PRIME FINANCIAL GROUP LIMITED — Proxy Solicitation & Information Statement 2005

Mar 21, 2005

AUSTRALIAN VALUE FUNDS MANAGEMENT LIMITED ACN 009 487 674

NOTICE OF EXTRAORDINARY GENERAL MEETING

incorporating

LETTER TO SHAREHOLDERS

and

PROXY FORM

DATE AND TIME OF MEETING

Friday 22 April, 2005 at 10:00 am EST

PLACE OF MEETING

Level 16, 90 Collins Street, Melbourne

Level 16, 90 Collins Street Melbourne VIC 3000 Ph: (03) 9639 8709 Fax: (03) 9639 0311 ACN 009 487 674

18 March, 2005

Dear Shareholder

In principle agreement to buy into Garnaut Private Client Advisers

Your Directors have much pleasure in providing you with this document containing a Notice of Extraordinary General Meeting to seek your approval to the acquisition and other transactions (Acquisition) that was announced by the Company to the ASX on 11 March 2005.

The Company is seeking to acquire shares giving it a 40% interest in the business of Garnaut Private Client Advisers (GPCA) under a Share Sale Agreement dated 11 March 2005 (Share Sale Agreement) made between the Company, GPCA, Garnfam Pty Ltd as trustee of the Garnaut Family Trust (Vendor), Beksan Pty Ltd (Beksan – a wholly owned subsidiary of the Vendor), and Mr Christopher Garnaut, the Founder and Managing Partner of GPCA.

GPCA is a high quality, long established business, specialising in investment management to high wealth individuals and small to medium enterprises and currently has in excess of $400M under advisement. GPCA's client base is spread throughout Australia, predominately in Melbourne, Sydney and the ACT.

The Acquisition upon completion, is anticipated to be immediately earnings per share and dividend per share accretive for the Company.

The consideration being paid by the Company for the Acquisition is 11,333,333 fully paid ordinary shares in the Company and $3M in cash, to be respectively issued and paid to Garnfam Pty Ltd as trustee of the Garnaut Family Trust (Vendor), an entity controlled by the Founder and Managing Partner of GPCA, Mr Christopher Garnaut.

This will give the Vendor a relevant interest of not more than 17.5 % of the issued ordinary shares of the Company. At the date of this letter the Company has 54,171,035 shares on issue and is continuing on a weekly basis to issue more shares upon the exercise of options that were issued in the Company's public offering and ASX listing made late last year.

The Vendor will retain a 60% relevant interest in GPCA and Mr Christopher Garnaut has entered into a 3 year service agreement with GPCA.

Subject to the approval of the Acquisition, Mr Garnaut will also be appointed as a non-executive director of the Company.

The Company's Directors are extremely pleased at being able to bring to the Company this investment in one of Australia's leading independent financial advisory businesses. The Company, is now well positioned to achieve one of its stated objectives, that being the establishment of a meaningful presence in the Australian financial planning and superannuation advisory industry.

If approval is obtained from shareholders, it is anticipated the Acquisition will be completed within one day following the EGM.

Appointment of Nicholas Pike as a Non-executive Director

The Company has completed its purchase of a 28% interest in Carroll, Pike & Piercy (CPP) which was disclosed in the Company's Prospectus. As part of that acquisition Mr Nicholas Pike, the Managing Director of CPP, was appointed by the Board as a non-executive director of the Company on 17 January, 2005. The Directors now seek shareholder ratification of the appointment of Mr. Nicholas Pike as a director.

Increase in Aggregate Remuneration of Non-Executive Directors

Recognising the recent increase in the number of the Company's appointed non-executive directors, a resolution will be also sought for the Company to determine under clause 60.1 of its Constitution that the aggregate maximum sum of $375,000 per annum may collectively be paid to the nonexecutive directors for their services effective on and from 1 July 2005. This represents an increase of $125,000 from the maximum sum of $250,000 which may be determined by the directors under clause 60.1 of the Company's Constitution.

Change of Auditor

Your directors report that the Company's previous Auditor, MCG Partners, has resigned following the Company's successful completion of its listing on the ASX late last year. The Directors have appointed Pitcher Partners to fill that vacancy and now seek shareholder ratification of the appointment of Pitcher Partners as the Company's Auditor.

Summary of Resolutions

In summary, the meeting will deal with, and seek shareholder approval of, the following matters:

• $1.$ pursuant to the Share Sale Agreement dated 11 March 2005, the Company (as Purchaser) acquiring from Garnfam Pty Ltd as trustee of the Garnaut Family Trust (as Vendor) all of the issued shares in Beksan Pty Ltd (Beksan) giving the Company a 40% interest in the business of Garnaut Private Client Advisers (GPCA) (the Acquisition), and in consideration of the Acquisition, the Company will:
  • issue and allot 11.333.333 fully paid ordinary shares in the Company to the Vendor $\overline{a}$ . at a issue price of 30 cents; and
  • $\mathbf{b}$ . pay $3M in cash to the Vendor;
• $\overline{2}$ . as part of the consideration for the Acquisition, approval be given for the Company to issue and allot 11.333.333 fully paid ordinary shares in the Company to the Vendor at a issue price of 30 cents giving the Vendor a relevant interest in not more than 17.5% of the issued ordinary securities of the Company;
• 1. the appointment of Mr Christopher Garnaut as a non-executive director of the Company:
• $\overline{4}$ the ratification of the appointment of Mr Nicholas Pike as a non-executive director of the Company;
• 1. the determination of the aggregate maximum sum of $$375,000$ per annum to be paid as remuneration for the services of the non-executive directors effective on and from 1 July 2005; and
• the ratification of the appointment of Pitcher Partners as Auditor of the Company. 6.

Your directors believe these proposals will help to enhance the value of the Company. I invite you to attend the meeting to support the proposals at which you will also have the opportunity to ask any questions. However, if you cannot attend. I encourage you to make your vote by completing and returning the Proxy Form included in the Notice.

Yours faithfully,

P. Dennedy

P.R. KENNEDY CHAIRMAN

NOTICE OF EXTRAORDINARY GENERAL MEETING

AUSTRALIAN VALUE FUNDS MANAGEMENT LIMITED

(ACN 009 487 674)

Notice is hereby given that an Extraordinary General Meeting of the Shareholders of the Company will be held at 10.00am EST on Friday, 22 April 2005, at Level 16, 90 Collins Street, Melbourne.

AGENDA

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

$\mathbf{1}$ . Acquisition of 40% Interest in GPCA Business

"Subject to the passing of resolution 2 at this meeting, that for the purposes of Listing Rule 7.1 of the Listing Rules of the Australian Stock Exchange Limited ("Listing Rules") and for all other purposes, the following transaction is approved by the Company:

The Company (Purchaser) acquire from Garnfam Pty Ltd as Trustee of the Garnaut Family Trust (Vendor) all of the issued ordinary shares in Beksan Pty Ltd (Beksan) giving the Company a 40% interest in the business of Garnaut Private Client Advisers (GPCA) in accordance with the terms and conditions of the Share Sale Agreement dated 11 March 2005 between the Company, Vendor, Beksan, GPCA and Mr Christopher Garnaut (Share Sale Agreement), on the Completion Date as defined in the Share Sale Agreement and in consideration of the Acquisition, the Company will:

• a. issue and allot 11,333,333 fully paid ordinary shares in the Company ("Consideration Shares") to the Vendor at a issue price of 30 cents; and
• pay $3 million in cash to the Vendor." $h1$

$\overline{2}$ . Approval for issue and allotment of Consideration Shares for the Acquisition

"Subject to the passing of resolution 1 at this meeting, that for the purposes of Listing Rules 7.1 and for all other purposes, the Company approves the issue and allotment of 11.333.333 fully paid ordinary shares in the Company, such shares ranking equally with all other issued ordinary shares, to Garnfam Pty Ltd in its capacity as Trustee of the Garnaut Family Trust at an issue price of $0.30 per share. Such issue and allotment to be made at Completion of the Share Sale Agreement which is to be one business day after the date of this Resolution, and which in any event is to be no later than 3 months after the date of this meeting.

Appointment of Non-Executive Director (Mr Christopher Garnaut) 3.

"That, subject to the passing of Resolutions 1 and 2 inclusive at this meeting, Mr Christopher Garnaut be appointed as a non-executive director of the Company on and from Completion of the Share Sale Agreement".

Ratification of Appointment of Non-Executive Director (Mr Nicholas Pike) $\overline{4}$ .

"That the Company ratify the appointment by the directors of Mr Nicholas Pike as a non-executive director of the Company effective from 17 January 2005."

$\overline{5}$ . Alteration to the Remuneration of Directors

"That for the purposes of clause 60.1 of its Constitution and until the Company determines otherwise, the Company determines and approves that effective on and from 1 July 2005 the aggregate maximum sum that may collectively be paid to the non-executive directors for their services is $375,000 per annum".

6. Appointment of new Auditor.

"That pursuant to section 327(5) of the Corporations Act and the Company's Constitution, the Company approves the appointment of, and/or alternatively, ratifies the appointment by the directors of, Pitcher Partners as the Auditor of the Company."

Dated: 18 March 2005

By order of the Board

Campbell Kennedy

Company Secretary

Voting Exclusion Statement

$\mathbf{1}$ . The Company will disregard any votes cast on Resolution 1 by Christopher Garnaut, Garnfam Pty Ltd or their associates and any person, and an associate of any of those persons, who might obtain a benefit, except for a benefit solely in the capacity of a Company shareholder, if that resolution is passed. However, the Company need not disregard a vote on a resolution if it is cast by a person as proxy for a person who is entitled to vote in accordance with the directions on the proxy form, or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote in accordance with a direction on the proxy form to vote as the proxy decides.

• $2.$ The Company will disregard any votes cast on Resolution 2 by Christopher Garnaut, Garnfam Pty Ltd or their associates and any person, and an associate of any of those persons, who might obtain a benefit, except for a benefit solely in the capacity of a Company shareholder, if that resolution is passed. However, the Company need not disregard a vote on a resolution if it is cast by a person as proxy for a person who is entitled to vote in accordance with the directions on the proxy form, or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote in accordance with a direction on the proxy form to vote as the proxy decides.
• $3.$ The Company will disregard any votes cast on Resolution 5 by any director and any associate of any director and any person, and an associate of any of those persons, who might obtain a benefit, except for a benefit solely in the capacity of a Company shareholder, if that resolution is passed. However, the Company need not disregard a vote on a resolution if it is cast by a person as proxy for a person who is entitled to vote in accordance with the directions on the proxy form, or 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.

Proxies

THE CHANGE

All proxies must be received by the Company by no later than 48 hours before the time for holding the meeting. A proxy form should be completed on the basis of the enclosed form by following the instructions set out on the reverse of the form. The completed proxy form may be delivered to the Company in person, by mail or by facsimile transmission as follows:

Australian Value Funds Management Limited Level 16, 90 Collins Street Melbourne, Vic. 3000 Facsimile No: (03) 9639 0311

Chairman

Peter R. Kennedy will be Chairman of the meeting pursuant to Section 249U of the Corporations Act.

Enquiries

All enquiries should be directed to: Attn: Mr. Campbell Kennedy on (03) 9639 8709.

Australian Value Funds Management Ltd

ARN 70 009 487 674

All correspondence to:

Mark this box with an 'X' if you have made any changes to your address details (see reverse)

Computershare Investor Services Pty Limited GPO Box 242 Melbourne Victoria 3001 Australia Enquiries (within Australia) 1300 850 505 (outside Australia) 61 3 9415 4000 Facsimile 61 3 9473 2555 www.computershare.com

Securityholder Reference Number (SRN)

Appointment of Proxy

飞

I/We being a member/s of Australian Value Funds Management Ltd and entitled to attend and vote hereby appoint
	If you are not appointing the Chairman of the Meeting as
the Chairman	your proxy please write here the full name of the individual or
of the Meeting	body corporate (excluding the registered Securityholder) you
: (mark with an 'X')	are appointing as your proxy.
or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting on my/our behalf and to vote in
accordance with the following directions (or if no directions have been given, as the proxy sees at) at the Extraordinary General Meeting of Australian Value Funds Management Ltd to be held at Level 16, 90
Coilins Street, Malbourne, Victoria on Etirbay, 22 April 2005 at 10:00am and at any adiouroment of that meeting

IMPORTANT: FOR ITEMS 1, 2 AND 5 BELOW

If the Chairman of the Meeting is your nominated proxy, or may be appointed by default, and you have not directed your proxy how to vote on these Items below, please place a mark in this box. By marking this box you acknowledge that the Chairman of the Meeting may exercise your proxy even if he has an interest in the outcome of those items and that votes cast by him, other than as proxy holder, would be disregarded because of that interest. If you do not mark this box, and you have not directed your proxy how to vote, the Chairman of the Meeting will not cast your votes on these flems and your votes will not be counted in computing the required majority if a poll is called on these items. The Chairman of the Meeting intends to vote undirected proxies in favour of each of these items.

PLEASE SIGN HERE This section must be signed in accordance with the instructions overleaf to enable your directions to be implemented.

Individual or Securityholder 1

proxy.

Individual/Sole Director and	88888

Securityholder 2 Director

Securityholder 3

Director/Company Secretary
	.
	ĺ

Director/Company Secretary

Sole Company Secretary

Contact Daytime Telephone

Date

1 Your Address

This is your address as it appears on the company's share register. If this information is incorrect, please mark the box and make the correction on the form. Securityholders sponsored by a broker (in which case your reference number overleaf will commence with an 'x') should advise your broker of any changes. Please note, you cannot change ownership of your securities using this form.

$\overline{2}$ Appointment of a Proxy

If you wish to appoint the Chairman of the Meeting as your proxy, mark the box. If the individual or body corporate you wish to appoint as your proxy is someone other than the Chairman of the Meeting please write the full name of that individual or body corporate in the space provided. If you leave this section blank, or your named proxy does not attend the meeting, the Chairman of the Meeting will be your proxy. A proxy need not be a securityholder of the company. Do not write the name of the issuer company or the registered securityholder in the space.

3 Votes on Items of Business

You may direct your proxy how to vote by placing a mark in one of the three boxes opposite each item of business. All your securities will be voted in accordance with such a direction unless you indicate only a portion of voting rights are to be voted on any item by inserting the percentage or number of securities you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on a given item, your proxy may vote as he or she chooses. If you mark more than one box on an item your vote on that item will be invalid.

$\boldsymbol{\Lambda}$ Appointment of a Second Proxy

You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you wish to appoint a second proxy, an additional Proxy Form may be obtained by telephoning the company's share registry or you may copy this form.

To appoint a second proxy you must:

• indicate that you wish to appoint a second proxy by marking the box. $(a)$
• on each of the first Proxy Form and the second Proxy Form state the percentage of your voting rights or number of securities applicable to that $(b)$ form. If the appointments do not specify the percentage or number of votes that each proxy may exercise, each proxy may exercise half your votes. Fractions of votes will be disregarded.
• return both forms together in the same envelope. $(c)$

Signing Instructions

5

You must sign this form as follows in the spaces provided:

Individual.	where the holding is in one name, the holder must sign.
Joint Holding:	where the holding is in more than one name, all of the securityholders should sign.
Power of Attorney:	to sign under Power of Attorney, you must have already lodged this document with the registry. If you have notpreviously lodged this document for notation, please attach a certified photocopy of the Power of Attorney to this formwhen you return it.
Companies:	where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by thatperson. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, aSole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Directoror a Company Secretary. Please indicate the office held by signing in the appropriate place.

If a representative of a corporate Securityholder or proxy is to attend the meeting the appropriate "Certificate of Appointment of Corporate Representative" should be produced prior to admission. A form of the certificate may be obtained from the company's share registry.

Lodgement of a Proxy

This Proxy Form (and any Power of Attorney under which it is signed) must be received at an address given below no later than 48 hours before the commencement of the meeting at 10:00am on Friday, 22 April 2005. Any Proxy Form received after that time will not be valid for the scheduled meeting.

Documents may be lodged: IN PERSON

Australian Value Funds Management Limited - Level 16, 90 Collins Street, Melbourne, Victoria 3000, AUSTRALIA

BY MAIL Australian Value Funds Management Limited - Level 16, 90 Collins Street, Melbourne, Victoria 3000, AUSTRALIA BY FAX 61396390311