SKS TECHNOLOGIES GROUP LIMITED — Capital/Financing Update 2014

Jun 23, 2014

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX's property and may be made public.

Introduced 01/07/96 Origin: Appendix 5 Amended 01/07/98, 01/09/99, 01/07/00, 30/09/01, 11/03/02, 01/01/03, 24/10/05, 01/08/12, 04/03/13

Name of entity

Stokes Limited

ABN

004 554 929

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

1	+Class of +securities issued or tobe issued	UnsecuredConvertible("Convertible Notes")	Notes
2	Number of +securities issued ortobeissued(ifknown)ormaximum number which maybe issued	7,287,820 Convertible Notes

+ See chapter 19 for defined terms.

3	Principal terms of the +securities(e.g. if options, exercise priceand expiry date; if partly paid+securities,theamountoutstanding and due dates for+convertiblepayment;ifsecurities, the conversion priceand dates for conversion)	Convertible Notes to be issued at a priceof $0.35 each with a Maturity Date of 30June 2017.Each Convertible Note isconvertible into one ordinary fully paidshare(subjecttoadjustmentinaccordancewiththetermsoftheConvertible Notes.In addition, theCompany undertakes to issue one $0.352019optionforeverytwoordinarysharesissueduponconversionofaConvertible Note.
		Interest (to accrue daily and be payablequarterly in arrears) will be payable onthe Convertible Notes at 10% p.a.TheNotes are redeemable at Maturity or inthe event of default (subject to certainconditions).EarlypaymentoftheConvertible Notes is not permitted.Forfurtherdetails,refertotheCompany'sProspectusdated26May2014
4	Do the +securities rank equallyin all respects from the +issuedate with an existing +class ofquoted +securities?If the additional +securities donot rank equally, please state:•the date from which they do•the extent to which theyparticipateforthenextdividend, (in the case of atrust,distribution)orinterest payment•the extent to which they donot rank equally, other thaninrelationtothenextdividend,distributionorinterest payment	No.Subject to approval being granted byASX,itisexpectedthatOfficialQuotationandtradingoftheConvertible Notes will commence onASX on a normal basis on 24 June 2014The Notes do not confer any dividendrights.
5	Issue price or consideration	$0.35 per Convertible Note.

6	Purpose of the issue(If issued as consideration forthe acquisition of assets, clearlyidentify those assets)	To raise funds to be utilised primarily asfollows:•fund the expansion of the StokesTechnologies Division;•repaymentofexistingdebtassociated with recent expansion andsales activities;•generalworkingcapitalpurposes;and•costs associated with the entitlementissue.
6a	Is the entity an +eligible entitythathasobtainedsecurityholder approval under rule 7.1A?If Yes, complete sections 6b – 6hin relation to the +securities thesubject of this Appendix 3B, andcomply with section 6i	Not applicable
6b	The date the security holderresolution under rule 7.1A waspassed	Not applicable
6c	Number of +securities issuedwithout security holder approvalunder rule 7.1	Not applicable
6d	Number of +securities issuedwith security holder approvalunder rule 7.1A	Not applicable
6e	Number of +securities issuedwith security holder approvalunderrule7.3,oranotherspecific security holder approval(specify date of meeting)	Not applicable
6f	Number of +securities issuedunder an exception in rule 7.2	Not applicable
6g	If +securities issued under rule7.1A, was issue price at least 75%of 15 day VWAP as calculatedunder rule 7.1A.3?Include the+issue date and both values.Include the source of the VWAPcalculation.	Not applicable

+ See chapter 19 for defined terms.

• 6h If +securities were issued under rule 7.1A for non-cash consideration, state date on which valuation of consideration was released to ASX Market Announcements
• 6i Calculate the entity's remaining issue capacity under rule 7.1 and rule 7.1A – complete Annexure 1 and release to ASX Market Announcements
• 7 +Issue dates

Note: The issue date may be prescribed by ASX (refer to the definition of issue date in rule 19.12). For example, the issue date for a pro rata entitlement issue must comply with the applicable timetable in Appendix 7A.

Cross reference: item 33 of Appendix 3B.

• 8 Number and +class of all +securities quoted on ASX (including the +securities in section 2 if applicable)
• 9 Number and +class of all +securities not quoted on ASX (including the +securities in section 2 if applicable)
• 10 Dividend policy (in the case of a trust, distribution policy) on the increased capital (interests)

Not applicable

See Annexure 1

23 June 2014

Number +Class 29,151,281 7,287,820 Fully paid Ordinary Shares Convertible Notes at $0.35 each convertible on or before 30 June 2017 Number +Class Nil

Not applicable

Part 2 - Pro rata issue

11	Issecurityholderapprovalrequired?	No
12	Is the issue renounceable or nonrenounceable?	Non-renounceable
13	Ratio in which the +securitieswill be offered	One new Convertible Note for everyfour shares held
14	+Class of +securities to which theoffer relates	ConvertibleNotesareofferedtoholders of ordinary shares only.
15	+Recorddatetodetermineentitlements	2 June 2014
16	Willholdingsondifferentregisters(orsubregisters)beaggregatedforcalculatingentitlements?	No
17	Policy for deciding entitlementsin relation to fractions	Fractional entitlements will be roundedup
18	Names of countries in which theentity has security holders whowillnotbesentnewofferdocuments	All countries other than Australia andNew Zealand
	Note: Security holders must be told how theirentitlements are to be dealt with.
	Cross reference: rule 7.7.
19	Closingdateforreceiptofacceptances or renunciations	17 June 2014

+ See chapter 19 for defined terms.

20	Names of any underwriters	JM Financial Group Ltd ACN 007 364 132
21	Amount of any underwriting feeor commission	$127,000(5%oftheUnderwrittenAmount)
22	Names of any brokers to theissue	Not applicable
23	Fee or commission payable to thebroker to the issue	Not applicable
24	Amountofanyhandlingfeepayable to brokers who lodgeacceptances or renunciations onbehalf of security holders	Not applicable
25	If the issue is contingent onsecurity holders' approval, thedate of the meeting	Not applicable
26	Date entitlement and acceptanceform and offer documents will besent to persons entitled	5 June 2014
27	If the entity has issued options,andthe terms entitle optionholderstoparticipateonexercise,thedateonwhichnotices will be sent to optionholders	Not applicable
28	Date rights trading will begin (ifapplicable)	Not applicable
29	Date rights trading will end (ifapplicable)	Not applicable
30	How do security holders selltheir entitlements in full througha broker?	Not applicable
31	How do security holders sell partof their entitlements through abrokerandacceptforthebalance?	Not applicable

+ See chapter 19 for defined terms.

32 How do security holders dispose of their entitlements (except by sale through a broker)?

Not applicable

33 +Issue date 23 June 2014

Part 3 - Quotation of securities

You need only complete this section if you are applying for quotation of securities

• 34 Type of +securities (tick one)
• (a) +Securities described in Part 1

(b) All other +securities

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

• 35 If the +securities are +equity securities, the names of the 20 largest holders of the additional +securities, and the number and percentage of additional +securities held by those holders
• 36 If the +securities are +equity securities, a distribution schedule of the additional +securities setting out the number of holders in the categories
  • 1 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over

37 A copy of any trust deed for the additional +securities

+ See chapter 19 for defined terms.

Entities that have ticked box 34(b)

38	Number of +securities for which+quotation is sought
39	+Class of +securities for whichquotation is sought
40	Do the +securities rank equally inall respects from the +issue datewith an existing +class of quoted+securities?
	If the additional +securities do notrank equally, please state:•the date from which they do•theextenttowhichtheyparticipateforthenextdividend, (in the case of atrust, distribution) or interestpayment•the extent to which they donot rank equally, other than inrelation to the next dividend,distributionorinterestpayment
41	Reason for request for quotationnow
	Example: In the case of restricted securities, endof restriction period
	(if issued upon conversion ofanother +security, clearly identifythat other +security)
		Number	+Class
42	+classNumberandofall+securitiesquotedonASX(including the +securities in clause38)

+ See chapter 19 for defined terms.

Quotation agreement

• 1 +Quotation of our additional +securities is in ASX's absolute discretion. ASX may quote the +securities on any conditions it decides.
• 2 We warrant the following to ASX.
  • The issue of the +securities to be quoted complies with the law and is not for an illegal purpose.
  • There is no reason why those +securities should not be granted +quotation.
  • An offer of the + securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

• Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any +securities to be quoted and that no-one has any right to return any +securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the +securities be quoted.
• If we are a trust, we warrant that no person has the right to return the +securities to be quoted under section 1019B of the Corporations Act at the time that we request that the +securities be quoted.
• 3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.
• 4 We give ASX the information and documents required by this form. If any information or document is not available now, we will give it to ASX before +quotation of the +securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

== == == == ==

Sign here: ................................................. Date: 24 June 2014 (Director/Company secretary)

Print name: Con Scrinis

+ See chapter 19 for defined terms.

Appendix 3B – Annexure 1

Calculation of placement capacity under rule 7.1 and rule 7.1A for eligible entities

Introduced 01/08/12 Amended 04/03/13

Part 1

Rule 7.1 – Issues exceeding 15% of capital
Step 1: Calculate "A", the base figure from which the placementcapacity is calculated
Insert number of fully paid +ordinarysecurities on issue 12 months before the+issue date or date of agreement to issue	23,401,281
Add the following:Number of fully paid +ordinary securities•issued in that 12 month period under anexception in rule 7.2Number of fully paid +ordinary securities•issued in that 12 month period withshareholder approvalNumber of partly paid +ordinary•securities that became fully paid in that12 month periodNote:•Include only ordinary securities here –other classes of equity securities cannotbe added•Include here (if applicable) the securitiesthe subject of the Appendix 3B to whichthis form is annexed•It may be useful to set out issues ofsecurities on different dates as separate	4,892,000 Shares issued on 1 November2013858,000 Shares issued on 29 November2013
line itemsSubtract the number of fully paid +ordinarysecurities cancelled during that 12 monthperiod	Nil
"A"	29,151,281

+ See chapter 19 for defined terms.

Step 2: Calculate 15% of "A"
"B"	0.15
	[Note: this value cannot be changed]
Multiply "A" by 0.15	4,372,692
Step 3: Calculate "C", the amount of placement capacity under rule7.1 that has already been used
Insert number of +equity securities issuedor agreed to be issued in that 12 monthperiod not counting those issued:	Nil
•Under an exception in rule 7.2
•Under rule 7.1A
•With security holder approval under rule7.1 or rule 7.4
Note:•This applies to equity securities, unlessspecifically excluded – not just ordinarysecurities•Include here (if applicable) the securitiesthe subject of the Appendix 3B to whichthis form is annexed•It may be useful to set out issues ofsecurities on different dates as separateline items
"C"	nil
Step 4: Subtract "C" from ["A" x "B"] to calculate remainingplacement capacity under rule 7.1
"A" x 0.15	4,372,692
Note: number must be same as shown inStep 2
Subtract "C"	Nil
Note: number must be same as shown inStep 3
Total ["A" x 0.15] – "C"	4,372,692
	[Note: this is the remaining placement

capacity under rule 7.1]

+ See chapter 19 for defined terms.

Part 2

Rule 7.1A – Additional placement capacity for eligible entities
Step 1: Calculate "A", the base figure from which the placementcapacity is calculated
"A"	29,151,281
Note: number must be same as shown inStep 1 of Part 1
Step 2: Calculate 10% of "A"
"D"	0.10
	Note: this value cannot be changed
Multiply "A" by 0.10	2,915,128
Step 3: Calculate "E", the amount of placement capacity under rule7.1A that has already been used
Insert number of +equity securities issuedor agreed to be issued in that 12 monthperiod under rule 7.1A	Nil
Notes:•This applies to equity securities – notjust ordinary securities•Include here – if applicable – thesecurities the subject of the Appendix3B to which this form is annexed•Do not include equity securities issuedunder rule 7.1 (they must be dealt within Part 1), or for which specific securityholder approval has been obtained•It may be useful to set out issues ofsecurities on different dates as separateline items
"E"	Nil

+ See chapter 19 for defined terms.

Step 4: Subtract "E" from ["A" x "D"] to calculate remaining placement capacity under rule 7.1A

"A" x 0.10	2,915,128
Note: number must be same as shown inStep 2
Subtract "E"	Nil
Note: number must be same as shown inStep 3
Total ["A" x 0.10] – "E"	2,915,128
	Note: this is the remaining placementcapacity under rule 7.1A

+ See chapter 19 for defined terms.

	Name	# of Convertible Notes	% of Units
1	SANDHURST TRUSTEES LTD	1,679,214	23.04
2	BOOM CAPITAL PTY LTD	946,500	12.99
3	GREG ELECTRICAL CONTRACTORS	875,000	12.01
4	VOLANTOR SUPERANNUATION FUND	872,500	11.97
5	SANDHURST TRUSTEES LTD	495,667	6.80
6	KINSHIP NOMINEES PTY LTD	285,714	3.92
7	MR MATTHEW PETER JINKS	206,167	2.83
8	BUGEJA SUPER FUND	200,000	2.74
9	SKYCAR INVESTMENTS PTY LTD	150,000	2.06
10	SOPHIE EDMUNDS	142,857	1.96
11	SHANE EDMUNDS SUPERANNUATION FUND	142,857	1.96
12	TRACEY TOWNER	114,286	1.57
13	WINPAR HOLDINGS LIMITED	100,000	1.37
14	SEYMOUR PENSION FUND PTY LTD	85,000	1.17
15	MR MICHAEL KOUTSAKIS &	71,643	0.98
16	VOLANTOR SUPERANNUATION FUND	71,500	0.98
17	MR GREG JINKS & MRS DOROTHY JINKS	71,500	0.98
18	RAAMIN SUPER FUND	71,429	0.98
19	HADJ SUPERANNUATION FUND	57,143	0.78
20	HONAN BUSINESS SERVICES PTY	50,430	0.69

Range	Total holders	Units	% of Issued Capital
1 - 1,000	4	1,592	0.02
1,001 - 5,000	10	27,658	0.38
5,001 - 10,000	4	31,036	0.43
10,001 - 100,000	28	1,116,772	15.32
100,001 - 9,999,999,999	12	6,110,762	83.85
Total	58	7,287,820	100.00

+ See chapter 19 for defined terms.