MCS SERVICES LIMITED — Investor Presentation 2014

Nov 16, 2014

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Roadshow Presentation Reverse Takeover via Red Gum Resources Ltd (ASX:RGX) and Change of Company Name (subject to shareholder approval)

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November 2014

1

Important Notice and Disclaimer

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The presentation in this projected form and as verbally presented (Presentation) is provided on the basis that none of Red Gum Resources Ltd (Company or Red Gum), nor the three companies proposed to be acquired by the Company referred to in this Presentation as Holiday Planet, Asia Escape and Motive Travel, nor their respective directors and other officers, shareholders, related bodies corporate, partners, affiliates, employees, representatives and advisers make any representation or warranty (express or implied) as to the accuracy, reliability, relevance or completeness of the material contained in the Presentation and nothing contained in the Presentation is, or may be relied upon as, a promise, representation or warranty, whether as to the past or the future. The Company hereby excludes all warranties that can be excluded by law. Where applicable the Presentation has been prepared on the assumption that the proposed acquisition of Holiday Planet, Asia Escape and Motive Travel by Red Gum is completed. Information about these proposed acquisitions, including the applicable conditions, has previously been released to the market.

The Presentation contains prospective financial material which is predictive in nature and may be affected by inaccurate assumptions or by known or unknown risks and uncertainties, and may differ materially from results ultimately achieved. Certain market and company-specific data contained in this Presentation has been provided by or sourced from Holiday Planet, Asia Escape or Motive Travel. While the information is believed to be reliable it has not been independently verified by Red Gum.

Not Financial Advice

This Presentation is for information purposes only and is not a prospectus, product disclosure statement or other offer document under Australian law or the law of any other jurisdiction. This Presentation is not financial product or investment advice, a recommendation to acquire Red Gum securities or accounting, legal or tax advice. It has been prepared without taking into account the objectives, financial or tax situation or needs of individuals. Before making an investment decision, prospective investors should consider the appropriateness of the information having regard to their own objectives, financial and tax situation and needs and seek legal and taxation advice appropriate to their jurisdiction. Red Gum is not licensed to provide financial product advice in respect of Red Gum securities. Cooling off rights do not apply to the acquisition of Red Gum securities.

Historical performance

Past performance information contained in this Presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of the Company’s views on its future financial performance or condition. Investors should note that past performance, including past share price performance, of Red Gum and past performance of Holiday Planet, Asia Escape and Motive Travel cannot be relied upon as an indicator of (and provides no guidance as to) future Red Gum performance including future share price performance. The historical information included in this Presentation concerning Red Gum is, or is based on, information that has previously been released to the market. Investors should also be aware that certain financial data included in this Presentation may be “non-IFRS financial information” under Regulatory Guide 230 Disclosing non-IFRS financial information published by the Australian Securities and Investments Commission (“ASIC”) or “non-GAAP financial measures” under Regulation G of the U.S. Securities Exchange Act of 1934. The disclosure of such non-GAAP financial measures in the manner included in this Presentation would not be permissible in a registration statement under the U.S. Securities Act of 1933, as amended (“U.S. Securities Act”). The Company believes this non-IFRS financial information provides, and these non-GAAP financial measures provide, useful information to users in measuring the financial performance and conditions of Red Gum and Holiday Planet, Asia Escape and Motive Travel. The non-IFRS financial information and these non-GAAP financial measures do not have a standardised meaning prescribed by Australian Accounting Standards and, therefore, may not be comparable to similarly titled measures presented by other entities, nor should they be construed as an alternative to other financial measures determined in accordance with Australian Accounting Standards. Investors are cautioned, therefore, not to place undue reliance on any non-IFRS financial information or non-GAAP financial measures and ratios included in this Presentation.

All persons should consider seeking appropriate professional advice in reviewing the Presentation and all other information with respect to the Company and evaluating the business, financial performance and operations of the Company. Neither the provision of the Presentation nor any information contained in the Presentation or subsequently communicated to any person in connection with the Presentation is, or should be taken as, constituting the giving of investment advice to any person.

The Presentation does not relate to any securities which will be registered under the United States Securities Act of 1933 nor any securities which may be offered or sold in the United States or to a U.S. person unless registered under the United States Securities Act of 1933 or in a transaction exempt from registration.

Financial data

All dollar values are in Australian dollars ($ or A$) and financial data is presented as at or for the year ended 30 June 2014 unless stated otherwise.

Future performance

This Presentation contains certain “forward-looking statements”. The words “expect”, “anticipate”, “estimate”, “intend”, “believe”, “guidance”, “should”, “could”, “may”, “will”, “predict”, “plan” and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. Forward-looking statements, opinions and estimates provided in this Presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions.

Forward-looking statements, including projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance.

No representation, warranty or assurance (express or implied) is given or made in relation to any forward-looking statement by any person (including the Company). In particular, no representation, warranty or assurance (express or implied) is given that the occurrence of the events expressed or implied in any forward-looking statements in this Presentation will actually occur. Actual results, performance or achievement may vary materially from any projections and forward-looking statements and the assumptions on which those statements are based. The forward-looking statements in this Presentation speak only as of the date of this Presentation. Subject to any continuing obligations under applicable law or any relevant ASX listing rules, the Company disclaims any obligation or undertaking to provide any updates or revisions to any forward-looking statements in this Presentation to reflect any change in expectations in relation to any forward-looking statements or any change in events, conditions or circumstances on which any such statement is based. Nothing in this Presentation will under any circumstances create an implication that there has been no change in the affairs of RGX/ATG since the date of this Presentation.

Investment risk

An investment in RGX/ATG securities is subject to investment and other known and unknown risks, some of which are beyond the control of RGX/ATG, including possible delays in repayment and loss of income and principal invested. RGX/ATG does not guarantee any particular rate of return or the performance of RGX/ATG, nor does it guarantee the repayment of capital from RGX/ATG or any particular tax treatment. Persons should have regard to the risks outlined in the Company’s prospectus dated 11 November 2014 (Prospectus).

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Introduction

Forecasts

The acquisition entities are:

• Based in Perth, Western Australia and have each been in operation for more than 10 years

• Profitable privately owned businesses

FY 2015 CY 2015

TTV* $100 million $104 million

Gross Profit $12.2 million $12.7 million EBITDA $0.8 million $1.3 million

• Debt free

• Total Transaction Value

• Run by experienced, highly regarded management teams

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• Travel wholesaler

• Online travel agency

• Continuing to service its existing 3,000 travel agencies

• Flights, hotels, cruises, holiday packages

• Continuing expansion into the east coast travel agency market

• Continuing focus on high margin retail leisure travel sector - cruising, luxury collection

• Continued expansion of new travel products

Figures to be read in conjunction with the financial information contained in section 6 of the Prospectus

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• Specialist retail and group travel agency

• Focused on corporate groups, sports, tours and leisure travel

• Continued service of the WA market while expanding group tours into the east coast

3

Summary

Unique investment opportunity

• Strong platform for future growth built on an average of 20+ years of profitable private SME operation.

• East coast expansion provides potential for future growth.

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Creating a highly consumer-focused leisure travel distribution network

• Growing online business complemented by state of the art call centres based in Australia.

• Increasing presence across all three growth markets: retail, wholesale and corporate travel.

Upside and EBIT growth through sustainable operational improvements

• A stable platform for further organic and M&A growth.

• Improve staff, operational and procurement efficiencies, and negotiating power with key suppliers.

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• Cross sell opportunities and consolidating marketing spend.

Capturing growth through digital distribution

• Expanding the customer base over the next 12-24 months particularly on the east coast of Australia.

• Business improvement opportunities for all brands through sharing of technology and marketing platforms.

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Strong cultural fit and organisational alignment across all three acquisitions

• Enhanced talent pool and opportunities for staff.

• Highly regarded and experienced management team with an average of 18+ years of industry experience.

4

Strategy Overview

Online Vertically Integrated Travel Group

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Groups &
Corporate Wholesale Online Retail
Sporting Events
Motive Travel Asia Escape Holiday Planet All Motive Travel
Flights Holidays Cruise Hotels
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The Australian Travel Group (“ATG”, “the Company”, “the Group”) intends to grow with organic and A&D processes through five key business strategies, and the acquisitions of Holiday Planet, Asia Escape and Motive Travel provide a linchpin to the Company’s near term growth.

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Aggregation Strategy

Each acquisition entity will leverage off each other’s strengths to enable the Group to become a new force in the Australian travel industry.

The amalgamation of the entities will allow for a strong vertically integrated growth platform, expanded distribution channels and economies of scale.

• Generate new customers on the east coast of Australia.

• Expansion of current range of escorted group tours.

• Cross-selling via network of Travel Agents.

• Scale to negotiate improved margins with key partners.

• Significant increased online presence.

• Continuing enhancement to online search and booking engines.

• Expanded online distribution platforms including highly functional smart Apps.

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Strategic Rationale

Australian Travel Group Limited intends to become a significant new force in the Australian travel sector through its focus on high margin leisure and package markets.

• Provides a strong established foothold in the leisure and package markets both online and offline.

• Growth • Enhance and vertically integrate an already strong online position across leisure packages, cruise, flight and hotel markets.

• platform • Pool of potential new customers grows significantly on the east coast.

• • Combined business with retail or wholesale distribution with improved buying power and service offerings. •

• Synergies Efficiency, economy and operating margin gains through increased scale and group integration. • Enhance revenue, profit streams and supplier negotiating power through integration economies and market expansion.

• • Expanded and strengthened balance sheet provides capital to pursue further growth into the Australian east coast.

• Balance •

• sheet ASX listing provides script instrument and longer term additional funding optionality for EPS accretive acquisitions.

• flexibility • Consolidated balance sheet and growing profitability provides debt flexibility.

• • Cross-sell opportunities providing an opportunity for market share and revenue growth in key market sectors.

• •

• Cross-sell Provides instant east coast presence for the Luxury Collection and cruise product through 3,000 travel agents. • Extensive database of 50,000+ customers allows for targeted marketing and cross-sell.

• •

• Strengthen Increases each entity’s online distribution of their products across the entire group. online • Improves package offerings across all target markets.

• presence

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ATG Business Metrics

Actual Forecast

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Source: RGX / ATG Prospectus

Figures to be read in conjunction with the financial information contained in Section 6 of the Prospectus

8

ATG Growth Strategies

Leverage off existing business activities incorporating:

• Cross selling of products

• Increased margins through enhanced negotiating ability

• Advancements in technology platforms

• Expand product range across the entire group

• Expand distribution network on eastern seaboard

• Assess acquisition opportunities in line with ATG business model

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Actual Forecast
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Source: RGX / ATG

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Acquisition and Integration Benefits

• Significant improvements in operating margins

• Improved negotiating power with key suppliers

• Operating and technology economies

• Strengthened balance sheet

• ASX listing provides longer term additional funding optionality

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Proposed Board and Management

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Alan Dodson Executive Chairman

Alan was founder of the Holiday Planet Group in May 2001.

Alan has successfully guided Holiday Planet since its inception and has spent more than 38 years in the travel industry in Australia and the United Kingdom.

Alan’s key responsibilities within the Group will include company development, finance and overall Sales and Marketing Strategy.

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Mason brings 17 years of travel wholesaling experience to the Group and was an original founder of Asia Escape Holidays.

Mason has successfully grown Asia Escape’s wholesale reach from 85 agents to over 3,000 travel agents in Australia.

Mason’s key responsibilities within the Group will include responsibility for wholesale activities.

Mason Adams Executive Director - Wholesale

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Michael joins the Group with over 30 years experience in the travel industry.

Michael has extensive knowledge of international and domestic tourism markets having served with Jetset Travel for some 20 years including the last 10 years as WA State Manager, prior to joining Holiday Planet.

Michael joined Holiday Planet in 2002 where his responsibilities will continue to include information technology management, recruitment and overall logistical and operational management.

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Jennifer is a partner of law firm Minter Ellison where she advises on a broad range of matters including M&A, capital markets and regulatory compliance. Jennifer is currently a director of Red Gum.

Jennifer’s role encompasses advice on business acquisitions, restructures, regulatory issues and corporate governance.

Jennifer is a member of the Corporations Committee of the Law Council of Australia, and a Member of the Australian Institute of Company Directors.

Michael Croy Executive Director - Operations

Jennifer Tobin

Independent Non - Executive Director

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Growth Opportunities

• 8.4 million international departures from Australia in the year to June 2013 (Source: ABS).

• Last year approximately 833,000 travelled on a cruise holiday, a 20% increase on previous year.

• Cruise numbers predicted to be over 1 million by 2016.

• 8.8% revenue growth for Australian international travel.

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Cruise Sector Growth (Source: RGX / ATG Prospectus)
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ATG intends to take advantage of growth opportunities to continue to strategically grow in its markets of operation .

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ATG – On Industry Trend

• Cruise industry undergoing phenomenal growth

• Luxury product and destinations

• Development of new destinations

• Growth of “Multi Segmented” packages

• Specialist group departures

• Exclusive product offerings

• Mobile enabled sites for smartphones and tablets

13

Industry Peer Comparison

• ATG provides leverage into higher margin leisure, cruise and package market.

• ATG has the benefit of both a strong online presence and traditional retail sales channels.

• Peer valuation based on a number of publicly listed companies focused on the provision of travel services.

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Source: wise-owl

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Transaction Terms

• Targets and Holiday Planet (HP), Asia Escape (AE) and Motive Travel (MT) Purchase • See table for breakdown

• Prices • Funded through a combination of Capital Raising and issue

• Acquisition of Convertible Notes

• funding • EGM approval required (27 November 2014)

• • Regulatory approvals - ASX Listing Rules Chapters 1 & 2 recompliance and ASX relisting

• Key terms • Capital Raising $3 - $5 mil, DJ Carmichael (Lead Manager)

• • Create new force in tourism sector

• Acquisition • Online vertically integrated travel group

• impact • Annual forecast FY15 TTV >$100 mil

	Transaction Terms	Transaction Terms
Vendor	Cash	Shares	Convertible Notes	Total Consideration
Holiday Planet Shareholders	750,000 $	18,750,000	250,000 $	4,750,000 $
Asia Escape Shareholder	750,000 $	10,000,000	750,000 $	3,500,000 $
Motive Travel Shareholders	500,000 $	5,000,000	500,000 $	2,000,000 $
	2,000,000 $	33,750,000	1,500,000 $	10,250,000 $
				Source: RGX / ATG

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Capital Raising – Overview

The Capital Raising Prospectus was lodged on 11 November 2014*

Public Offer	• Minimum subscription 15 million shares to raise $3 million
Size	• Maximum subscription 25 million shares to raise $5 million
	• Shares $0.20 per share
Offer price	• One free attaching option for every two shares subscribed for
	• Shares are fully paid and will rank equally
Ranking	• Options exercisable at $0.25 on or before 15 November 2017
Broker support	• DJ Carmichael Pty Limited mandated as Lead Manager

• Red Gum Resources Limited is the issuer of the Capital Raising shares and options, and has lodged a Prospectus in relation to the offer. The Prospectus can be obtained at www.redgumresources.com. Investors should consider the Prospectus in deciding whether to acquire shares or options.

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Capital Raising – Use of Funds

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Source: RGX / ATG Prospectus

¹ Please refer to Section 3 of the Prospectus for more details on how the Company will use the funds raised.

² This amount is the estimated transaction costs which have not been paid as at the date of the Prospectus. As at the date of this Prospectus, a total of approximately $809,000 of the transaction has been paid by the Company.

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Capital Raising – Outcomes

The Australian Travel Group Limited intends to relist via Red Gum Resources Limited and contemporaneously raise up to $5 million of new equity capital.

Post Consolidation Capital Structure

	Minimum	Minimum	Maximum	Maximum
	Shares	% Ownership	Shares	% Ownership
Existing Red Gum shareholders	33,280,000	40.4%	33,280,000	36.0%
Travel vendors	33,750,000	41.0%	33,750,000	36.6%
Capital Raising new investors	15,000,000	18.2%	25,000,000	27.1%
Promoter shares	300,000	0.4%	300,000	0.3%
Total shares on issue	82,330,000	100.0%	92,330,000	100.0%
Market capitalisation at listing	$16.5 million		$18.5 million
Net cash at listing	$4.2 million		$6.2 million

Source: RGX / ATG

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Source: RGX / ATG

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Details of Offer

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Source: RGX / ATG Prospectus Refer to Prospectus for Notes

19

Capital Raising – Indicative Timetable

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¹ Refers to the sale purchase agreements of Holiday Planet, Asia Escape and Motive Travel.

The above timeline is indicative only and may change without notice. All dates and times above refer to the date and time in Perth, Western Australia.

Source: RGX / ATG Prospectus

20

Summary

Unique investment opportunity

• Strong platform for future growth built on an average of 20+ years of profitable private SME operation.

• East coast expansion provides potential for future growth.

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Creating a highly consumer-focused leisure travel distribution network

• Growing online business complemented by state of the art call centres based in Australia.

• Increasing presence across all three growth markets: retail, wholesale and corporate travel.

Upside and EBIT growth through sustainable operational improvements

• A stable platform for further organic and M&A growth.

• Improve staff, operational and procurement efficiencies, and negotiating power with key suppliers.

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• Cross sell opportunities and consolidating marketing spend.

Capturing growth through digital distribution

• Expanding the customer base over the next 12-24 months particularly on the east coast of Australia.

• Business improvement opportunities for all brands through sharing of technology and marketing platforms.

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Strong cultural fit and organisational alignment across all three acquisitions

• Enhanced talent pool and opportunities for staff.

• Highly regarded and experienced management team with an average of 18+ years of industry experience.

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Contacts

Alan Dodson Australian Travel Group Proposed Chairman

Level 1

288 Stirling Street Perth WA 6000

P: 1300 790 635 F: +61 8 9426 9990

Ray Shaw Red Gum Resources Chairman

Level 1 79 Angas Street Adelaide SA 5000

P: 1300 8223 1680 F: +61 8 8223 1685

Anthony Tascone and Scott Robertson DJ Carmichael Institutional Advisers

Level 3 216 St Georges Terrace PERTH WA 6000

P: +61 8 9263 5200 F: +61 8 9263 5289

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