Empire Beer Group Limited ACN 119 327 169

Notice of General Meeting and Explanatory Statement

For the General Meeting to be held on 15 April 2009 at 10:00am (WST) at Freemasons Building, 181 Roberts Road, Subiaco, Western Australia

This Notice of Meeting should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisers prior to voting.

The Independent Expert reporting on Resolution 1 concludes that the acquisition referred to in that resolution is NOT FAIR BUT REASONABLE to the non‐associated Shareholders of the Company.

Should you wish to discuss the matters in this Notice of Meeting please do not hesitate to contact the Company Secretary on +61 8 9322 7600.

Venue

The General Meeting of Shareholders will be held on 15 April 2009 at 10:00am (WST) at:

Freemasons Building 181 Roberts Road Subiaco, Western Australia

How to Vote

You may vote by attending the meeting in person, by proxy or authorised representative.

Voting in Person

To vote in person, attend the meeting on the date and at the place set out above. The meeting will commence at 10:00am (WST).

Voting by Proxy

To vote by proxy, please complete and sign the proxy form enclosed:

send the proxy form by post to Empire Beer Group Limited, 945 Wellington Street, West Perth, Western Australia, 6005; or
deliver the proxy form to Empire Beer Group Limited, 945 Wellington Street, West Perth, Western Australia, 6005; or
send the proxy form by facsimile to the Company on facsimile number INT + 61 8 9322 7602,

so that it is received not later than 10:00am (WST) on 13 April 2009.

Proxy forms received later than this time will be invalid.

Empire Beer Group Limited ACN 119 327 169

Notice of General Meeting

Notice is given that the General Meeting of Shareholders will be held at the Freemasons Building, 181 Roberts Road, Subiaco, Western Australia at 10:00am (WST) on 15 April 2009.

Agenda

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

Resolution 1 – Acquisition of Shares by Finico Pty Ltd pursuant to Finico Sub‐underwriting Agreement

"That for the purpose of Section 611 (item 7) of the Corporations Act, and for all other purposes, the Company approves and authorises any increase in Finico Pty Ltd's voting power in the Company by way of the acquisition of up to 28,444,444 Shares by Finico Pty Ltd pursuant to the Finico Sub‐underwriting Agreement at a price of 4.5 cents per share and otherwise on the terms and conditions described in the Explanatory Memorandum that forms part of this Notice (including the Annexure attached to the Explanatory Memorandum accompanying this Notice of Meeting)."

Independent Expert's Report: Shareholders should carefully consider the Independent Expert's Report prepared by RSM Bird Cameron for the purposes of shareholder approval under item 7 of Section 611 of the Corporations Act. The Independent Expert's Report comments on the fairness and reasonableness of the transaction to the non‐associated Shareholders in the Company. The Independent Expert has determined that the Rights Issue is NOT FAIR BUT REASONABLE to the non‐associated Shareholders in the Company.

Voting Exclusion: The Company will disregard any votes cast on Resolution 1 by Finico Pty Ltd or any associate of Finico Pty Ltd. However, the Company need not disregard a vote 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 the vote 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.

Resolution 2 – Acquisition of Shares by Finico Pty Ltd pursuant to the Rights Issue

"That, subject to Resolution 1 not being passed, and for the purpose of Section 611 (item 7) of the Corporations Act, and for all other purposes, the Company approves and authorises any increase in Finico Pty Ltd's voting power in the Company by way of the acquisition of up to 6,316,123 Shares by Finico Pty Ltd pursuant to the exercise of its entitlement under the Rights Issue at a price of 4.5 cents per share and otherwise on the terms and conditions described in the Explanatory Memorandum that forms part of this Notice (including the Annexure attached to the Explanatory Memorandum accompanying this Notice of Meeting)."

Voting Exclusion: The Company will disregard any votes cast on Resolution 2 by Finico Pty Ltd or any associate of Finico Pty Ltd. However, the Company need not disregard a vote 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 the vote 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.

Resolution 3 – Grant of Options to Mr Chris Morris (Proposed Director)

"That pursuant to Listing Rule 10.11 of the ASX and Section 208 of the Corporations Act and for all other purposes, the Company approves and authorises, subject to the successful completion of the Rights Issue, the grant to Mr Chris Morris, proposed Director of the Company, or his nominee(s), for no consideration 2,400,000 Options with an exercise price of $0.06 and an expiry date of 31 December 2011 on the terms and conditions described in the Explanatory Memorandum that forms part of this Notice (including the Annexure attached to the Explanatory Memorandum accompanying this Notice of Meeting)."

Voting Exclusion: The Company will disregard any votes cast on Resolution 3 by Mr Chris Morris or any associate of Mr Chris Morris. However, the Company need not disregard a vote 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 the vote 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.

Resolution 4 – Grant of Options to Mr Greg Bandy (Proposed Director)

"That pursuant to Listing Rule 10.11 of the ASX and Section 208 of the Corporations Act and for all other purposes, the Company approves and authorises, subject to the successful completion of the Rights Issue, the grant to Mr Greg Bandy, proposed Director of the Company, or his nominee(s), for no consideration 4,800,000 Options with an exercise price of $0.06 and an expiry date of 31 December 2011 on the terms and conditions described in the Explanatory Memorandum that forms part of this Notice (including the Annexure attached to the Explanatory Memorandum accompanying this Notice of Meeting)."

Voting Exclusion: The Company will disregard any votes cast on Resolution 4 by Mr Greg Bandy or any associate of Mr Greg Bandy. However, the Company need not disregard a vote 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 the vote 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.

Resolution 5 – Grant of Options to Mr Tony King (Proposed Director)

"That pursuant to Listing Rule 10.11 of the ASX and Section 208 of the Corporations Act and for all other purposes, the Company approves and authorises, subject to the successful completion of the Rights Issue, the grant to Mr Tony King, proposed Director of the Company, or his nominee(s), for no consideration 4,800,000 Options with an exercise price of $0.06 and an expiry date of 31 December 2011 on the terms and conditions described in the Explanatory Memorandum that forms part of this Notice (including the Annexure attached to the Explanatory Memorandum accompanying this Notice of Meeting)."

Voting Exclusion: The Company will disregard any votes cast on Resolution 5 by Mr Tony King or any associate of Mr Tony King. However, the Company need not disregard a vote 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 the vote 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.

Dated this 4th day of March 2009 By order of the Board

PHIL WARREN Company Secretary

Notes:

(1) A shareholder of the Company entitled to attend and vote is entitled to appoint not more than two proxies. Where more than one proxy is appointed, each proxy must be appointed to represent a specified proportion of the shareholder's voting rights. If the shareholder appoints two proxies and the appointment does not specify this proportion, each proxy may exercise half of the votes. A proxy need not be a shareholder of the Company.
(2) For the purposes of the Corporations Regulations, the Directors have set a snapshot date to determine the identity of those entitled to attend and vote at the Meeting. The snapshot date is 10.00am (WST) on 13 April 2009. Accordingly, transactions registered after this time will be disregarded in determining entitlements to attend and vote at the meeting.

Enquiries

Shareholders are invited to contact the Company Secretary, Mr Phil Warren on (08) 9322 7600 if they have any queries in respect of the matters set out in these documents.

Explanatory Statement

1. General Information

This Explanatory Statement has been prepared for the Shareholders in connection with the General Meeting of the Company to be held on 15 April 2009 ("General Meeting").

The purpose of this Explanatory Statement is to provide Shareholders with information that the Board believes to be material to Shareholders in deciding whether or not to approve the above resolutions detailed in the Notice.

This Explanatory Statement is an important document and should be read carefully in full by all Shareholders. If you have any questions regarding the matters set out in this Explanatory Statement or the preceding Notice, please contact the Company, your stockbroker or other professional adviser.

2. Background

The Company has undertaken a pro‐rata non‐renounceable rights issue whereby it is offering each shareholder one new share for each existing share held in order to raise approximately $1.9 million ("Rights Issue"). Following the recent disposal of its leasehold hospitality operations, it has been proposed that there will be a Board restructuring and Chairman, Mr Mel Ashton and current Director, Ms Kate Lamont shall step down from the Board. It is proposed that Mr Chris Morris will be appointed to the Board as Chairman, and that Mr Greg Bandy and Mr Tony King will be appointed as Directors of the Company ("Proposed Directors").

Mr Morris was the founder of Computershare Limited ("Computershare"). He served as chief executive officer of Computershare from 1990 to 2006. Chris' extensive knowledge of the securities industry and its user requirements from both a national and international perspective coupled with his passion and long term strategic vision were instrumental in developing Computershare into a truly global company that is unique in its provision of a full range of solutions to meet the needs of listed companies and their stakeholders. Mr Morris is currently the executive chairman of Computershare. Mr Morris's wealth of connections and experience in the capital markets is expected to prove invaluable to the Company as it moves to a new phase in its existence. Mr Morris' experience as a senior board member of a significant global enterprise is also expected to add significant value in terms of governance quality and business acumen.

Mr Bandy is a senior advisor at Patersons Securities (and formerly Montagu Stockbrokers). He has nearly ten years experience with capital markets. He brings with him an intimate knowledge of the listed equities markets and corporate transactions in general as well as an array of opportunities to Empire through his experience and expertise in the capital markets. It is expected that Mr Bandy will devote a significant amount of time to the Company, and that his expertise in terms of identifying and assessing investment opportunities will prove of significant benefit to the Company.

Mr King is a Chartered Accountant with over fourteen years experience in finance, accounting and corporate matters. Mr King is the managing director of Max Capital Pty Ltd and a director of Grange Consulting Group Pty Ltd. Mr King has advised on numerous acquisitions and disposals of businesses and assets and regularly reviews and analyses significant opportunities for investment in a wide variety of businesses and business sectors. Mr King's experience in analysing prospective investments and sourcing opportunities will be utilised by the Company, particularly in terms of his experience with various investment valuation methodologies and financing strategies.

The Rights issue is underwritten by Max Capital Pty Ltd ("Max"), an entity controlled by Mr Ian Macliver and Mr Tony King. It is sub‐underwritten to 90% by a combination of Finico Pty Ltd (a private company controlled by Mr Chris Morris), Mr Ian Macliver, Mr Tony King and Mr Greg Bandy.

Under the terms of the underwriting agreement with Max, should all regulatory approvals to sub‐underwrite the Rights Issue not be obtained by the sub‐underwriters, Max may terminate the underwriting. Max has notified the Company that in the absence of shareholder approval (under Resolution 1) for the potential increase in Finico's voting power in the Company, it will terminate its underwriting commitment. In that event, the Rights Issue

would not be underwritten to any degree. Each of Max as underwriter to the Rights Issue, and Finico Pty Ltd, Mr Tony King, Mr Greg Bandy and Mr Ian Macliver as sub‐underwriters to the Rights Issue have advised the Company that in that scenario they each intend to take up their respective entitlements to the Rights Issue as ordinary Shareholders in the Company.

If shareholder approval (under Resolution 1) for the potential increase in Finico's voting power in the Company is obtained, Max and each of the sub‐underwriters will fulfil their obligations under their relevant underwriting and sub‐underwriting agreements (subject to compliance with all other terms of the agreements). As disclosed in the Rights Issue offer document, should this occur, neither Max nor the sub‐underwriters intend to take up their respective entitlements to the Rights Issue.

As previously disclosed by the Company, due to unacceptable performance of the venues and their lack of scale in a listed company context, a decision was made by the Board to dispose of its leasehold hospitality operations in Margaret River and East Perth, and to seek new business opportunities which would deliver value to Shareholders. The disposal of such interests was settled on 24 November, 2008. Following the settlement of this disposal, the Company has net assets of approximately $2.6 million.

In the current economic climate where capital is extremely scarce, the Board believes that an increased amount of funds available to it would materially increase the likelihood that a higher quality asset or business would be attracted to the Company.

In the Board's view:

a) the current economic downturn will at some stage reward those companies with a stronger balance sheet;
b) those companies with a requisite level of existing net cash will be far better placed both in terms of opportunities being presented to them and the ability to transact than those which have to raise funds in order to make an acquisition or investment;
c) in the current economic climate significant investment opportunities which would otherwise not be present will quickly begin to appear across various industries;
d) as valuations across all asset classes have deteriorated over the last 12 months or so, the value of cash has commensurately increased; and
e) the increased net cash available to the Company following the Rights Issue (assuming full subscription) is significant (over 50% increase in available cash) in the context of the Company's ability to consummate a transaction to acquire a business with the scale required for a publicly listed entity.

The Board has also noted that the availability of credit or debt to make acquisitions or investments has reduced significantly.

The Board is particularly conscious of the scale required for a business in the context of a listed Company. It is the Board's view that in order to achieve appropriate recognition of value from the marketplace, listed companies require businesses with sufficient scale or potential scale. The increase in net cash available following the Rights Issue allows the Company access to businesses with greater scale.

Overall, the Board is of the view that the above factors, when combined with the certainty of capital represented by the underwriting and sub‐underwriting arrangements put in place by the Company, mean that the advantages of the Rights Issue as structured outweigh any possible dilution to Shareholders that may result from Shareholders choosing not to exercise their entitlement to the Rights Issue.

In addition, the Board notes the following in respect of the Rights Issue:

At present, there is no specific investment criteria that the Board has established or business sector or geographical location that it is limiting itself to or focussing on. However, it is likely that the Company will pursue an investment strategy that is unrelated to its previous hospitality business.

The current lack of specific investment strategy represents a risk for investors. It may be that the investment strategy that the Company ultimately pursues does not result in the accretion of value to Shareholders. While the Board's view is that in the current economic climate significant opportunities for well funded and transaction ready entities will arise, the economic conditions remain volatile and consummating transactions remains subject to market and capital raising risk.
It will take time for the Company to evaluate prospective investment and acquisition opportunities, and it is likely due diligence costs will be incurred in connection therewith.
As disclosed in the Rights Issue offer document the Company's estimated total overhead and administration cost assuming successful completion of the Rights Issue is approximately $346,000 per annum (approximately $28,800 per month).
Assuming that the Rights Issue is fully subscribed, the Company's net assets per share will reduce from approximately 6.29 cents per Share to approximately 5.19 cents per Share (based upon the net asset position of the company as at 31 December 2008) immediately following completion of the Rights Issue. An alternative open to the Board is to propose to Shareholders to de‐list the Company, wind it up and distribute capital to Shareholders. The likely costs of such an exercise for the Company including disclosure and shareholder meeting costs, liquidator fees, lawyer fees and other advisors of such an exercise range from approximately $250,000 to $350,000. This scenario would therefore result in a distribution of approximately 5.47 to 5.71 cents per share to Shareholders. The Board notes that such a policy would require Shareholder approval (a special resolution requiring 75% Shareholder approval). The Board understands from certain of its larger Shareholders including Finico that they would not be willing to support such a policy at this time.
In the event that in the future the Company proposes to make a significant change to the nature and/or scale of its businesses activities it may need to re‐comply with Chapters 1 and 2 of the ASX Listing Rules. This will likely involve a consolidation of capital of the Company's existing Shares (on a ratio to be determined), the issue of a full form prospectus and the raising of funds through the issue of shares at a price not less than $0.20 each.

3. Resolution 1: Acquisition of Shares by Finico Pty Ltd pursuant to Sub‐underwriting

Resolution 1 seeks Shareholder approval for the issue and allotment of up to 28,444,444 Shares to Finico Pty Ltd pursuant to the Finico Sub‐underwriting Agreement. Under the terms of the Finico Sub‐underwriting Agreement, Finico Pty Ltd has agreed to subscribe for a portion of the Shares in the Company which are not subscribed for under the Rights Issue, up to a maximum of 28,444,444 Shares. Finico's ultimate relevant interest in the Company will therefore vary according to the results of the Rights Issue. Part A of Section 5.4 of this Explanatory Statement sets out various scenarios which detail Finico's potential interest in the Company following completion of the Rights Issue.

However, the Company considers that it is reasonably likely that Finico's voting power in the Company will go from below 20% to above 20%. Accordingly, the Company considers that it is prudent to seek shareholder approval of such increase pursuant to Item 7 of Section 611 of the Corporations Act.

3.1 Section 606 – Statutory Prohibition

In summary, pursuant to Section 606(1) of the Corporations Act, a person must not acquire a relevant interest in issued voting shares in a listed company if the person acquiring the shares does so through a transaction related to the shares by or on behalf of the person and because of the transaction that person or someone else's voting power in the company increases:

a) from 20% or below to above 20%; or
b) from a starting point above 20% and below 90%.

Mr Chris Morris controls Finico Pty Ltd. Under certain scenarios under the Rights Issue (see Part A of Section 5.4 of this Explanatory Memorandum), Finico's shareholding and voting power in the Company will increase from below 20% to above 20%.

Voting Power and Relevant Interests

The voting power of a person in a body corporate is determined in accordance with Section 610 of the Corporations Act. The calculation of a person's voting power in a company involves determining the voting shares in the company in which the person and the person's associates have a relevant interest.

A person ("second person") will be an "associate" of the other person ("first person") if:

a) the first person is a body corporate and the second person is:
- i) a body corporate the first person controls;
- ii) a body corporate that controls the first person; or
- iii) a body corporate that is controlled by an entity that controls the person;
b) the second person has entered or proposed to enter into a relevant agreement with the first person for the purpose of controlling or influencing the composition of the Company's board or the conduct of the Company's affairs; and
c) the second person is a person with whom the first person is acting or proposed to act, in concert in relation to the Company's affairs.

Section 608(1) of the Corporations Act provides that a person has a relevant interest in securities if they:

a) are the holder of the securities;
b) have the power to exercise, or control the exercise of, a right to vote attached to the securities; or
c) have power to dispose of, or control the exercise of a power to dispose of, the securities.

It does not matter how remote the relevant interest is or how it arises. If two or more people can jointly exercise one of these powers, each of them is taken to have that power.

Section 608(3) of the Corporations Act provides that a person has the relevant interests in any securities held by a body corporate in which the person's voting power is above 20%.

Deemed Relevant Interests, Voting Power and Associates

Finico is controlled by Mr Chris Morris. As such, this party is considered to be an "associate" of Finico for the purposes of the Corporations Act.

In the event the Shares the subject of Resolution 1 are issued, the voting power of Finico and Mr Morris will increase from a point below 20% to above 20%.

For the purposes of the remainder of this Explanatory Memorandum, a reference to Finico shall include a reference to Mr Morris.

3.2 Section 611 Item 7 of the Corporations Act – Exemption from Section 606

Section 611 of the Corporations Act provides that certain acquisitions of relevant interests in a company's voting shares are exempt from the prohibition of Section 606(1), including acquisitions approved previously by a resolution passed at a general meeting of the company in which the acquisition is made (Section 611 Item 7).

For the exemption in Section 611 Item 7 to apply, Shareholders must be given all information known to the person proposing to make the acquisition or their associates, or known to the Company, that was material to the decision on how to vote on the resolution. The ASIC has indicated what additional information should be provided to shareholders in these circumstances.

For the purposes of the Corporations Act and Regulatory Guide 111 the following information is disclosed in relation to the acquisition of a relevant interest in the Company by Finico Pty Ltd and Mr Chris Morris. Shareholders are also referred to the Independent Expert's Report prepared by RSM Bird Cameron which forms part of this Explanatory Statement.

Prescribed information:

a) The identity of the person proposing to make the acquisition and their associates:

The background information on Finico Pty Ltd is set out in Section 2 of this Explanatory Statement. As detailed in Section 2, Finico is controlled by Mr Chris Morris who is a proposed director of the Company.

The background information on Mr Chris Morris is set out in Section 2 of this Explanatory Statement.

b) The maximum extent of the increase in the person' voting power in the Company that would result from the acquisition:

On the assumption that no shareholders take up their entitlement to subscribe for Shares under the Rights Issue, as set out in Table 2 of Part A of Section 5.4 of this Explanatory Statement, the maximum voting power of Finico Pty Ltd would be approximately 40.9%. Accordingly, the maximum extent of the increase in Finico's voting power is 26%.

However, should shareholders take up some or all of their entitlement under the Rights Issue, Finico's maximum voting power would be less than 40.9%. Please refer to the tables in Part A of Section 5.4 below for full details of the varying levels of Finico's voting power in these situations.

c) The voting power that person would have as a result of the acquisition:

As set out in Section 3.2(b) above, the maximum voting power Finico will obtain as a result of the acquisition will be 40.9%.

d) The maximum extent of the increase in voting power of each of that person's associates that would result from the acquisition:

As set out in Section 3.2(b) above, the maximum extent of the increase in voting power of Mr Morris (being Finico's associate) is 26%.

e) The voting power that each of that person's associates would have as a result of the acquisition:

As set out in Section 3.2(b) above, the maximum voting power Mr Morris will obtain as a result of the acquisition will be 40.9%.

Other Required Information

Other than as disclosed elsewhere in this Explanatory Memorandum, the Company understands that Finico:

a) has no specific intention of making any changes to the business of the Company. However, as previously disclosed the Company is considering new business opportunities in which case Shareholder approval will be sought if required under the ASX Listing Rules;
b) has no intention to inject further capital into the Company however this may be re‐evaluated if the Company makes an acquisition, in which case Shareholder approval will be sought if required under the ASX Listing Rules;
c) has no intention to nor is there any proposal whereby any property will be transferred between Finico or any person associated with Finico and the Company; and
d) has no current intention to change the employment policies of the Company, although it is recognised that additional employees may be required in the future as the Company's operations expand.
e) other than set out above, has no current intention to redeploy any other fixed assets of the Company or to change the Company's existing policies in relation to financial matters or dividends. At present, the Company does not pay a dividend.
f) has no current intention to change the Company's existing policies in relation to financial matters or dividends. The dividend policy of the Company will be assessed in accordance with the future profitability of the business.

3.3 Directors recommendation

Based on the information available, including that contained in this Explanatory Statement, all of the Directors (being Mr Mel Ashton, Ms Kate Lamont Mr Ian Macliver) consider that Resolution 1 is in the best interests of the Company and recommend that Shareholders vote in favour of Resolution 1. To the extent that Mr Chris Morris is a Director at the time of the General Meeting, Mr Chris Morris declines to make a recommendation to Shareholders in respect of Resolution 1 as he has a material personal interest in the outcome of the Resolution by virtue of the proposed issue and allotment of Shares to him or his nominee.

3.4 Independent Expert's Report

Accompanying this Explanatory Statement is an Independent Expert's Report prepared by RSM Bird Cameron which sets out a detailed examination of the acquisition by Finico of a relevant interest in the Company's shares pursuant to the Finico Sub‐underwriting Agreement. The Independent Expert's Report concludes that the proposed transaction is NOT FAIR BUT REASONABLE to the non‐associated Shareholders of the Company.

The transaction will result in various advantages and disadvantages which Shareholders need to consider in assessing the impact of the transaction on the Company.

Shareholders are urged to carefully read the Independent Expert's Report to understand the scope of the report, the methodology of the valuation and the sources of information and assumptions made.

4. Resolution 2: Acquisition of Shares by Finico Pty Ltd pursuant to Sub‐underwriting

Resolution 2 seeks approval for the issue and allotment of up to 6,316,123 shares to Finico Pty Ltd pursuant to the exercise of its entitlement under the Rights Issue. As outlined in Section 3 above, Max has advised the Company that should shareholder approval not be granted under Resolution 1, it intends to terminate its underwriting commitment pursuant to its rights under the Underwriting Agreement. The rights Issue would therefore not be underwritten to any extent. Max, Finico and the other sub‐underwriters have each advised the Company that, in this circumstance, they each intend to exercise their rights as ordinary Shareholders to take up their full entitlement under the Rights Issue. The extent of Finico's ultimate holding will therefore depend on the take‐up of other Shareholders under the Rights Issue, and Part B of Section 5.4 of this Explanatory Statement sets out various scenarios which detail Finico's potential interest in the Company following completion of the Rights Issue in this circumstance.

Due to the fact that Finico currently holds approximately 14.9% of the voting power in the Company, there exists potential for Finico to move from a holding in the Company of below 20% to above 20%. Accordingly, the Company considers that it is prudent to seek shareholder approval of such increase pursuant to Item 7 of Section 611 of the Corporations Act.

4.1 Section 606 – Statutory Prohibition

a) from 20% or below to above 20%; or
b) from a starting point above 20% and below 90%.

Mr Chris Morris controls Finico Pty Ltd. Under certain scenarios under the Rights Issue (see Part B of Section 5.4 of this Explanatory Memorandum), Finico's shareholding and voting power in the Company will increase from below 20% to above 20%.

Voting Power and Relevant Interests

A person ("second person") will be an "associate" of the other person ("first person") if:

a) the first person is a body corporate and the second person is:
- i) a body corporate the first person controls;
- ii) a body corporate that controls the first person; or
- iii) a body corporate that is controlled by an entity that controls the person;
b) the second person has entered or proposed to enter into a relevant agreement with the first person for the purpose of controlling or influencing the composition of the Company's board or the conduct of the Company's affairs; and
c) the second person is a person with whom the first person is acting or proposed to act, in concert in relation to the Company's affairs.

Section 608(1) of the Corporations Act provides that a person has a relevant interest in securities if they:

a) are the holder of the securities;
b) have the power to exercise, or control the exercise of, a right to vote attached to the securities; or
c) have power to dispose of, or control the exercise of a power to dispose of, the securities.

It does not matter how remote the relevant interest is or how it arises. If two or more people can jointly exercise one of these powers, each of them is taken to have that power.

Section 608(3) of the Corporations Act provides that a person has the relevant interests in any securities held by a body corporate in which the person's voting power is above 20%.

Deemed Relevant Interests, Voting Power and Associates

Finico is controlled by Mr Chris Morris. As such, this party is considered to be an "associate" of Finico for the purposes of the Corporations Act.

In the event the Shares the subject of Resolution 2 are issued, the voting power of Finico and Mr Morris may increase from a point below 20% to above 20% (see Part B of Section 5.4 for further information).

For the purposes of the remainder of this Explanatory Memorandum, a reference to Finico shall include a reference to Mr Morris.

4.2 Section 611 Item 7 of the Corporations Act – Exemption from Section 606

Prescribed information:

a) The identity of the person proposing to make the acquisition and their associates:

The background information on Mr Chris Morris is set out in Section 2 of this Explanatory Statement.

b) The maximum extent of the increase in the person' voting power in the Company that would result from the acquisition:

On the assumption that no shareholders take up their entitlement to subscribe for Shares under the Rights Issue, as set out in Table 2 of Part B of Section 5.4 of this Explanatory Statement, the maximum voting power of Finico Pty Ltd would be approximately 25.9%. Accordingly, the maximum extent of the increase in Finico's voting power is 11%.

However, should shareholders take up some or all of their entitlement under the Rights Issue, Finico's maximum voting power would be less than 25.9%. Please refer to the tables in Section 5.4 below for full details of the varying levels of Finico's voting power in these situations.

c) The voting power that person would have as a result of the acquisition:

As set out in Section 4.2(b) above, the maximum voting power Finico will obtain as a result of the acquisition will be 25.9%.

d) The maximum extent of the increase in voting power of each of that person's associates that would result from the acquisition:

As set out in Section 4.2(b) above, the maximum extent of the increase in voting power of Mr Morris (being Finico's associate) is 11%.

e) The voting power that each of that person's associates would have as a result of the acquisition:

As set out in Section 4.2(b) above, the maximum voting power Mr Morris will obtain as a result of the acquisition will be 25.9%.

Other Required Information

Other than as disclosed elsewhere in this Explanatory Memorandum, the Company understands that Finico:

a) has no specific intention of making any changes to the business of the Company. However, as previously disclosed the Company is considering new business opportunities in which case Shareholder approval will be sought if required under the ASX Listing Rules;

b) has no intention to inject further capital into the Company however this may be re‐evaluated if the Company makes an acquisition, in which case Shareholder approval will be sought if required under the ASX Listing Rules;
c) has no intention to nor is there any proposal whereby any property will be transferred between Finico or any person associated with Finico and the Company;
d) has no current intention to change the employment policies of the Company, although it is recognised that additional employees may be required in the future as the Company's operations expand; and
e) other than set out above, has no current intention to redeploy any other fixed assets of the Company or to change the Company's existing policies in relation to financial matters or dividends. At present, the Company does not pay a dividend. The dividend policy of the Company will be assessed in accordance with the future profitability of the business.

4.3 Directors recommendation

Based on the information available, including that contained in this Explanatory Statement, all of the Directors (being Mr Mel Ashton, Ms Kate Lamont Mr Ian Macliver) consider that the Resolution 2 is in the best interests of the Company and recommend that Shareholders vote in favour of Resolution 2. To the extent that Mr Chris Morris is a Director at the time of the General Meeting, Mr Chris Morris declines to make a recommendation to Shareholders in respect of Resolution 2 as he has a material personal interest in the outcome of the Resolution by virtue of the proposed issue and allotment of Shares to him or his nominee.

5. Resolutions 3 – 5: Approval of Grant of Director Options

It is proposed that, subject to the successful completion of the Rights Issue and the appointment of Messrs Morris, Bandy and King as Directors of the Company that Messrs Morris, Bandy and King be issued Director Options to provide a market linked incentive component to their remuneration package.

The terms of the Director Options are set out in the Annexure to this Explanatory Memorandum.

Under the Company's current circumstances, it is considered that the incentive to the Directors, represented by the grant of the Director Options, is a cost effective and efficient reward and incentive, as opposed to alternative forms of incentives, such as the payment of cash compensation. The Directors agree that it is better for the Company that each of them be rewarded by way of securities in the Company, rather than by way of cash.

Other than Mr Bandy, who will receive a monthly consulting fee, none of the Directors shall be paid cash directors fees for 2009.

The number of Director Options to be granted to the Directors has been determined based upon the Director's wish to ensure that the remuneration offered is competitive with market standards.

The Directors have generally reviewed a selection of comparable companies to determine market conditions generally and consider the proposed number of Director Options to be granted will ensure the Directors overall remuneration is in line with market standards.

Shareholder approval for the grant of Director Options to Messrs Morris, Bandy and King is required by Section 208 of the Corporations Act because they are each a related party of the Company.

5.1 Section 208 of the Corporations Act

Under section 208 of the Corporations Act, a public company cannot give a "financial benefit" to a "related party" unless one of the exceptions to that section applies or shareholders have in general meeting approved the giving of that financial benefit to the related party.

In the current circumstances, the grant of the Director Options to the Directors constitutes a "financial benefit" as defined in the Corporations Act. Further more, Messrs Morris, Bandy and King are each a "related party" of the Company as defined under the Corporations Act because they are all Directors of the Company. Accordingly, the proposed grant of Director Options to the Directors (or their nominees) will constitute the provision of a financial benefit to a related party of the Company.

It is the view of the Directors that the exceptions under the Corporations Act to the provision of financial benefits to related parties may not apply in the current circumstances and so the Directors have determined to seek Shareholder approval under section 208 of the Corporations Act to permit the grant of the Director Options.

5.2 Regulatory Requirements – Section 217 to 227 Corporations Act

The following information is provided pursuant to sections 219 of the Corporations Act in relation to Resolutions 3 to 5:

a) The related parties to whom the proposed Resolutions would permit the financial benefit to be given are as follows:

Name	Director Options
	($0.06, Expiring 31 December 2011)
Mr Chris Morris (or his nominee)	2,400,000
Mr Greg Bandy (or his nominee)	4,800,000
Mr Tony King (or his nominee)	4,800,000
Total	12,000,000

b) The nature of the financial benefit proposed to be given is the grant of the Director Options for no consideration on the terms and conditions set out in Resolutions 3 to 5 and the Annexure to this Explanatory Memorandum.
c) All Directors were available to consider Resolutions 3 to 5 and all Directors (being Mr Mel Ashton, Ms Kate Lamont and Mr Ian Macliver) recommend that Shareholders vote in favour of Resolutions 3‐5 for the reasons outlined in Section 4.1 above, provided that:
- i) To the extent that Mr Chris Morris is a Director at the time of the General Meeting, Mr Chris Morris declines to make a recommendation to Shareholders in respect of Resolution 3 as he has a material personal interest in the outcome of the Resolution by virtue of the proposed grant of Director Options to him or his nominee.
- ii) To the extent that Mr Greg Bandy is a Director at the time of the General Meeting, Mr Greg Bandy declines to make a recommendation to Shareholders in respect of Resolution 4 as he has a material personal interest in the outcome of the Resolution by virtue of the proposed grant of Director Options to him or his nominee.
- iii) To the extent that Mr Tony King is a Director at the time of the General Meeting, Mr Tony King declines to make a recommendation to Shareholders in respect of Resolution 5 as he has a material personal interest in the outcome of the Resolution by virtue of the proposed grant of Director Options to him or his nominee.
d) Outlined below is other information, which is known to the Company or any of its Directors, which may be reasonably required by Shareholders to make a decision whether it is in the best interests of the Company to pass Resolutions 3 to 5:
- i) The proposed Resolutions 3 to 5 if approved would have the effect of giving power to the Directors to grant up to 12,000,000 Director Options on the terms and conditions as set out in Resolutions 3 to 5 and the Annexure to this Explanatory Memorandum.
- ii) If Shareholders approve the grant of the Director Options, the Rights Issue proceeds fully subscribed and all the Director Options were exercised, the effect will be to dilute the shareholding of existing Shareholders by approximately 12.38% (assuming that no other options are exercised and no other

Shares are issued) based on the number of Shares on issue following the exercise of the Director Options proposed to be issued pursuant to Resolutions 3 to 5 and upon completion of the Rights Issue:

Related Party	Total IssuedShares uponcompletion ofRights Issue	DirectorOptions to beissued	Total IssuedShares uponexercise of allDirectorOptions	Dilutionaryeffect uponexercise ofDirectorOptions
Mr Chris Morris		2,400,000	87,334,928	2.48%
Mr Greg Bandy		4,800,000	89,734,928	4.95%
Mr Tony King		4,800,000	87,334,928	4.95%
TOTAL	84,934,928	12,000,000	96,934,928	12.38%

iii) The market price of the Shares during the term of the Director Options would normally determine whether or not the Directors exercise their Director Options. The quoted price of the Shares at any given time will have a large influence on whether the Director Options are exercised. If, at the time any of the Director Options are exercised, the Shares are trading on ASX at a price higher than the exercise price of the Director Options, there may be a perceived cost to the Company.
iv) The fair value of the Director Options has been estimated using the Black & Scholes option valuation model based on the following input assumptions.

	Director Options
Share Price	$0.045
Exercise Price	$0.06
Risk Free Rate	2.72%
Term	Expiring 31 December 2011
Dividend rate	Nil
Volatility	68%

v) Based upon the above assumptions, each Director Option is valued at $0.017 and the total value of the Directors Options to be granted to the Directors or their nominees is an aggregate of $204,000.
vi) None of Mr Chris Morris, Mr Greg Bandy nor Mr Tony King received any directors fees or remuneration during the course of 2008.
vii) Mr Bandy will be receiving a consulting fee of $10,000 per month. None of Mr Chris Morris, Mr Ian Macliver nor Mr Tony King shall be receiving cash directors fees during the course of 2009.
viii) The Directors are also reimbursed for reasonable out of pocket expenses incurred in connection with their duties as Directors.
ix) Upon exercise of the Director Options, the Shares allotted will be fully paid ordinary Shares in the Company and shall rank pari passu with existing Shares;
x) the trading history of the Shares on ASX in the 12 months before the date of this Notice of General Meeting is set out below:

	Price	Date
Highest	15.0 cents	30 April 2008
Lowest	3.3 cents	27 February 2009
Last	4.0 cents	3 March 2009

xi) The primary purpose for the grant of the Director Options as outlined in Section 5.1 is to provide a market‐linked incentive component in the remuneration package for the Directors and for the future performance by the Directors in managing the operations and strategic direction of the Company;
xii) Under the Australian Equivalent of IFRS, the Company is required to expense the value of the Director Options in the statement of financial performance for the current financial year. Other than as disclosed in this Explanatory Memorandum, the Director do not consider from an economic and commercial point of view, there are any costs or detriments including opportunity costs or taxation consequences or the Company or benefits foregone by the Company in granting the Director Options pursuant to Resolutions 3 to 5;
xiii) The Directors are not aware of any other information that would be reasonably required by Shareholders to allow them to make a decision whether it is in the best interests of the Company to pass Resolutions 3 to 5.

5.3 Listing Rule 10.11

Listing Rule 10.11 requires shareholder approval by ordinary resolution to any issue by a listed company of securities to a related party. Accordingly, Listing Rule 10.11 requires shareholders to approve the issue of Options to Messrs Morris, Bandy and King.

For the purposes of Listing Rule 10.13, the following information is provided to shareholders:

a) the Options will be granted to Messrs Morris, Bandy and King or their respective nominee(s);
b) the maximum number of Options to be granted is 12,000,000;
c) the Options will be granted on a date which will be no later than 1 month after the date of this meeting or on such other date as approved by ASX;
d) the Options will be granted for no consideration;
e) no funds will be raised by the grant of the Options; and
f) the terms and conditions of the Options are set out in the Annexure to this Explanatory Statement.

If approval is given for the issue of the Options under Listing Rule 10.11, approval is not required under Listing Rule 7.1.

5.4 Directors' Interests

Part A

Because Mr Macliver as a Director and Mr Morris, Mr Bandy and Mr King as Proposed Directors are underwriting and sub‐underwriting the Rights Issue (subject to Shareholder approval for Finico's sub‐underwriting being obtained), the extent of Mr Macliver's and the Proposed Directors holding in the Company will vary according to the final outcome of the Rights Issue. The tables below set out the resultant relevant interests of the Directors, proposed Directors and their associates (including Finico Pty Ltd) assuming different levels of non‐associated Shareholders taking up their entitlement to the Rights Issue.

Mr Macliver's and the Proposed Directors interest in the securities of the Company are set out in the following tables. Each of the scenarios below assumes that shareholder approval under Resolution 1 for the acquisition by Finico Pty Ltd under the Finico Sub‐underwriting Agreement is obtained.

Table 1 – Existing Interests

	Shares	% of Total Shares
Finico Pty Ltd1	6,316,123	14.9%
Mr Greg Bandy	100,000	0.2%
Mr Tony King and Mr Ian Macliver2	2,384,966	5.6%
Mr Tony King	421,771	1.0%
Mr Ian Macliver	391,936	0.9%
Total Shares held by Directors and Proposed Directors
	9,614,796	22.6%
Other Shareholders	32,852,668	77.4%
Total	42,467,464	100%

Mr Chris Morris has a relevant interest in the 6,316,123 Shares held by Finico Pty Ltd
Mr Tony King and Mr Ian Macliver each have a relevant interest in 2,126,901 Shares held by Max Capital

Pty Ltd and 258,065 Shares held by Grange Consulting Group Pty Ltd

	Options (50 cents)1	Options (10 cents)2
Option Holders
Finico Pty Ltd	‐	2,000,000
Mr Greg Bandy	‐	2,000,000
Mr Tony King and Mr Ian Macliver3	187,500	‐
Mr Tony King	‐	500,000
Mr Ian Macliver	62,500	‐
Other Option holders	4,250,000	1,250,000
Total	4,500,000	5,750,000
1. Unlisted Options exercisable at 50 cents each on or before 30 November 2009
2. Unlisted Options exercisable at 10 cents each on or before 30 June 2011

Mr King and Mr Macliver have a relevant interest in 187,500 Options held by Grange Consulting Group Pty Ltd.

Table 2 – No Eligible shareholders take up any of their entitlement under the Rights Issue and the shortfall is taken up fully by the Sub‐underwriters and the Underwriter in accordance with the sub‐underwriting and underwriting arrangements:

	Shares	% of Total Shares
Finico Pty Ltd1	34,760,567	40.9%
Mr Greg Bandy	5,433,333	6.4%
Mr Tony King and Mr Ian Macliver2	6,630,208	7.8%
Mr Tony King	3,088,438	3.6%
Mr Ian Macliver	2,169,714	2.6%
Total Shares held by Directors and Proposed Directors	52,082,260	61.3%
Other Shareholders	32,852,668	38.7%
Total	84,934,928	100.0%
1.Mr Chris Morris has a relevant interest in the 34,760,567 Shares held by Finico Pty Ltd

Mr King and Mr Macliver each have a relevant interest in 6,372,143 Shares held by Max Capital Pty Ltd and 258,065 Shares held by Grange Consulting Group Pty Ltd

Table 3 – Eligible shareholders (excluding the sub‐underwriters and/or entities controlled by them who do not take up any of their Entitlements) take up 50% of their entitlement under the Rights Issue and each of the sub‐ underwriters and underwriter take up their proportion of the shortfall in accordance with the sub‐underwriting and underwriting arrangements:

	Shares	% of Total Shares
Finico Pty Ltd1	23,758,311	28.0%
Mr Greg Bandy	3,370,410	4.0%
Mr Tony King and Mr Ian Macliver2	4,988,156	5.9%
Mr Tony King	2,056,976	2.4%
Mr Ian Macliver	1,482,073	1.7%
Total Shares held by Directors and Proposed Directors	35,655,926	42%
Other Shareholders	49,279,002	58.0%
Total	84,934,928	100%
1.Chris Morris has a relevant interest in the 23,758,311 Shares held by Finico Pty Ltd
2.Mr Tony King and Mr Ian Macliver each have a relevant interest in 4,730,091 Shares held by Max Capital

Pty Ltd and 258,065 Shares held by Grange Consulting Group Pty Ltd

Table 4 – Eligible Shareholders (excluding the sub‐underwriters and/or entities controlled by them who do not take up any of their Entitlements) take up 100% of their entitlement under the Rights Issue and each of the sub‐ underwriters take up their proportion of the shortfall in accordance with the sub‐underwriting and underwriting arrangements:

	Shares	% of Total Shares
Finico Pty Ltd1	12,756,054	15.0%
Mr Greg Bandy	1,307,487	1.5%
Mr Tony King and Mr Ian Macliver2	3,346,105	3.9%
Mr Tony King	1,025,515	1.2%
Mr Ian Macliver	794,432	0.9%
Total Shares held by Directors and Proposed Directors	19,229,592	22.6%
Other Shareholders	65,705,336	77.4%
Total	84,934,928	100%
1.Mr Chris Morris has a relevant interest in the 12,756,054 Shares held by Finico Pty Ltd

Mr Tony King and Mr Ian Macliver each have a relevant interest in 3,088,040 Shares held by Max Capital Pty Ltd and 258,065 Shares held by Grange Consulting Group Pty Ltd

Part B

The tables below set out the resultant relevant interests of Finico and, where relevant, proposed Directors and their associates, assuming different levels of non‐associated Shareholders taking up their entitlement to the Rights Issue.

Each of the scenarios below assumes that shareholder approval under Resolution 1 for the acquisition by Finico Pty Ltd under the Finico Sub‐underwriting Agreement is NOT obtained and the Rights Issue is not underwritten to any degree.

Table 1 – Existing Interests

	Shares	% of Total Shares
Finico Pty Ltd1	6,316,123	14.9%
Mr Greg Bandy	100,000	0.2%
Mr Tony King and Mr Ian Macliver2	2,384,966	5.6%
Mr Tony King	421,771	1.0%
Mr Ian Macliver	391,936	0.9%

Other Shareholders	32,852,668	77.4%
Total	42,467,464	100%

Mr Chris Morris has a relevant interest in the 6,316,123 Shares held by Finico Pty Ltd
Mr Tony King and Mr Ian Macliver each have a relevant interest in 2,126,901 Shares held by Max Capital Pty Ltd and 258,065 Shares held by Grange Consulting Group Pty Ltd

Option Holders	Options (50 cents)1	Options (10 cents)2
Finico Pty Ltd	‐	2,000,000
Mr Greg Bandy	‐	2,000,000
Mr Tony King and Mr Ian Macliver3	187,500	‐
Mr Tony King	‐	500,000
Mr Ian Macliver	62,500	‐
Other Option holders	4,250,000	1,250,000
Total	4,500,000	5,750,000
1. Unlisted Options exercisable at 50 cents each on or before 30 November 2009

Unlisted Options exercisable at 10 cents each on or before 30 June 2011
Mr King and Mr Macliver have a relevant interest in 187,500 Options held by Grange Consulting Group Pty Ltd.

Table 2 – No Eligible shareholders take up any of their entitlement under the Rights Issue, other than Finico which takes up 100% of its entitlement:

	Shares	% of Total Shares
Finico Pty Ltd1	12,632,246	25.9%
Other Shareholders2	36,151,341	74.1%
Total	48,783,587	100.0%
Chris Morris has a relevant interest in the 12,632,246 Shares held by Finico Pty Ltd1.
2.This includes the other sub‐underwriters (Mr Greg Bandy, Mr Tony King and Mr Ian Macliver).

However each of Messrs Bandy, King and Macliver have indicated to the Company that they intend to take up their entitlements to the Rights Issue in this circumstance.

Table 3 – 15% of Eligible shareholders take up their entitlement under the Rights Issue and, as indicated to the Company, Finico and the other sub‐underwriters (Mr Greg Bandy, Mr Tony King and Mr Ian Macliver) each take up 100% of their entitlement:

	Shares	% of Total Shares
Finico Pty Ltd1	12,632,246	22.2%
Mr Greg Bandy	200,000	0.4%
Mr Tony King and Mr Ian Macliver2	4,769,932	8.4%
Mr Tony King	843,542	1.5%
Mr Ian Macliver	783,872	1.4%
Other Shareholders	37,780,568	66.3%
Total	57,010,160	100.0%
1.Mr Chris Morris has a relevant interest in the 12,632,246 Shares held by Finico Pty Ltd
2. Mr King and Mr Macliver each have a relevant interest in 6,372,143 Shares held by Max Capital Pty Ltd

and 258,065 Shares held by Grange Consulting Group Pty Ltd

Table 4 – 34% of Eligible shareholders take up their entitlement under the Rights Issue and, as indicated to the Company, Finico and the other sub‐underwriters (Mr Greg Bandy, Mr Tony King and Mr Ian Macliver) each take up 100% of their entitlement:

	Shares	% of Total Shares
Finico Pty Ltd1	12,632,246	20.0%
Mr Greg Bandy	200,000	0.3%
Mr Tony King and Mr Ian Macliver2	4,769,932	7.5%
Mr Tony King	843,542	1.3%
Mr Ian Macliver	783,872	1.2%
Other Shareholders	44,022,575	69.6%
Total	63,252,167	100.0%

Chris Morris has a relevant interest in the 12,632,246 Shares held by Finico Pty Ltd
Mr King and Mr Macliver each have a relevant interest in 6,372,143 Shares held by Max Capital Pty Ltd and 258,065 Shares held by Grange Consulting Group Pty Ltd

Table 5 – 65% of Eligible shareholders take up their entitlement under the Rights Issue and, as indicated to the Company, Finico and the other sub‐underwriters (Mr Greg Bandy, Mr Tony King and Mr Ian Macliver) each take up 100% of their entitlement:

	Shares	% of Total Shares
Finico Pty Ltd1	12,632,246	17.2%
Mr Greg Bandy	200,000	0.3%
Mr Tony King and Mr Ian Macliver2	4,769,932	6.5%
Mr Tony King	843,542	1.1%
Mr Ian Macliver	783,872	1.1%
Other Shareholders	54,206,902	73.8%
Total	73,436,494	100.0%
1.Mr Chris Morris has a relevant interest in the 12,632,246 Shares held by Finico Pty Ltd
2. Mr King and Mr Macliver each have a relevant interest in 6,372,143 Shares held by Max Capital Pty Ltdand 258,065 Shares held by Grange Consulting Group Pty Ltd

Each of the Directors and Proposed Directors intend to vote their Shares in favour of Resolution 3‐5, subject to the limitations described above under Section 5.2(c). The Directors have approved the proposal to put the Resolutions to Shareholders.

Glossary

In this Explanatory Statement, the following terms have the following unless the context otherwise requires:

ASIC	means Australian Securities Investment Commission.
ASX	means ASX Limited ABN 98 008 624 691.
ASXListingRulesorListing Rules	means the listing rules of ASX.
Board	means the board of Directors of the Company.
Chairman	means the Chairman of the Company.
Company	means Empire Beer Group Limited ACN 119 327 169.
CorporationsAct	means the Corporations Act 2001 (Cth).
Director	means a director of the Company.
ExplanatoryStatement	meanstheexplanatorystatementaccompanyingtheNoticeofMeeting.
FinicoSub‐underwritingAgreement	means the sub‐underwriting agreement entered into between MaxCapital Pty Ltd as underwriter and Finico Pty Ltd as sub‐underwriter inconnection with the Rights Issue.
NoticeofMeeting	means this notice of meeting including the Explanatory Statement.
RightsIssue	hasthemeaningascribedtoitinSection2ofthisExplanatoryStatement.
Share	means a fully paid ordinary share in the capital of the Company.
Shareholder	means a shareholder of the Company.
WST	meansWesternStandardTimeasobservedinPerth,WesternAustralia.

Annexure

Terms & Conditions of EEE Options

The Options entitle the holder to subscribe for Shares on the following terms and conditions:

a) Each Option gives the Optionholder the right to subscribe for one Share. To obtain the right given by each Option, the Optionholder must exercise the Options in accordance with the terms and conditions of the Options.
b) The Options will expire at 5.00 pm on 31 December 2011 (Expiry Date). Any Option not exercised before the Expiry Date will automatically lapse on the Expiry Date.
c) The amount payable upon exercise of each Option will be $0.06 (Exercise Price).
d) The Options held by each Optionholder may be exercised in whole or in part, and if exercised in part, multiples of 1,000 must be exercised on each occasion.
e) An Optionholder may exercise their Options by lodging with the Company, before the Expiry Date:
- i) a written notice of exercise of Options specifying the number of Options being exercised; and
- ii) a cheque or electronic funds transfer for the Exercise Price for the number of Options being exercised;

(Exercise Notice).

f) An Exercise Notice is only effective when the Company has received the full amount of the Exercise Price in cleared funds.
g) Within 10 Business Days of receipt of the Exercise Notice accompanied by the Exercise Price, the Company will allot the number of Shares required under these terms and conditions in respect of the number of Options specified in the Exercise Notice.
h) The Options are transferable.
i) All Shares allotted upon the exercise of Options will upon allotment rank pari passu in all respects with other Shares.
j) The Company will not apply for quotation of the Options on ASX. However, The Company will apply for quotation of all Shares allotted pursuant to the exercise of Options on ASX within 10 Business Days after the date of allotment of those Shares.
k) If at any time the issued capital of the Company is reconstructed, all rights of an Optionholder are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reconstruction.
l) There are no participating rights or entitlements inherent in the Options and Optionholders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least 7 Business Days after the issue is announced. This will give Optionholders the opportunity to exercise their Options prior to the date for determining entitlements to participate in any such issue.
m) An Option does not confer the right to a change in exercise price or a change in the number of underlying securities over which the Option can be exercised.

8 St Georges Terrace Perth WA 6000 GPO Box R1253 Perth WA 6844 T +61 8 9261 9100 F +61 8 9261 9101 www.rsmi.com.au

E-mail: [email protected] Direct Telephone: 08 9261 9447 Direct Facsimile: 08 9261 9120 AJG:NEB 911100/IER

27 February 2009

The Directors Empire Beer Group Limited 945 Wellington Street WEST PERTH WA 6005

Dear Sirs

Independent Expert's Report and Financial Services Guide

1. Introduction

1.1. RSM Bird Cameron Corporate Pty Ltd ("RSMBCC") has been engaged by the directors of Empire Beer Group Limited ("the Directors") to prepare an Independent Expert's Report to the shareholders of Empire Beer Group Limited ("Empire Beer" or "the Company") regarding an agreement with Finico Pty Ltd to sub-underwrite the Company's proposed rights issue.
1.2. This report has been prepared to accompany the Notice of General Meeting and Explanatory Statement for shareholders for the Meeting of Empire Beer to be held on 13 March 2009 at which Shareholder approval will be sought for Resolution 1:-

Resolution 1 – Acquisition of Shares by Finico Pty Ltd pursuant to Finico Subunderwriting Agreement

"That for the purpose of Section 611 (item 7) of the Corporations Act, and for all other purposes, the Company approves and authorises any increase in Finico Pty Ltd's voting power in the Company by way of the acquisition of up to 28,444,444 Shares by Finico Pty Ltd pursuant to the Finico Sub-underwriting Agreement at a price of 4.5 cents per share and otherwise on the terms and conditions described in the Explanatory Memorandum that forms part of this Notice (including the Annexure attached to the Explanatory Memorandum accompanying this Notice of Meeting)."

S:\Documents\Empire Beer Group Ltd\Company Secretary\Members Meetings\EGM February 2009\Empire Beer IER - FINAL 270209.doc

Liability limited by a scheme approved under Professional Standards Legislation

RSM Bird Cameron Corporate Pty Ltd ABN 82 050 508 024 Licensed Investment Adviser No 255847

Major Offices in: Perth, Sydney, Melbourne, Adelaide and Canberra

RSM Bird Cameron Corporate Pty Ltd is an independent member firm of RSM International, an affiliation of independent accounting and consulting firms.

1.3. The Company is making a non-renounceable pro-rata offer of new shares at an issue price of $0.045 each on the basis of 1 new share for every 1 share held on 22 January 2009 ("the Rights Issue"). The Company intends to use the funds raised from the Rights Issue to pursue business opportunities for the Company and for working capital purposes.
1.4. The Rights Issue will be fully underwritten by Max Capital Pty Ltd and subunderwritten to approximately 90% by a combination of Finico Pty Ltd ("Finico"), Mr Greg Bandy, Mr Tony King and Mr Ian Macliver.
1.5. Finico is a major shareholder of the Company, holding 6,316,123 shares at 22 January 2009 which represents a relevant interest of 14.9%. If no shareholders take up their entitlements under the Rights Issue, the maximum increase in Finico's relevant interest by way of the sub-underwriting arrangement will be an increase of 28,444,444 shares, bringing its relevant interest to approximately 40.9%.
1.6. The Directors have requested that RSMBCC, being independent and qualified for the purpose, express an opinion as to whether or not the sub-underwriting agreement with Finico ("the Proposed Transaction") is fair and reasonable to those Empire Beer shareholders not associated with Finico ("the Shareholders").

2. Summary and Conclusion

2.1. In our opinion and for the reasons set out in Sections 8 and 9 of this Report, the Proposed Transaction, being the sub-underwriting of the Rights Issue by Finico, is Not Fair but is Reasonable to the Shareholders of Empire Beer.
2.2. The principal factors affecting our opinion are summarised below and are discussed in more detail in Sections 8 and 9 together with other factors we have considered:

Fairness

• The Proposed Transaction is Not Fair to the Shareholders as the net asset value per ordinary share is likely to decrease following the Proposed Transaction, from 6.29 cents to a pro-forma 5.19 cents, as at 31 December 2008.

Reasonableness

The Proposed Transaction is Reasonable based on our view that the advantages of the Proposed Transaction outweigh the disadvantages and consequently, the Shareholders will be better off if the Proposed Transaction proceeds than if it does not. This is a question of the relative advantages and disadvantages of the Proposed Transaction together with the future prospects of the Company should the Proposed Transaction not proceed.
2.3. Our opinion that the Proposed Transaction is Not Fair relates only to the subunderwriting of the Rights Issue by Finico. We are not providing advice to Shareholders as to whether to take up their entitlement under the Rights Issue; this decision should be made by each Shareholder individually after considering their own personal circumstances.
2.4. Shareholders should however note that if they do not take up their entitlement in the Rights Issue, then their shareholding in the Company will be diluted.
2.5. In our opinion, the primary advantages of the sub-underwriting of the Rights Issue to the Shareholders of Empire Beer are:
- should the Proposed Transaction not be approved by the Shareholders, Max Capital Pty Ltd has notified the Company that it would terminate its underwriting commitment and the Rights Issue would not be underwritten to any degree. The Proposed Transaction therefore provides certainty over the amount of funds which will be raised through the Rights Issue, increasing the Company's net cash by approximately 50%;
- the Proposed Transaction will provide the Company with a greater ability to pursue new business opportunities as the additional capital would materially increase the likelihood that a higher quality asset or business would be attracted to the Company or alternatively that the Company would have an increased financial capacity to acquire a higher quality asset or business; and
- in the current economic environment, the availability of credit or debt to make acquisitions or investments has reduced significantly. Companies with a requisite level of existing net cash will be better placed both in terms of opportunities being presented to them and the ability to transact than those which have to raise funds in order to make an acquisition or investment.
2.6. In our opinion, the primary disadvantage of the Proposed Transaction to the Shareholders of Empire Beer is:
- the Proposed Transaction may result in a dilution of interest for the existing Shareholders should they not take up their full entitlements in the Rights Issue.
2.7. We have also considered the following issues when forming our opinion on the reasonableness of the Proposed Transaction:
- the Rights Issue is a pro-rata non-renounceable offer to all Empire Beer shareholders on the share register at 22 January 2009. All shareholders have an equal opportunity to participate in the Rights Issue at the issue price;
- the future prospects of the Company should the Proposed Transaction not proceed, including the option of a return of capital to shareholders by way of a de-listing and voluntary liquidation of the Company;
- the potential for a change in control of the Company and Finico's stated intentions to support the Company's current strategic direction; and
- the fact that the Directors are of the opinion that the current economic downturn will at some stage reward those companies with strong balance sheets as attractive investment opportunities materialise. They are also of the view that significant investment opportunities will quickly begin to appear across various industries.
2.8. This opinion should be considered in conjunction with, and not independently of, the information set out in the remainder of this Report.

3. Report Structure

3.1. The remainder of our report is divided into the following sections:-

Section Page

4.	Summary of Proposed Transaction6
5.	Purpose of this Report9
6.	Background Information11
7.	Valuation Approach14
8.	Evaluation15
9.	Other Factors Taken into Consideration in Forming Our Opinion18

Appendices

A Declarations and Disclaimers
B Sources of Information
C Financial Services Guide

4. Summary of the Proposed Transaction

Rights Issue

4.1. As announced on 14 January 2009, the Company is proposing to raise approximately $1.9 million through a non-renounceable pro-rata offer of new shares at an issue price of $0.045 each on the basis of 1 new share for every 1 share held on 22 January 2009.
4.2. The key terms of the Rights Issue can be summarised as follows:

Key Terms of Rights Issue
Rights	1 right to acquire 1 new share for every 1 share held
Shares to be issued	42,467,464 new shares, subject to rounding
Price	$0.045 per new share
Raising	$1,911,036
Estimated costs of issue	$180,000
Type	Non-renounceable and fully underwritten
	Table 1 – Key Terms of the Rights Issue

4.3. The Rights Issue is specified in an Offer Document dated 13 January 2009 ("Offer Document").
4.4. On the basis of the Company's capital structure as at 22 January 2009 (the record date), the capital structure of the Company following completion of the Rights Issue will be as follows:

Shares	Number
Shares on issue at 22 January 2009	42,467,464
Shares now offered under the Rights Issue	42,467,464
Total shares on issue at completion of the Rights Issue	84,934,928

Options	Number
Unlisted options exercisable at $0.50 each on or before 30 November 2009	4,500,000
Unlisted options exercisable at $0.10 each on or before 30 June 2011	5,750,000
Table 2 – Empire Beer Capital Structure on completion of the Rights Issue

4.5. The Company intends to apply the funds raised from the Rights Issue towards pursuing business opportunities for the Company with the intention of creating value for shareholders, meeting the costs of the Rights Issue and for working capital purposes.

Underwriting Agreements

4.6. The Company has entered into an Underwriting Agreement with Max Capital Pty Ltd ("Max Capital") to underwrite the Rights Issue. Under the Agreement, Max Capital will subscribe, or procure offers to subscribe, for any shortfall in the Rights Issue where shareholders have chosen not to exercise their rights. Max Capital will receive an underwriting fee of 6% of the amount raised under the Rights Issue.
4.7. Max Capital is a related party of the Company by virtue of being controlled by a current director, Mr Ian Macliver, and a proposed director, Mr Tony King, of the Company. The terms and conditions of the Underwriting Agreement are on arm's length commercial terms and the underwriting is subject to customary terminating events, warranties and covenants.
4.8. The Rights Issue is sub-underwritten to approximately 90% by a combination of:
- Finico Pty Ltd ("Finico"), a company controlled by a proposed director, Mr Chris Morris;
- Mr Greg Bandy, a proposed director;
- Mr Tony King, a proposed director; and
- Mr Ian Macliver, a current director of the Company.
4.9. The above parties, "the Sub-Underwriters", have entered into sub-underwriting agreements with Max Capital whereby they will subscribe for approximately 90% of the shortfall in the Rights Issue. The Sub-Underwriters are liable to subscribe for up to the following numbers of new shares, on a pro-rata basis:
- Finico 28,444,444 new shares;
- Mr Greg Bandy 5,333,333 new shares;
- Mr Tony King 2,666,667 new shares; and
- Mr Ian Macliver 1,777,778 new shares.
4.10. The Sub-Underwriters will receive a sub-underwriting fee from Max Capital of 5% of the amount which they each sub-underwrite. The Sub-Underwriters' obligations in respect of each sub-underwriting agreement will only terminate if Max Capital's obligations under the underwriting agreement cease or are terminated.
4.11. Finico, Mr Greg Bandy, Mr Tony King and Mr Ian Macliver all hold relevant interests in the Company's shares at 22 January 2009 and are all related parties of the Company by virtue of being either a company controlled by a proposed director, a proposed director or a current director of the Company.

Effect of Proposed Transaction on the Control of the Company

4.12. Finico is the major shareholder of Empire Beer with a holding of 6,316,123 shares as at 22 January 2009 (approximately 14.9% of the total shares on issue).
4.13. We understand that Finico, Mr Greg Bandy, Mr Tony King and Mr Ian Macliver have all confirmed to the Company that, should shareholder approval for the potential increase in voting power of Finico be obtained, they and/or entities controlled by them do not intend to take up any of their entitlements in the Rights Issue.
4.14. The table below summarises the capital structure of the Company immediately prior to and following the Rights Issue under two scenarios:
- (i) Shareholders excluding the Sub-Underwriters and/or entities controlled by them ("Eligible Shareholders") take up 100% of their entitlements; and

	As at 22 January 2009		All Eligible Shareholderstake up entitlements		No Eligible Shareholderstake up entitlements
	Shares	%	Shares	%	Shares	%

Finico	6,316,123	14.9%	12,756,054	15.0%	34,760,567	40.9%
Non-associated shareholders
of the Company	36,151,341	85.1%	72,178,874	85.0%	50,174,361	59.1%
Total	42,467,464	100.0%	84,934,928	100.0%	84,934,928	100.0%

(ii) No Eligible Shareholders take up any of their entitlements.

Table 3 – Empire Beer Capital Structure on completion of the Rights Issue under two Scenarios

4.15. This table shows that the final relevant interest of Finico following completion of the Rights Issue decreases as entitlements taken up by Eligible Shareholders increases.
4.16. If all Eligible Shareholders take up their entitlements then Finico's relevant interest will remain at approximately 15%.
4.17. The maximum increase in Finico's relevant interest by way of the sub-underwriting arrangement would be an increase of 28,444,444 shares, bringing its relevant interest to approximately 40.9%.
4.18. The exact number of shares which may be acquired by Finico as a result of the subunderwriting cannot be determined at the current time as it will depend on the number of Eligible Shareholders that do not take up their rights to participate in the Rights Issue.

Rationale for the Proposed Transaction

4.19. The Company has recently sold its two leasehold interests in the hospitality industry and is actively seeking new business opportunities. In the current economic climate where capital is extremely scarce, the Directors believe that an increased amount of funds available to it would materially increase the likelihood that a higher quality asset or business would be attracted to the Company. In the Director's view, the current economic downturn will at some stage reward those companies with strong balance sheets as attractive investment opportunities materialise.
4.20. The Directors consider that entering into the Underwriting Agreement with Max Capital, with the knowledge that Max Capital has entered into sub-underwriting agreements with each of the Sub-Underwriters, provides the Company with the highest degree of certainty that the Rights Issue will be successful, in the time available and in a volatile and difficult financial market.

5. Purpose of this Report

ASX Listing Rules

5.1. Section 606 of the Corporations Act ("the Act") prohibits a person from acquiring a relevant interest in the issued voting shares of a public company if the acquisition results in that person's voting interest in the company exceeding 20%.
5.2. However, under item 7 of section 611 the prohibition contained in section 606 does not apply if the acquisition has been approved by the non-associated shareholders of the company.
5.3. Accordingly, shareholder approval of the sub-underwriting arrangement with Finico is being sought by the Company under item 7 of section 611 of the Act, as Finico's relevant interest could exceed 20% if not all entitlements under the Rights Issue are taken up by Eligible Shareholders .
5.4. Section 611 states that shareholders must be given all information that is material to the decision on how to vote at the meeting. Regulatory Guide 111 Content of Expert Reports ("RG 111") issued by the Australian Securities and Investments Commission ("ASIC") advises the commissioning of an Independent Expert's Report in such circumstances and provides guidance on the content.
5.5. In determining whether the Transaction is "fair and reasonable" we have given regard to the views expressed by ASIC in RG 111.
5.6. RG 111 provides ASIC's views on how an expert can help security holders make informed decisions about transactions. Specifically it gives guidance to experts on how to evaluate whether or not a proposed transaction is fair and reasonable.
5.7. RG 111 states that the expert report should focus on:
- the issues facing the security holders for whom the report is being prepared; and
- the substance of the transaction rather than the legal mechanism used to achieve it.

Basis of Assessment

5.8. Where an issue of shares by a company otherwise prohibited under s606 is approved under item 7 of s611 and the effect on the company's shareholding is comparable to a takeover bid, RG 111 states that the transaction should be analysed as if it was a takeover bid (RG 111.21 and RG 111.22).
5.9. RG 111 applies the "fair and reasonable" test as two distinct criteria in the circumstance of a takeover bid, stating:
- A takeover offer is considered "fair" if the value of the offer price or consideration is equal to or greater than the value of the securities that are the subject of the offer; and
- A takeover offer is considered "reasonable" if it is fair or, where the offer is "not fair", it may still be "reasonable" if the expert believes that there are sufficient reasons for security holders to accept the offer.
5.10. Consistent with the guidelines in RG 111, in determining whether the Proposed Transaction is "fair and reasonable" to the Shareholders, the analysis undertaken is as follows:
- A comparison of the fair value of an ordinary share in Empire Beer prior to and immediately following the Proposed Transaction, being the 'consideration' for Shareholders - fairness; and
- A review of other significant factors which Shareholders might consider prior to approving the Proposed Transaction - reasonableness.
5.11. In particular, we have considered the advantages and disadvantages of the Proposed Transaction in the event that it proceeds or does not proceed including:
- The future prospects of the Company if the Proposed Transaction does not proceed; and
- Any other commercial advantages and disadvantages to the Shareholders as a consequence of the Proposed Transaction proceeding.
5.12. Our assessment of the Proposed Transaction is based on economic, market and other conditions prevailing at the date of this report.

6. Background Information

6.1. Empire Beer (ASX code EEE) was incorporated on 29 May 2006.
6.2. The Company issued 18,274,286 shares at 35 cents each raising $6.4 million on IPO on 28 December 2006. The Company was entered onto the official list of the ASX on 9 January 2007.
6.3. Empire Beer acquired the leasehold businesses of the Colonial Brewing Co. Margaret River ("Colonial Brewing") for a total consideration of $6.5 million on 28 December 2006, and The Royal on the Waterfront in East Perth ("The Royal") for a cash consideration of $3.8 million on 18 July 2007.
6.4. Following these acquisitions, the Empire Beer Group's operating activities comprised:-
- On-site manufacture of beer at the Colonial Brewing premises at Margaret River, and the sale of that beer to The Royal in East Perth and through the bar/restaurant located on site at Margaret River (Colonial Brewing);
- Operation of the Bar/Restaurant at Margaret River (Colonial Brewing); and
- Operation of The Royal in East Perth being a significant bar, brassiere and restaurant.
6.5. Both The Royal and Colonial Brewing generated losses from acquisition and the Company's operating cash flows were not sufficient to sustain operations, meet working capital requirements and compliance costs of an ASX listed entity. The Directors therefore pursued a divestment strategy for the Royal and Colonial Brewing.
6.6. On 11 August 2008, Colonial Leisure Group Pty contracted to purchase the leasehold operations of The Royal and Colonial Brewing for a cash consideration of $4.45 million. The sale was settled on 24 November 2008 with control of the operations passing to the purchaser on that date.
6.7. The proceeds from the sale were used to repay the Company's $0.9 million bank facility and redeem $575,000 of convertible notes. The Company is now debt free and held approximately $3.0 million of cash reserves at 31 December 2008.
6.8. The Company proposes to restructure the Board following completion of the Rights Issue and pursue strategic business opportunities in a number of diversified fields.

Financial Analysis

6.9. The financial information set out in the following paragraphs is based on the audited financial report for the year ended 30 June 2008 and the audited interim report for the half-year ended 31 December 2008.

Financial Position

6.10. The table below summarises the audited consolidated financial position at 31 December 2008.

	Ref.	Audited31-Dec-08$000s
Current Assets
Cash and cash equivalents		3,020
Trade and other receivables		60
Total Current Assets		3,080
TOTAL ASSETS		3,080
Current Liabilities
Trade and other payables		407
Total Current Liabilities		407
TOTAL LIABILITIES		407
NET ASSETS	6.11	2,673
Issued capital		12,510
Reserves		957
Retained earnings/ (accumulated losses)		(10,794)
TOTAL EQUITY		2,673

Table 4 – Empire Beer balance sheet at 31 December 2008

6.11. At 31 December 2008, Empire Beer had net assets of approximately $2.67 million principally comprising cash and cash equivalents.

Financial Performance

6.12. The table below sets out a summary of the financial performance of the Empire Beer Group for the six months ended 31 December 2008 and the year ended 30 June 2008.

	Audited31-Dec-08$000s	Audited30-Jun-08$000s
Revenue	2,926	7,365
Other revenue	180	77
Total revenue	3,106	7,442
Cost of goods sold	(872)	(2,369)
Employee benefits expense	(1,373)	(3,921)
Occupancy Costs	(210)	(506)
Other expenses	(932)	(2,186)
Loss before interest, depreciation, impairment & income tax	(281)	(1,540)
Impairment expense	-	(1,646)
Depreciation	(96)	(236)
Interest	(79)	(152)
Income tax benefit	-	129
Loss after income tax expense	(456)	(3,445)

Table 5 – Summary of Empire Beer financial performance for the 18 months to 31 December 2008

6.13. As shown in the table above, Empire Beer has made substantial losses in each of the two trading periods to 31 December 2008.
6.14. Although a significant contributor to the loss in the year ended 30 June 2008 is the impairment expense, a substantial loss had already been recorded prior to the impairment expense. The impairment expense was effectively to reduce the value of Empire Beer's investment in Colonial Brewing and The Royal to the amount of the sale consideration.

Share price and performance

6.15. On the 26 February 2009 Empire Beer's latest closing share price was $0.033.
6.16. The chart shown below provides a comparison of the movement in Empire Beer's closing share price against the ASX Small Ordinary Index for the last 12 months.

Figure 1 – Share Price of Empire Beer against ASX Small Ordinaries (source: Reuters)

6.17. The share price of Empire Beer has progressively declined over the past year, on thin trading, as a result of the poor performance of the trading assets. Following the divestment of these assets and the announcement of the Rights Issue in mid-January 2009, the Company's share price increased marginally.
6.18. However, over the last few weeks the share price has fallen to 3.3 cents, the lowest traded value in the last 12 months.
6.19. The ASX Small Ordinary index since 28 February 2008 to the date of this Report has lost approximately 55% in value, whilst Empire Beer's share price has dropped almost 80% over the same period, as illustrated in the chart above.

7. Valuation Approach

Valuation Methodologies

7.1. In assessing the value of the Company, we have considered a range of valuation methodologies. RG 111.54 proposed that it is generally appropriate for an expert to consider using the following methodologies:
- the discounted cash flow method and the estimated realisable value of any surplus assets;
- the application of earnings multiples to the estimated future maintainable earnings or cashflows added to the estimated realisable value of any surplus assets;
- the amount which would be available for distribution on an orderly realisation of assets;
- the quoted price for listed securities; and
- any recent genuine offers received.
7.2. We consider each of these valuation methodologies below:
- We have not addressed the discounted cash flow methodology as a basis of valuation because the Company no longer generates cash inflows through trading;
- We have not addressed the future maintainable earnings methodology as a basis of valuation because the Company no longer generates earnings through trading;
- We have addressed the orderly realisation of assets methodology as a basis of valuation for the Company;
- We have addressed the quoted price of listed securities as a basis of valuation for the Company; and
- We have not addressed alternative offers as an alternative basis of valuation as we understand that have not been any offers.
7.3. For those methodologies which we have addressed, we set out more detail of the methodology in the following paragraphs.

Orderly Realisation of Assets

7.4. The value achievable in an orderly realisation of assets is estimated by determining the realisable value of the net assets. This technique is particularly appropriate for entities which do not carry on any commercial trading activities.

Quoted Price of Listed Securities

7.5. Prices at which a company's shares have traded on the ASX can, in the absence low liquidity or unusual circumstances, provide an objective measure of the value of the Company, excluding a premium for control.
7.6. This technique is a useful reasonableness check for other valuation methodologies.

8. Evaluation

8.1. As previously stated in paragraph 5.10, in assessing whether the Proposed Transaction is fair and reasonable to the Shareholders we have considered the following:
- A comparison of the fair value of the ordinary shares in the Company prior to and immediately following the Proposed Transaction (refer this section of this report);
- The future prospects of the Company if the Proposed Transaction does not proceed (refer section 9 of this report); and
- Other commercial advantages and disadvantages to the Shareholders as a consequence of the Proposed Transaction proceeding (refer section 9 of this report).

Valuation of the Company's Shares

8.2. As stated in Section 7 we have considered these valuation methodologies for the Company's shares:-
- Realisation of net assets; and
- Quoted market price.

Realisation of Net Assets

8.3. The net assets of the Company at 31 December 2008 amounted to $2,673,000 (refer 6.11). Realisation costs would be minimal as the Company's assets are primarily cash and cash equivalents; therefore we consider this to be a reasonable estimate of the realisable value of the net assets of Empire Beer.
8.4. The table below sets out our view of the net asset value per share at 31 December 2008:

Net asset value of each Empire Beer share at 31 December 2008	$0.0629
Number of shares on issue as at 22 January 2009	42,467,464
Realisable net asset value of Empire Beer at 31 December 2008	$2,673,000

Table 6 – Net Asset Value per Share at 31 December 2008

8.5. This shows that the net asset value per share at 31 December 2008 is 6.29 cents.
8.6. This assessment does not take into account the potential costs of winding-up the Company which we consider could be substantial given the ongoing working capital requirement of approximately $30,000 per month and additional expenses associated with a de-listing and voluntary liquidation.

Quoted Market Price

8.7. Based on the daily closing share price, Empire Beer's share price has traded in a 52 week range of a low of 3.3 cents (24 February 2009) and a high of 18.5 cents (26 February).

8.8. The following graph shows the daily closing price recorded on the Australian Securities Exchange ("ASX") and trading volumes for the 12 months prior to the date of this report.

8.9. Trading in Empire Beer's shares is generally thin as shown in the graph above, particularly since the divestment of the trading assets in November 2008. We have calculated the share turnover for the last 12 months to be approximately 13.9% of share capital, and only 0.86% for the last 3 months.
8.10. The weighted average price of Empire Beer's shares have been calculated over various time periods within the last 12 months and shown in the table below along with the current share price.

	26-Feb-09	1 week	1 month	3 months	6 months	1 year
Closing price ($)	0.033
Weighted average price ($)		0.033	0.042	0.041	0.048	0.112

Table 7 – Empire Beer Weighted Average Share Price

8.11. This is also illustrated graphically below. The vertical line indicates the date on which the Company completed its divestment of trading assets, being the 24 November 2008. We consider that trading information prior to this date does not appropriately reflect the market's perception of the value of the Company in its current state.

Figure 3 – Weighted Average Share Price of Empire Beer over Specified Time Periods

8.12. We note that the weighted average share prices over recent periods are lower than the net asset value per share at 31 December 2008. This is likely to be a result of the uncertainty surrounding the Company's future direction following the divestment of its trading assets.
8.13. There have been no recent share issues which could be used as a guide to the current fair value of Empire Beer shares.
8.14. Shares in Empire Beer are thinly traded and we have therefore placed less reliance on the quoted market price valuation in our evaluation of fairness.

Valuation Summary

8.15. We believe that the net asset valuation is the most relevant in assessing the fair value of the shares held by Empire Beer Shareholders prior to and immediately following the Proposed Transaction, due to the low levels of market trading since the divestment of the Company's trading assets.
8.16. Therefore, we consider the fair value of an ordinary share in the Company prior to the Proposed Transaction to be the net asset value per share at 31 December 2008 of 6.29 cents.

Evaluation of Fairness

8.17. To assess whether the Proposed Transaction is fair to Shareholders, we must estimate the fair value of an ordinary share of the Company immediately following the Proposed Transaction, being the effective 'consideration' received by the Shareholders.
8.18. A pro-forma balance sheet assuming the Proposed Transaction occurred at 31 December 2008 is shown below, along with the actual balance sheet at 13 December 2008.

Ref.	PreTransaction(31-Dec-08)$'000	PostTransaction(Proforma31-Dec-08)$'000
8.19	3,020	4,751
	60	60
	3,080	4,811

	407	407
	407	407
	2,673	4,404
4.14	42,467,464	84,934,928
	$0.0629	$0.0519

Table 8 – Comparison of Net Asset Value per Share Prior to and Following the Proposed Transaction

8.19. The cash balance is shown after total funds raised of $1,911,000 less estimated costs of the Rights Issue of $180,000.
8.20. Based on the pro-forma balance sheet as at 31 December 2008, the net asset value per share following the Proposed Transaction is 5.19 cents.
8.21. The assessed value of an ordinary share of Empire Beer following the Proposed Transaction, being the 'consideration' which Shareholders will receive, is less than the current value of their existing shares in the Company and therefore the Proposed Transaction is Not Fair to Shareholders.

Consideration of Issue Price

8.22. The following table compares the value of Empire Beer shares, as determined on the basis of net asset values, to the price of the proposed Rights Issue.

	Ref.	Value
Value per ordinary share based on the net asset value per share at 31December 2008	8.15	$0.0629
Issue price of Rights Issue		$0.045
Discount to fair value		$0.018
As a percentage		28.5%

Table 9 – Comparison of Net Asset Value per Share to Issue Price

8.23. The above tables show that the issue price of the Rights Issue represents a discount of 28.5% to the realisation of assets valuation per share.
8.24. We consider that it is appropriate to determine the Rights Issue price at a discount to the net asset value per share, particularly given the uncertainty over the Company's future direction while it seeks new investment opportunities. In our view, 28.5% is an excessive discount at which Finico has an opportunity to purchase up to 28 million Empire Beer shares.
8.25. However, we also note that the issue price is greater than the current share price of $0.033 and therefore all shareholders participating in the Rights Issue would pay more than if they purchased the shares on the market at today's price.

9. Other Factors Taken into Consideration in Forming Our Opinion

Stated Intentions of Empire Beer

9.1. The Offer Document states that Empire Beer intends to use the proceeds received from the sale for the following purposes:
- Expenses of the transaction;
- Working capital for estimated annual overhead costs; and
- Investment in new business opportunities.

Stated Intentions of Finico

9.2. We understand that Finico has informed the Company that if it were to gain effective control of the Company by virtue of its shareholding and sub-underwriting of the Rights Issue, the current intentions of Finico are:
- that the Company will:
  - continue seeking new business opportunities;
  - not make any major changes to the business of the Company nor redeploy any of the fixed assets of the Company; and
  - continue the employment of the Company's present employees; and
- that the current Board of the Company be restructured as outlined in the Offer Document.

Future Prospects of Empire Beer if the Proposed Transaction Does Not Proceed

9.3. If the sub-underwriting agreement with Finico is not approved, the Company will not be provided with certainty regarding the amount of funds that can be raised through the Rights Issue.
9.4. Under the terms of the Underwriting Agreement with Max Capital, should all regulatory approvals to sub-underwrite the Rights Issue not be obtained by the Sub-Underwriters, Max Capital may terminate the underwriting. Max Capital has notified the Company that in the absence of shareholder approval (under Resolution 1) for the Proposed Transaction, it will terminate its underwriting commitment. In that event, the Rights Issue would not be underwritten to any degree.
9.5. Each of Max Capital as underwriter to the Rights Issue, and Finico, Mr Tony King, Mr Greg Bandy and Mr Ian Macliver as sub-underwriters to the Rights Issue have advised the Company that in that scenario they each intend to take up their respective entitlements to the Rights Issue as ordinary shareholders in the Company.
9.6. The Directors believe that the Company will have difficulty raising the entirety of the $1.9 million funds in the absence of the Proposed Transaction, particularly given the current conditions in the share market and general financial market. This could limit the Company's ability to pursue new business opportunities.

Return of Capital to Shareholders

9.7. As the assessed net asset value per ordinary share is greater than both the current share price and the estimated net asset value assuming the Proposed Transaction occurred at 31 December 2008, we have considered the option of a return of capital to shareholders.
9.8. The process of de-listing and voluntary liquidation is likely to incur significant costs; we consider these costs would be in the range of $250,000 to $350,000, resulting in a potential distribution of 5.47 cents to 5.71 per share to shareholders based on the financial position as at 31 December 2008.
9.9. Whilst this potential distribution is slightly in excess of the net asset value per share assuming the Proposed Transaction occurred at 31 December 2008 of 5.19 cents, in our opinion the opportunity for shareholder wealth accretion through new investments outweighs the marginal additional return per share through a voluntary liquidation of the Company.
9.10. In addition, we understand from the Board that certain of the larger shareholders, including Finico, would not be willing to support such an option at this time.

Advantages and Disadvantages

9.11. In assessing whether the Shareholders are likely to be better off if the Proposed Transaction proceeds than if it does not, we have compared various advantages and disadvantages that are likely to accrue to the Shareholders.

Advantages

Advantage 1 – Certainty of fund raising

9.12. Having the Rights Issue fully underwritten provides the Company with certainty that the funds sought will be received.
9.13. Should the Proposed Transaction not be approved by the Shareholders, Max Capital Pty Ltd has notified the Company that it would terminate its underwriting commitment and the Rights Issue would not be underwritten to any degree.

Advantage 2 – Opportunity to pursue other business opportunities

9.14. The Proposed Transaction provides the funding to allow the Company to pursue new business opportunities with the potential to increase shareholder value, increasing net cash available to the Company by approximately 50%.
9.15. The Directors have advised that, in their opinion, in the current uncertain economic climate an increased amount of funds available to it would materially increase the likelihood that a higher quality asset or business would be attracted to the Company, and we view this position as reasonable.

Advantage 3 – Reduced reliance on debt funding for new acquisitions

9.16. In the current economic environment, the availability of credit or debt to make acquisitions or investments has reduced significantly.

9.17. Companies with a requisite level of existing net cash will be better placed both in terms of opportunities being presented to them and the ability to transact than those which have to raise funds in order to make an acquisition or investment.

Disadvantages

Disadvantage 1 – Dilution of Shareholders' interests

9.18. If the Shareholders do not take up their full entitlements under the Rights Issue, then their collective voting power will be diluted. The maximum possible dilution would be from 85.1% to 59.1%.
9.19. This would result in Finico having a material influence at any general meeting of the Company and on matters such as the composition of the board of directors and a change in control of the Company.

Potential for Change in Control

9.20. Finico is the largest shareholder of Empire Beer, currently holding approximately 14.9% of the issued shares in the Company. Finico is controlled by Mr Chris Morris, who is proposed to be appointed to the Board of Empire Beer as Chairman.
9.21. If the proposed Transaction is approved Finico's shareholding could increase to a maximum of 40.9%. It is our view that the control which Finico is able to exert over the Company in such circumstances will be significant.
9.22. However, having regard to the terms of the Proposed Transaction, the potential for a change in control of the Company is not unreasonable for reasons including the following:
- All Shareholders have the opportunity to participate in the Rights Issue. Finico's shareholding will increase relative to other Shareholders only if Shareholders do not take up their rights; and
- Finico have stated that they intend to support the Company's current strategic direction.

The Directors' Rationale for the Proposed Transaction

9.23. In the current economic climate where capital is extremely scarce, the Directors believe that an increased amount of funds available would materially increase the likelihood that a higher quality asset or business would be attracted to the Company.
9.24. In the Board's view:
- a) the current economic downturn will at some stage reward those companies with a stronger balance sheet;
- b) those companies with a requisite level of existing net cash will be far better placed both in terms of opportunities being presented to them and the ability to transact than those which have to raise funds in order to make an acquisition or investment;
- c) in the current economic climate significant investment opportunities which would otherwise not be present will quickly begin to appear across various industries;
d) as valuations across all asset classes have deteriorated over the last 12 months or so, the value of cash has commensurately increased; and
e) the increased net cash available to the Company following the Rights Issue (assuming full subscription) is significant (over 50% increase in available cash) in the context of the Company's ability to consummate a transaction to acquire a business with the scale required for a publicly listed entity.
9.25. The Board has also noted that the availability of credit or debt to make acquisitions or investments has reduced significantly in the current economic environment.
9.26. Overall, the Board is of the view that the above factors, when combined with the certainty of capital represented by the underwriting and sub-underwriting arrangements put in place by the Company, mean that the advantages of the Rights Issue as structured outweigh any possible dilution to Shareholders that may result from Shareholders choosing not to exercise their entitlement to the Rights Issue.

Response of Market to the Announcement of the Proposed Transaction

9.27. We have also considered the market's response to the announcement of the Rights Issue. The Proposed Transaction was announced to the ASX on 14 January 2009. In the event that the Proposed Transaction was not reasonable we would expect some correction downward in the share price of Empire Beer as the market responds to what it perceives to be an unfavourable transaction for shareholders.
9.28. The share price immediately prior to the announcement was 3.8 cents; it rose to a traded high of 5.7 cents on 28 January 2009 before falling in the latter half of February 2009 to a traded low of 3.3 cents.
9.29. We note that over the period from announcement to the date of this report only 7 trading days were recorded. Whilst the share price initially rose on announcement of the Proposed Transaction, indicating a favourable response from the market, due to the low trading levels it is not possible to determine the true reaction of the market.

Conclusion

9.30. The Proposed Transaction is Reasonable based on our view that the advantages of the Proposed Transaction outweigh the disadvantages and consequently, the Shareholders will be better off if the Proposed Transaction proceeds than if it does not. This is a question of the relative advantages and disadvantages of the Proposed Transaction together with the future prospects of the Company should the Proposed Transaction not proceed.

Yours faithfully

A J GILMOUR Director

APPENDIX A

Declarations and Disclosures

RSM Bird Cameron Corporate Pty Ltd holds Australian Financial Services Licence 255847 issued by ASIC pursuant to which they are licensed to prepare reports for the purpose of advising clients in relation to proposed or actual mergers, acquisitions, takeovers, corporate reconstructions or share issues.

Qualifications

RSM Bird Cameron Corporate Pty Ltd is beneficially owned by the partners of RSM Bird Cameron (RSMBC) a large national firm of chartered accountants and business advisors.

Mr. Andrew Gilmour is a director of RSM Bird Cameron Corporate Pty Ltd. He is a Chartered Accountant with extensive experience in the field of corporate valuations and the provision of independent expert's reports for transactions involving publicly listed and unlisted companies in Australia.

Reliance on this Report

This report has been prepared solely for the purpose of assisting the Shareholders of Empire Beer in considering the proposed Transaction. We do not assume any responsibility or liability to any party as a result of reliance on this report for any other purpose.

Reliance on Information

Statements and opinions contained in this report are given in good faith. In the preparation of this report, we have relied upon information provided by the directors and management of Empire Beer and we have no reason to believe that this information was inaccurate, misleading or incomplete. However, we have not endeavoured to seek any independent confirmation in relation to its accuracy, reliability or completeness. RSM Bird Cameron Corporate Pty Ltd does not imply, nor should it be construed that it has carried out any form of audit or verification on the information and records supplied to us.

The opinion of RSM Bird Cameron Corporate Pty Ltd is based on economic, market and other conditions prevailing at the date of this report. Such conditions can change significantly over relatively short periods of time.

In addition, we have considered publicly available information which we believe to be reliable. We have not, however, sought to independently verify any of the publicly available information which we have utilised for the purposes of this report.

We assume no responsibility or liability for any loss suffered by any party as a result of our reliance on information supplied to us.

Disclosure of Interest

At the date of this report, none of RSM Bird Cameron Corporate Pty Ltd, RSMBC, Andrew Gilmour, nor any other member, director, partner or employee of RSM Bird Cameron Corporate Pty Ltd and RSMBC has any interest in the outcome of the proposed Transactions, except that RSM Bird Cameron Corporate Pty Ltd are expected to receive a fee of approximately $10,000 based on time occupied at normal professional rates for the preparation of this report. The fees are payable regardless of whether Empire Beer Group Limited receives Shareholder approval for the Proposed Transaction, or otherwise.

Consents

RSM Bird Cameron Corporate Pty Ltd consents to the inclusion of this report in the form and context in which it is included with the Explanatory Memorandum to be issued to Shareholders. Other than this report, none of RSM Bird Cameron Corporate Pty Ltd, RSM Bird Cameron Partners or RSMBC has been involved in the preparation of the Notice of General Meeting and Explanatory Statement. Accordingly, we take no responsibility for the content of the Notice of General Meeting and Explanatory Statement as a whole.

APPENDIX B

Sources of Information

In preparing this report we have relied upon the following principal sources of information:

Notice of Meeting and Explanatory Statement dated 27 February 2009
Offer Document dated 13 January 2009
Empire Beer Group Limited Annual Report 07/08
Empire Beer Group Limited Interim Report for the half-year ended 31 December 2008
Empire Beer Group Limited Quarterly Updates for September 2008 and December 2008
Publicly available information including ASX announcements and financial information from subscription services
Information provided to us during meetings and correspondence with management and directors of Empire Beer

APPENDIX C

Financial Services Guide

Overview

RSM Bird Cameron Corporate Pty Ltd, ABN 82 050 508 024 ("RSM Bird Cameron Corporate Pty Ltd" or "we" or "us" or "ours" as appropriate) has been engaged to issue general financial product advice in the form of a report to be provided to you.

In the above circumstances we are required to issue to you, as a retail client, a Financial Services Guide ("FSG"). This FSG is designed to help retail clients make a decision as to their use of the general financial product advice and to ensure that we comply with our obligations as financial services licensees.

This FSG includes information about:

who we are and how we can be contacted;
the services we are authorised to provide under our Australian Financial Services Licence, Licence No 255847;
remuneration that we and/or our staff and any associates receive in connection with the general financial product advice;
any relevant associations or relationships we have; and
our complaints handling procedures and how you may access them.

Financial services we are licensed to provide

We hold an Australian Financial Services Licence, which authorises us to provide financial product advice in relation to:

deposit and payment products limited to:
- (a) basic deposit products;

(b)deposit products other than basic deposit products.

interests in managed investments schemes (excluding investor directed portfolio services); and
securities (such as shares and debentures).

We provide financial product advice by virtue of an engagement to issue a report in connection with a financial product of another person. Our report will include a description of the circumstances of our engagement and identify the person who has engaged us. You will not have engaged us directly but will be provided with a copy of the report as a retail client because of your connection to the matters in respect of which we have been engaged to report.

Any report we provide is provided on our own behalf as a financial services licensee authorised to provide the financial product advice contained in the report.

General Financial Product Advice

In our report we provide general financial product advice, not personal financial product advice, because it has been prepared without taking into account your personal objectives, financial situation or needs.

You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on the advice. Where the advice relates to the acquisition or possible acquisition of a financial product, you should also obtain a product disclosure statement relating to the product and consider that statement before making any decision about whether to acquire the product.

Benefits that we may receive

We charge fees for providing reports. These fees will be agreed with, and paid by, the person who engages us to provide the report. Fees will be agreed on either a fixed fee or time cost basis.

Except for the fees referred to above, neither RSM Bird Cameron Corporate Pty Ltd, nor any of its directors, employees or related entities, receive any pecuniary benefit or other benefit, directly or indirectly, for or in connection with the provision of the report.

Remuneration or other benefits received by our employees

All our employees receive a salary.

Referrals

We do not pay commissions or provide any other benefits to any person for referring customers to us in connection with the reports that we are licensed to provide.

Associations and relationships

RSM Bird Cameron Corporate Pty Ltd is beneficially owned by the partners of RSM Bird Cameron, a large national firm of chartered accountants and business advisers. Our directors are partners of RSM Bird Cameron Partners.

From time to time, RSM Bird Cameron Corporate Pty Ltd, RSM Bird Cameron Partners, RSM Bird Cameron and / or RSM Bird Cameron related entities may provide professional services, including audit, tax and financial advisory services, to financial product issuers in the ordinary course of its business.

Complaints Resolution

Internal complaints resolution process

As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. All complaints must be in writing, addressed to The Complaints Officer, RSM Bird Cameron Corporate Pty Ltd, P O Box R1253, Perth, WA, 6844.

When we receive a written complaint we will record the complaint, acknowledge receipt of the complaint within 15 days and investigate the issues raised. As soon as practical, and not more than 45 days after receiving the written complaint, we will advise the complainant in writing of our determination.

Referral to External Dispute Resolution Scheme

A complainant not satisfied with the outcome of the above process, or our determination, has the right to refer the matter to the Financial Industry Complaints Service Limited ("FICS"). FICS is an independent company that has been established to provide free advice and assistance to consumers to help in resolving complaints relating to the financial services industry.

Further details about FICS are available at the FICS website www.fics.asn.au or by contacting them directly via the details set out below.

Financial Industry Complaints Service Limited P O Box 579 Collins Street West Melbourne VIC 8007

Toll Free:	1300 78 08 08
Facsimile:	(03) 9621 2291

Contact Details

You may contact us using the details set out at the top of our letterhead on page 1 of this report.

AI assistant

SMART PARKING LIMITED — Proxy Solicitation & Information Statement 2009

65850_rns_2009-03-11_58a20bd1-7fa9-4630-992e-50333bc05732.pdf

Venue

How to Vote

Voting in Person

Voting by Proxy

Empire Beer Group Limited ACN 119 327 169

Notice of General Meeting

Agenda

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

Resolution 1 – Acquisition of Shares by Finico Pty Ltd pursuant to Finico Sub‐underwriting Agreement

Resolution 2 – Acquisition of Shares by Finico Pty Ltd pursuant to the Rights Issue

Resolution 3 – Grant of Options to Mr Chris Morris (Proposed Director)

Resolution 4 – Grant of Options to Mr Greg Bandy (Proposed Director)

Resolution 5 – Grant of Options to Mr Tony King (Proposed Director)

Notes:

Enquiries

Explanatory Statement

1. General Information

2. Background

3. Resolution 1: Acquisition of Shares by Finico Pty Ltd pursuant to Sub‐underwriting

3.1 Section 606 – Statutory Prohibition

Voting Power and Relevant Interests

Deemed Relevant Interests, Voting Power and Associates

3.2 Section 611 Item 7 of the Corporations Act – Exemption from Section 606

Prescribed information:

Other Required Information

3.3 Directors recommendation

3.4 Independent Expert's Report

4. Resolution 2: Acquisition of Shares by Finico Pty Ltd pursuant to Sub‐underwriting

4.1 Section 606 – Statutory Prohibition

Voting Power and Relevant Interests

Deemed Relevant Interests, Voting Power and Associates

4.2 Section 611 Item 7 of the Corporations Act – Exemption from Section 606

Prescribed information:

Other Required Information

4.3 Directors recommendation

5. Resolutions 3 – 5: Approval of Grant of Director Options

5.1 Section 208 of the Corporations Act

5.2 Regulatory Requirements – Section 217 to 227 Corporations Act

5.3 Listing Rule 10.11

5.4 Directors' Interests

Part A

Table 1 – Existing Interests

Part B

Table 1 – Existing Interests

Glossary

Annexure

Terms & Conditions of EEE Options

(Exercise Notice).

Independent Expert's Report and Financial Services Guide

1. Introduction

2. Summary and Conclusion

Fairness

Reasonableness

3. Report Structure

Section Page

Appendices

4. Summary of the Proposed Transaction

Rights Issue

Underwriting Agreements

Effect of Proposed Transaction on the Control of the Company

Rationale for the Proposed Transaction

5. Purpose of this Report

ASX Listing Rules

Basis of Assessment

6. Background Information

Financial Analysis

Financial Position

Financial Performance

Share price and performance

7. Valuation Approach

Valuation Methodologies

Orderly Realisation of Assets

Quoted Price of Listed Securities

8. Evaluation

Valuation of the Company's Shares

Realisation of Net Assets

Quoted Market Price

SMART PARKING LIMITED Proxy Solicitation & Information Statement 2009