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1 3 December 2013 The Manager Company Announcements Australian Securities Exchange Level 5, 20 Bridge Street SYDNEY NSW 2000 By E-Lodgement Dear Sirs ASX Code: FRR Significant Acquisition of Cloud Centric Software and Service Provider FRR Corporation Limited (FRR) is pleased to announce that it has signed a Share Sale and Purchase Deed, subject to shareholder approval and certain conditions precedent, to acquire 100% of the shareholding in Newlease Pty Limited (Newlease), a high growth business offering cloud based subscription software licensing solutions and services. Highlights: Newlease has recorded 5 year compound revenue growth of 47% p.a. from monthly subscription software license revenue streams in the Australian, New Zealand and more recently Asian Pacific markets; It is a market leader in its field of servicing and licensing IT service providers that sell Cloud based subscriptions for IT infrastructure and software to enterprises; The new ownership structure will enable Newlease to take advantage of the opportunities that are presenting themselves to grow further in both product and geographical reach; The Board and advisory team at FRR adds a wealth of experience to assist Newlease fulfil its future strategy and objectives; and Approval and support of the Board of Directors of both FRR and Newlease. Transaction Summary: Acquisition of Newlease via the issue of FRR shares valued at $13.5m; Issue of unvested Management Options to proposed new Directors of the Company (that includes key Newlease executives); FRR plus Newlease will have net cash of approximately $2.5million post transaction; FRR to be renamed Rhype Limited, which will wholly own Newlease; FRR will undergo a capital consolidation after the acquisition of Newlease to meet ASX Listing Rule requirements; Changes to the Board to support the new business activity; and The transaction is conditional on re-compliance with Chapter 1 & 2 of the ASX Listing Rules and FRR shareholders approving the transaction in general meeting.

2 Background to the transaction In April 2013, the Board of FRR was changed, an advisory committee created and a placement of $950,000 was completed. The purpose was to re-capitalise the company and seek out high growth investment opportunities that would enhance value for all shareholders. As a result of this process, FRR commenced discussions with Newlease and has now reached agreement that will result in FRR acquiring 100% of the issued capital of Newlease subject to certain conditions precedent. Consideration involves the issue of 1,350,000,000 FRR ordinary shares and 85,000,000 Management Options (subject to ASX, other regulatory approvals and prior to any consolidation required pursuant to Chapters 1 & 2 of the ASX Listing Rules). The Management Options being issued as part of the transaction are linked to future share price vesting provisions on similar terms as existing Management Options currently on issue in FRR. There is no cash consideration being paid by FRR and no requirement to raise new equity other than for shareholder spread if required. Post merger, FRR and Newlease will have cash reserves of circa $2.5million and no debt. Cash funds will be used for working capital and growth investment as Newlease continues its expansion of operations in South East Asia and adds further licensed software products with major vendors to its distribution suite. About Newlease Newlease is a successful Melbourne based company with sales and support offices in Sydney, Auckland, Singapore, Bangkok and Manila. It is currently in the process of opening its seventh office in Kuala Lumpur. Newlease generates revenue from: Selling on-demand cloud subscription licensing from leading global software vendors to IT service providers offering IT as a Service (ITaaS) to end users; and Provision of related consulting services enabling service providers to provide Software, Platform and Infrastructure as a Service to enterprise clients. Its customers are public and private cloud service providers, Cloud Information Technology Services (CITS) clients, Value Added Resellers (VAR s) and Data Centres throughout Australia, New Zealand and South East Asia. Newlease has strong relationships with key software vendors who value this service provider channel to establish subscription based licensing of their software products. It has secured strong vendor relationships with Microsoft, VMWare, Veeam, Red Hat, Citrix, Trend Micro and McAfee amongst others. As reported by Frost & Sullivan Asia Pacific, the Australian cloud computing market was worth US$882.4 million in 2012 and is expected to reach US$3.33 billion in They expect this market to grow at a compound annual growth rate (CAGR) of 40.3% from Frost & Sullivan Asia Pacific, Dec 2012

3 Newlease revenue growth confirms that Australian businesses have a high adoption rate of cloud computing, and cloud based software is taking an increasing share of this. IT as a Service (ITaaS) is a disruptive process changing traditional software enterprise sales towards subscription licensed software sales. This is the core of the Newlease business. Having established itself as a market leader in Australia and New Zealand, Newlease has invested in expanding its product offering by signing up new software vendors plus geographical expansion of services into South East Asia. Newlease has achieved strong compound annual revenue growth over the last five years. This impressive and sustained growth in annuity subscription revenue generated from cloud software licensing sales is anticipated to continue. Additional information about the Newlease business is available on its website: In fiscal 2013, Newlease recorded revenue growth of 36% on This growth is in line with expected market growth in the cloud software sector and represents both new customers added plus growth in revenues from existing customers as end user adoption increases. Year Ended Year Ended Year Ended Newlease financial statements 30-Jun Jun Jun-13 ($000s) (unaudited) (audited) (audited) Revenue 25,513 37,822 51,514 EBITDA EBITDA after adding back growth investment expenditure expensed* n/a n/a 1,644 * Future reported earnings will vary depending upon the level of investment made to fund growth opportunities. In fiscal 2013, this growth investment represented c.$760,000 and in 2014 it is currently estimated to be in excess of $1m. In line with the companies conservative nature and reflective of the cash generated within the business, these costs are being expensed not capitalised. The Board and management of Newlease believe this an appropriate stance. Over time the Board and management believe operating leverage from investment in systems and processes will result in improved profitability. Board Changes The transaction involves a change of the Board at completion to support the new business activity. Mike Hill has agreed to remain as Chairman of the group post completion with new appointments that will include the founders of Newlease, Doug Tutus (CEO) and Dawn Edwards (COO) as executive Directors. Mr Laurence Sellers and Mr Michael Everett will join the Board as Non Executive Directors. Mr Philip Kapp will remain on the Board as a Non Executive Director. Mr Jonathan Pager will resign at completion to make way for the new Board and Mr Leigh Curyer will resign from the Board and join the Advisory Committee.

4 The FRR Advisory Committee will continue and comprise of Julian Knights, Leigh Curyer and Mark Pierce. The Advisory Committee will meet with the Board and executive management from time to time and offer strategic advice around certain organic and acquisitive growth strategies. In addition and as part of the transaction FRR has revised certain service agreements with the current Directors and advisory committee members. These revisions include clarification of termination events and advisory committee appointment terms. More detail will be provided in the forthcoming Notice of Meeting to be provided to Shareholders of FRR. Additional background on each of the proposed new Directors is provided in Schedule 1 of this release. Shareholder Approval and ASX Re-compliance The transaction is subject to FRR shareholder approval and a number of other matters (outlined in Schedule 2) including re-compliance with Chapters 1 and 2 of the ASX Listing Rules and approval for re-admission to the official list of ASX. Amongst other things, this will involve shareholders approving: a significant change to the nature and scale of its activities; the issue of the 1,350,000,000 pre-consolidation consideration shares at 1 cent and 85,000,000 pre-consolidation Management Options; FRR undergoing a capital consolidation after the acquisition of Newlease to meet ASX Listing Rule requirements; a capital raising at a price to be determined, if required to achieve spread when applying for re-instatement; a capital raising at a price to be determined from employees of Newlease to allow them to acquire ordinary shares in FRR; and the election of the new Board. Full details and terms relating to the issue of the consideration shares and Management Options referred to above will be provided in the Notice of Meeting sent to all shareholders. An Independent Expert Report has been commissioned to assist all shareholders in understanding and voting on the proposed acquisition. This will be mailed to all FRR shareholders and form part of a notice of the extraordinary general meeting. The Board believes the proposed acquisition and change of business post transaction are both very positive and in the interest of shareholders. Change in Name As part of the shareholder approval process, FRR Corporation Limited will change its name to Rhype Limited. Following such approval, and acceptance by all Newlease shareholders, Rhype Limited will wholly own Newlease. The Newlease business name will not be changed.

5 Indicative Capital Structure and Pro-forma Balance Sheet Share Capital Ordinary Options 2 Management Shares 1 Options Existing Shares & Options 488,689,375 80,000,000 85,000,000 3 Issue of Consideration Shares & 1,350,000,000-85,000,000 4 Options Total Securities on Issue 1,838,689,375 80,000, ,000,000 Note: 1 Excludes the effect of a capital raising at a price to be determined, that may be required to achieve spread and allow for employees of Newlease to participate and acquire ordinary shares in the Company. 2 Unquoted options having an exercise price of 1 cent per option (pre-consolidation) and expiring 31 December Excludes 125,000 pre-consolidation employee options that are exercisable at $1.20 by 26 November These Management Options are unquoted, have an exercise price of 1 cent per option (pre-consolidation) and are split into 2 equal tranches as follows: a. Options expiring on 12 March 2016, will vest only after the Company s Share price has traded at $0.02 or above for 20 business days (using the 20 day VWAP) (pre-consolidation); and b. Options expiring on 12 March 2018 will vest only after the Company s Share price has traded at $0.03 or above for 20 business days (using the 20 day VWAP) (pre-consolidation). 4 These Management Options will be will be unquoted, will have an exercise price of 1 cent per option (preconsolidation) and will be split into 2 equal tranches with expiry dates on or around 3 years from the date of issue, and on or around 5 years from the date of issue, in addition to vesting conditions which will be set out in the Notice of Meeting that will be sent to all shareholders. It is envisaged that the Company will have a single focus in the information technology sector hence FRR has commenced a process to actively and prudently divest its remote accommodation interests. The Company will seek to maximize its position from this exit process, possibly via a lease and put/call option arrangement, joint venture structure or outright sale should market conditions allow. Indicative Timetable Following discussions between FRR and the Australian Securities Exchange (ASX), the ASX has informed FRR that the significant change to the nature and scale of the Company s main business activity arising from the Newlease acquisition will require re-compliance with ASX admission requirements in Chapters 1 and 2 of the ASX Listing Rules, including the lodgement of a prospectus with the Australian Securities and Investments Commission (ASIC).

6 An indicative timetable for re-compliance with the admission requirements is set out in the following table: Action Date Despatch of the Notice and Explanatory Statement 20 December 2013 Lodge Prospectus with ASIC and ASX 20 December 2013 Shareholders Meeting* 20 January 2014 Notification to the ASX of the results of the Meeting 20 January 2014 Suspension of trading in the Company s securities 20 January 2014 Offer under Prospectus opens 10 January 2014 Offer under Prospectus closes 20 January 2014 Complete Acquisition and Issue of Shares under the Prospectus 23 January 2014 Consolidation record date 28 January 2014 Reinstatement to official quotation on the ASX* 31 January 2014 NB: The above dates are indicative only and may be subject to change at any time. *The Company s Securities will be suspended on the day of the Shareholder Meeting from official quotation on the ASX following shareholder approval of the transaction and until such time as the transactions, the subjects of this announcement have been completed and the Company has complied with the requirements of the ASX, including re-compliance with Chapters 1 and 2 of the ASX Listing Rules. Accordingly, there will be no trading in the Company s Securities, according to the indicative timetable between 20 January 2014 and 31 January The Board of FRR are pleased to have reached an agreement to acquire Newlease and the opportunities it brings for the enlarged group. For more information, please contact Mike Hill on or Doug Tutus on (03) Yours faithfully, Mike Hill Executive Chairman

7 Schedule 1 Proposed New Directors Background to proposed new Directors to be appointed at the completion of the proposed acquisition: Mr Douglas Tutus, Chief Executive Officer and Managing Director Mr Douglas Tutus is the Founder, Chief Executive Officer and Managing Director of Newlease. Since its inception in 2003, Mr Tutus has guided Newlease and developed the business into one of the global leaders in SPLA distribution, and in recent years has embraced and harnessed the potential of Cloud Computing systems. Ms Dawn Edmonds, Chief Operating Officer Ms Dawn Edmonds is the Chief Operating Officer and Executive Director of Newlease. Prior to joining Newlease in 2003, Ms Edmonds was instrumental in building successful start-up businesses in the temporary labour hire and IT outsourcing sectors. Ms Edmonds was recognised by Smart Company as one of Australia s 40 female entrepreneurs in 2011 and in 2012 was awarded the ARN Women in ICT Entrepreneur Award. Mr Laurence (Laurie) Sellers, Non-Executive Director Mr Laurie Sellers is a Non-Executive Director of Newlease, having joined in the firm in Mr Sellers is a 37 year veteran in the Australian IT Channel, having served as the Chief Executive Officer of ALSTOM, Managing Director of ITX Group Limited, General Manager of Avnet Technology Solutions and most recently, Co-Founder and Chairman of PushPull Marketing Pty Limited. Mr Michael Everett, Non-Executive Director Michael Everett has more than 25 years of capital markets and advisory experience. He recently retired from Goldman Sachs after 11 years where he was a Managing Director and Co-head of the Financing Group within Investment Banking Division of Goldman Sachs Australia. Prior to Goldman Sachs Michael worked internationally for a large investment bank and has broad experience across the securities industry. During his career, Michael has advised a broad range of companies in a variety of industries.

8 Schedule 2 Key Deal Terms and Conditions Consideration 1,350,000,000 fully paid ordinary shares in FRR at an issue price of 1 cent ($0.01) per share (pre-consolidation), subject to Conditions Precedents (outlined below), to be issued to shareholders of Newlease on a pro rata basis in accordance with their shareholdings in Newlease at the time of completion. Completion of the Proposed Acquisition is subject to, amongst other things: Conditions Precedent FRR obtaining all necessary corporate and regulatory approvals required to complete (including shareholder approval under ASX Listing Rules and and item 7 of section 611 of the Corporations Act); all minority shareholders in Newlease accepting to sell their shares; the group being be debt free; and necessary third party consents having been obtained. Management Options Proposed new directors and other key management will be collectively issued with 85,000,000 Management Options (pre-consolidation). Terms of these Management Options will be set out in the Notice of Meeting that will be sent to all shareholders. Shareholder approval for the terms of an Option Plan to govern both current and proposed new Management Options will be sought as part of the Proposed Acquisition.

9 Caution Regarding Forward Looking Information This announcement contains forward looking statements. Forward looking statements are not statements of historical fact and actual events and results may differ materially from those described in the forward looking statements as a result of a variety of risks, uncertainties and other factors. Forward looking statements are inherently subject to business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause the Company's actual results to differ materially from those expressed or implied in any forward looking information provided by the Company, or on behalf of, the Company. Forward looking statements in this announcement are based on the Company's beliefs, opinions and estimates of the Company as of the dates the forward looking statements are made, and no obligation is assumed to update forward looking statements if these beliefs, opinions and estimates should change or to reflect other future developments. Circumstances or management's estimates or opinions could change. The reader is cautioned not to place undue reliance on forward looking statements.