A description of the acts and dealings that remain to be carried out in order to complete the winding up; and

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1 18 October 2017 To the creditor as addressed DSHE Holdings Limited (formerly Dick Smith Holdings Limited) (Receivers and Managers Appointed) (In Liquidation) ACN And entities as listed in Annexure A (collectively referred to as the Dick Smith Group ) Liquidators Annual Report to Creditors Joseph Hayes, Jamie Harris, Matthew Caddy and I were appointed as Joint and Several Voluntary Administrators of the Dick Smith Group on 4 January 2016 and of Joseph Hayes and I were appointed as Joint and Several Liquidators on 25 July Pursuant to section 508(1)(b)(ii) of the Corporations Act 2001 (the Act), I am required as Liquidator to provide an annual report to creditors giving an account of; My acts and dealings; The conduct of the winding up; A description of the acts and dealings that remain to be carried out in order to complete the winding up; and An estimate of when the winding up is likely to be completed. In summary, I have continued over the past year to attend to investigations into the affairs of the Dick Smith Group and realising assets with a view to enabling distributions to be made to creditors. Key activities undertaken The key activities that have been undertaken by the Liquidators over the course of the past twelve months can be summarised into the following broad categories: Investigating the Dick Smith Groups affairs, including investigation of offences, voidable transactions and insolvent trading to determine if recoveries are available for the benefit of creditors; Responding to legal action being contemplated by shareholders against DSHE Holdings Limited; Dealing with statutory duties imposed on us as Liquidators of each company; Attending to statutory lodgements including GST lodgements and liaising with the Australian Taxation Office regarding the same; and General creditor correspondence and engagement management. Receivers lodged claims The Receivers and Managers, as agents of DSHE Holdings Limited, have commenced legal proceedings against certain current and former directors and officers of the Dick Smith Group. The secured creditors suffered a significant loss as a result of the failure of the Dick Smith Group, and are attempting to recover some of the losses through litigation. D DICKSGE01-s508 Report -AP

2 Shareholder claims Two groups of shareholders of the Dick Smith Group are contemplating commencing a class action against the Dick Smith Group and/or the Dick Smith Group s directors and officers. One group is represented by Bannister Law (the Bannister Class), and the other is represented by Johnson Winter & Slattery (the JWS Class). On 22 February 2017 the JWS class, in cooperation with the Bannister Class, obtained Court Orders to access books and records of the Dick Smith Group to assist them in investigating the contemplated claim(s). The Liquidators have reviewed and produced a substantial quantum of books and records of the Dick Smith Group in order to comply with the Orders. The Orders included the Liquidators being indemnified by the claimants for costs, up to a capped amount, to comply with the Orders. Subsequent to production of books and records, the Bannister Class applied to the Court to seek leave to commence legal proceedings against the Dick Smith Group (required under section 500(2) of the Act as the Dick Smith Group is in liquidation). On 24 July 2017 the Court granted the Bannister Class with the requested leave. Investigating voidable transactions Since the date of liquidation I have continued detailed investigations into the affairs of the Dick Smith Group including: Reviewing and reconstructing financial statements to establish a date of insolvency for the Dick Smith Group (ongoing); Investigating the existence, and if so, the quantum and prospects of an insolvent trading claim against the Dick Smith Group s directors (ongoing); and Investigating and substantiating potential antecedent transaction claims (e.g. preferential payment claims and voidable transactions) (ongoing). The Liquidators have certain obligations under section 533 of the Act to report to Australian Securities and Investments Commission (ASIC) if in the course of the winding up they become aware that certain individuals may be guilty of an offence or if a Company is unable to be a dividend to its unsecured creditors of more than 50 cents in the dollar. Our reports have been filed with ASIC in this regard. ACN Pty Limited (formerly known as Mac 1 Pty Limited) ( Mac 1 ) The Administrators were also appointed over Mac 1, a subsidiary of the Dick Smith Group. The voluntary administration and subsequent liquidation of Mac 1 has been conducted separately to that of the broader Dick Smith Group. This is because Receivers and Managers were not appointed over Mac 1. The key activities that have been undertaken by the Liquidators over the course of the past twelve months, with respect to Mac 1 include the following; Liaising with the Fair Entitlements Guarantee Scheme (FEG) with regard to payment of employee s pre-appointment entitlements; Settling a retention of title claim with a supplier; Attending to statutory lodgements including GST lodgements and liaising with the Australian Taxation Office regarding the same; and General creditor correspondence and engagement management.

3 Estimated return to creditors Due to the impact the matters set out in section 4 may have on the distributions to various classes of creditors. I have not included an estimated return to creditors at his this time. In this regard, I refer creditors to the estimates provided in my report as Voluntary Administrator pursuant to section 439A of the Act dated 13 July Next steps in liquidation A summary of the key tasks remaining to be completed in the liquidation are as follows; Dealing with matters set out in this update; and Complying with statutory obligations; Having regard to the above, I currently estimate the winding up is likely to be completed in the next two years. If you have any queries in relation to the above, please contact Aleksandra Pejoska at apejoska@mcgrathnicol.com. Yours faithfully Dick Smith Group (In Liquidation) Jason Preston Liquidator Enclosures: Annexure A Dick Smith Group entities over which the Liquidators are appointed Annexure B Receipts and payments

4 Annexure A: Dick Smith Group entities over which the Liquidators are appointed Company name Appointment type ACN DSSH Pty Ltd (formerly Dick Smith Sub-Holdings Pty Limited) (Receivers and Managers Appointed) (In Liquidation) DSHG Pty Limited (formerly DSE Holdings Pty Limited) (Receivers and Managers Appointed) (In Liquidation) DSG Wholesale Pty Ltd (formerly Dick Smith (Wholesale) Pty Ltd) (Receivers and Managers Appointed) (In Liquidation) DSG Electronics Pty Limited (formerly Dick Smith Electronics Pty Limited) (Receivers and Managers Appointed) (In Liquidation) INTT Pty Ltd (formerly InterTAN Australia Pty Ltd) (Receivers and Managers Appointed) (In Liquidation) DSG Franchising Pty Ltd (formerly Dick Smith Electronics Franchising Pty Ltd) (Receivers and Managers Appointed) (In Liquidation) DMSG Pty Ltd (formerly Dick Smith Management Pty Ltd) (Receivers and Managers Appointed) (In Liquidation) Dick Smith Electronics Staff Superannuation Fund Pty Limited (In Liquidation) A.C.N Pty Limited (formerly Mac 1 Pty Limited) (In Liquidation)

5 Annexure B: Receipts and Payments Receipts and Payments for the period 25 July September 2017 Mac 1 DSE DSHE Particulars Amount ($) Amount ($) Amount ($) Receipts Transfer from Administrator 4,430, Bank interest 78, GST Refunds 331,821 51,584 - Funding from Receivers and Managers - 826,629 - Funding received on behalf of DSHE - 88,688 - Funding from Shareholders ,688 Payroll tax refunds 2, Post Appointment Debtors 2, Post Sale Debtors 1 765, Pre Appointment Debtors Refunds 8, Transfer from DSG ,183 Uncleared amounts 3 1, Total receipts 5,621, , ,871 Payments Administrators fees and disbursements (401,638) (660,275) (66,644) Accounting system costs - (1,100) Employee winding up costs (4,573) - - Bank Charges (8,992) - - Legal Fees (55,096) (142,218) (6,539) Link Market Services (5,871) - - Liquidators fees (67,921) - - Payroll Tax (72,850) - - Post Sale Debtors 2 (812,457) - - Refunds (242) - - Transfer to DSHE - (161,871) - Retention of title stock (3,064,239) - - Supplier payments (25,271) - - Sefiani media advisors - (457) - Telephone and fax (1,527) - - Wages (39,173) - - Total payments (4,559,850) (965,921) (73,183) Net receipts / (payments) 1,061,811 1,554 88,688 Source: Liquidators' accounts Note 1: Debtors received post sale of business, funds to be transferred to the purchaser. Funds transferred to the purchaser (note 2) exceed receipts due to the specific time period of this report Note 2: Debtors received post sale of business, funds transferred to the purchaser. Funds transferred to the purchaser exceed receipts (note 1) due to the specific time period of this report Note 3: Related to a closed account in relation to employee winding up costs