards and other mandatory professional reporting requirements in Australia, except where otherwise disclosed in this Section.

Significant accounting policies relevant to the Financial Information are disclosed in Section 8.8 of this Prospectus.

The Financial Information is presented in an abbreviated form and does not contain all of the disclosure provided in an annual report prepared in accordance with the Corporations Act.

8.2.1 Preparation of Historical Financial Information

The Historical Financial Information for the year ended 30 June 2010 is based on independently audited accounts for AAO and EML for the financial year to 30 June 2010. The AAO accounts were audited by HLB Mann Judd and are available on the AAO website (www.australasiaconsolidated.com.au); the EML accounts were audited by BDO Audit. It should be noted that EML's FY2010 accounts were audited by BDO Audit, who provided a Modified Auditor's Opinion. Refer to section 8.6.2 for additional details regarding the

modification. The historical statement of financial positions at 31 December 2010 is based upon independently reviewed accounts for AAO and management accounts for EML.

In preparing the Historical Financial Information, adjustments were made only to reflect the Group's operations upon Completion of the EML Acquisition. Significant one-off items are explained in Section 8.3.

8.2.2 Preparation of Forecast Financial Information

The Directors believe they have prepared the Forecast Financial Information with due care and attention and consider all best estimate assumptions when taken as a whole to be reasonable at the date of this Prospectus. The Forecast Financial Information comprises ten months of actual results and two months forecast results.

The Forecast Financial Information has been prepared on the basis of numerous assumptions, including the key best estimate assumptions set out in Section 8.7. This information is intended to assist investors in assessing the reasonableness and likelihood of the assumptions occurring, and is not intended to be a representation that the assumptions will occur.

8.3 AAO Group pro forma consolidated historical and forecast income statements

Set out below is a summary of the AAO Group's pro forma consolidated historical income statement for FY2010 and the pro forma consolidated forecast income statement for FY2011. The results of EML have been included assuming EML had been owned by AAO from 1 July 2009. The actual acquisition will occur shortly following completion of the Offer.

Only one year of pro forma historical financial information is provided as the nature of the AAO business and the growth profile of the EML business make pro forma combination analysis of periods prior to FY2010 irrelevant and possibly misleading for investors.

For further details see Section 8.6.

AAO Group summary income statement

	FY2010	FY2011
\$'000
	Pro forma historical	Pro forma forecast
Revenue	1,182	2,130
Cost of sales	(321)	(390)
Administrative costs	(2,195)	(4,753)
Share-based payment costs	-	(2,391)
Exploration and evaluation expenditure written-off	(243)	(432)
EBITDA	(1,576)	(5,835)
Depreciation	(502)	(547)
Loss before tax	(2,078)	(6,382)
R&D tax credits	489	340
Net loss after tax	(1,590)	(6,042)

Notes:

1. The consolidated pro forma historical financial information is derived from the audited financial statements of AAO and EML.

2. 1. FY2011 administrative costs include a non-recurring cost of \$350,000 associated with termination of an administration agreement relating to provision of services to AAO, and transaction costs related to the EML Acquisition of \$243,000 (notwithstanding that the pro forma above combines EML and AAO for the historical and forecast periods).
3. 1. FY2011 exploration and evaluation expenditure written-off includes \$310,000 relating to total expenditure on the Mt Lucky (P38/3313) and Mt Lucky North (E38/2591) tenements, as AAO is uncertain about the ongoing value of these tenements.

4. The FY2011 pro forma forecast includes share-based payment costs of \$2,391,000 relating to Shares (\$2,141,000) and Options granted (\$250,000) (or expected to be granted) to Directors, Proposed Directors, management, employees and service providers.

8.3.1 AAO Group summary reconciliation to statutory accounts

Set out below is a summary reconciliation of the AAO Group's pro forma net loss after tax to its statutory net loss after tax.

	FY2010	FY2011
\$'000
	Pro forma historical	Pro forma forecast
Pro forma historical/forecast NPAT	(1,590)	(6,042)
Net adjustments1	1,204	1,083
Statutory historical/forecast NPAT	(386)	(4,959)

Notes:

1. Net adjustments comprise NPAT of EML.

AAO has received advice that following Completion of the EML Acquisition and completion of the Placement, the AAO and EML tax losses will be available to offset against future taxable income.

8.4 AAO Group pro forma consolidated statement of financial position

The Directors have prepared the pro-forma statement of financial position to present the anticipated position of the AAO Group following the EML Acquisition and the Placement.

The AAO Group pro forma consolidated statement of financial position has been derived from the reviewed financial statements of the AAO Group and the management accounts of EML. They have been adjusted for the Completion of the EML Acquisition and completion of the Placement under this Prospectus assuming those events occurred on 31 December 2010.

The following matters make up the pro forma adjustments to the 31 December 2010 statement of financial position:

• a 5:1 consolidation of the issued capital of AAO;
• the issue of 12,000,000 New Shares to the EML Vendors, being the number of New Shares that the Directors anticipate being issued; pursuant to the terms of the EML Share Purchase Deed the actual number of New Shares to be issued will only be determined following Completion of the EML Acquisition, as described in Schedule 1 of the Notice of General Meeting;
• the funding of \$2.5 million of cash consideration for EML Vendors;
• proceeds from the issue of 11,764,706 New Shares at \$0.85 each, raising \$10,000,000 pursuant to this Prospectus;
• costs of the Placement of \$1.2 million plus other transaction-related costs amounting to \$0.2 million; and
• the impact on Share capital and retained earnings of the issue of Shares under Resolutions 9 – 12 of the Notice of General Meeting.

AAO Group pro forma Statement of Financial position

	Note	Australasia Consolidated 31-Dec-10	EML	Pro forma Adjustments	Pro forma
			31-Dec-10		31-Dec-10
		\$'000			\$'000
			\$'000	\$'000
Assets
Cash & cash-like items Trade debtors	1	4,307 33	54 67	6,102	10,464 100
Other current assets		16	549		565
Loans Property, plant & equipment		5	231 90		231 95
Exploration & evaluation expenditure		2,487			2,487
Goodwill and intangible assets	2		1,915	11,142	13,058
Total assets		6,849	2,906	17,244	27,000
Liabilities
Trade creditors		95	752		847
Other current liabilities			309		309
Loans			94		94
Other non-current liabilities		59	193		252
Total liabilities		154	1,349		1,502
Net assets		6,695	1,558	17,244	25,497
Equity
Share capital	3	14,262	4,238	16,024	34,524
Retained earnings/(losses)	4	(7,567)	(2,680)	1,220	(9,027)
Total equity		6,695	1,558	17,244	25,497

The notes relating to cash, goodwill, Share capital and retained earnings can be found in Section 8.10.

In accordance with Australian Accounting Standard AASB 3 Business Combinations, the Company is required to allocate the consideration for the EML Acquisition by recognising identifiable assets, liabilities and contingent liabilities of EML at their fair values at Completion. Any difference between consideration paid for the EML Acquisition and the net fair value of the identifiable assets, liabilities and contingent liabilities is accounted for as goodwill. The preliminary calculation of goodwill arising upon the EML Acquisition is shown in Section 8.10.

The value of the EML purchase consideration for accounting purposes will differ from the amount assumed in the AAO Group Pro forma Statement of Financial Position above due to future changes in the market price of AAO shares.

An exercise to ascertain the fair value of EML's assets, liabilities and consideration will be undertaken at close and will result in a change in the goodwill assumed above. This adjustment will impact the profit arising from the depreciation and amortisation charges resulting from the EML Acquisition in future periods. No adjustments arising in these areas have been included in the income statements.

8.5 AAO Group pro forma consolidated cash flows

Set out in the table below is a summary of the AAO Group's pro forma consolidated historical cash flow for FY2010 and the pro forma consolidated forecast cash flow for FY2011. This excludes the cash flow associated with the acquisition and capital raising associated with the Offer (refer to the sources and uses included in section 1.6 for the impact of the Offer).

	FY2010	FY2011
\$'000
	Pro forma historic	Pro forma forecast
Pro forma EBITDA	(1,576)	(5,835)
Non-cash share-based payment costs	-	2,391
Non-cash impairments & write-offs	340	432
Change in working capital	(290)	(421)
Other items not included in EBITDA	416	340
Capital expenditure	(456)	(610)
Free cash flow before financing	(1,567)	(3,703)
Related party funding	(244)	509
Issuance of shares, net of costs	2,728	3,614
Net increase/ (decrease) in cash held	918	420

Notes:

• 1. The consolidated pro forma Historical cash flows are derived from the audited financial statements of AAO and EML.
• 1. "Other items not included in EBITDA" primarily comprises R&D tax credits received by EML.
• 1. The FY11 statutory change in cash is expected to be \$380,000 (AAO forecasted cash inflow), the remaining increase in cash is driven by EML, which is forecast to generate the remaining \$40,000 increase in cash on hand.

8.6 Management discussion and analysis of historical and forecast results

Below is a brief discussion of the main factors that affected the two entities' operating and financial performance in FY2010, together with a similar discussion of the main factors that have affected, or are expected to affect, performance in the FY2011 forecast period.

The general factors described below are a summary only and do not represent everything that affected, or are expected to affect, operating and financial performance in these periods. The information in this Section should also be read in conjunction with the risk factors set out in Section 9 and other information contained in this Prospectus.

8.6.1 AAO - summary financial discussion

Principal activities

The principal activity of AAO was, and will continue to be until Completion of the EML Acquisition, the exploration for and development of economic deposits of gold and other minerals.

Review of operations

During FY 2010 and FY2011F year to date, AAO has carried out exploration on its tenements with the objective of identifying economic deposits of gold and other metals. A key development in 2011 has been AAO entering into a new option agreement with the vendor of Prospecting Licence P38/3313. AAO will decide whether to exercise this option over the following 12 months.

Changes in state of affairs

Significant changes in the state of affairs of AAO during the financial year were as follows:

• The completion of a non-renounceable rights issue to raise \$1,361,234.
• The cessation of the Company's New Zealand exploration activities with the transfer of its remaining 30% interest in the Otago region tenements to its joint venture partner in exchange for a 2% gross royalty on any future gold production.

AAO standalone - Historical and forecast financial information

Summary financial information for AAO on a standalone basis for FY2010 and FY2011F is shown in the table below.

	FY2010	FY2011F
\$'000
	Historical	Forecast
Revenue	45	183
Administrative costs	(330)	(1,724)
Administrative services contract break fee	-	(350)
Transaction fees	-	(243)
Non-cash share based payment costs	-	(2,391)
Exploration and evaluation written off	(243)	(432)
EBITDA	(528)	(4,957)
Depreciation	(5)	(2)
Loss before tax	(533)	(4,959)
R&D tax credits	147	-
Net loss after tax	(386)	(4,959)

Administrative costs

The increase in AAO's administrative costs in FY2011F when compared to FY2010 is mainly driven by the expansion of the management team (e.g. CEO, CFO, General Counsel and Company Secretary) following the announcement of a new strategic direction for the Company during 2010, the increase in costs associated with the administration services contract with Chellserv and increased legal and travel expenses associated with elevated levels of corporate activity.

Administration services contract break fee

AAO's FY2011F costs include a non-recurring cost of \$350,000 associated with termination of an administration agreement relating to provision of administration services to AAO from Chellserv. AAO intends to transition to its own administration services during the first half of FY2012.

Transaction fees

AAO's FY2011F costs include a non-recurring cost of \$243,000 associated with transaction costs related to the EML Acquisition.

Non-cash share based payments

AAO's FY2011F pro forma forecast includes share-based payment costs of \$2,391,000 relating to Shares and Options granted (or expected to be granted) to Directors, Proposed Directors, management, employees and service providers.

Exploration and evaluation written-off

FY2011F exploration and evaluation expenditure written-off includes an impairment of the mineral assets that the Company believes is likely to occur in the FY2011F year of \$310,000.

8.6.2 EML - summary financial discussion

Principal activities

The principal financial activities of EML during FY2010 and in FY2011F year to date, consisted of the development and provision of payment systems with a core product of hostbased pre-paid financial cards and custom stored value products.

No significant changes in the nature of these activities occurred during FY2010 or are expected to occur during FY2011F.

Review of operations

EML has been transitioning from a technology development business to a commercial operating business during FY2010 and FY2011 year to date. Despite generating a significant increase in revenue over the period it still made operating losses in both FY2010 and FY2011 year to date. A major factor contributing to the operating losses has been the significant investment in research and development expenditure which is expected to generate increased revenues in future years.

Changes in state of affairs

During FY2010 EML entered into a contract with EMH for the acquisition of intellectual property in exchange for the allotment of fully paid ordinary shares.

In FY2010 EML also allotted fully paid ordinary shares to Globetrotter in exchange for conversion of debt to equity and cash.

EML standalone - Historical and forecast financial information

Summary financial information for EML for FY2010 and FY2011F is shown in the table below.

	FY2010	FY2011F
\$'000
	Historical	Forecast
Revenue	1,137	1,947
Cost of sales	(321)	(390)
Administrative costs	(1,865)	(2,436)
- Wages, superannuation and mgmt fee	(1,175)	(1,741)
- Other admin costs	(690)	(694)
EBITDA	(1,049)	(878)
Depreciation	(497)	(544)
Loss before tax	(1,546)	(1,423)
R&D tax credits	342	340
Net loss after tax	(1,204)	(1,083)

Revenue

Substantial revenue growth has been achieved over FY2010 and FY2011F. The forecast growth in revenue from FY2010 to FY2011F is expected to be 71%. This growth has principally been driven by the increased issuance of cards to customers and the increase in the stored value relating to those cards.

The increase in cards and stored value is expected to result in increases in all the key components of revenue as outlined in Note 1 of section 8.9. These include increases in setup fees associated with establishing new programs with customers, transaction fees associated with cardholders utilising the cards, net breakage (the component of the stored value not utilised by cardholders and shared with the customer) and income which is earned on the stored value of the cards.

Cost of sales

The nature of EML's service capabilities means that cost of sales is expected to rise at a considerably lower rate than revenue over the period FY2010 to FY2011F.

Administrative costs

The majority of EML's administrative costs in both FY2010 and FY2011F is wages, superannuation and management fee payments, with this element representing over 71% of the FY2011F total administrative cost forecast. The increase in expected administrative costs in FY2011F compared to FY2010 is mainly driven by expansion of employee numbers as EML has added to its IT and operations team as well as its sales team in order to drive growth.

Tax benefit

EML benefits from research and development tax grants based upon eligible expenditure which has been relatively stable at \$340,000 for FY2010 and FY2011F.

Note on EML's FY2010 accounts

EML's FY2010 accounts were audited by BDO Audit, who provided a Modified Auditor's Opinion. The basis for BDO's Modified Audit Opinion related to a transaction undertaken by EML to acquire intellectual property assets from EMH, a related party, in exchange for fully paid ordinary shares. BDO Audit did not receive sufficient or appropriate information to support whether the acquisition reflected the fair value of the intellectual property asset or fair value of the shares issued at the acquisition date.

EML also performed an impairment assessment of the intellectual property asset and BDO Audit did not receive sufficient or appropriate information to support the inputs used in determining the recoverable amount for the intellectual property asset.

BDO Audit's Modified Audit Opinion included an emphasis of matter in relation to EML's ability to continue as a going concern. The Directors are satisfied that the EML Acquisition and the Placement have removed this risk.

8.7 Forecast assumptions and sensitivities

The Directors' forecast consolidated income statement for the 12 months ending 30 June 2011 has been prepared by the Directors with due care and attention on the basis of the best estimate assumptions set out in Sections 8.7.1 and 8.7.2 (which should be read in conjunction with the forecast). The Directors consider the best estimate assumptions to be reasonable when viewed as a whole at the time of preparing this Prospectus based upon present circumstances and market conditions.

However, the actual financial results may vary and differ in quantum and timing from those in the forecast financial information and any variation may be materially positive or negative. The Directors' best estimate assumptions are subject to business, economic and competitive uncertainties and contingencies and risks many of which are beyond the control of the AAO Group and the Directors (refer to the risk factors in Section 10). The industry in which the AAO Group operates is subject to external influences which can materially impact financial performance.

No assurance can be given that business decisions and strategies of the AAO Group will be effective or that anticipated benefits will be realised in the period for which the Directors' forecasts have been prepared or otherwise. As shown in the sensitivity analysis in Section 8.7.3 relatively small changes in key variables can have a significant impact on earnings.

The Directors' best estimate assumptions as set out in Sections 8.7.1 and 8.7.2 are intended to assist potential investors in assessing the reasonableness and likelihood of the Directors'

forecasts being achieved, and are not intended to represent that those events that have been assumed will occur.

The Directors' forecasts should be read in conjunction with the Directors' best estimate assumptions set out in Sections 8.7.1 and 8.7.2, the sensitivity analysis set out in Section 8.7.3, the discussion of the risk factors associated with an investment in AAO Group set out in Section 10.1 and other information set out in this Prospectus.

The Directors' forecasts have been reviewed by PricewaterhouseCoopers Securities Ltd, as Investigating Accountant and a copy of their Investigating Accountant's Report is included in Section 9.

8.7.1 Specific best estimate assumptions

The Directors' specific best estimate assumptions are underpinned by achievement of the following major business milestones during FY2011 year to date (or expected achievement of these milestones by the end of the forecast period):

Revenue

• Forecast EML revenue for FY2011 is based on actual revenues earned in the first 10 months of the period (from 1 July 2010 to 30 April 2011) plus the Directors' best estimate of revenue expected to be earned in the final two months of the year (May and June 2011). Over 78% of EML's contribution to FY2011 revenue has already been booked in the 10 month period to 30 April 2011.
• Revenue is generally earned on a client account basis, with various contract terms across the business. Forecast revenue and related income have been prepared based on past experience with existing customers and known future revenues as well as new projects on which management believes the AAO Group has a high degree of probability of securing work.
• Pricing structure of services is assumed to be in line with current pricing structures.
• Revenue rates, margins and charge rates for other services are assumed to be consistent with historical periods.

Operating costs

• Operating costs have been forecast based on recent past experience, adjusted for known circumstances, and include additional on-going Board and administration costs.
• FY2011 administrative costs include a non-recurring cost of \$350,000 associated with termination of an administration agreement relating to provision of services to the AAO Group.
• Exploration and evaluation expenditure written-off in FY2011 includes \$310,000 relating to total expenditure on the Mt Lucky (P38/3313) and Mt Lucky North (E38/2591) tenements, as AAO is uncertain about the on-going value of these tenements.
• The FY2011 pro forma forecast includes share-based payment costs of \$2,391,000 relating to shares (\$2,141,000) and options granted (\$250,000) (or expected to be granted) to Board, management, employees and service providers.

Depreciation and amortisation

• Depreciation rates have been determined based on the existing useful lives of noncurrent assets and does not reflect the impact of the proposed business combination (refer to section 8.8.2 for the acquisition accounting for additional details).

Taxation

• No income tax expense has been recognised as the AAO Group is not expected to generate taxable profit in the period. However, the AAO Group expects to receive a research and development tax grant of \$0.34 million in FY2011, based upon

expenditure incurred to date, and this expected tax grant has been included in the forecast.

8.7.2 General best estimate assumptions

The following general best estimate assumptions have been used to derive the Directors' forecasts:

• There is no material change in the legislative regimes and regulatory environments in the jurisdictions in which the AAO Group operates.
• There is no early termination of any contract pursuant to which the AAO Group generates income.
• There is no material adverse change in economic conditions prevailing in the jurisdictions in which the AAO Group operates.
• There is no change to key senior management, Directors or other personnel.
• There is no material adverse change to the current relationships the AAO Group has with employees.
• There is no change to Australian Accounting Standards that would have a material impact on the AAO Group's accounting policies, financial reporting or disclosure.
• There is no material amendment or termination to any material agreement relating to the AAO Group's business.
• There is no material litigation that will arise or be realised to the detriment of the AAO Group.
• There are no business acquisitions or mergers other than the acquisition of EML.
• There are no contingent liabilities that will materialise to the detriment of the AAO Group.

8.7.3 Sensitivity analysis

The Directors' forecast has been based on certain assumptions outlined in Section 8.7.1 and 8.7.2 of the Prospectus, regarding future conditions, events and such matters as economics, industry, regulatory and other matters relating to the AAO Group. The AAO Group's financial performance is sensitive to a number of key variables including:

• revenue levels; and
• administrative costs.

Investors should note that this analysis treats each movement in an assumption in isolation from possible movements in other assumptions, which may not be the case. Movements in one assumption may have an off-setting or compounding effect which is also not reflected in this analysis. In addition, it is possible that more than one assumption may move at any point giving rise to cumulative effects, which are also not reflected in this analysis. The analysis presented is no indication of the likely level of variation to each assumption.

Typically the AAO Group's management would respond to any material adverse change in conditions by taking appropriate action to minimise (to the extent possible) any adverse effects on profits. The effect of any such mitigation action has also been excluded from the following analysis.

Sensitivity analysis	FY2011 forecast
Base earnings NPAT (\$'000)	(6,042)
Revenue (+/-10%)*

NPAT impact (+/-)(\$'000)	45
NPAT impact (+/-)(%)	2%

Administrative costs (+/-10%)

NPAT impact (+/-)(\$'000)	110
NPAT impact (+/-)(%)	2%

*Represents the sensitivities for the two month forecast. The administrative costs sensitivities are based upon the administrative costs are set out in section 8.6.1

8.8 Statement of significant accounting policies

The significant accounting policies adopted by the AAO Group are set out below.

8.8.1 Basis of preparation

The historical financial information which has been prepared in accordance with the measurement, but not all of the disclosure requirements of Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act.

8.8.2 Summary of significant accounting policies

Principles of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries, including EML) (referred to as 'the AAO Group' in these financial statements).

Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during the year are included in the statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the AAO Group. All intra-AAO Group transactions, balances, income and expenses are eliminated in full on consolidation.

Business combinations have been accounted for using the acquisition method of accounting.

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors of the AAO Group.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances and rebates. The AAO Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the AAO Group's activities as described below. The AAO Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Revenue is recognised for the major business activities as follows:

Rendering of services – Emerchants

The AAO Group develops and operates a payment system for pre-paid debit, MasterCard, gift and loyalty cards which are usually valid for a period of 1 month to 3 years. Fees received are for the initial development as well as ongoing administration of the cards. The AAO Group also receives a portion of breakage revenue on gift and loyalty cards which is unspent monies on expired cards. Revenue from the rendering of services is recognised

by reference to the stage of completion of the contract except where it cannot be reliably measured. Where there is limited trading history on which to base estimates, the AAO Group recognises such revenue when received or receivable.

Other income

Revenue received on funds held on behalf of customers is presented as other income as it currently forms one of the AAO Group's main lines of recurring revenue. Interest income is recognised using the effective rate method.

Government grants

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the AAO Group will comply with all attached conditions. Government grants relating to costs are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate. Accordingly, government grants to assist with exploration activities are recognised as deferred income in the statement of financial position and recognised as income when the related exploration and evaluation is written off.

Income tax

Current tax

Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of taxable profit or tax loss for the year. It is calculated using tax rates and tax laws that have been enacted or substantially enacted by reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable).

Eligibility for claiming a research and development tax offset is dependent on the AAO Group complying with the Australian Taxation Office's research and development group turnover provision.

Deferred tax

Deferred tax is provided on all temporary differences at balance date arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items.

In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profit. Furthermore, a deferred tax liability is not recognised in relation to taxable temporary differences arising from goodwill.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacting by the reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the AAO Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the AAO Group intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax is recognised as an expense or income in the statement of comprehensive income, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill or excess of net assets.

Business combinations

The acquisition method of accounting is used to account for all business combinations, including business combinations involving entities or businesses under common control, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the AAO Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the AAO Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree's net identifiable assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the AAO Group's share of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

Contingent consideration is classified as either equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.

Joint ventures

Interests in jointly controlled assets, operations and entities are reported in the financial statements by including the AAO Group's share of assets employed in the joint ventures, the share of liabilities incurred in relation to the joint ventures and the share of any expenses incurred in relation to the joint ventures in their respective classification categories.

Impairment of non-financial assets (other than exploration and evaluation)

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, cash in banks and bank deposits.

Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Trade receivables are generally due for settlement within 30 days. They are presented as current assets unless collection is not expected for more than 12 months after the reporting date.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by reducing the carrying amount directly. An allowance account (provision for impairment of trade receivables) is used when there is objective

evidence that the AAO Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the impairment allowance is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.

The amount of the impairment loss is recognised in profit or loss within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in profit or loss.

Plant and equipment

Plant and equipment are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item. In the event that settlement of all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their present value as at the date of acquisition.

Depreciation is provided on plant and equipment. Depreciation is calculated on a straight line basis so as to write off the net cost of each asset over its expected useful life to its estimated residual value. The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period. The following estimated useful lives are used in the calculation of deprecation:

• Plant and equipment 3-5 years
• Leasehold improvements 40 years or unexpired portion of lease, whichever is shorter
• Computer equipment 1.5 –10 years
• Office furniture and fittings 2-10 years
• Low value pool 2.7 years

Exploration and evaluation expenditure

Exploration and evaluation expenditure in relation to each separate area of interest is recognised as an exploration and evaluation asset in the year in which it is incurred where the following conditions are satisfied:

• (a) the rights to tenure of the area of interest are current; and
• (b) at least one of the following conditions is also met:
• (i) the exploration and evaluation expenditures are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale; or
• (ii) exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing.

Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploration drilling, trenching and sampling and associated activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest.

Exploration and evaluation assets are assessed for impairment when facts and circumstances (as defined in AASB 6 "Exploration for and Evaluation of Mineral Resources") suggest that the carrying amount of exploration and evaluation assets may exceed its recoverable amount. The recoverable amount of the exploration and evaluation assets (or the cash-generating unit(s) to which it has been allocated, being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years.

Where a decision is made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment, reclassified to development properties, and then amortised over the life of the reserves associated with the area of interest once mining operations have commenced.

Intangible assets

Goodwill

Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of associates is included in investments in associates.

Goodwill is not amortised but it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cashgenerating units for the purpose of impairment testing. The allocation is made to those cashgenerating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose, identified according to operating segments

IT development and software

Costs incurred in developing products or systems and costs incurred in acquiring software and licenses that will contribute to future period financial benefits through revenue generation and/or cost reduction are capitalised to software and systems. Costs capitalised include external direct costs of materials and service and direct payroll and payroll related costs of employees' time spent on the project. Amortisation is calculated on a straight-line basis over periods generally ranging from 2.5 - 4 years.

IT development costs include only those costs directly attributable to the development phase and are only recognised following completion of technical feasibility and where the AAO Group has an intention and ability to use the asset.

Customer contracts

Customer contracts acquired as part of a business combination are recognised separately from goodwill. The customer contracts are carried at their fair value at the date of acquisition less accumulated amortisation and impairment losses. Amortisation is calculated based on the timing of projected cash flows of the contracts over their estimated useful lives, which currently vary from 1 - 3 years.

Research and development

Research expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets when it is probable that the project will, after considering its commercial and technical feasibility, be completed and generate future economic benefits and its costs can be measured reliably. The expenditure capitalised comprises all directly attributable costs, including costs of materials, services, direct labour and an appropriate proportion of overheads. Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is ready for use on a straight-line basis over its useful life, which varies from 2.5 - 4 years.

Goods and service tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:

• (a) here the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or
• (b) for receivables and payables which are recognised inclusive of GST, the net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.

Cash flows are included in the statement of cash flows on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.

Trade and other payables

These amounts represent liabilities for goods and services provided to the AAO Group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the reporting date. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

Earnings per Share

Basic earnings per Share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity other than ordinary Shares, divided by the weighted average number of ordinary Shares, adjusted for any bonus element.

Diluted earnings per Share is calculated as net profit attributable to members of the parent, adjusted for:

• costs of servicing equity other than ordinary Shares;
• the after tax effect of dividends and interest associated with dilutive potential ordinary Shares that have been recognised as expenses; and
• other changes in revenues or expenses during the period that would result from the dilution of potential ordinary Shares; divided by the weighted average number of ordinary Shares and dilutive potential ordinary Shares, adjusted for any bonus element.

Employee benefits

Short-term obligations

Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. All short-term employee benefit obligations are presented as other current liabilities.

Other long-term employee benefit obligations

The liability for long service leave which is not expected to be settled within 12 months after the end of the period in which the employees render the related service is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the end of the reporting period on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave, and sick leave when it is probable that settlement will be required and they are capable of being measured reliably. Liabilities recognised in respect

of employee benefits are measured at their nominal values using the remuneration rate expected to apply at the time of settlement.

Defined contribution superannuation plan

Contributions to defined contribution superannuation benefit plans are expensed when incurred.

Share based payments

The AAO Group provides benefits to employees (including senior executives) in the form of share-based payments via an Employee Share Option Plan (ESOP). The fair value of Options granted under the ESOP is recognised as an employee benefit expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the Options granted, which includes any market performance conditions but excludes the impact of any service and nonmarket performance vesting conditions and the impact of any non-vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to vest with the total expense recognised over the vesting period. Any revision to the number of options that are expected to vest is reflected in the profit and loss with a corresponding adjustment to equity.

AAO Group also issues Shares to senior executives for no cash consideration in exchange for services provided to AAO Group subject to fulfilment of certain performance criteria. Fair value is determined by an external valuer taking account of market and non-market conditions.

The expense is recognised over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting period).

Contributed equity

Ordinary Shares are classified as equity. Incremental costs directly attributable to the issue of new Shares or Options are shown in equity as a deduction, net of tax, from the proceeds.

8.9 Notes to the pro forma income statement

Note 1: Components of revenue

EML's contribution to the Group's pro forma consolidated revenue is based on net breakage income plus revenue received on funds held on behalf of customers plus set-up and transaction fee income, as shown below. Net breakage income is calculated as total (i.e. gross) breakage collected by the Group less breakage paid out to customers, which is not contractually under EML's ownership.

	FY10	FY11
\$'000	Pro forma historical (EML contribution)	Pro forma forecast (EML contribution)
Gross breakage	257	668
Income received on funds held on behalf of customers	71	262
Set-up fee income	643	785
Transaction fee income	284	604
Income (gross breakage basis)	1,255	2,319
Less: breakage paid to customers	(118)	(372)
Revenue (net breakage basis)	1,137	1,947

8.10 Notes to the pro forma statement of financial position

Note 1: Cash and cash equivalents

	Pro forma as at 31 December 2010
	\$'000
Adjustments arising in the preparation of the pro forma balance are summarised as follows:
AAO actual balance	4,307
EML actual balance	54
Opening balance at 31 December 2010	4,362
Capital raising via the issue of 11,764,706 New Shares under the Placement	10,000
Vendor cash consideration	(2,500)
Cost of the EML Placement	(1,155)
Other transaction costs	(243)
Closing (pro forma) balance	10,464

Note 2: Acquisition Goodwill

Goodwill is calculated as follows:

	Pro forma as at 31 December 2010
	\$'000
Cash consideration	2,500
Shares issued (11.5 million Shares at the post-Consolidation price of 0.85c)	9,775
Contingent consideration Shares (2.5 million Shares based upon FY12 sales target)	0
NTA Share issuance (500,000 Shares at the post-Consolidation price of 0.85c)	425
Total consideration paid for EML	12,700
Less net assets of EML at 31 December 2010	1,558
Goodwill arising on EML Acquisition	11,142

Note: No contingent Consideration Shares are included as their issue is not considered probable Note 3: Issued Share capital

Pro forma as at 31 December 2010 Number million
189.3
(151.4)
12.0
11.8
61.6

Note 4: Retained earnings/(losses)

	Pro forma as at 31 December 2010
	\$'000
Adjustments arising in the preparation of the pro forma balance are summarised as follows:
AAO reviewed balance	(7,567)
EML reviewed balance	(2,680)
Opening balance	(10,247)
Cost of Shares issued to Messrs Browning, Plavsic, Barnaba & Willinge (Resolutions 9 – 12 of Notice of Meeting)	(1,217)
Other transaction costs shown in P&L	(243)
Elimination of pre-acquisition profit/(loss) reserves of EML	2,680
Closing (pro forma) balance	(9,027)

The Directors Australasia Consolidated Limited 4/213 Balcatta Road Balcatta WA 6021

21 June 2011

Dear Directors

Subject: Investigating Accountant's Report on Historical and Forecast and Financial Services Guide and Financial Information

We have prepared this report on certain historical and forecast financial information of Australasia Consolidated Limited and its controlled entities (AAO or the Company) and Emerchants Limited (EML) for inclusion in a prospectus dated on or about 21 June 2011 (the Prospectus) relating to the issue of ordinary shares in the Company (the Issue). nclusion on and information Australasia prospectus 21 2011 (the Prospectus) the of

Expressions defined in the Prospectus have the same meaning in this report. the report.

The nature of this report is such that services licence under the Corporations Act 2001. PricewaterhouseCoopers Securities Ltd, which is wholly owned by PricewaterhouseCoopers, holds the appropriate Australian financial servic This report is both an Investigating Accountant's Report, the scope of which is set out below, and a Financial Services Guide, as attached at Appendix A. it should be given by an entity which holds an Australian financial be an which Australian under holds services licence. This the of which is and Consolidated acquire (the Transaction) and conduct an

Background

Australasia Consolidated Limited has agreed to acquire EML (the Transaction) an associated capital raising. The Issue is undertaken in connection with the Transaction as set out in the Prospectus.

Scope

Australasia Consolidated Limited has requested PricewaterhouseCoopers Securities Ltd to prepare this investigating accountant's report (the Report) covering the following information: ountant's year ended 30 June 2010 ( raising. Issue connection out Consolidated Ltd Report) the ar ended 30 2010 (the AAO

Financial information

• (i) The income statement of the Company for the ye Standalone Historical Financial Information Offer Document; ) as disclosed in Section 8.6.1 of the of ar 30 (the EML Standalone
• (ii) The income statement of EML for the ye Historical Financial Information year ended 30 June 2010 ( ) as disclosed in Section 8.6.2 of the Offer Document; ) as in

(iii) The Company and EML comb information for the year ended 30 June 2010 together with the proforma statement of financial position of the AAO Group which assumes completion of the Offer and the Transaction as at 31 December 2010 as set out in Sect (together the in Section 8.3 and 8.4 of the Offer Document; combined pro forma income statement Section 8.4 of the Offer Document AAO Group Pro Forma Historical Financial Information and cash flow position of Group the the 8.4 Document Group Information) as disclosed

(together the Historical Financial Information )

• (iv) The forecast income statement of the Company for t AAO Standalone Forecast Financial Information the Offer Document; the year ending 30 June 2011 (the ) as disclosed in Section 8.6.1 of he EML the year EML
• (v) The forecast income statement of EML for the year ending 30 June 2011 (the Standalone Forecast Financial Information Document; ) as set out in Section 8.6.2 of the Offer
• (vi) The Company and EML combined pro forma forecast income statement and cash flow information for the year ending 30 June 2011 (the Financial Information AAO Group Pro Forma Forecast ) as disclosed in Section 8.3 and 8.5 of the Offer Document.

(together the Forecasts )

(collectively the Financial Information )

This Report has been prepared for inclusion in the Prospectus. We disclaim any assumption of responsibility for any reliance on this Report or on the Hist to which this Report relates for any purposes other than the purpose for which it was prepared. Historical Financial Information or the Forecasts

Scope of review of Historical Financial Information

The Australasia Consolidated Limited historical financial info Prospectus has been derived from the audited financial statements of the Company. The financial statements were audited by HLB Mann Judd that issued a Historical Financial Information incorporates such pro forma transactions and adjustments as the Directors considered necessary to present the Historical Financial Information on a basis consistent with the Forecasts. The Directors are responsible for the preparation of the Histor Information, including the determination of the Pro Forma Transactions and adjustments completion of the Offer and the Transaction information set out in Section 8.6.1 of the an unqualified audit opinion on them. The rmation Transaction. as in the income and Document.This for in disclaim assumption orical Financial which this rmation in Prospectus has from financial of Company. unqualified opinion on them. such pro Directors on a Forecasts. The are Historical Financial including the Forma Transactions adjustments related to the

The EML historical financial information set out in Section 8.6.3 of the Prospectus has been from the audited financial statements of EML. The financial statements were audited by BDO that issued a modified audit opinion on them. The mod ability to continue as a going concern Section 8.6). The Issue addresses the going concern modifications were in respect of and the fair value of intellectual property acquired (refer to modification. set in Section been derived of statements n of uncertainty over EML's al to

The fair value of EML's assets and therefore represents a limitati s being acquired by AAO has yet to be determined (refer to limitation of scope to the review set out below. (refer to Section 8.4)

The Historical Financial Information incorporates such pro forma transactions and adjustments as the Directors considered necessary to present the Historical Financial Information on a basis consistent with the Forecasts. The Directors are responsible for the preparation of the Historical Financial Information, including the determination of the Pro Forma Transactions and adjustments. such pro Directors on a ecasts. The are including the Forma Transactions review the Historical with Australian

We have conducted our review of the Historical Financial Information in accordance Auditing Standards applicable to review engagements. We made such inquiries and performed such procedures as we, in our professional judgement, considered reasonable in the circumstances including: ecasts. financial performance of the Company and EML for the applicable review engagements. We procedures professional in cial Company of work papers, accounting of Informationto application and Accounting other professional reporting

• an analytical review of the audited finan relevant historical period
• a review of work papers, accounting records and other documents
• a review of the adjustments made to the Historical Financial Information
• a review of the assumptions which include AAO Group pro forma statement of financial p the Pro Forma Transactions used to compile the position
• a comparison of consistency in application of the recognition and measurement principles under Australian Accounting Standards and other mandatory profession requirements in Australia, and the accounting policies adopted by the Co Section 8.8 of the Prospectus Prospectus, and requirements Australia, Company disclosed in
• enquiry of Directors, management and others.

These procedures do not provide all the evidence that would be required assurance provided is less than given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion on the Historical Financial Information. in an audit, thus the level of the of

Scope of review of Forecasts

The Directors are responsible for the preparation and presentation of the Forecasts, including the best estimate assumptions (which include the Pro Forma Transactions) on which they are based. presentation the include Pro Transactions) the assumptions was in accordance

Our review of the best estimate assumptions underlying the Forecasts was conducted with Australian Auditing Standards applicable to review engagements. Our procedures consisted primarily of enquiry and comparison and other such analytical review procedures as we considered necessary to form an opinion as to whether anythin believe that: sponsible anything has come to our attention which causes us to Auditing consisted and procedures g best for

(a) the best estimate assumptions do not provide a reasonable basis for the Forecasts;

• (b) in all material respects, the Forecasts are not properly prepared on the basis of the best estimate assumptions measurement principles prescribed in Australian Accounting Standards and other mandatory professional reporting requirements in Australia, and the accounting policies of the Company disclosed in Section 8.8 of the Prospectus; or and presented fairly in accordance with the recognition and respects, of presented accordance and
• (c) the Forecasts are unreasonable.

The Forecasts have been prepared by the Directors to provide investors with a guide to the Company's potential future financial performance based upon the achievement of certain economic, operating, development and trading assumptions about future events and actions that have not yet occurred and may not necessarily occur. There is a considerable degree of subjective judgement involved in the preparation of Forecasts. Actual results may var the variation may be materially positive or negative. Accordingly, investors should have regard to the description of investment risks set out in Section 10 of the Prospectus. ection perating, vary materially from the Forecasts and reporting Australia, Forecasts prepared Company's future performance based upon economic,development and that not yet

Our review of the Forecasts and the best est is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards. A review of this nature provides less assurance than an audit. We have not performed an audit and we do not express an audit opinion on the Forecasts included in the Prospectus. estimate assumptions upon which the Forecasts are based occurred There is judgementy from the the or investors have imate the Forecasts of this performed an opinion on the the

Limitation of scope of review

In preparing the pro forma income statements group, no adjustments have been made to reflect of EML in accordance with AASB 3 Business Combinations as described in Section 8.4 of the Prospectus. and statement of financial position the fair values of the acquired assets and liabilities of the combined

Accordingly the Historical Financial Information and Forecast Financial Information does not necessarily contain all of the adjustments to the reported amounts of assets and liabilities that will be required to reflect their fair values at acquisition date. Consequently the AAO Group pro forma historical and forecast income statements do not necessari changes that would be required had fair value adjustments been undertaken. sarily necessarily reflect the depreciation and amortisation the liabilitiesEML Combinations as thesarily contain of to the liabilities their acquisition date. the formaly be review, not limitation described above, nothing

Review statement on Historical Financial Information

Based on our review, which is not an audit, except for the limitation of scope de has come to our attention which causes us to believe that:

• the AAO Group pro forma statement of financial position the basis of the Pro Forma Transactions has not been properly prepared on prepared sonable AAO Group pro forma
• the Pro Forma Transactions do not form a rea statement of financial position reasonable basis for the

• the Historical Financial Information, as set Prospectus, does not present fairly: out in Section 8.4, 8.5, 8.6.1 out Section and 8.6.2 of the
• (i) the standalone historical income statements of the ended 30 June 2010; and Company and EML for the year
• (ii) the AAO Group information combined pro forma historical income statement and cash flow for the year ended 30 June 2010; and
• (iii) the AAO Group assuming completion of the Pro Forma Transactions pro forma statement of financial position as at 31 December 2010

in accordance with the recognition and measurement principles prescribed under Australian Accounting Standards and other mandatory professional reporting requirements in Australia, and the accounting policies adopted by the Company disclosed in Section 8.8 of the Prospectus. Company EML as at AustralianStandards Australia, theadopted Company in Prospectus.

Review statement on the Forecasts

Based on our review of the Forecasts, which is not an audit, and the reasonableness of the best estimate assumptions giving rise to the Forecasts, excep nothing has come to our attention which causes us to believe that: es except for the limitation of scope described above review which an audit, the t the scope above,

• the best estimate assumptions set out in Section 8.7.1 of the Prospectus do not provide a reasonable basis for the preparation of the Forecast Forecasts; best in respects, of assumptions presented accordance and
• in all material respects, the Forecasts are not properly prepared on the basis of the best estimate assumptions and presented fairly in accordance with the recognition and measurement principles prescribed in Australian Accounting Standards and other m professional reporting requirements in Australia, and the accounting policies of the Company disclosed in Section 8.8 of the Prospectus; or mandatory reporting Australia, best assumptions out 8.7.1 are subject to significant
• the Forecasts are unreasonable.

The best estimate assumptions set out in Section 8.7.1 of the Prospectus ar uncertainties and contingencies often outside the control of the Company. assumed, actual results and distributions achieved by the Company may vary significantly from the Forecasts. Accordingly, we do n events, by their very nature, are not capable of independent substantiation. not confirm or guarantee the achievement of the Forecasts, as future If events do not occur as distributions Company ot guarantee their nature, substantiation.

Subsequent events

Apart from the matters dealt with in this Report, and having regard to the scope of our Repor best of our knowledge and belief no material transactions or events outside of the ordinary course of business of the Company have come to our attention that would require comment on, or adjustment to, the information referred to in our Report or deceptive. that would cause such information to be misleading or dealt in Report, having the our Report, to the transactions of course of on, adjustment cause such or

Independence or disclosure of interest

PricewaterhouseCoopers Securities Ltd does not have any interest in the outcome of the Issue other than the preparation of this Report and participatio professional fees will be received. participation in due diligence procedures for which normal

Liability

PricewaterhouseCoopers Securities Ltd has consented to the inclusion of this Report in the Prospectus in the form and context in which it is included. The liabilit Securities Ltd is limited to the inclusion of this Report in the Prospectus. PricewaterhouseCoopers Securities Ltd makes no representation regarding, and has no liability for, any other statements or other material in, or any om liability of PricewaterhouseCoopers omissions from, the Prospectus. Securities n which Securities consented to the inclusion y of the of makes regarding, liability any included our Services Guide Appendix Report. Financial designed retail their of general

Financial Services Guide

We have included our Financial Services Guide as Appendix A to our Report. The Financial Services Guide is designed to assist retail clients in their use of any general financial product advice in our Report.

Yours faithfully

Jonathan Griffiths Authorised Representative of PricewaterhouseCoopers Securities Ltd

Appendix A – Financial Services Guide

PRICEWATERHOUSECOOPERS SECURITIES LTD FINANCIAL SERVICES GUIDE

This Financial Services Guide is dated 21 June 2011

1 About us

PricewaterhouseCoopers Securities Ltd (ABN 54 003 311 617, Australian Financial Services Licence no 244572) ("PwC Securities") has been engaged by Australasia Consolidated Limited ("AAO") to provide a report in the form of an Investigating Accountants Report in relation to the Historical and Forecast Financial Information (the "Report") for inclusion in the Prospectus dated on or about 2011. 2011Securities (ABN Financial LicenceSecurities") by toHistorical andForecast Prospectus about21 June

You have not engaged us directly but have been provided with a cop because of your connection to the matters set out in the Report. copy of the Report as a retail client y of a client

2 This Financial Services Guide

This Financial Services Guide ("FSG") is designed to assist retail clients in their use of any general financial product advice contained in the Report. This FSG contains information about PwC Securities generally, the financial services we are licensed to provide, the remuneration we may receive in connection with the preparation of the Report, and how complaints against us vice This is to of generalcontained This are with preparation and how against will be dealt with.

3 Financial services we are licensed to provide

Our Australian financial services licence allows us to provide a broad range of services, including providing financial product advice in relation to various financial products such as se in managed investment schemes, derivatives, superannuation products, foreign exchange contracts, insurance products, life products, managed investment schemes, government debentures, stocks or bonds, and deposit products. services of services, financial relation products as securities, interests schemes, products, contracts,debentures, Report was prepared account

4 General financial product advice ancial

The Report contains only general financial product advice. It was prepared without taking into account your personal objectives, financial situation or needs.

You should consider your own objectives, financial situation and needs wh of the Report to your situation. You may wish to obtain personal financial product advice from the holder of an Australian Financial Services Licence to assist you in this assessment. when assessing the suitability en assessing the to obtain personal product of Australian Services assist assessment.including These on an

5 Fees, commissions and other benefits we may receive

PwC Securities charges fees to produce reports, including this Report. These fees are negotiated and agreed with the entity who engages PwC Securities to provide a report. Fees are charged on an

hourly basis or as a fixed amount depending on engages us. In the preparation of this Report our fees are charged on an hourly basis and as at the date of this Report amount to the terms of the agreement with the person who \$175,000. the Report are the

Directors or employees of PwC Securities, PricewaterhouseCoopers, o receive partnership distributions, salary or wages from PricewaterhouseCoopers. or other associated entities, may r partnership distributions, its representatives, employees from time

6 Associations with issuers of financial products

PwC Securities and its authorised representatives, employees and associates may from time to have relationships with the issuers of financial products. For example, PricewaterhouseCoopers may be the auditor of, or provide financial services to, the issuer of a financial product and PwC Securities may provide financial services to the issuer business. of a financial product in the ordinary course of its financial Securities

7 Complaints

If you have a complaint, please raise it with us first, using the contact details listed below. We will endeavour to satisfactorily resolve your complaint in a timely manner. internal complaints handling procedure is available upon request. In addition, a copy of our the of please listed not resolve your your 45 days e Service

If we are not able to resolve your complaint to your satisfaction within 45 days of your written notification, you are entitled to have your matter referred to th ("FOS"), an external complaints resolution service. FOS can be contacted by calling 1300 780 808. You will not be charged for using the FOS service. the Financial Ombudsman Service service. the

Contact Details

PwC Securities can be contacted by sending a letter to the following address:

Jonathan Griffiths Authorised Representative Darling Park Tower 2 201 Sussex Street GPO Box 2650 SYDNEY NSW 1171

10. Investment risks

10.1 Overview

An investment in the New Shares offered under this Prospectus involves inherent risks associated with the Company's intended activities. Neither the Company nor the Directors warrant the future performance of the Company or any investment made pursuant to this Prospectus.

The Directors recommend that Shareholders and investors examine the contents of this Prospectus together with previous ASX disclosures and public documents of the Company, including its most recent audited financial statements, and rely on the advice of their professional advisers before deciding whether or not to apply for New Shares pursuant to this Prospectus.

The following summary, which is not exhaustive, represents some of the major risk factors which Shareholders and investors need to be aware of.

10.2 Risk factors specific to the Company and EML

10.2.1 Lower growth in the pre-paid financial card market than anticipated

The markets in which EML operates may grow at a lower rate than EML anticipates, resulting in lower revenue growth than expected.

To reduce the potential impact of this risk the Company has developed strategies supported by business plans to grow EML's share of the pre-paid financial card market.

10.2.2 EML achieving lower market share than anticipated

EML may face difficulty in achieving anticipated growth in market share due to greater competition, resulting in lower revenue growth than expected.

To address this risk, the Company will expand the current sales team and formalise a structured approach to obtaining a greater market share.

10.2.3 Access to growth funding may be limited

Expansion of the Company's activities beyond the acquisition and growth of Emerchants may require further capital expenditure.

There can be no guarantee that the Company will be able to raise further capital if and when needed potentially delaying expansion of the Company's activities beyond the Emerchants business.

10.2.4 Unauthorised disclosure of client information

Unauthorised disclosure of Emerchants' private client information may result in damage to Emerchants' brand, reputation and, possibly, direct and detrimental legal and financial consequences.

To address this risk, Emerchants has invested in developing a robust and scalable information technology platform. The client-facing applications and Core Card Management System comply with the industry security best practice, Payment Card Industry Data Security Standard (PCI DSS). Emerchants undertakes regular PCI compliance reviews to ensure the platform and data are secure.

10.2.5 Disruption of EML's relationships for the provision of services

Pursuant to an agreement between EMH and Cuscal Limited (Cuscal), Cuscal manages all of EML's transaction settlements with the exception of its MasterCard transactions, whose settlements are managed by BankWest. Disruption to the agreement between EMH and Cuscal could result in EML not being able to provide transaction services or undertake any further card issuance. This would result in significant reduction in revenue and profitability.

Cuscal has confirmed that it will continue to provide services to EMH pursuant to the agreement. In addition, as part of its normal course of business, EML is in discussion with Cuscal and other potential transaction settlement providers to access the transaction settlement products on offer.

10.2.6 EMH no longer holding an AFSL

Until such time as EML obtains an AFSL and an agreement is entered into between EML and a transaction settlement provider to manage all of EML's transaction settlements (other than MasterCard), or if it fails to gain an AFSL, EML is reliant on EMH's AFSL as an authorised representative. EML is reliant on EMH's AFSL to carry on a financial services business and to provide general financial advice for the following classes of financial products:

• deposit and payment products limited to basic deposit products and non-cash payment products; and
• to deal in a financial product by issuing, applying for, acquiring, varying or disposing of a financial product.

To maintain its AFSL, EMH is required to meet certain criteria, for example it must remain solvent and must not breach any of its licence conditions.

There is a risk that EMH may breach its licence conditions or may not remain solvent. In EMH's financial statements for the year ended 30 June 2010, EMH 's auditor BDO Audit (Qld) Pty Ltd, raised a significant uncertainty of the ability of EMH to operate as a going concern. To address this concern, AAO, EML, EMH, Globetrotter, John Battley, Tony Ferguson and EMH director Richard Ferguson have entered into a deed containing provisions requiring and enabling EMH to maintain its AFSL. See Section 11.5 for further details.

10.2.7 Commercial relationships with EML customers and suppliers

EML has a number of important supplier and customer relationships. The loss of one or more key supplier or customer relationships could have the potential to adversely impact the operating results of EML.

EML is party to a number of contracts with its customers for the provision of products and services. Some of these contracts are material in nature and in the event that any of these were terminated, there could be an adverse effect on the financial performance and future prospects of EML.

EML's ability to retain key customers may also be materially adversely affected through the loss of key staff.

The Company has entered into multi-year agreements with the key management of EML to minimise this risk.

10.2.8 Regulatory changes in the pre-paid financial card industry

EML's business is impacted by the regulatory regime under which it operates. If the regulatory regime were to significantly change then this may have an impact on the operations and the financial position of the business.

To minimise the risk of the regulatory regime changing in the near future, AAO has initiated an ADI PPF application process so that the Company will be in a position to lodge an application for an ADI PPF as soon as practicable.

Refer to Section 4.9 of this Prospectus for further information about EML's regulatory obligations.

10.2.9 Integration risk

Although there is minimal integration required as part of acquiring the EML business, a level of risk always exists when combining businesses, including risks which may not have been foreseen prior to the acquisition of a business. These risks could result in staff and customer departures, inefficiencies and unforeseen problems arising.

10.2.10 Reliance on key personnel

EML's success depends largely on the core competencies of its key management and personnel, and their familiarisation with, and ability to operate EML, and the Company's ability to retain those key management and personnel.

The Company has entered into multi-year agreements with the key management of EML to minimise this risk.

10.2.11 Inability of both AAO and EML and to secure and maintain appropriate APRA regulated institution status

The AAO Group's medium to long-term strategy is dependent upon receiving appropriate APRA regulated status. As discussed in Section 4.9, it is envisaged that this will involve AAO becoming a NOHC, with EML, its wholly-owned subsidiary, securing an ADI authority as a provider of PPFs. Should this status not be attained and subsequently maintained, the business may not be able to take full advantage of all growth opportunities that are available to it.

10.2.12 Impairment of intangible assets

Accounting standards require the Company to test for impairment of assets on annual basis. Given the significant increase of intangible assets as a result of the EML Acquisition there is a risk of impairment of the intangible assets base in 12 months' time when this test is initially undertaken. The key driver of the result of the impairment test will be the financial performance of the EML business over the following 12 month period.

10.2.13 Increased competition and new market technologies

As is true in any competitive market, the risk exists that current competitors could increase their level of activity in relation to marketing and sales. In addition, new competitors can potentially emerge both from within Australia and from international sources. Finally, the emergence of 'e-commerce' in this industry can potentially translate to new service and product offerings using PDAs and mobile phones.

To reduce the potential impact of this risk the Company has developed strategies supported by business plans to grow EML's share of the pre-paid financial card market.

10.2.14 Insurance

The business of Emerchants is dependent on its IT systems and there are various risks to the business should the IT systems fail. Although EML insures against such risks by way of business interruption and computer / electronic equipment insurance in such amounts as it considers reasonable, there is a possibility that the insurance will not cover all potential exposures and insurance coverage may not be available or may not be adequate to cover any resulting liability.

10.3 General risk factors

10.3.1 Economic conditions

Operating results may vary significantly based on the impact of changes in global economic conditions on clients. Both Australian and world economic conditions may negatively affect the Company's performance. Any slowdown in economic conditions or factors such as the level of production in the relevant economy, inflation, currency fluctuation, interest rates, supply and demand and industrial disruption may have a negative impact on the AAO Group's revenue and costs. These changes may adversely affect the Company's financial performance and/or financial position.

10.3.2 Market conditions

The market price of securities can fall as well as rise and may be subject to varied and unpredictable influences on the market for equities both domestically and internationally. Neither the Company nor the Directors warrant the future performance of the Company or any return on an investment in the Company.

Applicants should be aware that there are risks associated with any securities investment, particularly in light of the recent down turn in world markets. Securities listed on the stock market experience extreme price and volume fluctuations that have often been unrelated to the operating performance of a particular company. These factors may materially affect the market price of the Shares regardless of the Company's performance.

10.3.3 Regulatory risk

The introduction of new legislation or amendments to existing legislation by governments, developments in existing common law, or the respective interpretation of the legal requirements in any of the legal jurisdictions which govern the Company's operations or contractual obligations, could impact adversely on the assets, operations and, ultimately, the financial performance of the Company and its Shares. In addition, there is a commercial risk that legal action may be taken against the Company in relation to commercial matters.

10.3.4 Potential acquisitions

As part of its business strategy, the Company may make acquisitions of, or significant investments in, companies, products or technologies. Any such future transactions would be accompanied by the risks commonly encountered in making acquisitions of companies, products, technologies or resource projects.

10.3.5 Forward looking statements

Any forward looking statements and business objectives contained in this Prospectus are based on a number of assumptions and are subject to uncertainties and unexpected events, many of which may be outside the control of the Company. Accordingly, investors should not place undue reliance on them. Actual results may differ from those presented and these differences may be material.

10.3.6 Accounting standards

Changes in accounting standards or the interpretation of those accounting standards that occur after the date of this Prospectus may adversely impact on the Company's reported financial performance and/or financial position.

10.3.7 Force majeure

The Company is exposed, like most businesses, to "force majeure" risks, which are events beyond its control. Force majeure events include acts of God, fire, flood, earthquakes, war, terrorism and strikes. To the extent that any of these events occur, it may adversely affect the Company's ability to function effectively and therefore affect its financial performance and the value and price of the Shares.

10.4 Investment is uncertain

The above list of risk factors ought not to be taken as exhaustive of the risks faced by the Company or by investors in the Company. The above factors, and others not specifically referred to above, may in the future materially affect the financial performance of the Company and the value of the New Shares offered under this Prospectus. Therefore, the New Shares to be issued pursuant to this Prospectus carry no guarantee with respect to the payment of dividends, returns of capital or the market value of those securities.

Potential investors should consider that a return on an investment in the Company is not certain and should consult their professional advisers before deciding whether to apply for New Shares.

11. Summary of material contracts

11.1 Introduction

Set out below are summaries of the various material contracts entered into by the Company and/or EML which are or may be material to the Placement or the operation of the business of the Company or otherwise are or may be relevant to a potential investor in the Company.

11.2 EML Share Purchase Deed

The Company has entered into a share purchase deed dated 9 May 2011 with Globetrotter and EMH (together, EML Vendors), pursuant to which the EML Vendors have agreed to sell 100% of the shares in EML (EML Shares) to the Company (EML Share Purchase Deed).

Pursuant to the EML Share Purchase Deed the Company will pay the EML Vendors \$2,500,000 in cash and issue up to 30.5 million New Shares, with the exact number to be issued to be determined by AAO's future financial performance. A summary of the consideration provisions of the EML Share Purchase Deed is included at Schedule 1 of this Prospectus.

Under the EML Share Purchase Deed, John Battley (a Proposed Director) and Tony Ferguson (a proposed executive of the Company) (Guarantors), provide certain guarantees to the Company, including the Vendor warranties and the benefit of certain indemnities.

Indemnities given in favour of the Company

The EML Vendors and the Guarantors indemnify the Company and its related bodies corporate, including EML, for all loss suffered by them in respect of any breach of a vendor warranty.

Warranties given by parties

The EML Share Purchase Deed contains warranties that are given by each of the Company to the EML Vendors, and the EML Vendors and the Guarantors to the Company. Each set of warranties is considered customary for a transaction of this nature.

The Company's maximum aggregate liability for warranty claims made by the EML Vendors for a breach of a purchaser warranty is \$5,000,000.

The EML Vendors' and the Guarantors' maximum aggregate liability for a breach of a vendor warranty or a claim under the indemnity referred to above is \$5,000,000.

Conditions precedent to EML Acquisition

Completion of the EML Acquisition is subject to a number of conditions precedent (Conditions Precedent) being satisfied or waived by the Completion Date. The outstanding conditions include:

• (a) that there is no material change to EML's business, financial condition, prospects, contracts or current or future credit standing that may have a material adverse effect on the value of EML's shares, the business of EML or EML itself other than a change requested or consented to by the Company;
• (b) the approval by the Company's shareholders in general meeting of the issue of the Consideration Shares and the Performance Shares to the EML Vendors pursuant to the terms of the EML Share Purchase Deed for the purposes of the ASX Listing Rules;
• (c) the approval by the Company's Shareholders for the Company to raise \$10,000,000 in capital by the issue of New Shares;
• (d) the Company raising \$10,000,000 in capital by the issue of New Shares;
• (e) the Company obtaining all necessary regulatory and shareholder approvals required by the Corporations Act and the Listing Rules in relation to the transactions contemplated by the EML Share Purchase Deed, including all necessary regulatory and shareholder approvals required by Listing Rule 11.1 and the approval of ASX for reinstatement of its securities to quotation;
• (f) EML:

• (i) obtaining an AFSL, the conditions of which enable EML to lawfully conduct its business without EMH's AFSL; and

• (ii) being in compliance with all of the conditions of its AFSL; and

• (g) the repayment and discharge of certain related party loans.

Completion of the EML Acquisition is scheduled to take place 5 Business Days after the Conditions Precedent are satisfied or waived, or on such other date as the parties agree in writing.

Each party must use reasonable endeavours within its power, capacity and control to effect the conditions precedent.

11.3 Voluntary Escrow Deeds with EML Vendors

Each of the EML Vendors has entered into voluntary escrow deeds with the Company pursuant to which 100% of each EML Vendor's New Shares received at Completion of the EML Acquisition will be escrowed for a period of three years commencing on the date of issue of the New Shares.

The voluntary escrow deeds enable the Company to place a holding lock on the escrowed Shares of the relevant EML Vendor.

The EML Vendors have also agreed to execute voluntary escrow deeds in respect of any Shares issued to them as Deferred Consideration Shares, Deferred NA Adjustment Shares, or Performance Shares in accordance with the terms of the EML Share Purchase Deed.

Notwithstanding the terms of the EML Share Purchase Deed, it is the Company's intention that, in the absence of a modification from ASIC, the number of Shares in escrow at any particular time will not exceed 20% of the Company's issued capital at that time.

The voluntary escrow arrangements will not preclude either EML Vendor from participating in a takeover bid if the following conditions are met:

• (a) the offers under the takeover bid are for the securities of the Company in the same bid class as the relevant escrowed securities;
• (b) holders of at least half of the securities of the Company in the bid class that are not escrowed securities, either under these agreements or any other agreement between the Company and one of its Shareholders which imposes similar restrictions, to which the offers relate have accepted the takeover bid; and
• (c) if the takeover bid is an off-market takeover bid, and if the offer is conditional, the EML Vendor agrees with the bidder in writing that a holding lock will be re-applied to each escrowed security that is not bought by the bidder under the takeover bid.

Additionally, an EML Vendor's escrowed Shares may be transferred or cancelled in accordance with a merger by way of scheme of arrangement under the Corporations Act if the EML Vendor agrees in writing that a holding lock will be re-applied if the merger does not take effect.

The voluntary escrow arrangements contained in these deeds also do not preclude the EML Vendors from disposing of their escrowed Shares to the extent required under a buy-back or selective reduction of capital effected in accordance with the Corporations Act.

11.4 Loan Agreement for loan by the Company to EML

By an agreement dated 9 May 2011 the Company has lent \$500,000 to EML (Loan Agreement). The loan is repayable by 31 March 2012. Interest accrues on the loan at a rate of 12%.

The loan is secured by a first ranked fixed and floating charge granted by EML to the Company on standard terms (Charge). However, the Company has agreed to execute a deed of priority in favour of BankWest, subject to Completion of the EML Acquisition, to secure BankWest's performance of the BankWest Payment Schemes Sponsorship Agreement (see Section 11.12 below).

Until the principal sum owing under the Loan Agreement and all monies owing by EML to the Company under any "Transaction Document" are repaid, EML may not lend or pay any amount to any of its related parties, its shareholders or related parties of its shareholders. "Transaction Document" includes among other things, the Charge.

EML makes standard representations, warranties and undertakings including undertakings not to, without the prior written consent of the Company, pay any dividends, increase the salaries of its employees or dispose of or declare a trust over any of its properties except for at arms' length and at full value. Further, EML may not permit any encumbrance over any of its property except where it is

created under a Transaction Document, arises in the normal course of business, or with the prior written consent of the Company.

If EML defaults under the Loan Agreement then the principal amount owing under the Loan Agreement will, upon notification by the Company, become immediately due and payable.

Under the Charge, EML must not, without the prior written consent of the Company, transfer or dispose of any part of the property that is subject to a fixed charge, but may, in the ordinary course of business, dispose of any property that is subject to a floating charge. In addition, EML may not permit any encumbrances to exist over the charged property unless it is expressly approved by the Company or arises in the ordinary course of EML's business.

11.5 EMH Transitional Services Deed

The Company, EMH, EML, Globetrotter, John Battley, Tony Ferguson and EMH director Richard Ferguson have entered into an agreement for transitional services whereby EMH agrees to:

• (a) maintain its status as the holder of an AFSL;
• (b) continue to authorise EML as its authorised representative under EMH's AFSL; and
• (c) continue to perform and maintain its existing commercial relationships with customers and suppliers until such time as those relationships have been assigned or novated to EML, or EML has entered into new commercial arrangements.

Given the significant reliance EML will be placing on EMH continuing to perform its obligations under the transitional services deed, the deed includes provisions requiring and enabling EMH to continue to be in a position to provide the services specified in (a) to (c) above for as long as may be required by EML.

Under the deed:

• (a) EMH is required to place a portion of the cash consideration it is to receive at Completion of the EML Acquisition in a security deposit account opened by EMH for the payment of debts (other than debts owing to EML Vendors and their related parties); and
• (b) Globetrotter, John Battley, Tony Ferguson and Richard Ferguson guarantee to AAO and EML EMH's due performance of its obligations under the deed.

As consideration for provision of the services under the transitional services deed, EML will pay EMH a fee.

EMH provides standard representations and warranties for an agreement of this nature and EMH and the guarantors indemnify EML for any loss it may suffer as a consequence of a breach or nonperformance by EMH of its obligations under the transitional services deed.

The transitional services deed is supported by a deed of forbearance and indemnity whereby the EML Vendors and interests associated with the EML Vendors have agreed that they will not seek repayment of certain amounts owed to them by EMH until such time as EMH is released from its obligations under the transitional services deed.

11.6 Deed of Termination and Release of Managerial Services Agreement

Globetrotter, an EML Vendor and a company controlled by John Battley, a Proposed Director, provides managerial services to EML in consideration for the payment of a monthly fee.

In satisfaction of a Condition Precedent, EML has entered into a deed of termination and release whereby all agreements and arrangements between EML and Globetrotter for the provision of managerial services to EML will be terminated with effect from Completion of the EML Acquisition and:

• (a) EML will be released from all liability to Globetrotter, John Battley and Juanita Oversby; and
• (b) EML will release Globetrotter, John Battley and Juanita Oversby in respect of any liability they may have to EML,

in respect of such agreements, arrangements and services.

11.7 Executive Service Agreements – existing executives

Robert Browning (Managing Director and CEO)

The Company has entered into an executive services agreement engaging Mr Robert Barrett Browning as the managing director and chief executive officer of the Company.

Pursuant to his executive services agreement, Mr Browning is entitled to receive a total remuneration package of \$400,000 per annum (comprising base salary and superannuation benefits at the statutory rate of 9% and other entitlements).

Mr Browning's employment commenced on 16 November 2010 and will end on 30 April 2013 unless extended by mutual agreement between Mr Browning and the Board.

Bryant Plavsic (Executive Director and CFO)

The Company has also entered into an executive services agreement engaging Mr Bryant Plavsic as an executive director and chief financial officer of the Company.

Pursuant to his executive services agreement, Mr Plavsic is entitled to receive a total remuneration package of \$300,000 per annum (comprising base salary and superannuation benefits at the statutory rate of 9% and other entitlements).

Mr Plavsic's employment commenced on 1 November 2010 and will end on 30 April 2013 unless extended by mutual agreement between Mr Plavsic and the Board.

Other terms and conditions

Both agreements include the following terms and conditions:

• (a) each executive is eligible to participate in an employee share option incentive plan (to be established by the Company no later than 1 July 2011) in a manner determined by the Board of the Company;
• (b) each executive is entitled to receive bonus Shares calculated in accordance with a specific formula subject to satisfaction of the following conditions:
• (i) the Board giving its approval to an acquisition within 12 months of the date the executive commences work with the Company; and
• (ii) the price of the Company's Shares traded on ASX being at least \$0.22 per Share for a period of 15 consecutive trading days at any time during the period commencing on the date the executive commences work with the Company and ending on the date which is 3 months after the date of completion of an acquisition;
• (c) each executive must perform various duties consistent with those normally expected of executive officers of a public listed company in the Company's circumstances;
• (d) each executive owes general duties to the Company, which are typical for an agreement of this nature, including:
• (i) duties to act faithfully and diligently and in the best interests of the Company;
• (ii) recognition of the Company's rights regarding the ownership of any intellectual property developed by the executive;
• (iii) confidentiality provisions; and
• (iv) compliance with all policies of the Company;
• (e) the agreements shall terminate on 30 April 2013 unless extended by agreement or terminated beforehand;
• (f) each executive may terminate at any time during the term of the agreement by giving 3 months' notice in writing;
• (g) the Company may elect to terminate the agreement at any time during the term of the agreement by giving the executive 3 months' notice or making a payment in lieu of the total remuneration the executive would have received during the remaining notice period;

• (h) the Company may terminate the agreement without notice in the case of the executive's misconduct and other circumstance contrary to the interests of the Company;

• (i) except in the event of termination by the Company without notice in the circumstances described in paragraph (h) above, on termination of employment the executive shall be entitled to retain any employee options granted but unvested as at the termination date; and

• (j) neither Mr Plavsic nor Mr Browning are subject to any post-termination non-competition restraints.

Yasmin Broughton (General Counsel and Company Secretary)

The Company has also entered into an executive services agreement engaging Ms Yasmin Broughton as General Counsel and Company Secretary of the Company.

Pursuant to her executive services agreement, Ms Broughton is entitled to receive a total remuneration package of \$225,000 per annum (comprising base salary and superannuation benefits at the statutory rate of 9% and other entitlements).

Ms Broughton's employment commenced on 2 May 2011. Her agreement includes the following terms and conditions:

• (a) Ms Broughton is eligible to participate in an employee share option incentive plan (to be established by the Company no later than 1 July 2011) in a manner determined by the Board of the Company;
• (b) Ms Broughton must perform various duties consistent with those normally expected of a general counsel and company secretary of a public listed company in the Company's circumstances;
• (c) Ms Broughton owes general duties to the Company, which are typical for an agreement of this nature, including:
• (i) duties to act faithfully and diligently and in the best interests of the Company;
• (ii) recognition of the Company's rights regarding the ownership of any intellectual property developed by the executive;
• (iii) confidentiality provisions; and
• (iv) compliance with all policies of the Company;
• (d) Ms Broughton may terminate at any time during the term of the agreement by giving 3 months' notice in writing;
• (e) the Company may elect to terminate the agreement at any time during the term of the agreement by giving Ms Broughton 3 months' notice or making a payment in lieu of the total remuneration she would have received during the remaining notice period;
• (f) the Company may terminate the agreement without notice in the case of Ms Broughton's misconduct and other circumstance contrary to the interests of the Company;
• (g) except in the event of termination by the Company without notice in the circumstances described in paragraph (f) above, on termination of employment Ms Broughton shall be entitled to retain any employee options granted but unvested as at the termination date; and
• (h) Ms Broughton is not subject to any post-termination non-competition restraints.

11.8 Executive Service Agreements – new executives

In addition to those employees referred to above, at Completion of the EML Acquisition, the Company intends to execute executive service agreements with the following persons who are considered to be key personnel.

John Battley (Executive Director and COO)

The Company will enter into an executive services agreement engaging Mr John Richard Battley as an executive director and Chief Operating Officer.

Pursuant to his executive services agreement, Mr Battley will be entitled to receive a salary of \$300,000 per annum (including superannuation at the statutory rate of 9% and other entitlements).

Tony Ferguson (CIO)

The Company will enter into an executive services agreement engaging Mr Anthony Thomas Ferguson as Chief Information Officer.

Pursuant to his executive services agreement, Mr Ferguson will be entitled to receive a salary of \$250,000 per annum (including superannuation at the statutory rate of 9% and other entitlements).

Donna Ferguson (GM, Sales and Marketing)

The Company will enter into an executive services agreement engaging Ms Donna Marie Ferguson as General Manager, Sales and Marketing.

Pursuant to her executive services agreement, Ms Ferguson will be entitled to receive a salary of \$175,000 per annum (including superannuation at the statutory rate of 9% and other entitlements).

Each of the new executives' agreements include the following terms and conditions:

• (a) each executive must faithfully and diligently perform the duties and exercise the powers consistent with the position of a person who fulfils the role of a senior executive of a public listed company;
• (b) each executive owes general duties to the Company, which are typical for an agreement of this nature, including:
• (i) promoting the interests and prosperity, and enhance the reputation, of the Company;
• (ii) recognition of the Company's rights regarding the ownership of any intellectual property developed by the executive;
• (iii) confidentiality provisions; and
• (iv) compliance with all policies of the Company;
• (c) termination arrangements are consistent with agreements of this type and the executives must give 3 months notice if they wish to resign; and
• (d) none of Messrs Battley or Ferguson or Ms Ferguson are subject to any post-termination noncompetition restraints.

11.9 Consultancy Agreement – Barbizon Capital Pty Ltd

The Company has entered into a consultancy agreement engaging Barbizon Capital Pty Ltd (Barbizon) to provide services to the Company (Consultancy Agreement). The services to be provided include strategic review of existing and potential future product markets and analysis of and recommendation development for the acquisition of business that represent logical extensions to the Emerchants business, and are to be provided by Barbizon's employee Mr Andrew Burt (Burt).

The Company will pay Barbizon a fee for providing the services. The fee comprises \$28,000 plus GST per month. Barbizon is entitled to recover its reasonable out-of-pocket expenses necessarily incurred in its provision of the services.

Pursuant to the Consultancy Agreement the Company has granted Barbizon 8,000,000 Options exercisable at \$0.29 (on a pre-Consolidation basis) on or before 1 June 2014.

The Consultancy Agreement was entered into on 14 May 2011 and is for a term of one year, unless terminated earlier by either party giving 3 months notice in writing to the other party.

The Consultancy Agreement may also be terminated immediately by the Company:

• (a) if at any time Barbizon or Burt go into liquidation or bankruptcy;
• (b) if Burt:
• (i) is incapacitated by illness or injury of any kind which prevents the performing of the services;
• (ii) commits any serious or persistent breach of any of the provisions of the consultancy agreement;

• (iii) is guilty of grave misconduct or wilful neglect;

• (iv) is convicted of a serious criminal offence; or

• (v) enters into an employment agreement with the Company.

The Consultancy Agreement may also be terminated immediately by Barbizon if at any time:

• (a) the Company commits any serious or persistent breach of any of the provisions of the Consultancy Agreement; or
• (b) there is a change in control of the Company.

Barbizon has agreed to provisions regarding confidentiality of the Company's information and acknowledgement of the Company's ownership of any intellectual property developed by Barbizon or Burt during the course of the consultancy.

Neither party can assign, novate or otherwise transfer any of its rights and obligations under the Consultancy Agreement without the prior written consent of the other party.

11.10 EMH and Cuscal

Pursuant to the terms of the Transitional Services Agreement referred to in Section 11.5, EML has the benefit of agreements between EMH and Cuscal which cover:

• (a) provision of access to Redinet, which is an EFT system owned and operated by Cuscal comprising a combination of hardware, software, telecommunication lines and operational procedures that enables the exchange, reconciliation and settlement of transactions between it and other participants in Redinet, and between participants in Redinet and other similar EFT systems. In order to provide Redinet, Cuscal has entered into a service agreement with a third party, referred to as the "Cuscal Preferred Service Provider". These transactions include the reconciliation of EFT transactions such as ATM cash withdrawals and balance inquiries, EFTPOS terminal purchases, cash withdrawals and refunds; and
• (b) the provision of Bulk Electronic Clearing System (BECS) services to EMH whereby Cuscal:
• (i) approves the use of the direct credit process under BECS by users who issue credit payment instructions to participants in BECS other than Cuscal; and
• (ii) sponsors the use of the direct debit process under BECS by users who issue debit payment instructions to participants in BECS other than Cuscal.

The agreements are for a term of 5 years commencing on 20 February 2008. Cuscal may terminate the agreements upon 30 days notice if EMH breaches a material obligation and does not remedy it within that time. Other termination events include an insolvency event, a restructure event, failure to pay any fees, settlement or security deposit owed to Cuscal under the agreement, and ceasing to hold any licence or authority or like thing that is required for EMH to receive the services provided by Cuscal under the agreements.

The agreement provides that each party indemnifies the other for losses suffered as a result of that party's fraudulent, wilful or negligent act or omission, any breach of the agreement, a claim by a third party for breach of intellectual property rights or the personal injury, death or property damage caused or contributed to by the indemnifying party.

AAO anticipates that EML may be required to provide a security deposit to Cuscal as part of ensuring Cuscal continues to provide the BECS services to EMH.

11.11 First Data Agreement

EML has entered into an agreement with First Data Resources Australia Limited (First Data) for First Data to be EML's exclusive provider of electronic funds transfer switching and processing services (Services).

The agreement was entered into on 26 February 2009 and is for a period of 3 years, renewable by either party for a further 2 years.

In consideration for the provision of the Services, EML paid an upfront fee and agreed to pay transaction processing fees for each transaction processed by First Data. First Data provides standard warranties, such that it has the power to enter the agreement and will provide the Services with due care and skill, but disclaims, to the maximum extent permitted by law, all other warranties, conditions and undertakings that may be implied into the agreement.

EML indemnifies First Data, its officers, employees, agents and contractors for all loss, damage, cost or expense that they may incur as a result of any claim against them by any person in relation to the Services. First Data does not provide any indemnity in favour of EML.

Either party may terminate a particular service that is provided under the agreement, or the agreement in its entirety if the other party commits a material breach and remains in breach for 30 days after notice is given. Either party may terminate the agreement immediately if the other party suffers an insolvency event.

First Data has the additional right to terminate the agreement if a change in law materially impacts its ability to provide the Services, or if any of its agreements with any of its subcontractors expires or terminates and First Data is unable to enter into another suitable agreement in its place, in sufficient time to allow it to continue to provide the Services.

11.12 BankWest Payment Schemes Sponsorship Agreement

EML has entered into an agreement with the Bank of Western Australia Limited (BankWest) whereby Bankwest will:

• (a) facilitate the participation of EML in the payment schemes in respect of the pre-paid debit cards it issues, including the Bulk Electronic Clearing System and the Consumer Electronic Clearing System operated by the Australian Payments Clearing Association Limited, the bill payment clearing system operated by BPAY Pty Ltd, the MasterCard scheme, and any other card scheme (Payment Scheme);
• (b) accept, hold and release the deposit funds associated with the pre-paid debit cards issued by EML; and
• (c) grant EML the use of MasterCard branding in respect of those pre-paid debit cards.

The agreement was entered into on 17 March 2010 and is for a term of 3 years, to be renewed annually thereafter unless terminated.

Either party may terminate the agreement by giving 6 months' written notice to the other. Either party may also terminate the agreement on 1 months' written notice if there is a breach incapable of remedy, on 20 days' notice if the breach is not remedied in that amount of time after a notice is given requesting such remedy, and with immediate effect if the other party experiences an insolvency event, a change in control (without written consent of the terminating party), there is a material change in BankWest's rights as a member of MasterCard, or EML does not achieve annual volume targets. The fees EML must pay to BankWest include fees for set up, IT development, various registrations, issuance of each pre-paid debit card and for each transaction.

Under the agreement, EML indemnifies BankWest for all losses arising out of claims made by third parties in respect of the following:

• (a) acts, omissions, negligence, intentional misconduct, or breach of the agreement by employees and agents of EML and EML customers;
• (b) negligence or fraud by EML customers and cardholders;
• (c) compliance by BankWest with any of EML's instructions pursuant to the agreement;
• (d) breach of the Payment Scheme rules by EML;
• (e) chargebacks or other reversals of deposits under the MasterCard scheme that in leaves any pre-paid debit card with a negative balance;
• (f) EML's operation of the account which holds funds associated with pre-paid debit cards;
• (g) payments by BankWest purporting to be under a cardholder's authority; and
• (h) any breach of country sanctions, government or regulatory rules and regulations.

EML also indemnifies BankWest for losses incurred by EML that arise from errors and delays caused by other interchange partners, and from any act or omission of BankWest unless the error is caused directly by the fraud or negligence of Bankwest or a breach of the agreement by BankWest.

To secure its obligations under the agreement, EML has agreed to provide Bankwest with a firstranking fixed and floating charge over all of its assets and undertakings (Bankwest Charge) on the following terms.

In order to establish the Bankwest Charge as first-ranking, the Company will execute a deed of priority in Bankwest's favour, subject to Completion of the EML Acquisition.

11.13 EML standard terms for customer stored value cards agreements

EML has standard terms in place by which it offers customers the provision of the following services (Standard Services):

• (a) access, via stored value cards, to the electronic payment systems owned and operated by EML;
• (b) delivery of stored value cards to the customer for distribution by the customer to cardholders;
• (c) transactional access to use and reload stored value;
• (d) arranging for funds held all cards distributed to be held by an ADI; and
• (e) provision of information in respect of cardholders' stored value cards, transactions and balances.

In consideration for the Standard Services, the customer agrees to pay fees for setup and card manufacture, and acknowledges that EML is entitled to charge the cardholder for cardholder fees.

The term of each stored value cards agreement is 12 months.

Each agreement incorporates by reference to EMH's product disclosure statement (PDS) which is provided to cardholders and which states the conditions of use of cards provided to the relevant cardholders. Once it has obtained its own AFSL, the Company will establish and provide to cardholders its own product disclosure statement.

EMH's present PDS provides, among other things:

• (a) that stored value cards expire three years after the stored value is issued;
• (b) that fees and other costs are at the discretion of EMH;
• (c) that EMH may demand the return of the stored value at any time for security reasons or where a term of the PDS is breached, capture the stored value card at any ATM, or stop the stored value card from being used at any time; and
• (d) that the customer is not liable for unauthorised use of a stored value card before the customer receives it, after the customer reports it lost or stolen and where the customer does not contribute to any unauthorised use of the stored value card.

Either party may terminate the agreement at any time with 60 days written notice. Either party may terminate the agreement immediately if the other party breaches the agreement and remains in breach for 10 days following service notice of breach, if that other party suffers an insolvency event or if a force majeure event continues for more than 2 months.

The customer indemnifies EML for any losses arising from any claims brought by any third party in respect of the following:

• (a) acts, omissions, negligence, intentional misconduct or breach of the agreement by their employee or agent;
• (b) their own negligence and fraud;
• (c) EML's compliance with any specific instruction they may make; and
• (d) unless fraudulent, gross negligence or a breach of the agreement, any act or omission of EML relating to the agreement.

In addition, the agreement provides, among other things:

• (a) that each party must keep confidential information secure and not disclose it except in specific circumstances;
• (b) that nothing in the agreement constitutes a transfer of intellectual property by EML; and
• (c) that the customer must use its best endeavours to promote and advertise the card and Standard Services to potential cardholders.

11.14 EML standard terms for customer gift card fee agreements

EML has a standard agreement by which it charges the transactional fees applicable to ongoing EML co-branded gift card programs.

The agreement provides for the gift card transaction fees, such as the fee for a successful transaction and for a declined transaction, and setup fees, such as the fee for monthly reporting and the fees for card artwork and card design.

At present, EML's standard terms for gift card services do not contain any provisions specifying the conditions on which the gift cards are provided, the duration of the agreement or the manner in which the agreement may be terminated.

The Company intends that after Completion, EML will review and modify its gift card fee agreements to include detailed terms and conditions in relation to, among other things, duration, termination, indemnities, warranties, confidentiality and intellectual property.

11.15 Oracle Licence and Services Agreement

EML has purchased various Oracle software licences and related products and services.

EML has also entered into an ongoing licences and services agreement with Oracle Corporation Australia Pty Ltd (Oracle) for the provision of software update licenses and support for Oracle Database Enterprise Edition. The agreement is for a term of 1 year commencing on 28 February 2011. The agreement may be renewed annually upon payment of a renewal fee.

Oracle warrants that programs licensed under the agreement will operate as described in the program documentation for 1 year after delivery, and that services will be provided in a professional manner consistent with industry standards. Oracle's liability under those warranties is limited, as applicable, to the correction of program errors or the refunding of fees, or the re-performance of services or the refunding of fees.

Oracle warrants that any hardware and operating system media and integrated software media it provides will be free from material defects in materials and workmanship for 90 days from the date it was shipped. Where the law permits, Oracle's liability pursuant to that warranty is limited to repair, replacement or refund of the product.

Oracle's liability for damages, and for any loss of profits, revenue, data or data use is limited to the amount of the fees paid to Oracle under the agreement. EML's liability is limited in the same way.

Each party indemnifies the other for claims made by third parties that information provided by the other party infringes intellectual property rights.

11.16 Edge Loyalty Systems Exclusivity Agreement

EML has entered into an exclusivity agreement with Edge Loyalty Systems Pty Ltd (Edge Loyalty) dated 1 April 2010 whereby EML has granted to Edge Loyalty exclusivity over access to and the use of EML's open loop gift cards within the Australian and New Zealand markets.

Open loop gift cards are non-reloadable gift cards that can be used to retrieve value wherever EFTPOS is accepted.

The period of exclusivity with respect to open loop gift cards is two years from 13 April 2010.

Either party may terminate the agreement on 30 days written notice if the other party has breached a material term of the agreement and has not remedied that breach. Either party may terminate the agreement immediately if the other party breaches a material term of the agreement that is incapable of remedy, or suffers an insolvency event.

Either party may assign its rights and benefits under the agreement to a third party, but only with the prior written consent of the other party.

11.17 Stored Value Cards Agreement with iNcard Pty Ltd

Pursuant to a heads of agreement dated 15 February 2011 EML has entered into a stored value cards agreement with iNcard Pty Ltd (iNcard), for EML to provide iNcard cards and associated services to iNcard for distribution through stores operating under the TeleChoice brand name.

The agreement is for a term of one year commencing on 10 June 2011 and includes two options for iNcard to extend the agreement for one year each.

In consideration for the provision of the iNcard cards, iNcard paid EML a set-up fee and will continue to pay EML fees for cards ordered, EFTPOS transactions, ATM withdrawals, balance enquiries, deposits, and a monthly card activation fee for each card.

Either party may terminate the agreement at any time with 180 days written notice. Either party may terminate the agreement immediately if the other party breaches the agreement and remains in breach for 10 days following service notice of breach, if that other party suffers an insolvency event or if a force majeure event continues for more than 2 months.

Other than as regards the notice period for termination, the Agreement includes the standard terms for customer stored value cards agreements described in Section 11.13.

11.18 Lease of Suite 3/54 Vernon Terrace, Teneriffe, Queensland

EML has executed an agreement of intent to lease with Simba Securities (Aust) Pty Ltd (Simba), for the lease of EML's premises located at suite 3/54 Vernon Terrace, Ground Floor, Winchcombe Carson Woolstore, Teneriffe, Queensland.

The lease commenced on 1 October 2008 and will expire on 1 October 2011. It is subject to 2 options to renew for further terms of 3 years each.

The rent payable is \$A7,060 per month, which is to be adjusted on 1 July 2011 in accordance with a movement in the consumer price index (CPI), but in any event is not increased by less than 4%. If the lease is renewed, the rent is subject to market review in the first year of each further term, and for each other year it is adjusted in accordance with the CPI, but is not to be increased by less than 5%.

11.19 Valleybrook Option Agreement

The Company has entered into an option agreement with Valleybrook Investments Pty Ltd (Valleybrook) dated 8 April 2011 pursuant to which Valleybrook agreed to grant to the Company the option to purchase prospecting licence P38/3313. The Company paid Valleybrook \$10,000 for this option.

Vallybrook is an entity related to John Terpu, a Director of the Company.

The option may be exercised by the Company within 12 months from the date of the option agreement (Option Period) by giving Valleybrook notice in writing prior to the Option Period expiring.

Upon the Company's exercise of the option, Valleybrook agrees to sell and the Company agrees to purchase its rights and interests in the Mt Lucky Tenement, free from all encumbrances (except any native title conditions imposed by the Minister on the Mt Lucky Tenement), in consideration of the payment by the Company to Valleybrook of \$280,000.

In consideration for Valleybrook entering into the option agreement, the Company granted Valleybrook the right to be paid a 5% overriding royalty on the gross sale price of any minerals mined from the Mt Lucky Tenement (Royalty). The Royalty will be on terms set out in a royalty deed in accordance with a formula set out in the option agreement.

The Company may, but is not obliged to, carry out exploration activities on the Mt Lucky Tenement in accordance with the requirements under the Mining Act 1978 (WA).

The Company must indemnify Valleybrook for expenses in relation to the rehabilitation resulting from any exploration activities the Company undertakes on Mt Lucky Tenement including any activity undertaken by the Company prior to entering into the option agreement.

Valleybrook must, amongst other things:

• (a) administer the Mt Lucky Tenement with due regard to the interests of the Company under the option agreement and in accordance with the provisions of the Mining Act;
• (b) Valleybrook must not sell, lease or otherwise deal with the Mt Lucky Tenement, except in accordance with the terms of the option agreement and with prior consent of the Company; and
• (c) maintain the Mt Lucky Tenement in good standing.

As at the date of this Prospectus, the Company has not exercised the option under the option agreement.

11.20 Murninnie Uranium Joint Venture Agreement

On 11 June 2009, the Company) entered into a joint venture agreement known as the "Murninnie Uranium Joint Venture Agreement" with Gingertom Resources Pty Ltd (GRPL), a wholly owned subsidiary of UraniumSA Limited, to explore for Uranium on mineral exploration licence EL 3542 (JV Agreement).

The Company is the beneficial owner of 90% interest in EL 3542 located in the Upper Eyre Peninsula region of South Australia. The remaining 10% interest is held by a syndicate known as Murninnie Mining and Exploration (MME). MME has granted the Company the right to act on behalf of MME with respect to the JV Agreement.

Pursuant to the JV Agreement:

• (a) GRPL and the Company have agreed to engage in an unincorporated joint venture for the purpose of conducting exploration for uranium (and all other co-mingled minerals) within a defined portion of EL 3542 defined as the Cover;
• (b) the participating interest of each of GRPL and the Company in the Cover shall be 70% and 30% respectively;
• (c) the Company's 30% interest will be free carried until the identification of a JORC compliant inferred resource, following which both parties will contribute pro-rata in accordance with their respective interests;
• (d) the Company shall be responsible for funding exploration activities in the area below the Cover (Basement) to satisfy, as a minimum, 50% of the annual expenditure commitment and other statutory requirement in relation to EL 3652 while the Company retains an interest in the Basement of the JV Agreement.

The Murninnie Uranium Joint Venture Agreement shall continue until:

• (a) it has been terminated by written agreement of all the parties;
• (b) due to assignment, withdraw or the operation of the "dilution" provision, there is only one party;
• (c) the expiration of three (3) years from the date of GRPL's election to proceed with the joint venture upon completion of the first exploration program provided that GRPL has not exercised its right to excise a mining area pursuant to the JV Agreement; or
• (d) the termination of the JV Agreement in accordance with its terms.

GRPL completed the First Exploration Program and elected to proceed with the joint venture on 2 December 2010.

11.21 Chellserv Administration Services Agreement

By agreement dated 13 May 2010, as varied by deed dated 21 June 2011 the Company entered into an administration services agreement with Chellingtons Pty Ltd (as trustee for CAS Trust) and Chell Pty Ltd (as trustee for BCF Trust) trading in partnership as Chellserv (Chellserv), for the provision of supervisory and administrative services (Administration Services) including, among other things, the following:

• (a) providing the Board with monthly reports of the Company's financial transactions;
• (b) keeping the books of account and financial records of the Company;
• (c) assisting the Company's secretary and principal accounting officer;
• (d) assisting with preparation of the Company's annual, half yearly and quarterly reports; and
• (e) providing book-keeping services.

The companies comprising Chellserv are associated with two Directors, John Terpu and Bruno Firriolo. Accordingly, Chellserv is considered to be a "related party" of the Company within the meaning of the Corporations Act.

Chellserv will be paid a fee of \$45,000 plus GST per month (or part thereof) for the Administration Services provided. The fee payable is subject to annual review in accordance with a set formula. Chellserv is also entitled to recover any out of pocket expenses incurred in providing the Services. The payment of the fee to Chellserv constitutes a financial benefit to a "related party" of the Company. The Directors consider that this benefit is on arms length terms and is reasonable in the circumstances. Accordingly, the Directors consider the fee payable under the agreement does not require Shareholder approval for the purposes of the related party benefits provisions of Part 2E.1 of the Corporations Act.

The agreement is for a minimum of 2 years from the commencement date unless terminated earlier.

The Company can terminate the agreement by:

• (a) providing 30 days' written notice to Chellserv and paying Chellserv \$350,000; or
• (b) providing a written notice of termination to Chellserv if:
• (i) Chellserv or any of its officers are guilty of grave misconduct in relation to the provision of Services;
• (ii) a liquidator is appointed to Chellserv, or a receiver or receiver and manager is appointed to the whole or a substantial part of its undertaking; or
• (iii) Chellserv is guilty of any breach of its obligations under the agreement,

and, in respect of (i) and (iii), the Company has, in its written notice, set out the particulars of the alleged breach, and such breach has not been substantially rectified within 21 days of receipt of the notice.

Chellserv may terminate the agreement, effective immediately:

• (a) if the Company materially breaches any of its obligations under the agreement and remains in breach for at least 14 days after written notice of such breach has been given by Chellserv to the Company; or
• (b) if a liquidator, inspector, receiver or receiver and manager is appointed to the Company.

The Company has decided to terminate the agreement. Accordingly, the Company must, on termination, pay to Chellserv \$350,000 and will do so before 31 July 2011, conditional on Completion of EML Acquisition. The payment of the termination fee to Chellserv constitutes a financial benefit to a "related party" of the Company. The Directors consider that this benefit is on arms length terms and is reasonable in the circumstances. Accordingly, the Directors consider the termination fee payable under the agreement does not require Shareholder approval for the purposes of the related party benefits provisions of Part 2E.1 of the Corporations Act.

Chellserv will continue to supply the Administration Services to the Company until 30 November 2011.

The Company indemnifies Chellserv for any loss it incurs in performing the Administration Services except where the loss is caused by the wilful default of Chellserv.

Chellserv covenants that it will use its best endeavours to keep the Company's confidential information and trade secrets confidential.

Chellserv may assign its rights and obligations under the agreement but only with the prior written consent of the Company.

12. Additional information

12.1 Rights and liabilities attaching to Shares

The New Shares issued under this Prospectus will be fully paid ordinary shares in the capital of the Company and will rank equally with the Shares already on issue.

The following is a broad summary (though not necessarily an exhaustive or definitive statement) of the rights and liabilities attaching to the Shares. Full details of the rights and liabilities attaching to the Shares are contained in the Constitution of the Company and in certain circumstances, are regulated by the Corporations Act, the ASX Listing Rules, the ASX Settlement Operating Rules and the common law. The Constitution is available for inspection free of charge at the Company's registered office.

(a) Share capital

All issued ordinary fully paid shares rank equally in all respects.

(b) Voting rights

At a general meeting of the Company, every holder of Shares present in person, by an attorney, representative or proxy has one (1) vote on a show of hands and one (1) vote on a poll, for each fully paid Share held, and, in respect of each partly paid Share, a fraction of a vote equal to the proportion which the amount paid (excluding amounts credited) bears to the total issue price of the Share.

Where there is an equality of votes the chairperson has a casting vote, except where the chairperson is not entitled to vote, in which case the matter is to be decided in the negative.

(c) Dividend rights

Subject to the rights or restrictions attached to a class of Shares and the Corporations Act, the Company may pay dividends on Shares as the Directors resolve, but only to the extent that the Company's assets exceed its liabilities by at least the amount of the dividend to be paid, it is fair and reasonable to Shareholders as a whole and the payment of a dividend does not materially prejudice the Company's ability to pay its creditors.

Subject to the Constitution, each Share of a class on which the Board resolves to pay a dividend carries the right to participate in the dividend, in the same proportion that the amount paid (excluding amounts credited) on the Share bears to the total issue price of the Share.

(d) Rights on winding-up

If the Company is wound up, the liquidator may, with the authority of a special resolution, divide the assets of the Company amongst the Shareholders in kind and may, for that purpose, set the value of assets and determine how the division is to be carried out as between the Shareholders or different classes of Shareholders.

The liquidator may, with the authority of a special resolution, vest assets of the Company in trustees on any trusts for the benefit of the Shareholders as the liquidator thinks appropriate, but so that no Shareholder is compelled to accept any marketable securities in respect of which there is any liability.

(e) Transfer of Shares

Shares in the Company may be transferred by such means in accordance with the Constitution, the Corporations Act, the ASX Listing Rules and the ASX Settlement Operating Rules.

The Directors may refuse to register a transfer of Shares only in those circumstances permitted by the Constitution, the ASX Listing Rules and the ASX Settlement Operating Rules.

(f) Further increases in capital

Subject to the Constitution, the Corporations Act and the ASX Listing Rules, Shares in the Company are under the control of the Directors, who may issue, grant options over or

otherwise dispose of unissued Shares to any person, and on such terms, as the Directors determine.

The Company may also issue preference Shares (including preference Shares that are liable to be redeemed).

(g) Variation of rights attaching to Shares

The rights attaching to the Shares of a class (subject to sections 246C and 246D of the Corporations Act) may only be varied or cancelled by a special resolution passed at a separate general meeting of the holders of the issued Shares of that class, or, with the written consent of the holders of seventy-five percent (75%) of the issued Shares of that class.

(h) General meeting

Each holder of Shares, each Director and the Company's auditor will be entitled to receive notice of, and to attend and vote at, general meetings of the Company.

12.2 Employee Share Option Plan

The Company has established an Employee Share Option Plan (ESOP).

Under the ESOP, the Company may grant Options to acquire Shares on terms set by the Board in its discretion.

Shareholder approval for the ESOP has been sought at the General Meeting to enable Options granted under the ESOP to be excluded from the operation of ASX Listing Rule 7.1.

The purpose of the ESOP is to:

• (a) assist in the reward, retention and motivation of eligible employees;
• (b) link reward to Shareholder value creation; and
• (c) align the economic interests of eligible employees with those of Shareholders by providing an opportunity for eligible employees to invest via an equity interest in the form of Options.

The ESOP is open to any person who is a full-time or permanent part-time employee or Director of the Company or a related body corporate of the Company or any other person who is declared by the Board in its sole and absolute discretion to be eligible to participate in the ESOP (Eligible Participant).

Unless the Board in their absolute discretion determines otherwise, Options will lapse upon the earlier of:

• (a) the expiry of the exercise date;
• (b) the Optionholder ceasing to be an Eligible Participant by reason of resignation, dismissal or termination of employment, office or services for any reason;
• (c) the forfeiture of the Options for reasons determined by the Board, including where the Eligible Participant acts fraudulently, dishonestly or has wilfully breached his or her duties to the Company or its related bodies corporate; or
• (d) the Board determining in its reasonable opinion that the vesting conditions (if any) have not been met and cannot be met prior to the expiry date of the Options.

Options may not be granted to a Director or his or her Associates under the ESOP unless approval of the grant is given by the Shareholders in general meeting in accordance with the requirements of the ASX Listing Rules.

The Board has broad discretions under the ESOP, including (without limitation) as to:

• (a) the timing of making an offer to participate in the ESOP;
• (b) identifying persons eligible to participate in the ESOP; and
• (c) the terms of issue of Options (including vesting conditions, if any).

Options issued under the ESOP are not transferable and will not be quoted on ASX.

12.3 Terms of Listed Options

As at the date of this Prospectus, the Company has 130,448,128 Listed Options (26,089,626 on a post-Consolidation basis) on issue granted on the following terms:

• (a) Each Listed Option entitles the Optionholder to subscribe for one (1) fully paid ordinary Share in the Company.
• (b) The exercise price of each Listed Option is \$0.10 (\$0.50 on a post-Consolidation basis).
• (c) Each Listed Option may be exercised at any time before 5.00pm Perth, Western Australia local time 19 April 2013 (Expiry Date). Any Listed Option not exercised by the Expiry Date will automatically expire.
• (d) The Company must give the Optionholder a certificate or Holding Statement stating:
• (i) the number of Listed Options issued to the Optionholder;
• (ii) the exercise price of the Listed Options; and
• (iii) the date of issue of the Listed Options.
• (e) The Listed Options are transferable. Subject to the ASX Listing Rules and the Corporations Act, the Optionholder may transfer some or all of the Listed Options at any time before the Expiry Date by:
• (i) a proper ASX Settlement transfer or any other method permitted by the Corporations Act; or
• (ii) a prescribed instrument of transfer.
• (f) An instrument of transfer of a Listed Option must be:
• (i) in writing;
• (ii) in any usual form or in any other form approved by the Directors that is otherwise permitted by law;
• (iii) subject to the Corporations Act, executed by or on behalf of the transferor, and if required by the Company, the transferee; and
• (iv) delivered to the Company, at the place where the Company's register of Optionholders is kept, together with the certificate (if any) of the Listed Options to be transferred and any other evidence as the Directors require to prove the:
  • (A) title of the transferor to that Listed Option;
  • (B) the right of the transferor to transfer that Listed Option; and
  • (C) the proper execution of the instrument of transfer.
• (g) The Company will apply to ASX for official quotation of the Shares issued on exercise of Listed Options.
• (h) The Optionholder is not entitled to participate in any new issue to existing Shareholders of securities in the Company unless they have exercised their Listed Options before the record date for determining entitlements to the new issue of securities and participate as a result of holding Shares. The Company must give the Optionholder notice of the proposed terms of the issue or offer in accordance with ASX Listing Rules.
• (i) If the Company makes a bonus issue of Shares or other securities to Shareholders (except an issue in lieu of dividends or by way of dividend reinvestment) and no Share has been issued in respect of the Listed Option before the record date for determining entitlements to the issue, then the number of underlying Shares over which the Listed Option is exercisable is increased by the number of Shares which the Optionholder would have received if the Optionholder had exercised the Listed Option before the record date for determining entitlements to the issue.
• (j) If there is a reorganisation (including consolidation, sub-division, reduction or return) of the Share capital of the Company, then the rights of the Optionholder (including the number of Listed Options to which the Optionholder is entitled to and the exercise price) is changed to

the extent necessary to comply with the ASX Listing Rules applying to a reorganisation of capital at the time of the reorganisation.

• (k) Any calculations or adjustments which are required to be made will be made by the Board and will, in the absence of manifest error, be final and conclusive and binding on the Company and the Optionholder.
• (l) The Company will, within a reasonable period, give to the Optionholder notice of any change to the:
• (i) exercise price of any Listed Options held by the Optionholder; or
• (ii) the number of Shares which the Optionholder is entitled to subscribe for on exercise of a Listed Option.
• (m) To exercise Listed Options, the Optionholder must give the Company or its the share registry, at the same time:
• (i) a written exercise notice (in the form approved by the Board from time to time) specifying the number of Listed Options being exercised and Shares to be issued; and
• (ii) payment of the exercise price for the Listed Options the subject of the exercise notice, by way of bank cheque or by other means of payment approved by the Company.
• (n) The Optionholder may only exercise Listed Options in multiples of 100 Listed Options unless the Optionholder exercises all Listed Options held by the Optionholder.
• (o) Listed Options will be deemed to have been exercised on the date the exercise notice is lodged with the Directors.
• (p) If the Optionholder exercises less than the total number of Listed Options registered in the Optionholder's name, the Company will issue the Optionholder a new holding statement stating the remaining number of Listed Options held by the Optionholder.
• (q) Within 10 days after re receiving an application for exercise of Listed Options and payment by the Optionholder of the exercise price, the Company will issue the Optionholder the number of Shares specified in the application.
• (r) Subject to the Constitution, all Shares issued on the exercise of Listed Options will rank in all respects (including rights relating to dividends) equally with the existing Shares of the Company at the date of issue.
• (s) These terms and the rights and obligations of the Optionholder are governed by the laws of Western Australia. The Optionholder irrevocably and unconditionally submits to the nonexclusive jurisdiction of the courts of Western Australia.

12.4 Terms of existing Unlisted Options

Of the 1,699,000 (on a post-Consolidation basis) existing Unlisted Options:

• (a) 1,600,000 have been granted to consultant Barbizon Capital Pty Ltd under the ESOP on terms summarised in section 12.2 above with an exercise price of \$1.30 (on a post-Consolidation basis) and an expiry date of 1 June 2014;
• (b) 84,000 have been granted under the Company's previous employee share option plan on the following terms:
• (i) 30,000 options with an exercise price of \$0.55 (on a post-Consolidation basis) and expiry date of 31 December 2012;
• (ii) 20,000 options with an exercise price of \$0.95 (on a post-Consolidation basis) and expiry date of 13 March 2012; and
• (iii) 34,000 options with an exercise price of \$0.65 (on a post-Consolidation basis) and expiry date of 31 December 2011; and
• (c) 15,000 have been granted as an incentive to a consultant with an exercise price of \$0.60 (on a post-Consolidation basis) and an expiry date of 31 October 2012.

12.5 Employee Share Option Plan and proposed grant of Options to Directors, Proposed Director and Company Secretary

As outlined in section 12.2 above, the Company has introduced an ESOP to provide its eligible employees with an incentive to work towards the Company's success and to grant Options to eligible employees pursuant to the terms of that plan.

Subject to Completion of the EML Acquisition and shareholder approval, the Company proposes to grant a total of 5,500,000 Options under the ESOP to the following Directors, Proposed Director, and Company Secretary on the following terms:

• (a) to Director Bob Browning a total of 2,600,000 Options exercisable at \$1.45 on or before 18 July 2014 vesting as follows:
• (i) Tranche 1: 1,000,000 Options will vest on 18 April 2012;
• (ii) Tranche 2: 800,000 Options will vest on 18 April 2013; and
• (iii) Tranche 3: 800,000 Options will vest on 18 April 2014, and

upon vesting, the Options will become exercisable.

• (b) to Director Bryant Plavsic a total of 2,000,000 Options exercisable at \$1.45 on or before 18 July 2014 vesting as follows:
• (i) Tranche 1: 800,000 Options will vest on 18 April 2012;
• (ii) Tranche 2: 600,000 Options will vest on 18 April 2013; and
• (iii) Tranche 3: 600,000 Options will vest on 18 April 2014, and

upon vesting, the Options will become exercisable;

• (c) to Proposed Director John Toms, a total of 200,000 Options exercisable at \$1.45 on or before 18 July 2014, to be granted no later than 12 months after the date of the General Meeting; and
• (d) to Company Secretary Yasmin Broughton a total of 1,200,000 Options exercisable at \$1.45 on or before 18 July 2014 vesting as follows:
• (i) Tranche 1: 500,000 Options will vest on 2 May 2012;
• (ii) Tranche 2: 350,000 Options will vest on 2 May 2013; and
• (iii) Tranche 3: 350,000 Options will vest on 2 May 2014, and

upon vesting, the Options will become exercisable.

12.6 Valuation of Options to be granted to Directors and Proposed Director

The Company commissioned a valuation report by an independent expert, Stantons International Pty Ltd trading as Stantons International Securities (Stantons) to value the Options being granted to Messrs Browning, Plavsic and Toms.

Stantons provided two different valuations of the Options to be granted based on different assumptions. In relation to Messrs Browning and Plavsic the first valuation assumes that the Options will be exercised at the end of their term (being approximately 3 years from their date of grant) (Method 1) and the second valuation assumes the Options will be exercised immediately upon the vesting of the Options (Method 2).

In relation to the Options to be granted to Mr Toms, the first valuation assumes that the Options will be exercised at the end of their term (being approximately 3 years from their date of grant) (Method 1) and the second valuation assumes the Options will be exercised a day after eighteen (18) months from their grant date (Method 3).

The Directors are of the opinion that Methods 2 and 3 represent the more likely scenario.

The other assumptions used by Stantons were, as at 23 May 2011:

Assumptions	Metrics
Market price of Shares	\$1.075
Exercise price	\$1.45
Risk free interest rate	5.29%
Volatility of Shares	70%

The fair value (calculated on a post-Consolidation basis) of the Options to be granted to Messrs Browning, Plavsic and Toms, using the Black & Scholes option valuation methodology and based on the assumptions and parameters referred to above is:

Director / Proposed Director	Valuation method 1	Valuation method 2 / 3
Bob Browning	\$949,000	\$619,600
Bryant Plavsic	\$730,000	\$471,600
John Toms	\$73,000	\$45,000

12.7 Issue of Shares to Directors and Proposed Directors

Following completion of the Placement and Completion of the EML Acquisition, and subject to Shareholder approval at the General Meeting, the Company proposes to issue a total of 1,323,217 Shares to the following Directors and Proposed Directors on the following terms:

• (a) to Director Bob Browning, a total of 417,973 Shares to be issued pursuant to the terms of his employment contract with the Company, which provides that the Company will issue such Shares upon:
• (i) the Board giving its approval to an acquisition within 12 months of the commencement of his employment; and
• (ii) the price of Shares traded on ASX is at least \$0.22 per Share (\$1.10 on a post-Consolidation basis) for a period of 15 consecutive trading days at any time from the commencement of his employment and the date which is 3 months after the date of completion of an acquisition;
• (b) to Director Bryant Plavsic, a total of 313,480 Shares to be issued pursuant to the terms of his employment contract with the Company, which provides that the Company will issue such Shares upon:
• (i) the Board giving its approval to an acquisition within 12 months of the commencement of his employment; and
• (ii) the price of Shares traded on ASX is at least \$0.22 per Share (\$1.10 on a post-Consolidation basis) for a period of 15 consecutive trading days at any time from the commencement of his employment and the date which is 3 months after the date of completion of an acquisition;
• (c) to Proposed Director Mark Barnaba, a total of 443,823 Shares to be issued in consideration for services provided by him as a member of the Company's Advisory Committee; and
• (d) to Proposed Director John Willinge, a total of 147,941 Shares to be issued in consideration for services provided by him as a member of the Company's Advisory Committee.

As at the date of this Prospectus, the conditions referred to Sections 12.7(a) and 12.7(b) have been satisfied.

Disposal of Shares issued to Directors and Proposed Directors and referred to in this Section 12.7 will be restricted until 1 July 2012.

12.8 Valuation of Shares to be issued to Directors and Proposed Directors

For the purposes of Shareholder approval at the General Meeting, based on the closing price of the Company's Shares on ASX on 23 May 2011 of \$0.215, the Directors determined:

• (a) the fair value of the 417,973 Shares to be issued to Mr Browning to be \$449,321;
• (b) the fair value of the 313,480 Shares to be issued to Mr Plavsic to be \$336,991;
• (c) the fair value of the 443,823 Shares to be issued to Mr Barnaba to be \$477,110; and
• (d) the fair value of the 147,941 Shares to be issued to Mr Willinge to be \$159,037.

(It should be noted that that the fair values are based upon the market prices on 23 May 2011, however the accounting expense included in the FY2011 forecast is based upon the fair value at grant date.)

12.9 Share price data

The most recent available data concerning the price of the Company's shares over the last 12 months are as follows:

	High	Low	Last
Price	\$0.29	\$0.04	\$0.165
Date	7 December 2010	5 July 2011	20 June 2011

12.10 Shareholder approvals

At the General Meeting, the Company is seeking the approval of Shareholders of the following Resolutions:

• (a) Resolution 1 (an ordinary resolution) seeks approval for the Company to make a significant change in the nature and scale of its activities by the acquisition of all of the shares in EML on the terms of the EML Share Purchase Deed.
• (b) Resolution 2 (an ordinary resolution) seeks approval for the purposes of ASX Listing Rules 7.1 for:
• (i) up to 19,447,552 New Shares to Globetrotter; and
• (ii) up to 11,052,448 New Shares to EMH,

on the terms and conditions of the EML Share Purchase Deed.

• (c) Resolution 3 (an ordinary resolution) seeks approval for the issued capital of the Company to be consolidated on the basis that every five (5) Shares be consolidated into one (1) Share and every five (5) Options be consolidated into one (1) Option.
• (d) Resolution 4 (an ordinary resolution) seeks approval for the Directors to allot and issue up to 11,764,706 New Shares at an issue price of not less than \$0.85 per New Share (on a post-Consolidation basis) to raise \$10,000,000 before costs and expenses of the issue (i.e. approval of the Placement).
• (e) Resolution 5 (a special resolution) seeks approval for the name of the Company to be changed to Adept Solutions Limited.
• (f) Resolution 6 (an ordinary resolution) seeks approval for the establishment of the ESOP.
• (g) Resolution 7 (an ordinary resolution) seeks approval for the Directors to grant 2,600,000 Options (on a post-Consolidation basis) under the ESOP to Mr Browning.
• (h) Resolution 8 (an ordinary resolution) seeks approval for the Directors to grant 2,000,000 Options (on a post-Consolidation basis) under the ESOP to Mr Plavsic.
• (i) Resolution 9 (an ordinary resolution) seeks approval for the Directors to issue 417,973 Shares (on a post-Consolidation basis) to Mr Browning, pursuant to his employment agreement with the Company.

• (j) Resolution 10 (an ordinary resolution) seeks approval for the Directors to issue 313,480 Shares (on a post-Consolidation basis) to Mr Plavsic, pursuant to his employment agreement with the Company.

• (k) Resolution 11 (an ordinary resolution) seeks approval for the Directors to issue 443,823 Shares (on a post-Consolidation basis) to Mr Barnaba, in consideration for services provided by him as a member of the Company's Advisory Committee.

• (l) Resolution 12 (an ordinary resolution) seeks approval for the Directors to issue 147,941 Shares (on a post-Consolidation basis) to Mr Willinge, in consideration for services provided by him as a member of the Company's Advisory Committee.
• (m) Resolution 13 (an ordinary resolution) seeks approval for the Directors to grant 200,000 Options (on a post-Consolidation basis) under the ESOP to Mr Toms.

Resolutions 1, 2, 3, 4 and 5 are inter-dependent.

12.11 Continuous disclosure

The Company is a "disclosing entity" for the purposes of the Corporations Act and, as such, is subject to regular reporting and disclosure obligations. As a listed company, the Company is subject to the ASX Listing Rules which require it to immediately notify ASX of any information concerning the Company of which it is or becomes aware and which a reasonable person would expect to have a material effect on the price or value of Shares, subject to certain exceptions.

Copies of documents lodged with ASX or ASIC, in relation to the Company, may be obtained from the Company's website at www.australasiaconsolidated.com.au .

12.12 Substantial shareholding interests in AAO

As at the date of this Prospectus, the following persons have given notice of their substantial shareholding interests in the Company (i.e. interests of 5% or more of the total Shares on issue):

Shareholder	Shares No.	Shares %
Valleybrook Investments Pty Ltd and associated entities	24,925,844	13.16%
Westlink Asset Management Pty Ltd	14,000,001	7.40%
Citicorp Nominees Pty Ltd	11,330,544	5.98%

12.13 Effect of the EML Acquisition on shareholding interests and voting power

The EML Acquisition will result in the issue of New Shares to the EML Vendors. Each EML Vendor will acquire a significant shareholding interest and voting power in the Company. The precise quantum of voting power that each EML Vendor may ultimately acquire by reason of the issue of New Shares will depend on:

• the financial position and sales performance of EML for the period ending 30 June 2011 and for the three financial years commencing 1 July 2011, which may result in further New Shares being issued to the EML Vendors (refer to Section 11.2 and Schedule 1 for further details);
• issues of new securities in the Company from Completion of the EML Acquisition to 30 June 2014; and
• whether any Options held by Optionholders are exercised.

The EML Vendors are not considered to be "Associates" of each other within the meaning of the Corporations Act in respect of their shareholding interests in the Company.

The anticipated interests stated below assume that 11,500,000 New Shares will initially be issued to the EML Vendors at Completion of the EML Acquisition and no Shares are issued by AAO to any other person and no Options held by any other person are exercised.

The anticipated interests stated below do not take into account the exercise of existing Unlisted Options, Listed Options or Options to be granted pursuant to Resolutions 7, 8 and 13 of the Notice of General Meeting, nor do they take into account the issue of Shares to Directors and Proposed pursuant to Resolutions 9 – 12 of the Notice of General Meeting (see Sections 12.7 and 12.10).

Immediately following Completion of the EML Acquisition and the Placement, it is anticipated that Globetrotter will hold 11.99% and EMH will hold 6.82% of the expanded issued Share capital of the Company if \$10,000,000 is raised under the Placement.

If the EML Vendors become entitled to receive a further 1,000,000 Deferred NA Adjustment Shares, the Deferred Consideration Shares and the Performance Shares (see Section 11.2 and Schedule 1 for details) and there is no subsequent conversion or exercise of any listed or unlisted options and there is no further capital raising activities that would increase the number of Shares on issue and there are no further acquisitions that may require the issuance of further Securities, it would then follow that Globetrotter will hold 24.27% and EMH will hold 13.79% of the expanded issued Share capital of the Company if \$10,000,000 is raised under the Placement.

As noted in Section 11.2, the maximum number of New Shares that can be issued under the EML Share Purchase Deed is 30,500,000 New Shares.

12.14 Interests of Directors and Proposed Directors

Other than as set out below or elsewhere in this Prospectus, no Director or Proposed Director nor any entity in which such a Director or Proposed Director is a partner or director, has or has had in the two years before the date of this Prospectus, any interest in:

• (a) property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the Placement; or
• (b) the Placement,

and no amounts have been paid or agreed to be paid (in cash or Shares or otherwise) and no other benefit has been given or agreed to be given to any Director or Proposed Director or to any entity in which such a Director or Proposed Director is a partner or director, either to induce him to become, or to qualify as, a Director or otherwise for services rendered by him or by the entity in connection with the formation or promotion of the Company or the Placement.

12.15 Security holding interests of Directors and Proposed Directors

At the date of this Prospectus the relevant interest of each of the Directors and Proposed Directors in the Shares and Options (on a post-Consolidation basis) of the Company are as follows:

Director / Proposed Director	Shares	Shares to be issued*	Listed Options	Unlisted Options to be issued*
John Terpu	4,985,169	Nil	997,034	Nil
Bob Browning	576,923	417,973	2,800,000	2,600,000
Bryant Plavsic	576,923	313,480	3,315,000	2,000,000
Bruno Firriolo1	300,000	Nil	Nil	Nil
Mark Barnaba2	2,800,000	443,823	6,100,000	Nil
John Battley3	Nil	7,332,748 – 19,447,724	Nil	Nil
John Toms4	Nil	Nil	Nil	200,000
John Willinge2	1,041,539	147,941	2,403,600	Nil

(* subject to Shareholder approval at the General Meeting)

Notes:

• 1. Mr Firriolo will resign as a Director effective from the date of the General Meeting.
• 1. Proposed Directors are currently members of the Company's Advisory Committee.
• 1. As a director of Globetrotter, Mr Battley will have a relevant interest in Shares to be issued pursuant to the EML Acquisition. The minimum number of Shares that may be issued to Globetrotter pursuant to the EML Acquisition is 7,332,748 and the maximum number that may be issued, subject to achievement of certain performance hurdles, is 19,447,724.

4. A Proposed Director.

Each of the Directors and the Proposed Directors, and their Associates, intend to vote in favour of all of the Resolutions, subject to any voting exclusions for particular Resolutions.

12.16 Remuneration of Directors

The Constitution of the Company provides that the Directors may be paid for their services as Directors. The remuneration shall, subject to any resolution of a general meeting, be fixed by the Directors.

The Constitution provides that non-executive Directors may collectively be paid as remuneration for their services a fixed sum not exceeding the aggregate maximum set by the Company in general meeting. The aggregate maximum is presently set at \$500,000.

Details of the remuneration payable to Messrs Browning, Plavsic and Battley, are set out in Section 11.

A Director may be paid fees or other amounts as the Directors determine, where a Director performs duties or provides services outside the scope of their normal duties. A Director may also be reimbursed for out-of-pocket expenses incurred as a result of their directorship or any special duties.

12.17 Directors' indemnity and insurance deeds

The Company has entered into deeds of access, indemnity and insurance with each Director and the Company Secretary (Officer) and proposes to enter into deeds with each Proposed Director.

Under the deeds the Company has undertaken, subject to the restrictions in the Corporations Act, to:

• (a) indemnify each Officer in certain circumstances;
• (b) maintain directors' and officers' insurance cover (if available) in favour of each Officer whilst an Officer and for 7 years after the Officer has ceased to be an Officer (provided run-off insurance can be procured at reasonable policy premiums); and
• (c) provide access to any Company records which are relevant to the Officer's holding of office with the Company, for a period of 7 years after the Officer has ceased to be an Officer.

12.18 Expenses of the Placement

In the event that the Placement is fully subscribed, the estimated expenses payable by the Company in respect of costs associated with this Prospectus and the Placement including offer management, legal, accounting, corporate advisory, expert's fees, printing, ASIC and ASX fees and other costs will be approximately \$1.2 million, with other transaction related costs amounting to \$200,000.

Included in the estimated expenses is an amount of \$400,000 payable to the Broker for management and distribution fees.

12.19 Litigation

As at the date of this Prospectus, the Company and EML are not involved in any material legal proceedings and the Directors are not aware of any material legal proceedings pending or threatened against the Company or EML.

12.20 Consents and liability statements

McKenzie Moncrieff Pty Ltd (trading as McKenzie Moncrieff Lawyers) has given and has not, before lodgement of this Prospectus with the ASIC, withdrawn its consent to be named in this Prospectus as solicitors to the Company in the form and context in which it is named.

PricewaterhouseCoopers Securities Ltd has given and has not, before lodgement of this Prospectus with the ASIC, withdrawn its consent to be named in this Prospectus as Investigating Accountant in the form and context in which it is named and to the inclusion of its Investigating Accountant's Report in this Prospectus.

HLB Mann Judd (SA Partnership) has given and has not, before lodgement of this Prospectus with the ASIC, withdrawn its consent to:

• (a) be named in this Prospectus as the former Auditor to the Company in the form and context in which it is named; and
• (b) to the inclusion in this Prospectus of the audited financial information included in this Prospectus from the Company's audited financial statements for the period ended 30 June 2010.

HLB Mann Judd (WA Partnership) has given and has not, before lodgement of this Prospectus with the ASIC, withdrawn its consent to be named in this Prospectus as the Auditor to the Company in the form and context in which it is named.

BDO Audit (QLD) Pty Ltd has given and has not, before lodgement of this Prospectus with the ASIC, withdrawn its consent to be named in this Prospectus as Auditor to EML in the form and context in which it is named.

Link Market Services Limited has given and has not, before lodgement of this Prospectus with the ASIC, withdrawn its consent to be named in this Prospectus as the Company's share registry in the form and context in which it is named.

Each of McKenzie Moncrieff Lawyers, PricewaterhouseCoopers Securities Ltd, HLB Mann Judd WA Partnership, BDO Audit (Qld) Pty Ltd and Link Market Services Limited:

• (a) did not authorise or cause the issue of this Prospectus;
• (b) does not make, or purport to make, any statement in this Prospectus nor is any statement in this Prospectus based on any statement by any of those parties other than as specified in this Section; and
• (c) to the maximum extent permitted by law, expressly disclaims any responsibility or liability for any part of this Prospectus other than a reference to its name and a statement contained in this Prospectus with consent of that party as specified in this Section.

12.21 Interests of experts and advisers

Other than as set out below or elsewhere in this Prospectus, all other persons named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus do not have, and have not had in the two (2) years before the date of this Prospectus, any interest in:

• (a) the formation or promotion of the Company;
• (b) property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the Placement; or
• (c) the Placement,

and no amounts have been paid or agreed to be paid (in cash or Shares or otherwise) and no other benefit has been given or agreed to be given to any of those persons for services provided by those persons in connection with the formation or promotion of the Company or the Placement.

McKenzie Moncrieff Lawyers has acted as solicitors to the Company in relation to this Prospectus, the General Meeting, and the EML Acquisition and is entitled to be paid up to approximately \$300,000 (plus GST) in respect of these services. In addition, McKenzie Moncrieff Lawyers has been paid or is entitled to be paid approximately \$32,200 (plus GST) for legal services provided to the Company in the period two (2) years prior to the date of this Prospectus.

HLB Mann Judd (WA Partnership) acts as auditor of the Company and has been paid \$27,950 (plus GST) for the provision of professional services in relation to the auditing of the financial statements of the Company and other professional services in the period one (1) year prior to the date of this Prospectus.

HLB Mann Judd (SA Partnership) acted as auditor of the Company until the appointment of HLB Mann Judd (WA Partnership) and has been paid \$28,200 (plus GST) for the provision of professional services in relation to the auditing of the financial statements of the Company and other professional services in the period two (2) years prior to the date of this Prospectus.

PricewaterhouseCoopers Securities Ltd has prepared the Investigating Accountant's Report on the historical financial information contained in this Prospectus. The Company has paid or will pay an amount of approximately \$175,000 for these services. The Company has also paid an amount of

approximately \$100,600 for financial due diligence services by PricewaterhouseCoopers Securities Ltd in relation to the EML Acquisition.

14. Glossary

AAO or Company means Australasia Consolidated Limited ABN 93 104 757 904.

AAO Group means AAO and its subsidiaries (including EML).

ADI means approved deposit-taking institution.

AFSL means an Australian Financial Services licence.

AIFRS means Australian equivalents to International Financial Reporting Standards.

APCA means the Australian Payments Clearing Association Limited.

Applicant means a person who applies for New Shares in accordance with this Prospectus.

Application means an application for New Shares offered by this Prospectus.

Application Form means an application form accompanying this Prospectus.

Application Monies means monies payable by applicants to the Placement.

APRA means the Australian Prudential Regulation Authority.

ASIC means the Australian Securities and Investments Commission.

Associate has the meaning given to it by Division 2 of the Corporations Act.

ASX means ASX Limited ABN 98 008 624 691.

ASX Listing Rules means the listing rules of ASX.

ASX Settlement means ASX Settlement Pty Ltd ABN 49 008 504 532.

ASX Settlement Operating Rules means the operating rules of ASX Settlement.

Austrac means the Australian Transactions Reports and Analysis Centre.

BDO Audit means BDO Audit (Qld) Pty Ltd.

Board means the board of Directors of the Company.

Broker means Macquarie Equities Limited.

CAGR means compound annual growth rate.

Chairman means the chairman of the Board.

Chellserv means Chellingtons Pty Ltd (as trustee for CAS Trust) and Chell Pty Ltd (as trustee for BCF Trust) trading in partnership.

CHESS Statement means a statement of shares registered in a CHESS account, as referred to in Section 2.11.

Chief Executive Officer or CEO means the chief executive officer of the Company.

Completion or Completion of the EML Acquisition means completion of the Company's acquisition of the EML shares held by the EML Vendors pursuant to the terms of the EML Share Purchase Deed.

Completion Date means 30 June 2011 or such other date as the parties to the EML Share Purchase Deed may agree.

Condition Precedent means a condition precedent of the EML Share Purchase Deed.

Consideration Shares means:

• (a) the Initial Consideration Shares;
• (b) the Deferred Consideration Shares; and
• (c) the Deferred NA Consideration Shares.

Consolidation means the consolidation of the Company's capital to be undertaken pursuant to Resolution 3 of the Notice of General Meeting on a 5:1 basis.

Constitution means the constitution of the Company.

Corporations Act means the Corporations Act 2001 (Cth).

Deferred Consideration Shares means 3,000,000 New Shares that may be issued pursuant to the terms of the EML Share Purchase Deed.

Deferred NA Adjustment Shares means up to 1,000,000 New Shares that may be issued pursuant to the terms of the EML Share Purchase Deed.

Director means a director of the Company as at the date of this Prospectus.

EBIT means earnings before interest and tax.

EBITDA means earnings before interest, tax, depreciation and amortisation.

EFT means Electronic Funds Transfer.

EFTPOS means Electronic Funds Transfer at Point of Sale.

EL means exploration licence.

EML means Emerchants Limited ABN 30 131 436 532.

Emerchants means EML or the business of EML, as the context requires.

Emerchants Holdings or EMH means Emerchants Holdings Pty Ltd ABN 74 098 296 050

EML Acquisition means the proposed purchase of all of the shares in EML from the EML Vendors under the terms of the EML Share Purchase Deed.

EML Share Purchase Deed means the share purchase deed between the Company and the EML Vendors dated 9 May 2011 pursuant to which the Company acquired 100% of the issued securities in EML, as summarised in Section 2.

EML Vendors means Globetrotter and EMH.

EPAL means EFTPOS Payments Australia Limited.

ESOP means the Company's employee share option plan.

Existing Shareholder means a holder of an Existing Share.

Existing Shares means a Share on issue before the date of this Prospectus.

FY means financial year. For example, FY2011 or FY2011 means the financial year ending 30 June 2011.

General Meeting means the general meeting of the Company's Shareholders to be held on 29 June 2011 to approve, among other things, the EML Acquisition, the Placement and the Consolidation.

Gift Facility has the meaning as defined in Class Order CO 05/738 issued by ASIC November 2005.

Globetrotter means Globetrotter Group Pty Ltd ACN 067 013 192.

GST means Goods and Services Tax.

Guarantor means a guarantor of the EML Vendors' obligations under the EML Share Purchase Deed.

HLB Mann Judd means HLB Mann Judd (WA Partnership).

Holding Statement means a statement of shares registered in a CHESS account, as referred to in Section 2.11.

Initial Consideration Shares means 11,500,000 New Shares.

Listed Options means an Option exercisable at \$0.10 (\$0.50 on a post-consolidation basis) each on or before 19 April 2013 quoted on ASX (ASX Code: AAOO) and granted on the terms set out in Section 2.

Listing Rules means the listing rules of ASX.

Marketable Parcel means a parcel of Shares with a market value of not less than \$500.

New Share means a Share issued post-Consolidation pursuant to this Prospectus.

NOHC means non-operating holding company.

Notice of General Meeting means the Notice of General Meeting and Explanatory Statement dated 29 June 2011 in respect of the General Meeting.

NPAT means net profit after tax.

Offer means the offer of New Shares under this Prospectus.

Official Quotation means quotation on the stock exchange of ASX.

Option means an option to subscribe for a Share.

Optionholder means the holder of an Option.

PCI DSS means Payment Card Industry Data Security Standard.

Performance Shares means up to 15,000,000 New Shares that may be issued pursuant to the terms of the EML Share Purchase Deed.

Placement means the placement of 11,764,706 New Shares pursuant to this Prospectus at \$0.85 per New Share to raise \$10 million.

PPF means a purchased payment facility.

Proposed Directors means Mark Barnaba, John Willinge, John Toms and John Battley.

Prospectus means this prospectus, including any electronic or online version of this prospectus.

Prospectus Date means the date the Prospectus is lodged with ASIC.

R&D tax credits means research and development tax credits.

RBA means the Reserve Bank of Australia.

Resolution means a resolution set out in the Notice of General Meeting and summarised at Section 12.9 of this Prospectus.

Section means a section of this Prospectus.

Share means a fully paid ordinary share in the capital of the Company.

Share Registry means Link Market Services Limited.

Shareholder means the holder of a Share.

Statement means Holding Statement or CHESS Statement.

Unlisted Options means Options granted with varying exercise prices and expiry dates as specifed in clause 12.4

WST means Western Standard Time.

Corporate Directory

Directors (as at date of Prospectus) Registered Office

John Terpu Non-Executive Chairman Bob Browning Managing Director & Chief Executive Officer Bryant Plavsic Executive Director & Chief Financial Officer Bruno Firriolo* Non-Executive Director *Retiring at General Meeting.

Yasmin Broughton

Suite 4, 213 Balcatta Road Balcatta WA 6021 Telephone: +61 8 9240 4111 Facsimile: +61 8 9240 4054 Email: admin@australasiaconsolidated.com.au

Proposed New Directors General Counsel & Company Secretary

John Battley* Executive Director & General Manager Operations Mark Barnaba* Non-Executive Director John Willinge* Non-Executive Director John Toms* Non-Executive Director

*Proposed to be appointed at General Meeting

Investigating Accountant Auditor

PricewaterhouseCoopers Securities Limited 210 Sussex Street Sydney NSW 2000

HLB Mann Judd (WA Partnership) Level 4, 130 Stirling Street Perth WA 6000 Phone: (08) 9227 7500 Facsimiile: (08) 9227 7533 Email: hlb@hlbwa.com.au

Share Registry Solicitors to the Company

McKenzie Moncrieff Lawyers Level 5, Citibank House 37 St Georges Terrace Perth WA 6000

Link Market Services Limited Ground Floor 178 St Georges Terrace Perth WA 6000 Telephone: (02) 8280 7111 Facsimile: (02) 9287 0303 Email: registrars@linkmarketservices.com.au

Website ASX Code

www.australasiaconsolidated.com.au AAO

Schedule 1

Summary of Consideration Provisions of EML Share Purchase Deed

1. General

• 1.1 This Schedule summarises the procedures and formulae used to determine the number of New Shares that may be issued to the EML Vendors under the EML Share Purchase Deed. In this Schedule, unless otherwise defined in Section 14 of the Prospectus, capitalised terms have the meanings set out in paragraph 7.
• 1.2 The EML Vendors will be issued a maximum of 30,500,000 Shares under the EML Share Purchase Deed.

2. Initial Consideration Shares

2.1 At Completion of the EML Acquisition, AAO will issue 11,500,000 Initial Consideration Shares to the EML Vendors in their Respective Proportions.

3. Deferred NA Adjustment Shares

• 3.1 Up to a further 1,000,000 Shares may be issued to the EML Vendors, subject to the calculation of net assets of EML at Completion of the EML Acquisition (Completion NA).
• 3.2 The Completion NA will be determined by reference to EML's 30 June Accounts, which will be prepared in accordance with Accounting Standards and AAO's accounting policies as reviewed by AAO's accountants, PricewaterhouseCoopers.
• 3.3 If the quantum of the Completion NA is equal to \$1,500,000, the EML Vendors will receive 500,000 Deferred NA Adjustment Shares in their Respective Proportions.
• 3.4 If the quantum of the Completion NA is greater than \$1,500,000 (Surplus NA Amount), the EML Vendors will receive that number of Deferred NA Adjustment Shares determined in accordance with the following formula:

(500,000 / CN) + (SNA / IP)

where:

• CN is the number by which all Shares are divided in the event of any consolidation of AAO's capital approved by Shareholders after the date of the EML Share Purchase Deed; and
• SNA is the Surplus NA Amount expressed as a number; and
• IP is the issue price of Shares issued under the Prospectus expressed as a number,

provided that the number of Deferred NA Adjustment Shares must not exceed 1,000,000.

If the quantum of the Completion NA is less than \$1,500,000 (Deficit NA Amount), the EML Vendors will receive that number of Deferred NA Adjustment Shares determined in accordance with the following formula:

(500,000 / CN) - (DNA / IP)

where:

• CN is the number by which all Shares are divided in the event of any consolidation of AAO's capital approved by Shareholders after the date of the EML Share Purchase Deed; and
• DNA is the Deficit NA Amount expressed as a number; and
• IP is the issue price of Shares issued under the Prospectus expressed as a number.
• 3.5 That number of Deferred NA Adjustment Shares determined in accordance with the formulae in paragraphs 3.4 and 3.5 above (as the case may be) will be issued to the EML Vendors in their Respective Proportions.

4. Deferred Consideration Shares

• 4.1 Subject to EML achieving annual gross sales revenue of \$7,000,000 for the 12 month period ending 30 June 2012 (Sales Forecast), the Company will issue a further 3,000,000 Deferred Consideration Shares to the EML Vendors in their Respective Proportions.
• 4.2 In the event EML does not achieve the Sales Forecast, the Deferred Consideration Shares may still be issued to the EML Vendors at the Company's absolute discretion.

5. Performance Shares

5.1 The EML Vendors may become entitled to a further 15,000,000 Performance Shares on the achievement of specified net profit before tax targets over the three financial years commencing on 1 July 2011 as set out in the tables below.

Table A – Threshold Targets; \$M (80% of Expected Targets)

	2011 / 2012	2012 / 2013	2013 / 2014
Net profit before tax target	\$4.1M	\$11.3M	\$17.9M
Performance Shares to be issued to EML Vendors (in their Respective Proportions)	1.4M	1.4M	1.4M

Table B – Expected Targets; \$M

	2011 / 2012	2012 / 2013	2013 / 2014
Net profit before tax target	\$5.2M	\$14.1M	\$22.3M
Performance Shares to be issued to EML Vendors (in their Respective Proportions)	2.5M	2.5M	2.5M

Table C – Stretch Targets; \$M (120% of Expected Targets)

	2011 / 2012	2012 / 2013	2013 / 2014
Net profit before tax target	\$6.2M	\$17.0M	\$26.8M
Performance Shares to be issued to EML Vendors (in their Respective Proportions)	3.6M	3.6M	3.6M

Table D – Super Stretch Targets; \$M (150% of Expected Targets)

	2011 / 2012	2012 / 2013	2013 / 2014
Net profit before tax target	\$7.7M	\$21.2M	\$33.5M
Performance Shares to be issued to EML Vendors (in their Respective Proportions)	5M	5M	5M

6. Adjustment to the issue of Shares to the EML Vendors generally

• 6.1 In the event of any reconstruction, consolidation or division of the issued share capital of AAO into (respectively) a lesser or greater number of Shares on issue which is approved by Shareholders after the date of the EML Share Purchase Deed, the number of Shares to be issued pursuant to the EML Share Purchase Deed shall be reconstructed, consolidated or divided in the same proportion as the Shares are reconstructed, consolidated or divided and, in any event, in a manner which will not result in any additional benefits being conferred on the EML Vendors which are not conferred on the Shareholders generally and for the avoidance of doubt:
• (a) if there is a consolidation of the capital of AAO then the number of Shares to be issued to the EML Vendors must be reduced in the same ratio as the Shares that are being consolidated; and

(b) if there is a sub-division of the capital of AAO then the number of Shares to be issued must be increased in the same ratio as those Shares that are being subdivided.

7. Glossary

In this Schedule:

30 June Accounts means EML's statement of financial position as at 30 June 2011 and its profit and loss account for the 12 month period ending on 30 June 2011, together with copies of all related working papers.

Accounting Standards means the requirements of the Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, the requirements of the Corporations Act in relation to the preparation and content of accounts and, to the extent not covered by any of them, means generally accepted accounting principles applied from time to time in Australia for companies similar to EML.

Net Profit Before Tax means the net profit before tax of EML determined in accordance with Accounting Standards.

Respective Proportion means, in respect of Globetrotter: 63.76% and, in respect of EMH: 36.24%.