G8 EDUCATION LIMITED - M&A Activity 2015

ASX Announcement

G8 Education Limited (ASX:GEM)

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3 August 2015

On-Market Takeover Bid $0.80 per Share – Affinity Education

G8 Education Limited ACN 123 828 553 ( G8 Education ) has today announced an on-market takeover bid for all of the fully paid ordinary shares in Affinity Education Group Limited ACN 163 864 195 ( Affinity Education ) ( Offer ) which are not already held by G8 Education at a price of $0.80 per Affinity Education share.

Please find enclosed in accordance with item 3 of section 635(1) of the Corporations Act 2001 (Cth), a copy of G8 Education’s bidder statement in relation to the Offer (which will be lodged with the Australian Securities and Investments Commission and served on Affinity Education today).

ENDS Chris Scott Managing Director

G8 Education Limited 159 Varsity Parade Varsity Lakes QLD 4227

ACN 123 828 553 [email protected] www.g8education.edu.au

t. +61 7 5581 5300 f. +61 7 5581 5311

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BIDDER’S STATEMENT – CASH OFFER

This is an important This is an important document and requires document and requires your immediate attention. your immediate attention.

If you are in any doubt as to If you are in any doubt as to how to deal with it, you how to deal with it, you should should consult your legal, consult your legal, financial or financial or other professional other professional adviser as adviser as soon as possible. soon as possible.

UNCONDITIONAL ON-MARKET CASH OFFER BY G8 EDUCATION LIMITED ACN 123 828 553

to purchase all of your fully paid ordinary shares in

AFFINITY EDUCATION GROUP LIMITED ACN 163 864 195

For $0.80 IN CASH per AFFINITY EDUCATION SHARE THE OFFER PRICE IS FINAL AND WILL NOT BE INCREASED

G8 EDUCATION DIRECTORS UNANIMOUSLY RECOMMEND THAT YOU ACCEPT THIS OFFER

Please call 08 9389 8033 Monday to Friday between 8.00 am and 5.00 pm if you require assistance with your acceptance.

Canaccord Genuity (Australia) Limited ACN 075 071 466 will stand in the market from 3 August 2015. The Offer Period will commence officially on 18 August 2015 and will end on 28 September 2015, unless extended.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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Table of C onte nts	Table of C onte nts
Important N otices .......... .................... .................... .................... .................... .................... ................... .................. 2
How to acce pt ................ .................... .................... .................... .................... .................... ................... .................. 3
Key Dates ... .................... .................... .................... .................... .................... .................... ................... .................. 4
Letter from t he Chairpers on ................ .................... .................... .................... .................... ................... .................. 5
1	Highligh ts ............... .................... .................... .................... .................... .................... ................... .................. 6
2	Freque ntly asked qu estions abou t the Cash Of fer ................ .................... .................... ................... .................. 7
3	Reason s to accept th e Cash Offer .................... .................... .................... .................... ................... .................. 9
4	Profile of G8 Educati on ............... .................... .................... .................... .................... ................... ................ 16
5	Profile of Affinity Ed ucation ........ .................... .................... .................... .................... ................... ................ 29
6	G8 Edu cation’s inten tions ........... .................... .................... .................... .................... ................... ................ 36
7	Funding .................. .................... .................... .................... .................... .................... ................... ................ 41
8	Taxatio n considerati ons .............. .................... .................... .................... .................... ................... ................ 43
9	Additio nal informati on ............... .................... .................... .................... .................... ................... ................ 45
10	Approv al of Bidder’s Statement .. .................... .................... .................... .................... ................... ................ 49
11	Definiti ons and inter pretation..... .................... .................... .................... .................... ................... ................ 50
Schedule 1 Announcem ent ............. .................... .................... .................... .................... ................... ................ 53
Corporate D irectory ........ .................... .................... .................... .................... .................... ................... ................ 55

2 G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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Important Notices

This Bidder’s Stateme n t is given by G 8 Education Limited A CN 123 828 5 53 ( G8 Education ) to Affi n ity Educatio n Group Limi t ed ACN 163 8 64 195 ( Affinity Education ) under Part 6.5 Corporat i ons Act and s ets out certain disclosure s required by t he Corporations Act.

This Bidder’s Stateme n t is dated 3 A ugust 2015. This Bidder’s S tatement w a s lodged wit h ASIC and AS X on 3 August 2015. None o f ASIC, ASX n or any of th e ir officers t a kes any res p onsibility for the contents of the Bidd e r’s Statement.

Investment decisions

This Bidder’s Stateme n t does not take into consider a tion your in d ividual inves t ment objecti v es, financial situation or p articular nee d s. You may w ish to seek i n dependent f i nancial and t a xation advic e before d e ciding whet h er or not to a ccept the Ca s h Offer for your Affinity Education Sh a res.

Forward looking statements

This Bidder’s Stateme n t contains certain forwar d looking s t atements and statements of current intentio n . The forwar d looking statements in thi s Bidder’s S tatement re f lect views held at the dat e of this Bidd e r’s Stateme n t. You shoul d be aware that those statements involve inherent r isks and uncertai n ties. Actual e vents or res u lts may diffe r materiall y from the e v ents or results expressed o r implied i n any forwar d looking stat e ment and th o se deviatio n s are both n o rmal and to b e expected.

None of G 8 Education , its officers or any person named i n this Bidder’s Statement w ith their con s ent or involv e d in the pre p aration of th i s Bidder’s Stateme n t makes any representati o n or warrant y as to the ac c uracy or likelihood of fulfilment of any forward looking state m ent. You sh o uld not plac e undue reliance on tho s e statement s .

The Corporations Act per m its informati o n to be made available to certain p ersons, including G8 Education. Y o ur informati o n may also b e disclosed on a confide n tial basis to G 8 Education’s related bodies corporate and exte r nal service providers and may be required to be dis c losed to regulators such as ASIC. You can contact u s for details o f information h eld by us ab o ut you.

Sources of information

The information included in this Bidder’s Statement in relation Af f inity Educati o n has been p repared by G8 Education using publicl y available in f ormation, and has not b een indepen d ently verifie d . Accordingly, G 8 Education does not, to t he maximum ex t ent permitte d by law, ma k e any representati o n or warrant y , express or i mplied, as to the accuracy or complete n ess of this in f ormation.

The information on Affinit y Education i n this Bidder’ s Statement should not be c onsidered co m prehensive.

Subject to th e foregoing a n d to the ma x imum extent permitted by law, G8 Edu c ation and its d irectors disclaim liability for any in f ormation co n cerning Affinity Educ a tion include d in this Bidd e r’s Statement. A ffinity Educa t ion Shareholders should form their o w n views con c erning Affinity Education from publically available i n formation. I n addition, the Corporations Act requ i res Affinity E d ucation to provide a Target’s Statem e nt to Affinity Education Shareholders in response t o this Bidder ’ s Statement, setting out c e rtain materi a l information concerning Affinity Educ a tion.

Enquiries

If you are in a ny doubt ho w to deal wit h this document, y o u should co n sult your Broker or your legal, financi a l or other pr o fessional ad v iser.

Defined terms

A number of defined terms are use d in this Bidd e r’s Stateme n t. These ter m s are explai n ed in section 11.

Privacy statement

G8 Educ a tion has coll e cted your inf o rmation fro m the regis t er of Affinity Education Shareholders.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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How to accept

You may sell your Affinity Education Shares to G8 Education on-market by offering to sell some or all of your Affinity Education Shares on ASX at the Offer Price on and from the Announcement Date until the end of the Offer Period. Canaccord Genuity will stand in the market to acquire on behalf of G8 Education all Affinity Education Shares offered at the Offer Price during normal trading on ASX on and from the Announcement Date, as follows:

if you hold your Affinity Education Shares in an Issuer Sponsored Holding (your SRN starts with an “I”), to sell your Affinity Education Shares to G8 Education you must instruct any Broker, which may include Canaccord Genuity (where Canaccord Genuity is your existing Broker or you appoint Canaccord Genuity as your Broker), to initiate acceptance;
if you hold your Affinity Education Shares in a CHESS Holding (your HIN starts with an “X”), to sell your Affinity Education Shares to G8 Education you must instruct your Controlling Participant (for example, your Broker) to initiate acceptance; or
if you are a Broker or a Participant, to sell your Affinity Education Shares to G8 Education you must initiate acceptance in accordance with the requirements of the ASX Settlement Rules.

You are not required to complete a form to accept the Cash Offer.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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Dates Key

Annou ncemen t Date	3 Augus t 2015
Bidde r’s State ment lod ged with ASIC	3 Augus t 2015
Affinit Affinit y Educa y Educa tion Sha tion Sha reholder res to G8 s able to Educati sell on	3 Augus t 2015
Offer Periodo fficiallyc ommen ces	18 Augu st 2015
CashO (unles ffer clo s extend ses ed or w ithdrawn )	28 Sept ember 2 015

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Letter from the Ch rson airpe

3 August 2 015

Dear Affinity Education S hareholder

Cash Offer to acquire your Affinity Education Shares

On behalf of G8 Educati o n Limited ACN 123 828 553 ( G8 Education ), we are please d to present an on-marke t , uncondition a l cash offer to a cquire your A f finity Education Shares ( Cash Offer ). The Offer Pric e of $0.80 cash per Affinity Education Share ( Offer Price ) represents:

 a premium of 48.1% on Affinity Education’s closing share price on 2 July 2015; and

a premium of 25% on Affinity Education’s ten day VWAP up to and including 2 July 2015.

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The Offer Price of $0.80 cash per Affinity Education Share is final and will not be increased .

The Cash O ffer is made b y way of an on-market, unco n ditional cash o ffer. Particulars of the Cash O ffer were disclosed by Canaccor d Genuity (G8 Education’s bro k er) to the ASX on the date o f this Bidder’s S t atement. A c o py of the Takeover Announc e ment is set ou t in Schedule 1 to this Bidder’ s Statement.

I encoura g e you to read t his Bidder’s St a tement for m o re details about the Cash Of f er and about G 8 Education.

The Cash O ffer may only be accepted b y selling your A ffinity Educati o n Shares on market. You can do this through your stockbrok e r or through G 8 Education’s b roker, Canaccord Genuity. T he usual rules f or settlement o f transaction s which occur on-marke t on ASX will a p ply to G8 Education’s purcha s e of Affinity E d ucation Share s on-market. T h is means that if you accept the Cash O ffer, you will b e paid on a T+ 3 Basis (being w ithin 3 Tradin g Days after th e trade is exec u ted).

G8 Educa t ion also announced today th a t its offers un d er the off-mar k et bid announced on 2 July 2 0 15 (Scrip Offer), will be free from all d e feating conditions and the c o nsideration will be increased to 1 G8 Educa t ion Share for e very 4.25 Affinity Education Shares. F u rther, G8 Edu c ation has decl a red the consi d eration under the Scrip Offer final[1] . The Scr i p Offer is exp e cted to open on or abo u t 18 August 2 0 15 and run co n currently to t h e Cash Offer. For more information on the S crip Offer, ref e r to the replacem e nt bidder’s statement dated 3 August 2015.

If you hav e any question s about the Ca s h Offer, pleas e contact your legal, financial o r other profes s ional adviser o r call 08 938 80 3 3 Monday to F riday 8.30 am to 5.00 pm.

I commend the Cash Off e r to you and s t rongly encour a ge you to acc e pt it for the re a sons set out i n this Bidder’s S tatement.

Yours sincerely

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Jenny Hutson Chairperson G8 Education Limited

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1 G8 Ed u cation may be required by law to increase the consideration under the Scrip O ffer, which wo u ld occur prior t o the Scrip offe r opening – refer to Section 9.2 for more information.

159 Varsi t y Parade

r e [email protected] u www.g8education.edu.a u

159 Varsi t y Parade t. +61 7 5581 5 300 Varsity La k es QLD 4227 f. +61 7 5581 5 311

PO Box 515, Varsity Lakes QLD 4227

6 G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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1 Highlights

1.	The Cas price of h Offer r Affinity epresen Educatio ts an att n Share ractive s. premium to the trading
2. Accepti conside be paid ng the C ration n for your ash Offe ow for y shares o r enable our Affin n a T+3 s you to ity Educ Basis. realise c ation Sh ash ares. Yo u will
3.	There a Affinity re risks i Educatio n remain n. ing a m inority s harehold er of
4. No othe Shares a r propos t the da al has e te of thi merged s Bidder for your ’s Statem Affinity ent. Educati on
5.	Affinity reduced Educatio . n’s shar e price may fall and liqu idity ma y be
6. No stam p duty w ill appl y.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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2 Frequently asked questions about the Cash Offer

Question	Answer
What is the Cash Offer?	G8 Education is making an on-market, unconditional cash offer to acquire your
	Affinity Education Shares at $0.80 cash per Affinity Education Share (Cash Offer).
	The Offer Price of $0.80 cash per Affinity Education Share is final and will not be
	increased.
	If you accept the Cash Offer, you will be paid on a T+3 Basis (being within 3 Trading
	Days after the trade is executed).
How long is the	The Cash Offer officially opens on 18 August 2015, however you can sell your Affinity
Cash Offer open for?	Education Shares on-market to G8 Educationimmediately.
	Canaccord Genuity will stand in the market on behalf of G8 Education and receive all
	Affinity Education Shares offered to it at the Offer Price from the Announcement
	Date until 28 September 2015, the date the Cash Offer is scheduled to close (unless
	extended or withdrawn in accordance with the Corporations Act).
What are the conditions	The Cash Offer is unconditional.
of the Cash Offer?
Do I have to pay any	You are responsible for paying your Broker’s fees. You should ask your Broker or
fees?	Controlling Participant (usually your Broker) whether it will charge any transaction
	fees or service charges in connection with acceptance of the Cash Offer.
What should I do?	To accept the Cash Offer, you should:
	 read this Bidder’s Statement in full;
	 read Affinity Education’s Target’s Statement in full (when issued);
	 consult your Broker, financial or other professional adviser if you are in any
	doubt as to what action to take or how to accept the Offer; and
	 accept the Cash Offer in the manner described in the section ‘How to Accept’ of
	this Bidder’s Statement.
	If you have any queries about the Cash Offer, you may also call
	Advanced Share Registry Services on 08 9389 8033 on Monday to Friday between
	8.30 am and 5.00 pm.
How do I accept the	To accept the Cash Offer, you should follow the instructions set out in the section
Cash Offer?	‘How to Accept’ of this Bidder’s Statement.
If I accept the Cash Offer,	The usual rules for settlement of transactions which occur on-market on ASX will
when will I receive	apply to G8 Education’s purchase of Affinity Education Shares on-market. This
consideration for my	means that, if you accept the Cash Offer, you will be paid on a T+3 Basis (being
Affinity Education	within 3 Trading Days after your acceptance).
Shares?

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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Question		Answe r
Can I rece ive G8		The Ca sh Offer is ac ash only offe r. If you wish to receive G8 Education Sh ares as
Educatio n Shares as		conside ration for yo ur Affinity Ed ucation Share s, accept the Scrip Offer.
considera tion?		Detaile d information about the Sc rip Offer is se t out in ther eplacementb idder’s
		statem ent (Scrip Off er) dated 3A ugust 2015.
What hap pens if I acce pt		If youa ccept the Cas h Offer, you will be paid th e Offer Price on a T+3 Bas is, unless
the Cash Offer?		G8 Edu cation becom es entitled to acquire you r Affinity Educ ation Shares (and does
		so).
What hap pens if I do n ot		If youd o not accept the Cash Offe r (or the Scri p Offer), you will remain an
accept th e Cash Offer?		Affinity Education Sh areholder.
What are the tax		A gene ral descriptio n of the taxat ion treatmen t for certainA ustralian res ident
implicatio ns of accept ing		Affinity Education Sh areholdersa ccepting theC ash Offer iss et out in sect ion 8.
the Cash Offer?		You sh ould not rely on that descr iption as advi ce for your ow n affairs.
		You sh ould consulty our taxation adviser for de tailed taxatio n advice befo re making
		a decis ion as to whe ther or not to accept theO ffer.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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3 Reasons to accept the Cash Offer

	1	The Cash Offer represents an attractive premium to the trading price of Affinity Education Shares.
		Accepting the Cash Offer enables you to realise cash
	2	consideration now for your Affinity Education Shares. You
		will be paid for your shares on a T+3 Basis.
	3	There are risks in remaining a minority shareholder of Affinity Education.
	4	No other proposal has emerged for your Affinity Education Shares at the date of this Bidder’s Statement.
		Affinity Education’s share price may fall and liquidity may
	5	be reduced.
	6	No stamp duty will apply.

10 G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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1
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The Cash Offer represents an attractive premium to the trading price of Affinity Education Shares.

The Cash Offer of $0. 8 0 per Affinity Education S h are represen t s an attracti v e premium t o the trading p rice of Affinity Education Sha r es prior to G 8 Education announcing it s intention to make an off- m arket bid o n 3 July 2015.

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$1.00
$0.90 8.1% premium
$0.80
Offer
$0.70 Price
48.1% premium 25% premium
$0.60
$0.50
$0.40
$0.30
$0.20
$0.10
$0.00
AFJ Close 10 day V W AP 3 1 July 2015
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The Offer Price is $0.80 per Affinity Education Share.

‘AFJ Close’ is the closing price of Affinity Education Shares on 2 July 2015, the trading day before G8 Education announced its intention to make the Scrip Offer.

’10 day VWAP’ is calculated as the VWAP of Affinity Education Shares on ASX on the 10 trading days up to and including 2 July 2015, being the 10 trading days before G8 Education announced its intention to make an offmarket Scrip Offer. ’31 July 2015’ is based on the closing price of Affinity Education Shares on 31 July 2015 of $0.74, being the trading day before this Bidder’s Statement was lodged with ASIC. Recent trading prices for shares in Affinity Education are set out in section 5.16.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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Accepting the Cash Offer enables you to realise cash consideration now for your Affinity Education Shares. You will be paid for your shares on a T+3 Basis.

Key attributes of the Cash Offer are:

an on-market bid, unconditional offer of $0.80 cash per Affinity Education Share ( Offer Price );
the Cash Offer will be made during the period commencing on 18 August 2015 and ending on 28 September 2015, but you can sell your Affinity Education Shares on-market immediately ; and
the Offer Price of $0.80 cash per Affinity Education Share is final and will not be increased.

By accepting the Cash Offer:

you will receive $0.80 cash for each Affinity Education Share purchased by Canaccord Genuity on behalf of G8 Education; and
you will be paid on a T+3 Basis (being within 3 Trading Days after the trade is executed).

The certainty of this cash consideration should be compared against the uncertainties of, and risks associated with, remaining an Affinity Education Shareholder.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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There are risks in remaining a minority shareholder in Affinity Education.

G8 Educ a tion already o wns 19.89% of Affinity Education Shar e s as at the d a te of this Bid d er’s Statem e nt and is Affinity Education’s la r gest shareholder. The Ca s h Offer is fre e from all def e ating conditi o ns and in particular, there is n o minimum a cceptance c o ndition.

Any incr e ase in G8 Ed u cation’s ownership intere s t in Affinity E ducation, pa r ticularly a m a terial increase, may cause G8 Educ a tion to obtai n effective co n trol of Affini t y Education. G8 Educatio n ’s intentions in these circ u mstances are set o u t in section 6 . In particul a r, G8 Educati o n will seek b oard represe n tation on th e Affinity Education board. While G 8 Education’s n ominees will, at all times, act in accord a nce with th e ir fiduciary d u ties, the pre s ence of a controlli n g sharehold e r with board representati o n gives risk t o a risk that Affinity Education is consid e red a less attractiv e investment. For example, the market m ay perceive that control t ransactions a re less likely, and if G8 Educatio n was succes s ful in applyin g to ASX to d e list Affinity Education, thi s may have a m aterial effe c t on the value of A ffinity Education Shares.

Therefor e , by not acc e pting the Cash Offer, ther e is a risk that Affinity Educ a tion Shareh o lders may b e come minority shareholders in an unliste d public com p any. If G8 Education decid e s not to seek a delisting of Affinity Education, or its a p plication to A SX in unsuc c essful it is likely that trading in A f finity Educat i on Shares wi l l be even les s liquid than i t has been hi s torically.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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No other proposal has emerged for your Affinity Education Shares at the date of this Bidder’s Statement.

G8 Education’s current 19.89% shareholding in Affinity Education might make a competing proposal for Affinity Education less likely.

G8 Education currently owns 19.89% of Affinity Education Shares as at the date of this Bidder’s Statement and consequently is able to prevent any other bidder for Affinity Education from reaching the compulsory acquisition threshold under a takeover bid. In addition, G8 Education’s shareholding would also make it difficult for another party to acquire control through a scheme of arrangement without G8 Education’s support, although this is theoretically possible.

As a result of these factors, it is less likely that another proposal will emerge for your Affinity Education Shares.

14 G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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Affinity Education’s share price may fall and liquidity may be reduced.

If the Cash Offer does not proceed, Affinity Education’s share price may fall and liquidity may be reduced. As at the date of this B idder’s State m ent, no oth e r party has announced an offer for you r Affinity Education Sha r es.

Since G8 Education announced its Scrip Offer for Affinity Educ a tion Shares o n 3 July 201 5 , the price of Affinity Educatio n Shares has increased by 3 7%[2] . When t he Cash Offer is no longer open for acc e ptance, the A ffinity Educatio n share price may fall back to levels prior to the announcement of t he Scrip Off e r and liquidit y may be reduced. If the Cash O ffer does succeed, but G8 Education does not achiev e sufficient a c ceptances to proceed to compuls o rily acquire a ll Affinity Ed u cation Share s that it does not own, this may, for the r easons set out above, cause a f a ll in the Affi n ity Educatio n Share price a nd a reducti o n in liquidity .

2 Based o n the closing p r ice of Affinity E d ucation Shares on 31 July 2015 , the trading da y before this Bid d er’s Statement was lodged wit h ASIC.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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[No stamp duty will apply. ]

Affinity Education shareholders will not have to pay stamp duty on the transfer of their Affinity Education Shares under the Cash Offer.

However, you may need to pay brokerage (and GST) to accept the Cash Offer. You are responsible for paying your Broker’s fees. You should ask your Broker or Controlling Participant (usually your Broker) whether it will charge any transaction fees or service charges in connection with acceptance of the Cash Offer.

16 G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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4 Profile of G8 Education

4.1 OVERVIEW

G 8 Education was admitte d to the offici a l list of the A SX in 2007. I n March 2010 the compan y merged with P ayce Child C a re Pty Ltd to become G8 E ducation. As at 31 Decem b er 2014 G8 E ducation em p loyed 9,705 p eople acros s its operatio n s with its he a d office located in Queensland.

S ince 2010 G 8 Education h a s been highl y acquisitive w ith centre a d ditions each y ear. G8 Edu c ation applie s a disciplined a pproach to acquisitions w i th a focus in high demand areas. The a c quisition due diligence p rocess is ro b ust and disci p lined providing multiple a v enues for as s essment an d review.

4.2 BUSINESS OPERATIONS

G 8 Education is the largest for-profit pr o vider of high quality educ a tion and chil d care in Aust r alia with 457 o wned centr e s and a daily licence capa c ity of 33,402 children as at 30 June 201 5 . G8 Educati o n’s business m odel is to identify, acquire, integrate and manage c h ildcare centres and imple m ent best pr a ctice o perating efficiencies to i m prove organic performan c e. G8 Education acquired 2 03 new cen t res with 1 3,697 licens e d places in 2 0 14 with a fo c us on discipl i ned consolid a tion in high d emand area s .

G 8 Education also owns 18 childcare an d education c e ntres and o p erates 37 fra n chised child c are and e ducation ce n tres in Singa p ore, manag e d under the ‘ O ur Juniors’, B right Junior s ’ and ‘Cherie Hearts’ b rands. The m odel under w hich the Sin g apore franc h ise centres operate is a fe e for service a nd involves d ifferent services and level of service ac c ording to th e fees paid.

Growth in G8 Education’s Portfolio of Childcare Centres

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60 0
50 0
18
18
40 0
18
30 0
18 436 457
20 0
1 8 18 3 49
1 8 18 18 234
10 0 167 187
132 135 136
77 88
-
1H10A 2H10A 1H11A 2H11A 1H12A 2H12A 1H13A 2H13A 1 H 14A 2H14A 1H15A
Australi a n centres Singapore centre s
G8 Education - number of centres
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G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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Change in Portfolio
130
120
110
100
90
80
70
60 1 1 5
50
87
40
30 63
54
20 39
31
10 2 22 21
1 2 9
- - 1 -1 -6 -1 -1 -7
-10 1H10A 2H10A 1H11A 2H11A 1H12A 2H12 A 1H13A 2H13A 1H 1 4A 2H14A 1H15A
Additions Disposals
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4.3 LOCATIONS OF CHILDCARE AND EDUCATION CENTRES

Australia

T he majority o f G8 Educati o n’s centres a re located in metropolitan areas with o v er 70% of all centres l ocated withi n 40km of a CBD.

Australia centres

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457
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Queensland
Western Australia
NSW
South Australia
ACT
Victoria
Tasmania
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G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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Singapore

Singapore Centres

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4.4 G8 EDUCATION BRAND PORTFOLIO

G 8 Education operates a diversified bra n d strategy which allows G 8 Education t o access and b uild upon t he existing v a lue of the brands within t h e communities in which t h ey operate. T he strength o f these b rands is de m onstrated th r ough their c o nsistent per f ormance. Thi s combined w ith the high q uality s trength of t h e G8 Educati o n brand pro v ides comfort to parents that the servic e s provided m eets the n eeds of the local commu n ity.

G 8 Education maintains a c entralised curriculum whi c h includes the key concep t s to be addr e ssed and t aught within all centres. H owever, the curriculum is adaptable by the individu a l centres (an d brands) in o rder to address the socio - economic de m ographic profile of that centre brand a nd the corre s ponding s ervice level.

T he table bel o w illustrates the number o f centres pe r brand within the G8 Educ a tion portfoli o in both A ustralia and Singapore.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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Total number of centres by brand

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AUSTRALIA – 457 CENTRES
88 63 52 37
2930 22
16 176 10
13 9
7 6
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SINGAPORE – 18 CENTRES

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Note: Nu m ber of centres in d icated by numb e r
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20 G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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4.5 OCCUPANCY RATES

G 8 Education ’ s continued improvement s in occupancy since 2010 a re an impor t ant indicatio n of family s atisfaction.

G 8 Education ’ s business is seasonal wit h occupancy i n creasing thr o ughout the y ear. The chart below i llustrates av e rage occupa n cy for the ye a r.

Childcare and Education Centre Occupancy

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90% 84% 84%
80%
77%
80% 75%
70%
60%
50%
40%
30%
20%
10%
0%
F Y 10 FY11 FY12 FY13 FY14
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4.6 LEASE ARRANGEMENTS

G 8 Education has made th e strategic de c ision to leas e its childcare centres. This maintains balance sheet a nd operatio n al flexibility a llowing G8 E d ucation to o p erate a capi t al light mod e l with strong cash g eneration a n d low capital expenditure requirement s . G8 Educati o n does not e n gage in the d evelopment o f childcare c e ntres and is not exposed t o developm e nt risk.

G 8 Education has a diversi f ied and stabl e lease portf o lio with aver a ge lease ten u re of 19 yea r s. The m ajority of t h e portfolio is held with individual landlords on stand a rd contract t e rms.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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4.7 STRATEGY

G 8 Education ’ s key strateg i c objective is to be a leadi n g provider o f high quality , developmental and e ducation childcare servic e s. It achieve s this through building a p o rtfolio of out s tanding earl y childhood e ducation br a nds, focusin g on the impo r tance of earl y childhood education and by making g o od centres g reat centres by delivering outstanding e arly childho o d education management . G 8 Education focuses on f o ur key driver s that underpin its corporate strategy:

Four Key Pillars

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Quality Care and Education

G 8 Education believes that continually i n vesting in its facilities pro v ides the tool s for its educ a tors to c ontinue to d e liver exceptional care an d education f o r the thousa n ds of childre n that attend G8 E ducation’s c h ildcare and e ducation ce n tres.

W ithin Austr a lia, G8 Educa t ion continu e s to be asses s ed under the National Qu a lity Framew o rk. I ntroduced in January 201 2 , the frame w ork replaced existing state-based stand a rds, licensin g and r egulation. As an agreement between t h e Common w ealth, State a nd Territory G overnments of Australia, i t establishes a standardis e d national q u ality assessment and regulation frame w ork for early childhood e ducation an d care. Many of G8 Education’s childcare and education centres h a ve been ass e ssed across s even quality areas. All ce n tres owned b y G8 Education which have been asses s ed have received results w hich mean that no signifi c ant improve m ent is requi r ed.

O ne of the m o st demanding componen t s of the fram e work has be e n the highe r staff-to-child ratio. The f irst tranche o f these chan g es occurred i n 2013 with a second tran c he being int r oduced on 1 January 2 016. G8 Ed u cation has estimated that overall costs w ill rise to $2.20 per child p er enrolled d ay from $ 2.00 with th e actual quantum depend e nt upon occupancy levels a cross affect e d individual r ooms/centr e s and differe n ces by State from 1 January 2016.

22 G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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NQF high level assessment framework summary

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Employees

G 8 Education is committe d to maintaini n g a positive w orkplace culture and is f o cused on becoming an e mployer of c hoice throug h offering a n u mber of wo r kplace benefits for over 9, 7 00 employe e s.

G 8 Education ’ s management team rem a ins disciplined and focuse d on providin g support for i ts network o f front line childcare edu c ators. Area m anagers and corporate support teams a re charged w ith the day- t o-day role o f supporting i t s educators i n the field to e nsure they are providing t he highest le v el of care a nd educatio n for the chil d ren attendin g its childcare and educati o n centres.

W ith a continued focus on providing th e highest level of employee workplace s a tisfaction an d e ngagement, staff turnover has decline d over the las t five years.

Community

G 8 Education now operates under 22 b r ands in Austr a lia and Singapore. No tw o centres are the same an d a re a collabo r ation of children, parents a nd educator s who attend the centre.

A ll centres continue to be a n integral part of their local communit y offering sup p ort to the fa m ilies, c harities and community e v ents.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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4.8 ACQUISITIONS

History

G8 Education has established a successful track record of acquiring and integrating centres. Its strategy is to acquire profitable centres in premium locations and integrate them into the corporate model. G8 Education focuses on a number of key operational metrics to drive performance. Efficiencies include achieving cost synergies in back-office management and leveraging the education curriculum.

Acquisition Criteria

G8 Education has a comprehensive methodology to identify childcare centres which may be suitable for its portfolio. G8 Education applies strict selection criteria and the current portfolio has been structured in geographical clusters that enable cost efficient regional management practices. G8 Education assesses each centre based on the sustainability of the EBIT which is a function of the location, daily fees, occupancy, centre physical structure and lease tenure.

G8 Education focuses on identifying childcare centre brands within socio-economic areas which have the potential to increase placements and which are able to be acquired on terms based on a multiple of centre EBIT as determined by G8 Education.

Management is attracted to centres with the following characteristics:

A catchment area supported by a large population with limited external competition; and
close to existing G8 Education centres to leverage operational efficiencies from local managers and pricing structures
EBIT sustainability driven by licensed places and historical occupancy, reasonable lease terms and growing fees.

24 G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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4.9 DIRECTORS AND SENIOR MANAGEMENT

T he Directors and Senior M anagement o f G8 Educati o n are set out below:

Jennifer Hutson B.Com, LLB, FAIM – Chairperson

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Jenny H u tson is an inv e stment ban k er and fund m anager and h as been the Chairper s on of G8 Ed u cation for ov e r five years. S he is an exp e rienced corporat e adviser and company dir e ctor. She ha s over 20 yea r s experien c e in advising listed compa n ies on capit a l raisings, m e rgers and acquisiti o ns, finance and corporate governance i s sues. She w a s previously chairper s on of S8, Harvey World Tr a vel and Trav e lscene Amer i can Express and a di re ctor of the R oyal Children’s Hospital Fo u ndation an d the centena ry committee f or Surf Life S a ving Austral i a.

Christopher Scott B.Econ (Hons) – Managing Director

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Chris Scott has over 2 5 years experi e nce in senio r management positions includin g seven years i n the childca r e and educa t ion sector. He graduated with firs t class honors in Economics. He was aw a rded the DM Myers Universi ty Medal. He h as spent ov e r 30 years in b usiness in Si n gapore where h e was involve d in a number of successful businesses. C hris was also the f ounder and m anaging dir e ctor of ASX li s ted S8 which was an integrat e d travel com p any that ma d e 36 acquisi t ions over fiv e years and reached a market cap i talisation of $ 700 million. H is operation a l analytical and stra t egic skills ar e critical to th e operation o f G8 Educatio n .

Brian Bailison B.Com., B.Acc (Cum Laude), ACA – Non-Executive Director

Brian Ba i lison has ove r 20 years’ ex p erience in fi n ance, corpor a te finance and ope r ations from s e nior roles in listed and un l isted busines s es in South Africa and Australia, i n cluding seni o r positions a t Rand Merch a nt Bank Limited ( S outh Africa’ s largest bank-assurance b u siness), the I v any Investm e nt Group (di v ersified inves t ment Group) and Payce C o nsolidated Limited w hich operated 59 childcar e centres prio r to them bei n g acquired by G8 Ed u cation.

Susan Forrester BA, LLB (Hons), EMBA, FAICD – Non-Executive Director

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Susan Fo r rester is an e xperienced c o mpany direc t or with a div e rse portfolio career. She has a significa n t blend of co m mercial, fin a ncial and legal ma n agement ex p erience gain e d across pu b lic and privat e organisa t ions. She is c u rrently a dir e ctor of Uniti n gCare Qld, Healthdirect Australi a Limited and i s the chairpe r son of Onco re Group Holdings, Propell National Valuers and N ational Vete r inary Care L t d. She also l e ads the strategy p ractice of B o ard Matters P ty Ltd, wher e she provide s expert advice t o listed and u n listed boards on board go v ernance, exe c utive and strategy i ssues.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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Matthew Reynolds BSc (Hons), LLB (Hons), MQLS - Non-Executive Director

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Matthew Reynolds is currently a partner at HWL Ebsworth Lawyers and has experience in capital markets, ASX listings, private equity and mergers and acquisitions. He specialises in providing tailored legal and strategic advice in a highly regulated and technical market and has advised on a large number of complex capital market and merger and acquisition projects. His key clients are primarily in the energy and resources, technology and infrastructure sectors throughout Australia and Asia. Matthew was previously a Director of G8 Education Limited from 2011 to 2013. He holds a Bachelor of Political Science and Economics (Honours) and a Bachelor of Laws (Honours) and is a member of the Company Law Committee of the Queensland Law Society.

Jason Roberts BArt, CFA - Chief Executive Officer

Jason Roberts is Chief Executive Officer of G8 Education. Jason has significant business, financial and capital markets experience as well as valuable international experience having worked in Hong Kong, London and Singapore. He was CEO of G8 Education’s Singapore business prior to his appointment as CEO in Australia. He is a CFA Charter holder and has a Bachelor of Arts (Honors).

Chris Sacre BBus, CA, SA Fin, GDipApp Fin (FINSIA) - Chief Financial Officer/Company Secretary

Chris Sacre has been involved with G8 Education since its inception as Early Learning Services Limited 8 years ago. Chris was appointed as the G8 Education’s Chief Financial Officer in May 2008. He is responsible for financial management including reporting, forecasting (short term and long term growth) and centre acquisitions. Being Chartered Accountant qualified, Chris provides invaluable experience and skills from a business and financial perspective.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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4.10 FINANCIAL PROFILE OF G8 EDUCATION

G 8 Education released its full consolidated financial accounts for t h e financial p e riod ending 3 1 D ecember 2014 on 16 Feb r uary 2015. A n electronic c opy of this r e port can be o btained fro m G8 E ducation’s w ebsite http:/ / wwwg8educ a tion.edu.au or from ASX.

4.11 G8 EDUCATION DIVIDEND HISTORY

G 8 Education has declared and paid qu a rterly divide n ds since 201 0 . G8 Educati o n currently p ays 6 cents p er share as a quarterly fully franked di v idend. G8 E d ucation’s div i dend history is reflected graphically b elow:

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G8 Education Quarterly Dividends - 2010 to 2015
7 25
6
20
5
15
4
3
10
2
5
1
0 0
Quant u m $m cents per s h are
Cents Per Share - Quarterly
Total Cumulative Dividend A$ million
Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15
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G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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4.12 G8 EDUCATION DEBT PROFILE

G8 Education varied its existing finance arrangement with Bankwest on 31 July 2015. G8 Education now has $50 million undrawn and available for the purpose of refinancing Affinity Education’s existing debt arrangements with the Commonwealth Bank of Australia.

G8 Education has raised debt through the issue of unsecured notes. The key commercial terms are summarised as follows:

DEBT3	MATURITY DATE	COUPON
$70 million	7 August 2019	7.65% pa (fixed)
$50 million	3 March 2018	BBSW + 3.90 % pa (variable)
SGD $175 million	19 May 2017	4.75% pa (fixed)
SGD $85 million	19 May 2017	4.75% pa (fixed)
SGD $155 million	2 August 2016	3.5% pa (fixed)

Proceeds from the placement of SGD$155 million of unlisted unsecured notes issued on 31 July 2015 with a maturity date of 2 August 2016 will be used to fund the Cash Offer. Details of the unsecured notes issued are set out in G8 Education’s ASX Announcement on 3 August 2015.

G8 Education has issued unsecured notes in both Australia and in Singapore. The Board is of the view that at the relevant maturity dates the unsecured notes issued prior to 31 July 2015 will be refinanced in the same currency as they have been issued, meaning the Australian issued unsecured notes will be refinanced in Australian dollars and the Singapore issued unsecured notes will be refinanced in Singapore dollars. The Board has consequentially determined not to hedge G8 Education’s currency position as any translation adjustment for accounting purposes is a non cash item, and accordingly does not impact G8 Education’s operating performance.

The funds from the issue of SGD$155 million on 31 July 2105 have been converted into Australian dollars. G8 Education intends to hedge the funds raised in this tranche for an initial period of 4 months.

4.13 G8 EDUCATION’S SUBSTANTIAL HOLDERS

Based on material lodged with ASX as at the day before this Bidder’s Statement, each of the following persons has identified itself as having a substantial holding in G8 Education:

G8 EDUCATION SHAREHOLDER	NUMBER	PERCENTAGE
UBS Group AG	31,891,193	8.67%
Greencape Capital Pty Ltd	23,107,441	6.28%
National Australia Bank Limited	22,980,087	6.25%
Challenger Limited	22,174,168	6.03%

3 The relevant terms of issue of the unsecured note are set out in the issuance documents released to the market on 3 March 2014, 5 May 2014 and 7 August 2014.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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4.14 PUBLICLY AVAILABLE INFORMATION

G 8 Education is a compan y listed on AS X (ASX:GEM) a nd is subject to the contin u ous and per i odic d isclosure re q uirements o f the Listing R u les and the C orporations A ct. A substa n tial amount of i nformation o n G8 Educati o n is publicly a vailable and may be acce s sed by refer r ing to G8 Ed u cation on w ww.asx.co m .au.

4.15 FURTHER INFORMATION

F urther infor m ation about G8 Educatio n can be foun d on G8 Educ a tion’s websi t e: w ww.g8educ a tion.edu.au.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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5 Profile of Affinity Education

5.1 DISCLAIMER

The following information on Affinity Education has been prepared by G8 Education using publicly available information, and has not been independently verified. Accordingly, to the extent permitted by law G8 Education does not make any representation or warranty, express or implied, as to the accuracy or completeness of this information.

The information on Affinity Education in this Bidder’s Statement should not be considered comprehensive.

In addition, the Corporations Act requires Affinity Education to provide a Target’s Statement to Affinity Education Shareholders in response to this Bidder’s Statement, setting out certain material information concerning Affinity Education.

5.2 OVERVIEW

Affinity Education Group Limited (ASX: AFJ) listed on the ASX on 9 December 2013. Incorporated in May 2013, Affinity Education owns and operates 161 education and childcare centres centres across Queensland, New South Wales, Victoria, Western Australia and the Northern Territory.

5.3 BUSINESS OPERATIONS

Affinity Education is a for profit provider of education and childcare in Australia with 161 owned and operated centres and a daily licence capacity of approximately 12,000 children.

Affinity Education operates a tiered management structure.

At the corporate level, the business is responsible for providing centralised management of shared services, as well as operational and executive support. Responsibility for the day to day running of individual centres is delegated to each centre director and support staff, who are overseen at a regional level by area managers reporting to Affinity Education management.[4]

4 Affinity Education, Prospectus, 12 November 2013, page 10

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5.4 LOCATIONS OF CHILDCARE AND EDUCATION CENTRES

A ffinity Educ a tion has a ge o graphically d iversified po r tfolio of 161 owned and o p erated cent r es located a cross Australia, with a balance betwee n metropolitan and non-m e tropolitan locations as de p icted b elow:[5]

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C entre locati o ns have a hi g her weightin g towards ar e as with hous e hold income s which are l e ss than $ 130,000 per annum. A ffinity Educ a tion has a cl u ster strategy and is targeting a reweigh t ing to Sydne y and Melbourne.[6]

5 Affinity E d ucation, Market Update Present a tion, ASX, 7 July 2015, page 2

6 Affinity E d ucation, 2014 R e sults Presentati o n, ASX, 27 Febr u ary 2015, page 1 4

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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5.5 AFFINITY EDUCATION BRAND PORTFOLIO

Affinity Education operates a diversified brand strategy to leverage existing community value and mitigate risk.

The table below illustrates the centre brands in the Affinity Education Portfolio as at 27 February 2015.[7]

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5.6 OCCUPANCY RATES

Affinity Education’s occupancy is currently 77%, with weekly growth forecast between 0.4% and 0.6%.[8]

Affinity Education has forecast that occupancy is expected to peak in the mid to high eighties around November and December 2015.

By comparison, Affinity Education occupancy for 2014 was 80%.[9]

Affinity Education’s stated occupancy plan is to:[10]

Focus on attracting new families to Affinity Education centres:
Bespoke marketing campaigns tailored to the specific region, including community involvement;
Investment in staff to enhance educational programs and attract improved local support
Focus on upselling to existing Affinity Education existing families:
Creating awareness of the development and socialisation benefits of children attending our programs;
Informing families of existing government subsidies and assisting them to maximise their usage.

7 Affinity Education 2014 Results Presentation, ASX, 27 February 2015, page 15

8 Affinity Education, Investor Update, ASX, 7 July 2015

9 Affinity Education, 2014 Results Presentation, ASX, 27 February 2015, page 16

10 Affinity Education, Investor Update, ASX, 7 July 2015

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5.7 STRATEGY

A ffinity Educ a tion’s busin e ss strategy is to aim to achieve effi c iencies and economies o f scale in it s b usiness through the integration of bot h individual a n d multiple c e ntres. A ffinity Educ a tion’s strate g y is to grow i t s business through:

Organic growth incl u ding impro v ements in revenue le v els and ef fi ciencies gained throug h corporat i sing a large portfolio of ce n tres; and
A consid e red and disciplined acquisition strategy.[11]

5.8 DIRECTORS AND SENIOR MANAGEMENT

Stuart James BA (Hons) – Chairman, Independent Non-Executive Director

S tuart James is an experie n ced executiv e across mult i ple sectors. S tuart’s past r o les have included M anaging Director of Aust r alian Financi a l Services fo r Colonial Group Ltd and Managing Dire c tor of C olonial Stat e Bank. Stuart also held an e xecutive rol e as Chief Exe c utive Office r of the Mayn e Group Ltd f rom January 2002 to Nov e mber 2005.

Justin Michael Laboo BSc, LLB, MBA – Chief Executive Officer and Managing Director

J ustin Laboo w as an execu t ive general m anager of FKP Limited, an Australian pr o perty and in v estment c ompany, be t ween November 2006 an d September 2 012. Justin also held the p o sition of Managing D irector of F o rest Place Gr o up, an ASX listed compan y operating i n the aged ca r e sector. Justin has p reviously held chairman and director r e sponsibilitie s on numerous private co m pany boards.

Stephanie Daveson BA, LLB (Hons) – independent Non-Executive Director

S tephanie Da v eson is a pa r tner with national law fir m Corrs Cham b ers Westgar t h and has ov e r two d ecades experience advisi n g companies , principally on mergers and acquisition s , equity capi t al markets a nd governa n ce. Stephani e is one of 10 partners who comprise Co r rs’ Executive Leadership Team and co- c hairs the fir m ’s China Country Group. Stephanie wa s named Best Lawyer Corp o rate/Govern a nce and B est Lawyer M ergers and A cquisitions i n the Best La w yers Peer Re v iew.

Jeffrey Forbes BComm, GAICD – Independent Non-Executive Director

J effrey Forbe s has 35 year s experience i n senior fina n cial and man a gerial roles w ith extensiv e mergers a nd acquisiti o ns experienc e . Jeff was Chief Financial O fficer, Company Secretar y and Executi v e Director of F inance of Cardno Ltd fro m 2006 to Ma r ch 2013. Dur i ng this time, Jeff oversaw m ore than 3 0 acquisitions a nd the grow t h of Cardno L td from a co m pany with r e venues of $ 1 80 million to $1.2 billion. Jeff has a s ignificant ba c kground in project development in Australasia and t h e Asia-Pacifi c region. Jeff was an e xecutive dir e ctor and chi e f financial of f icer of Highlands Pacific a n d has held s e nior financial roles with a n umber of m a jor compani e s operating i n the resourc e s sector.

11 Affinity Education, Prosp e ctus, ASX, 12 No v ember 2013

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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Gabriel Giufre – Chief Operating Officer and Executive Director

Gabriel Giufre as Managing Director of Eternal Echoes (non-listed childcare business), has 14 years experience in the childcare sector having been responsible for the operation of that business since 2005. Gabriel has extensive knowledge of all operational and performance requirements in delivering childcare services.

Paul Cochrane – Chief Financial Officer and Company Secretary

Paul Cochrane is the Chief Financial Officer and Company Secretary of Affinity Education. Paul has over 25 years of financial and commercial experience in listed companies, most recently as chief financial officer and company secretary at Devine Limited, a position he held since 2009. Prior to this, he worked at FKP Limited and spent seven years with Lend Lease in the role of Project Director and Commercial Operations Manager. He commenced his career with 9 years at PriceWaterhousecoopers in Brisbane, Hong Kong and London. Paul is a member of the Institute of Chartered Accountants and Institute of Company Directors.

5.9 FINANCIAL PROFILE OF AFFINITY EDUCATION

Affinity Education released its full consolidated financial accounts for the financial period ending 31 December 2014 on 27 February 2015. An electronic copy of this report can be obtained from Affinity Education’s website http://www.affinityeducation.com.au/ or from ASX.

5.10 AFFINITY EDUCATION CAPITAL STRUCTURE

G8 Education’s Offer is to acquire all of the issued Affinity Education Shares and any Affinity Education Shares issued during the Offer Period as a result of the exercise of Affinity Education Rights.
At the date of this Bidder’s Statement, there are:
231,451,639 Affinity Education Shares on issue; and
1,327,141 Affinity Education Rights.

5.11 AFFINITY EDUCATION RIGHTS

The Affinity Education Rights were granted to certain executive directors and senior managers on 12 May 2015 in accordance with Affinity Education’s long term equity incentive plan ( Equity Incentive Plan ).

The terms of the Equity Incentive Plan were summarised in Affinity Education’s 2014 notice of annual general meeting and were approved by Affinity Education Shareholders for the purposes Listing Rule 7.2 Exception 9 at the meeting on 17 April 2015.

In accordance with the Equity Incentive Plan each Affinity Education Right is subject to certain vesting conditions, performance conditions and may be subject to disposal restrictions. On satisfaction of the performance and vesting conditions each Affinity Education Right will convert into 1 Affinity Education Share.

As advised by Affinity Education on 12 May 2015 for the Affinity Education Rights issued in 2015, earnings per share growth and relative total shareholder return were selected as the appropriate benchmarks. The performance measurement period ends 31 December 2017.

The benchmarks achieved will be determined by the Affinity Education Board in early 2018 following the release of Affinity Education’s financial results for the year ended 31 December 2017.

34 G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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S ubject to th e achievemen t of the relev a nt benchma r ks the Affinit y Education r i ghts will eith e r lapse or v est (in whic h case the hol d er will be tr a nsferred or i s sued 1 Affini t y Education S hare for eac h vested A ffinity Right for no additi o nal consider a tion).

I n accordanc e with the ter m s of the Equity Incentive P lan, in the e v ent that G8 E ducation obtains a R elevant Inte r est in more than 50% of t h e Affinity Ed u cation Shares each Affinit y Education R ight will a utomaticall y convert into 1 Affinity Ed u cation Share and no dispo s al restrictio n s will apply t o the shares. T he Affinity E d ucation Boa r d also has th e discretion t o declare tha t the Affinity E ducation Rights are free o f vesting co n ditions and disposal restri c tions in cert a in other circ u mstances.

5.12 AFFINITY EDUCATION DIVIDEND HISTORY

N o dividends were declare d or paid by A ffinity Educa t ion during the financial year ending 31 December 2 014. Affinit y Education a n nounced on 17 April 2015 an intention to declare a m aiden divid e nd for the f inancial year ending 31 D e cember 201 5 .

5.13 DEBT PROFILE

A ffinity Educ a tion has a $117.5 million s e cured debt f acility in plac e with the Co m monwealth Bank of A ustralia Limited.[12] As at 3 0 June 2015 A ffinity Education had dra w n debt of $3 4 million[13] .

5.14 AFFINITY EDUCATION’S SUBSTANTIAL HOLDERS

B ased on ma t erial lodged w ith ASX as a t the day before this Bidde r ’s Statement , each of the f ollowing p ersons has i d entified itself as having a s ubstantial h o lding in Affinity Education :

Affinity Edu cation Shareh older Num ber	Perce ntage
G8 Educatio n 46,0 51,790	19.89 %
Argo Invest ments Limite d 15,5 12,010	6.70%
Affinity Edu cation 12,4 43,305	5.38%

5.15 RESTRICTION AGREEMENTS

A t the date o f this Bidder’s Statement A f finity Education is party t o voluntary es c row arrangements with c ertain Affini t y Education S hareholders w hich arrang e ments relate to 12,443,3 0 5 Affinity Ed u cation S hares. The h older is free t o accept the Cash Offer when Affinity Education Sha r eholders hol d ing no less t han 50% of the bid class s h ares that ar e not subject t o escrow ha v e accepted t h e Cash Offer .

12 Affinit y Education Mar k et Presentation 7 July 2015 13 Affinit y Education impr o ves pricing, increases the size a n d extends matu r ity of existing debt of $34 million 15 June 2015

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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5.16 RECENT TRADING IN AFFINITY EDUCATION SHARES

Affinity Education Shares are quoted on the ASX. Set out below is a table showing recent trading prices of Affinity Education Shares on the ASX:

Comparative trading period of Affinity Education Shares	Price
Highest trading price in the 4 month period to the date of this Bidder’s	$1.15
Statement was lodged with ASIC
Lowest trading price in the 4 month period to the date of this Bidder’s	$0.49
Statement was lodged with ASIC
Closing trading price on the last trading day prior to G8 Education’s	$0.54
announcement of its intention make the Offer, being 2 July 2015
Closing price of Affinity Education Shares on 29 July 2015 being the day	$0.74
before the date this Bidder’s Statement was lodged with ASIC, being
31 July 2015

5.17 PUBLICLY AVAILABLE INFORMATION

Affinity Education is a company listed on ASX and is subject to the periodic and continuous disclosure requirements of the Listing Rules and the Corporations Act. A substantial amount of information on Affinity Education is publicly available and may be accessed by referring to Affinity Education on www.asx.com.au.

5.18 FURTHER INFORMATION

Further information about Affinity Education can be found on Affinity Education’s website: http://www.affinityeducation.com.au/.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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6 G8 Education’s intentions

6.1 LIMITATIONS AND FURTHER REVIEW

This section sets out G8 Education’ s current inte n tions for:
the c ontinuation o f Affinity Ed u cation’s busi n ess;
any m ajor changes to be made to Affinity Education’s business, includi n g the redepl o yment of the f ixed assets o f Affinity Edu c ation; and
o the f uture emplo y ment of the p resent empl o yees of Affinity Education .
G8 Educ a tion’s curren t intentions f o r Affinity Ed u cation have b een formed f ollowing a review of informat i on about Affinity Education that was p u blicly availab l e at the date of this Bidder’s S tatement. G8 Education h as not had t h e opportunit y to conduct d ue diligence on Affinity Education. Th a t review of p ublic inform a tion by G8 E d ucation did n ot provide G 8 Education with suff i cient inform a tion necessa r y to finally d e termine its i n tentions for A ffinity Educ a tion. As such, sta t ements set o ut in this sec t ion are state m ents of curr e nt intention only which m ay change as new info r mation becomes availabl e or circumstances change.
Followin g the close of the Cash Off e r, it is G8 Ed u cation’s inte n tion to unde r take a furth e r detailed review o f the operations, assets an d employees o f Affinity Ed u cation. The o bjective of t h e detailed review will be to:
eval u ate the perf o rmance, pro s pects and st r ategic releva n ce of the Af f inity Educati o n business and c hildcare cen t res to G8 Ed u cation;
dev e lop a strateg y to effectivel y integrate A f finity Education’s childcar e and educati o n centres with G8 Educatio n ’s existing p o rtfolio of chil d care and ed u cation centr e s;
iden t ify opportun i ties to increase occupanc y at Affinity E d ucation’s chi l dcare centre s and imp r ove wage efficiency; and
asse s s opportunit i es to reduce costs associa t ed with Affinity Education ’ s current op e rations by mer g ing the head office operations of G8 Education and A ffinity Educa t ion.

T his review m ay result in G8 Education p roposing ch a nges to som e of Affinity E d ucation’s exi s ting o perations.

O nly upon co m pletion of t h e detailed r e view, and in light of all ma t erial facts a n d circumstances will G 8 Education finally deter m ine its inten t ions for Affi n ity Education and will take the action it considers d esirable to achieve optimum integrati o n and synerg i es.

6.2 INTENTIONS UPON ACQUISITION OF 90 PERCENT OR MORE OF AFFINITY EDUCATION SHARES

T his section s e ts out G8 Education’s cur r ent intentio n s if, by virtue of acceptanc e of the Cash Offer and t he Scrip Off e r, it obtains a Relevant Int e rest in 90 percent or mor e of the Affini t y Education S hares and is e ntitled to pr o ceed to compulsory acqu i sition of the o utstanding A ffinity Educa t ion Shares.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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Compulsory acquisition

If it becomes entitled to do so, G8 Education intends to give notices to compulsorily acquire any outstanding Affinity Education Shares under section 661B Corporations Act and elect to acquire Affinity Education Shares issued as a result of exercise of the Affinity Education Rights:

after the end of the Offer Period and before the compulsory acquisition notice; and
within six weeks after the compulsory acquisition notice is given, in each case subject to satisfaction of the relevant statutory conditions.

In certain circumstances, G8 Education may be required to buy out the holders of Affinity Education Rights. G8 Education will comply with the statutory obligation in that regard.

Amend Affinity Education constitution

G8 Education intends to amend the constitution of Affinity Education to reflect its status as a whollyowned subsidiary of G8 Education and will seek to convert Affinity Education from a public company to a proprietary company.

ASX listing

After conclusion of the compulsory acquisition process, G8 Education intends to procure that Affinity Education be removed from the official list of ASX.

Directors

G8 Education intends to replace all members of the Affinity Education Board and of the board of any company on which Affinity Education has nominee directors (including its Subsidiaries) with G8 Education nominee directors.

G8 Education’s present intention is to appoint Jennifer Hutson, Chris Scott, Brian Bailison, Susan Forrester and Matthew Reynolds to the Affinity Education Board. Profiles for each of the proposed directors are set out in section 4.9 .

Operations

G8 Education does not intend to make any material changes to Affinity Education’s business. G8 Education will look to:

leverage best practices between Affinity Education and G8 Education to enhance childcare centre occupancy;
apply G8 Education’s experience in operating a large number of high quality childcare centres to increase wage efficiency within the Affinity Education business;
use G8 Education’s acquisition experience to improve integration progressing plans internally within the Affinity Education group and of the Merged Group; and
continue to develop Affinity Education’s online early learning platform and curriculum tools.

Finally, G8 Education expects that it will be able to rationalise various administrative, management and corporate functions, the IT systems and certain duplicate services.

Employees

The acquisition of Affinity Education by G8 Education will provide Affinity Education employees an opportunity to be a part of a larger Merged Group, which has a strong commitment to developing its employees and employee engagement.

38 G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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W ith the ben e fit of its det a iled review, G 8 Education will consider t he best alloc a tion of Affinity Education e mployees to continuing a n d new roles. G8 Education expects that it should be able to retai n A ffinity Educ a tion’s childcare and educa t ion centre e m ployees.

G 8 Education also expects t hat there wi l l be overlap in administrative and corp o rate functions, including h ead office p o sitions at Af f inity Educati o n that will h a ve diminishe d responsibili t y. For exam p le, certain h ead office p o sitions associated with Af f inity Educati o n’s financial managemen t or its ASX lis t ing will likely b e no longer r equired if G 8 Education a c quires 100% of Affinity Ed u cation.

G 8 Education would aim t o identify suit a ble alternati v e roles for A f finity Educat i on employees in business a reas that ar e significantly adversely aff e cted by any i ntegration. W here this is n ot feasible or the e mployee do e s not wish t o accept an al t ernative role, those indivi d uals would r e ceive redun d ancy p ayments an d other benefits in accorda n ce with thei r legal and co n tractual enti t lements.

6.3 INTENTIONS UPON ACQUISITION OF BETWEEN 50 PERCENT AND 90 PERCENT OF AFFINITY EDUCATION SHARES

T his section s e ts out G8 Education’s cur r ent intentio n s if, by virtue of acceptanc e of the Cash Offer and t he Scrip Off e r, it was to g a in effective c o ntrol of Affi n ity Educatio n but was not entitled to p r oceed to c ompulsory acquisition of t he outstandi n g Affinity Education Shar e s.

Compulsory acquisition

I f G8 Educati o n does not b e come entitl e d to compulsorily acquire A ffinity Educ a tion Shares u nder s ection 661B Corporations Act, it may n e vertheless b e come entitl e d to exercise the general compulsory a cquisition p o wer under p a rt 6A.2 Corp o rations Act i n the future. G8 Educatio n intends to e x ercise that p ower if it be c omes entitl e d to do so. T h is could occ u r, for example, if G8 Educ a tion acquire d further A ffinity Educ a tion Shares i n reliance on t he 3% creep exception pr o vided in ite m 9 of section 611 C orporations Act.

ASX listing

G 8 Education intends to seek that Affini t y Education b e removed f r om the official list of ASX.

Directors

I f, following t h e close of the Offer, G8 E d ucation is th e majority sh a reholder in A ffinity Educa t ion, it will ( subject to fo r mal require m ents of the C orporations A ct and Affini t y Education’ s constitution) seek to p rocure the appointment o f a majority o f G8 Educati o n nominees t o the Affinit y Education B o ard so that t he proportion of G8 Educ a tion nomine e directors is b roadly in lin e with G8 Education’s voti n g power in A ffinity Educ a tion. This w o uld likely inv o lve the rem o val of some o f the existin g directors of A ffinity E ducation to e nsure that director fees o f the Affinity E ducation Bo a rd remain r e asonable having regard to t he financial c apacity of th e entity. G8 E ducation wo u ld determin e which direc t ors it would invite to r esign, based on the G8 Education nomi n ees to be appointed and h aving regard to maintaini n g an a ppropriate m ix of skills o n the Affinity E ducation Bo a rd. The iden t ity of such n o minee direc t ors has not y et been det e rmined, but n ominees wo u ld likely be d rawn from the existing G8 Education b o ard of d irectors par t icularly thos e identified in section 4.9. S uch nomine e s will be dire c ted to ensure that they c omply with t heir fiduciary duties and o b ligations as d irectors of A f finity Educat i on.

Intentions generally (including about matters at section 6.2 above)

I f, following t h e close of the Offer, Affin i ty Education becomes a c o ntrolled enti t y but not a w holly-owned s ubsidiary of G 8 Education , it is the pre s ent intention of G8 Education to procur e that the ne w Affinity E ducation Bo a rd impleme n ts the object i ves and goal s outlined in section 6.2 to t he extent p o ssible and a ppropriate.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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Limitations on intentions

To the extent that Affinity Education is not a wholly owned subsidiary of G8 Education and there are minority shareholders of Affinity Education, G8 Education intends to ensure that the G8 Education nominees appointed to the board of Affinity Education will act at all times in accordance with their fiduciary duties and that all requisite shareholder approvals and other legal requirements are complied with in pursuing any of the intentions outlined above.

The requirement to have regard to those fiduciary duties in the context of a partly owned company and the possible requirements of minority shareholder approval may prevent the particular objective being achieved.

Dividends

G8 Education will review the dividend policy of Affinity Education having regard to any capital funding and ongoing operational requirements of the Affinity Education on the one hand and the appropriateness of paying dividends to Affinity Education Shareholders on the other.

6.4 INTENTIONS UPON ACQUISITION OF LESS THAN 50 PERCENT OF AFFINITY EDUCATION SHARES

Directors

If following the close of the Cash Offer, G8 Education is the majority shareholder in Affinity Education, it will (subject to formal requirements of the Corporations Act and Affinity Education’s constitution) seek to procure the appointment of a majority of G8 Education nominees to the Affinity Education Board notwithstanding that the proportion of G8 Education nominees would exceed G8 Education’s voting power in Affinity Education. This would likely involve the removal of some of the existing directors of Affinity Education to ensure that director’s fees of the Affinity Education Board remain reasonable having regard to the financial capacity of the entity. G8 Education would determine which director it would invite to resign, based on the G8 Education nominees to be appointed and having regard to maintaining an appropriate mix of skills on the Affinity Education Board. The identity of such nominee directors has not yet been determined, but nominees would likely be drawn from the existing G8 Education board of directors particularly those identified in section 4.9. Such nominees will be directed to ensure that they comply with their fiduciary duties and obligations as directors of Affinity Education.

There is no guarantee that G8 Education will be granted or otherwise obtain the representation on the Affinity Education Board that it seeks.

Limitations on intentions

G8 Education will endeavour to implement its intentions as it has outlined in section 6.2 to the extent to which it is able to do so, subject to the limitations identified in section 6.3.

6.5 SPECIFIC INTENTIONS – AFFINITY EDUCATION RIGHTS

G8 Education is not offering to acquire any Affinity Education Rights. G8 Education encourages holders of Affinity Education Rights to exercise their Affinity Education Rights, to the extent they are entitled to do so, and accept the Cash Offer in respect of the Affinity Education Shares issued on exercise.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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6.6 INTENTIONS GENERALLY

E xcept for th e changes an d intentions s e t out in this s ection 6, G8 E ducation int e nds, based o n the i nformation p resently kno w n to it:

to continue the busin e ss of Affinity Education;
not to m a ke any majo r changes to the business o f Affinity Education or the deployment o f Affinity Educatio n assets; and
to continue the employment of the majority of Affinity Education employe e s.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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7 Funding

7.1 FORM OF CONSIDERATION

The consideration for the acquisition of Affinity Education Shares (excluding the Affinity Education Shares already owned by G8 Education at the date of this Bidder’s Statement) to which the Cash Offer relates (including Affinity Education Shares issued upon vesting of Affinity Education Rights) will be satisfied wholly in cash.

7.2 MAXIMUM CASH CONSIDERATION

The maximum amount of cash which would be payable by G8 Education, if the Cash Offer is accepted in respect of all the Affinity Education Shares (excluding the Affinity Education Shares already owned by G8 Education at the date of this Bidder’s Statement), will be $148,319,880.

An additional amount of $1,061,712.80 will be required in the event that all the Affinity Education Rights vest and the Affinity Education Shares issued on their exercise are accepted into the Cash Offer.

The total cash consideration payable by G8 Education as described above excludes any brokerage payable by G8 Education to Canaccord Genuity.

7.3 SOURCE OF FUNDS

G8 Education raised SGD$155 million by way of unlisted, unsecured notes under its existing Multicurrency Debt Issuance Programme on 31 July 2015.

The funds made available to G8 Education from the issue:

are immediately available in Australian dollars;
are not subject to any conditions; and
are sufficient to fund the maximum available amount of consideration payable under the Cash Offer and associated transaction costs.

7.4 DETAILS OF THE MULTICURRENCY DEBT ISSUANCE PROGRAMME

The Multicurrency Debt Issuance Programme was established on 2 May 2014. G8 Education has capacity to issue up to SGD$500 million in either unsecured notes or perpetual securities (or a combination of both) under the Programme.

The full terms of the Programme are set out in the information memorandum released by G8 Education to the ASX on 5 May 2014.

42 G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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7.5 KEY TERMS OF THE FIXED RATE NOTES – SGD$155 MILLION

Issuer G8 Educatio n Limited
Guarantors The subsidi the consoli all times. aries of G8 Ed dated total as ucation Limit sets of G8 Ed ed, represent ucation Limit ing no less th ed and its sub an 90% of sidiaries at
Sole Lead M Bookrunner anager and DBS BankL td.
Issue Size SGD$155m illion
Type Fixed Rate Notes
Form and De Coupon Issue Date nomination Bearer Form 3.5 % pera and 31 July actual/365 convention 31 July 201 , in denomin nnum, payab 2016 (eacha (fixed) day co . 5 ations of S$2 le in arrearso nInterest Pa unt basis and 50,000 n 30 Novemb yment Date), subject to th er 2015, 31M calculated on e followingb arch 2016 an usiness day
Maturity Da te Shall be the same datea s the third Int erest Paymen t Date
Purpose Redemption Change of Co Redemption of G8 Educat Redemption cessation or of trading in Negative Ple Other Coven upon ntrol at option ion upon suspension shares dge and ants The net pro acquisition Upon theo Programme Programme At any time EducationL togetherw rata_basis.A principal am SGD$1,000 Upon a ces described i accordance The termso other term ceeds are av s and for gene ccurrence of ), the Notes . on or after3 imited may, ith unpaid acc ny partial re ount of SGD ,000 thereaft sation or susp n the Program with the Pro f the Notes i s and conditio ailable for the ral corporate a Change ofC will be redeem 0 November upon giving th rued interest demption of $5,000,000 a er. ension of tra me), the Not gramme. nclude a nega ns in accorda purposes of purposes of ontrol Event ed at 101% 2015 and upt e required no , at par, in wh Notes shall be nd in integral ding in G8 Ed es will be red tive pledge,f nce with the financing pot the G8 Educa (as defined u in accordance o the Maturi tice, redeem ole or in par subject to a multiples of ucation Limit eemed at pa inancial cove Programme. ential tion group. nder the with the ty Date, G8 the Notes t on a_pro- minimum ed shares (as r in nants and
Unlisted The Notesw ill not be list ed.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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8 Taxation considerations

8.1 INTRODUCTION

The following is an outline of the principal Australian income tax consequences generally applicable to an Affinity Education Shareholder who disposes of Affinity Education Shares by accepting the Cash Offer. The comments set out below are also relevant to those Affinity Education Shareholders who do not accept the Cash Offer if G8 Education proceeds to compulsorily acquire their shares following G8 Education having a relevant interest in at least 90% of Affinity Education Shares (by number) on issue at any time during the Offer Period, and the Affinity Education Shareholder elects to take the Offer Price.

This outline reflects the current provisions of the Income Tax Assessment Act 1936 (Cth) and the Income Tax Assessment Act 1997 (Cth) ( Tax Acts ) and the regulations made under the Tax Acts, taking into account G8 Education’s understanding of the current administrative practices of the Australian Taxation Office. The outline does not otherwise take into account or anticipate changes in the law, whether by way of judicial decision or legislative action, nor does it take into account tax legislation of countries other than Australia.

The following outline is not exhaustive of all possible Australian income tax considerations that could apply to particular Affinity Education Shareholders. In particular, the summary is only relevant to those Affinity Education Shareholders who hold their Affinity Education Shares as capital assets for the purposes of investment and does not address all tax considerations applicable to Affinity Education Shareholders that may be subject to special tax rules, such as banks, insurance companies, tax exempt organisations, superannuation funds, dealers in securities or Affinity Education Shareholders who acquired their Affinity Education Shares as part of an employee share scheme operated by Affinity Education. For Affinity Education Shareholders who are non-residents of Australia for tax purposes, it is assumed that the Affinity Education Shares are not held and have never been held, as an asset of a permanent establishment of that Affinity Education Shareholder in Australia.

This outline does not constitute tax advice. It is recommended that each Affinity Education Shareholder consult their own tax adviser regarding the consequences of acquiring, holding or disposing of their Affinity Education Shares in light of current tax laws and their particular circumstances.

8.2 TAXATION ON THE DISPOSAL OF AFFINITY EDUCATION SHARES

If you accept the Cash Offer, you will be treated as having disposed of your Affinity Education Shares for income tax purposes.

8.3 AUSTRALIAN RESIDENT AFFINITY EDUCATION SHAREHOLDERS

You will realise a capital gain in connection with the disposal of an Affinity Education Share to the extent that the amount you receive (or that you are entitled to receive) for the disposal of that Affinity Education Share is more than the cost base of that Affinity Education Share. You should realise a capital loss to the extent that the amount you receive (or that you are entitled to receive) for the disposal of that Affinity Education Share is less than the reduced cost base of that Affinity Education Share. Capital losses can usually only be offset against capital gains you realise in the same income year or in later income years.

Broadly, the cost base of an Affinity Education Share is the total of the amount you paid for the Affinity Education Share and your acquisition and disposal costs in respect of that Affinity Education Share. However, there are circumstances where this may not be the case and we recommend that you speak to your tax adviser to confirm the cost base of your Affinity Education Shares. The reduced cost base of an Affinity Education Share is usually determined in a similar, but not identical, manner.

44 G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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A ny net capit a l gain in res p ect of an inc o me year wo u ld be include d in your ass e ssable income for that i ncome year. Broadly, your net capital g ain in respec t of an incom e year would b e calculated by a ggregating all of your cap i tal gains real i sed in respe c t of that inco m e year and r educing that amount by y our capital l o sses realised in that inco m e year and a n y net capital losses from p rior years th a t can be u tilised. That amount may be further r e duced by other concessio n s, particularl y under the d i scount c apital gains t ax rules.

A ffinity Educ a tion Shareholders who ar e individuals, t rusts or com p lying supera n nuation fun d s may be e ligible for di s count capital gains treat m ent in respec t of an Affinit y Education S h are if they have held that A ffinity Educ a tion Share for at least 12 m onths (excluding the day o f acquisition and the day o f disposal) a t the time t h ey are taken t o have disp o sed of their A ffinity Educa t ion Share. C o mpanies are not eligible f or discount c apital gains t r eatment.

T he above co m ments do n o t apply to y o u if you buy a nd sell share s in the ordin a ry course of business, or i f you acquired the shares f or resale at a profit. In th o se cases, an y gain will ge n erally be tax e d as ordinar y i ncome. You should seek y our own advice.

A ffinity Educ a tion Shareholders should s eek their ow n advice as to the tax cons e quences of d isposing of t heir Affinity E ducation Sh a res, in partic u lar as to the availability o f the discoun t capital gains tax c oncession.

8.4 NON-RESIDENT AFFINITY EDUCATION SHAREHOLDERS

I f you are not a resident of Australia for tax purposes , you will gen e rally not hav e to pay Australian tax on a ny capital g a in when you d ispose of yo u r Affinity Ed u cation Shares, unless bot h of the follo w ing r equirement s are satisfied:

you hold a “non-portf o lio interest” i n Affinity Ed u cation; and
the Affin i ty Education Shares pass t h e “principal a sset test” at the time of t h e disposal.

I f either element is absent, any capital g a in made on t he disposal o f the Affinity Education Shares should n ot be subject to income t a x in Australi a .

Y ou will hold a “non-portf o lio interest” in Affinity Ed u cation if you (together wit h your associ a tes) own, or o wned, throughout a 12 month period d uring the tw o years prece d ing the sale o f your Affini t y Education S hares, 10% o r more of (broadly) all of t h e shares in A ffinity Educa t ion.

B roadly, the A ffinity Educa t ion Shares w ould pass th e “principal as s et test” if th e market value of Affinity E ducation’s direct and indi r ect interests in Australian land (includi n g leases and mining rights) is more t han the mar k et value of its other asset s at the time y ou accept th e Cash Offer.

D etailed calc u lations are n e cessary to d e termine the results of the “principal as s et test”. I f you hold a “ non-portfoli o ” interest in A ffinity Educ a tion, you should contact t h e Affinity Ed u cation to d etermine if t he Affinity E d ucation Shar e s would pas s the “princip a l asset test”.

I f you buy an d sell shares i n the ordinar y course of b u siness, or ac q uired the sh a res for resal e at a profit, a ny gain coul d be taxed in A ustralia as ordinary inco m e and not as a capital gai n (subject to any relief u nder a double tax treaty that Australia has concluded with your c o untry of resi d ence). Agai n , you should s eek your ow n advice.

Y ou should s e ek advice from your taxati o n adviser as to the taxati o n implicatio n s of acceptin g the Offer in y our country of residence.

8.5 STAMP DUTY

A ny stamp d u ty payable o n the transfer of Affinity Education Shar e s to G8 Educ a tion pursua n t to the Offe r w ill be paid b y G8 Educati o n.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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9 Additional information

9.1 ASIC RELIEF

ASIC has published various class order instruments providing for modifications and exemptions that apply generally to all persons, including G8 Education, about the operation of chapter 6 Corporations Act. G8 Education may rely on this class order relief.

G8 Education has relied on the modification to section 636(3) Corporations Act in paragraph 11 of ASIC Class Order 13/521 ‘Takeover Bids’ to include references to certain statements in documents lodged with ASIC and ASX without obtaining the consent of the persons to whom those statements are attributed.

As required by Class Order 13/521, G8 Education will make available a copy of the documents containing these statements (or relevant extracts from these documents), free of charge to Affinity Education Shareholders who request them before the end of the Offer Period. To obtain a copy of these documents (or the relevant extracts) Affinity Education Shareholders should contact Advanced Share Registry Services on 08 9389 8033 on Monday to Friday between 8.30 am and 5.00 pm.

9.2 SCRIP OFFER

On 2 July 2015, G8 Education announced its intention to make an off-market takeover bid for all of the Affinity Education Shares (other than those it holds), offering one fully paid ordinary share in G8 Education for every 4.61 Affinity Education Share.

G8 Education lodged a replacement Bidder’s Statement for the Scrip Offer with ASIC on 3 August 2015. The replacement Bidder’s Statement sought to reflect G8 Education’s announcement of the same day waiving the defeating conditions, increasing the consideration to 1 G8 Education Share for every 4.25 Affinity Education Shares and declaring the consideration final. It is expected that the Scrip Offer will open for acceptance on 18 August 2015 and is scheduled to close on 28 September 2015 (unless extended).

Although G8 Education has declared the consideration of 1 G8 Education Share for every 4.25 Affinity Education Shares under the Scrip Offer to be final, it may be required by law to increase the ratio of G8 Education Shares to Affinity Education Shares. Section 621(3) Corporations Act operates such that the consideration offered under the Scrip Offer must equal or exceed the maximum consideration that G8 Education paid in the four month period before the Scrip Offer opens. The Scrip Offer must be valued, based on two Trading Day VWAP of G8 Education Shares over a 5 Business Day period before the Scrip Offer opens. G8 Education may be required by law to increase the ratio of G8 Education Shares to Affinity Education Shares under the Scrip Offer so that it is valued at no less than $0.80 per Affinity Education Share during the two Trading Day valuation window. Any such variation will occur before the Scrip Offer opens for acceptance and will have no effect on the Offer Price under the Cash Offer.

You may choose to accept either the Scrip Offer or this Cash Offer.

Detailed information about the Scrip Offer is set out in the Scrip Offer Bidder’s Statement.

46 G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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9.3 DETAILS OF G8 EDUCATION’S RELEVANT INTERESTS IN AFFINITY EDUCATION SHARES A t the date o f this Bidder’s Statement, t h e number o f Affinity Edu c ation Shares i n which G8 E ducation had a Relevant In t erest is set o u t below:

Class of secu rities T otal number in class	T otal number in class	T otal number in class	% Sh of Affinity Ed ares on issue ucation

Affinity Edu cation Shares 4 6,051,790			19 .89%

A s at the dat e of this Bidd e r’s Statemen t G8 Education has voting p ower of 19. 8 9 percent in A ffinity E ducation. A l l of the Affini t y Education S hares owne d by G8 Education have be e n purchased on-market w ithin 4 mon t hs before th e start of the O ffer Period f or consideration of $0.70 c ents per Affi n ity E ducation Sh a re.

G 8 Education reserves the right to purc h ase Affinity E ducation Shares outside t h e Cash Offer at any time d uring the Of f er Period, subject to the C orporations A ct.

9.4 G8 EDUCATION’S DIRECTORS’ RELEVANT INTERESTS IN AFFINITY EDUCATION SHARES

A t the date o f this Bidder’s Statement, t h e Directors o f G8 Educati o n have no relevant intere s t in Affinity E ducation Sh a res.

9.5 CONSENTS

T his Bidder’s S tatement in c ludes state m ents which a r e made in, o r based on st a tements whi c h are made i n, document s provided by Affinity Education or ann o unced on the company an n ouncement s platform of A SX by Affinity Education. No person w h o has made a ny of these s tatements h a s consented t o the s tatement being included in or accomp a nying this Bi d der’s Statem e nt in the for m and conte x t in which it i s included.

Canacco r d Genuity (A u stralia) Limit e d have give n and have not, before the l odgement o f this Bidder’s Stateme n t with ASIC, w ithdrawn its written cons e nt to being n amed in this Bidder’s Stat e ment as brokers to the Cash O f fer in the for m and contex t in which th e y are named .
McCullo u gh Robertso n Lawyers ha v e given and h ave not, bef o re the lodge m ent of this Bidder’s Stateme n t with ASIC, w ithdrawn th e ir written consent to bein g named in t h is Bidder’s Statement as legal adv i sers to G8 Education in re s pect of the Cash Offer an d the Scrip Of f er in the for m and context in which t hey are named.
Advance d Share Regis t ry Services h a s given and h as not, befo r e the lodge m ent of this Bi d der’s Stateme n t with ASIC, w ithdrawn its written cons e nt to being n amed in this Bidder’s Stat e ment as registry to G8 Educati o n in respect o f the Offer i n the form an d context in w hich it is na m ed.
HLB Mann Judd has gi v en and has not, before th e lodgement o f this Bidder ’ s Statement w ith ASIC, withdra w n its written consent to b e ing named in this Bidder’s Statement a s auditor for G 8 Education in the fo r m and conte x t in which it is included.
Each of C anaccord Ge n uity, McCull o ugh Roberts o n, Advanced Share Regist r y Services and HLB Mann Judd:
doe s not make, o r purport to m ake, any statement in this Bidder’s Stat e ment or any statement on w hich a state m ent in this Bi d der’s State m ent is based o ther than, i n the case of a person

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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referred to above as having given their consent to the inclusion of a statement, a statement included in this Bidder’s Statement with the consent of that person; and

to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any part of this Bidder’s Statement, other than a reference to its name and, in the case of a person referred to above as having given their consent to the inclusion of a statement, any statement or report which has been included in this Bidder’s Statement with the consent of that party.

9.6 FEES AND BENEFITS PAYABLE TO DIRECTORS AND ADVISERS

The Directors of G8 Education have the following relevant interests in G8 Education Shares (either held directly, held by entities controlled by them or held by entities of which they are directors at the date of this Bidder’s Statement:

DIRECTOR	G8 EDUCATION SHARES	% OF G8 EDUCATION
		SHARES ON ISSUE
Jennifer Hutson	1,953,778	0.53%
Christopher Scott	1,000,000	0.27%
Brian Bailison	Nil	Nil
Susan Forrester	Nil	Nil
Matthew Reynolds	14,695	0.00004%

Executives are offered a competitive base pay that comprises the fixed component of pay and rewards. Base pay for executives is reviewed annually to ensure the executive’s pay is competitive with the market and comparable to other companies of similar operational complexity and market capitalisation as G8 Education. The salary levels were determined by analysing other listed public companies in the ASX 200 index to ensure that G8 Education’s executive pay structure is market based. An executive’s remuneration is also reviewed on promotion. There are no guaranteed base pay increases included in any executive contracts.

McCullough Robertson has acted as legal advisers to G8 Education in relation to the Offer. McCullough Robertson are entitled to receive professional fees on a normal basis.

HLB Mann Judd has provided advice in relation to the Offer. HLB Mann Judd is entitled to receive professional fees on a normal basis.

Canaccord Genuity is the broker to the Cash Offer. Canaccord Genuity is entitled to receive brokerage on a normal basis.

9.7 NO COLLATERAL BENEFIT

Except as set out in this Bidder’s Statement, neither G8 Education nor any of its Associates has, during the period of four months before the date of the Cash Offer, or in the period commencing on the date of this Bidder’s Statement and ending on the date of the Offer, given, offered or agreed to give, a benefit to another person where the benefit was likely to induce the other person, or an associate, to:

accept a Cash Offer; or
dispose of Affinity Education Shares,

which benefit was not offered to all Affinity Education Shareholders under the Cash Offer.

48 G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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9.8 NO ESCALATION AGREEMENT

N either G8 E d ucation nor a ny of its Ass o ciates has entered into an escalation a g reement tha t is prohibited u nder sectio n 622 Corpora t ions Act.

9.9 POWER TO WITHDRAW

G 8 Education may only withdraw unacc e pted Offers m ade under t h is bid if a Pr e scribed Event occurs d uring the Of f er Period, but only if G8 E d ucation’s vo t ing power in Affinity Educ a tion, at the t ime of the P rescribed Event is at or b e low 50%.

G 8 Education may also im m ediately wit h draw unacc e pted Offers m ade under t h is bid upon t h e o ccurrence o f an Insolvency Event (rega r dless of the level of G8 Education’s vot i ng power in A ffinity E ducation) at the time tha t Insolvency E v ent occurs.

9.10 EFFECT OF WITHDRAWAL

T he Cash Off e r is incapabl e of acceptan c e if withdra w n.

9.11 EXTENSION OF OFFER PERIOD

G 8 Education may vary thi s Cash Offer b y extending the Offer Peri o d, in accord a nce with sec t ion 649C C orporations Act.

9.12 VARIATION

G 8 Education reserves the right to vary t his Cash Off e r in accordance with the p r ovisions of s e ction 649A C orporations Act.

9.13 COSTS AND EXPENSES

A ll costs and e xpenses of t h e preparation and circula t ion of this Bi d der’s State m ent and the C ash Offer a nd all transf e r duty payable on the tra n sfer of your A ffinity Educa t ion Shares w ill be paid by the Bidder.

9.14 OTHER MATERIAL INFORMATION

E xcept as set out elsewher e in this Bidd e r’s Statement, there is no other inform a tion that is:  material t o the makin g of a decisio n by an Affinit y Education Shareholder w hether or no t to accept the Cash Offer; and
known t o G8 Educatio n ,

a nd has not previously been disclosed t o the Affinity E ducation Sh a reholders.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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10 Approval of Bidder’s Statement

T he copy of t h is Bidder’s S t atement tha t is to be lodg e d with ASIC h as been app r oved by a unanimous r esolution pa s sed by the Directors of G 8 Education o n 3 August 2015. S igned by Jennifer Hutson, Chairperson o f G8 Education, under se c tion 351 Cor p orations Act.

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Jennifer Hutson Chairperson G8 Education Limited ACN 123 828 553

50 G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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11 Definitions and interpretation

11.1 DEFINITIONS

T he following defined ter m s are used throughout thi s Bidder’s Sta t ement unles s the contrar y intention a ppears or the context requires otherwise:

T erm D efinition
A A A A A A A A A A A A A B B B B C C CCC ffinity Educa ffinity Educa ffinity Educa ffinity Educa ffinity Educa ffinity Educa nnounceme SIC ssociates SX SX Settleme UD$ or $ idder’s State oard roker usiness Day anaccord Ge HESS tion tion Board tion Group tion Rights tion Shares tion Shareho nt Date nt Rules ment nuity m m A m m m i m E lders m m A m h C i m m t m m G t m m C m b i m m eans Austra eans the tar CN 163 864 eans the bo eans Affinity eans the 1,3 ssue. eans fully p ducation. eans holder eans 3 Augu nnounceme eans Austra as the mean orporations ncluded a ref eans ASX Lim eans the set ime to time. eans Austra eans this do 8 Education o the Cash O eans the bo eans a mem HESS undert eans a dayo usiness in Sy n that place). eans Canacc eans Clearin lian Competit get company 195. ard of directo Education a 27,141 perfo aid ordinary s s of Affinity E st 2015, bein nt. lian Securitie ing given to t Act as if secti erence to this ited, operat tlement and lian dollars. cument, bein under Part 6. ffer. ard of directo ber organisat he ASX Settle n which bank dney (not bei ord Genuity g House Elec ion and Cons , Affinity Educ rs of Affinity nd each of its rmance rights hares in thec ducation Shar g the date of s and Investm hat term by se on 12(1) of th document. ing the Austra operating rule g the bidder’s 5 Division 2C rs of G8 Educ ion admitted ment Rules. s are open fo ng a Saturday (Australia) Lim tronic Subreg umer Commi ation Group Education. Subsidiaries. in Affinity Ed apital of Affin es. the Takeover ents Commis ction 12 of t e Corporation lian Securitie s of the ASX statemento orporationsA ation. to participat r general ban , Sunday orp ited ACN 075 ister System, ssion. Limited ucation on ity sion. he s Act s Exchange. in force from f ct relating e in the king ublic holiday 071 466. which

T
erm
D
efinition

A
A
A
A
A
A
A
A
A
A
A
A
A
B
B
B
B
C
C
CCC
ffinity Educa
ffinity Educa
ffinity Educa
ffinity Educa
ffinity Educa
ffinity Educa
nnounceme
SIC
ssociates
SX
SX Settleme
UD$ or $
idder’s State
oard
roker
usiness Day
anaccord Ge
HESS
tion
tion Board
tion Group
tion Rights
tion Shares
tion Shareho
nt Date
nt Rules
ment
nuity
m
m
A
m
m
m
i
m
E
lders
m
m
A
m
h
C
i
m
m
t
m
m
G
t
m
m
C
m
b
i
m
m
eans Austra
eans the tar
CN 163 864
eans the bo
eans Affinity
eans the 1,3
ssue.
eans fully p
ducation.
eans holder
eans 3 Augu
nnounceme
eans Austra
as the mean
orporations
ncluded a ref
eans ASX Lim
eans the set
ime to time.
eans Austra
eans this do
8 Education
o the Cash O
eans the bo
eans a mem
HESS undert
eans a dayo
usiness in Sy
n that place).
eans Canacc
eans Clearin
lian Competit
get company
195.
ard of directo
Education a
27,141 perfo
aid ordinary s
s of Affinity E
st 2015, bein
nt.
lian Securitie
ing given to t
Act as if secti
erence to this
ited, operat
tlement and
lian dollars.
cument, bein
under Part 6.
ffer.
ard of directo
ber organisat
he ASX Settle
n which bank
dney (not bei
ord Genuity
g House Elec
ion and Cons
, Affinity Educ
rs of Affinity
nd each of its
rmance rights
hares in thec
ducation Shar
g the date of
s and Investm
hat term by se
on 12(1) of th
document.
ing the Austra
operating rule
g the bidder’s
5 Division 2C
rs of G8 Educ
ion admitted
ment Rules.
s are open fo
ng a Saturday
(Australia) Lim
tronic Subreg
umer Commi
ation Group
Education.
Subsidiaries.
in Affinity Ed
apital of Affin
es.
the Takeover
ents Commis
ction 12 of t
e Corporation
lian Securitie
s of the ASX
statemento
orporationsA
ation.
to participat
r general ban
, Sunday orp
ited ACN 075
ister System,
ssion.
Limited
ucation on
ity
sion.
he
s Act
s Exchange.
in force from
f
ct relating
e in the
king
ublic holiday
071 466.
which

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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Term	Definition
	provides for the electronic transfer for securities in Australia.
CHESS Holding	means a holding of Affinity Education Shares on the CHESS
	subregister of Affinity Education.
Controlling Participant	has the meaning given to that term by the ASX Settlement Rules.
Corporations Act	means the_Corporations Act 2001_(Cwlth).
G8 Education	means G8 Education Limited ACN 123 828 553.
G8 Education Group	means G8 Education and its Subsidiaries.
G8 Education Share	means a fully paid ordinary share in the capital of G8 Education.
Insolvency Event	means any of the events described in section 652C(2)
	Corporations Act.
Issuer Sponsored Holding	means a holding of Affinity Education Shares on Affinity
	Education’s issuer sponsored subregister.
Merged Group	means G8 Education and each of its Subsidiaries (including the
	Affinity Education Group) which will exist should G8 Education
	acquire control of Affinity Education.
Offer	means the offer to acquire Affinity Education Shares which will be
	made on-market by Canaccord Genuity on behalf of G8 Education
	as described in this Bidder’s Statement (and for the avoidance of
	doubt includes each such offer made to an individual Affinity
	Education Shareholder pursuant to that offer).
Offer Period	means the period commencing on 18 August 2015 and ending on
	28 September 2015, or such later date to which the Cash Offer has
	been extended.
Offer Price	means $0.80 per Affinity Education Share.
Participant	has the meaning given to that term by the ASX Settlement Rules.
Prescribed Event	means any of the events in section 652C(1) Corporations Act.
Related Bodies Corporate	has the meaning given to that term in the Corporations Act.
Relevant Interest	means the meaning given to that term by Corporations Act.
Scrip Offer	means the off-market bid made by G8 Education for all of the
	Affinity Education Shares for consideration of one fully paid
	ordinary share in G8 Education for every 4.25 Affinity Education
	Shares.
SGD$	means Singapore dollars.
Subsidiary	has the meaning given in the Corporations Act.
Takeover Announcement	means the announcement of Cash Offer made by Canaccord
	Genuity on 3 August 2015, a copy of which is set out in Appendix
	1.
Trading Day	has the meaning given in the ASX Listing Rules.
T+3 Basis	means that settlement occurs on the third Trading Day after the
	date of the transaction in accordance with ASX Settlement Rules.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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11.2 INTERPRETATION

I n this Bidder ’ s Statement, unless the c o ntext otherwise requires: T he following rules of inte r pretation ap p ly unless the contrary intention appear s or the cont e xt requires o therwise:

A refere n ce to time is a reference t o Sydney tim e .
Heading s are for conv e nience only a nd do not af f ect interpret a tion.
The sing u lar includes the plural and conversely.
A refere n ce to a secti o n is to a section of this Bidder’s Statem e nt.
A gender includes all genders.
Where a word or phra s e is defined, its other gra m matical for m s have a cor r esponding m e aning.  $, or cen t s is a reference to the law f ul currency i n Australia, u n less otherwi s e stated.  A refere n ce to a person includes a b ody corpora t e, an unincorporated bod y or other ent i ty and conversely.
A refere n ce to a person includes a r eference to t h e person's e x ecutors, ad m inistrators, successors, substitut e s (including, but not limit e d to, person s taking by novation) and a s signs.
A refere n ce to any leg i slation or to a ny provision of any legislation includes any modifica t ion or reenactme n t of it, any l e gislative pro v ision substit u ted for it and all regulatio n s and statut o ry instruments issued un d er it.
A refere n ce to any ins t rument or d o cument incl u des any variation or repla c ement of it.
A term n o t specifically defined in this Bidder’s St a tement has t he meaning g iven to it (if a ny) in the Corporations Act or the ASX Settle m ent Rules, as the case ma y be.
A refere n ce to a right o r obligation o f any two or more persons confers tha t right, or imposes that obligatio n , as the case may be, join t ly and indivi d ually.

G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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Schedule 1 A n nounce m ent

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G8 EDUCATION LIMITED’S BIDDER’S STATEMENT CASH OFFER FOR AFFINITY EDUCATION GROUP

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Corporate Directory

Company

G8 Education Limited ACN 123 828 553 159 Varsity Parade Varsity Lakes QLD 4227 +61 7 5581 5300 www.g8education.edu.au

Directors

Jennifer Hutson – Chairperson Christopher Scott – Managing Director Brian Bailison – Non-Executive Director Susan Forrester – Non-Executive Director Matthew Reynolds – Non-Executive Director

Stockbroker

Canaccord Genuity (Australia) Limited Level 4 60 Collins Street MELBOURNE VIC 3000 +61 3 8688 9100 www.canaccord.com.au

Legal Advisers

McCullough Robertson Lawyers Level 11 Central Plaza Two 66 Eagle Street BRISBANE QLD 4000 +61 7 3233 8888 www.mccullough.com.au

Share Registry

Advanced Share Registry Services 110 Stirling Highway NEDLANDS WA 6009 +61 8 9389 8033 www.advancedshare.com.au

Auditor

HLB Mann Judd Level 15 66 Eagle Street BRISBANE QLD 4000 +61 7 3001 8800 www.hlb.com.au

AI assistant

G8 EDUCATION LIMITED — M&A Activity 2015

64978_rns_2015-08-02_a5b07bc8-2552-4d16-b428-7e45976ab9de.pdf

ASX Announcement

G8 Education Limited (ASX:GEM)

3 August 2015

On-Market Takeover Bid $0.80 per Share – Affinity Education

BIDDER’S STATEMENT – CASH OFFER

AFFINITY EDUCATION GROUP LIMITED ACN 163 864 195

Table of Contents

Important Notices

Investment decisions

Forward looking statements

Sources of information

Enquiries

Defined terms

Privacy statement

How to accept

Dates Key

Letter from the Ch rson airpe

3 August 2 015

Cash Offer to acquire your Affinity Education Shares

 a premium of 48.1% on Affinity Education’s closing share price on 2 July 2015; and

The Offer Price of $0.80 cash per Affinity Education Share is final and will not be increased .

1 Highlights

2 Frequently asked questions about the Cash Offer

3 Reasons to accept the Cash Offer

The Offer Price is $0.80 per Affinity Education Share.

G8 Education’s current 19.89% shareholding in Affinity Education might make a competing proposal for Affinity Education less likely.

Affinity Education shareholders will not have to pay stamp duty on the transfer of their Affinity Education Shares under the Cash Offer.

4 Profile of G8 Education

4.1 OVERVIEW

4.2 BUSINESS OPERATIONS

4.3 LOCATIONS OF CHILDCARE AND EDUCATION CENTRES

Australia

Australia centres

Singapore

Singapore Centres

4.4 G8 EDUCATION BRAND PORTFOLIO

Total number of centres by brand

SINGAPORE – 18 CENTRES

4.5 OCCUPANCY RATES

Childcare and Education Centre Occupancy

4.6 LEASE ARRANGEMENTS

4.7 STRATEGY

Four Key Pillars

Quality Care and Education

NQF high level assessment framework summary

Employees

Community

4.8 ACQUISITIONS

History

Acquisition Criteria

4.9 DIRECTORS AND SENIOR MANAGEMENT

Jennifer Hutson B.Com, LLB, FAIM – Chairperson

Christopher Scott B.Econ (Hons) – Managing Director

Brian Bailison B.Com., B.Acc (Cum Laude), ACA – Non-Executive Director

Susan Forrester BA, LLB (Hons), EMBA, FAICD – Non-Executive Director

Matthew Reynolds BSc (Hons), LLB (Hons), MQLS - Non-Executive Director

Jason Roberts BArt, CFA - Chief Executive Officer

Chris Sacre BBus, CA, SA Fin, GDipApp Fin (FINSIA) - Chief Financial Officer/Company Secretary

4.10 FINANCIAL PROFILE OF G8 EDUCATION

4.11 G8 EDUCATION DIVIDEND HISTORY

4.12 G8 EDUCATION DEBT PROFILE

4.13 G8 EDUCATION’S SUBSTANTIAL HOLDERS

4.14 PUBLICLY AVAILABLE INFORMATION

4.15 FURTHER INFORMATION

5 Profile of Affinity Education

5.1 DISCLAIMER

5.2

OVERVIEW

5.3

BUSINESS OPERATIONS

5.4 LOCATIONS OF CHILDCARE AND EDUCATION CENTRES

5.5 AFFINITY EDUCATION BRAND PORTFOLIO

5.6 OCCUPANCY RATES

5.7 STRATEGY

5.8 DIRECTORS AND SENIOR MANAGEMENT

Stuart James BA (Hons) – Chairman, Independent Non-Executive Director

Justin Michael Laboo BSc, LLB, MBA – Chief Executive Officer and Managing Director

G8 EDUCATION LIMITED M&A Activity 2015