REFRESH GROUP LIMITED

ACN 079 681 244

N O T I C E O F G E N E R A L M E E T I N G E X P L A N A T O R Y N O T E S

P R O X Y F O R M

Date of Meeting

15 June 2011

Time of Meeting

10:00 a.m. (WST)

Place of Meeting

17 Denninup Way, Malaga, Perth WA 6090

N O T I C E O F G E N E R A L M E E T I N G

A General Meeting ( Meeting ) of shareholders of Refresh Group Limited ( Company or Refresh ) is to be held on 15 June 2011 at 17 Denninup Way, Malaga, Perth WA 6090 commencing at 10:00 am (WST).

The Explanatory Notes that accompany and form part of this Notice of General Meeting ( Notice ) describes the matters to be considered at this Meeting.

Terms and abbreviations used in this Notice and the Explanatory Notes are defined in Schedule 1 of the Explanatory Notes.

AGENDA

BUSINESS

1. Approval of Sale of AridTec Pte Ltd

To consider, and if thought fit, to pass the following resolution as an ordinary resolution with or without amendment:

"Conditional on Resolutions 2 and 3 being approved, for the purpose of ASX Listing Rule 11.1.2 and for all other purposes:

a) the sale by the Company of the entire issued capital held by the Company in AridTec Pte Ltd pursuant to the terms and conditions of the Share Sale Agreement; and
b) completion by the Company of the Share Sale Agreement and the performance of by the Company of its obligations under the Share Sale Agreement

be approved.”

Voting Exclusion

In accordance with the ASX Listing Rules, the Company will disregard any votes cast on this resolution by the AridTec Purchasers and any associates of the AridTec Purchasers. However, the Company need not disregard a vote if:

(a) it is cast by that person as proxy, in accordance with the directions on the proxy form; or
(b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

2. Approval of Selective Capital Reduction

To consider, and if thought fit, to pass the following resolution as a special resolution with or without amendment:

"Conditional upon Resolutions 1 and 3 being approved, for the purpose of section 256C(2) of the Corporations Act and for all other purposes, the selective capital reduction and cancellation by the Company of a total of 71,800,000 Shares on the terms and conditions set out in the Explanatory Notes be approved”.

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Expert Report: Shareholders should consider the Independent Export’s Report for the purposes of ASX Listing Rule 10.10 and section 219 of the Corporations Act which comments on the fairness and reasonableness of the transaction to the non-associated Shareholders in the Company.

Expert’s Conclusion : The Independent Expert concludes that the sale of AridTec Shares by the Company to the AridTec Purchasers and the cancellation of the Shares held by the AridTec Purchasers is fair and reasonable to the non-associated Shareholders of the Company.

Voting Exclusion

In accordance with the Corporations Act and ASX Listing Rules, the Company will disregard any votes cast on this resolution by the AridTec Purchasers and any associates of the AridTec Purchasers. However, the Company need not disregard a vote if:

(a) it is cast by that person as proxy, in accordance with the directions on the proxy form; or
(b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

3. Approval of participation of Mr Chee Keong Oh and Mr Mun Yew Chan in the sale of AridTec Pte Ltd

To consider, and, if thought fit, pass the following resolution as an ordinary resolution with or without amendment:

"For the purpose of Listing Rule 10.1 and Chapter 2E of the Corporations Act, and for all other purposes, the sale by the Company of 3,750,000 AridTec Shares to Mr Chee Keong Oh and Mr Mun Yew Chan on the terms set out in the Explanatory Notes, be approved.”

Voting Exclusion

The Company will disregard any votes cast on this resolution by Mr Chee Keong Oh and Mr Mun Yew Chan and any of their associates.

However, the Company will not disregard a vote if:

(a) it is cast by the person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
(b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

4. Approval of Placement

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

“For the purpose of ASX Listing Rule 7.1, the issue of up to 16,000,000 Shares on the terms set out in the Explanatory Notes, be approved.”

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Voting Exclusion

In accordance with the ASX Listing Rules, the Company will disregard any votes cast on this resolution by any person participating in the Placement and any of their associates. However, the Company need not disregard a vote if:

(a) it is cast by that person as proxy, in accordance with the directions on the proxy form; or
(b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

5. Approval of allotment of Shares

To consider, and if thought fit to pass the following as an ordinary resolution with or without amendment:

“For the purposes of ASX Listing Rule 7.4, the issue of 10,896,908 Shares on the terms set out in the Explanatory Notes be approved”.

Voting Exclusion

In accordance with the ASX Listing Rules, the Company will disregard any votes cast on this resolution by any person that participated in the issue and any of their associates. However, the Company need not disregard a vote if:

(a) it is cast by that person as proxy, in accordance with the directions on the proxy form; or
(b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

6. Approval to adopt new Constitution

To consider, and if thought fit, to pass the following resolution as a special resolution :

“ For the purpose of section 136(2) of the Corporations Act and for all other purposes, the Company’s Constitution be modified by replacing the Constitution entirely with the Constitution tabled at the meeting and signed by the Chairman”.

7. Proportional Takeover Approval Provisions

To consider, and if thought fit, to pass the following resolution as a special resolution :

“ New clauses 111-112 of the Constitution in the form set out in Schedule 2 of the Explanatory Notes be approved”.

8. Election of Director

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

" Ms Jamie Gee Choo Khoo be re-elected as a director of the Company ."

Voting and Proxies

For the purpose of determining the voting entitlements at the meeting, the Board has determined that Shareholders eligible to vote on the Resolutions will be those Shareholders registered as holders of those Shares at 10.00 am ( WST ) on 13 June 2011. Accordingly, transactions registered after that time will be disregarded in determining entitlements to attend and vote at the meeting.

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A Shareholder wishing to vote on the Resolutions should either attend in person or appoint a proxy or proxies to attend or vote on its behalf. A proxy form is included with this Notice. The proxy or proxies do not need to be a Shareholder. A Shareholder that is a body corporate may appoint a representative to attend in accordance with the Corporations Act.

A Shareholder entitled to attend and to cast two or more votes is entitled to appoint not more than two proxies. Where more than one proxy is appointed, each proxy must be appointed to represent a specified proportion of the Shareholders' voting rights. If the Shareholder appoints two proxies and the appointment does not specify this proportion, each proxy may exercise half of the votes able to be cast by the appointing Shareholder.

The proxy form (and any power of attorney under which it is signed) must be received at the address below not later than 10.00 am ( WST ) on 13 June 2011 (being 48 hours before the commencement of the meeting). Any proxy forms received after that time will not be valid for the meeting.

Completed proxy forms should be sent to the Company as follows:

Refresh Group Limited Telephone: (within Australia) [08 92483006 (outside Australia) +61 8 92483006 17 Denninup Way, Malaga WA 6090 Facsimile: (within Australia) 08 92487233 (outside Australia) +61 8 92487233

Email: [email protected]

DATED THIS 16[TH] DAY OF May 2011

BY ORDER OF THE BOARD

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E X P L AN AT O R Y N OT E S

These Explanatory Notes have been prepared to provide Shareholders with material information to enable them to make an informed decision on the business to be conducted at the Meeting of the Company.

The Directors recommend that Shareholders read these Explanatory Notes in full before making any decision in relation to the Resolutions.

Resolution 1 – Sale of AridTec Pte Ltd

Background

Resolution 1 is seeking Shareholder approval for the sale of the AridTec (by way of the sale of the AridTec Shares) to the AridTec Purchasers. This Resolution is conditional on Resolutions 2 and 3 being approved which also relate to the same transaction.

Refresh acquired AridTec from the AridTec Purchasers (as vendors) in July 2010 pursuant to a purchase agreement dated 20 April 2010 ( Original Purchase Agreement ) which transaction was approved by Shareholders. AridTec is a Singaporean incorporated company. It has developed a range of products that provide atmospheric water harvesting solutions, based on drawing water vapour from the air and producing drinking water.

Refresh originally considered that the potential to distribute AridTec products would complement the existing Refresh water production and distribution business.

Following the half year results to 31 December 2010, the Board, after having considered the financial performance of AridTec since its acquisition, considers that the performance of AridTec does not meet the original expectations of Refresh and is unlikely to meet such expectations in the future. In addition, the Directors consider that more operational focus is required on Refresh's Australian based production and distribution business.

Accordingly, the Share Sale Agreement has been entered into between Refresh and the AridTec Purchasers, pursuant to which the AridTec Purchasers will re-acquire the shares in AridTec Shares (being all of the issued capital of AridTec) from Refresh.

Summary of Share Sale Agreement

The consideration for the sale of the AridTec Shares by the Company to the AridTec Purchasers is the cancellation (by way of selective capital reduction) of the 71,800,000 Refresh Shares issued to the AridTec Purchasers when they originally sold the AridTec Shares to Refresh pursuant to the Original Purchase Agreement.
The sale of the AridTec Shares is conditional upon and subject to Refresh obtaining all necessary approvals of Refresh Shareholders for the sale of the AridTec Shares including but not limited to:
a. the approval of the Refresh shareholders of the selective capital reduction by special resolution passed at a general meeting at which the AridTec Purchasers do not vote; and
b. the approval of the selective capital reduction by the AridTec Purchasers by special resolution passed at a separate meeting.
Mr Chee Keong Oh will resign as a director of Refresh with effect from completion of the Sale Agreement.
An inter-company loan of $485,928.04 from Refresh to AridTec will be capitalized and effectively forgiven such that upon Completion there will be no outstanding loan owing to Refresh by AridTec.

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Under the Original Purchase Agreement, the AridTec Purchasers had the potential to receive up to a further 48,200,000 shares in Refresh on the basis of AridTec achieving certain profit milestones. Those milestones are unlikely to be met and as such the AridTec Purchasers will no longer be entitled to receive the further 48,200,000 Refresh shares contemplated in the Original Purchase Agreement.

Independent Expert’s Report

The Directors have obtained the Independent Expert’s Report in relation to the sale of the AridTec Shares by the Company. The Independent Expert’s Report states that the selective reduction of capital in consideration for the sale of the AridTec shares is fair and reasonable having regard to the interests of the non-associated Shareholders of Refresh. Shareholders are urged to carefully read the Independent Expert's Report to understand the scope of the report, advantages and disadvantages of the transaction, the methodology of the valuation and assumptions made.

In summary the Independent Expert has assessed the value of the consideration to be as follows:

the fair value of the AridTec Shares to be $3,156,000 as at 28 February 2011; and
the 71,800,000 Shares to be cancelled, to have a value a mean value of $3,410,000, with a range between $2,872,000 and $3,949,000.

The Independent Expert has also assessed:

the net asset backing per Share before the transaction to be 4.8 cents per Share, compared to the net asset backing per Share after the transaction to be 4.6 cents per Share; and
the net tangible asset backing per Share before the transaction to be 2.1 cents per Share, compared to net tangible asset backing per Share after the transaction to be 3.5 cents per Share.

The Independent Expert has concluded that the value of the AridTec Shares to be sold by Refresh is less than the mean value of the Refresh Shares to be cancelled, and in the context of the transaction taken as a whole, that the transaction is fair to the non associated Shareholders.

Business Post Divestment

After the sale of AridTec, if approved, the Company intends to continue with its remaining business lines, being production and distribution of bottled water, coolers and filtration systems. In Australia, its main business is bottled water.

In addition, the business of the Company will include:

The sale of retail packs of Refresh Pure Water via supermarkets and retail outlets, the sale of packs of its Moores Ultrapure Water brand in various Australian states and its premium spring water known as Sunshower Springs which is available for home and office deliveries in Brisbane and Sydney.
The sale of the Company’s Oxyfresh product, which is a superoxygenated water product, and via the Company’s trading arm, Fusion H2O, the sale of bottled water and beverages to supermarkets, restaurants and delicatessens.
Supply of distilled water for industries, such as dental and medical laboratories, as well as contract bottling of private labelled water.
Supply of a range of water purifiers via its Oz Water Filters division. The range includes sediment and carbon filters, reverse osmosis, distillers and air-to-water generators.

The Company is seeking approval for a placement of new Shares (see Resolution 4) to raise capital for debt reduction, provide working capital of the existing water production and distribution business, and to enable the Company to take advantage of new opportunities for Refresh.

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Pro Forma Balance Sheet

Assuming the transaction proceeds, the Independent Expert has provided a summary of the Company’s pro forma consolidated financial position as at 28 February 2011 as follows:

	Position Before	Proforma Position
	the Proposed	After The
	Transaction	Proposed
		Transaction
	AUD$’000	AUD$’000
ASSETS Current Assets Cash and cash equivalents Trade and other receivables Inventories Total Current Assets Non-Current Assets Other financial assets Property, plant and equipment Intangible assets Total Non-Current Assets Total Assets LIABILITIES Current Liabilities* Trade and other payables Financial liabilities Short-term provisions and accruals	170 945 1,344	106 887 1,179
	2,459	2,172
	1 2,379 4,339	1 2,194 909
	6,719	3,104
	9,178	5,276
	1,100 173 129	938 159 129
Total Current Liabilities	1,402	1,226
Non-Current Liabilities Financial liabilities Long-term provision Total Non-Current Liabilities Total Liabilities Net Assets Net Asset Backing Per Share	84 45	84 45
	129	129
	1,531	1,355
	$7,647	$3,921
	$0.048	$0.046
NetTangibleAssets	$3,308	$3,012
NetTangibleAssetBackingPerShare	$ 0.021	$0.035
Number of RGP Issued Shares	157,846,065	86,046,065

Board Recommendation

Mr Chee Keong Oh and Mr Mun Yew Chan have an interest in the transaction which is the subject of Resolution 1 and therefore believe it inappropriate to make a recommendation. The other Directors recommend Shareholder vote in favour of the Resolution.

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Resolution 2 – Selective Capital Reduction

Background and reasons for reduction in capital

Resolution 2 is seeking Shareholder approval for the cancellation of the 71,800,000 Shares held by the AridTec Purchasers. This cancellation is to be by way of a selective capital reduction of the Company. Resolution 2 is conditional on the approval of Resolutions 1 and 3.

As set out in the Explanatory Note to Resolution 1, Refresh has agreed to sell its 100% interest in AridTec (by way of the AridTec Shares) to the AridTec Purchasers. The consideration for the disposal of the AridTec Shares by Refresh is the cancellation by Refresh of the 71,800,000 Shares originally issued by Refresh to the AridTec Purchasers.

Corporations Act

Pursuant to section 256C(2) of the Corporations Act, a company may make a selective capital reduction if it is approved by special resolution passed at a general meeting of the Company, with no votes being cast in favour of the resolution by any person who it to receive consideration as part of the reduction.

As the capital reduction also involved a cancellation of shares, the reduction must also be approved by a special resolution passed at a meeting of the members whose shares are to be cancelled. The AridTec Purchasers have agreed the cancellation of their Shares pursuant to the Share Sale Agreement.

To satisfy the requirements of the Corporations Act, if the capital reduction is approved, it will not be finalized until at least 14 days after the notice of this Resolution is lodged with ASIC.

Section 256B of the Corporations Act provides that a company may only reduce its share capital if the reduction:

is fair and reasonable to the shareholders as a whole;
does not materially prejudice the company’s ability to pay its creditors; and
is approved by shareholders pursuant to section 257C of the Corporations Act.

Independent Expert’s Report

The Directors have obtained the Independent Expert’s Report in relation to the selective reduction of capital of the Company to assist Shareholders in deciding whether to approve the capital reduction. The Independent Expert’s Report states that the selective reduction of capital in consideration for the sale of the AridTec shares is fair and reasonable having regard to the interests of the non-associated Shareholders of Refresh. Shareholders are urged to carefully read the Independent Expert's Report to understand the scope of the report, advantages and disadvantages of the transaction, the methodology of the valuation and assumptions made.

Shares to be Cancelled

The 71,800,000 Shares held by the AridTec Purchasers to be cancelled currently represents approximately 42.5% of the issued capital of the Company, which are held by the AridTec Purchasers as follows:

AridTec Purchasers	Number of Shares held by the AridTec Purchasers to be cancelled	Proportional interest in Company (before cancellation)
Mr Mun Yew Chan	29,492,590	18.68%
Mr Chee Keong Oh	13,884,650	8.8%
Mr Keith King Lien Ng	8,784,166	5.57%

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AridTec Purchasers	Number of Shares held by the AridTec Purchasers to be cancelled	Proportional interest in Company (before cancellation)
Ms Sin Hui Teo	5,667,204	3.59%
Ms Brenda Kah Yah Lee	4,718,814	2.99%
Mr Yuen Heng Loh	3,469,716	2.20%
Ms Xiaofei Sun	3,469,716	2.20%
Mr Edward Lim	2,313,144	1.47%
Total	71,800,000	42.5% (approx)

Effect of proposed selective capital reduction of the Company and on control of the Company

As a result of the selective capital reduction, the non-associated Shareholders will own 100% of the issued capital of the Company.

	Issued Shares in Refresh
Shares currently on issue	157,846,065
Less cancelled Shares being consideration fordisposalof AridTec Shares	(71,800,000)
Resulting Shares on issue following selective reduction	86,046,065

Immediately after cancellation of the Shares (and assuming there is no change to the Shareholders’ interests in the Company between the date of this Notice and the cancellation of the Shares) no Shareholder will have a relevant interest in the Company which is greater than 19.9%.

Terms of the selective capital reduction

The terms of the selective capital reduction are set out in the summary of the Share Sale Agreement in the Explanatory Notes to Resolution 1.

Financial Effect on the Company

The financial effect of the transaction on the Company is assessed in the Independent Expert's Report, particularly sections 7 and 9, which Shareholders are encouraged to consider in full.

In summary the Independent Expert has assessed the value of the consideration to be as follows:

the fair value of the AridTec Shares to be $3,156,000 as at 28 February 2011; and
the 71,800,000 Shares to be cancelled, to have a value a mean value of $3,410,000, with a range between $2,872,000 and $3,949,000.

The Independent Expert has also assessed:

the net asset backing per Share before the transaction to be 4.8 cents per Share, compared to the net asset backing per Share after the transaction to be 4.6 cents per Share; and
the net tangible asset backing per Share before the transaction to be 2.1 cents per Share, compared to net tangible asset backing per Share after the transaction to be 3.5 cents per Share.

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The Board does not consider that the disposal of AridTec by Refresh will materially prejudice the interests of the Company’s creditors.

Advantages and disadvantages of the selective capital reduction

The advantages and disadvantages of the selective capital reduction are assessed in the Independent Expert's Report, particularly at section 8, which Shareholders are encouraged to consider in full.

In summary the Independent Expert has assessed the advantages and disadvantages of the selective capital reduction as follows.

Advantages

Prevention of Ongoing Losses – AridTec has been trading at a loss since being acquired by Refresh. Furthermore, the actual trading results have been significantly lower than the original forecasts, specifically with respect to sales revenue and earnings. Since acquiring AridTec, the Board expects that AridTec will continue to trade at a loss in the short term. If the transaction proceeds, any further losses incurred by AridTec following completion will not impact on Refresh.

Ongoing Funding of AridTec - Since the acquisition, Refresh has provided funding to AridTec and Refresh anticipates that AridTec will continue to require ongoing funding for its operations. If the transaction proceeds, Refresh will not have to provide further funding following Completion and will be able to better preserve its cash resources.

No Further Diminution in Value of the AridTec Investment - There is a real risk that if the transaction does not proceed, the Company’s investment in AridTec will require a further write down. The transaction proceeding will avoid any future write down of the AridTec investment.

Management of AridTec - The divesting of AridTec should also allow the Company’s internal management to focus on Refresh and its Australian operations.

Disadvantages

Future Growth of AridTec - The divesting of AridTec will mean that any future potential of earnings and earnings growth of the AridTec business will not be enjoyed by Refresh. AridTec has originally provided forecast revenue and earnings to Refresh in June 2010, which disclosed potential substantial increases in future revenue and earnings. Refresh management now considers it highly unlikely these forecasts will be achieved. These forecasts have not been met in the current financial year and the Directors consider it highly unlikely that the future year projections will be achieved.

Loan to AridTec – Although the Board has assessed the loan of $485,928.04 owing by AridTec to Refresh not to be recoverable, if the transaction proceeds, any prospect of recovering this loan will be lost.

Board Recommendation

Mr Chee Keong Oh and Mun Yew Chan have an interest in the transaction which is the subject of Resolution 2 and therefore believe it in appropriate to make a recommendation. The other Directors recommend Shareholders vote in favour of the Resolution.

Resolution 3 – Approval of the participation of Mr Chee Keong Oh and Mr Mun Yew Chan in sale of AridTec Shares

Resolution 3 seeks Shareholder approval for Mr Chee Keong Oh and Mr Mun Yew Chan to participate in the sale of AridTec Shares to the AridTec Purchasers, as they are 2 of the AridTec Purchasers.

Resolutions 1 and 2 are conditional on the approval of Resolution 3.

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Mr Chee Keong Oh and Mr Mun Yew Chan are related parties of the Company as they are current Directors of the Company.

Listing Rule 10.1 and section 208 of the Corporations Act

Because Mr Chee Keong Oh and Mr Mun Yew Chan are related parties of the Company, Shareholder approval is required under Listing Rule 10.1 and Chapter 2E of the Corporations Act for the sale of AridTec Pte Ltd to them.

Listing Rule 10.1 provides that a company may not dispose of a substantial asset to a related party without shareholder approval. Listing Rule 10.2 provides that a substantial asset is an asset which (in the opinion of ASX) is valued at 5% or more of the equity interests of the Company as set out in the latest financial accounts given to ASX under the Listing Rules. AridTec Pte Ltd is a substantial asset for the purposes of Listing Rule 10.2.

Section 208 of the Corporations Act provides that a company must obtain shareholder approval before giving a financial benefit to a related party. Mr Chee Keong Oh and Mr Mun Yew Chan are receiving a financial benefit, being shares in AridTec as follows:

Mr Mun Yew Chan - 2,550,000 shares in AridTec (41.08% of AridTec’s issued capital)
Mr Chee Keong Oh - 1,200,500 shares in AridTec (19.34% of AridTec’s issued capital)

Information required by ASX Listing Rule 10.10 and section 219 - Independent Expert’s Report

Listing Rule 10.10 provides that the Company must obtain a report from an independent expert for the purpose of Listing Rule 10.1. This report must state whether the proposed transaction is fair and reasonable to the non-associated shareholders of the Company.

The Independent Expert’s Report concludes that the proposed transaction is fair and reasonable to the non-associated shareholders of the Company. Shareholders are urged to carefully read the Independent Expert's Report to understand the scope of the report, advantages and disadvantages of the transaction, the methodology of the valuation and assumptions made.

Section 219 of the Corporations Act requires that the following information to be provided to Shareholders for the purpose of obtaining Shareholder approval for the participation of Mr Chee Keong Oh and Mr Mun Yew Chan in the sale of AridTec Shares.

The fair value of the AridTec Shares to be received by Mr Chee Keong Oh and Mr Mun Yew Chan in the sale of AridTec Shares b the Company is set out as follows, based on the assessment of the Independent Expert (see section 7 of the Independent Expert Report).

Fair value of AridTec Shares (100%) (as at 28 February 2011)	$3,156,000
Fair value of 2,550,000 AridTec Shares owned by Mr Mun Yew Chan (41.08%) (as at 28 February 2011)	$1,296,484.80
Fair value of 1,200,500 AridTec Shares owned by Mr Chee Keong Oh (19.34%) (as at 28 February 2011)	$610,370.10

As stated in the Independent Expert's Report the assessed mean value of the Shares of Mr Mun Yew Chan and Mr Chee Keong Oh being cancelled is greater than the assessed fair value of the AridTec Shares they will receive pursuant to the proposed transaction.

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Interests of Related Parties

Apart from their Shares (which are all to be cancelled as part of the transaction), Mr Mun Yew Chan and Mr Chee Keong Oh do not hold or control any securities in the Company. They receive or are entitled to receive the following remuneration this financial year:

Mr Mun Yew Chan - $17,000 pa
Mr Chee Keong Oh - $61,013 pa

Board Recommendation

Mr Chee Keong Oh and Mr Mun Yew Chan have an interest in the transaction which is the subject of Resolution 3 and therefore believe it inappropriate to make a recommendation. The other Directors, recommend Shareholders vote in favour of the resolution.

Resolution 4 – Approval of Placement

As previously announced to ASX, the Company has recently engaged First Corporate Pty Ltd (“ First ”) to assist the Board in assessing the ongoing strategic development of both its existing water production and distribution business, as well as new strategic opportunities that might be pursued by Refresh, and intended to enhance value for all Shareholders.

First is a corporate advisory business based in Perth, Western Australia. The two principals of First are Mr Jeffrey Broun and Mr Michael Slater. Refresh, assisted by First, will look to identify and consider suitable strategies to implement within Refresh. As part of the process to identify such opportunities, the Company intends to make a placement of up to 16 million new Shares, at 3.5 cents per Share (assuming satisfactory market conditions), in order to raise around $560,000 new equity funds (“ Placement ”).

Should the Placement be undertaken, the proceeds would be applied to working capital of the existing water production and distribution business, costs of the Issue (including corporate fees and commissions), reduction of debt, with the balance being applied to identification of new opportunities for Refresh.

It is anticipated that should the Placement proceed successfully as intended, then Mr Broun and Mr Slater will be invited to join the Board following the completion of such Placement.

Mr Broun is a Fellow of the Institute of Chartered Accountants in Australia and a member of the Australian Institute of Company Directors. He has been a director of a number of ASX listed companies over last ten years and has been heavily involved with the companies’ corporate growth strategies, capital raisings, corporate governance platforms and investor relations interface.

Mr Broun has strong corporate and financial background and has led the development and implementation of strategic plans and value creation pathways for companies, underpinned by best practice governance systems and processes. Mr Slater is a Chartered Accountant - a member of both the Institute of Chartered Accountants in Australia and the Institute of Chartered Accountants in England and Wales. He also holds a Bachelor of Arts in Accountancy.

Mr Slater has substantial CFO experience gained with both public and private companies. His experience includes strategic planning and implementation, M&A, and financial management, encompassing capital raising, treasury, investor relations and corporate governance. He has experience of operating in Europe, North America, the Near East, and Australia, across a broad range of industry sectors.

Listing Rule 7.1

Listing Rule 7.1 generally provides that a company may not issue equity securities if those equity securities will, in themselves or when aggregated with the equity securities issued by a company during the previous 12 months, exceed 15% of the number of equity securities on issue at the commencement of the 12 month period unless the issue falls within one of the exceptions set out in Listing Rule 7.2 of the approval of shareholders of the company in a general meeting is obtained.

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For the purpose of ASX Listing Rule 7.3, the following information is provided:

(i) The maximum number of Shares to be issued is 16 million.
(ii) The issue price of the Shares is 3.5 cents per share.
(iii) The Shares will rank equally in all respects with the existing fully paid ordinary shares in the Company quoted on the ASX.
(iv) The allotees of the Shares will be certain Australian institutional, sophisticated and professional investors none of whom will be related parties of the Company or associate of any Directors.
(v) The Company intends to apply the funds raised from the issue of the Shares for the following purposes:
a. Costs of the issue including corporate costs and commissions;
b. Applied to working capital of the existing water production and distribution business,
c. Debt reduction; and
d. identification of new opportunities for Refresh.
(vi) The Shares are expected to be issued shortly after the shareholders meeting (assuming satisfactory market conditions), and in any event on a date no later than 3 months from the date of the Meeting or such later date as approved by ASX;
(vii) A voting exclusion statement relating to Resolution 4 is included in the Notice.

Board Recommendation

The Directors recommend that Shareholders vote in favour of the Resolution for the Placement.

Resolution 5 – Approval of Allotment

Prior to the Meeting the Company has issued certain Shares that have yet to be approved by Shareholders.

Listing Rule 7.4

Listing Rule 7.4 generally provides that an issue of securities made without approval under Listing Rule 7.1 will be treated as being approved under Listing Rule 7.1 as long as the following applies:

a) The issue did not breach Listing Rule 7.1; and
b) Holders of ordinary securities subsequently approve it.

Resolution 5 seeks Shareholder approval under Listing Rule 7.4 for the issue of 10,896,908 Shares allotted on the dates set out in the table below which contains the following additional information for the purpose of Listing Rule 7.5.

Date of issue of Shares	Number of Shares Issued	Issue Price of Shares	Allottees of Shares	Purpose
1 September 2009	750,000	$0.07	Graeme Arthur Price	Part consideration for business acquisition of Minnamurra Natural Springwater

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Date of issue of Shares	Number of Shares Issued	Issue Price of Shares	Allottees of Shares	Purpose
14 July 2010	384,600	$0.065	Mr Meng Leong Lye (185,000) Mr Chong Seng Cheng (77,000) Ms Yan Chen (45,600) Ms Cheng Sum Leong (77,000)	Corporate advisory fees in relation to acquisition of AridTec Pte Ltd
14 July 2010	500,000	$0.065	Company Employees	Employee share account for options
27 August 2010	1,570,000	$0.065	Ms Catherine Chan andHon Leong Chang	Applied to working capital of the Company
29 September 2010	7,692,308	$0.065	Pacific Alliance Group	Applied to working capital of the Company
	10,896,908

All Shares issued rank equally with existing issued Shares. A voting exclusion statement relating to Resolution 5 is included in the Notice.

Board Recommendation

The Directors recommend that Shareholders vote in favour of the Resolution.

Resolution 6 – Modification of Constitution

Section 136 of the Corporations Act provides that a Company may repeal its Constitution and adopt a new Constitution by special resolution.

The Company adopted its current Constitution since converting from a private to a public company. In line with changes in current regulations, instead of amending individual clauses, the Board proposes to replace the whole Constitution instead.

A copy of the proposed Constitution is available for inspection by Shareholders at the Company’s registered office during normal business hours until the Meeting. A copy of the Constitution is also available on the Company’s website.

Summary of Proposed New Constitution

Constitution and rights attaching to Shares

The proposed new Constitution contains provisions common for public companies in Australia. Full details of the rights attaching to Shares are set out in the Constitution. The following is a broad summary of the key rights, privileges and restrictions attaching to the Shares. This summary is not exhaustive and does not constitute a definitive statement of the rights and liabilities of Shareholders.

In adopting the proposed new Constitution, there would be no change to the existing structure of the issued capital of the Company or the rights and obligations attaching to any securities on issue.

Directors (Constitution clauses 58 and 59)

Subject to the Corporations Act, unless altered by the Company in general meeting, the minimum number of Directors is 3 and the maximum is 10 (counting alternate Directors). Subject to the provisions of the Constitution, the Company may elect a person as a Director by resolution passed in general meeting.

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The existing Directors may, at any time, appoint a new Director, either to fill a casual vacancy or as an addition to the Board, subject to this not exceeding the maximum number of Directors permitted by the Constitution. Any such Director may hold office only until the next annual general meeting and is then eligible for election at that meeting but will not be taken into account in determining the number of Directors who are to retire at that meeting.

Future increases in capital (Constitution clause 3)

Without affecting the special rights of any holders of existing Shares and subject to the Listing Rules, the Board may at any time issue such number of shares or class of shares as the Board determines in its discretion with or without preferred, deferred or other special rights, obligations or restrictions.

By resolution of the Board, the rights attached to Shares in class of Shares may be varied by the issue of new shares not having the same rights as any Shares already issued.

Variation of rights

Pursuant to section 246B of the Corporations Act, the Company may, with the sanction of a special resolution passed at a meeting of Shareholders, vary or abrogate the rights attaching to Shares. If at any time the Share capital is divided into different classes of Shares, the rights attached to any class (unless otherwise provided by the terms of issue of the Shares of that class), whether or not the Company is being wound up may be varied or cancelled:

by special resolution passed at a separate meeting of the holders of the Shares of that class; or
with the written consent of the holders of 75% of the votes attaching to the Shares of that class.

Transfer of Shares (Constitution clauses 36 and 39)

Subject to the Company’s Constitution, the Corporations Act, the Listing Rules and the ASX Settlement Operating Rules, Shares are freely transferrable.

The Board may refuse to register a transfer of Shares only in limited circumstances, such as where the Company has a lien or charge in relation to those Shares.

Meetings of Shareholders (Constitution clauses 42 and 45)

The Board may convene a general meeting of Shareholders whenever it thinks fit, subject to the provisions of the Constitution and the Corporations Act. Shareholders may request that the Directors call a general meeting in accordance with section 249D of the Corporations Act. A quorum for a general meeting comprises the Shareholders present at the meeting or all Shareholders if there are less than three.

Voting rights (Constitution clause 53)

Subject to any rights or restrictions attached to any class or classes of Shares, at general meetings of Shareholders:

each Shareholder entitled to vote may vote in person or by proxy, attorney or representative;
on a show of hands, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder has one vote; and
on a poll, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder shall, in respect of each fully paid Share held by that person, or in respect of which that person is appointed a proxy, attorney or representative, have one vote for the Share, but in respect of partly paid Shares, shall have a fraction of the vote for each partly paid Share (equal to the proportion paid on that Share).

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Dividend rights (Constitution clauses 84 and 85)

Subject to the rights of holders of Shares issued with special rights (if any), dividends will be payable on all Shares in proportion to the amount paid on Shares during the period in respect of which the dividends are paid. Dividends will be payable in accordance with the Corporations Act. The Board may pay to the Shareholders interim dividends as appear to the Board to be justified. No dividend shall carry interest as against the Company.

Rights on winding up (Constitution clauses 99 and 100)

Subject to the rights of holders of Shares issued with special rights (if any), if the Company is wound up then any surplus must be divided among the Shareholders in proportion to the Shares held by them and, if any Shares are not fully paid, in proportion to the amounts paid or credited as paid on their Shares.

Board Recommendation

The Directors recommend that Shareholders vote in favour of the Resolution for the adoption of the new Constitution.

Resolution 7 – Proportional Takeover Approval Provisions

Clauses 111-112 of the proposed new Constitution relate to proportional takeover bids. The proposed new clauses are set out in Schedule 2.

A proportional takeover bid is a takeover offer made to all shareholders, but only in respect of a specified portion of each shareholder’s shares. The provisions do not apply to full takeover bids. Under the Corporations Act, proportional takeover approval provisions may be inserted into a company’s constitution and will expire after 3 years if not renewed. Previously, the Company’s Constitution did not contain proportional takeover approval provisions.

The Corporations Act requires that the following information be provided with a notice proposing the adoption or renewal of those provisions.

Effect

If a proportional takeover bid is made, the Directors must ensure that an approval resolution is voted on by shareholders no more than 14 days before the bid period ends. The Directors will decide whether the vote is to be taken at a general meeting or by postal ballot. If the resolution is approved by simple majority, transfers of shares to the bidder will be registered provided they comply with other provisions of the Company’s Constitution. If the resolution is rejected by Shareholders, then the bid will be deemed to be withdrawn and registration of any transfer of shares resulting from the bid will be prohibited. Acceptances will be returned and any contracts formed by acceptances will be rescinded.

If the resolution is not voted on at least 14 days before the end of the bid period, then the resolution will be deemed to have been approved.

The bidder and associates cannot vote on the resolution.

Reasons for proposing clauses 111-112

Clauses 111-112 are proposed to be inserted into the Constitution because a proportional takeover bid may result in effective control of the Company changing hands without shareholders having the opportunity to sell all of their shares. Shareholders could be left as minority interests in the Company, with control having passed to the bidder but without payment of an adequate control premium for all shares.

The proposed provisions lessen this risk because they allow shareholders to decide whether a proportional takeover bid is acceptable and should be permitted to proceed.

No present acquisition proposals

At the date of preparation of these Explanatory Notes, no Director is aware of any proposal by any person to acquire or increase the extent of a substantial interest in the Company.

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Potential advantages and disadvantages

Having the proposed provisions will enable the Directors to ascertain the view of shareholders on a proportional takeover bid. Otherwise, there is no specific advantage or disadvantage for Directors in the Company adopting the provisions in its Constitution.

Potential advantages for shareholders in adopting the provisions are:

shareholders will have an opportunity to determine by majority vote whether a proportional takeover bid should proceed;
that proportional takeover bids are likely to be structured to be more attractive to a majority of shareholders (other than the bidder and associates); and
there is less likelihood that shareholders could be locked in as a minority.

Possible disadvantages to shareholders in adopting the provisions are:

they may discourage a potential bidder from making a proportional takeover offer;
they may reduce the opportunity for shareholders to sell some of their shares at an attractive price to a bidder seeking to control the Company;
they may reduce an element of takeover speculation in the Company’s share price; and
they may be said to add a restriction on the ability of shareholders to deal freely with their shares.

Board recommendation

The Directors recommend that Shareholders vote in favour of the Resolution for inclusion of clauses 111112 in the Constitution. In particular, they consider that the potential advantages of inclusion of the proportional takeover provisions outweigh the potential disadvantages and generally that the provisions are in the interests of Shareholders.

Resolution 8 – Election of Director

General

Ms Khoo was appointed as a Director by the Board on 25 November 2010. The appointment occurred after the Company’s previous general meeting. As the Meeting being held 15 June 2011 is the first Shareholder meeting following Ms Khoo’s appointment, is the first opportunity for Refresh Shareholders to approve the re-election of Ms Khoo.

Ms Jamie Gee Choo Khoo

Between September 2008 and September 2010, Ms Khoo was the Executive Director of Adventus Holdings Ltd, a company listed on the Catalist Board of the Singapore Stock Exchange Ltd. Under her leadership, Adventus Holdings Ltd was transformed from a fledging electronics company to a telecommunications distribution and resources trading company. Ms Khoo has also held senior positions in various companies including STT Communications Ltd and Hughes Tool Singapore Pte Ltd, and ABB Holdings Ltd in Hong Kong.

Ms Khoo is also an independent, non-executive director of ASX-listed MDS Financial Group Ltd.

Ms Khoo graduated from the National University of Singapore with a Bachelor of Accountancy, and from the University of Hull, England, with a Masters of Business Administration.

Board Recommendation

The Directors other than Ms Khoo recommend that Shareholders vote in favour of the Resolution.

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SCHEDULE 1 - GLOSSARY

In this Notice of Meeting and Explanatory Notes, the following terms have the following meanings unless the context otherwise requires:

“ AridTec ” means AridTec Pte Ltd a company incorporated in the Republic of Singapore under registration number 200721828E of 514 Chai Chee Lane # 05-01 Singapore 469029.

“ AridTec Purchasers ” means Mr Mun Yew Chan, Mr Chee Keong Oh, Mr Keith King Lien Ng, Ms Sin Hui Teo, Ms Brenda Kah Yah Lee, Mr Yuen Heng Loh, Ms Xiaofei Sun and Mr Edward Lim.

“ AridTec Shares ” means 100% of the issued shares in AridTec owned by the Company and which are to be sold by the Company to the AridTec Purchasers pursuant to the Share Sale Agreement.

“ ASX ” means ASX Limited ABN 98 008 624 691 and where the content permits, trading as the Australian Securities Exchange operated by ASX Limited.

“ Board ” means the board of Directors.

“ Business Day ” means a day on which the ASX is opened for trading.

“ Company ” means Refresh Group Limited ACN 079 681 244.

“ Completion ” has the same meaning as in the Share Sale Agreement.

“ Constitution ” means the constitution of the Company.

“ Corporations Act ” means the Corporations Act 2001 (Cth).

“ Director ” means a director of the Company.

“ Explanatory Notes ” means the explanatory notes to the Notice.

“ Independent Expert ” means Moore Stephens Perth Corporate Services Pty Ltd ABN 41 421 048 107 AFSL 240773.

“ Independent Expert’s Report ” means the report dated 2 May 2011 by the Independent Expert which is attached as Annexure A to this Notice.

“ Listing Rules ” means the listing rules of ASX.

“ Notice ” means the notice of general meeting which accompanies the Explanatory Notes.

“Original Purchase Agreement ” means the agreement dated 20 April 2010 for the Company’s purchase of the AridTec Shares from the AridTec Purchasers (as vendors).

“ Proxy Form ” means the proxy form attached to the Notice.

“ Refresh ” means Refresh Group Limited ACN 079 681 244.

“ Resolution ” means a resolution referred to in the Notice.

“ Share ” means a fully paid ordinary share in the capital of the Company.

“ Shareholder ” means a person registered as a shareholder of the Company.

“ Share Sale Agreement ” means the share sale agreement dated 14 April 2011 between the Company and the AridTec Purchasers.

“ WST ” means Western Standard Time being the time in Perth, Western Australia.

In this Notice and Explanatory Notes, words importing the singular include the plural and vice versa.

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SCHEDULE 2 – RESOLUTION 7

The following is the proposed new clauses 111-112 of the Constitution for the purpose of Resolution 7:

111. Approval of proportional takeover bids

If offers are made under a proportional takeover bid for Securities of the Company:

111.1 the Company must refuse to register a transfer giving effect to a takeover contract for the bid unless and until a resolution (" Approving Resolution ") to approve the bid is passed in accordance with this clause 37.1 and the Act;
111.2 the Board must call and hold a meeting of the persons entitled to vote on an Approving Resolution for the purpose of voting on the Approving Resolution;
111.3 the clauses of this Constitution concerning meetings of Members (with necessary changes) apply to a meeting held under clause 37.1.2;
111.4 a person (other than the bidder or an associate of the bidder) who, as at the end of the day on which the first offer under the bid was made, held bid class Securities, is entitled to vote on an Approving Resolution;
111.5 the bidder or an associate of the bidder is not entitled to vote on an Approving Resolution; and
111.6 an Approving Resolution that has been voted on in accordance with this clause is taken to have been passed if the proportion that the number of votes in favour of the resolution bears to the total number of votes on the resolution is greater than 50%, and otherwise is taken to have been rejected.

112. Expiry

Clause 111 and this clause 112 cease to apply on the third anniversary of the date of their adoption or last renewal.

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APPENDIX A – INDEPENDENT EXPERT REPORT

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REFRESH GROUP LIMITED

INDEPENDENT EXPERT’S REPORT

and Financial Services Guide

2 May 2011

For the proposed General Meeting to be held on 15 June 2011

Prepared by Moore Stephens Perth Corporate Services Pty Ltd Australian Financial Services License No. 240773

Moore Stephens Perth Corporate Services Pty Ltd ABN 41 421 048 107 Level 3, 12 St Georges Terrace Perth , Western Australia 6000 Telephone +61 8 9225 5355 Facsimile +61 8 9225 6181 Email [email protected] Website www.moorestehphens.com.au

A member of the Moore Stephens International Limited Group of Independent Firms

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MOORE STEPHENS PERTH CORPORATE SERVICES PTY LTD Australian Financial Services License No. 240773

FINANCIAL SERVICES GUIDE

This Financial Services Guide is issued in relation to the Independent Expert‟s Report on the proposed divestment by Refresh Group Limited of AridTec Pte Ltd, prepared at the request of the Directors of Refresh Group Limited for inclusion in a Notice of General Meeting of Shareholders dated on or about 15 June 2011.

Moore Stephens Perth Corporate Services Pty Ltd

Moore Stephens Perth Corporate Services Pty Ltd “MSPCS” has been engaged by the directors of Refresh Group Limited to prepare an independent expert‟s report expressing our opinion as to whether or not the proposed divestment of its investment of AridTec Pte Ltd and cancellation of 71,800,000 Refresh Group Limited shares is “fair and reasonable” to non-associated shareholders.

MSPCS holds an Australian Financial Services Licence – Licence No 240773.

Benefits that we may receive

We have charged fees for providing our report. The basis on which our fees will be determined has been agreed with, and will be paid by, the person who engaged us to provide the report. Our fees have been agreed on either a fixed fee or time cost basis.

Remuneration or other benefits received by our employees

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

Referrals

Financial Services Guide

As a result of our report being provided to you we are required to issue to you, as a retail client, a Financial Services Guide “FSG”. The FSG includes information on the use of general financial product advice and is issued so as to comply with our obligations as holder of an Australian Financial Services Licence.

Financial Services we are licensed to provide

We hold an Australian Financial Services Licence which authorises us to provide reports for the purposes of acting for and on behalf of clients in relation to proposed or actual mergers, acquisitions, takeovers, corporate restructures or share issues, and to carry on a financial services business to provide general financial product advice for securities to retail and wholesale clients.

We provide financial product advice by virtue of an engagement to issue a report in connection with the issue of securities of a company or other entities.

We do not pay commissions or provide any other benefits to any parties or person for referring customers to us in connection with the reports that we are licensed to provide.

Associations and relationships

MSPCS is the licensed corporate advisory arm of Moore Stephens Perth, Chartered Accountants and Business Advisers. The directors of MSPCS may also be partners in Moore Stephens Perth Chartered, Accountants and Business Advisers.

Moore Stephens Perth, Chartered Accountants and Business Advisers is comprised of a number of related entities that provide audit, accounting, tax, insolvency and financial advisory services to a wide range of clients.

MSPCS‟s contact details are set out on our letterhead.

Complaints resolution

Our report includes a description of the circumstances of our engagement and identifies the party who has engaged us. You have not engaged us directly but will be provided with a copy of our report as a retail client because of your connection with the matters on which our report has been issued. We do not accept instructions from retail clients and do not receive remuneration from retail clients for financial services.

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

General Financial Product Advice

Our report provides general financial product advice only, and does provide personal financial product advice, because it has been prepared without taking into account your particular personal circumstances or objectives either financial or otherwise, your financial position or your needs.

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

An individual‟s decision in relation to the Proposed Allotment may be influenced by their particular circumstances and, therefore, individuals should seek independent advice.

As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. All complaints must be in writing, addressed to The Complaints Officer, Moore Stephens, PO Box 3019, Perth Adelaide Terrace, Perth WA 6832.

On receipt of a written complaint we will record the complaint, acknowledge receipt of the complaint and seek to resolve the complaint as soon as practical.

If we cannot reach a satisfactory resolution, you can raise your concerns with the Financial Ombudsman Service Limited “FOS”. FOS is an independent body established to provide advice and assistance in helping resolve complaints relating to the financial services industry. MSPCS is a member of FOS. FOS may be contacted directly via the details set out below.

Financial Ombudsman Service Limited PO Box 3 Melbourne VIC 3001 Toll free: 1300 78 08 08 Facsimile: 03 9613 6499 Email: [email protected]

REFRESH GROUP LIMITED

INDEPENDENT EXPERT’S REPORT

1. EXECUTIVE SUMMARY

2. PURPOSE OF THIS REPORT

3. OUTLINE OF THE PROPOSED TRANSACTION

4. PROFILE OF REFRESH GROUP LIMITED

5. PROFILE OF ARIDTEC PTE LTD

6. BASIS OF EVALUATION

7. ASSESSMENT OF FAIRNESS – COMPARISON OF PRICE AND VALUES

8. ASSESSMENT OF REASONABLENESS

9. SUMMARY AND CONCLUSIONS

10. INDEPENDENCE

11. QUALIFICATIONS

12. DISCLAIMERS AND CONSENTS

APPENDIX “A” SOURCES OF INFORMATION

APPENDIX “B” VALUATION METHODOLOGIES

APPENDIX “C” INDUSTRY INFORMATION

GLOSSARY

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2 May 2011

The Directors Refresh Group Limited 17 Denningup Way MALAGA WA 6090

Dear Sirs

INDEPENDENT EXPERT’S REPORT – REFRESH GROUP LIMITED

1. EXECUTIVE SUMMARY

Overview

1.1. Refresh Group Limited “RGP” is a public company listed on the Australian Securities Exchange, ASX Code: RGP. The directors of Refresh Group Limited have engaged Moore Stephens Perth Corporate Services Pty Ltd to prepare an Independent Expert‟s Report to express an opinion as to whether or not the proposed disposal of 100% of its shareholding in AridTec Pte Ltd in consideration of a selective capital reduction of shares in RGP, is fair and reasonable to the non associated shareholders of RGP, referred to as “the Proposed Transaction”.
1.2. This report is to accompany the Notice of General Meeting of Shareholders and Explanatory Statement of RGP to be sent to all shareholders to assist them in determining whether or not to approve the Proposed Transaction.

Background

1.3. AridTec is a Singaporean incorporated company. It has developed a range of products that provide atmospheric water harvesting solutions, designed to draw water vapour from the air to produce drinking water.
1.4. In April 2010 RGP entered into a share sale agreement, whereby RGP acquired the entire share capital in AridTec, in consideration for the issue of 71,800,000 shares in RGP and up to a further 48,200,000 shares in RGP. The effective value of the 71,800,000 RGP shares was 6.5 cents per share, equating to a total value of $4,667,000 for AridTec, (“the Original Agreement”). Mr Mun Yew Chan and Mr Chee Keong Oh were appointed as directors of RGP.
1.5. Following the half year results to 31 December 2010, the board of directors of RGP, after having considered the financial performance of AridTec since its acquisition, now consider that the performance of AridTec does not meet the original expectations of RGP and is unlikely to meet such expectations in the future. In addition, the Directors consider that more operational focus is required on RGP‟s Australian production and distribution business.
1.6. In order to minimise ongoing financial costs to RGP, it is proposed that RGP will undertake a selective capital reduction whereby shares of RGP, issued to the Original Vendors of AridTec will be cancelled in consideration of RGP transferring its shares in AridTec to the Vendors. Further, we understand that RGP will capitalise and effectively forgive a loan owed by AridTec to RGP. A share sale agreement has been executed to effect the Proposed Transaction.

A member of the Moore Stephens International Limited Group of Independent Firms

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Summary of the Proposed Transaction

1.7. RGP proposes to undertake a selective capital reduction, whereby RGP will cancel 71,800,000 shares issued to the Original Vendors of the AridTec shares, in consideration of disposing 100% of its shares in AridTec owned by RGP back to the Original Vendors, being 6,208,000 issued shares in AridTec
1.8. The following table sets out the effect of the Proposed Transaction on the RGP associated and non associated Shareholders.

Shareholders	Pre Proposed Transaction	Pre Proposed Transaction	Post Proposed Transaction	Post Proposed Transaction
	Shares %		Shares %
Associated Shareholders Being RelatedParties	43,377,240	27.5	0	0
Other Associated Shareholders	28,422,760	18.0	0	0
Non Associated Shareholders	86,046,065	54.5	86,046,065	100.0
Total	157,846,065	100.0	86,046,065	100.0

Note: Mr Chee Keong Oh and Mr Mun Yew Chan are the associated shareholders and related parties. Please refer to point 1.18 below.

1.9. The above table shows that the non associated shareholders hold 86,046,065 shares or 54.5% of the shareholding in RGP before the Proposed Transaction and will hold 100% of the shareholding in RGP after the Proposed Transaction.
1.10. The sale of the AridTec shares is conditional upon and subject to RGP obtaining all necessary approvals of RGP shareholders for the sale of the AridTec shares including but not limited to:
the approval by the RGP shareholders of the selective capital reduction by special resolution to be passed at a general meeting at which the Original Vendors do not vote and
the approval by the Original Vendors of the selective capital reduction by special resolution to be passed at a separate meeting.
1.11. An inter-company loan of $485,928 from RGP to AridTec will be capitalised such that upon completion of the Proposed Transaction there will be no outstanding loan owing to RGP by AridTec.
1.12. Mr Chee Keong Oh will resign as a director of RGP with effect from completion of the Proposed Transaction.
1.13. This will only occur once a special resolution is passed at a general meeting of shareholders approving the selective capital reduction. This process is further explained below.

Basis of Evaluation

The Corporations Act

Selective Capital reduction

1.14. Section 256B of the Corporations Act 2001 (“the Act”) provides that a company may reduce its share capital by way of a selective capital reduction where the reduction:
Is fair and reasonable to the company's shareholders as a whole; and
Does not materially prejudice the company's ability to pay its creditors; and
Is approved by shareholders under section 256C.
1.15. Under section 256C(2) of the Act, a selective reduction must be approved by either:
Special resolution passed at a general meeting of the company, with no votes being cast in favour of the resolution by any person who is to receive consideration as part

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of the reduction or whose liability to pay amounts unpaid on shares is to be reduced, or by their associates; or

Resolution agreed to, at a general meeting, by all shareholders.
1.16. Further where the reduction involves the cancellation of shares, the reduction must also be approved by a special resolution passed at a meeting of the shareholders whose shares are to be cancelled .
1.17. Under section 256C(4) of the Act, RGP must include with the notice of the meeting a statement setting out all information known to it that is material to the decision on how to vote on the resolution.

Financial Benefit to a Related Party

1.18. Section 208 of the Act provides that a company must obtain shareholder approval before giving of a financial benefit to a related party. Mr Chee Keong Oh and Mr Mun Yew Chan are related parties and are receiving a financial benefit in connection with the sale of shares in AridTec and the cancellation of their shares.
1.19. Furthermore Section 228 of the Act provides that an entity is a related party if it acts in concert with a related party on the basis that it will receive a financial benefit. To this end we have assumed that the Proposed Purchasers are also related parties for the purpose of this report.
1.20. Section 219 of the Act provides that the explanatory statement is required to set out, amongst other things, all information that is reasonably required by shareholders in order to decide whether or not it is in the company's interests to pass the proposed resolution and is known to the company or to any of its directors.

ASX Listing Rules

1.21. ASX Listing Rule 10.1 states that where a company proposes to acquire a substantial asset from, or dispose of a substantial asset to, a related party, the company must obtain the prior approval of the non-associated shareholders. Listing Rule 10.1 describes a substantial asset as an asset that has a value in the ASX‟s opinion, of at least 5 percent or more of the shareholders funds in the entity as set out in the latest accounts of the company.
1.22. Under such circumstances Listing Rule 10.10 requires the Notice of General Meeting to include a report on the transaction from an Independent Expert. The report must state whether the transaction is fair and reasonable to holders of the entity‟s ordinary securities whose votes are not to be disregarded. Unless the opinion is that the transaction is fair and reasonable, the opinion must be displayed prominently in the notice of meeting and on the covering page of the accompanying documents.

ASIC Regulatory Guide 111 (“RG 111”)

1.23. In preparing our report we have had regard to the guidelines set out in RG 111. The Act does not define the term “fair and reasonable”; however RG 111 provides that each of these criteria be assessed individually and not as a compound phrase. RG 111 provides that a proposed related party transaction:
Is “fair” if the value of the financial benefit to be provided by the entity to the related party is equal to or less than the value of the consideration being provided to the entity by the related party. This comparison is required to be made assuming an arm‟s length transaction between knowledgeable and willing, but not anxious parties;
Is “reasonable” if it is “fair”; and
May be “reasonable” despite being “not fair”, if the expert believes there are other reasons for shareholders to vote for the proposal.

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1.24. Generally an expert need only conduct one analysis of whether the transaction is “fair and reasonable”, even if the report has been prepared for a reason other than the transaction being a related party transaction.
1.25. We also have had regard to RG 112, which outlines guidelines with respect to the independence of requirements of experts.

Purpose of Report

1.26. RGP has engaged Moore Stephens Perth Corporate Services Pty Ltd to prepare a report providing an opinion on whether the Proposed Transaction is fair and reasonable to non associated shareholders. This report is to accompany the Notice of General Meeting of Shareholders in order to:
Satisfy the information requirements that the reduction in share capital is fair and reasonable to RGP‟s shareholders in order to assist shareholders in voting on the resolutions required by section 256C of the Act; and
Satisfy the requirements of section 219 of the Act and ASX Listing Rule 10.10 both of which concern related party transactions, by reason of Mr Mun Yew Chan and Mr Chee Keong Oh, being directors of RGP and being the proposed recipients of shares in AridTec to be divested by RGP.

Summary of Opinion

1.27. In our opinion the Proposed Transaction is fair and reasonable to the non associated shareholders of RGP.

1.28. This opinion is based on our view that the value of the AridTec shares to be sold by RGP is less than the mean value of the RGP shares to be cancelled under the Proposed Transaction.
1.29. In addition the advantages of the Proposed Transaction outweigh the disadvantages and consequently, the non associated shareholders will be better off if the Proposed Transaction proceeds than if it does not.
1.30. The principal factors affecting our opinion are summarised below and are discussed in more detail in Section 9 of this report.

Assessment of Fairness

Value of the Shares in AridTec to be Sold Compared to the Consideration Being Paid

1.31. We have assessed the fair value of the shares in AridTec proposed to be sold to have a value of $3,156,000 at 28 February 2011.
1.32. This compares to the value of the purchase consideration being paid for by the Vendors, being 71,800,000 shares in RGP proposed to be cancelled, which have been assessed to have a value a mean value of $3,410,000, with a range between $2,872,000 and $3,949,000,
1.33. We consider that the value of the AridTec shares to be sold by RGP is less than the mean value of the RGP shares to be cancelled under the Proposed Transaction.

Premium for Control

1.34. In assessing the valuation of shares in RGP and AridTec, we have considered whether a premium for control would be applicable. Our approach is explained further in this report.

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Impact of the Proposed Transaction on the Net Asset and Net Tangible Asset Backing Per RGP Share

1.35. We have assessed the net asset backing per RGP share before the Proposed Transaction to be 4.8 cents per share compared to the net asset backing per RGP share after the Proposed Transaction to be 4.6 cents per share.
1.36. The net tangible asset backing per share before the Proposed Transaction has been assessed to be 2.1 cents per share compared to 3.5 cents per share after the Proposed Transaction.
1.37. We have concluded that as the value of the AridTec shares to be sold by RGP is less than the mean value of the RGP shares to be cancelled, in the context of the transaction taken as a whole, that the Proposed Transaction is fair to the non associated RGP shareholders.

Assessment of Reasonableness

1.38. In assessing whether the Proposed Transaction is reasonable, we have considered the potential advantages and disadvantages to non associated shareholders of RGP and whether the advantages outweigh the disadvantages. We have also considered the impact upon RGP shareholders what the Proposed Transaction as a whole will achieve.

If the Proposed Transaction Proceeds

Advantages

1.39. Prevention of Ongoing Losses – AridTec has been trading at a loss, since being acquired by RGP. Furthermore, the actual trading results have been significantly lower than the original forecasts, specifically with respect to sales revenue and earnings. Since acquiring AridTec, RGP expects that AridTec will continue to trade at a loss in the short term. If the Proposed Transaction proceeds, any further losses incurred by AridTec following completion will not impact on RGP.
1.40. Ongoing Funding of AridTec - Since the acquisition, RGP has provided funding to AridTec and RGP anticipates that AridTec will continue to require ongoing funding for its operations. If the Proposed Transaction proceeds, RGP will not have to provide further funding following completion and will be able to better preserve its cash resources.
1.41. No Further Diminution in Value of the AridTec Investment - There is a real risk that if the Proposed Transaction does not proceed, that the investment in AridTec will require a further write down. The Proposed Transaction proceeding will avoid any future write down of the AridTec investment.
1.42. Management of AridTec - The divesting of AridTec should also allow RGP internal management to focus on RGP and its Australian operations.

Disadvantages

1.43. Future Growth of AridTec - The divesting of AridTec will mean that any future potential of earnings and earnings growth of the AridTec business will not be enjoyed by RGP. We note that AridTec has originally provided forecast revenue and earnings to RGP in June 2010, which disclosed potential substantial increases in future revenue and earnings. RGP management now considers it highly unlikely these forecasts will be achieved. These forecasts have not been met in the current financial year and the Directors consider it highly unlikely that the future year projections will be achieved.
1.44. Loan to AridTec - Although RGP has assessed the loan owing by AridTec not to be recoverable, if the Proposed Transaction proceeds, any prospect to recover this loan will be lost.

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If the Proposed Transaction does not Proceed

Advantages

1.45. RGP shareholders will benefit from any future growth in sales and earnings that may be achieved by AridTec and any growth in the value of the investment which RGP has in AridTec.

Disadvantages

1.46. If the Proposed Transaction does not proceed, the investment in AridTec is at risk of further diminution in value, particularly in the absence of any capital raising to provide ongoing funding. This risk is to be taken in the context that RGP management considers that the original forecast as presented by AridTec is unlikely to be achieved.
1.47. Should AridTec continue to perform at current performance levels, then RGP will have to reflect further losses as part of the reported RGP group earnings.
1.48. Should AridTec continue to perform at current performance levels, then RGP will have to provide additional cash funding for working capital purposes to the AridTec business. As such, the cash resources of RGP will be put under additional pressure.

Other Matters

1.49. Our opinion is based on economic, market and other conditions prevailing at the date of our report. These conditions can experience rapid change which can have a significant effect on values over a short period of time. The opinions expressed in this executive summary must be read as part of our detailed comments and considered within the scope of our report and the information to be sent to RGP shareholders with the Notice of General Meeting.

Yours faithfully

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Neil Pace Director Moore Stephens Perth Corporate Services Pty Ltd

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Dino Travaglini Director

Moore Stephens Perth Corporate Services Pty Ltd

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2. PURPOSE OF THIS REPORT

2.1. This report has been independently prepared to accompany the Notice of General Meeting of RGP and Explanatory Statement to be sent to its shareholders.
2.2. Whilst this report is provided to all shareholders of RGP, its purpose is to provide an independent opinion to the “non associated” shareholders of RGP. Defined in simple terms, these are shareholders who are not in any other way associated with the parties to the Proposed Transaction, AridTec, nor any of the Original Vendors of AridTec.
2.3. This report is required to express an opinion as to whether the Proposed Transaction is fairly based and in the best interests of non-associated shareholders of RGP.
2.4. This report is prepared in compliance with ASX Listing Rule 10.1 and Chapter 2E and Section 256C((2) of the Act. Shareholders will be requested to consider the following resolutions at the General Meeting of Shareholders to be convened by RGP:

RESOLUTION 1 - APPROVAL OF SALE OF ARIDTEC PTE LTD

"Conditional on Resolutions 2 and 3 being approved, for the purpose of ASX Listing Rule 11.1.2 and for all other purposes, Shareholders approve:

the sale by the Company of the entire issued capital held by the Company in AridTec Pte Ltd pursuant to the terms and conditions of the Share Sale Agreement; and completion by the Company of the Share Sale Agreement and the performance of by the Company of its obligations under the Share Sale Agreement.” RESOLUTION 2 - APPROVAL OF SELECTIVE REDUCTION OF CAPITAL

"Conditional upon Resolutions 1 and 3 being approved, for the purpose of section 256C(2) of the Corporations Act and for all other purposes, approval is given for the Company to make a selective reduction of capital and cancel a total of 71,800,000 Shares (being the Shares held by the AridTec Purchasers) on the terms and conditions set out in the Explanatory Notes accompanying this Notice”.

RESOLUTION 3 - APPROVAL OF PARTICIPATION OF MR CHEE KEONG OH AND MR MUN YEW CHAN IN THE SALE OF ARIDTEC PTE LTD AND THE SELECTIVE CAPITAL REDUCTION

"For the purpose of Listing Rule 10.1 and Chapter 2E of the Corporations Act, and for all other purposes the participation of Mr Chee Keong Oh and Mr Mun Yew Chan in:

the sale of AridTec Pte Ltd to the AridTec Purchasers pursuant to Resolution 1; and

the selective reduction of capital of the Company as a result of the cancellation of the 71,800,000 Shares held by the AridTec Purchasers pursuant to Resolution 2

on the terms set out in the Explanatory Notes, be approved”.

2.5. We have prepared this report in accordance with the ASIC Regulatory Guidelines, including RG 74, Acquisitions Agreed to by Shareholders; RG 111, Content of Expert Reports and RG 112, Independence of Experts.
2.6. RG 111 notes that in regard to related party transactions, the expert report is to express an opinion on whether the transaction is “fair” and “reasonable” from the perspective of nonassociated shareholders.
2.7. In regard to related party transactions, in the determination of what is “fair and reasonable” RG 111 provides that it is expected that an expert who is asked to analyse a related party transaction to express an opinion on whether the transaction is „fair and reasonable‟ should do so from the perspective of non associated shareholders. This should not be applied as a composite test, that is there should be a separate assessment of whether the transaction is “fair” and “reasonable”, as in a control transaction

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2.8. This analysis is specifically required where the report is also intended to accompany meeting documents for member approval of an asset acquisition or disposal under ASX Listing Rule 10.1.
2.9. In forming our opinion on whether or not the Proposed Transaction is fair and reasonable for the non associated shareholders of RGP we have compared the fair value of the shares being cancelled by RGP, subject to the selective capital reduction, with the value of the shares currently held by RGP in AridTec and which will be transferred to the Proposed Purchasers.
2.10. Furthermore, we have also compared (i) the likely advantages and disadvantages of the Proposed Transaction proceeding and (ii) the likely advantages and disadvantages of the Proposed Transaction not proceeding.
2.11. Whilst the terms of “fairness” and “reasonableness” are not defined in the Act, we have considered them in the following context for the purpose of this report:

Is the proposed transaction fair?	The Proposed Transaction is fair if the value of AridTec shares and loan is equal to or less than the value of RGP shares proposed to be cancelled.
Is the proposed transaction reasonable?	The Proposed Transaction may be reasonable whether it is fair or unfair, as it involves consideration of other significant factors that RGP shareholders might consider prior to voting on the resolution to approve theProposedTransaction.

2.12. Consistent with current policy and regulatory guidelines referred to above, we have assessed the proposals and objectives of the Proposed Transaction taken as a whole, which must be fair and reasonable to the non associated shareholders of RGP. We have also considered the position of those non associated shareholders in the event that the Proposed Transaction proceeds, or if it does not.
2.13. This report deals with the effect of the Proposed Transaction on RGP as a whole and does not cover the individual positions of each of the non associated shareholders. Nor does it consider the individual taxation position of non associated shareholders, which depends upon individual circumstances. Non associated shareholders should therefore seek their own professional financial and taxation advice.
2.14. This report aims to provide an opinion on the fairness and reasonableness of the Proposed Transaction as it impacts upon all non associated shareholders as a group.

Existing Conditions

2.15. It must also be noted that the conclusions reached and opinions expressed in this report are made in the context of the prevailing economic, market and business conditions existing at the date of this report. An assessment of the likelihood of any significant changes in these conditions, which may then impact upon both RGP and AridTec are outside the scope of this report.
2.16. Moore Stephens Perth Corporate Services Pty Ltd has been engaged by the Directors of RGP to prepare this report providing an independent opinion as to the fairness and reasonableness of the Proposed Transaction for the purposes as specified in this report only. This report has been prepared for the exclusive purpose of assisting the non associated shareholders in their assessment of the Proposed Transaction and for no other purpose.

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3. OUTLINE OF THE PROPOSED TRANSACTION

Background

3.1. On 20 April 2010, RGP announced that it had entered into an agreement to acquire 100% of the issued capital in AridTec. On 13 July 2010 RGP, completed the acquisition of 100% of the issued capital of AridTec, which is a Singapore based company, and is a manufacturer of water harvesting and purification equipment.
3.2. The purchase consideration was 71,800,000 ordinary shares in RGP, based on a price per share of 6.5 cents each and a further issue of up to 48,200,000 deferred RGP shares based on 6.5 cents to be issued no later than 1 November 2011, such issue being dependent upon certain profit hurdles being achieved by AridTec
3.3. At the date of this report only 71,800,000 shares have been issued by RGP and no further shares will be issued by RGP, in relation to this transaction. These shares were noted as having a book value of $4,667,000 as at 31 December 2010.
3.4. The RGP shares issued to the Original Vendors, were subject to escrow conditions for a period of approximately one year from the date of completion of the original acquisition of AridTec by RGP.
3.5. Further, Mr Mun Yew Chan and Mr Chee Keong Oh were appointed as directors of RGP on 14 July 2010.

The Proposed Transaction

3.6. RGP has entered into a Share Sale Agreement whereby it wishes to sell its shares in AridTec to the Proposed Purchasers, who are noted in the following table and who are currently shareholders in RGP. This will effectively reverse RGP‟s original acquisition of AridTec.
3.7. In consideration of purchasing the shares in AridTec, the RGP shares held by the following parties being the Proposed Purchasers will be cancelled by way of a selective capital reduction:

RGP shareholder	Number of RGP shares to be cancelled

Mr Mun YewChan	29,492,590
MrCheeKeong Oh	13,884,650
Mr Keith KingLien Ng	8,784,166
Ms Sin Hui Teo	5,667,204
MsBrendaKah Yah Lee	4,718,814
Mr Yuen HengLoh	3,469,716
MsXiaofeiSun	3,469,716
Mr EdwardLim	2,313,144
Total	71,800,000

Conditions Precedent

3.8. The Proposed Transaction will be subject to the following conditions precedent:
RGP obtaining all necessary approvals of its shareholders, as required by the Corporations Act and the ASX Listing Rules, including, but not limited to:
The approval of the shareholders of RGP for the capital reduction, by special resolution passed at a general meeting at which the Proposed Purchasers will not vote and
The approval of the capital reduction, by special resolution of the Proposed Purchasers at a separate meeting of the Proposed Purchasers.
RGP filing copies of the special resolutions with ASIC within 14 days of the resolutions being passed.

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Capitalising of Loan Owing by AridTec

3.9. There is a debt owing by AridTec to RGP, which has a balance of $485,928. This loan has been considered by RGP to be unlikely to have any recoverable value and this loan will be effectively forgiven by RGP, as part of the Proposed Transaction.

4. PROFILE OF REFRESH GROUP LIMITED

Overview of Refresh Group Limited Operations[1]

4.1. RGP produces and distributes bottled water, coolers and filtration systems. In Australia, its main business is bottled water. Refresh Pure Water is Australia‟s largest producer of distilled drinking water with a capacity to produce more than 10,000 litres of distilled water per hour. It has factories in Western Australia (Perth and Kalgoorlie), New South Wales (Sydney), Victoria (Melbourne) and Queensland (Brisbane and Toowoomba). Refresh Pure Water is sold in pack sizes ranging from 600mL to 15L for home and office deliveries.
4.2. Five litre packs of its Moores Ultrapure Water brand are sold in Woolworths supermarkets in Queensland, New South Wales, Australian Capital Territory and Victoria. Retail packs of Refresh Pure Water are sold via supermarkets and retail outlets.
4.3. RGP also markets the product Oxyfresh, which it refers to as a superoxygenated water. Another brand of bottled water marketed by the company is Sunshower Springs, which is a premium spring water and available for home and office deliveries in Brisbane and Sydney.
4.4. RGP also has a trading arm, Fusion H2O, which markets bottled water and beverages to supermarkets, restaurants and delicatessens.
4.5. For industries, such as dental and medical laboratories, RGP supplies distilled water in containers ranging in size from 25 litres to 1,000 litres.
4.6. Refresh also provides contract bottling of private labels. It has been packing for the WA Water Corporation since 2000. Many other companies use bottled water as a promotional product with their own custom-designed labels.
4.7. Another division, Oz Water Filters, stocks the widest range of water purifiers in Australia. The range includes sediment and carbon filters, reverse osmosis, distillers and air-to-water generators. These include portable as well as plumbed-in units. The wide variety ensures a drinking water solution to suit every requirement or budget. Distributorships held include AirQua from Singapore, Woongjin Coway from Korea, Durastill and Forever Water from United States, Precision Water Systems from Canada and Megahome from Taiwan.

History and Key Acquisitions

4.8. RGP has undertaken a number of acquisitions of enterprises in the water manufacturing and distribution industry, some of the key acquisitions have included:
September 2009 - acquisition of Minnmurra Natural Spring Water, for the issue of 750,000 ordinary RGP shares at an issue price of 7.0 cents per share and $150,000 in cash.
May 2010 – acquisition of Fusion H2O for $120,000 in cash.
July 2010 – acquisition of AridTec, for the issue of 71,800,000 ordinary RGP shares at an issue of 6.5 cents per share.

1 Source: RGP Managemen t

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Group Structure

4.9. The Group structure for RGP is outlined underneath:

Entity	Entity	Equity Interest	Equity Interest	areholder
RefreshGroupLimited		Parent
Refresh WatersPtyLtd		100%
Refresh Waters QueenslandPtyLtd		100%
AridTecPteLtd		100%
ry of RGP Securities RGP currently has 157,846,065 ordinary shares on issue. Details are as follows:
			Number of RGP Ordinary Shares	% of Total Shares
	Shareholder
1.	Mr Mun Yew Chan		29,492,590	18.7%
2.	Mr Chee KeongOh		13,884,650	8.8%
3.	Mr HenryEngChye Heng+ Ms Sok Hwa Ngoh		8,860,700	5.6%
4.	Mr Keith KingLien Ng		8,784,166	5.6%
5.	National Nominees Limited		7,692,308	4.9%
6.	Mr Edmund Soon Kin Teo + Mrs Janice Teo		6,793,900	4.3%
7.	Asia Pacific Links(BVI)PtyLtd		6,532,528	4.1%
8.	Mr Boon KhengOng		6,040,529	3.8%
9.	Ms Sin Hui Teo		5,667,204	3.6%
10.	Ms Inn Hoon JudyOng		5,411,550	3.4%
	Total Top 10		99,160,125	62.8%
	Other Shareholders		58,685,940	38.2%
	Total Shares		157,846,065	100.0%
Source: RGP Management

Summary of RGP Securities

4.10. RGP currently has 157,846,065 ordinary shares on issue. Details of 10 largest shareholders are as follows:
4.11. Options - RGP has 510,000 options which it has granted and which are due to expire 28 September 2011 at an exercise price of 6.5 cents.

Historical Statement of Financial Performance

4.12. A summary of the comparative financial performance of RGP for the period from 1 July 2008 to 28 February 2011 is summarised as follows:

Refresh Group Limited - Consolidated Statement of Financial Performance

	12 Months	12 Months	6 Months	8 Months
	30 Jun 2009	30 Jun 2010	Dec 2010	28 Feb 2011
	Audited	Audited	Reviewed	Unaudited
	AUD$’000	AUD$’000	AUD$’000	AUD$’000
Revenue Other income Cost of Sales Gross Profit Expenses Marketing Expenses Distribution Expenses Production, Research and Development Administrative Expenses Occupancy Expenses Other expenses Total expenses EBITDA Impairment loss Depreciation and amortisation EBIT Finance expenses Loss before income tax Income tax benefit/expense Net Loss after tax	5,937 - (2,309)	5,545 - (1,993)	3,527 21 (1,676)	4,655 34 (2,177)
	3,628	3,552	1,872	2,512
	(536) (1,205) - (1,577) (549) -	(403) (1,161) - (1,602) (560) -	(568) (644) (98) (832) (339) (4)	(690) (854) (156) (1,096) (445) (34)
	(3,867)	(3,726)	(2,485)	(3,275)
	(239)	(174)	(613)	(763)
	- 205	- 231	158 268	158 382
	(444)	(405)	(1,039)	(1,303)
	44	15	15	12
	(488)	(420)	(1,054)	(1,315)

	($488)	($420)	($1,054)	($1,315)
Source: RGP Management

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Comments and Observations

4.13. The loss for the six months ended 31 December 2010 of $1,054,034, was due to incurring operating losses in the Fusion business of $428,000 and operating losses in AridTec of $366.000[2]
4.14. RGP reported an impairment loss of $158,000 during the period ended 31 December 2010, which related to the Toowomba operations.[ 3]
4.15. The auditors noted in the 31 December 2010 Financial Report that RGP reported a loss of $1,054,034 during the half year ended 31 December 2010 and noted the existence of a material uncertainty which cast significant doubt about the consolidated entity‟s ability to continue as a going concern.[4]

Historical Statement of Financial Position

4.16. Set out below is a summary of the comparative financial position for RGP from 30 June 2009 to 28 February 2011.

Refresh Group Limited

Refresh Group Limited	Refresh Group Limited	Refresh Group Limited	Refresh Group Limited
Statement of Consolidated Financial Position
	30 Jun 2009	30 Jun 2010	31 Dec 2010	28 Feb 2011
	Audited	Audited	Reviewed	Unaudited
	AUD$’000	AUD$’000	AUD$’000	AUD$’000
Current Assets Cash and cash equivalents Trade and other receivables Inventories Total Current Assets Non-Current Assets Other financial assets Property, plant and equipment Intangible assets Total Non-Current Assets Total Assets Current Liabilities Trade and other payables Financial liabilities Short-term provisions and accruals Total Current Liabilities Non-Current Liabilities Financial liabilities Long-term provision Total Non-Current Liabilities Total Liabilities Net Assets Equity Issued Capital Reserves Accumulated Losses Total Equity	1,257 614 777	537 650 1,081	242 973 1,452	170 945 1,344
	2,648	2,268	2,667	2,459
	1 2,006 971	1 2,018 1,165	1 2,411 5,409	1 2,379 5,321
	2,978	3,184	7,821	7,701
	5,626	5,452	10,488	10,160
	1,701 159 86	957 47 102	1,057 329 95	1,100 173 129
	1,946	1,106	1,481	1,402
	81 26	35 49	93 45	84 45
	107	84	138	129
	2,053	1,190	1,619	1,531
	3,573	4,262	8,869	8,629
	4,779 142 (1,348)	5,843 187 (1,768)	11,562 129 (2,822)	11,563 148 (3,082)
	$3,573	$4,262	$8,869	$8,629

Source: RGP Management and ASX Announcements

Comments and Observations

4.17. Acquisition of AridTec

4.18. RGP made a number of new share issues during the six months ended 31 December 2010, resulting in an increase in issued share capital. The largest issue of new shares was the consideration for the acquisition of AridTec, being 71,800,000 shares issued at 6.5 cents per share, equating to $4,667,000.

2 Reference: 31 December 2010 Financial Report

3 Reference: 31 December 2010 Financial Report

4 Reference: 31 December 2010 Financial Report

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4.19. In regard to the acquisition of AridTec the purchase consideration at 13 July 2010 can be summarised as follows:

AridTec – Summary of Investment
	As at 13 July 2010 AUD$’000

RGP Shares issued as consideration Represented by: Assets and liabilities held at acquisition Cash on hand Receivables Inventories Plant & equipment Patent Payables Net Assets Acquired Goodwill on acquisition Total	$4,667
	- 42 242 68 4,000 (216)
	4,136
	531
	$4,667

Source: RGP Half Year Financial Report 31 December 2010

4.20. Intangible Assets
4.21. The increase in intangible assets as at 31 December 2010 can be attributable to the acquisition of AridTec, which included the acquisition of existing patents, which were noted as having a value of $4,000,000.
4.22. In regard to RGP‟s investment in AridTec, the 31 December 2010 Financial Report for RGP notes that the AridTec assets may need to be substantially written down.[5]
4.23. Prior to the acquisition of AridTec, RGP was provided with forecasts for AridTec and since the time of the acquisition the actual trading results for AridTec, namely sales revenue and earnings have been substantially less than the original AridTec forecasts.
4.24. Write Down of Intellectual Property
4.25. On 20 April 2011 the Directors of RGP resolved that having considered a number of revenue values and growth rates as applied in various forecast scenarios relating to AridTec as being unlikely to be achieved by AridTec, that they reassessed the value of AridTec‟s intellectual property to be no greater than $2.9 million.
4.26. Advance from RGP to AridTec
4.27. Since acquisition, RGP has advanced funds to AridTec and as at 28 February 2011, the loan owing by AridTec to RGP totals $485,928. This loan is not considered to be recoverable by RGP and is considered to have no value. However, the summary of financial reports noted above does not reflect any write off in respect of this loan.

5 31 December 2010 Financial Report

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5. PROFILE OF ARIDTEC PTE LTD

Background

5.1. RGP acquired 100% of the issued share capital of AridTec Pte Ltd with effect from 13 July 2010.
5.2. A summary of the key acquisition components of AridTec are noted below in the following table.

	Shares	Implied Value AUD$’000

Consideration	71,800,000 Ordinary Shares in RGP	$4,667
NetAssetsAcquired		$4,136
Goodwillonacquisition		$531

Source: RGP Management

Business Description and Intellectual Property[6]

5.3. AridTec has developed a technology, harvesting water from the air and transforming it into drinking water in abundance through its patented technologies.
5.4. AridTec also has copyright protection over materials it produces as part of the operation of its business, including copyright in drawings, manuals, websites, brochures and other written or electronic materials.
5.5. AridTec is the owner of certain patents for the extraction of atmospheric water. The patent portfolio primarily relates to apparatus and methods for transforming water vapour into potable water. The countries where patent protection had been sought include most Asian countries (except Thailand and Taiwan), Australia, the European region and USA.
5.6. Some of the important intellectual property and know-how that AridTec owns and/or uses is protected in the form of confidential information or as trade secrets, as it is not able to be protected under registered schemes such as patents and designs.
5.7. AridTec has been developing water supply solutions, for end users, including domestic, commercial users, the military, international aid and rescue organisations, using either fixed or mobile water harvesting units.
5.8. AridTec also has developed, its “Purez UF” solutions, which enables municipalities, businesses and homeowners to obtain safer, better tasting water from tap water by filtering water at the point of entry, providing an effective barrier to bacteria, parasites and viruses with lower energy consumption and greater cost savings.
5.9. Capital Structure
5.10. AridTec has 6,208,000 issued shares and all these issued shares are currently owned by RGP.

6 Source: RGP Management

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Historical Statement of Financial Performance

5.11. A summary of the comparative financial performance for AridTec for period 1 January 2008 to 28 February 2011 is summarised as follows:

AridTec Pte Ltd

Statement of Financial Performance

	12 Months	12 Months	12 Months	8 Months
	31 Dec 2008	31 Dec 2009	31 Dec 2010	28 Feb 2011
	Audited	Audited	Reviewed	Unaudited
	AUD$’000	AUD$’000	AUD$’000	AUD$’000
Revenue Other income Cost of Sales Gross Profit Expenses Marketing Expenses Distribution Expenses Production, Research and Development Expenses Administrative Expenses Occupancy Expenses Other expenses Total expenses EBITDA Depreciation and amortisation EBIT Finance expenses Loss before income tax Income tax benefit/(expense) Net loss after tax	440 24 (297)	384 45 (274)	87 18 (47)	173 32 (91)
	167	155	58	114
	(89) (73) (70) (370) (55)	(87) (47) (34) (385) (92)	(59) (12) (108) (61) (28) (3)	(89) (20) (148) (83) (36) (3)
	(657)	(645)	(271)	(379)
	(490)	(490)	(213)	(265)
	(69)	(50)	(18)	(22)
	(559)	(540)	(231)	(287)
	-	-	-	-
	(559)	(540)	(231)	(287)
	-	-	-	-
	($559)	($540)	($231)	($287)

Source: RGP Management

Comments and Observations

5.12. The table above has been based upon information provided by RGP management. The underlying information has been expressed in Singapore dollars and US dollars and has been converted to Australian dollars, using the following exchange rates.

31 December 2008	1 AUD =0.9967SGD
31 December 2009	1 AUD = 1.2589 SGD
31 December 2010	1 AUD = 1.0163 USD
28February2011	1 AUD = 1.0163 USD

5.13. The statement of financial performance discloses that AridTec has been trading at a loss for the period in review as outlined in the table above. Since being acquired by RGP, actual earnings have been significantly lower than originally forecast by AridTec. This is discussed further below.

Historical Statement of Financial Position

5.14. Set out below is a summary of the comparative financial position for AridTec as at 31 December 2008 through to 28 February 2011.

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AridTec Pte Ltd

Statement of Financial Position

	31 Dec 2008	31 Dec 2009	31 Dec 2010	28 Feb 2011
	Audited	Audited	Reviewed	Unaudited
	AUD$’000	AUD$’000	AUD$’000	AUD$’000
Current Assets Cash and cash equivalents Trade and other receivables Inventories Total Current Assets Non-Current Assets Other financial assets Property, plant and equipment Intangible assets Total Non-Current Assets Total Assets Current Liabilities Trade and other payables Financial liabilities Total Current Liabilities Non-Current Liabilities Current account – AridTec loan Total Non-Current Liabilities Total Liabilities Net Assets/(Liabilities) Attributable to Shareholders	391 58 227	211 36 273	17 17 173	64 58 165
	676	520	207	287
	139	1 85	191	185
	139	86	191	185
	815	606	398	472
	69	318	68 14	202 14
	69	318	82	216
			443	443
			443	443
	69	318	525	659
	$746	$288	($127)	($187)

Source: RGP Management

Comments and Observations

5.15. The table set out in 5.14, has been based upon information provided by RGP management. The underlying information has been expressed in Singapore dollars and US dollars and has been converted to Australian dollars, using the following exchange rates:

31 December 2008	1 AUD =0.9967SGD
31 December 2009	1 AUD = 1.2589 SGD
31 December 2010	1 AUD = 1.0163 USD
28February2011	1 AUD = 1.0163 USD

5.16. Since the date of acquisition to 28 February 2011, RGP has advanced approximately A$486,000 to AridTec to fund working capital and ongoing commitments, which is disclosed as a non current liability in the above table. The disclosed amount of $443,000 noted above is due to foreign exchange differences. RGP does not consider this advance to be recoverable.
5.17. The statement of financial position notes no value attributable to the intangible assets, specifically patents. The notes to the 31 December 2010 Financial Statements, disclose a book value attributed to patents of $3,882,000, being assessed as $4,000,000 at the time of AridTec‟s acquisition, less amortisation charged in the six months ended 31 December 2010.
5.18. Notes to the 31 December 2010 Financial Report discloses that the recoverability of this value and other assets relating to AridTec, depends on the successful completion of one of the commercial options being considered. If any of the commercial options cannot be successfully concluded, these assets would need to be significantly written down.
5.19. On 20 April 2011, the Directors have resolved to write down the value of intellectual property to an amount no greater than $2.9 million.
5.20. Write Down of AridTec Intellectual Property
5.21. In regard to the reasons for this write down of the value of the intellectual property, it is relevant to compare the actual trading for AridTec to the forecast provided to RGP prior to acquisition of AridTec and the future trading outlook of AridTec.
5.22. We have referred to the forecast earnings which we are advised by RGP were provided by AridTec prior to the acquisition of AridTec. We are advised that RGP does not have a current earnings forecast for AridTec.

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5.23. The earnings forecasts as originally provided by AridTec to RGP prior to the AridTec acquisition are summarised below:

Forecast Profit and Loss

	Year 1	Year 2	Year 3
	12 months	12 months	12 months
	30 Jun 2011	30 Jun 2012	30 Jun 2013
	AUD$’000	AUD$’000	AUD$’000
Sales	3,591	4,921	6,650
Cost of Sales	2,140	2,926	3,842
Gross Profit	1,451	1,995	2,808
Operating Expenses	833	956	1,053
EBITDA	618	1,039	1,755
Depreciation	30	58	85
EBIT	$588	$981	$1,670

Note: (i) Source: AridTec provided forecasts, using pessimistic scenario

(ii) Based a foreign exchange conversion of 1 AUD = 1.31 SGD.

5.24. AridTec has not performed to the expectations of the RGP board since acquisition. Actual performance has been materially adverse compared to the original forecast provided by AridTec, reporting only minimal sales revenue and an EBIT loss, as demonstrated in the following table.

Comparison of Actual to Forecast Results for AridTec

	Actual 1 July 2010 to 28 February 2011 AUD$’000	Original Forecast 12 months 30 Jun 2011 AUD$’000

Revenue	$173	$3,591
EBIT	($284)	$588

Source: RGP Management

5.25. AridTec is expected to incur an EBIT loss of approximately $465,000 to the year ended 30 June 2011.
5.26. Given the results to date, RGP now considers the original AridTec forecasts to be extremely unrealistic and highly unlikely to be achieved in years 2 and 3.
5.27. AridTec is understood to have limited funding available and is likely to require ongoing and further funding to continue operations.
5.28. Given that RGP now considers that it is highly unlikely that the original forecasts provided by AridTec will be achieved and the uncertainty regarding securing ongoing funding for AridTec RGP has determined that the value of the intellectual property of AridTec should now be written down to a value of no more than $2.9 million.
5.29. We have recast the balance sheet, based on the intellectual property (relating to patents), being written down to $2.9 million.

AridTec – Summary of Investment Following Write Down of Intellectual Property

	Based on Write Down of Intellectual Property Value AUD$’000

Assets and liabilities held at acquisition Cash on hand Receivables Inventories Plant & equipment Patents Payables Net Assets Acquired Goodwill on acquisition Total	- 42 242 68 2,900 (216)
	3,036
	531
	$3,567

Notes: (i) Based on written down values as at 13 July 2010, being the date of acquisition of AridTec by RGP. (ii) Patent value written down to $2.9 million.

(iii) Source: RGP Half Year Financial Report 31 December 2010 and Management Advice

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6. BASIS OF EVALUATION

6.1. We have referred to RG 111 which provides guidelines in determining whether transactions are fair and reasonable.
6.2. RG 111 notes that an expert is required to analyse a related party transaction to express an opinion on whether the transaction is „fair and reasonable‟ from the perspective of nonassociated members.
6.3. The expert should identify the advantages and disadvantages of the proposal to security holders not associated with the transaction.

Fairness

6.4. Fairness relates to price, whereas reasonableness includes the consideration of factors other than price.
6.5. RG111 notes that an offer is “fair” if the value of the offer price or consideration is equal to or greater than the value of the securities the subject of the offer and that this comparison should be made (a) assuming a knowledgeable and willing, but not anxious buyer and a knowledgeable and willing, but not anxious, seller acting at arm‟s length and (b) assuming 100% ownership of the „target‟ irrespective of whether the consideration is scrip or cash.

Reasonableness

6.6. RG 111 provides that in deciding whether a proposed transaction is „reasonable‟, factors that an expert might consider include:
the financial situation and solvency of the entity, if the consideration for the financial benefit is cash;
opportunity costs;
the alternative options available to the entity and the likelihood of those options occurring;
the entity‟s bargaining position;
whether there is selective treatment of any security holder, particularly the related party;
any special value of the transaction to the purchaser, such as particular technology or the potential to write off outstanding loans from the target; and
the liquidity of the market in the entity‟s securities.

Applicability to the Proposed Transaction

6.7. In determining whether the Proposed Transaction is fair and reasonable we have addressed the following:
6.8. A comparison of the estimated value of AridTec shares being acquired and the value of the RGP shares being cancelled by RGP - “fairness”
6.9. A comparison of other potential advantages and disadvantages to the non associated shareholders of the Proposed Transaction - “reasonableness”
6.10. An estimation of the amount of any premium paid for control of AridTec being paid by the Proposed Purchasers being the amount by which the consideration paid exceeds the estimated value of an AridTec share.

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Accepted Valuation Methodologies

6.11. RG 111 also notes that it is appropriate for the independent expert to consider various methodologies in forming an opinion as to whether a particular transaction may be considered fair and reasonable. In conducting our assessment, the following techniques, which are commonly used to value businesses have been considered:
Discounted cash flow method and the estimated realisable value of any surplus assets;
Application of earnings multiples (appropriate to the business or industry in which the entity operates) to the estimated future maintainable earnings or cash flows of the entity, added to the estimated realisable value of any surplus assets;
The amount that would be available for distribution to security holders on an orderly realisation of assets, or asset based approach.
The quoted price for listed securities, when there is a liquid and active market and allowing for the fact that the quoted price may not reflect their value, should 100% of the securities be available for sale; and
Any recent genuine offers received by the owner for the entire business, or any business units or assets as a basis for valuation of those business units or assets.
6.12. Appendix B provides an outline of a number of valuation approaches and methodologies and the applicability of the use of these methodologies will depend upon the specific circumstances of the entity being valued.
6.13. We have considered the applicability of these valuation approaches and methodologies in context of the Proposed Transaction, specifically (i) in the valuation of the RGP shares proposed to be cancelled and (ii) in the valuation of the shares of ArdiTec, proposed to be sold. We now make the following comments in this regard.

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7. ASSESSMENT OF FAIRNESS – COMPARISON OF PRICE AND VALUES

Valuation Methodology for RGP

7.1. Discounted Cash flow Method - as we have not been provided with any forecast cash flow for RGP, we have been unable to apply the discounted cash flow methodology.
7.2. Capitalisation of Future Maintainable Earnings Method - RGP does not have a history of earnings, which can be used to apply the capitalisation of future earnings method, accordingly, it is considered inappropriate to apply this method in valuing RGP.
7.3. Net Asset Value Method - we have considered the net asset value and specifically the net asset per share value before and after the Proposed Transaction. We have used this method as a cross check as part of our evaluation of the Proposed Transaction.
7.4. Quoted Market Price Method - ASX Market Based Valuation for RGP
7.5. RGP is listed on the ASX and there exists a ready market for its securities. Accordingly, recent prices at which RGP securities have been bought and sold can be used as a basis for valuation of its securities and we have adopted this methodology to value RGP and the RGP shares proposed to be cancelled as part of the Proposed Transaction.
7.6. Historical Share Trading Price and Volume
7.7. We have reviewed the historical price and volume data for RGP shares which have traded on the ASX for the twelve months ended 31 March 2011.

Historical Share Price and Volume[7]

Month	High	Low	Close	Volume	% Of Total
	$	$	$		Shares On
					Issue
Mar-11	0.040	0.035	0.040	20,000	0.02%
Feb-11	0.040	0.040	0.040	200,000	0.23%
Jan-11	0.045	0.045	0.045	75,000	0.09%
Dec-10	0.055	0.055	0.055	362,115	0.42%
Nov-10	0.065	0.065	0.065	74,000	0.09%
Oct-10	0.071	0.064	0.071	161,000	0.19%
Sep-10	0	0	0	0	0.00%
Aug-10	0	0	0	0	0.00%
Jul-10	0.075	0.072	0.075	30,000	0.03%
Jun-10	0.072	0.068	0.072	255,500	0.30%
May-10	0.072	0.072	0.072	65,000	0.08%
Apr-10	0.063	0.062	0.063	595,000	0.69%

7.8. The daily share price data of RGP for the 12 month period ended 31 March 2011 shows that the closing share price for RGP has ranged from a low of 4.0 cents per share in March 2011 to a high of 7.5 cents per share in July 2010.
7.9. Over this 12 month period, 1,837,615 shares were traded, which represented 2.15% of the total shares on issue, excluding shares subject to escrow conditions and not yet able to be traded on the ASX. In regard to the liquidity of RGP shares, we consider that the shares are thinly traded. Despite this we still consider that using the quoted market price method is still the most appropriate valuation method to use.

7 Share trading price statistics supplied by RGP management.

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Twelve Month Price and Volume History

7.10. The following chart provides a summary of the price and trading volume in RGP for the twelve month period to 31 March 2011.

Refresh Group Limited Volume and Closing Price For the Twelve Months Ended 31 March 2011

REFRESH GROUP LIMITED

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

250,000 $0.09
$0.08
200,000 $0.07
$0.06
150,000
$0.05
$0.04
100,000
$0.03
50,000 $0.02
$0.01
0 $0.00
Volume Close
----- End of picture text -----

7.11. The following comments relate to the price movements of shares in the above graph:
On 13 July 2010 RGP acquired AridTec with the issue of 71,800,000 ordinary shares at an issue price of 6.5 cents per share.[8]
During the six months ended 31 December 2010, RGP issued 17,339,216 shares at an issue price of 6.5 cents per share, principally raising cash funds for working capital purposes.[ 9]

Premium for Control – Assessment of Value for RGP

7.12. RG 111 refers to a “control transaction” as being the acquisition or increase of a controlling stake in a company. The control premium reflects the benefits an acquirer achieves through holding a 100% controlling interest in contrast to a portfolio shareholding.
7.13. The benefits of holding a 100% controlling interest and the reasons a company pays a premium for control may include:
Integration of the acquired entity‟s business and/or assets with those of the acquirer;
Ability to control the composition of the board of directors;
Control over the future direction of the company without the need to consider whether the interests of minority shareholders are prejudiced;
Ability to group tax losses; and
Full access to cash flows of the entity.
7.14. Premiums are paid for reasons that vary from case to case. In some situations the premium paid may be greater than others due to the extent of synergies or other benefits the acquirer expects to realise.

8 Half Year Financial Report 31 December 2010 9 Half Year Financial Report 31 December 2010 and RGP management

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7.15. Based on the current shareholding of RGP and the shareholding after the Proposed Transaction, it appears that no one RGP shareholder will hold more than 20% of the total shares issued by RGP, both before and after the Proposed Transaction.
7.16. We consider that no control premium is to be included in the assessment of the fair value of RGP shares, as no one shareholder will control RGP either before or after the Proposed Transaction.

Conclusion Regarding the ASX Market Price Valuation

7.17. For the purposes of assessing whether the Proposed Transaction is fair, we have determined the fair value per RGP share to range from a low of 4.0 cents per share to a high of 5.5 cents per share, as noted in the following table:

Summary of Assessed Value Per RGP Share	Summary of Assessed Value Per RGP Share
	Low $	High $

Value ofpershare	$0.040	$0.055

Valuation Methodology for AridTec

7.18. We have considered the following methodologies for valuing AridTec.
7.19. Discounted Cash Flow Method – we have been provided with the original forecast earnings and cash flows for AridTec, as originally provided to RGP by AridTec prior to the AridTec acquisition.
7.20. As noted previously we are advised by RGP management, that these original AridTec forecasts are now considered to be unrealistic and unlikely to be achieved. Accordingly as we have not been provided with reliable future forecasts for AridTec, we have been unable to apply the discounted cash flow methodology.
7.21. Capitalisation of Future Maintainable Earnings Method - AridTec is still considered to be in a start up phase and does not have a history of positive earnings, which can be used to apply the capitalisation of future earnings method. Accordingly, it is considered not appropriate to adopt this valuation method.
7.22. Quoted Market Share Price Methodology – as AridTec securities are not listed, we consider that it is not appropriate to use this methodology. We acknowledge that AridTec has undertaken private placements of shares prior to the acquisition by RGP, however given the small number of transactions and the change in ownership and control, which has occurred since those share placements, we do not consider that it would be appropriate to use this valuation method.

Net Asset Value Method

7.23. We consider that the net asset method will provide the most appropriate valuation method to be used for valuing AridTec. In this regard, we note that we have recent financial information for AridTec, which is relevant to using the net asset value method, including:
details of the original purchase price of AridTec as at 13 July 2010;
financial results and carrying value for assets and liabilities for AridTec has been subject to a limited scope review as reported in the 31 December 2010 consolidated Financial Report for RGP;
statement of financial position as at 28 February 2010 and
the recent assessment by the Directors of the value of the intellectual property of AridTec.

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7.24. Accordingly, we consider that this together with other information, which we have been provided allows us to determine the value of AridTec using the net asset valuation method.

Valuation of AridTec Intellectual Property

7.25. The Directors of RGP consider that the revenue and earnings values applied in the original forecasts provided to them are unlikely to be achieved by AridTec.
7.26. However, the Directors have undertaken an assessment of the value of the intellectual property, based on a range of assumed revenue and growth levels. This effectively provides an indication as to the upper range of the value of the intellectual property, which they have assessed as $2.9 million.
7.27. We have reviewed their approach and methodology and consider that in the absence of any further information, that this provides an indicative fair value estimate of the intellectual property and AridTec which can be used for our evaluation.
7.28. A summary of the indicative valuation and key assumptions used by RGP now follows.
7.29. RGP has used a simple discounted cash flow valuation method and sensitivity analysis, using a range of forecast earnings for AridTec for the years ended 30 June 2012 to 2016. The key assumptions used are:
Sensitivity has been applied using a number of alternatives of (i) commencing revenues for the year ended 30 June 2012 ranging from, $2,000,000 to $4,000,000 and (ii) growth rates for those commencing revenue levels ranges from 10% per annum to 42% per annum, over a period of five years.
Gross margin for production is assumed to be 40% based upon original AridTec forecasts supplied in June 2010.
Fixed operating costs have been assumed to be $1,000,000 per year based on original AridTec forecasts.
Discount factor of 36.5%, being (i) 6.5% risk free rate and (ii) 30% additional risk premium to reflect extreme level of unpredictability for future earnings.
It is noted that the discounted cash flow did not include assumptions for income tax or working capital movements.
7.30. A summary of the outcome of the valuation is noted below. Although we have not conducted a formal valuation of the intellectual property of AridTec, we consider that the approach and method used by RGP as being appropriate for the purpose of determining an indicative value of the upper range of the intellectual property of AridTec.

Summary Valuation for AridTec Intellectual Property

	Forecast Revenue For the Year Ended 30 June 2012 $AUD’000
			Indicative Value Of Intellectual Property $AUD’000
		Annual Growth % Per Annum for the Period
Valuation Matrix

Alternate a	$2,000	41.8%	$2,885
Alternate b	$2,500	31.0%	$2,860
Alternate c	$ 3,000	22.5%	$2,857
Alternate d	$ 3,500	15.5%	$2,872
Alternate e	$4,000	9.5%	$2,893

Source: RGP Management

7.31. We consider that the valuation adopted by RGP may be applied to the value of the entirety of the business assets of AridTec as a whole, as opposed to only the intellectual property with the effect being to further decrease the value of AridTec.

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7.32. For the purpose of this report, we have applied this value on the basis that the intellectual property (the patents) is valued at no greater than $2.9 million, plus the net tangible assets of AridTec. We do not consider that the value goodwill on consolidation should be included, as this would overstate the value of AridTec.

Net Asset Position of AridTec

7.33. In order to determine a value for AridTec, we have prepared a proforma statement of the net asset position, which is explained below.
We have adopted the asset and liability values for AridTec as at 28 February 2011.
The value of $2.9 million has been used as the value for the patents, although we note that the RGP Directors‟ value is on the basis that the value is no greater than $2.9 million.
As this value may be applied to the entirety of the business assets of AridTec, we do not consider that a value for goodwill on consolidation should be included, as this would overstate the value of AridTec.
The net asset position has been prepared on the assumption that the loan between RGP and AridTec is forgiven, as contemplated under the Proposed Transaction.
7.34.
The proforma statement of net assets for AridTec now follows:

Proforma Statement of Net Assets AridTec Pte Ltd

	Net Assets
	As at
	28 Feb 2011
	AUD$’000
Cash Trade and other receivables Inventories Property, plant and equipment Payables Patents (based on revised RGP Directors‟ value) Net Asset Value	64 58 165 185 (216) 2,900
	$3,156

7.35. Net Asset Value - the proforma statement of net assets, discloses a net asset value for AridTec of $3,156,000, which we have adopted for the purpose of our evaluation.
7.36. Upper Range of Valuation – as the Directors have considered the value to the intellectual property to be on the basis of no greater than $2,900,000, we consider that the net asset value of AridTec noted above to be the upper range of the valuation and that the value could be less than stated in the above table.
7.37. Ability of AridTec to Continue as a Going Concern - we note that the net asset values disclosed above are likely to be dependent upon AridTec obtaining funding to continue as a going concern.

Premium for Control

7.38. Generally the value of 100% of a company is normally greater than the sum of values attributable to the individual shares of that company based on transactions in minority shareholdings.
7.39. As the primary valuation method is already based on 100% ownership or AridTec by RGP, it is considered that no further premium needs to be applied, as the assessment of value is already based on RGP having 100% control of AridTec and that the Proposed Purchasers will have 100% control immediately following completion of the Proposed Transaction.

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Conclusion of Value for AridTec

7.40. For the purposes of evaluating the Proposed Transaction we have adopted a fair value of the shares in AridTec held by RGP of $3,156,000 and although this is assessed as the upper range of the value, we have used this as the basis for concluding the value of AridTec for the purpose of this report.

Comparison of Value of RGP Shares to be Cancelled to AridTec Shares

7.41. On the basis of the imputed market prices referred to above, we set out the following comparative table.

Comparison of RGP Shares and AridTec Net Tangible Assets

	Share Price	Share Price	Total Value of Shares To Be Cancelled	Total Value of Shares To Be Cancelled	Total Value of Shares To Be Cancelled
	Low	High	Low	Mean	High
			$000	$000	$000
Value of RGP Share to be Cancelled	$0.040	$ 0.055	$2,872	$3,411	$3,949
Value for AridTech shares			$3,156	$3,156	$3,156
Value of RGP shares to be cancelled versus fair value of AridTec shares			($284)	$255	$793

7.42. As noted in the table above, the assessed fair value of shares in AridTec proposed to be sold is $3,156,000 falls within the range the values for the shares in RGP to be cancelled of $2,872,000 to $3,949,000 and is less than the mean value of $3,411,000 of the RGP shares.
7.43. Accordingly, we have assessed the value of the AridTec shares being sold to the Original Vendors as being less than the mean value of the RGP shares to be cancelled, pursuant to the Proposed Transaction.

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Net Asset Value Methodology - Comparison of RGP Net Asset Per Share Before and After the Proposed Transaction – Cross Check

7.44. In order to assist in determining the value of shares of RGP and specifically the value of shares held by the parties not affected by the Proposed Transaction, we have compared the net asset value per share before and after the Proposed Transaction.
7.45. The following is a summary of the Financial Position as at 28 February 2011, assuming the Proposed Transaction proceeds:

Refresh Group Limited Proforma Consolidated Financial Position As at 28 February 2011

	Position	Proforma
	Before the	Position
	Proposed	After The
	Transaction	Proposed
		Transaction
	AUD$’000	AUD$’000
ASSETS Current Assets Cash and cash equivalents Trade and other receivables Inventories Total Current Assets Non-Current Assets Other financial assets Property, plant and equipment Intangible assets Total Non-Current Assets Total Assets LIABILITIES Current Liabilities Trade and other payables Financial liabilities Short-term provisions and accruals Total Current Liabilities Non-Current Liabilities Financial liabilities Long-term provision Total Non-Current Liabilities Total Liabilities Net Assets* Net Asset Backing Per Share	170 945 1,344	106 887 1,179
	2,459	2,172
	1 2,379 4,339	1 2,194 909
	6,719	3,104
	9,178	5,276
	1,100 173 129	938 159 129
	1,402	1,226
	84 45	84 45
	129	129
	1,531	1,355
	$7,647	$3,921
	$0.048	$0.046
NetTangibleAssets	$3,308	$3,012
NetTangibleAssetBackingPerShare	$ 0.021	$0.035
Number of RGP Issued Shares	157,846,065	86,046,065

Note: After write down of AridTec intellectual property to $2.9 million

7.46. The net asset position before the Proposed Transaction as at 28 February 2011 is $7,647,000, compared to $3,921,000, being the proforma position after the Proposed Transaction. The net tangible asset position will change from $3,308,000 before the Proposed Transaction to $3,012,000 after the Proposed Transaction.

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Proforma Capital Structure

7.47. Assuming that the Proposed Transaction proceeds, RGP‟s shareholding structure, will be affected as follows:

Shareholders	Existing Shareholding	Existing Shareholding	Shares to be Cancelled	Shares to be Cancelled	Post Proposed	Post Proposed
			Upon Proposed		Transaction
			Transaction		Proforma Position
	Shares	%		%	Shares	%
Associated Shareholders being Relatedparties	43,377,240	27.5%	(43,377,240)	60%	-	0%
Other Associated Shareholders	28,422,760	18.0%	(28,422,760)	40%	-	0%
Non-associated Shareholders	86,046,065	54.5%	-	-	86,046,065	100%
Total	157,846,065	100%	(71,800,000)	100%	86,046,065	100%

Net Asset Value Per Share

7.48. Assuming that the Proposed Transaction proceeds, the net asset backing per share, before and after the Proposed Transaction, is summarised as follows:

Position as at 28 February 2011
	Position Before Proposed	Proforma Position After the
	Transaction	Proposed Transaction

Net Assets	$7,647,000	$3,921,000
Net Asset Backing Per RGP Share	$0.048	$0.046

Net Tangible Assets	$3,308,000	$3,012,000
Net Tangible Asset Backing Per Share	$ 0.021	$0.035

Total Shares On Issue	157,846,065	86,046,065
Rounded

7.49. As noted in the above table, the net asset backing per share before the Proposed Transaction, based on RGP‟s financial position as at 28 February 2011 is 4.8 cents per share. This compares to an estimated net asset backing per share after the Proposed Transaction of 4.6 cents per share.

Net Tangible Asset Backing Per Share

7.50. Using a measure of net tangible asset backing per share the net tangible asset per share before the Proposed Transaction is 2.1 cents per share, which compares to 3.5 cents per share after the Proposed Transaction.

Summary of Fairness

7.51. Based on the above, the Proposed Transaction is fair to the non associated shareholders of RGP, as the value of the AridTec shares being sold falls within the assessed range of values the RGP shares and is less than the mean value of the RGP shares being cancelled under the Proposed Transaction.
7.52. The net asset backing per RGP share will reduce from 4.8 cents before the Proposed Transaction to 4.6 cents after the Proposed Transaction. However, the net tangible asset backing per RGP share will improve from 2.1 cents before the Proposed Transaction to 3.5 cents to after the Proposed Transaction.
7.53. Further, we consider that there is a risk that the value of RGP‟s investment in the AridTec shares may be subject to further decline, based upon the expectation of the RGP Directors‟ that AridTec‟s trading losses will continue into the short / medium term and that AridTec will have further requirements for external funding.
7.54. Accordingly, after taking consideration of the above factors, we have concluded that the Proposed Transaction is fair to the non associated shareholders of RGP.

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8. ASSESSMENT OF REASONABLENESS

Advantages and Disadvantages to the Non Associated shareholders

8.1. In accordance with RG 111 a transaction is reasonable if it is fair and on this basis the Proposed Transaction is reasonable.
8.2. As part of our assessment of whether the Proposed Transaction is reasonable, we have also considered the advantages and the disadvantages to the non associated shareholders, in the two situations of whether the Proposed Transaction proceeds or it does not proceed.

If the Proposed Transaction Proceeds

Advantages

8.3. The Proposed Transaction will provide the following advantages:

Prevention of Ongoing Losses

8.4. Since acquiring AridTec, the actual trading results have been substantially lower than what was originally forecast by AridTec, specifically in terms of sales revenue and earnings. RGP expects that these operating losses will continue into the short term. If the Proposed Transaction proceeds, any losses incurred by AridTec following completion will not impact on RGP.

Ongoing Funding of AridTec

8.5. Since the acquisition, RGP has provided funding to AridTec and RGP anticipates that AridTec will continue to require ongoing funding for its operations. If the Proposed Transaction proceeds, RGP will not have to provide further funding following completion and will be better able to preserve its cash resources.
8.6. Furthermore, if RGP was required to provide further funding to AridTec, this may require RGP to undertake a capital raising and we understand that RGP has no plans at this stage to undertake a capital raising for this purpose.

Further Diminution in Value of the AridTec Investment

8.7. There is a real risk that if the Proposed Transaction does not proceed the investment in AridTec will require a further write down. Accordingly, should the Proposed Transaction proceed, this will avoid any future write down of the AridTec investment, should the trading and financial position of AridTec fail to recover and will provide certainty as to the value of the AridTec shares which will be disposed.

Management of AridTec

8.8. The divesting of AridTec should also allow RGP executive management to focus more fully on RGP‟s Australian operations.

Disadvantages

Future Growth of AridTec

8.9. The divesting of AridTec will mean that any future potential earnings generation and growth of AridTec will not be enjoyed by RGP. We note that AridTec originally provided forecast revenue and earnings to RGP in June 2010, which disclosed potential substantial increases in future revenue and earnings, although RGP management now considers it highly unlikely these forecasts will be achieved. This assessment is supported by the fact that year one (year ended 30 June 2011) actual performance is significantly below the original forecast for that same period.

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Recovery of Loan to AridTec

8.10. Although RGP has assessed the loan owing by AridTec not to be recoverable, if the Proposed Transaction proceeds, any prospect to recover this loan will be lost.

If the Proposed Transaction does not Proceed

Advantages

8.11. As noted above, RGP shareholders will benefit from future growth in sales and earnings that may be achieved by AridTec and any growth in the value of the investment which RGP has in AridTec.

Disadvantages

8.12. If the Proposed Transaction does not proceed, the investment in AridTec is at risk of diminution of value particularly in the absence of any capital raising to provide ongoing funding. This risk is to be taken in the context of RGP management considering that the original forecast as presented by AridTec is unlikely to be achieved.
8.13. Should AridTec continue to perform at current performance levels, then RGP will have to reflect further losses as part of the reported RGP group earnings.
8.14. Should AridTec continue to perform at current performance levels, then RGP will have to provide additional cash funding for working capital purposes to the AridTec business. As such, the cash resources of RGP will be put under additional pressure.

9. SUMMARY AND CONCLUSIONS

9.1. In our opinion the Proposed Transaction is fair and reasonable to the non associated shareholders of RGP.
9.2. Our opinion as to fairness and reasonableness has been determined on the basis of our assessment of all relevant matters and circumstances of the Proposed Transaction.
9.3. Our opinion is not only based upon the value of consideration to be paid by the Proposed Purchasers, in terms of the value of the AridTec shares to be sold, compared to the value of RGP shares to be cancelled, but also after consideration of the overall impact of the Proposed Transaction and the potential advantages and disadvantages to the non associated shareholders of RGP.

Fairness

9.4. We have the assessed fair value of shares in AridTec proposed to be sold is $3,156,000 compared to a mean value of $3,410,000 for the RGP shares to be cancelled, hence the value of the AridTec shares being sold to the Original Vendors is less than the value of the RGP shares to be cancelled, pursuant to the Proposed Transaction.
9.5. Furthermore, we have assessed the net asset backing per RGP share before the Proposed Transaction to be 4.8 cents per share compared to the net assets per RGP share after the Proposed Transaction to be 4.6 cents per share.
9.6. The net tangible asset backing per share before the Proposed Transaction has been assessed to be 2.1 cents per share compared to 3.5 cents per share after the Proposed Transaction.
9.7. On this basis, the prima facie “price” comparative includes a premium being paid by the Proposed Purchasers for the combined value of the AridTec shares in order to attain 100% direct control of AridTec.
9.8. We have concluded that in the context of the transaction taken as a whole, the Proposed Transaction is fair to the non associated RGP shareholders.

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Reasonableness

9.9. In assessing whether the Proposed Transaction is reasonable, we have considered the potential advantages and disadvantages to non associated shareholders of RGP and whether the advantages outweigh the disadvantages. We have also considered the impact upon non associated RGP shareholders which the transaction as a whole will achieve.

Conclusion Regarding Fairness and Reasonableness

9.10. Taking into account the factors summarised above and discussed in further detail in previous sections of our report, we have concluded that the Proposed Transaction is “fair and reasonable” and the advantages to non associated RGP shareholders outweigh the disadvantages of the Proposed Transaction proceeding.
9.11. Our opinion is based on economic, market and other conditions prevailing at the date of our report. These conditions can experience rapid change which can have a significant effect on values over a short period of time. This opinion must be read in conjunction with our detailed comments and scope of our report and the information to be sent to RGP shareholders with the Notice of General Meeting.

10. INDEPENDENCE

10.1. Moore Stephens Perth Corporate Services Pty Ltd is entitled to receive a fee of approximately $20,000 excluding GST and reimbursement of out of pocket expenses. Except for this fee Moore Stephens Perth Corporate Services Pty Ltd has not received and will not receive any pecuniary or other benefit whether direct or indirect in connection with the preparation of this report.
10.2. Prior to accepting this engagement Moore Stephens Perth Corporate Services Pty Ltd has considered its independence with respect to RGP, AridTec and any of their respective associates with reference to RG 112, Independence of Expert‟s Reports. It is the opinion of Moore Stephens Perth Corporate Services Pty Ltd that it is independent of RGP, AridTec and their respective associates.
10.3. Moore Stephens Perth Corporate Services Pty Ltd and Moore Stephens Perth have not had at the date of this report any relationship which may impair its independence.
10.4. We have held discussions with management of RGP regarding the information contained in this report. We did not change the methodology used in our assessment as a result of discussions and our independence has not been impaired in any way.

11. QUALIFICATIONS

11.1. Moore Stephens Perth Corporate Services Pty Ltd is a professional practice company, wholly owned by the Perth practice of Moore Stephens, Chartered Accountants. The firm is part of the National and International network of Moore Stephens independent firms, and provide a wide range of professional accounting and business advisory services.
11.2. Moore Stephens Perth Corporate Services Pty Ltd holds an Australian Financial Services license and its principals and owners are suitably professionally qualified, with substantial experience in professional practice.
11.3. The directors responsible for the signing of this report are, Mr Neil Pace and Mr Dino Travaglini who are directors of Moore Stephens Perth Corporate Services Pty Ltd and partners of Moore Stephens, Perth. Mr Pace and Mr Travaglini each have approximately 25 years experience as Chartered Accountants.
11.4. At the date of this report neither Messrs Pace and Travaglini nor any member or Director of Moore Stephens Perth Corporate Services Pty Ltd has any interest in the outcome of the Proposed Transaction.

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12. DISCLAIMERS AND CONSENTS

12.1. Moore Stephens Perth Corporate Services Pty Ltd has been requested to prepare this report, to accompany the Notice of General Meeting and Explanatory Notes which will be sent to RGP‟ shareholders.
12.2. Moore Stephens Perth Corporate Services Pty Ltd consents to this report accompanying the Notice of Extraordinary General Meeting and Explanatory Statement and being referred to in those documents. This report or any reference thereto is not to be included in or attached to any document, statement or letter without prior consent from Moore Stephens Perth Corporate Services Pty Ltd.
12.3. Moore Stephens Perth Corporate Services Pty Ltd has not conducted any form of audit or any verification of information provided to us and which we have relied upon in regard to RGP or AridTec, however we have no reason to believe that any of the information provided, is false or materially incorrect.
12.4. The statements and opinions provided in this report are given in good faith and in the belief that they are not false, misleading or incomplete.
12.5. Neither Moore Stephens Perth Corporate Services Pty Ltd nor Mr Pace or Mr Travaglini take any responsibility for nor have they authorised or caused the issue of any part of this report for any third party other than the shareholders of Refresh Group Limited in the context of the scope and purpose defined in section 2 of this report.
12.6. The statements and opinions expressed in this report are given in good faith and with reliance upon information generated both independently and internally and with regard to all of the circumstances pertaining to the Proposed Transaction.
12.7. In regard to any projected financial information noted in this report, no member or director of Moore Stephens Perth Corporate Services Pty Ltd has had any involvement in the preparation of the projected financial information.
12.8. Furthermore we do not provide any opinion whatsoever as to any projected financial or other results prepared for RGP or AridTec and in particular do not provide any opinion as to whether or not the projected financial results referred to in the report will or will not be achieved.

Yours faithfully

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Neil Pace Director Moore Stephens Perth Corporate Services Pty Ltd

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Dino Travaglini Director

Moore Stephens Pert Corporate Services Pty Ltd

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APPENDIX A

SOURCES OF INFORMATION

In preparing this report we have had access to the following principal sources of information:

Annual Reports for RGP.

Publicly available information in relation to share prices for RGP.

Independent Expert‟s Report prepared for Refresh Group Limited shareholders in relation to the original acquisition of AridTec Pte Ltd.

ASX announcements for RGP.

Bottled water research as provided by the management of RGP, including IBISWorld report regarding Bottled Water Manufacturing in Australia.

Information for AridTec, including but not limited to internally prepared summary financial reports, summary cash flow forecast and summary profit and loss forecast.

Due diligence report prepared for the Board of Directors of RGP regarding the original acquisition of AridTec.

Share and Sale Agreement between RGP and the Proposed Purchasers

Draft Notice of General Meeting of Shareholders for RGP and Explanatory Statement.

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APPENDIX B

VALUATION METHODOLOGIES

We have considered which valuation methodology is the most appropriate in light of all the circumstances and information available. We have considered the following valuation methodologies and approaches:

Discounted cash flow methodology

Capitalisation of future maintainable earnings methodology

Orderly realisation of assets

Quoted market price methodology and

Comparable market transactions, (recent genuine offers basis).

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Valuation Methodologies and Approaches

Discounted Cash Flow Method

Discounted cash flow methods estimate fair market value by discounting a company‟s future cash flows to their net present value. These methods are appropriate where a forecast of future cash flows can be made with a reasonable degree of confidence. Discounted cash flow methods are commonly used to value early stage companies or projects with a finite life.

Capitalisation of Maintainable Earnings Method

The capitalisation of maintainable earnings method estimates “fair market value” or “enterprise value”, by estimating a company‟s future maintainable earnings and dividing this by a market capitalisation rate. The capitalisation rate represents the return an investor would expect to earn from investing in the company which is commensurate with the individual risks associated with the business.

It is appropriate to apply the capitalisation of maintainable earnings method where there is an established and relatively stable level of earnings which is likely to be sustained into the foreseeable future.

The measure of earnings will need to be assessed and can include, net profit after taxes, (NPAT), earnings before interest and taxes (EBIT and earnings before interest, taxes, depreciation and amortisation (EBITDA).

The capitalisation of maintainable earnings method can also be considered a market based methodology as the appropriate capitalisation rate or „earnings multiple‟ is based on evidence of market transactions involving comparable companies.

An extension of the capitalisation of maintainable earnings method involves the calculation of share value of an entity. This process involves the calculation of the enterprise value, which is then adjusted for the net tangible assets of the entity.

Orderly Realisation of Assets

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

Liquidation of assets - The Liquidation method is similar to the orderly realisation of asset method except the liquidation method assumes the assets are sold in a shorter time frame.

Net assets – The net assets method is based on the value of the assets of a business less certain liabilities at book values, adjusted to a market value.

The asset based approach, as a general rule, ignores the possibility that a company‟s value could exceed the realisable value of its assets as they ignore the value of intangible assets such as customer lists, management, supply arrangements, and goodwill.

The asset based approach is most appropriate when companies are not profitable, a significant proportion of assets are liquid, or for asset holding companies.

Cost Based Approach - The cost based approach involves determining the fair market value of an asset by deducting the accumulated depreciation from the asset‟s replacement cost at current prices.

Like the asset based approach, the cost based approach has a number of disadvantages, primarily that the cost of an asset does not necessarily reflect the assets ability to generate income. Accordingly this approach is only useful in limited circumstances, usually associated with intangible asset valuation.

Quoted Market Price Methodology

The method relies on the pricing benchmarks set by sale and purchase transactions in a fully informed market the ASX which is subject to continuous disclosure rules aimed at providing that market with the necessary information to make informed decisions to buy or to sell.

Consequently, this approach provides a “fair price”, independently determined by a real market. However the question of a fair price for a particular transaction requires an assessment in the context of that transaction taken as a whole.

In taking a quoted market price based assessment of the consideration to both parties to the proposed transaction, the overall reasonableness and benefits to the non participating shareholders must be carefully evaluated.

Comparable Market Based Approach

The market based approach estimates a company‟s fair market value by considering the market prices of transactions in its shares or the market value of comparable companies.

This includes, consideration f any recent genuine offers received by the target for an entire entity‟s business, or any business units or asset as a basis for the valuation of those business units or assets

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APPENDIX C

INDUSTRY RESEARCH

BOTTLED WATER INDUSTRY IN AUSTRALIA

The bottled water manufacturing Industry in Australia consists of establishments that manufacture or bottle purified water, spring water or functional water. Excluded are those engaged in the manufacture of soft drinks, fruit juice, alcoholic beverages or milk drinks. Also excluded are firms engaged in the supply of water by pipelines or mains

The industry has witnessed good growth over the past five years, driven by consumer desire for healthy, convenient beverages and sound economic conditions. Revenue is expected to increase at an average annual rate of 2.9% over the next five years.

Product Innovation

The bottled water market has been able to win a market share from the high-sugar soft drinks, energy drinks and sports drinks market, by the creation and promotion of sport waters and similar products. Vitamin - or nutrient – enriched water is expected to demonstrate significant growth over the five years through 2015-16.

Manufacturers have also recognised the importance of bottle design to target style conscious consumers. The increased availability of multi-packs has driven up demand within both convenience stores and supermarkets.

Environmental Impact

Producers have also developed more environmentally friendly packaging and emphasising their green credentials. Manufacturers are being forced to develop carbon – neutral products, reducing packaging, and manufacturing bottles from renewable of natural sources.

Revenue in Past Years

In 2006-07 it was estimated that the industry grew by 14.2%. There were a number of product innovations and relaunches which contributed to the growth. In 2007-08 growth was at a more moderate level of 5.3%. During 2008-09 sales fell due to challenging economic conditions and cooler weather. Consumer switched from more expensive branded and imported bottled waters to cheaper, private-label products. Industry revenue fell by 0.3%. Sales recovered during 2009-10 with the improving economy and stronger demand from supermarkets and convenience stores. There was a move away from private labels back to major brands. Revenue increased by 1.9% over the year.

Profitability

Industry profitability is expected to decline marginally in the five years through 2010-11. Despite this bottled water still has the highest profit margin of any non-alcoholic beverage. Profitability has been affected by higher packaging costs, particularly PET resin for the production of plastic bottles. Resin prices have been driven up by rising oil prices. Most bottled water producers make their own bottles, and this increase in resin price has diminished profitability of the industry overall.

Competition

Manufacturers face competition from within the industry and also from external sources. Internally, participants differentiate their product and compete using packaging, image, price, taste, scale and retail service. Gaining the support of retailers and obtaining favourable terms from retailers can determine the success of a product. Externally, there is a highly level of competition, mainly from other non-alcoholic beverage manufacturers. Competition also comes from, to a degree, home filters, This has mainly affected the bulk water segment. Tap water is also seen as an external competitor, with a clear advantage in price.

INTERNATIONAL BOTTLED WATER MARKET

The bottled water shares about 38% of the refreshing drinks market. Companies are looking to enter markets such as Asia and the Middle East, which show rapid growth potential. According to a report by Global Industry Analysts, the global water market is dominated by Europe and the United States, which together account for 55% of the estimated market value for 2008. A challenge for most companies is product innovation and differentiation. Large companies are consolidating by acquiring local/small/niche‟ players to increase capacity as well as product portfolio.[10]

10 Sources: RGP Management, IBISWorld Industry Report, www.borealwater.com.au

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GLOSSARY

In this report, unless the context requires otherwise:

Term	Meaning

AridTec	AridTec Pte Ltd
ASIC	Australian Securities and Investments Commission
Associated Shareholders	Shareholders of Refresh Group Limited, who were the original vendors of shares in AridTec Pte Ltd, which were sold to Refresh Group Limited and who are directors of Refresh Group Limited
ASX	Australian Securities Exchange or ASX Limited ACN 008 624 691
Business Day	has the meaning given in the Listing Rules
Director	a director of Refresh Group Limited
Income Tax Assessment Act	the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997
Refresh Group Limited VWAP	the volume weighted average share price of a Refresh Group Limited share in Australian dollars
Listing Rules	the official listing rules of ASX and includes the business rules of ASX
Moore Stephens or MSPCS	Moore Stephens Perth Corporate Services Pty Ltd
Option	an option to subscribe for Refresh Group Limited Shares
Original Vendors	Being those shareholders of RGP, who sold the share in AridTec, in consideration of receiving 71,800,000 RGP shares, pursuant to the Original Agreement, dated 30 April 2011 and noted as follows: RGP shareholder Number of RGP Shares Received Mr Mun Yew Chan 29,492,590 Mr Chee Keong Oh 13,884,650 Mr Keith King Lien Ng 8,784,166 Ms Sin Hui Teo 5,667,204 Ms Brenda Kah Yah Lee 4,718,814 Mr Yuen Heng Loh 3,469,716 Ms Xiaofei Sun 3,469,716 Mr Edward Lim 2,313,144 Total 71,800,000
Register	the register of members of Refresh Group Limited shareholders or option holders, as the case requires
RGP	Refresh Group Limited
Refresh Shares	fully paid ordinaryshares in the capital of Refresh GroupLimited
Proposed Purchasers	Being the Original vendors who will repurchase 100% of the shares in AridTec Pte Ltd from RGP, consideration for such purchase being the cancellation of the currently held shares in RGP as detailed below RGP shareholder Number of RGP Shares currently held Mr Mun Yew Chan 29,492,590 Mr Chee Keong Oh 13,884,650 Mr Keith King Lien Ng 8,784,166 Ms Sin Hui Teo 5,667,204 Ms Brenda Kah Yah Lee 4,718,814 Mr Yuen Heng Loh 3,469,716 Ms Xiaofei Sun 3,469,716 Mr Edward Lim 2,313,144 Total 71,800,000
The Proposed Transaction	The proposed divestment of shares owned by Refresh Group Limited in AridTec Pte Ltd in consideration of the selective capital reduction and share cancelation of 71,800,000 Refresh Group Limited shares
The Vendors	Shareholders of Refresh Group Limited, who were the original vendors of shares in AridTec Pte Ltd,which were sold to Refresh GroupLimited

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000001 000 RGP MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

Lodge your vote:

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By Mail:

Refresh Group Limited 17 Denninup Way Malaga WA 6090

Alternatively you can fax your form to (within Australia) 08 9248 7233 (outside Australia) +61 8 9248 7233

For all enquiries call:

(within Australia) 08 9248 3006 (outside Australia) +61 8 9248 3006

Proxy Form

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For your vote to be effective it must be received by 10:00am (WST) Monday 13 June 2011

How to Vote on Items of Business

All your securities will be voted in accordance with your directions.

Appointment of Proxy

Voting 100% of your holding: Direct your proxy how to vote by marking one of the boxes opposite each item of business. If you do not mark a box your proxy may vote as they choose. If you mark more than one box on an item your vote will be invalid on that item.

Voting a portion of your holding: Indicate a portion of your voting rights by inserting the percentage or number of securities you wish to vote in the For, Against or Abstain box or boxes. The sum of the votes cast must not exceed your voting entitlement or 100%.

Appointing a second proxy: You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you appoint two proxies you must specify the percentage of votes or number of securities for each proxy, otherwise each proxy may exercise half of the votes. When appointing a second proxy write both names and the percentage of votes or number of securities for each in Step 1 overleaf.

A proxy need not be a securityholder of the Company.

Signing Instructions

Individual: Where the holding is in one name, the securityholder must sign.

Joint Holding: Where the holding is in more than one name, all of the securityholders should sign.

Power of Attorney: If you have not already lodged the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please sign in the appropriate place to indicate the office held. Delete titles as applicable.

Attending the Meeting

Bring this form to assist registration. If a representative of a corporate securityholder or proxy is to attend the meeting you will need to provide the appropriate “Certificate of Appointment of Corporate Representative” prior to admission. A form of the certificate may be obtained from Computershare or online at www.investorcentre.com under the information tab, "Downloadable Forms".

Comments & Questions: If you have any comments or questions for the company, please write them on a separate sheet of paper and return with this form.

Turn over to complete the form

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View your securityholder information, 24 hours a day, 7 days a week:

www.investorcentre.com

Review your securityholding

Update your securityholding

Your secure access information is:

SRN/HIN: I9999999999

PLEASE NOTE: For security reasons it is important that you keep your SRN/HIN confidential.

916CR_0_Sample_Proxy/000001/000001/i

MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

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

I9999999999
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Change of address. If incorrect, mark this box and make the correction in the space to the left. Securityholders sponsored by a broker (reference number commences with ’ X ’) should advise your broker of any changes.

I 9999999999

I ND

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Proxy Form

Please mark

to indicate your directions

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Appoint a Proxy to Vote on Your Behalf

XX

I/We being a member/s of Refresh Group Limited hereby appoint

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the Chairman of the Meeting

OR

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PLEASE NOTE: Leave this box blank if you have selected the Chairman of the Meeting. Do not insert your own name(s).

or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as the proxy sees fit) at the General Meeting of Refresh Group Limited to be held at 17 Denniunp Way, Malaga, Perth WA 6090 on Wednesday, 15 June 2011 at 10:00am (WST) and at any adjournment of that meeting.

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Items of Business

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PLEASE NOTE: If you mark the Abstain box for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.

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Resolution 1 Approval of Sale of AridTec Pte Ltd Resolution 2 Approval of Selective Capital Reduction Resolution 3 Approval of Participation of Mr Chee Keong Oh and Mr Mun Yew Chan in the sale of AridTec Pte Ltd Resolution 4 Approval of Placement Resolution 5 Approval of Allotment of Shares

Resolution 6 Approval to Adopt New Constitution

Resolution 7 Proportional Takeover Approval Provisions

Resolution 8 Election of Director - Ms Jamie Gee Choo Khoo

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The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business.

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Signature of Securityholder(s) This section must be completed.
Individual or Securityholder 1 Securityholder 2 Securityholder 3
Sole Director and Sole Company Secretary Director Director/Company Secretary
Contact
Contact Daytime
Name Telephone Date / /
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R G P

9 9 9 9 9 9 A

AI assistant

ENECO REFRESH LTD — Proxy Solicitation & Information Statement 2011

64874_rns_2011-05-15_8f4b3aca-d5fe-42ec-bf44-8247962b5303.pdf

REFRESH GROUP LIMITED

ACN 079 681 244

N O T I C E O F G E N E R A L M E E T I N G E X P L A N A T O R Y N O T E S

P R O X Y F O R M

Date of Meeting

Time of Meeting

Place of Meeting

N O T I C E O F G E N E R A L M E E T I N G

BUSINESS

1. Approval of Sale of AridTec Pte Ltd

Voting Exclusion

2. Approval of Selective Capital Reduction

Voting Exclusion

3. Approval of participation of Mr Chee Keong Oh and Mr Mun Yew Chan in the sale of AridTec Pte Ltd

Voting Exclusion

4. Approval of Placement

Voting Exclusion

5. Approval of allotment of Shares

Voting Exclusion

6. Approval to adopt new Constitution

7. Proportional Takeover Approval Provisions

8. Election of Director

Voting and Proxies

DATED THIS 16[TH] DAY OF May 2011

BY ORDER OF THE BOARD

E X P L AN AT O R Y N OT E S

Resolution 1 – Sale of AridTec Pte Ltd

Background

Summary of Share Sale Agreement

Independent Expert’s Report

Business Post Divestment

Pro Forma Balance Sheet

Board Recommendation

Resolution 2 – Selective Capital Reduction

Background and reasons for reduction in capital

Corporations Act

Independent Expert’s Report

Shares to be Cancelled

Effect of proposed selective capital reduction of the Company and on control of the Company

Terms of the selective capital reduction

Financial Effect on the Company

Advantages and disadvantages of the selective capital reduction

Advantages

Disadvantages

Board Recommendation

Resolution 3 – Approval of the participation of Mr Chee Keong Oh and Mr Mun Yew Chan in sale of AridTec Shares

Listing Rule 10.1 and section 208 of the Corporations Act

Information required by ASX Listing Rule 10.10 and section 219 - Independent Expert’s Report

Interests of Related Parties

Board Recommendation

Resolution 4 – Approval of Placement

Listing Rule 7.1

Board Recommendation

Resolution 5 – Approval of Allotment

Listing Rule 7.4

Board Recommendation

Resolution 6 – Modification of Constitution

Summary of Proposed New Constitution

Constitution and rights attaching to Shares

Directors (Constitution clauses 58 and 59)

Future increases in capital (Constitution clause 3)

Variation of rights

Transfer of Shares (Constitution clauses 36 and 39)

Voting rights (Constitution clause 53)

Dividend rights (Constitution clauses 84 and 85)

Rights on winding up (Constitution clauses 99 and 100)

Board Recommendation

Resolution 7 – Proportional Takeover Approval Provisions

Effect

Reasons for proposing clauses 111-112

No present acquisition proposals

Potential advantages and disadvantages

Board recommendation

Resolution 8 – Election of Director

General

Ms Jamie Gee Choo Khoo

Board Recommendation

ENECO REFRESH LTD Proxy Solicitation & Information Statement 2011