FINBAR GROUP LIMITED — AGM Information 2004

Oct 31, 2004

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FINBAR INTERNATIONAL LIMITED

ACN 009 113 473

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS

EXPLANATORY MEMORANDUM

AND

PROXY FORM

DATE OF MEETING

30th DAY OF NOVEMBER 2004

TIME OF MEETING 11.00a.m.

PLACE OF MEETING Level 3, Finbar Building 15 Labouchere Road SOUTH PERTH WA 6151

LC:29480F:Nd-06

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FINBAR INTERNATIONAL LIMITED ACN 009 113 473

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NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS

NOTICE IS HEREBY GIVEN that an Annual General Meeting of the shareholders of Finbar International Limited ("the Company") will be held at Level 3, Finbar Building, 15 Labouchere Road, 2004 at 11.00am Western Australian Time dav of day the South Perth on ("the Meeting") for the purpose of transacting the following business.

An Explanatory Memorandum containing information in relation to the following Resolution accompanies this Notice of General Meeting.

AGENDA

$0: -11 - 04: 13: 06 = 1$

Resolution 1 - Management Agreement

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

"That approval be and is hereby given to the Company to execute a Management Agreement between the company and J & R Management Pty Ltd (ACN 065 211 556) for a term of three years commencing 1 July 2004 with an option to renew the term for a further three years commencing 1 July 2007, in accordance with the proposed Management Agreement submitted to the meeting, and for the purposes of identification, signed by the Chairman."

The Company will in accordance with Section 224 of the Corporations Act disregard any votes cast on the Resolution by J & R Management Pty Ltd, Mr John Chan, Mr Richard Rimington, Mr Darren Pateman, Mr John Cheak, Mr Loh Kee Kong and Mr Paul Rengel and any of their associates. However, the Company need not disregard a vote if it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form or if 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.

Resolution 2 - Financial Statements and Reports

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

"To accept the financial statements of the company for the financial year ended 30 June 2004 and the reports of the Directors and Auditors thereon"

Resolution 3 - Election of Directors

$01 - 11 - 04$ ; 13:08 ;

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

"That pursuant to clause 13.2 of the Company Constitution, the resignation of Mr John Cheak be accepted, and thereafter, being eligible his offer to stand for re-election as a Director of the company be accepted."

Resolution 4 - Increase of Fees payable to Directors

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

"For the purpose of Australian Stock Exchange Limited Lists Rule and clause of the Company Constitution, then the fees to the Directors be increased to a minimum aggregate of \$157,000.000 to be divided amongst the Directors as agreed between them or failing agreement, equally."

Resolution 5 - Ratification of Payment of Dividend

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

"That the fully franked dividend of .02 dollars per fully paid ordinary share paid is ratified."

Resolution 6 - General Business

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

"To deal with any other business which may be brought forward in accordance with the Company's constitution and in accordance with the Corporations Law."

Directors Recommendations

Each of the Directors of the Company recommend to shareholders that each of the resolutions contained in this notice of meeting be approved.

Voting Exclusions

Except as set out below, the Company must disregard any votes cast on resolution 4 by any director of the Company and any associates of a director. The Company need not disregard a vote if.

it is cast by a person as proxy for a person who is entitled to vote, in accordance with the 1. directions on the proxy form; or

it is case by the person chairing the meeting as proxy for a person who is entitled to vote, in $2.$ accordance with the direction on the proxy form to vote as the proxy decides.

Voting Entitlements

$01 - 11 = 04$ ; $13:07$ ;

For the purpose of the Corporations Act, the Company has determined that all securities of the Company that are quoted securities at 7.00p.m. Australian Western Standard Time on Friday 26 November 2004 will be taken, for the purpose of the Meeting, to be held by the persons who held them at that time.

Dated the 29th day of October 2004

BY ORDER OF THE BOARD

Director

$5.7 - 7.4$

Proxies

4.

A shareholder entitled to attend and vote at the above Annual General Meeting of shareholders may appoint not more than 2 proxies. Where more than one proxy is appointed, each proxy must may appoint not more man z proxies, viriene more man one proxy is appointed, each proxy must
be appointed to represent a specified proportion of the shareholders voting rights. A proxy may,
but need not be a shareholder o prior to the General Meeting.

$01 - 11 - 04$ ; $13307$ ;

FINBAR INTERNATIONAL LTD ACN 009 113 473

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PROXY FORM

The Secretary To: Finbar International Limited 6 Preston Street COMO WA 6152

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Being a member/members of Finbar International Ltd hereby appoint:

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or failing him/her the Chairman of the meeting in respect of __________shares as my/our proxy to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held on the 30^th day of November 2004 and at any adjournment thereof.

2004 day of SIGNED this

Signature of Shareholder(s):

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The COMMON SEAL of was hereunto affixed by authority of its Directors in the presence of:

Directors

Director/Secretary

INSTRUCTION AS TO VOTING

CHAIRMAN'S VOTING INTENTIONS

Please note that if the Chairman is appointed as proxy and there is no direction on the proxy form as to how the proxy is to vote, the Chairman intends to vote FOR all resolutions.

If you do not wish to direct your proxy how to vote please place a mark in the box. By Marking this box, you acknowledge that the Chairman may exercise your proxy even if He has an interest in the outcome of the resolution and votes cast by him other than as Proxy holder will be disregarded because of that interest.

RESOLUTION

Commercial Account Commercial

$01 - 11 - 04113107$ :

Item	General Description	FOR	AGAINST	ABSTAIN
	To execute the Management Agreement with J & R Management
2	To accept financial statements of the Company and reports of Directors and Auditor for financial year ended 30 June 2004
3	Resignation and re-election of Mr John Cheak
4	Payment of Dividend
5	General business

PROXIES

• A proxy need not be a member of the Company. 1
• The instrument appointing a proxy shall be in writing under the hand of the appointor or his $\overline{2}$ attorney duly authorised in writing or if such an appointor is a corporation either under seal or under the hand of an officer or attorney duly authorised.
• The instrument appointing a proxy (and the power of attorney or other authority under which it 3 is signed) or proof thereof to the satisfaction of the Directors shall be deposited at the registered office of the Company not less than 48 hours before the time for holding the meeting at which the person named in such instrument proposes to vote.

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FINBAR INTERNATIONAL LIMITED ACN 009 113 473

EXPLANATORY MEMORANDUM

INTRODUCTION

This Explanatory Memorandum is intended to provide shareholders in Finbar International Ltd ("the Company") with sufficient information to assess the merits of the resolutions contained in the accompanying Notice of General Meeting.

The Directors recommend that shareholders read this Explanatory Memorandum in full before making any decision in relation to the resolutions.

The following information should be noted in respect of the various matters contained in the accompany Notice of General Meeting.

Resolution 1 - Executing Management Agreement.

Background

By deed dated 12 October 1999 between Finbar and J & R Management Pty Ltd ("J & R"), J & R agreed to provide management services to Finbar upon the terms therein described ("the Management Agreement"). The Management Agreement was approved by shareholders at the 1999 Annual General Meeting of the Company.

The Management Agreement was entered into to secure the services of John Chan, Richard Rimington and Darren Pateman. Messrs Chan and Rimington are directors and shareholders of J & R and payment of fees and commission to J & R was a cost effective and efficient way of providing remuneration to them.

The Management Agreement did not provide that J & R was obliged to provide project management services to Finbar where Finbar was a party to a joint venture.

To achieve the objectives of the Management Agreement, it was proposed that the Management Agreement be varied to allow for J & R to provide project management services to Finbar where Finbar was a party to a joint venture.

J & R had performed project management services in respect of the development of Boas Gardens Estate, a joint venture between J & R and the Company. It was proposed that the involvement of J & R in Boas Gardens Estate Development be acknowledged and that J & R be entitled to half of the joint venture fees to which the Company would become entitled to pursuant to a Project Management Agreement stamp dated 25 February 2000 between Boas Gardens Estate Pty Ltd and Finbar.

The Deed of Variation of the Management Agreement was approved by shareholders at the 2003 Annual General Meeting of the company, and then executed and stamp dated 29 July 2003.

$01 - 11 - 04113107$ :

$-2-$

$107.24$

The Management Agreement (as varied) was for a term of three years from 1 July 1998 together with an option to renew the term for a further thee years commencing 1 July 2001 and concluding 1 July 2004.

It is proposed, subject to shareholder's approval to enter into a new Management Agreement, substantially on the same terms as the previous Management Agreement (as varied), with J & R Management to provide management services to the Company, the relevant terms of which provide that:

• The term of the Agreement shall be three years effective from 1 July 2004 together with $(a)$ an option to renew the term for a further three years commencing 1 July 2007.
• The Company shall renumerate J & R Management by: $(b)$
• payment of a fee of \$415,000.00 per annum by way of monthly instalments in $(i)$ arrears. This fee is to be reviewed annually and increased by a minimum amount equal to Consumer Price Index accruais;
• payment of one half of the joint venture fees in respect of each joint venture for $(ii)$ which J & R Management provides joint venture project management on behalf of the Company which remuneration shall be paid be the Company to J & R Management on the same dates and same manner as the Company is entitled to receive its remuneration pursuant to the joint venture Management Agreement;
• payment of a commission, equal to 8% of the net annual profits of the Company $(iii)$ and any of its subsidiaries, 14 days after the accounts for the relevant financial year have been made up and audited;
• payment of a fair and reasonable proportion of any work in progress the benefit of (iv) which will accrue in the profits of the Company and any of its subsidiaries when the benefit of the work in progress is brought to account in the relevant financial year;
• reimbursing any expenses incurred by J & R Management in discharging its $(v)$ obligations; and
• the Company will be liable to pay to J & R Management any Goods and Services (vi) Tax assessed on any payment made by the Company under the Agreement.
• The Company recognises J & R Management's right to undertake property developments (c) in its own right and on behalf of or in conjunction with other developers, subject to the Company having been given and renounced the opportunity to take up the property development.
• J & R Management will provide executive management and project management $(d)$ services and company secretarial services to the Company. Thus J & R Management is

to assume responsibility for fulfilling all of the obligations and duties previously performed by Chan, Rimington and Pateman, both individually and collectively.

$8 + 1 / 24$

• The Agreement can be determined before expiration of the term if: $(e)$
• either Chan or Rimington dies, becomes bankrupt, unsound in mind or, because of $(i)$ incapacity J & R Management is unable to effectively discharges its duties for a total period of thirty days in any twelve consecutive months;
• J & R Management becomes insolvent, fails to carry out the company's lawful $(ii)$ instructions or wilfully commits a serious or persistent breach of the Agreement; or;
• either of Chan or Rimington or J & R Management is convicted of a criminal (iii) offence.
• The Company agrees to indemnify J & R Management in respect of the performance of $(f)$ the duties to be performed by it on behalf of the Company under the Agreement.

A copy of the proposed new Management Agreement are available for inspection at the Company's registered office between the hours of 9.00 am and 4.00 pm by prior appointment or may be obtained by shareholders at no charge by writing to the Company Secretary.

Related Party Transaction

Chapter 2E of the Corporations Act prohibits a public company from giving a financial benefit to a related party of the public company unless the giving of the benefit falls within an exception set out in that part, or shareholder approval is obtained prior to the giving of the financial benefit,

Related Party

and and service

$0 + -1 + -0.4$ ; $1.3 : 0.7$

The Directors of the Company are related parties of the Company. Certain directors of the Company are also directors of J & R Management Pty Ltd. B virtue of Section 228(4) of the Corporations Act and for the purposes of chapter 2E of that Act, J & R Management is a related party of the Company as it is controlled by the Directors of the Company.

Financial Benefits

Section 229(3) of the Corporations Act provides that an example of the Company giving a financial benefit includes the public company receiving services from the related party, or giving money or property to the related party. Section 229(1) of the Corporations Act provides that in determining whether a financial benefit is given for the purposes of chapter 2E, any consideration that may be given for the benefit, even if the consideration is adequate, is to be disregarded.

Resolution 1 which provides for the execution of the Management Agreement will constitute the giving of a financial benefit by the Company to a related party, namely a J & R. John Chan is a related party of the Company by virtue of his being a director. He is also the holder of 50% of the issued shares in J & R.

Because John Chan holds 50% of the issued shares in J & R Management and will be employed by J & R so as to enable it to perform its obligations under the Agreement, the payment of monies by the Company to J & R will indirectly confer a financial benefit on John Chan.

Richard Rimington is a related party of the Company by virtue of his being a director of the Company. He is also the holder of 50% of the issued shares in J & R.

Because Richard Rimington holds 50% of the issued shares in J & R and will be employed by J & R so as to enable it to perform its obligations under the Agreement, the payment of money by the Company to J & R will indirectly confer a financial benefit on Richard Rimington.

J & R is for reasons expressed elsewhere in this Explanatory Memorandum are related party of the Company.

Darren Pateman will be employed for reward by J & R so as to enable it to perform its obligations under the Management Agreement and any variation thereof. J & R Management shall renumerate Darren Pateman through the application in part of the payments made to it by the Company under the Agreement so as to engage its obligation to Darren Pateman under his employment contract with J & R, thus Pateman will indirectly receive the financial benefit from the Company.

J & R proposes to act in concert with Darren Pateman in respect of the proposed giving of the financial benefit by the Company to Darren Paternan and proposes that for that reason a financial benefit has been or is expected to be given to J & R Management by the Company. Therefore, Darren Pateman is deemed by virtue of Section 228(7) of the Corporations Act to be a related party of the Company.

For the reasons set out above, the execution of the Management Agreement will constitute the giving of a financial benefit by the Company to a related party. Pursuant to chapter 2E of the Corporations Act the Company may give the financial benefit to a related party if the approval of the members of the Company is obtained, and the benefit is given within fifteen months after such approval.

For the purposes of chapter 2 of the Corporations Act, the following information is provided:

The Related Party to Whom the Proposed Resolution will Permit Financial Benefit to be Given

• J & R Management Pty Ltd;
• John Chan;

and a strong state $0.1 + 1.1 + 0.4$ ; $1.0 \pm 0.1$

• Richard Rimington; and
• Darren Pateman.

$-1.2$ / $-2.4$

The Nature of the Financial Benefits Under the Proposed Management Agreement.

To J & R Management: $(i)$

$0.1 - 1.1 - 0.4.11.9 \div 0.8$

payment of a fee of \$415,000.00 per annum by way of monthly instalments in arrears. This fee is to be reviewed annually and increased by an minimum amount equal to Consumer Price Index accruals;

$1.3 \times$

• payment of one half of the joint venture fees in respect of each joint venture for which J & R provide joint venture project management on behalf of the Company which remuneration shall be paid by the Company to J & R on the same dated and same manner as the Company is entitled to receive its remuneration pursuant to the joint venture Management Agreement;
• payment of the commission, equal to 8% of the net annual profits of the Company and any of its subsidiarles, fourteen days after the accounts for the relevant financial year have been made up and audited;
• reimbursing any expenses incurred by J & R in discharging its obligations;
• the Company will be liable to pay J & R Management any Goods and Services Tax assessed on any payment made by the Company under the Agreement; and
• the right to the opportunity to earn income from the property developments renounced by the Company.
• To Chan: $(ii)$
• the benefit of a portion of the funds paid by the Company to J & R Management by virtue of his being a shareholder in and an employee of J & R; and
• the right to the benefit of profits or income earned by J & R Management from property developments renounced by the Company.
• (iii) To Rimington:
• the benefit of a portion of the funds paid by the company to J & R Management by virtue of his being a shareholder in and an employee of J & R; and

• the right to the benefit of profits or income earned by J & R Management from property developments renounced by the Company.

• To Pateman: (iv)

• the benefit of a portion of the funds paid by the company to J & R Management by virtue of his being an employee of J & R Management;
• the right to the benefit of profits or income earned by J & R Management from property developments renounced by the company.

Emoluments

$11 - 04 : 13 : 08$

The total remuneration package of John Chan, Richard Rimington and Darren Pateman are as follows:

Director	Base Emolument	Superannuation	Commissión	Options issued -	Total
John Chan	20,682	2.045	Nil	36,895	59,622
Richard Rimington	20,682	2,045	ΝIΙ	28,671	51,398
Darren Pateman	ΝIΙ	Νij	Nii.	20.070	20,070

* Options Issued:

The fair value of options is calculated at the date of grant using a Binomial model and allocated to each reporting period evenly over the period from grant date to vesting date. The value disclosed above is the portion of the fair value of options allocated to this reporting period.

The following factors and assumptions were used in determining the fair value of options on grant date:

Grant date	Expiry date	Exercise price	Price of shares on grant date	Estimated volatility	Risk free $ $ nterest rate	Dividend vleid
5 September 2003	5 September 2003	\$0.30	\$0.28	40%	4.6%	5.1%

Estimated volatility approximates historic volatility. The life of all options granted is two years from the vesting date. Each option entitled the holder to purchase one ordinary share in the Company.

An estimated discount of 40% on the value of options was utilised to approximate the lack of marketability of the options.

Options do not vest until 12 months after the grant date.

The options were approved in an extraordinary shareholders meeting on 26 June 2003.

In relation to each Director of the Company:

$E \triangleq \Delta$

If not why not?; $2.$

$0 + -11 = 94 + 13108$

if the Director was not available to consider the proposed resolution - why not? 3.

Each of the directors (save for John Chan and Richard Rimington) voted to recommend the proposed resolution for reasons set out elsewhere in this Explanatory Memorandum.

Neither John Chan nor Richard Rimington participated in or cast a vote as a Director at the meeting of the Directors to recommend the proposed resolution because they were interested in the proposed resolution.

In relation to each Director:

• Whether this Director has an interest in the outcome of the proposed resolution, if so, 1. what it is?
• None of the Directors, other than John Chan and Richard Rimington, has an interest in the outcome of the resolution.
• Each of John Chan and Richard Rimington (for reasons expressed elsewhere in this Explanatory Memorandum) in the outcome of the resolutions.
• Neither John Chan nor Richard Rimington participated in the Director's deliberations concerning the resolution.

All other information that:

• Is reasonably required by members in order to decide if it is in the Company's interests 1. to pass the proposed resolution; and
• Is known to the Company or any of its Directors. $2.$

The company is often invited to enter into joint ventures and agreements for the development of land that are conditional upon it providing project management services.

If J & R did not provide the project management services, the company would either have to decline to enter into the joint ventures or agreements and thereby lose a commercial opportunity or it would have to undertake these duties itself requiring the company to hire experienced employees with skills similar to those provided by each of John Chan, Richard Rimington and Darren Pateman. It is considered that the payment by the company to J & R is less than the cost of the company undertaking the duties itself where it is obliged to do so pursuant to the terms of the joint venture or agreement.

$0: -11 - 04: 13: 08$

Listing Rule 10.1 provides that an entity must ensure that it does not dispose of a substantial asset to either a related party or a substantial shareholder who is entitled to at least 10% of the voting securities or their associates.

Listing Rule 10.2 provides that an asset is substantial If its value or the value of the consideration for It is 5% or more of the equity interests of the entity as set out in the latest financial statements given to the ASX under the Listing Rules.

The Company considers that the amounts payable in each year of the term and further term of the Agreement by the Company to J & R Management should be aggregated to determine the value of the asset that is being disposed by the Company pursuant to the Agreement. Both the fixed fee payable during the term and the further term of the Agreement and that fixed fee added to the potential commission also payable during the term and further term represents an amount which is 5% or more of the equily interests of the Company as set out in the latest financial statements given by the Company to the ASX under the Listing Rules.

Each of J & R Management, Chan, Rimington and Pateman is a related party of the Company, as that expression is defined in Chapter 19 of the Listing Rules.

For the foregoing reasons, Listing Rule 10.1 compels the Company to obtain shareholder approval to the transaction.

The Resolution at item 1 of the notice of meeting is presented as a resolution under Listing Rule $10.1.$

Listing Rule 10.10 obliges the Company to furnish together with the Notice of Meeting a report on the transaction from an independent expert. A report dated 21^st October 2004 prepared by Maurice L. Anghie of Hall Chadwick Corporate Finance (WA) Pty Ltd is appended to this Explanatory Statement in compliance with Listing Rule 10.10. The Company has paid to Hall Chadwick Corporate Finance (WA) Pty Ltd \$8,000.00 exclusive of GST for the provision of the report.

Resolution 2 - Financial Statements and Reports

As required by Section 317 of the Corporations Act 2001, the Financial Report, and the Reports of the Directors and Auditor for the most recent financial year will be laid before the meeting.

Resolution 3 - Election of Director

Mr Cheak was appointed a Director of the Company on 28 April 1993. Pursuant to Clause 13.2 of the Companies Constitution, he retires by way of rotation and, being eligible, offers himself for reelection.

Resolution 4 - Increase of Fees payable to Directors

$#$ (1.6 $\times$ 1.2.4)

It is proposed to increase the maximum aggregate remuneration to the Directors from \$125,000.00 to \$157,000.00 an increase of \$72,000.00. The proposed increase makes allowance for growth in Board remuneration to reflect market rates.

Additionally since the last review of Directors fees the demands on directors of listed companies have increased through legislation and community expectations. In order to meet these demands and the Company's own commitment to good governance the responsibilities of the Company directors have expanded. The proposed limit has regard to the increased responsibilities of the Board.

LC:20480F:kid-05

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« Hall Chadwick Corporate

Corporate Finance & Advisory Services

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$01 - 11 - 04113108$

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21^st October 2004

2 2 OCT 2004

The Directors Finbar International Ltd Level 3 15 Labouchere Road SOUTH PERTH WA 6151

Dear Sirs.

Management Agreement with J&R Management Pty Ltd ("J&R MANAGEMENT")

We have been requested to provide a report whether the above agreement is fair and reasonable to the shareholders of Finbar International Ltd ("Company"). This report is being prepared pursuant to Part 2E of the Corporations Act 2001 and Chapter 10 of the listing rules of the Australian Stock Exchange Ltd ("ASX") to be included in an Explanatory Statement to be sent to shareholders of the Company to assist shareholders in understanding the Resolution.

THE RESOLUTION 1.

The resolution to be put to the general meeting of Finbar is as follows:

"That approval be and is hereby given to the Company to enter into a Management Agreement with J&R Management Pty Ltd, ACN 065 211 556, for a term of three years commencing 1 July 2004 with an option to renew the term for a further three years commencing 1 July 2007."

DETAILS OF THE AGREEMENT $1.1$

The following are the material terms of the Agreement.

• The terms of the agreement shall be three years effective from 1.1.1 1 July 2004 together with an option to renew the term for a further three years commencing 1 July 2007.
• The Company shall remunerate J&R Management by: $1.1.2$
• payment of a fee of \$415,000 per annum by way of $\ddot{\textbf{(i)}}$ monthly instalments of \$34,583.33 in arrears. This fee to be reviewed annually and increased by a minimum amount equal to the CPI;
• payment of a commission, equal to 8% of the pre-tax $(ii)$ annual profits of the Company and any of its subsidiaries, 14 days after the accounts for the relevant financial year have been made up and sudited, but excluding fees in (iii);

Leven 42
DankWest Tower
105 St George's Texture
Perth 6000 ......................................

GPO Box 1/2106
PERTH WA 6846

Telephone: (58) 9320 2385
Facsimile: (68) 9320 2999
Email: haperinto@ball
www.halichadwick.com.au

Australian Financial Sarvices Licrice No. 246932

Kall Chadwick Corporate
Services in Perth

• Neigen and Acquisions
• . Valuations
• Operational Reviews and
  Réskucturing
• Copirel Rolsings
• Single get Positioning and
• Business Plonning
• Expert's Reports

Associated With:

Nadodel Association Hall Chadwick

Hall Chadwick Comporate Finance (WA) My Ud

A.C.N. 008 783 110

C Hall Chadwick Chartered Accountants & Business Advisers

payment of one half of the joint venture fees in respect $(iii)$ of each joint venture for which J&R Management provides joint venture project management on behalf of the Company, which remuneration shall be paid by the Company to J&R Management on the same dates and same manner as the Company is entitled to receive its pursuant to the joint ventures remuneration Management Agreement.

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• payment of a fair and reasonable proportion of any work $(iv)$ in progress the benefit of which will accrue in the profits of the Company and any of its subsidiaries when the benefit of the work in progress is brought to account in the relevant financial year.
• incurred J&R bу expenses any reimbursing $(v)$ Management in discharging its obligations; and
• The Company will be liable to pay J&R Management $(vi)$ goods and services tax on any payment made by the Company under the Agreement.
• The Company recognises J&R Management's right to undertake $1.1.3$ property developments in its own right and on behalf of or in conjunction with other developers, subject to the Company having been given and renounced the opportunity to take up the property development.
• J&R Management will provide executive management and $1.1.4$ project management services and company secretarial services to the Company. Thus, J&R Management is to assume responsibility for fulfilling all of the obligations and duties previously performed by Chan, Rimington and Pateman, both individually, and collectively.
• The Agreement can be determined before expiration of the term $1.1.5$ if.
• either Chan or Rimington dies, becomes bankrupt, $(i)$ unsound in mind, or because of incapacity J&R Management is unable to effectively discharge its duties for a total period of 30 days in any 12 consecutive months;
• J&R Management becomes insolvent, fails to carry out $(ii)$ the Company's Lawful instructions or wilfully commits a serious or persistent breach of the Agreement; and
• either Chan or Rimington or J&R Management is $(iii)$ convicted of a criminal offence.
• The Company agrees to indemnify J&R Management in respect $1.1.6$ of the performance of the duties to be performed by it on behalf of the Company under the Agreement.

ec Hall Chadwick Cheatered Accountains & Business Advisers

FINBAR INTERNATIONAL LTD MANAGEMENT AGREEMENT WITH J&R MANAGEMENT PTY LTD PAGE 3

BASIS OF EVALUATION - FAIR AND REASONABLE $\overline{z}$

$0 + -11 - 04 + 13 + 08$

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In determining the question of fair and reasonable we have had regard to ASIC Policy Statements $74$ and 75. The key to consider in assessing whether the above agreement is fair and reasonable to the shareholders of the Company whose votes are not to be disregarded is whether having regard to all the circumstances of the proposal, those shareholders will be no worse off if the proposed Agreement is approved then if it is not approved.

The Corporations Law provides no definition as to the meaning of fair and reasonable. Policy statement 75 provides guidelines, for the purpose of reports relating to takeover offers, in determining whether a transaction is fair and reasonable. Fairness relates to price whereas reasonableness will include the consideration of factors other than price. Policy statement 74 states that what is fair and reasonable for shareholders of the Company whose votes are not to be disregarded should be judged in all the circumstances of the proposal, with a comparison made of the likely advantages and disadvantages for the shareholders if the proposal does or does not proceed. Generally, a transaction or proposal will be fair and reasonable where the benefits of the proposal being approved outweigh the disadvantages.

In determining whether the proposal is fair and reasonable we have had regard to the following:

• Estimated cost to the Company if this agreement is approved. $(i)$
• Current salary packages in the market for a Managing Director, Project (ii) Director and Company Secretary.
• Dividend payments to shareholders on a regular basis, which are $(iii)$ franked, and increase in shareholder's funds.
• The earnings per share per Appendix I (iv)
• The possibility that Chan, Rimington and Pateman's services may not be $(v)$ available to the Company if the agreement is not approved.

BACKGROUND OF THE COMPANY MANAGEMENT 3.

The Company appointed Chan and Rimington as Directors of the Company on 27 April 1995 as Managing Director and Project Manager respectively, the Company subsequent to 30 June 1994 changed its activities from investment to property investment and development. This change in direction was under the direction of Chan and Rimington. Pateman was appointed Company Secretary on 28 February 1996 and the team of Chan, Rimington and Pateman effectively ran the Company's operations. In the period 1 July 1997 to 30 June 2004 the Company has shown an increase in shareholders funds from \$13,681,635 to \$31,044,706 in 2004.

$-2 + 2 - 24$

It can be seen from Appendix I that the shareholders have received a dividend from 2000 to 2004 and in fact they have received a divided every year from the time the Management Contract with J&R Management was in force.

It should also be noted that the shareholders funds as per Appendix I has increased every year from 2000 to 2004.

Chan and Rimington are the Directors and shareholders of J&R Management, which carries on business managing property developments. It would appear that the rapid change in the Company's results and net worth is as a result of the efforts of Chan, Rimington and Pateman.

ESTIMATED COST TO THE COMPANY 4.

$0 \div -11 - 04 \div 10 \div 09$

1.

If the Management Agreement is approved the estimated cost to the Company as per the budget forecasts would be as follows:

	Fer* з	COMMISSION	TOTAL Т
Year ended 30 June 2005	415,000	1,022,899	1,437,899
Year ended 30 June 2006	415,000	735.851	1,150,851
Year ended 30 June 2007	415.000	394,765	809.765

* Will increase by CPI.

It should be noted that the profit budget forecasts are estimates of projects already in hand and do not take into account any new work which may occur during these years.

In a report prepared by Beilby (executive search, selection and assessment), the current annual salary packages in the market are as follows:

Managing Director Project Director Company Secretary	AVERAGE (S) 290,979 178,817 134,106	UPPER QUARTILE (5) 443,634 210,271 182,327
	603,902	836,232

From the above it may be seen that the Company would have to pay between \$603,902 to \$836,232 for a management team as outlined above. However, in accordance with the Management Agreement with J&R Management the base fee is \$415,000, a significant discount to the market rate. The additional commission of 8% of operating profit and the commission is success based and as such is an incentive for the present management team to increase profits.

tc Hall Chadwick Chartered Accountants & Business Advisers

$2.2 \times$

FINBAR INTERNATIONAL LTD MANAGEMENT AGREEMENT WITH J&R MANAGEMENT PTY LTD PAGE 5

CONCLUSION 5.

$0 + -11 = 0.4 + 1.3 + 0.9$

$\mathbb{R}^2$

The foregoing suggests, that the Management Team of Chan, Rimington and Pateman have brought significant benefits to the Company and shareholders since they have been with the Company. In the event that the agreement is not approved there is a possibility that Chan, Rimington and Pateman's services may not be available to the Company. It is possible that the Company may be able to employ alternate personnel for a lesser package, however whether the same benefits will be delivered to the Company and shareholders is the question. J&R Management have a proven record and considering the benefits the Company and shareholders have received and can expect to receive in the future and it would appear that the benefits of the proposed agreement being approved outweigh the disadvantages, on that basis the Management Agreement appears fair and reasonable to the shareholders of the Company whose votes are not to be disregarded.

6. DECLARATIONS

This report has been prepared solely for the purpose set out in the introduction to this report. In accordance with our normal practice, we hereby expressly disclaim liability to any persons other than the directors and shareholders of the Company. The information contained in this report may not be relied upon or used by anyone other than the directors and shareholders of the Company in any matter whatsoever, without the prior written consent of Hall Chadwick Corporate Finance (WA) Pty Ltd.

The signatory of this report is a Director of Hall Chadwick Corporate Finance (WA) Pty Ltd and has assumed overall responsibility for this report. He has had over 20 years experience in providing financial, valuation and corporate advice and has the professional qualifications appropriate to the advice being offered.

The statements and opinions given in this report are given in good faith and in the belief that such statements and opinions are not false or misleading.

Our conclusions are based on assumptions stated and on information provided by management of the Company and by Beilby (executive search, selection and assessment). Neither Hall Chadwick Corporate Finance (WA) Pty Ltd nor any member or employee of Hall Chadwick undertakes responsibility in any way whatsoever to any person in respect of errors in this report arising from incorrect information provided by management of the Company and by Beilby.

We have no reason to believe that any information supplied to us was false or that any material information has been withheld from us.

$23/7.24$

FINBAR INTERNATIONAL LTD MANAGEMENT AGREEMENT WITH J&R MANAGEMENT PTY LTD PAGE 6

In providing our opinion, we have relied on forecast financial information provided by management of the Company. It is recognised that forecasts, by their nature, are based on opinions concerning the numerous economic and external factors which may influence those forecasts. Accordingly, forecast operating results will almost always differ from the actual results achieved and those differences may be material.

Yours faithfully

$0.1 - 1.1 - 0.4$ ; 13:09

$\mathbb{R}^2$

MAURICE L. ANGHIE Director

$\ddot{\ddot{\phantom{}}!!!\phantom{}}$

C Hall Chadwick
Changed Accountains & Business Advisers

$\bar{\phantom{a}}$

$#$ - 2.4 $\angle$ - 2.4

FUERAR INTERNATIONAL LTD MANAGEMENT AGREEMENT WITH J&R MANAGEMENT PTY LTD PAGE 7

APPENDIX I

$\begin{array}{c} 1 \ 1 \end{array}$

$\mathcal{L}^{\mathcal{A}}$ , and $\mathcal{L}^{\mathcal{A}}$ , and $\mathcal{L}^{\mathcal{A}}$ , and $\mathcal{L}^{\mathcal{A}}$ , and $\mathcal{L}^{\mathcal{A}}$

$0.1 - 1.1 = 0.4$ ; 1.3 : 0.9 $\pm$ 1.

	2000 š	2001 s	2002 s	2003 S	2004 s
Operating Revenue	30,043,674	16,253,749	21,721,555	18,502,427	10,122,772
Operating profit before Income Tax	4.414,820	2,667,490	4.554.333	3,690,712	4,474,948
Shareholders Equity attributable to members of the Company	24,803,785	23,828,122	26,120,460	29,261,856	31,044,706
Dividends Paid	3,945,391	898.816	887.716	887,716	2,692,098
Earnings Per Share	0.032	0.022	0.023	0.035	0.05