KORVEST LTD — AGM Information 2014

Sep 17, 2014

==> picture [171 x 43] intentionally omitted <==

Korvest Ltd

ACN 007 698 106

Notice of Annual General Meeting

Explanatory Notes

Date of meeting

Friday 24 October 2014

Time of meeting

11.30 am

Place of meeting

KPMG Boardroom Level 7, 151 Pirie Street Adelaide SA 5000

This Notice of Annual General Meeting should be read in its entirety. If shareholders are in doubt as to how they should vote, they should seek advice from their accountant, solicitor or other professional adviser prior to voting.

29525599v1

Notice of Annual General Meeting

Korvest Ltd ACN 007 698 106 ( Company ) will hold an annual general meeting at Level 7, 151 Pirie Street, Adelaide, South Australia on Friday 24 October 2014 at 11.30 am (Adelaide time).

The Explanatory Notes that accompany and form part of this notice of annual general meeting ( Notice ) describe the matters to be considered at the meeting.

AGENDA

GENERAL BUSINESS

2014 Financial Statements

To receive, consider and discuss the Company's financial statements and the report of the directors and auditor for the year ended 30 June 2014.

ORDINARY BUSINESS

Resolution 1

Adoption of Remuneration Report

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

• "That the remuneration report for the year ended 30 June 2014 be adopted for the purpose of section 250R(2) of the Corporations Act."

Note: Section 250R(3) of the Corporations Act provides that the vote on this resolution is advisory only and does not bind the directors or the Company.

Voting Restriction

In accordance with the Corporations Act, a vote must not be cast on this resolution (and will be taken not to have been cast if cast contrary to this restriction) by a member of the key management personnel, details of whose remuneration are included in the remuneration report, and any closely related party of such a member. However, the member or any closely related party of such a member may vote if:

• (a) it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the resolution or by a person who is the chair of the meeting at which the resolution is voted on and the appointment expressly authorises the chair of the meeting to exercise the proxy even if the resolution is connected directly or indirectly with the remuneration of a member of the key management personnel; and

• (b) it is not cast on behalf of the member or any closely related party of such a member.

Page 1

29525599v1

Resolution 2

Re-election of Director – Mr Steven McGregor

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

"That Mr Steven McGregor, a director retiring by rotation in accordance with the Company's constitution and being eligible for re-election, be re-elected as a director of the Company."

Resolution 3

Re-election of Director – Mr Gary Francis

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

"That Mr Gary Francis, a director retiring in accordance with the Company's constitution and being eligible for re-election, be re-elected as a director of the Company."

SPECIAL BUSINESS

Resolution 4

Approval of the grant of Performance Rights to Mr Alexander Kachellek for the purposes of ASX Listing Rule 10.14

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

"That, for the purposes of ASX Listing Rule 10.14, approval is given for the grant of 24,000 performance rights to Mr Alexander Kachellek under the Korvest Performance Rights Plan."

Voting Restriction and Exclusions

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

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

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

Further, in accordance with the Corporations Act, a vote must not be cast on this resolution (and will be taken not to have been cast if cast contrary to this restriction) by a member of the key management personnel, and any closely related party of such a member, acting as proxy if their appointment does not specify the way the proxy is to vote on this resolution. However, the member or any closely related party of such a member may vote if it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the resolution or by a person who is the chair of the meeting at which the resolution is voted on and the appointment expressly authorises the chair to exercise the proxy even if the resolution is connected directly or indirectly with the remuneration of a member of the key management personnel.

Page 2

29525599v1

Resolution 5

Approval of the grant of Performance Rights to Mr Steven McGregor for the purposes of ASX Listing Rule 10.14

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

" That, for the purposes of ASX Listing Rule 10.14, approval is given for the grant of 19,000 performance rights to Mr Steven McGregor under the Korvest Performance Rights Plan. "

Voting Restriction and Exclusions

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

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

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

Further, in accordance with the Corporations Act, a vote must not be cast on this resolution (and will be taken not to have been cast if cast contrary to this restriction) by a member of the key management personnel, and any closely related party of such a member, acting as proxy if their appointment does not specify the way the proxy is to vote on this resolution. However, the member or any closely related party of such a member may vote if it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the resolution or by a person who is the chair of the meeting at which the resolution is voted on and the appointment expressly authorises the chair to exercise the proxy even if the resolution is connected directly or indirectly with the remuneration of a member of the key management personnel.

Voting and the proxy

For the purpose of determining the voting entitlements at the meeting, the board has determined that shares in the Company will be taken to be held by the registered holders of those shares at 5.00pm (Adelaide time) on 22 October 2014. Accordingly, transactions registered after that time will be disregarded in determining entitlements to attend and vote at the meeting.

A shareholder who is entitled to attend and cast a vote at the meeting and who wishes to vote on the resolutions contained in this Notice should either attend in person, or appoint a proxy or proxies to attend or vote on the shareholder’s behalf. A proxy form is enclosed with this Notice. The proxy or proxies do not need to be a shareholder of the Company. A shareholder that is a body corporate may appoint a representative to attend in accordance with the Corporations Act.

A shareholder entitled to attend and to cast two or more votes is entitled to appoint two proxies. Where two proxies are appointed, each appointment must specify the proportion of the shareholder’s voting rights that the proxy may exercise. If the shareholder appoints two proxies and the appointment does not specify this proportion, each proxy may exercise half of the votes able to be cast by the appointing shareholder.

Page 3

29525599v1

The proxy form (and any power of attorney under which it is signed) must be received at the address below not later than 11.30am (Adelaide time) on 22 October 2014 (being 48 hours before the commencement of the meeting). Any proxy forms received after that time will not be valid for the meeting.

Completed proxy forms should be sent to the Company's share registrar, Computershare Investor Services Pty Ltd as follows:

By mail: Korvest Ltd C/- Computershare Investor Services Pty Ltd GPO Box 242 MELBOURNE VIC 3001 Australia By fax: Korvest Ltd C/- Computershare Investor Services Pty Ltd (within Australia) 1800 783 447 (outside Australia) +61 3 9473 2555 Online: Enter the control number, SRN/HIN and postcode shown on the first page of the proxy form at: www.investorvote.com.au Custodian voting: For Intermediary Online subscribers only: www.intermediaryonline.com

DATED THIS 11th DAY OF SEPTEMBER 2014 BY ORDER OF THE BOARD

Steven McGregor Company Secretary

Page 4

29525599v1

Explanatory Notes

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

The directors recommend shareholders read these Explanatory Notes in full before making any decision in relation to the resolutions.

GENERAL BUSINESS

Receiving financial statements and reports

The Corporations Act requires that shareholders consider the annual consolidated financial statements and reports of the directors and auditor every year.

Shareholders attending the annual general meeting will be given a reasonable opportunity:

• (a) to ask questions about or make comments on the management of the Company; and

• (b) to ask the Company's auditor or the auditor's representative questions relevant to:

• (1) the conduct of the audit;

• (2) the preparation and content of the auditor's report;

• (3) the accounting policies adopted by the Company in relation to the preparation of the financial statements; and

• (4) the independence of the auditor in relation to the conduct of the audit.

A shareholder of the Company who is entitled to cast a vote at the annual general meeting may submit a written question to the auditor if the question is relevant to:

• (a) the content of the auditor's report to be considered at the annual general meeting; or

• (b) the conduct of the audit of the annual financial report to be considered at the annual general meeting.

A written question may be submitted by giving the question to the Company no later than 17 October 2014, being five business days before the day on which the annual general meeting is to be held, and the Company will then, as soon as practicable after the question has been received, pass the question on to the auditor. At the annual general meeting the Company will allow a reasonable opportunity for the auditor or the auditor’s representative to answer such written questions submitted to the auditor.

The Company will make copies of the question list reasonably available to shareholders attending the annual general meeting.

No resolution is required to be moved in respect of this item of General Business.

29525599v1

ORDINARY BUSINESS

Resolution 1 – Adoption of Remuneration Report

The remuneration report of the Company for the financial year ended 30 June 2014 is contained in the 2014 Annual Report which is available on the Company's website http://www.korvest.com.au/assets/annual_reports/Korvest_Annual_Report_2014.pdf.

Section 300A of the Corporations Act requires the directors to include a remuneration report in their report for the financial year. Section 250R(2) requires the remuneration report be put to the vote at the Company's annual general meeting. The vote on the resolution is advisory only and does not bind the directors or the Company.

In relation to the non-binding shareholder vote, where a company's remuneration report receives a "no" vote of 25 per cent or more at an AGM and comments are made on the remuneration report, the company's subsequent remuneration report is required to include an explanation of the board's proposed action in response to the "no" vote and comments or an explanation of why no action has been taken. Where a company's subsequent remuneration report receives a "no" vote of 25 per cent or more, shareholders at that second AGM are to consider a resolution to determine whether to hold a further meeting. If this "spill resolution" passes by ordinary resolution, then the directors who approved the directors' report, other than the managing director, must resign or alternatively a meeting must be held within 90 days of the second AGM at which those directors cease to hold office immediately before the end of the "spill meeting" and the meeting may resolve to appoint those or other persons to the vacated positions. At the 2013 AGM, the Company’s remuneration report for the financial year ended 30 June 2013 did not receive a “no” vote of 25 per cent or more.

Directors' Recommendation

The directors recommend that the shareholders vote in favour of Resolution 1.

Resolution 2 – Re-election of Director – Mr Steven McGregor

Clause 10.3 of the Company's Constitution requires that at every annual general meeting one third of the directors for the time being (excluding the Managing Director) must retire from office and be eligible for re-election.

ASX Listing Rule 14.4 provides that a director (excluding the Managing Director) must not hold office (without re-election) past the third annual general meeting following the director's appointment or 3 years, whichever is longer. However, a director appointed to fill a causal vacancy or as an addition to the board must not hold office (without re-election) past the next annual general meeting of the entity.

Mr McGregor retires in rotation and offers himself for re-election pursuant to ASX Listing Rule 14.4 and the Company's Constitution.

A profile of Mr McGregor is contained in the Company's Annual Report.

Directors' Recommendation

Other than Mr McGregor (who is not entitled to make a recommendation), the directors recommend that the shareholders vote in favour of Resolution 2.

29525599v1

Resolution 3 – Re-election of Director – Mr Gary Francis

Mr Francis was appointed as a director of the Company by the board effective 11 February 2014. He has since been appointed as Chairman of the Remuneration Committee by the board.

Mr. Francis is a qualified civil engineer with an extensive background in the construction industry both in Australia and Asia over the past 35 years and of that 20 plus years have been at a general management level or above. His career has revolved around medium to large scale projects with major tier one contractors including senior positions with Transfield and Leighton in Asia over a nearly 15 year period.

Since returning to Australia, at the end of 2005, Mr. Francis has held board positions with private companies and has consulted to a number of entities both on and offshore within the construction and finance sectors.

In accordance with clause 10.13 of the Company's Constitution, Mr Francis is required to retire, and being eligible, has offered himself for re-election at this annual general meeting.

Directors' Recommendation

Other than Mr Francis (who is not entitled to make a recommendation), the directors recommend that the shareholders vote in favour of Resolution 3.

SPECIAL BUSINESS

Resolution 4 – Approval of the grant of Performance Rights to Mr Alexander Kachellek for the purposes of ASX Listing Rule 10.14

Background

At the 2011 AGM, shareholders approved the establishment of a plan called the Korvest Performance Rights Plan ( Plan ) as part of the overall remuneration strategy of the Company. The Plan provides for the issue of performance rights ( Performance Rights ) to executives of the Company invited by the Board to participate in the Plan. The Performance Rights result in the issue of fully paid ordinary shares in the Company ( Shares ). A copy of the Plan Rules is available on the Company's website www.korvest.com.au. A brief summary of the Plan Rules is set out below.

The Plan is designed to provide the Company's executives with an incentive to maximise the return to shareholders over the long term, and to assist in the attraction and retention of key executives. Details of the Company's executive remuneration philosophy and objectives can be found in the 2014 Annual Report.

At the 2013 AGM, approval was obtained from the Company's shareholders for the issue to Mr Alexander Kachellek, Managing Director, of 24,000 Performance Rights for no consideration and at nil exercise price in accordance with the Plan. Since that approval those Performance Rights were issued on the terms as approved.

Mr Kachellek has again been invited by the Board to participate in the Plan and to be issued with Performance Rights if approved by shareholders at this AGM.

Reason for Shareholder Approval

ASX Listing Rule 10.14 requires shareholder approval for the issue of securities to a director. Mr Kachellek is a director of the Company. Accordingly, shareholder approval is sought for the issue

29525599v1

to Mr Kachellek of 24,000 Performance Rights under the Plan. If approval is given under listing rule 10.14, approval is not required under listing rule 7.1.The Performance Rights to be granted to Mr Kachellek are in effect conditional entitlements, which may vest subject to the satisfaction of performance hurdles, details of which are summarised below.

Issue of Performance Rights

The Company proposes to issue 24,000 Performance Rights to Mr Kachellek no later than 1 month after the date of the AGM.

The Board has also invited Mr Steven McGregor, Finance Director, to participate in the plan and to be issued with 19,000 Performance Rights if approved by shareholders at the scheduled AGM. This means the maximum number of Performance Rights that may be acquired by all persons for whom approval is required at the scheduled AGM is 43,000.

Rights attaching to Performance Rights

A Performance Right is a right to acquire one Share which can be exercised once the Performance Right has become exercisable and provided it has not lapsed.

A Performance Right does not give the holder a legal or beneficial right to Shares and does not enable the participating executive, in this case Mr Kachellek, to receive dividends or any other shareholder benefit by virtue of the issue of these rights unless and until that Performance Right has been exercised and the Share issued.

Exercise of Performance Rights

Performance Rights are exercisable if:

• the Company meets during the performance period the performance criteria set by the Board at the time of grant;

• an event occurs such as a takeover bid for, or the winding up of, the Company; or

• the Board determines that a Performance Right becomes a vested Performance Right.

Performance Period

The performance period is the period commencing on 1 July 2014 and ending on 30 June 2017 ( Performance Period ).

Performance Hurdle

The Performance Rights will vest and become exercisable if the Performance Hurdle is satisfied over the Performance Period in the following circumstances:

• the Performance Hurdle will be met if the Company exceeds the aggregate threshold earnings per share ( eps ) over the Performance Period as set out in the table below;

• one third (1/3) of the Performance Rights will vest and be exercisable if the Company equals the aggregate threshold eps as set out in the table below;

• all of the Performance Rights will vest and be exercisable if the Company equals or exceeds the aggregate range eps as set out in the table below;

29525599v1

2. if the Company achieves an aggregate eps greater than the threshold eps but less than the range eps, the number of Performance Rights that will vest and be exercisable will be calculated on a pro rata basis in accordance with the following formula:

A = E x { 1/3 + 2/3 [ ( B - C ) / D ] }

where:

A = the number of Performance Rights that will vest and become exercisable (rounded down to the nearest whole number)

B = the aggregate actual eps over the Performance Period

C = the aggregate threshold eps

D = the aggregate range eps less the aggregate threshold eps

E = the number of Performance Rights issued to the relevant executive.

Year ended	Threshold eps	Range eps
Adjusted 30 June 2014 (base eps)	54.2	54.2
30 June 2015	58.265	62.33
30 June 2016	62.635	71.68
30 June 2017	67.333	82.432
Aggregate – 3 years to 30 June 2017	188.233	216.442

Under the Plan, the Board may make an invitation to an executive to apply for Performance Rights on such terms and conditions as the Board determines for such invitation including without limitation as to criteria and when, and in what circumstances, a Performance Right may become exercisable and any other criteria to be satisfied. Since inception of the Plan, the Board has set the Performance Hurdle eps figures on the basis of cumulative annual compounding growth in eps with the base eps being the prior financial year’s eps. This year, the Board has continued with that approach but has set the Performance Hurdle base eps figure to 54.2 by adjusting the 30 June 2014 reported eps 64.2 to take into account the dilutive effect of the underwritten special dividend reinvestment plan implemented in June 2014. This plan, which was offered to provide shareholders with the opportunity to reinvest their dividends in the Company free of any transaction costs and at a discounted price, resulted in 1,607,891 fully paid ordinary shares being issued by the Company on 27 June 2014 leading to an approximately 18% increase in the number of shares on issue. As this occurred late in the 2014 financial year, the impact of this issue on the eps as reported on 30 June 2014 was not material but will have an impact on future years’ eps.

The Performance Hurdle threshold is broadly equivalent to the Company achieving an aggregate compound annual growth rate of 7.5% per annum in respect of eps for the Performance Period.

29525599v1

The Performance Hurdle range is broadly equivalent to the Company achieving an aggregate compound annual growth rate of 15% per annum in respect of eps for the Performance Period.

If an eps figure for a particular year is not achieved, the threshold eps or range eps will still be met if the aggregate eps in the Performance Period is equal to or exceeds the amounts set out in the table above.

For the purposes of assessing satisfaction of the Performance Hurdle, the Board may adjust the Company's eps over the Performance Period for extraordinary, significant or non-recurring items.

Issue Price and Exercise Price

Each Performance Right will be issued to Mr Kachellek for no consideration and will have a nil exercise price. As such, there are no loans in relation to this acquisition. If the Performance Right vests it would allow Mr Kachellek to exercise the Performance Right and be issued with a Share.

Exercise Period

Once the Performance Rights have become exercisable, Mr Kachellek will need to exercise those rights within 12 months from the date on which they vest and become exercisable, or they will lapse and there will be no further entitlement to any Shares. This period may be shortened if Mr Kachellek ceases to be employed under certain circumstances and the Performance Rights have not lapsed.

Bonus issue and capital reconstruction of the Company

The number of Shares to which Mr Kachellek will become entitled on exercise of the Performance Rights will be adjusted to take account of any bonus issues, rights issues or reconstructions which the Company undertakes between the date of allocation of the Performance Rights and the exercise of those rights.

Cessation of employment

In the case of Mr Kachellek’s employment ceasing due to death or permanent disablement:

• Performance Rights which have otherwise become exercisable remain exercisable up until the end of the exercise period; and

• the Board has a discretion to treat the remaining Performance Rights as exercisable and to set the exercise period for them.

In all other cases where employment ceases, Performance Rights that have not vested and become exercisable will lapse immediately, and Performance Rights that have vested and are exercisable will lapse at the end of 30 days.

Restriction on the disposal of Shares

The Plan provides that the Shares issued on exercise of the Performance Rights will be restricted from disposal until the earlier of:

• the period (if any) specified in the invitation to participate in the Plan;

• the time when Mr Kachellek’s employment ceases;

• the Board approving a recommendation by the Board’s remuneration committee that the restriction on disposal be released; and

29525599v1

2. for a period of two years from the date of issue of the Performance Rights.

Forfeiture of Shares

Shares issued to Mr Kachellek on exercise of his Performance Rights may be forfeited if he perpetrates fraud against the Company or any of its subsidiaries ( Korvest group ), acts dishonestly or breaches his obligations to any member of the Korvest group.

The right of the Company to cause the Shares, which have been issued on exercise of the Performance Rights, to be forfeited, expires:

• on the termination of Mr Kachellek’s employment with the Company otherwise than as a result of fraud, dishonesty or a breach of his obligations to the Korvest group; or

• upon the sale or transfer of the Shares; or

• on the day following the expiry of the seven year period from the date of issue of the Performance Rights.

Directors' Recommendation

Other than Mr Alexander Kachellek and Mr Steven McGregor (who are not entitled to make a recommendation), the directors recommend that shareholders vote in favour of Resolution 4.

Resolution 5 – Approval of the grant of Performance Rights to Mr Steven McGregor for the purposes of ASX Listing Rule 10.14

Background

At the 2013 AGM, approval was obtained from the Company's shareholders for the issue to Mr Steven McGregor, Finance Director, of 19,000 Performance Rights for no consideration and at nil exercise price in accordance with the Plan. Since that approval those Performance Rights were issued on the terms as approved.

Mr McGregor has again been invited by the Board to participate in the Plan and to be issued with Performance Rights if approved by shareholders at this AGM.

Reason for Shareholder Approval

ASX Listing Rule 10.14 requires shareholder approval for the issue of securities to a director. Mr McGregor is a director of the Company. Accordingly, shareholder approval is sought for the issue to Mr McGregor of 19,000 Performance Rights under the Plan. If approval is given under listing rule 10.14, approval is not required under listing rule 7.1.

The Performance Rights to be granted to Mr McGregor are in effect conditional entitlements, which may vest subject to the satisfaction of performance hurdles, details of which are summarised below.

Issue of Performance Rights

The Company proposes to issue 19,000 Performance Rights to Mr McGregor no later than 1 month after the date of the AGM.

The Board has also invited Mr Alexander Kachellek, Managing Director, to participate in the Plan and to be issued with 24,000 Performance Rights if approved by shareholders at the scheduled AGM.

29525599v1

This means the maximum number of Performance Rights that may be acquired by all persons for who approval is required at the scheduled AGM is 43,000.

Rights attaching to Performance Rights

A Performance Right is a right to acquire one Share which can be exercised once the Performance Right has become exercisable and provided it has not lapsed.

A Performance Right does not give the holder a legal or beneficial right to Shares and does not enable Mr McGregor to receive dividends or any other shareholder benefit by virtue of the issue of these rights unless and until that Performance Right has been exercised and the Share issued.

Exercise of Performance Rights

Performance Rights are exercisable if:

• the Company meets during the performance period the performance criteria set by the Board at the time of grant;

• an event occurs such as a takeover bid for, or the winding up of, the Company; or

• the Board determines that a Performance Right becomes a vested Performance Right.

Performance Period

The performance period is the period commencing on 1 July 2014 and ending on 30 June 2017 ( Performance Period ).

Performance Hurdle

The Performance Rights will vest and become exercisable if the Performance Hurdle is satisfied over the Performance Period in the following circumstances:

• the Performance Hurdle will be met if the Company exceeds the aggregate threshold earnings per share ( eps ) over the Performance Period as set out in the table below;

• one third (1/3) of the Performance Rights will vest and be exercisable if the Company equals the aggregate threshold eps as set out in the table below;

• all of the Performance Rights will vest and be exercisable if the Company equals or exceeds the aggregate range eps as set out in the table below;

• if the Company achieves an aggregate eps greater than the threshold eps but less than the range eps, the number of Performance Rights that will vest and be exercisable will be calculated on a pro rata basis in accordance with the following formula:

A = E x { 1/3 + 2/3 [ ( B - C ) / D ] }

where:

A = the number of Performance Rights that will vest and become exercisable (rounded down to the nearest whole number)

B = the aggregate actual eps over the Performance Period

29525599v1

C = the aggregate threshold eps

D = the aggregate range eps less the aggregate threshold eps

E = the number of Performance Rights issued to the relevant executive.

Year ended	Threshold eps	Range eps
Adjusted 30 June 2014 (base eps)	54.2	54.2
30 June 2015	58.265	62.33
30 June 2016	62.635	71.68
30 June 2017	67.333	82.432
Aggregate – 3 years to 30 June 2017	188.233	216.442

Under the Plan, the Board may make an invitation to an executive to apply for Performance Rights on such terms and conditions as the Board determines for such invitation including without limitation as to criteria and when, and in what circumstances, a Performance Right may become exercisable and any other criteria to be satisfied. Since inception of the Plan, the Board has set the Performance Hurdle eps figures on the basis of cumulative annual compounding growth in eps with the base eps being the prior financial year’s eps. This year, the Board has continued with that approach but has set the Performance Hurdle base eps figure to 54.2 by adjusting the 30 June 2014 reported eps 64.2 to take into account the dilutive effect of the underwritten special dividend reinvestment plan implemented in June 2014. This plan, which was offered to provide shareholders with the opportunity to reinvest their dividends in the Company free of any transaction costs and at a discounted price, resulted in 1,607,891 fully paid ordinary shares being issued by the Company on 27 June 2014 leading to an approximately 18% increase in the number of shares on issue. As this occurred late in the 2014 financial year, the impact of this issue on the eps as reported on 30 June 2014 was not material but will have an impact on future years’ eps.

The Performance Hurdle threshold is broadly equivalent to the Company achieving an aggregate compound annual growth rate of 7.5% per annum in respect of eps for the Performance Period.

The Performance Hurdle range is broadly equivalent to the Company achieving an aggregate compound annual growth rate of 15% per annum in respect of eps for the Performance Period.

If an eps figure for a particular year is not achieved, the threshold eps or range eps will still be met if the aggregate eps in the Performance Period is equal to or exceeds the amounts set out in the table above.

For the purposes of assessing satisfaction of the Performance Hurdle, the Board may adjust the Company's eps over the Performance Period for extraordinary, significant or non-recurring items.

29525599v1

Issue Price and Exercise Price

Each Performance Right will be issued to Mr McGregor for no consideration and will have a nil exercise price. As such, there are no loans in relation to this acquisition. If the Performance Right vests it would allow Mr McGregor to exercise the Performance Right and be issued with a Share.

Exercise Period

Once the Performance Rights have become exercisable, Mr McGregor will need to exercise those rights within 12 months from the date on which they vest and become exercisable, or they will lapse and there will be no further entitlement to any Shares. This period may be shortened if Mr McGregor ceases to be employed under certain circumstances and the Performance Rights have not lapsed.

Bonus issue and capital reconstruction of the Company

The number of Shares to which Mr McGregor will become entitled on exercise of the Performance Rights will be adjusted to take account of any bonus issues, rights issues or reconstructions which the Company undertakes between the date of allocation of the Performance Rights and the exercise of those rights.

Cessation of employment

In the case of Mr McGregor’s employment ceasing due to death or permanent disablement:

• Performance Rights which have otherwise become exercisable remain exercisable up until the end of the exercise period; and

• the Board has a discretion to treat the remaining Performance Rights as exercisable and to set the exercise period for them.

In all other cases where employment ceases, Performance Rights that have not vested and become exercisable will lapse immediately, and Performance Rights that have vested and are exercisable will lapse at the end of 30 days.

Restriction on the disposal of Shares

The Plan provides that the Shares issued on exercise of the Performance Rights will be restricted from disposal until the earlier of:

• the period (if any) specified in the invitation to participate in the Plan;

• the time when Mr McGregor’s employment ceases;

• the Board approving a recommendation by the Board’s remuneration committee that the restriction on disposal be released; and

• for a period of two years from the date of issue of the Performance Rights.

Forfeiture of Shares

Shares issued to Mr McGregor on exercise of his Performance Rights may be forfeited if he perpetrates fraud against the Company or any of its subsidiaries ( Korvest group ), acts dishonestly or breaches his obligations to any member of the Korvest group.

29525599v1

The right of the Company to cause the Shares, which have been issued on exercise of the Performance Rights, to be forfeited, expires:

• on the termination of Mr McGregor’s employment with the Company otherwise than as a result of fraud, dishonesty or a breach of his obligations to the Korvest group; or

• upon the sale or transfer of the Shares; or

• on the day following the expiry of the seven year period from the date of issue of the Performance Rights.

Directors' Recommendation

Other than Mr Steven McGregor and Mr Alexander Kachellek (who are not entitled to make a recommendation), the directors recommend that shareholders approve the grant of the Performance Rights contemplated by Resolution 5.

29525599v1