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1 FASTER ENTERPRISES LTD ACN SUPPLEMENTARY PROSPECTUS IMPORTANT INFORMATION This is a supplementary disclosure document (Supplementary Prospectus) dated 20 September 2016 that was lodged with ASIC on that date. The Supplementary Prospectus contains particulars of changes to, and supplements the replacement prospectus lodged with ASIC on 2 August 2016 (Replacement Prospectus) by Faster Enterprises Ltd (Company). This Supplementary Prospectus and the Replacement Prospectus are important documents that must be read in conjunction with each other. Investors should read both documents in full and are advised to consult with their professional advisers before deciding whether to apply for Shares under this Supplementary Prospectus or if they have any queries. This Supplementary Prospectus is a refresh document as defined in Section 724(3H) of the Corporations Act and has been lodged with ASIC in accordance with Section 724(3G) of the Corporations Act. ASIC, the ASX and their respective officers take no responsibility for the content of this Supplementary Prospectus or the merits of the investment to which this Supplementary Prospectus relates. Other than as set out in this Supplementary Prospectus, all details set out in the Replacement Prospectus remain unchanged. In the event of inconsistencies between the Supplementary Prospectus and the Replacement Prospectus, the Supplementary Prospectus prevails. The Company will send a copy of the Supplementary Prospectus to all Applicants that have applied for securities under the Replacement Prospectus as at the date of this Supplementary Prospectus. OBTAINING A COPY OF THIS PROSPECTUS A paper copy of this Supplementary Prospectus and the Replacement Prospectus may be obtained free of charge from the Company by any person in Australia by calling between 9.00am and 5.00pm (AEST), Monday to Friday during the Offer Period. FASTER ENTERPRISES LTD SUPPLEMENTARY PROSPECTUS (to be read with the Replacement Prospectus dated 2 August 2016) 1

2 An electronic copy of this Supplementary Prospectus (together with the Replacement Prospectus) are also available to Australian resident investors on the website, The distribution of this Supplementary Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Supplementary Prospectus should seek advice on and observe any of these restrictions. Failure to comply with these restrictions may violate applicable securities laws. Applications may only be made using the Application Form attached to a hard copy of this Supplementary Prospectus or on a printed copy of the electronic version downloaded in its entirety. The Corporations Act prohibits any person from passing the Application Form on to another person unless it is attached to, or accompanied by, this Supplementary Prospectus and the Replacement Prospectus in its paper copy form or the complete and unaltered electronic version of this Supplementary Prospectus (together with the Replacement Prospectus). DEFINED TERMS AND ABBREVIATIONS Terms defined in the Replacement Prospectus have the same meaning in this Supplementary Prospectus unless otherwise specifically stated. FASTER ENTERPRISES LTD SUPPLEMENTARY PROSPECTUS (to be read with the Replacement Prospectus dated 2 August 2016) 2

3 1. SUMMARY CONTENTS OF THE SUPPLEMENTARY PROSPECTUS 1.1 Purpose of the Supplementary Prospectus The Supplementary Prospectus has been prepared for the purposes of: amending Sections 1.8 and 2.13 of the Replacement Prospectus to reflect that the ASX will not impose mandatory escrow on any Shares; amending Sections 1.4 and 6.2 to reflect the changes in the risks associated with the ASX not imposing mandatory escrow on any Shares; refreshing the period for admission to quotation of Shares offered under the Replacement Prospectus so that the period will expire on the date which is 3 months after the date of this Supplementary Prospectus under section 724 of the Corporations Act; and refreshing the period for raising the minimum subscription under the Public Offer so that the period will expire on the date which is 4 months after the date of this Supplementary Prospectus under section 724 of the Corporations Act. 1.2 Background In accordance with the Corporations Act, if an entity offers securities under a disclosure document such as a prospectus and the disclosure document states or implies that those securities are to be admitted to quotation on the ASX, and those securities are not then admitted to quotation on the ASX within 3 months after the date of the relevant disclosure document (Quotation Condition), then the issue of those securities would be void and all subscription moneys received in respect of those securities must be returned to the relevant applicants or, alternatively, the applicants must be given a supplementary disclosure document and the opportunity to withdraw their application (see Section 2.1 below for further details). Additionally, in accordance with the Corporations Act, if an entity offers securities under a disclosure document such as a prospectus and that disclosure document states a minimum subscription amount must be raised before any securities will be issued (Minimum Subscription Condition), then the Minimum Subscription Condition must be satisfied within 4 months after the date of the disclosure document. If not, any subscription moneys received in respect of the securities must be returned to the relevant applicants or, alternatively, the applicants must be given a supplementary disclosure document and the opportunity to withdraw their application (see Section 2.1 below for further details). ASIC has varied the Corporations Act to allow companies to refresh the timing of the Minimum Subscription Condition and Quotation Condition under legislative instrument ASIC Corporations (Minimum Subscription and Quotation Conditions) Instrument 2016/70 (LI 2016/70), so that the respective 4 and 3 month periods re-commence from the date that a refresh document is lodged with ASIC, provided that the refresh document meets certain conditions (Refresh Conditions). This Supplementary Prospectus addresses the relevant Refresh Conditions and it is the Company s intention that this will effectively refresh the 3-month period relating to the Quotation Condition and the 4-month period relating to the Minimum Subscription Condition, such that the respective time periods will re-commence from the date this Supplementary Prospectus is lodged with ASIC. FASTER ENTERPRISES LTD SUPPLEMENTARY PROSPECTUS (to be read with the Replacement Prospectus dated 2 August 2016) 3

4 This Supplementary Prospectus also contains some additional updates since the lodgement date of the Replacement Prospectus. 2. SPECIFIC DISCLOSURES REQUIRED IN A REFRESH DOCUMENT Set out below are the specific disclosures required in a refresh document by LI 2016/ Withdrawal rights Any Applicant who, prior to the date of this Supplementary Prospectus, has lodged an Application for Shares offered under the Public Offer, the Debt to Equity Offer or the Noteholder Offer, will be issued a copy of this Supplementary Prospectus and has the right to withdraw their Application and be repaid their subscription moneys without interest, provided that their request to withdraw their Application is received by the Company within 1 calendar month after the date of this Supplementary Prospectus (Withdrawal Period) (i.e. on or before 20 October 2016). A request to withdraw an Application under the terms of this Section 2.1 of the Supplementary Prospectus should be in writing, signed by the Applicant and given to the Company using one of the same contact methods and details used for the Applications as set out in section 10.9 of the Replacement Prospectus. If you do not wish to withdraw your Application, you do not need to take any action. The Offers will remain open at least until the end of the Withdrawal Period (i.e. until 20 October 2016). 2.2 Applications received The Company advises that 174 Applications have been received as at the date of this Supplementary Prospectus, for a total of: 22,628,250 Shares under the Public Offer with a total value of $4,525,650 banked as cleared funds; 8,505,330 Shares under the Debt to Equity Offer; and 8,702,323 Shares under the Noteholder Offer. 1 However, no Applications have been processed and no Shares have been issued under the Replacement Prospectus. 2.3 Minimum Subscription Condition At the date of this Supplementary Prospectus, the minimum subscription amount of $5,000,000 or 25,000,000 Shares under the Public Offer detailed in the Replacement Prospectus has not been achieved. This minimum subscription amount specified in the Replacement Prospectus remains unchanged at the date of this Supplementary Prospectus. No Shares have been issued under the Replacement Prospectus. Upon lodgement of this Supplementary Prospectus, and subject only to the lodgement of any future refresh document, the Minimum Subscription Condition must be satisfied by no later than 20 January 2017 (being 4 months after the date of this Supplementary Prospectus). 1 The number of Shares to be issued under the Noteholder Offer will increase depending on the amount of interest capitalised in accordance with the terms of the Convertible Note Agreements. FASTER ENTERPRISES LTD SUPPLEMENTARY PROSPECTUS (to be read with the Replacement Prospectus dated 2 August 2016) 4

5 2.4 Quotation Condition The Company submitted its Listing Application to the ASX within 7 days from the date of the Original Prospectus. At the date of this Supplementary Prospectus, the Company s Shares have not yet been admitted to quotation on the ASX. However, the ASX has indicated on 6 September 2016, that the Shares will be admitted to quotation subject to certain conditions being satisfied (Specific Quotation Conditions). The Specific Quotation Conditions which have not been satisfied as at the date of this Supplementary Prospectus are as follows: the Company closing the Public Offer and issuing at least 25,000,000 Shares (and up to 50,000,000 Shares); providing confirmation in a form acceptable to the ASX that the Company has received cleared funds for all Shares issued under the Public Offer; providing confirmation to the ASX of the completion of: o the issue of up to 8,505,330 Shares to the Creditors under the Debt to Equity Offer; and o the issue of approximately 8,702,323 Shares to the Noteholders under the Noteholder Offer; confirmation of the completion of the Pre-Offer Restructure Steps, including the issue of 68,336,915 Shares to Yong or his associated entities and trusts in exchange for the interests in various real estate properties and the transfer of these interest to the Company under the Restructure; the ASX being satisfied that the Company has the appropriate spread of shareholders and a minimum free float of at least 20%; the Company despatching a notice under ASX Settlement Operating Rule 8.9.1, all holding statements and any refund money; and provision of the following in a form suitable for release to the market: o a distribution schedule of the Shareholders; o a statement setting out the names of the 20 largest Shareholders, including the number and percentage of Shares held by those Shareholders; o an updated statement of commitments based on the actual amount of funds raised under the Public Offer; o the Company s audited amalgamated accounts for the full year ended 30 June 2016; o an updated pro-forma statement of financial position based on the actual amount of funds raised under the Pubic Offer; o a statement confirming the completion of the issue of up to 8,505,330 Shares to Creditors under the Debt to Equity Offer and approximately 8,702,323 Shares to note holders under the Noteholder Offer; o a statement confirming completion of the Pre-Offer Restructure Steps; and o copies of the Independent Property Valuation Reports. Upon the lodgement of this Supplementary Prospectus and, subject only to the lodgement of any future refresh document, the Quotation Condition must be satisfied by no later than 20 December 2016 (being 3 months after the date of this Supplementary Prospectus). FASTER ENTERPRISES LTD SUPPLEMENTARY PROSPECTUS (to be read with the Replacement Prospectus dated 2 August 2016) 5

6 3. OTHER CHANGES TO THE REPLACEMENT PROSPECTUS This Supplementary Prospectus also modifies and updates the Replacement Prospectus in respect of the following matters: 3.1 Replacement table of important dates The table of important dates in the Key Offer Information section is deleted and replaced with the following new table. Activity Indicative Timetable Lodgement of the Original Prospectus with ASIC Monday 11 July 2016 Lodgement of the Replacement Prospectus with ASIC Tuesday 2 August 2016 Lodgement of this Supplementary Prospectus with ASIC 20 September 2016 Opening Date for the Offers Tuesday 2 August 2016 Closing Date for the Offers 2 20 October 2016 Completion of Pre-Offer Restructure Steps 21 October 2016 Completion of the Offers (Shares to be issued to successful 21 October 2016 Applicants) 2 Expected date for dispatch of holding statements 2 24 October 2016 Expected date for Shares to commence trading on the ASX 2 27 October Restricted securities The text in the section relating to Will any Shares be escrowed? in Section 1.8 of the Replacement Prospectus and in the section titled Restricted securities in Section 2.13 of the Replacement Prospectus are deleted and replaced with the following: As at the date of the Replacement Prospectus, it was expected that 50,920,157 Shares issued (or to be issued) at $ per Share to one of Yong s associated entities would be subject to mandatory escrow under the Listing Rules for a period of 24 months after the Shares commence quotation on the ASX. However, the ASX has determined that it will not impose mandatory escrow on any Shares. As a result, none of the Shares will be subject to any escrow (mandatory or otherwise). 3.3 Key risks The following is added to the section titled What are the key risks of investing in Shares in the Company? in Section 1.4 of the Replacement Prospectus, after the sub-section titled Risks associated with capital structure : 2 Unless the Offer Period is varied by the Company (including in circumstances where the Offers are closed early) FASTER ENTERPRISES LTD SUPPLEMENTARY PROSPECTUS (to be read with the Replacement Prospectus dated 2 August 2016) 6

7 Risks associated with no escrow on Shares None of the Shares issued (or to be issued) to Yong or his associated entities will be under any escrow restrictions. This means that Yong and his associated entities may elect to sell some or all of the Shares that they hold (or will hold). This could have a negative impact on the price of the Shares, result in a change in the control of the Company and/or lessen the incentive that Yong has to remain with the Group. After the section titled Risks associated with capital structure in Section of the Replacement Prospectus, the following is inserted as the new Section (and the numbering in the remainder of Section 6.2 is updated accordingly): Risks associated with no escrow on Shares None of the Shares issued (or to be issued) to Yong or his associated entities will be under any escrow restrictions. This means that Yong and his associated entities may elect to sell some or all of the Shares that they hold (or will hold). This could have a negative impact on the price of the Shares, result in a change in the control of the Company and/or lessen the incentive that Yong has to remain with the Group. 4. NEW APPLICATIONS All Applications for Shares made on or after the date of this Supplementary Prospectus must be pursuant to the Replacement Prospectus as supplemented by this Supplementary Prospectus and be made on an Application Form attached to this Supplementary Prospectus. Applications must not be made on the Application Form contained in the Replacement Prospectus. 5. DIRECTORS AUTHORISATION This Supplementary Prospectus is authorised by each Director and each person listed in the Replacement Prospectus as a proposed Director. Each of those persons consent to the lodgement of this Supplementary Prospectus with ASIC. Signed by Frank Licciardello, a Director of the Company, pursuant to section 351 of the Corporations Act, for the purposes of lodgement of this Supplementary Prospectus with ASIC. Frank Licciardello Chairman and Director FASTER ENTERPRISES LTD SUPPLEMENTARY PROSPECTUS (to be read with the Replacement Prospectus dated 2 August 2016) 7

8 6. Application forms FASTER ENTERPRISES LTD SUPPLEMENTARY PROSPECTUS (to be read with the Replacement Prospectus dated 2 August 2016) 8

9 FASTER ENTERPRISES LTD ABN PUBLIC OFFER APPLICATION FORM SUPPLEMENTARY PROSPECTUS PLEASE FOLLOW THE INSTRUCTIONS TO COMPLETE THIS APPLICATION FORM (SEE REVERSE) AND PRINT CLEARLY IN CAPITAL LETTERS USING BLACK OR BLUE PEN. 1 Number of Shares applied for Application payment (multiply box 1 by $0.20 per share),, A$,,. 2 Applicant name(s) and postal address - refer to naming standards for correct form of registrable title(s) Name of Applicant 1 Name of Applicant 2 or <Account Designation> Name of Applicant 3 or <Account Designation> Postal address Number/Street Suburb/Town State Postcode Contact details Please advise your contact details between 9:00am AEST and 5:00pm AEST should we need to speak to you about your application. Telephone Number Contact Name (PRINT) ( ) Address 3 CHESS Holders Only Holder Identification Number (HIN) X Note: the name and address details in section 2 must match your registration details held at CHESS 4 TFN/ABN/Exemption Code Applicant 1 Applicant #2 Applicant #3 the Issuer Sponsored subregister. If NOT an individual TFN/ABN, please note the type in the box C = Company; P = Partnership; T = Trust; S = Super Fund Please insert Cheque details or, if paying by EFT please refer to point 5 in the instructions section accompanying this application form or 5 section 10.9 of the Prospectus for bank account instructions Cheques must be drawn on an Australian branch of a financial institutional in Australian currency, crossed Not Negotiable and made payable to Faster Enterprises Ltd - IPO Account. Cheque Number BSB Account Number - OVERSEAS SUBSCRIBERS: PLEASE CONTACT FASTER ENTERPRISES LTD ON DURING THE OFFER PERIOD FOR INSTRUCTIONS ON PAYMENT By lodging the Application Form, the Applicant(s) agree(s) that this Application for Shares in Faster Enterprises Ltd is upon and subject to the terms of the Prospectus and the Applicant(s), agrees to take any number of Shares that may be issued to the Applicant (s) pursuant to the Prospectus and to be bound by the Constitution of Faster Enterprises Ltd and declares that all details and statements made are complete and accurate. It is not necessary to sign the Application Form. CORRECT FORMS OF REGISTRABLE TITLE Note that ONLY legal entities can hold Shares. The application must be in the name of a natural person(s), companies or other legal entities acceptable by the Company. At least one full given name and surname is required for each natural person. Type of Investor Correct Form of Registration Incorrect Form of Registration Trusts Mr John Richard Sample John Sample Family Trust <Sample Family A/C> Superannuation Funds Mr John Sample & Mrs Anne Sample John & Anne Superannuation Fund <Sample Family Super A/C> Partnerships Mr John Sample & John Sample & Son Mr Richard Sample <Sample & Son A/C> Clubs/Unincorporated Bodies Mr John Sample Food Help Club < Food Help Club A/C> Deceased Estates Mr John Sample <Estate Late Anne Sample A/C> Anne Sample (Deceased)

10 INSTRUCTIONS FOR COMPLETION OF THIS APPLICATION FORM This is an Application Form for Ordinary Fully Paid Shares ( Shares ) in Faster Enterprises Ltd (ABN ) (Company), made under the terms set out in the Replacement Prospectus dated 2 August 2016, as supplemented by the supplementary prospectus dated 20 September 2016 and lodged with ASIC on that date (together the Prospectus). The Prospectus contains important information relevant to your decision to invest and you should read the entire Prospectus before applying for Shares. If you are in doubt as to how to deal with this Application Form, please contact your accountant, lawyer, stockbroker or other professional adviser. To meet the requirements of the Corporations Act, this Application Form must not be distributed unless included in, or accompanied by, the Prospectus. 1 Shares applied for Enter the number of Shares you wish to apply. Your application must be for a minimum of 10,000 Shares (A$2,000). Applications for greater than 10,000 shares must be in multiples of 1,000 Shares (A$200). Enter the amount of the Application Monies. To calculate this amount, multiply the number of Shares applied for by the offer price which is A$ Applicant name(s) and postal address Note that ONLY legal entities can hold Shares. The application must be in the name of a natural person(s), companies or other legal entities acceptable by the Company. At least one full given name and surname is required for each natural person. You should refer to the table for the correct forms of registrable title(s). Applicants using the wrong form of names may be rejected. Enter your postal address for all correspondence. Only one address can be recorded against a holding. With exception to annual reports, all communications to you from the Company will be mailed to the person(s) and address shown. Annual reports will be made available online when they are released. You can notify any change to your communication preferences by visiting the registry website Enter your contact details where we may reach you between the hours of 9:00am and 5:00pm should we need to speak to you about your application 3 CHESS Holders If you are sponsored by a stockbroker or other participant and you wish to hold shares allotted to you under this Application on the CHESS subregister, enter your CHESS HIN. Otherwise leave the section blank and on allotment you will be sponsored by the Company and a Securityholder Reference Number (SRN) will be allocated to you. 4 TFN/ABN/Exemption If you wish to have your Tax File Number, ABN or Exemption registered against your holding, please enter the details. Collection of TFN s is authorised by taxation laws but quotation is not compulsory and it will not affect your Application Form. 5 Payment Instructions Unless received from their broker, Applicants under the Offer must lodge their Application Form and Application Monies with Faster Enterprises Ltd by 5.00pm (AEST) on the Closing Date. To make payment via cheque: Cheques must be drawn on an Australian branch of a financial institutional in Australian currency, made payable to Faster Enterprises Ltd - IPO Account and crossed Not Negotiable. To make payment by EFT: Bank account details for EFT payments are supplied below. Please post your completed Application Form to Faster Enterprises Ltd at their mailing address supplied in the lodgement instructions below. If you pay the Application Moneys using EFT, you should use the name of the Applicant (as specified in your Application Form) as the transfer reference. Applicants should be aware of their financial institution s cut-off time. It is the Applicant s responsibility to ensure funds are submitted correctly by the Closing Date and time. Account Name: Faster Enterprises Ltd - IPO Account BSB: Account Number: SWIFT: WPACAU2S LODGEMENT INSTRUCTIONS There is no maximum value of Shares that may be applied for under the Offer. The Company may determine a person to be eligible to participate in the Offer. The Offer opened at 9.00am (AEST) on 2 August 2016 and is expected to close at 5.00pm (AEDST) on 20 October The Company may elect to extend the Offer or any part of it, and may close the Offer at any earlier date and time, without further notice. Applicants are therefore encouraged to submit their Applications as early as possible. Mail or deliver your completed Application Form with your cheque to the following address. Mailing Address Faster Enterprises Ltd IPO G02, 8 Ellingworth Parade Box Hill VIC 3128 Hand Delivery Faster Enterprises Ltd IPO G02, 8 Ellingworth Parade Box Hill VIC 3128 Enquiries in respect of this Share Application Form should be addressed to Faster Enterprises Ltd on Share Application Forms must be received no later than 5.00pm AEDST 20 October Privacy Clause: Automic Pty Ltd (ACN ) trading as Automic Registry Services (Automic) advises that Chapter 2C of the Corporations Act 2001 requires information about you as a securityholder (including your name, address and details of the securities you hold) to be included in the public register of the entity in which you hold securities. Primarily, your personal information is used in order to provide a service to you. We may also disclose the information that is related to the primary purpose and it is reasonable for you to expect the information to be disclosed. You have a right to access your personal information, subject to certain exceptions allowed by law and we ask that you provide your request for access in writing (for security reasons). Our privacy policy is available on our website

11 FASTER ENTERPRISES LTD ABN NOTEHOLDER OFFER APPLICATION FORM SUPPLEMENTARY PROSPECTUS PLEASE FOLLOW THE INSTRUCTIONS TO COMPLETE THIS APPLICATION FORM (SEE REVERSE) AND PRINT CLEARLY IN CAPITAL LETTERS USING BLACK OR BLUE PEN. THIS APPLICATION FORM MUST ONLY BE USED WHERE THE APPLICANT IS A NOTEHOLDER. 1 Number of Shares applied for Number of Convertible Notes to be converted into Shares,,,,. 2 Applicant name(s) and postal address - refer to naming standards for correct form of registrable title(s) Name of Applicant 1 Name of Applicant 2 or <Account Designation> Name of Applicant 3 or <Account Designation> Postal address Number/Street Suburb/Town State Postcode Contact details Please advise your contact details between 9:00am AEST and 5:00pm AEST should we need to speak to you about your application. Telephone Number Contact Name (PRINT) ( ) Address 3 CHESS Holders Only Holder Identification Number (HIN) X Note: Note: the name and address details in section 2 must match your registration details held at CHESS 4 TFN/ABN/Exemption Code Applicant 1 Applicant #2 Applicant #3 the Issuer Sponsored subregister. If NOT an individual TFN/ABN, please note the type in the box C = Company; P = Partnership; T = Trust; S = Super Fund By lodging the Application Form, the Applicant(s) agree(s) that this Application for Shares in Faster Enterprises Ltd is upon and subject to the terms of the Prospectus and the Applicant(s), agrees to take any number of Shares that may be issued to the Applicant (s) pursuant to the Prospectus and to be bound by the Constitution of Faster Enterprises Ltd and declares that all details and statements made are complete and accurate. It is not necessary to sign the Application Form. CORRECT FORMS OF REGISTRABLE TITLE Note that ONLY legal entities can hold Shares. The application must be in the name of a natural person(s), companies or other legal entities acceptable by the Company. At least one full given name and surname is required for each natural person. Type of Investor Correct Form of Registration Incorrect Form of Registration Trusts Mr John Richard Sample John Sample Family Trust <Sample Family A/C> Superannuation Funds Mr John Sample & Mrs Anne Sample John & Anne Superannuation Fund <Sample Family Super A/C> Partnerships Mr John Sample & John Sample & Son Mr Richard Sample <Sample & Son A/C> Clubs/Unincorporated Bodies Mr John Sample Food Help Club < Food Help Club A/C> Deceased Estates Mr John Sample <Estate Late Anne Sample A/C> Anne Sample (Deceased)

12 INSTRUCTIONS FOR COMPLETION OF THIS APPLICATION FORM This is an Application Form for Ordinary Fully Paid Shares ( Shares ) in Faster Enterprises Ltd (ABN ) (Company), made under the terms set out in the Replacement Prospectus dated 2 August 2016, as supplemented by the supplementary prospectus dated 20 September 2016 and lodged with ASIC on that date (together the Prospectus). The Prospectus contains important information relevant to your decision to invest and you should read the entire Prospectus before applying for Shares. If you are in doubt as to how to deal with this Application Form, please contact your accountant, lawyer, stockbroker or other professional adviser. To meet the requirements of the Corporations Act, this Application Form must not be distributed unless included in, or accompanied by, the Prospectus. 1 Shares applied for Enter the number of Shares you wish to apply for. Insert the amount of Convertible Notes to be converted into Shares. 2 Applicant name(s) and postal address Note that ONLY legal entities can hold Shares. The application must be in the name of a natural person(s), companies or other legal entities acceptable by the Company. At least one full given name and surname is required for each natural person. You should refer to the table for the correct forms of registrable title(s). Applicants using the wrong form of names may be rejected. Enter your postal address for all correspondence. Only one address can be recorded against a holding. With exception to annual reports, all communications to you from the Company will be mailed to the person(s) and address shown. Annual reports will be made available online when they are released. You can notify any change to your communication preferences by visiting the registry website Enter your contact details where we may reach you between the hours of 9:00am and 5:00pm should we need to speak to you about your application 3 CHESS Holders If you are sponsored by a stockbroker or other participant and you wish to hold shares allotted to you under this Application on the CHESS subregister, enter your CHESS HIN. Otherwise leave the section blank and on allotment you will be sponsored by the Company and a Securityholder Reference Number (SRN) will be allocated to you. 4 TFN/ABN/Exemption If you wish to have your Tax File Number, ABN or Exemption registered against your holding, please enter the details. Collection of TFN s is authorised by taxation laws but quotation is not compulsory and it will not affect your Application Form. LODGEMENT INSTRUCTIONS The Company may determine a person to be eligible to participate in the Offer. The Offer opens at 9.00am (AEST) on 2 August 2016 and is expected to close at 5.00pm (AEDST) on 20 October The Company may elect to extend the Offer or any part of it, and may close the Offer at any earlier date and time, without further notice. Applicants are therefore encouraged to submit their Applications as early as possible. Mail or deliver your completed Application Form to the following address. Mailing Address Faster Enterprises Ltd IPO G02, 8 Ellingworth Parade Box Hill VIC 3128 Hand Delivery Faster Enterprises Ltd IPO G02, 8 Ellingworth Parade Box Hill VIC 3128 Enquiries in respect of this Noteholder Offer Application Form should be addressed to Faster Enterprises Ltd on Noteholder Offer Application Forms must be received no later than 5.00pm AEDST 20 October Privacy Clause: Automic Pty Ltd (ACN ) trading as Automic Registry Services (Automic) advises that Chapter 2C of the Corporations Act 2001 requires information about you as a securityholder (including your name, address and details of the securities you hold) to be included in the public register of the entity in which you hold securities. Primarily, your personal information is used in order to provide a service to you. We may also disclose the information that is related to the primary purpose and it is reasonable for you to expect the information to be disclosed. You have a right to access your personal information, subject to certain exceptions allowed by law and we ask that you provide your request for access in writing (for security reasons). Our privacy policy is available on our website

13 FASTER ENTERPRISES LTD ABN DEBT TO EQUITY OFFER APPLICATION FORM SUPPLEMENTARY PROSPECTUS PLEASE FOLLOW THE INSTRUCTIONS TO COMPLETE THIS APPLICATION FORM (SEE REVERSE) AND PRINT CLEARLY IN CAPITAL LETTERS USING BLACK OR BLUE PEN. THIS APPLICATION FORM MUST ONLY BE USED WHERE THE APPLICANT IS ONE OF THE CREDITORS OR NOMINEES. 1 Number of Shares applied for Amount of Debt being converted into Shares (multiply box 1 by $0.20 per share),,,,. 2 Applicant name(s) and postal address - refer to naming standards for correct form of registrable title(s) Name of Applicant 1 Name of Applicant 2 or <Account Designation> Name of Applicant 3 or <Account Designation> Postal address Number/Street Suburb/Town State Postcode Contact details Please advise your contact details between 9:00am AEST and 5:00pm AEST should we need to speak to you about your application. Telephone Number Contact Name (PRINT) ( ) Address 3 CHESS Holders Only Holder Identification Number (HIN) X Note: Note: the name and address details in section 2 must match your registration details held at CHESS 4 TFN/ABN/Exemption Code Applicant 1 Applicant #2 Applicant #3 the Issuer Sponsored subregister. If NOT an individual TFN/ABN, please note the type in the box C = Company; P = Partnership; T = Trust; S = Super Fund By lodging the Application Form, the Applicant(s) agree(s) that this Application for Shares in Faster Enterprises Ltd is upon and subject to the terms of the Prospectus and the Applicant(s), agrees to take any number of Shares that may be issued to the Applicant (s) pursuant to the Prospectus and to be bound by the Constitution of Faster Enterprises Ltd and declares that all details and statements made are complete and accurate. It is not necessary to sign the Application Form. CORRECT FORMS OF REGISTRABLE TITLE Note that ONLY legal entities can hold Shares. The application must be in the name of a natural person(s), companies or other legal entities acceptable by the Company. At least one full given name and surname is required for each natural person. Type of Investor Correct Form of Registration Incorrect Form of Registration Trusts Mr John Richard Sample John Sample Family Trust <Sample Family A/C> Superannuation Funds Mr John Sample & Mrs Anne Sample John & Anne Superannuation Fund <Sample Family Super A/C> Partnerships Mr John Sample & John Sample & Son Mr Richard Sample <Sample & Son A/C> Clubs/Unincorporated Bodies Mr John Sample Food Help Club < Food Help Club A/C> Deceased Estates Mr John Sample <Estate Late Anne Sample A/C> Anne Sample (Deceased)

14 INSTRUCTIONS FOR COMPLETION OF THIS APPLICATION FORM This is an Application Form for Ordinary Fully Paid Shares ( Shares ) in Faster Enterprises Ltd (ABN ) (Company), made under the terms set out in the Replacement Prospectus dated 2 August 2016, as supplemented by the supplementary prospectus dated 20 September 2016 and lodged with ASIC on that date (together the Prospectus). The Prospectus contains important information relevant to your decision to invest and you should read the entire Prospectus before applying for Shares. If you are in doubt as to how to deal with this Application Form, please contact your accountant, lawyer, stockbroker or other professional adviser. To meet the requirements of the Corporations Act, this Application Form must not be distributed unless included in, or accompanied by, the Prospectus. 1 Shares applied for Enter the number of Shares you wish to apply for. Insert the amount of the debt being converted into Shares. To calculate this amount, multiply the number of Shares applied for by the offer price which is A$ Applicant name(s) and postal address Note that ONLY legal entities can hold Shares. The application must be in the name of a natural person(s), companies or other legal entities acceptable by the Company. At least one full given name and surname is required for each natural person. You should refer to the table for the correct forms of registrable title(s). Applicants using the wrong form of names may be rejected. Enter your postal address for all correspondence. Only one address can be recorded against a holding. With exception to annual reports, all communications to you from the Company will be mailed to the person(s) and address shown. Annual reports will be made available online when they are released. You can notify any change to your communication preferences by visiting the registry website Enter your contact details where we may reach you between the hours of 9:00am and 5:00pm should we need to speak to you about your application 3 CHESS Holders If you are sponsored by a stockbroker or other participant and you wish to hold shares allotted to you under this Application on the CHESS subregister, enter your CHESS HIN. Otherwise leave the section blank and on allotment you will be sponsored by the Company and a Securityholder Reference Number (SRN) will be allocated to you. 4 TFN/ABN/Exemption If you wish to have your Tax File Number, ABN or Exemption registered against your holding, please enter the details. Collection of TFN s is authorised by taxation laws but quotation is not compulsory and it will not affect your Application Form. LODGEMENT INSTRUCTIONS The Company may determine a person to be eligible to participate in the Offer. The Offer opens at 9.00am (AEST) on 2 August 2016 and is expected to close at 5.00pm (AEDST) on 20 October The Company may elect to extend the Offer or any part of it, and may close the Offer at any earlier date and time, without further notice. Applicants are therefore encouraged to submit their Applications as early as possible. Mail or deliver your completed Application Form to the following address. Mailing Address Faster Enterprises Ltd IPO G02, 8 Ellingworth Parade Box Hill VIC 3128 Hand Delivery Faster Enterprises Ltd IPO G02, Ellingworth Parade Box Hill VIC 3128 Enquiries in respect of this Debt to Equity Offer Application Form should be addressed to Faster Enterprises Ltd on Debt to Equity Offer Application Forms must be received no later than 5.00pm AEDST 20 October Privacy Clause: Automic Pty Ltd (ACN ) trading as Automic Registry Services (Automic) advises that Chapter 2C of the Corporation Act 2001 requires information about you as a securityholder (including your name, address and details of the securities you hold) to be included in the public register of the entity in which you hold securities. Primarily, your personal information is used in order to provide a service to you. We may also disclose the information that is related to the primary purpose and it is reasonable for you to expect the information to be disclosed. You have a right to access your personal information, subject to certain exceptions allowed by law and we ask that you provide your request for access in writing (for security reasons). Our privacy policy is available on our website

15 PROSPECTUS FASTER ENTERPRISES LTD ACN PUBLIC OFFER This Prospectus contains an offer of between 25,000,000 and 50,000,000 Shares at an issue price of $0.20 per Share to raise between $5 million and $10 million (Public Offer). SECONDARY OFFERS This Prospectus also contains offers of Shares to: - certain creditors of the Company that have agreed to convert certain debts to Shares (Debt to Equity Offer); and - investors that hold Convertible Notes issued by the Company in order to convert those Convertible Notes into Shares ( Noteholder Offer). THE OFFERS ARE SUBJECT TO CONDITIONS The offers are conditional upon certain events occurring. Please refer to Section 10.5 of this Prospectus for further details. FASTER ENTERPRISES LTD PROSPECTUS 1

16 Cover image: Company s office at Ellingworth Parade Property, with intended signage added digitally FASTER ENTERPRISES LTD PROSPECTUS 2

17 IMPORTANT INFORMATION This is an important document. Investors should read this document in full and are advised to consult with their professional advisers before deciding whether to apply for Shares under this Prospectus. Any investment in the Company under this Prospectus should be considered speculative in nature and prospective investors should be aware that they may lose some or all of their investment. GENERAL This Prospectus is dated 2 August 2016 and was lodged with ASIC on that date. This is a replacement prospectus which replaces the prospectus dated 11 July 2016 and lodged with ASIC on that date (Original Prospectus). ASIC, the ASX and their respective officers take no responsibility for the content of this Prospectus or the merits of the investment to which this Prospectus relates. This Prospectus is a prospectus for the purpose of satisfying Chapters 1 and 2 of the Listing Rules (relating to admission of an entity to the Official List and official quotation by the ASX of that entity s Securities). The Company lodged a Listing Application with the ASX within 7 days after the Original Prospectus Date. This replacement Prospectus differs from the Original Prospectus in the following key respects: The Public Offer is no longer being underwritten. Changes have been made to reflect the fact that the Company lodged its Listing Application with the ASX after the Original Prospectus Date but before the date of this Prospectus. Sanston s role has been changed from lead manager to corporate adviser to the Group. Details of the debts associated with each real estate property to be held by the Group after completion of the Restructure and the Offers are now set out in Section 2. The Directors valuations of the various properties previously set out in the Original Prospectus have been deleted from Section 2.3 and other relevant parts of Section 2. Investors should not rely on the Directors valuations for the properties that were -previously set out in the Original Prospectus. The going concern risk associated with an investment in the Company has been included in the Investment Overview section of this Prospectus and Section The shareholding details of an associated entity of Yong Chao Wu (the founder and CEO) have been updated in various parts of the Prospectus. Section and other relevant parts of the Prospectus now contain details of the indirect interests that Yong Chao Wu and Norman Wu (a Director) will hold in the Company as a result of those persons being beneficiaries of associated discretionary trusts that will be issued Shares under the Restructure. Section also now contains details of the indirect interests that Weiping Chen (a Director) holds in the Rooks Road Property. The Restructure Deed has been amended since the Original Prospectus Date. The number of Shares to be issued under the Restructure Deed to an entity associated with Yong Chao Wu at a price of $ per Share has increased. The number of Shares to be issued to entities associated with Yong as consideration for the property interests to be transferred to the Group under the Restructure Deed has decreased. The consideration to be given by the Company for the transfer of the relevant property interests to the Group under the Restructure is now explained in further detail in Section 9.1. Section 10.7 now contains further details on the use of funds raised under the Public Offer in the event that only the minimum amount of $5,000,000 is raised under the Public Offer. FASTER ENTERPRISES LTD PROSPECTUS 3

18 The indicative timetable for the Offers and the Restructure have been updated (including variations to the Opening Date and Closing Date). The updated indicative timetable is set out in the Key Offer Information section of this Prospectus. This Prospectus expires on the date that is 13 months after the Original Prospectus Date (Expiry Date) and no Shares will be issued pursuant to this Prospectus after the Expiry Date. THE OFFERS ARE SUBJECT TO CONDITIONS The Offers are conditional on certain events occurring. Please refer to Section 10.5 of this Prospectus for further details. OFFER PERIOD The Offers are scheduled to close at 5.00pm (AEST) on 18 August 2016 unless extended or withdrawn. Applications must be received before that time to be valid. NOTE TO APPLICANTS The information in this Prospectus is not financial product advice and does not take into account your investment objectives, financial situation, or particular needs. It is important that you read this Prospectus carefully and in full before deciding whether to invest in the Company. Some of the key risk factors that should be considered by prospective investors are set out in Section 6 of this Prospectus. There may be risk factors in addition to these that should be considered in light of your own personal circumstances. Investors should seek professional advice from an accountant, stockbroker, lawyer and/or other professional adviser before deciding to invest in any of the Offers. No person named in this Prospectus, nor any other person, guarantees the performance of the Company, the repayment of capital or any return on investment. NO OFFERING WHERE OFFERING WOULD BE ILLEGAL The Offers are not made to persons or in places to which, or in which, it would not be lawful to make such offers for Securities. No action has been taken to register or qualify the Offers or Shares, or otherwise permit an offer of Shares, in any jurisdiction outside Australia. The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any of these restrictions. Failure to comply with these restrictions may violate applicable securities laws. In particular, this Prospectus may not be distributed to, or relied on by, persons in the United States or to or for the account or benefit of US Persons (as defined in Rule 902(k) of Regulation S made under the US Securities Act of 1933). The Shares have not been and will not be registered under the US Securities Act or any state securities law in the United States and may not be offered or sold in the United States except in a transaction exempt from, or not subject to, registration under the US Securities Act and applicable state securities laws in the United States. FASTER ENTERPRISES LTD PROSPECTUS 4

19 DISCLAIMER AND FORWARD LOOKING STATEMENTS No person is authorised to give any information or to make any representation in relation to the Offers that is not contained in this Prospectus. Any information or representation not so contained in this Prospectus may not be relied on as having been authorised by the Company or the Directors. This Prospectus contains forward-looking statements, which may be identified by words such as may, could, believes, estimates, expects, intends, projects, plans, predicts, will, anticipates and other similar words, that involve risks and uncertainties. These forward-looking statements are based on an assessment of present economic and operating conditions, and on a number of assumptions regarding future events and actions that, at the Prospectus Date, are expected to take place. Such statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of the Company, the Directors and management. Each of the Company, the Directors, any persons named in this Prospectus with their consent or any person involved in the preparation of this Prospectus does not make any representation, assurance or guarantee as to the accuracy or likelihood of fulfilment of any forward looking statement or any outcomes express or implied in any forward looking statement. Except to the extent required by law, the Company has no intention to update or revise forward looking statements, or to publish prospective financial information in the future, regardless of whether new information or future events affect the information contained in this Prospectus. These forward looking statements are subject to various risk factors that could cause the Company s actual results to differ materially from the results expressed or anticipated in these statements. These risk factors are set out in Section 6. Investors are cautioned not to place undue reliance on these forward looking statements. STATEMENTS OF PAST PERFORMANCE This Prospectus includes information regarding the past performance of the Company. Investors should be aware that past performance is not indicative of future performance. FINANCIAL INFORMATION PRESENTATION The basis of preparation and presentation of the financial information in this Prospectus is set out in Section 4. The financial information should be read in conjunction with, and is qualified by reference to, the information contained in Section 4, the Investigating Accountant s Report in Section 5 and the risk factors in Section 6. OBTAINING A COPY OF THIS PROSPECTUS A paper copy of this Prospectus may be obtained free of charge from the Company by any person in Australia by calling between 9.00am and 5.00pm (AEST), Monday to Friday during the Offer Period. This Prospectus is also available to Australian resident investors in electronic format on the website, Any person accessing the electronic version of this Prospectus for the purpose of making an investment in the Company must be an Australian resident and must only access the Prospectus from within Australia. FASTER ENTERPRISES LTD PROSPECTUS 5

20 Applications may only be made using the Application Form attached to a hard copy of this Prospectus or on a printed copy of the electronic version downloaded in its entirety. The Corporations Act prohibits any person from passing the Application Form on to another person unless it is attached to, or accompanied by, this Prospectus in its paper copy form or the complete and unaltered electronic version of this Prospectus. Refer to Section 10 for further information. EXPOSURE PERIOD The Corporations Act prohibits the Company from accepting or processing Applications in the 7 day period after the date of lodgement of the Original Prospectus with ASIC (Exposure Period). By way of a letter dated 18 July 2016 from ASIC to the Company, the Exposure Period was extended by ASIC for a further period of 7 days, so that it ended on 25 July Applications received under the Original Prospectus during the Exposure Period will be dealt with in accordance with section 724 of the Corporations Act. No preference will be given to Applications received during the Exposure Period or the period before the Prospectus Date. Pursuant to ASIC Corporations (Exposure Period) Instrument 2016/74, this Prospectus is not subject to an Exposure Period. NO COOLING-OFF Cooling off rights do not apply to an investment in Shares issued under this Prospectus. This means that in most circumstances you cannot withdraw your Application once it has been accepted. PHOTOGRAPHS AND DIAGRAMS Photographs and diagrams used in this Prospectus that do not have descriptions are for illustration only and should not be interpreted to mean that any person shown in them endorses this Prospectus or its contents or that the assets shown in them are owned by the Company. Diagrams used in this Prospectus are for illustration only and may not be drawn to scale. Unless otherwise stated, all data contained in charts, graphs and tables is based on information available at the Prospectus Date. COMPANY WEBSITE Any references to documents included on the Company s website are provided for convenience only, and none of the documents or other information on the Company s website, or any other website referred to in this Prospectus, is incorporated in this Prospectus by reference. PRIVACY By filling out the Application Form, you will be providing personal information to the Company and the Share Registry. The Company, and the Share Registry (on behalf of the Company), may collect, hold and use that personal information in order to process your Application, service your needs as a Shareholder, provide services and facilities that you request and carry out appropriate administration. Once you have become a Shareholder, the Corporations Act requires the Company to include information about you (including your name, address and details of Shares you hold) in its public register of members. The information contained in the Company s register of members must remain there even if you cease to be a FASTER ENTERPRISES LTD PROSPECTUS 6

21 Shareholder. The information contained in the Company s register of members is also used to facilitate any dividend payments, corporate communications and compliance with legal and regulatory requirements. If you do not provide the information requested in the Application Form, the Company and the Share Registry may not be able to process or accept your Application. An Applicant has a right to gain access to the information that the Company and the Share Registry hold about that person, subject to certain exemptions under law. A fee may be charged for access. Your personal information may also be used from time to time to inform you about other products and services offered by the Company, which it considers may be of interest to you. Your personal information may also be provided to the Company s agents and service providers. The agents and service providers of the Company may be located outside Australia where your personal information may not receive the same level of protection as that afforded under Australian law. The types of agents and service providers that may be provided with your personal information and the circumstances in which your personal information may be shared are: the Share Registry for ongoing administration of the register of members; printers and other companies for the purpose of preparation and distribution of documents and for handling mail; market research companies for the purpose of analysing the Shareholder base and for product development and planning; and legal and accounting firms, auditors, contractors, consultants and other advisers for the purpose of administering and advising on the Shares and for related actions. DEFINED TERMS AND ABBREVIATIONS A number of terms and abbreviations used in this Prospectus have defined meanings which appear in Section 13 of this Prospectus. All financial amounts contained in this Prospectus are expressed in Australian dollars unless otherwise stated. QUESTIONS If you have any question about whether to invest in the Company or how to apply for Shares, please call your stockbroker, solicitor, accountant, tax adviser or other professional adviser. Instructions on how to apply for Shares are set out in Section 10.9 and on the back of the Application Form that applies to each Offer. Alternatively, please call the Company on between 9.00am and 5.00pm (AEST), Monday to Friday during the Offer Period. FASTER ENTERPRISES LTD PROSPECTUS 7

22 TABLE OF CONTENTS Chairman s Letter 9 Key Offer Information 11 Section 1 Investment Overview 13 Section 2 Group Overview 28 Section 3 Independent market report 54 Section 4 Financial information 74 Section 5 Investigating Accountant s Report 97 Section 6 Key Risks 102 Section 7 Key people, interests and benefits 109 Section 8 Corporate Governance 118 Section 9 Material Contracts 131 Section 10 Details of the Offers 147 Section 11 Additional Information 156 Section 12 Directors Authorisation 164 Section 13 Glossary 165 Section 14 Application Forms 171 Corporate Directory Back page FASTER ENTERPRISES LTD PROSPECTUS 8

23 CHAIRMAN S LETTER Dear Investor, On behalf of the Board, it is my pleasure to invite you to become a Shareholder of the Company. Faster Enterprises Ltd (Company) was incorporated in Victoria, Australia on 9 February 2015, primarily for the purpose of becoming a listing vehicle and holding company of a property development business. Subject to and conditional on raising at least $5 million under this Prospectus and the Company receiving conditional approval from the ASX that it will be admitted to the Official List of the ASX, the Company will undergo a restructure after which it will be the head company of the Group, consisting of several entities which own various properties and engage in the business of property development and management. The Group will initially consist of three main operating divisions, namely residential property development, commercial property development and hotel and serviced apartment development in Melbourne, Australia. With a CEO who is very experienced in all aspects of property development and management, and is well connected with financial institutions, professional advisers and property-related experts, the Group has developed its own integrated business model and strategies for site selection, land acquisition, project conceptualisation, construction, sale and property management. The current primary objective of the Company is to establish a strong brand name for the development and management of quality residential and commercial properties, as well as hotels and serviced apartments in Melbourne, with plans to expand into other major Australian cities in the future. The Company believes that it is well placed to benefit from the market growth in residential and commercial property development that has been seen in the Greater Melbourne suburbs where the Group will hold property after the Restructure. Demand for projects in this area is expected to be driven by population growth and economic growth. With Greater Melbourne projected to see an increase in its population from 4.4 million in 2014 to 7.8 million in 2051, and with economic conditions such as labour market resilience, relatively low unemployment rates, low fuel price levels and household consumption, the Company believes there is an opportunity for the Company to benefit from growth in the property market in Greater Melbourne. The Company also plans to investigate and explore opportunities to invest in and collaborate with modular building services businesses which may be operating from China. With the rising cost of building new homes and the need for affordable housing solutions in Australia, the Company believes that there is a real opportunity for growth in modular housing given the number of benefits that modular housing has over conventional construction such as affordability, reduced time to completion and improved sustainability. The Offers under this Prospectus include the Public Offer, the Debt to Equity Offer and the Noteholder Offer. The purpose of the Public Offer is to raise between $5 million and $10 million to (among other things) fund the immediate working capital needs of the Group and its current property development and management business, fund the costs of exploring and expanding into the modular building services market, fund the costs associated with the Restructure, reduce the Group s debt levels and to assist the Company with its Listing Application. The Debt to Equity Offer and the Noteholder Offer are intended to reduce the Group s debt levels by converting existing debts and loans into Shares. FASTER ENTERPRISES LTD PROSPECTUS 9

24 An investment in the Company under this Prospectus should be considered speculative in nature. The Group will be subject to a range of risks, including those risks set out in Section 6 of this Prospectus. Some of the key risks include the following: The Company on its own has limited operating and financial history and the Restructure has not yet been completed, which may make it difficult for investors to assess the Company s past performance or performance as a consolidated group. The majority of the Group s assets will be real property. Investors will therefore be exposed to property market risks. The Group s business strategy involves property development which has a number of inherent risks. Most of the Group s assets are highly geared and interest on loans is one of the Group s major expenses. Interest rates can rise and fall and may be subject to varied and unpredictable influences both globally and domestically. The Group s future success will be heavily reliant on the efforts, abilities, experience and expertise of the Company s founder and CEO, Yong Chao Wu. In the unlikely event that Yong ceases to be involved in the Company, the Group s performance could be adversely affected. After the Restructure, Yong Chao Wu (in his personal capacity and through his related entities) will hold between approximately 51% and 63% of the Shares (depending on the amount raised under the Public Offer) and will have a controlling interest in the Company. Yong s interests may differ from other investors. I encourage all potential investors to read this Prospectus carefully and in full before making a decision to invest. Should you view this opportunity favourably, we look forward to welcoming you as a Shareholder of the Company. Yours faithfully, Francesco (Frank) Licciardello Chairman Faster Enterprises Ltd FASTER ENTERPRISES LTD PROSPECTUS 10

25 KEY OFFER INFORMATION IMPORTANT DATES The anticipated date for commencement of trading of the Shares on the ASX as a result of the Listing Application is subject to ASX approval. The dates shown in the table below are indicative only and may vary. The Company reserves the right to vary the Opening Date and the Closing Date for the Offers without prior notice, which may have a consequential effect on the other dates. The Company also reserves the right to cancel some or all of the Offers at any time before the allotment of Shares under the Offers. Activity Indicative Timetable Lodgement of the Original Prospectus with ASIC Monday 11 July 2016 Lodgement of this replacement Prospectus with ASIC Tuesday 2 August 2016 Opening Date for the Offers Tuesday 2 August 2016 Closing Date for the Offers 1 Thursday 18 August 2016 Completion of Pre-Offer Restructure Steps Thursday 8 September 2016 Completion of the Offers (Shares to be issued to successful Thursday 8 September 2016 Applicants) 1 Expected date for dispatch of holding statements 1 Monday 12 September 2016 Expected date for Shares to commence trading on the ASX 1 Thursday 15 September 2016 KEY STATISTICS OF THE OFFERS Based on minimum subscription Based on maximum subscription Offer Price per Share under the Public Offer $0.20 $0.20 Gross proceeds of the Public Offer $5,000,000 $10,000,000 Existing Shares Shares issued under the Restructure 68,336,915 68,336,915 Shares to be issued under this Prospectus Public Offer 25,000,000 50,000,000 Debt to Equity Offer 8,505,330 8,505,330 Noteholder Offer 2 8,702,323 8,702,323 Shares on issue following completion of Offers 110,544, ,544,580 Indicative market capitalisation of the Company following completion of Offers 3 $22,108,916 $27,108,916 1 Unless the Offer Period is varied by the Company (including in circumstances where the Offers are closed early) 2 The number of Shares to be issued under the Noteholder Offer will increase depending on the amount of interest capitalised in accordance with the terms of the Convertible Note Agreements 3 Market capitalisation is usually determined by multiplying the number of Shares on issue by the price at which the Shares trade on the ASX from time to time. For indicative purposes only, the above market capitalisation calculations assume that FASTER ENTERPRISES LTD PROSPECTUS 11

26 ASX LISTING The Company is of the view that the listing of the Company on the ASX will: allow capital to be raised from a wider market in order to, among other things, expand the Group s business, acquire or establish new businesses and fund acquisitions and investments; raise the profile of the Company to institutional and professional investors; provide a means of increasing the number and diversity of investors; and improve the public recognition and commercial standing of the Company within Australia. Shares will be traded at the Offer Price. Shares may not trade at the Offer Price after trading on the ASX commences. If Shares trade below the Offer Price, the market capitalisation will be lower than the amount shown above. FASTER ENTERPRISES LTD PROSPECTUS 12

27 1. INVESTMENT OVERVIEW The information in this Section is a selective overview only and is not intended to be a comprehensive summary of this Prospectus. Prospective investors should read this Prospectus carefully and in full before deciding to invest. 1.1 Introduction Topic Summary Further information Who is the issuer of this Prospectus? Faster Enterprises Ltd ACN N/A What are the Offers? By this Prospectus, the Company is making the following 3 conditional offers of Shares: Section 10 Public Offer an offer to Australian residents of 25,000,000 to 50,000,000 Shares at an Offer Price of $0.20 per Share to raise a minimum of $5 million and a maximum of $10 million. Debt to Equity Offer an offer to the Creditors to convert approximately $1,701,066 of debt being assumed by the Group into Shares at a rate of $0.20 per Share, resulting in the allotment of up to approximately 8,505,330 Shares. Noteholder Offer an offer to the Noteholders for the allotment of approximately 8,702,323 Shares on conversion of the Convertible Notes issued under the Convertible Note Agreements. What is the Offer Price? The Offer Price under the Public Offer is $0.20 per Share. Section 10 What are the Conditions of the Offers? The Offers are conditional on: completion of the Pre-Offer Restructure Steps; the Company raising at least $5 million under the Public Offer; and the ASX giving conditional approval for the Listing Application. Section 10.5 FASTER ENTERPRISES LTD PROSPECTUS 13

28 Why are the Offers being conducted? The Public Offer is being conducted to: fund the immediate working capital needs of the Group and its current property development and management business; fund the costs of exploring and expanding into the modular building services market; fund the costs associated with the Restructure; reduce the level of debt of the Group; assist the Company to meet the requirements of the ASX and satisfy Chapters 1 and 2 of the Listing Rules; and provide funds to pursue identified and potential growth opportunities. Section 10.6 On completion of the minimum raising of $5 million under the Public Offer, the Board believes that the Company will have sufficient working capital to achieve the objectives stated in this Prospectus. The Debt to Equity Offer and the Noteholder Offer are being conducted to reduce the Group s debts and to maximise the portion of the Public Offer proceeds that can be applied to the development and growth of the Group s business. What is the minimum investment under the Public Offer? Applications under the Public Offer must be for a minimum of $2,000 worth of Shares (10,000 Shares) and thereafter, in multiples of $200 worth of Shares (1,000 Shares). Section Key features of the Group Topic Summary Further information What does the Group do? The Group currently engages in three main activities in Melbourne, namely residential property development, commercial property development, and hotel and serviced apartment development. Section 2 FASTER ENTERPRISES LTD PROSPECTUS 14

29 Who will have a controlling interest in the Group? Following completion of the Restructure, the Company will be the holding company of the other Group Companies. Section 7.3 Following completion of the Restructure and the Offers, Yong Chao Wu (the founder and CEO of the Company) will hold directly, or as a beneficiary of associated discretionary trusts, between approximately 51% and 63% of the Shares (depending on the amount raised under the Public Offer), and Norman Wu (a Director of the Company) will hold, as a beneficiary of associated discretionary trusts, between approximately 47% and 58% of the Shares (depending on the amount raised under the Public Offer). What is the Group s strategy? The Company intends to implement the following strategies to enable it to sustain and expand its operations: Section 2 continue to selectively grow the Group s property development portfolio with the aim to further increase the value of its assets; continue to selectively grow the Group s leasing portfolio and optimise tenant mix to increase recurring rental income and maintain a stable revenue stream; continue to maintain a mix of property developments for sale in the short term and property developments for long term investment purposes; explore property development opportunities in other major cities in Australia; promote the Group s business and brand across Victoria and in major cities in other Australian States and Territories; expand the Group s business into branded hotel apartment concepts; and explore opportunities in other property related services such as modular building services and construction project management. How will the Group generate income and what The Group will generate its income from rental income from commercial properties and the development and sale of residential properties. Section 2 FASTER ENTERPRISES LTD PROSPECTUS 15

30 will be its key costs? Key costs of the Group will be interest expenses, the cost of property management and the cost of property construction and development. 1.3 Key strengths of the Group Topic Summary Further information Frost & Sullivan Report This Prospectus includes an independent market report on the property sector prepared by Frost & Sullivan. Section 3 In respect of the property market, Frost & Sullivan has stated that: Melbourne is the second largest residential and commercial property market in Australia (second only to Sydney), and its population is expected to overtake that of Sydney s by around The three local government areas in which the Group will hold property will also see an increase in population and households. The increasing population is likely to sustain long-term demand for both residential and commercial property in these locations. In addition, housing affordability in Melbourne is still significantly better than it is in the other property hub, Sydney. Population increase and relative housing affordability are likely to sustain longterm demand for both residential and commercial property in these locations. Policies such as the First Home Owner Grant, negative gearing provisions and reductions in capital gains tax for investment in residential properties and low interest rates for housing loans all drive growth in the property market. Over the period from December 2014 to December 2015, residential prices in Melbourne rose by 9.6%. Over the period from December 2005 to December 2015, the residential property price index for Melbourne rose 97% (as compared to 89% for the eight capital city weighted average). While the short term outlook suggests moderation in house prices, it is expected that this will be more keenly felt in the inner suburbs (which has recently had significant oversupply of new apartments) rather than in the middle ring suburbs where the Group s properties will be located. FASTER ENTERPRISES LTD PROSPECTUS 16

31 There has been a surge in foreign investment into the Australian property market, with China as the largest source of foreign investment in residential and commercial real estate. While the Federal Government has introduced stricter rules around foreign investment in property which commenced in December 2015, the relative stability of the economy will continue to attract foreign investors. The depreciation of the Australian dollar has helped encourage business investment, job creation and economic growth in Greater Melbourne. While Melbourne was once most closely identified as a manufacturing hub, the long term decline in manufacturing has seen a diversification of its economy, especially through the service sector. This has helped sustain demand for commercial office property. In addition, the conversion of existing office stock in the suburbs to residential buildings is likely to ensure that office vacancy rates remain at low levels. Overall, these trends and market conditions are likely to support both residential and commercial property development activity in suburban Melbourne and the Group as a developer of such projects in the suburbs is well placed to benefit from this market growth. The Independent Market Report by Frost & Sullivan also noted the following in respect of the modular building services sector (in which the Company intends to explore and possibly expand): Global sales of prefabricated housing is projected to reach 1.1 million units in Modular housing has shown rapid growth in Australia in the past decade. Modular housing s affordability can address some of the demand for social housing and housing on city fringes which will help take this sector from niche to mainstream. FEL key strengths The Company believes that the following strengths will enable the Group to compete effectively in the property development market in Melbourne: Section experience in acquiring, developing, selling and leasing properties; clear and focused business model of mixing long-term ownership of selected properties for steady and recurring rental income and capital growth, with development and FASTER ENTERPRISES LTD PROSPECTUS 17

32 sale of properties for faster, short-term returns; strong financial and capital management; good working relationships with financial institutions, professional advisers and property-related experts; and previous cooperation with local councils and government. 1.4 Key risks Topic Summary Further information What are the key risks of investing in Shares in the Company? The list below is a summary of some of the key risks associated with investing in the Company. A more comprehensive list of risks is set out in Section 6. Limited historical or consolidated data Section 6 The Company on its own has limited operating and financial history and the Restructure has not yet been completed, which may make it difficult for investors to assess the Company s past performance or performance as a consolidated group. Property market risks The majority of the Group s assets will be real property. Investors will therefore be exposed to property market risks. The value of the Group s assets may fluctuate depending on property market conditions and economic and regulatory factors. Demand for property may change as investor preferences for particular sectors and asset classes change over time and can be influenced by general economic factors such as interest rates and share market cycles. There is a risk that the value of an asset may fall below the outstanding debt associated with that property in certain circumstances. Property development risks The Group s business strategy involves property development which comes with a number of inherent risks such as a risk that appropriate planning consents are not obtained, a risk that development costs escalate FASTER ENTERPRISES LTD PROSPECTUS 18

33 beyond those originally anticipated, a risk of project delays due to factors beyond the control of the Group, and a risk that a contractor appointed to implement the property development does not perform their role to a satisfactory standard or breaches their contract. Property investment risks The Group s operating cash flow is influenced by, among other things, income received from its property investment portfolio. Changes in market conditions for investment properties may impact the Group s assets held for investment, including vacancy rates, rental rates, competition from other property owners, the financial circumstances of tenants, and tenant defaults. Finance risks The Group relies on obtaining finance for its acquisitions of properties and the costs of development. There is a risk that the Company is unable to obtain finance on commercially acceptable terms, such as interest rates, financial covenants and security. Interest rate risks Most of the Group s assets are highly geared and interest on loans is one of the Group s major expenses. Interest rates can rise and fall and may be subject to varied and unpredictable influences both globally and domestically. Risks in future acquisitions or investments The Group is likely to acquire additional properties and make investments (debt or equity) in property development projects in the future. As the details of any future properties and investments are unknown, there is risk that such acquisitions or investments may have a detrimental effect on the Group. The timing of these acquisitions or investments and the requirement to outlay funds may impact on the ability of the Company to make any distributions in the periods that these acquisitions or investments are made. FASTER ENTERPRISES LTD PROSPECTUS 19

34 Reliance on key personnel The Group s future success will be heavily reliant on the efforts, abilities, experience and expertise of the Company s founder and CEO, Yong Chao Wu. In the unlikely event that Yong ceases to be involved in the Company, the Group s performance could be adversely affected. Completion risk Completion of the Restructure is conditional on the satisfaction of a number of conditions precedent (including Westpac approving the transfer of certain properties and being satisfied with the Group s ability to service loans). There is a risk that the Company may not be able to meet all of these conditions precedent. In the event that these conditions precedent are not satisfied or waived in accordance with requirements of the Restructure Deed, then the Company will not proceed with the Offers and will refund all Application Moneys received. Risks associated with capital structure After the Restructure, Yong Chao Wu will hold between approximately 51% and 63% of the Shares (depending on the amount raised under the Public Offer) and will have a controlling interest in the Company. Yong s interests may differ from other investors. Going concern As disclosed in the financial statements set out in Section 4, the Group has incurred a loss and had net cash outflows from operating activities for the half year ended 31 December As at that date, the Group also had net liabilities. These factors indicate significant uncertainty as to whether the Group will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. FASTER ENTERPRISES LTD PROSPECTUS 20

35 Notwithstanding the above, the Directors are of the view that there are reasonable grounds to believe that the Group will be able to continue as a going concern, for the reasons set out in Sections 4.9 (note 1(k)) and Market conditions The market price of the Shares can fall (as well as rise) and may be subject to varied and unpredictable influences both globally and domestically. Economic conditions General economic conditions, movements in interest and inflation rates and currency exchange rates may have an adverse effect on the Company s activities, as well as on its ability to fund those activities. 1.5 Share capital structure Immediately following completion of the Offers, the number of Shares on issue is expected to be as set out in the table below: Based on minimum subscription Based on maximum subscription Existing Shares Shares issued under the Restructure 68,336,915 68,336,915 Shares to be issued under this Prospectus Public Offer 25,000,000 50,000,000 Debt to Equity Offer 8,505,330 8,505,330 Noteholder Offer 4 8,702,323 8,702,323 Shares on issue following completion of Offers 110,544, ,544,580 The Company has issued a total of 7,583,000 Convertible Notes under the Convertible Note Agreements described in Section 9.2. It is expected that all Convertible Notes will be converted into Shares under the Noteholder Offer. 4 The number of Shares to be issued under the Noteholder Offer will increase depending on the amount of interest capitalised in accordance with the terms of the Convertible Note Agreements. FASTER ENTERPRISES LTD PROSPECTUS 21

36 1.6 Key financial metrics and dividends Topic Summary Further information What is the key financial information? The pro forma financial position of the Group as at 31 December 2015 (assuming completion of the Offers and the Restructure and completed as if they had completed by 31 December 2015) is set out below: Section 4 Audited 31-Dec-2015 Unaudited Pro Forma - Assuming $5 million raised under the Public Offer Unaudited Pro Forma - Assuming $10 million raised under the Public Offer Current Assets $3,302,928 $6,215,182 $10,865,182 Non-Current Assets $3,915,208 $3,915,208 $3,915,208 Total Assets $7,218,136 $10,130,390 $14,780,390 Current Liabilities $2,831,484 $902,400 $902,400 Non-current Liabilities $4,849,832 $4,569,231 $4,569,231 Total Liabilities $7,681,316 $5,471,631 $5,471,631 Net Assets ($463,180) $4,658,759 $9,308,759 Set out below is a summary of the pro forma historical statement of profit or loss and other comprehensive income of the Group for the half year ended 31 December 2015 and the years ended 30 June 2015 and 30 June 2014 (which has been prepared to illustrate the results of the Company during these periods assuming completion of the transactions summarised in Note 2 in Section 4.9 and taking into account the adjustments set out in Section 4.4): Audited Halfyear ended 31-Dec-15 Audited Year ended 30-Jun-15 Audited Year ended 30-Jun-14 Income Rental income $111,367 $225,545 $88,825 Other income $32,205 $35,185 $2,625 Expenses Total expenses $415,050 $541,410 $143,247 Loss before income tax ($271,478) ($280,680) ($51,797) Income tax expense Loss attributable to members of the entity ($271,478) ($280,680) ($51,797) As disclosed in the financial statements set out in Section 4.3, Section 4.6 and Section 4.8, the amalgamated entity incurred a loss of $27,089 and had net cash outflows from operating activities of $257,220 for the half year ended 31 December As at that date, the amalgamated entity had net liabilities of $463,180. FASTER ENTERPRISES LTD PROSPECTUS 22

37 In the 5 months to 31 May 2016, the amalgamated entity has also accumulated losses (relating to operating costs) of $926,589 (see Section 4.9, note 13). These factors indicate significant uncertainty as to whether the Group will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. How will the funds raised under the Public Offer be used? Notwithstanding the above, the Directors are of the view that there are reasonable grounds to believe that the Group will be able to continue as a going concern, for the reasons set out in Section 4.9 (note 1(k)). The Company intends to apply the funds raised from the Public Offer (together with existing cash reserves of the Group) during the 2 year period following completion of the Offers as follows: Purpose Minimum subscription ($5,000,000) Maximum subscription ($10,000,000) Cash reserves of the Group $128,831 $128,831 Funds raised under the Public Offer $5,000,000 $10,000,000 Total $5,128,831 $10,128,831 Expenses of the Offers $950,000 $1,300,000 Cost of development of Carnegie $263,000 $4,448,000 Property Payment of stamp duty associated with the Restructure Repayment of loan relating to the reduction of loan owing to Bankwest Reduction of loan owing to Yong Chao Wu $562,000 $562,000 $764,227 $764,227 $1,500,000 $1,500,000 ASX listing application fee $76,000 $83,000 Cost of research and exploration of $63,604 $121,604 the modular building market Working capital $950,000 $1,350,000 Total funds applied $5,128,831 $10,128,831 Section 10.7 The estimates of expenditure set out above are based on budgets set by the Directors. The Company s working capital will be at least $1.5 million if the Company s budgeted revenue (which includes revenue from the sale of the last remaining lot at the Albion Road Property and rental income from the other properties) for the first full financial year that ends after its listing was included in the working capital. FASTER ENTERPRISES LTD PROSPECTUS 23

38 If the Company only raises the minimum amount of $5,000,000 under the Public Offer: the amount of funds to be applied to the cost of the development of the Carnegie Property will be reduced and the Group will seek to obtain other means of funding for that development; and the Group will defer and reduce some of its spending on the research and exploration of the modular building market. The actual level and breakup of expenditure may change on an ongoing basis depending on results achieved. Prospects of the Group The Group has limited operating and financial history and the Restructure has not yet been completed. The Board believes that the Group s connections with Chinese property investors makes it ideally placed to capitalise on the surge in foreign investment in the Australian property market. N/A However, as the Group is intending to commence a range of new development projects and explore expanding into the modular building services market (together with the other risks identified in section 6), the Directors believe that they are not in a position to provide prospective financial information in relation to the Group (or make any other definitive statements regarding the prospects of the Group). There can be no certainty that the Group will achieve (or sustain) any level of revenue, profitability or cash flow in the future. What is the Company s dividend policy? The payment of a dividend by the Company is at the discretion of the Board and will be a function of a number of factors. There is no guarantee that the dividends will be paid on the Shares. Section 2.11 When will the first dividend be paid? The Company does not expect to pay dividends in the short term. Section 2.11 FASTER ENTERPRISES LTD PROSPECTUS 24

39 1.7 Experience and background of directors and management Topic Summary Further information Who are the Directors? The existing Directors of the Company are: Frank Licciardello (Non-Executive Chairman) Norman Wu (Non-Executive Director) Barry Moshel (Non-Executive Director) Weiping Chen (Non-Executive Director) Section 7 Who are the key managers The existing key managers of the Company are: Yong Chao Wu (Chief Executive Officer); and Wing Kee Cheng (Company Secretary and Financial Controller). Section 7 Who are the key consultants Brett Diston (director, Ray White Commercial Vic, Nunawading) is a key consultant to the Company. Section 7 What experience and background do the Directors, key managers and key consultants have? The experience and background of each of the Directors, key managers and key consultant that are involved in the operations of the Group as at the Prospectus Date are set out in Section 7. Section 7 What Securities will the Directors (and their associates) hold? Details of the interests of the current Directors in the Company s Securities are set out in Section Section FASTER ENTERPRISES LTD PROSPECTUS 25

40 1.8 Additional key information in relation to the Offers Topic Summary Further information Are the Offers underwritten? The Offers are not underwritten. Section Is there any brokerage commissions or stamp duty payable by Applicants? No brokerage, commission or stamp duty is payable by Applicants on an acquisition of Shares under the Public Offer, the Debt to Equity Offer or the Noteholder Offer. Section What are the tax implications of investing in the Shares under the Offers? Will the Shares be quoted? Will any Shares be escrowed? Financial benefits to related parties under the Offers The tax consequences of any investment in Shares will depend on each Applicant s particular circumstances. Applicants should obtain their own tax advice before deciding whether to invest. An application for official quotation of all Shares to be issued under the Offers (other than those that will be subject to escrow restrictions) was made to the ASX no later than 7 days after the Original Prospectus Date. It is expected that 50,920,157 Shares issued (or to be issued) to one of Yong s associated entities will be subject to mandatory escrow under the Listing Rules for a period of 24 months after the Shares commence quotation on the ASX. The Company is seeking confirmation from the ASX in relation to the final number of Shares that may be subject to mandatory escrow and these details will be released to the market before any Shares commence trading on the ASX. The Company will obtain approval by way of the Sole Shareholder Resolutions for the giving of financial benefits by the Company under the Related Party Contracts and the Debt to Equity Offer. Section 11.6 Section Section 2.13 Sections 7.2.2, 7.2.5, 9.1, 9.4 and 9.5 Where can I find more information? If you have any questions about whether to invest in the Company or how to apply for Shares, please call your stockbroker, solicitor, accountant, tax adviser or other N/A FASTER ENTERPRISES LTD PROSPECTUS 26

41 professional adviser. Instructions on how to apply for Shares are set out in Section 10.9 and on the back of the Application Form that relates to the relevant Offer. For general enquiries in relation to the Offers, please call the Company on between 9.00am and 5.00pm (AEST), Monday to Friday during the Offer Period. FASTER ENTERPRISES LTD PROSPECTUS 27

42 2. GROUP OVERVIEW 2.1 History of the Group The Company was incorporated in Victoria on 9 February 2015, primarily for the purpose of becoming a listing vehicle and holding company of a property development business operated by the other Group Companies. It has no operating history. On incorporation, 12 fully paid ordinary shares were issued at $1.00 per Share. The Shares are currently held by an entity associated with Yong Chao Wu, the founder and CEO of the Company. No further Shares have been issued since incorporation. Yong Chao Wu has operated a family property development business via several companies and discretionary trusts since The real property assets which will be vended into the Group under the Restructure have all been previously held, developed and/or managed by these companies and trusts. 2.2 Restructure As at the Prospectus Date, the Company s chief executive officer, Yong Chao Wu, holds interests in various real estate properties through his associated companies and trusts. In order to consolidate and expand on those assets and resources, Yong and his associated companies and trusts have entered into the Restructure Deed to undertake the Restructure. The terms of the Restructure Deed are summarised in Section 9.1. After the completion of the Restructure, which is subject to and conditional on (among other things) the successful capital raising of at least $5 million under the Public Offer and the Company receiving conditional approval from the ASX that it will be admitted to the Official List of the ASX following completion of the Restructure, the Group s corporate and asset holding structure will be as follows: FASTER ENTERPRISES LTD PROSPECTUS 28

43 Of the entities listed in the structure diagram above, the entities that have been incorporated as at the Prospectus Date are Faster Enterprises Ltd, Faster Properties Investment Pty Ltd, Amazon Investment (Aust) Pty Ltd as trustee for the Ferntree Gully Unit Trust, Faster (Carnegie) Properties Pty Ltd and Faster Enterprises International (HK) Limited. All other entities are to be incorporated as part of the completion process under the Restructure Deed. The above structure serves the following purposes: Operational it is intended that each division of the Group s business will be operated via a subholding company, and the relevant properties are grouped and aligned with the operations and future intended direction of the Group. Risk segregation within each business division it is expected that there will be separate legal entities, separating business risks. Asset protection it is intended that each property will be held by a separate legal entity, segregating risks associated with that property from the Group s other assets. The Group s business will initially comprise of the following divisions: Residential property division to be operated via FE (Residential) Pty Ltd: it is intended that this division of the Group will acquire residential properties for development and sale in the short term. Commercial property division to be operated via FE (Commercial) Pty Ltd: it is intended that this division of the Group will have a portfolio of commercial properties which are held long term with the aim of achieving an ongoing, stable revenue stream. Hotel and serviced apartment division to be operated via FE (Hotels) Pty Ltd: it is intended that this division will acquire, develop and manage (either on its own or through third party contractors) hotels and serviced apartments, with the aim of building up a chain of hotels and serviced apartments for long-term leasing. FASTER ENTERPRISES LTD PROSPECTUS 29

44 FE (Project Management) Pty Ltd will be established for the purpose of exploring other property related or building services businesses and opportunities which may be complementary to the Group s business. Faster Enterprises International (HK) Limited has been incorporated in Hong Kong for the purpose of investments in and dealings with other companies, businesses or properties located overseas. Details of the various properties are summarised in Section 2.3, and further information on each division of the Group and associated properties are set out in Sections 2.3 to 2.6 FASTER ENTERPRISES LTD PROSPECTUS 30

45 2.3 Summary details of properties Set out in the table below is a summary of the properties in which the Group will have an interest after the Restructure: Property address 78 Albion Road, Box Hill 5 G02, 8 Ellingworth Parade, Box Hill Group % interest post Restructure 1-3 Rooks Road, Nunawading 1-3/794 Burwood Highway and 4-7/1849 Ferntree Gully Road, Ferntree Gully 1032 Dandenong Road, Carnegie 100% 100% 33.33% 19.99% 100% 100% Springvale Road, Nunawading Owner post Restructure FE Albion Pty Ltd FE Ellingworth Pty Ltd Faster Properties Investment Pty Ltd Amazon Investment (Aust) Pty Ltd as trustee for the Ferntree Gully Unit Trust Faster (Carnegie) Properties Pty Ltd FE Nunawading Hotel Pty Ltd Registered encumbrance over property post Restructure 6 NA - Mortgage currently registered by Westpac will be discharged after the proceeds under the sale contracts relating to this property are applied to repay the loans owing to Westpac see section Caveat currently registered by Yong will be removed after Yong s loans to the Group have been converted into equity under the Debt to Equity Offer and repaid from the funds raised under the Public Offer Mortgage registered by Westpac Caveat currently registered by Yong will be removed after Yong s loans to the Group have been converted into equity under the Debt to Equity Offer and repaid from the funds raised under the Public Offer Mortgage registered by Westpac Mortgage registered by Westpac Mortgage registered by Westpac Caveat currently registered by Yong will be removed after Yong s loans to the Group have been converted into equity under the Debt to Equity Offer and repaid from the funds raised under the Public Offer NA - Caveat currently registered by Yong will be removed after Yong s loans to the Group have been converted into equity under the Debt to Equity Offer and repaid from the funds raised under the Public Offer 5 Three townhouses are being constructed and a plan of subdivision will be lodged to subdivide the property into three lots. The rights to the proceeds from the sale of 2 of the 3 lots will be transferred to the Group, and the remaining unsold lot will be transferred to the Group after the registration of the plan of subdivision. Please refer to Section It is possible that additional encumbrances will need to be granted in order to obtain the required consent from Westpac in relation to the Restructure. FASTER ENTERPRISES LTD PROSPECTUS 31

46 Property address 78 Albion Road, Box Hill 5 G02, 8 Ellingworth Parade, Box Hill Registered encumbrance over owner entity post Restructure NA Security interest registered by Westpac on the PPSR 1-3 Rooks Road, Nunawading Security interest registered by Westpac on the PPSR 1-3/794 Burwood Highway and 4-7/1849 Ferntree Gully Road, Ferntree Gully Security interest registered by Westpac on the PPSR 1032 Dandenong Road, Carnegie Security interest registered by Westpac on the PPSR Springvale Road, Nunawading NA Property Type Residential three double storey contemporary townhouses (under construction) Ground Floor, commercial lot Commercial office building Semi modern showroom / bulky goods development (constructed circa 2005). Incorporates two main buildings which have been subdivided into seven occupancy areas. Three storey brick commercial premises providing ground floor retail and two levels of commercial accommodation proposed site for development of serviced apartments Dated adjoining single level shops Zoning General Residential 1 Zone (GRZ1) Commercial 1 Zone (C1Z) Commercial 2 Zone (C2Z) Commercial 2 Zone (C2Z) Commercial 1 Zone (C1Z) Commercial 1 Zone (C1Z) Building area (sqm) Unit 1: 142 Unit 2: (net lettable area) 796 (net lettable area) 6, (gross lettable area - retail) Unit 3: 127 Site area (sqm) Unit 1: 261 Parent Allotment 530 1,465 16, Unit 2: 206 Unit 3: 217 Occupancy status Vacant Occupied by related party of Group 5 office spaces fully occupied Occupied Vacant Occupied Expiry of current lease term (and any options) NA February 2017 (with an option for a further term of 3 years) Suite 1: December 2020 (with an option for a further term of 5 years) Unit 1: February 2023 (with an option for a further term of 6 years) 30 June 2016 November 2016 (with no option) Suite 2: September 2017 (with an option for a further term of 3 years) Unit 2 (part 1 of 2): June 2018 (with 2 options for a further term of 5 years each) Suite 3: August 2018 (with an option for a further term of 5 years) Unit 2 (part 2 of 2): June 2022 (with 2 options for a further term of 7 years each) FASTER ENTERPRISES LTD PROSPECTUS 32

47 Property address 78 Albion Road, Box Hill 5 G02, 8 Ellingworth Parade, Box Hill 1-3 Rooks Road, Nunawading GL: March 2020 (with 3 options for a further term of 5 years each) 1-3/794 Burwood Highway and 4-7/1849 Ferntree Gully Road, Ferntree Gully Unit 3: June 2022 (with 2 options for a further term of 7 years each) 1032 Dandenong Road, Carnegie Springvale Road, Nunawading GR: May 2020 (with an option for a further term of 5 years) Unit 4: July 2017 (with no option) Unit 5: July 2020 (with 2 options for a further term of 5 years each) Unit 6: January 2021 (with no option) Unit 7: August 2019 (with 3 options for a further term of 3 years each) Rental NA $40,000 p.a. (assessed net rental) $203,000 p.a. (assessed net rental before any adjustments for estimated non-recoverable land tax) $1,150,000 p.a. (assessed net rental on a fully leased basis) $40,560 p.a. $20,000 p.a. (passing rental) Property value (based on valuation by Independent Property Expert in March/April 2016) Value of loans being repaid or converted into equity under the Restructure and Debt to Equity Offer (based on outstanding loan balances as at 31 May 2016) $2,750,000 $625,000 $3,000,000 $13,350,000 $2,300,000 $1,000,000 $710,000 Nil $634,894 Nil $1,128,051 $1,709,961 FASTER ENTERPRISES LTD PROSPECTUS 33

48 Property address 78 Albion Road, Box Hill 5 G02, 8 Ellingworth Parade, Box Hill Value of loans remaining after completion of Restructure and the Debt to Equity Offer (based on outstanding balances as at 31 May 2016) $1,744,000 (including drawdowns requested at or soon after 31 May 2016) - this debt is expected to be repaid in full on completion of the sale of 2 of the 3 townhouses being constructed at this property see sections and 9.8) 1-3 Rooks Road, Nunawading 1-3/794 Burwood Highway and 4-7/1849 Ferntree Gully Road, Ferntree Gully 1032 Dandenong Road, Carnegie $390,000 $1,950,000 $8,540,000 $1,610,000 Nil Springvale Road, Nunawading Property value less associated loans remaining after completion of Restructure and the Debt to Equity Offer (based on valuation by Independent Property Expert in March/April 2016 and outstanding loan balances as at 31 May 2016) Group s interest value before deducting associated loans (based on valuation by Independent Property Expert in March/April 2016) Group s interest value less associated loans remaining after completion of Restructure and the Debt to Equity Offer (based on valuation $1,006,000 $235,000 $1,050,000 $4,810,000 $690,000 $1,000,000 $2,750,000 $625,000 $1,000,000 $2,668,665 $2,300,000 $1,000,000 $1,006,000 $235,000 $349,965 $961,519 $690,000 $1,000,000 FASTER ENTERPRISES LTD PROSPECTUS 34

49 Property address 78 Albion Road, Box Hill 5 G02, 8 Ellingworth Parade, Box Hill by Independent Property Expert in March/April 2016 and outstanding loan balances as at 31 May 2016) 1-3 Rooks Road, Nunawading 1-3/794 Burwood Highway and 4-7/1849 Ferntree Gully Road, Ferntree Gully 1032 Dandenong Road, Carnegie Springvale Road, Nunawading Group s total interest value before deducting associated loans (based on valuation by Independent Property Expert) $10,343,665 Group s total interest value less associated loans remaining after completion of Restructure and the Debt to Equity Offer (based on valuation by Independent Property Expert in March/April 2016 and outstanding loan balances as at 31 May 2016) $4,242,484 Investors should not rely on the Directors valuations for the properties previously set out in the Original Prospectus. Property values differences between valuations set out in the table above and figures in the Pro Forma Accounts There are some differences between the values of the properties set out in the table above and those reflected in the pro forma statement of financial position (Pro Forma Accounts) set out in Section 4 (Financial Information). This is due to the method of accounting for the relevant asset. In particular: Property, plant and equipment including freehold land and buildings, are carried at cost unless otherwise stated. The carrying values of the Ellingworth Parade Property, Carnegie Property and Nunawading Property have been recognised in the Pro Forma Accounts at cost. FASTER ENTERPRISES LTD PROSPECTUS 35

50 The Albion Road Property has been recorded as an inventory at cost in the Pro Forma Accounts, compared with the Independent Property Expert s valuation which is assessed as if complete, that is, on the basis that the townhouses being constructed on the property will be completed in accordance with plans and specifications provided to the Independent Property Expert, to a high standard and in accordance with that outlined in the valuation report. Associates are entities over which the Group has significant influence but not control or joint control. This is generally the case where the Group holds between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. This method of accounting has been used to recognise the value of the Group s investment in the Ferntree Gully Property (which is held through units in the Ferntree Gully Unit Trust) and Rooks Road Property (which is held through shares in Faster Properties Investment Pty Ltd). In summary, under the equity method of accounting the investments are initially recognised at cost and adjusted to recognise the Group s share of the post-acquisition profits or losses of the investee (i.e. Ferntree Gully Unit Trust and Faster Properties Investment Pty Ltd). When the Group s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, the Group does not recognise further losses and adopts a nil balance (unless it has incurred obligations or made payments on behalf of the other entity). While the Independent Property Expert has assessed the market value of the Ferntree Gully Property to be $13,350,000, and accordingly the Group s percentage interest in that property (before associated liabilities) would equate to approximately $2,670,000, in the Pro Forma Accounts an amount of $29,370 has been assessed as the Group's equity interest in the Ferntree Gully Unit Trust as at 31 December 2015 (after the Trust's associated liabilities). The Rooks Road Property is held by Faster Properties Investment Pty Ltd. Faster Properties Investment Pty Ltd disclosed net losses and net liabilities at 31 December An investment in Faster Properties Investment Pty Ltd is therefore recognised with a $nil balance at 31 December Please refer to Section 4.9 for further details. FASTER ENTERPRISES LTD PROSPECTUS 36

51 2.4 Residential property division After the Restructure, this division is to be operated by FE (Residential) Pty Ltd. The objective of this division is to acquire residential properties for development (e.g. by subdivision and construction of units) and re-sale in the short term. The key revenue of this division is expected to be sale proceeds and capital gains from the sale of redeveloped properties (after deducting any outstanding loan owing in respect of the relevant property). The key expenses of this division are expected to be: costs of finance (e.g. interest payments); costs of acquiring properties (e.g. consideration, stamp duty, adviser fees); costs of development and construction (e.g. architects, demolition, builders and landscaping fees); and costs of marketing and subsequent re-sale of properties (e.g. advertising and agent s fees). The average period for each development project, including research on potential properties, acquisition, construction and development, marketing and sale, would be 2 to 3 years, depending on the nature and progress of the development. The Group has good relationships with real estate agents, architects, builders and other professional advisers who are able to assist at a competitive price Albion Road, Box Hill This property is currently owned by a discretionary trust associated with Yong and Norman Wu (a Director). Yong and Norman (among other persons) are beneficiaries of this discretionary trust (to which Shares will be issued under the Restructure). Three townhouses are being constructed at the property and a plan of subdivision will be lodged to subdivide the property into three lots. Off the plan contracts of sale have been entered into with separate purchasers for the sale of two of the three lots, one with the purchase price of $950,000 and the other with the purchase price of $915, % deposits have been received and are held on trust by the vendor s real estate agent in respect of each contract. The balance of the purchase price under each of those contracts is to be paid on the later of 14 days after the vendor s lawyers notify the purchaser in writing of the registration of the plan of subdivision or 14 days from the date on which the vendor s lawyers notify the purchaser in writing of the issue of the occupancy permit. Please refer to Section 9.8 for a summary of the key terms of the off the plan contracts of sale. Under the Restructure Deed, Yong s associated entity has undertaken to: direct the purchasers under the contracts of sale to pay and apply all proceeds of the sale first towards the full repayment of the loan owing to Westpac in respect of this property, and any FASTER ENTERPRISES LTD PROSPECTUS 37

52 surplus funds are to be paid to FE Albion Pty Ltd (which will be a wholly owned subsidiary of FE (Residential) Pty Ltd, which is in turn wholly owned by the Company); and as soon as practicable after the registration of the plan of subdivision with Land Victoria, transfer to FE Albion Pty Ltd its title and interest in the unsold lot. The property was valued by the Independent Property Expert on 6 March 2016 at $2,750,000 (based on market value with vacant possession). After completion of the Restructure and Debt to Equity Offer, the amount of loans associated with this property would be $1,744,000. However, this debt is expected to be repaid in full from the sale proceeds of the off the plan contracts of sale referred to above on settlement. Please refer to Section 9.8 for a summary of the key terms of the off the plan contracts of sale. A caveat has been lodged in respect of this property by Yong Chao Wu. This caveat will be removed by Yong after his loans to the Group have been converted into equity under the Debt to Equity Offer and repaid from the funds raised under the Public Offer. This property is located in the area of Box Hill in the municipality of Whitehorse. The immediate area is wholly residential with a mix of old style residences and modern dwellings. This property is located close to a full range of complementary services including local shopping facilities such as Centro Box Hill. There are also a number of educational facilities nearby including Box Hill TAFE, and the property is within the Box Hill High School Zone. The area is serviced by public transport services including the Box Hill Railway Station, a tram line along Whitehorse Road and various bus routes including a route along Albion Road and Barkly Street. There is sound rental and purchase demand for townhouse accommodation of this nature in Box Hill. This property comprises a rectangular shaped General Residential 1 (GR1Z) allotment of 684 sqm. Construction of the three townhouses on this property are near completion. Please refer to Section 9.7 for a summary of the key terms of the building contract for this property. A plan of subdivision to divide this property into three separate lots will be lodged subject to and after receiving the requisite certificate of compliance from the local council. The council will change the street address of the three townhouses from 78 Albion Road to 46, 48 and 50 Barkly Street Box Hill. FASTER ENTERPRISES LTD PROSPECTUS 38

53 Recent images of the current construction are set out below: FASTER ENTERPRISES LTD PROSPECTUS 39

54 Below are an artist s impressions of the interior and exterior of the townhouses after completion. These images are for indicative purposes only. The townhouses may not completely resemble these images and will not be furnished: 2.5 Commercial property division After the Restructure, this division is to be operated by FE (Commercial) Pty Ltd. The objective of this division is to have a portfolio of commercial properties which are held on a long term basis to generate an ongoing and stable revenue stream, which could then fund the day to day operations of the Group and the activities of other business divisions. The key revenue of this division is expected to be rental income from the leasing of properties. The key expenses of this division are expected to be: FASTER ENTERPRISES LTD PROSPECTUS 40

55 costs of finance (e.g. interest payments); costs of acquiring properties (e.g. consideration, stamp duty, adviser fees); costs of managing properties (e.g. agent s fees). The Group has good relationships with real estate agents who are able to assist at a competitive price. Following completion of the Restructure, the Group will have interests in 3 commercial properties G02, 8 Ellingworth Parade, Box Hill A commercial property at G02, 8 Ellingworth Parade, Box Hill is currently owned by a discretionary trust associated with Yong and Norman Wu (a Director). Yong and Norman (among other persons) are beneficiaries of this discretionary trust (to which Shares will be issued under the Restructure). After the Restructure, this property will be held by FE Ellingworth Pty Ltd (which will be a wholly owned subsidiary of FE (Commercial) Pty Ltd). The property was valued by the Independent Property Expert on 10 March 2016 at $625,000 (exclusive of GST) (valued as a freehold interest with vacant possession as it is currently occupied by a related party of the Group rather than a third party tenant). After completion of the Restructure and Debt to Equity Offer, the amount of loans associated with this property would be $390,000. Westpac has consented to the transfer of this property to FE Ellingworth Pty Ltd under the Restructure, subject to: FE Ellingworth Pty Ltd entering into a new loan facility agreement with Westpac under which the following will be provided to Westpac as securities: o a mortgage registered over this property in favour of Westpac; o a PPSR security interest registered by Westpac over FE Ellingworth Pty Ltd; o a guarantee from, and a PPSR security interest registered by Westpac over, an entity associated with Yong; o a guarantee by Yong supported by another property; and o a guarantee by Norman Wu; the transfer of the commercial loan facility between Westpac and the current registered proprietor of the property to FE Ellingworth Pty Ltd, with security acceptable to Westpac being provided; and Westpac being satisfied with the Group s ability to service the new loans. The Group intends to fund the repayment of these loans from the rental income generated by this property and the Group s working capital. FASTER ENTERPRISES LTD PROSPECTUS 41

56 A caveat has been lodged in respect of this property by Yong Chao Wu. This caveat will be removed by Yong after his loans to the Group have been converted into equity under the Debt to Equity Offer and repaid from the funds raised under the Public Offer. This property is located in the area of Box Hill in the municipality of Whitehorse. The immediate area is predominantly commercial in nature with numerous office suites and retail premises. The wider area comprises conventional residential housing of various styles. Box Hill has good access to both shopping and public transport facilities with the regional centre (Box Hill Central) easily accessible from this property. The area is well represented by both public and private educational facilities, and recreational facilities. Box Hill Railway Station is accessible within a short distance to the west of the property, providing access to Melbourne s city centre. The property is a shop front/office on the ground floor of a multi-level mixed use development. It is currently leased to and occupied by a related party of the Group. The current term expires in February 2017, with an option for a further term of 3 years. There are a number of mixed use projects nearby which have been recently completed or are currently proposed or under construction. The majority of these projects incorporate a ground floor commercial component. This has resulted in an increased number of commercial lots being offered to the market either for lease or for sale, and in some instances prolonged periods of vacancy and/or sale periods are experienced. Notwithstanding that, the property represents an affordable commercial lot which would appeal to owner occupiers and to a lesser extent investors. The assessed net rental is $40,000 per annum. This property will also be used as the Company s registered address and head office. Set out below is an image with the property highlighted in red: FASTER ENTERPRISES LTD PROSPECTUS 42

57 Rooks Road, Nunawading After the Restructure, the Group will own a 33.33% interest in a double storey, commercial office building at 1-3 Rooks Road, Nunawading. This property will remain to be held by Faster Properties Investment Pty Ltd as the registered proprietor. After the Restructure, 33.33% of the shares issued by Faster Properties Investment Pty Ltd will be held by FE (Commercial) Pty Ltd (with those shares having been transferred by Yong under the Restructure). The property has been valued by the Independent Property Expert on 9 March 2016 at $3,000,000 (exclusive of GST) (valued as a freehold interest subject to existing leases). Accordingly, the Group s 33.33% interest in this property will be valued at $1,000,000 (exclusive of GST). After the completion of the Restructure and Debt to Equity Offer, the amount of outstanding loans associated with this property (based on the outstanding loan balance as at 31 May 2016) would be $1,950,000 (with $650,000 being 33.33% of the total outstanding loan balance). After the Restructure, there will continue to be: a mortgage registered over this property in favour of Westpac; a PPSR security interest registered by Westpac over Faster Properties Investment Pty Ltd (and possibly other members of the Group); and a personal guarantee by Yong, in respect of the outstanding loan entered into for the acquisition of the property (which will continue to be held in the name of Faster Properties Investment Pty Ltd). The Group intends to fund its 33.33% contribution toward the repayment on this loan from the rental income generated by this property and the Group s working capital. A summary of the key terms of the loan is contained in Section 9.6. This property is located in Nunawading and within a secondary commercial precinct, with surrounding developments comprising car dealerships to the west and industrial sites to the south. The wider surrounding area is generally residential, including various primary and secondary retail strips. The property is serviced by an extensive road and public transport network, and all usual services and amenities complementing commercial occupation are within reasonable proximity. The property is located close to Mitcham Railway Station. The property consists of 5 office suites, all of which are currently occupied. The current terms of the leases will expire between September 2017 and December 2020, and each lease has at least 1 option for a further term. The Board believes that the property will require minimal capital expenditure in the short to medium term. The assessed net rental is $203,000 per annum (before any adjustments for estimated nonrecoverable land tax). FASTER ENTERPRISES LTD PROSPECTUS 43

58 Images of the property are set out below: /794 Burwood Highway and 4-7/1849 Ferntree Gully Road, Ferntree Gully After the Restructure, the Group will own a 19.99% interest in the property located at 1-3/794 Burwood Highway and 4-7/1849 Ferntree Gully Road, Ferntree Gully. The 19.99% interest in the property is currently held by a discretionary trust associated with Yong and Norman Wu (a Director). Yong and Norman (among others) are beneficiaries of this discretionary trust (to which Shares will be issued under the Restructure). After the Restructure, this property will remain held by Amazon Investment (Aust) Pty Ltd as trustee for the Ferntree Gully Unit Trust % of the units in this trust and the shares in the trustee will be transferred to FE (Commercial) Pty Ltd under the Restructure. The Ferntree Gully Unit Trust is constituted by the Ferntree Gully Unit Trust Deed which grants extensive powers to Amazon Investment (Aust) Pty Ltd as trustee of the unit trust. These powers FASTER ENTERPRISES LTD PROSPECTUS 44

59 include the power to request, with authorisation of a simple majority of the voting unit holders, that the unitholders contribute additional amounts to the trust fund in proportion to the number of units held by each unit holder, provided that the total of such contributions do not exceed 50% of the aggregate distribution of net income made by the trust during the immediately preceding Financial Year. Many of the trustee s other significant powers are subject to authorisation of a simple majority of voting unitholders. Because the Group has a minority interest in the unit trust, it will have limited control over the exercise of the trustee s extensive powers in relation to the Ferntree Gully Unit Trust. The Company s CEO, Yong Chao Wu, is a director and company secretary of Amazon Investment (Aust) Pty Ltd. Further details of the Ferntree Gully Unit Trust Deed are set out in Section 9.3. The property has been valued by the Independent Property Expert on 10 March 2016 at $13,350,000 (exclusive of GST) (valued as a freehold interest subject to existing leases). Accordingly, the Group s 19.99% interest in this property will be valued at $2,668,665 (exclusive of GST). After the completion of the Restructure and Debt to Equity Offer, the amount of loans associated with this property (based on the outstanding loan balance as at 31 May 2016) would be $8,540,000 (with $1,707,146 being 19.99% of the total outstanding loan balance). After the Restructure, there will continue to be: a mortgage registered over this property in favour of Westpac; a PPSR security interest registered by Westpac over Amazon Investment (Aust) Pty Ltd; and a guarantee by Yong and an associated entity, in respect of the outstanding loan entered into for the acquisition of the property (which will continue to be held in the name of Amazon Investment (Aust) Pty Ltd as trustee for the Ferntree Gully Unit Trust). The Group intends to fund its 19.99% contribution toward the repayment of this loan from the rental income generated by this property and the Group s working capital. A summary of the key terms of the loan is contained in Section 9.6. This property is located in Ferntree Gully, with frontage to Burwood Highway and Ferntree Gully Road. The immediate area comprises a number of showroom developments occupied by various national traders including Officeworks, Snooze, Beaumont Tiles, as well as a number of car dealerships. The Mountain Gate Shopping Centre and Mountain Gate Plaza are also situated on Ferntree Gully Road. A passing bus service and access to EastLink and the Eastern Freeway are located within reasonable proximity to the property. The property consists of 7 shops, all of which are currently occupied. The current terms of the leases will expire between July 2017 and February The leases for units 4 and 6 do not provide for further terms. Leases for all other units include at least 1 option for a further term. The initial term for the lease of Unit 7 was due to expire at the end of July 2016 but the tenant has entered into a new lease. The assessed net rental is $1,150,000 per annum on a fully leased basis. FASTER ENTERPRISES LTD PROSPECTUS 45

60 Images of the property are set out below: 2.6 Hotel and serviced apartment division After the Restructure, this division is to be operated by FE (Hotels) Pty Ltd. The objective of this division is to acquire, develop and manage (either on its own or through third party contractors) hotels and serviced apartments, with the aim of building up a chain of hotels and serviced apartments for long-term leasing. FASTER ENTERPRISES LTD PROSPECTUS 46

61 The key revenue of this division is expected to be rental income from the leasing and/or the sale of hotels and serviced apartments. The key expenses of this division are expected to be: costs of finance (e.g. interest payments); costs of acquiring properties (e.g. consideration, stamp duty, adviser fees); costs of development and construction (e.g. architects, demolition, builders and landscaping fees); costs of marketing the properties (e.g. advertising fees); and costs of managing the properties (e.g. agent s fees). The Group has good relationships with real estate agents, architects, builders and other professional advisers who are able to assist at a competitive price. After the Restructure, the Group will have an interest in 2 commercial properties which Group intends to develop into hotel apartments Dandenong Road, Carnegie After the Restructure, the Group will own a commercial property at 1032 Dandenong Road, Carnegie. This property will remain held by Faster (Carnegie) Properties Pty Ltd (which is currently wholly owned by Yong, but will be a wholly-owned subsidiary of FE (Hotels) Pty Ltd after the Restructure). The property has been valued by the Independent Property Expert on 10 March 2016 at $2,300,000 (exclusive of GST) (valued as freehold interest subject to short term lease). After the completion of the Restructure and Debt to Equity Offer, the amount of outstanding loans associated with this property (based on the outstanding loan balance as at 31 May 2016) would be $1,610,000. After the Restructure, there will continue to be: a mortgage registered over this property in favour of Westpac; a PPSR security interest registered by Westpac over Faster (Carnegie) Properties Pty Ltd (and possibly other members of the Group); and a personal guarantee by Yong Chao Wu, in respect of the outstanding loan entered into for the acquisition of the property (which will continue to be held in the name of Faster (Carnegie) Properties Pty Ltd). The Group intends to fund the repayment of the remaining outstanding balance on this loan from the rental income generated by this property (until commencement of redevelopment) and the Group s working capital. A summary of the key terms of the loan is contained in Section 9.6. A caveat has been lodged in respect of this property by Yong Chao Wu. This caveat will be removed by Yong after his loans to the Group have been converted into equity under the Debt to Equity Offer and repaid from the funds raised under the Public Offer. FASTER ENTERPRISES LTD PROSPECTUS 47

62 This property is located in the area of Carnegie within the City of Glen Eira. The property forms part of an established and continually emerging mixed use precinct. The immediate area comprises a mix of older style offices and factories as well as modern office redevelopments, showrooms and residential accommodation. The property is located on the southern side of a major arterial road being Dandenong Road (Princes Highway). It is also close to several other secondary arterial roads and a major south eastern arterial to the north of the property. Carnegie Railway Station is within 250 metres of the property and a bus service operates along a nearby road. The area enjoys considerable exposure to passing vehicular traffic and is close to facilities complementing a mixed use scheme. The property comprises an older style three storey brick commercial premises with frontage to Dandenong Road, with ground floor retail and two levels of commercial accommodation. The lease for this property expired on 30 June 2016, and it is currently vacant. The Independent Property Expert considers the highest and best use of this property to be redevelopment. This is consistent with the Group s plans for this property. The Group is proposing to redevelop this property into a 9 storey, 4½ star serviced apartment hotel, with a total of 49 rooms, 2 levels of basement car parking, and provision for retail tenancy and a Café/restaurant at ground level. A town planning application was submitted to the local council (City of Glen Eira) in December No decision has yet been made on this application. Subject to council approval, the Group is aiming to commence construction of the proposed apartment hotel at the end of calendar year The property falls within an Environmental Audit Overlay under the Planning Schemes of the City of Glen Eira, which means that before a sensitive use (residential use, child care centre, pre-school centre or primary school) commences or before the construction or carrying out of buildings and works in association with a sensitive use commences, either a certificate of environmental audit must be issued for the land under Part IXD of the Environment Protection Act 1970 or an environmental auditor appointed under that Act must make a statement that the environmental conditions of the land are suitable for the sensitive uses. Accordingly, prior to the commencement of construction, environmental audits may be required to ensure compliance with the Environmental Audit Overlay requirements. Early budgets that have been prepared by the management of the Company based on the development application plans that have been submitted to council indicate the total construction cost to be approximately $9,531,675. The construction time is estimated to take 24 months from the date council provides development planning and building approval. The costs of the construction are expected to be funded 60% by bank financing and 40% by the Group s existing cash reserves on the basis that the maximum amount of capital is raised under the Public Offer. Please refer to Section 10.7 for further commentary on the use of funds and funding plans for this development. FASTER ENTERPRISES LTD PROSPECTUS 48

63 To support this endeavour, Faster (Carnegie) Properties Pty Ltd is in discussions with a hotel operator in relation to a heads of agreement for the operation and leasing of the apartment hotel to commence from completion of the construction of the building. Set out below are an artist s impressions of the proposed hotel apartments which were submitted as part of the town planning application referred to above. These images are for indicative purposes only. The development may not completely resemble these images: Springvale Road, Nunawading After the Restructure, the Group will own a commercial property at Springvale Road, Nunawading. The property is currently held by a discretionary trust associated with Yong and Norman Wu (a Director). Yong and Norman (among others) are beneficiaries of this discretionary trust (to which Shares will be issued under the Restructure). This property will be transferred to FE Nunawading Hotel Pty Ltd (which will be a wholly owned subsidiary of FE (Hotels) Pty Ltd) under the Restructure. The property has been valued by the Independent Property Expert on 10 March 2016 at $1,000,000 (exclusive of GST) (valued as a freehold interest subject to a short term lease). Under the Restructure: the current loan from Bankwest in respect of this property will be repaid in full from funds to be loaned by Yong; Yong s loan for the repayment of the Bankwest loan will be assumed by FE Nunawading Hotel Pty Ltd; and the Company (as the ultimate holding company of FE Nunawading Hotel Pty Ltd) will repay in full Yong s loan for the repayment of the Bankwest loan from funds raised under the Public Offer. A caveat has been lodged in respect of this property by Yong Chao Wu. This caveat will be removed by Yong after his loans to the Group have been converted into equity under the Debt to Equity Offer and repaid from the funds raised under the Public Offer. FASTER ENTERPRISES LTD PROSPECTUS 49

64 This property is located in Nunawading, with street frontage to Springvale Road. The immediate surrounding area comprises single and two level retail premises occupied by local retailers. There is also a fast food outlet and service station nearby. The property is serviced by a bus service and is close to the Nunawading Railway Station. The property comprises dated adjoining single level shops. The improvements pre-date 1980 and it is not confirmed as to whether there is any contamination issues arising from asbestos. It is currently occupied. The passing rental is $20,000 p.a. The lease for this property will expire in November The Independent Property Expert has noted that this property is a redevelopment opportunity. This is consistent with the Group s plans for this property. The Group is proposing to redevelop this property into a 6 storey, 4½ star serviced apartment hotel, with a total of 87 rooms and basement car parking. A town planning application was submitted to the local council (City of Whitehorse) in December No decision has yet been made on this application. Subject to obtaining approval from council, the Group is aiming to commence construction of the proposed apartment hotel sometime in Current estimates indicate a July 2017 commencement date, but this timing is subject to change. Early budgets that have been prepared by the management of the Company based on the development application plans that have been submitted to council indicate the total construction cost to be approximately $9,120,100. The construction time is estimated to take 24 months from the date council provides development planning and building approval. The costs of the construction are expected to be funded 60% by bank financing. It is expected that this development will not commence until some time after the development of the Carnegie Property has begun. Therefore, the funding required to commence this project has not been secured, but management has plans in place to secure additional funding at the appropriate time when the council permits are issued. Please refer to Section 10.7 for further commentary on the use of funds and funding plans for this development. Set out below are an artist s impressions of the proposed hotel apartments which were submitted as part of the town planning application referred to above. These images are for indicative purposes only. The development may not completely resemble these images: FASTER ENTERPRISES LTD PROSPECTUS 50

65 Artist s impression Sketch design 2.7 Modular building services Given modular building techniques could complement the Group s business, especially with the hotel and serviced apartment development division, the Company intends to apply part of the funds raised under the Public Offer to investigate and explore the potential of expanding into the modular building services industry. This could involve further research in the modular building industry, acquisition of or investment in modular building technology, plant and/or equipment, hiring relevant personnel and setting up of a new business division. 2.8 Objectives and strategies Competitive strengths The Company believes that the following strengths will enable it to compete effectively in the property development market in Melbourne: experience in acquiring, developing, selling and leasing properties; experienced in-house property development team; FASTER ENTERPRISES LTD PROSPECTUS 51

66 clear and focused business model of mixing long-term ownership of selected properties for recurring rental income and capital growth, with development and sale of properties for faster, short-term returns; strong financial and capital management; good working relationships with financial institutions, professional advisers and property-related experts; and close cooperation with local councils and government Business strategies The Company believes that the following strategies will enable it to successfully expand its operations: continue to selectively grow the Group s property development portfolio with the aim to further increase the value of its assets; continue to selectively grow the Group s leasing portfolio and optimise tenant mix to increase recurring rental income and maintain a stable revenue stream; continue to maintain a mix of property developments for sale in the short term and property developments for long term investment purposes; explore property development opportunities in other major cities in Australia; promote the Company s branding across Victoria and in major cities in Australia; expand the Group s business into branded hotel concepts; and explore opportunities in other property related services such as modular building services and construction project management. 2.9 Funding and financing Apart from rental income and proceeds from sale of redeveloped properties, the Group s operations have previously relied on financial facilities provided by Westpac and Bankwest, shareholder loans and funds raised from the issue of convertible notes. Details of the Group s proposed use of the funds raised from the Public Offer are set out in Section Capital management policy The Company has no formal capital management policy in place due to its scale and size. In the short term, it is not anticipated that there will be any surplus funds available to the Company. It is currently proposed that all funds raised under the Public Offer (together with existing cash reserves) will be applied in the manner described in Section FASTER ENTERPRISES LTD PROSPECTUS 52

67 2.11 Dividend policy The payment of a dividend by the Company is at the discretion of the Board and will be a function of a number of factors such as the general business environment, operating results, cash flows, capital requirements, regulatory restrictions, the financial condition of the Company and any other factors that the Board may consider relevant. The Company does not expect to pay dividends in the short term Capital structure Immediately following completion of the Offers, the number of Shares on issue is expected to be as set out in the table below: Based on minimum subscription Based on maximum subscription Existing Shares Shares issued under the Restructure 68,336,915 68,336,915 Shares to be issued under this Prospectus Public Offer 25,000,000 50,000,000 Debt to Equity Offer 8,505,330 8,505,330 Noteholder Offer 7 8,702,323 8,702,323 Shares on issue following completion of Offers 110,544, ,544,580 The Company has issued a total of 7,583,000 Convertible Notes under the Convertible Note Agreements described in Section 9.2. It is expected that all Convertible Notes will be converted into Shares under the Noteholder Offer Restricted securities It is expected that 50,920,157 Shares issued (or to be issued) to one of Yong s associated entities will be subject to mandatory escrow under the Listing Rules for a period of 24 months after the Shares commence quotation on the ASX. The Company is seeking confirmation from the ASX in relation to the final number of Shares that may be subject to mandatory escrow and these details will be released to the market before any Shares commence trading on the ASX. 7 The number of Shares to be issued under the Noteholder Offer will increase depending on the amount of interest capitalised in accordance with the terms of the Convertible Note Agreements. FASTER ENTERPRISES LTD PROSPECTUS 53

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88 4. FINANCIAL INFORMATION 4.1 Background This Section of the Prospectus sets out the following: The Historical Financial Information, comprising the: the amalgamated Audited Statement of Profit or Loss and Other Comprehensive Income of the Company for the half-year ended 31 December 2015 and the amalgamated Audited Statement of Profit or Loss and Other Comprehensive Income of the Company for the years ended 30 June 2015 and 30 June 2014; the amalgamated Audited Statement of Cash Flows of the Company for the half-year ended 31 December 2015 and the amalgamated Audited Statement of Cash Flows of the Company for the years ended 30 June 2015 and 30 June 2014; and the amalgamated Audited Statement of Financial Position of the Company as at 31 December The Pro Forma Financial Information, comprising the: the Amalgamated Pro Forma Statement of Profit or Loss and Other Comprehensive Income for the half-year ended 31 December 2015 and the years ended 30 June 2015 and 30 June 2014, illustrating the historical results of the Company for the half-year ended 31 December 2015 and the years ended 30 June 2015 and 30 June 2014, and assuming the completion of the transactions summarised in Note 2 in Section 4.9; the Amalgamated Pro Forma Statement of Cash Flows for the half-year ended 31 December 2015 and the years ended 30 June 2015 and 30 June 2014, illustrating the historical cash flows of the Company for the half-year ended 31 December 2015 and the years ended 30 June 2015 and 30 June 2014; and the Amalgamated Pro Forma Statement of Financial Position at 31 December 2015, assuming the completion of the transactions summarised in Note 2 in Section 4.9 of the Prospectus. 4.2 Basis of preparation The Pro Forma Financial Information has been reviewed by RSM Financial Services Australia Pty Ltd, Melbourne. A copy of RSM Financial Services Australia Pty Ltd s Investigating Accountant s Report is set out in Section 5 of this Prospectus. The Financial Information has been prepared and presented in accordance with the accounting policies set out in Note 1 in Section 4.9. FASTER ENTERPRISES LTD PROSPECTUS 74

89 The Historical Financial Information of the Company has been prepared in accordance with the stated basis of preparation, being the recognition and measurement principles described in Australian Accounting Standards, and the Company s adopted accounting policies. The Historical Financial Information of the Company for the half-year ended 31 December 2015 has been extracted from the Company s amalgamated financial statements for the half-year ended 31 December 2015, which were audited by RSM Australia in accordance with Australian Auditing Standards, and on which an unqualified audit opinion was issued. For the half-year ended 31 December 2015, RSM Australia s opinion included an emphasis of matter that, without qualifying their conclusion, drew notice to the existence of a material uncertainty which may cast doubt over the Company s ability to continue as a going concern. The Historical Financial Information for the years ended 30 June 2015 and 30 June 2014 has been extracted from the Company s amalgamated financial statements for each financial year, which were audited by RSM Australia in accordance with Australian Auditing Standards, and on which an unqualified audit opinion was issued for each financial year. For each of these two financial years, RSM Australia s audit report included an emphasis of matter that, without qualifying its audit opinion, drew notice to the existence of a material uncertainty which may cast doubt over the Company s ability to continue as a going concern. The Financial Information has been solely prepared for the purpose of inclusion in this Prospectus and is presented in an abbreviated form insofar as it does not include all the presentation and disclosures required by Australian Accounting Standards and other mandatory professional reporting requirements applicable to general purpose financial reports prepared in accordance with the Corporations Act. FASTER ENTERPRISES LTD PROSPECTUS 75

90 4.3 Historical Amalgamated Statement of Profit or Loss and Other Comprehensive Income Set out below is the historical amalgamated Audited Statement of Profit or Loss and Other Comprehensive Income of the Company for the half-year ended 31 December 2015 and the historical amalgamated Audited Statement of Profit or Loss and Other Comprehensive Income of the Company for the years ended 30 June 2015 and 30 June Audited Audited Audited Half-year ended Year ended Year ended 31-Dec Jun Jun-14 $ $ $ INCOME Rental income 115, , ,906 OTHER INCOME Interest revenue Net profit on sale of investment property 248, Share of net profit of associates accounted for using the equity method 29,350 34,800 - Other income 2,587-2,495 Total other income 281,088 35,185 2,625 Total income 396, , ,531 EXPENSES Accountancy 38,390-3,877 Advertising - 2,137 - Bank charges 5,874 14,025 14,332 Borrowing expenses 3,903 5,452 1,453 Body corporate fees 467 3,806 2,400 Commission 6,023 6,757 4,316 Consulting fees 105, Depreciation 26,610 74,792 10,522 Electricity and gas 5,333 5,696 7,833 Filing fees Finance charges 10,355 27,185 - Fines 850-2,065 Formation costs 13,711 (2,787) 19,055 Impairment loss ,887 17,171 Inspection fees ,559 Insurance 3,162 6,023 1,480 Interest expense 118, ,332 72,413 Internet Land tax 3,270 5,170 7,788 Legal costs 57, Management fees Rates 5,316 13,350 4,066 Rent - 8,865 - Repairs and maintenance 5,680 3, Statement fees Sundry expenses Telephone 218 1,111 1,037 Wages 4, Water 4,635 19,583 5,761 Website design 2, Total expenses 423, , ,659 Loss before income tax (27,089) (278,936) (72,128) Income tax expense Loss attributable to members of the entity (27,089) (278,936) (72,128) Other comprehensive income Total comprehensive income (27,089) (278,936) (72,128) FASTER ENTERPRISES LTD PROSPECTUS 76

91 The historical amalgamated Statement of Profit or Loss and Other Comprehensive Income of the Company has been extracted from the audited amalgamated financial statements of the Company for the half-year ended 31 December 2015 and the audited amalgamated financial statements of the Company for the years ended 30 June 2015 and 30 June The Amalgamated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the Notes to the financial information set out in Section 4.9. FASTER ENTERPRISES LTD PROSPECTUS 77

92 4.4 Historical Amalgamated Pro Forma Statement of Profit or Loss and Other Comprehensive Income Set out below is the historical Amalgamated Pro Forma Statement of Profit or Loss and Other Comprehensive Income for the half-year ended 31 December 2015 and the years ended 30 June 2015 and 30 June The Amalgamated Pro Forma Statement of Profit or Loss and Other Comprehensive Income has been prepared to illustrate the results of the Company for the half-year ended 31 December 2015 and the years ended 30 June 2015 and 30 June 2014, assuming the completion of the transactions summarised in Note 2 in Section 4.9, and taking into account the adjustments as set out below. Audited Audited Audited Half-year ended Year ended Year ended 31-Dec Jun Jun-14 $ $ $ INCOME Rental income 111, ,545 88,825 OTHER INCOME Interest revenue Share of net profit of associates accounted for using the equity method 29,350 34,800 - Other income 2,587-2,495 Total other income 32,205 35,185 2,625 Total income 143, ,730 91,450 EXPENSES Accountancy 38,390-3,877 Advertising - 2,137 - Bank charges 5,874 14,025 14,332 Borrowing expenses 3,903 5,452 1,453 Body corporate fees 467 3,806 2,400 Commission 6,023 6,757 4,316 Consulting fees 105, Depreciation 26,610 74,792 10,522 Electricity and gas 5,333 5,696 7,833 Filing fees Finance charges 10,355 27,185 - Fines 850-2,065 Formation costs 13,711 (2,787) 19,055 Impairment loss ,887 - Inspection fees ,559 Insurance 3,162 6,023 1,480 Interest expense 110, ,613 52,172 Internet Land tax 3,270 5,170 7,788 Legal costs 57, Management fees Rates 5,316 13,350 4,066 Rent - 8,865 - Repairs and maintenance 5,680 3, Statement fees Sundry expenses Telephone 218 1,111 1,037 Wages 4, Water 4,635 19,583 5,761 Website design 2, Total expenses 415, , ,247 Loss before income tax (271,478) (280,680) (51,797) Income tax expense Loss attributable to members of the entity (271,478) (280,680) (51,797) Other comprehensive income Total comprehensive income (271,478) (280,680) (51,797) FASTER ENTERPRISES LTD PROSPECTUS 78

93 The Amalgamated Pro Forma Statement of Profit or Loss and Other Comprehensive Income has been prepared based on the audited amalgamated financial statements of the Company for the half-year ended 31 December 2015 and the audited amalgamated financial statements of the Company for the years ended 30 June 2015 and 30 June The adjustments recognised in the Amalgamated Pro Forma Statement of Profit or Loss and Other Comprehensive Income are summarised as follows: deduction of rental income attributable to land and improvements located at 23/4 Jacana Parade, Ballajura, Perth, Western Australia (Perth Property). The Perth Property was transferred out from the Wu Family Trust (an entity associated with Yong) and does not form part of the Restructure. The deduction of rental income in relation to the Perth Property was as follows: o half-year ended 31 December $3,722; o year ended 30 June $18,463; and o year ended 30 June $17,081. deduction of net profit on sale of investment property of $248,883, being the net profit recognised in relation to the transfer of a property at 80 Albion Road, Box Hill (80 Albion Road Property), and the Perth Property. No income was received in relation to the 80 Albion Road Property. The 80 Albion Road Property was transferred out from the Coolyah Properties Trust (an entity associated with Yong) and does not form part of the Restructure; add back of impairment expense of $17,171 recognised in relation to the Perth Property during the year ended 30 June 2015; and add back of interest expense recognised in relation to the Perth Property. No interest expense was recognised for the 80 Albion Road Property as interest expense was capitalised in relation to the 80 Albion Road Property asset. The add back of interest in relation to the Perth Property was as follows: o half-year ended 31 December $8,216; o year ended 30 June $16,719; and o year ended 30 June $20,241. The Amalgamated Pro Forma Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the Notes to the financial information set out in Section 4.9. FASTER ENTERPRISES LTD PROSPECTUS 79

94 4.5 Management Discussion and Analysis on the Historical Amalgamated Pro Forma Statement of Profit or Loss and Other Comprehensive Income Revenue Half-year ended Year ended Year ended 31-Dec Jun Jun-14 $ $ $ Rental income by property Ellingworth Parade Property 24,061 76,963 15,100 Nunawading Property 56,020 74,179 73,725 Carnegie Property 31,286 74, Albion Road Property Total income 111, ,545 88,825 The Company disclosed total pro forma amalgamated rental income of $111,000 for the half-year ended 31 December 2015, compared to $226,000 and $89,000 for the years ended 30 June 2015 and 30 June 2014, respectively. The 78 Albion Road Property is currently under construction. Once complete, the property will comprise three townhouses, each with three bedrooms, two bathrooms and a single car garage. The 78 Albion Road Property asset has been recognised in inventories (at cost), in the Company s amalgamated Audited Statement of Financial Position as at 31 December Expenses Expenses Half-year ended Year ended Year ended 31-Dec Jun Jun-14 $ $ $ Interest expense 110, ,613 52,172 Consulting fees 105, Bank charges 20,132 46,662 15,785 Legal costs 57, Impairment loss ,887 - Utilities 9,968 25,279 13,594 Depreciation 26,610 74,792 10,522 Other operating expenses 84,869 49,177 51,174 Total expenses 415, , ,247 FASTER ENTERPRISES LTD PROSPECTUS 80

95 The Company disclosed total pro forma amalgamated expenses of $415,000 for the half-year ended 31 December 2015, compared to $541,000 and $143,000 for the years ended 30 June 2015 and 30 June 2014, respectively. The increase in expenses during the half-year ended 31 December 2015 compared to the year ended 30 June 2015, is due primarily to consulting fees, legal and costs and other expenses, including accountancy and staff wages, in relation to the further development of the Company s property investments. The increase in expenses for the year ended 30 June 2015 compared to the year ended 30 June 2014 is due primarily to the increase in interest expense as a result of a corresponding increase in total borrowings in relation to the development of the Company s property investments. In addition to the increase in interest expense, the Company recognised an impairment loss of $172,000 in relation to the Carnegie Property during the year ended 30 June FASTER ENTERPRISES LTD PROSPECTUS 81

96 4.6 Historical Statement of Cash Flows Set out below is the historical amalgamated Audited Statement of Cash Flows of the Company for the half-year ended 31 December 2015 and the historical amalgamated Audited Statement of Cash Flows of the Company for the years ended 30 June 2015 and 30 June Audited Audited Audited Half-year ended Year ended Year ended 31-Dec Jun Jun-14 $ $ $ CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 74, , ,241 Payments to suppliers and employees (213,612) (134,886) (89,215) Interest received Interest paid (118,866) (190,332) (72,413) Net cash used in operating activities (257,220) (101,204) (42,257) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of investment property 397, Payment of purchase of investment property (50,981) (2,083,017) (1,075,762) Proceeds from sale of inventories 918,144 (20) - Payment for purchase of inventories (337,149) (170,937) (79,958) Net cash from investing activites 927,843 (2,253,974) (1,155,720) CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from borrowings 175,875 2,909,161 1,415,825 Proceeds from share issue Net proceeds/(payments) from/(to) beneficiaries (893,689) (885,352) 205,102 Distribution to trust beneficiaries (19,490) (10,358) (4,687) Net cash from financing activities (737,292) 2,013,451 1,616,330 Increase/(decrease) in cash held (66,669) (341,727) 418,353 Cash held at the beginning of the year 79, ,104 2,751 Cash held at the end of the financial period/year 12,708 79, ,104 The historical amalgamated Statement of Cash Flows of the Company has been extracted from the historical amalgamated audited financial statements of the Company for the half-year ended 31 December 2015 and the historical amalgamated audited financial statements of the Company for the years ended 30 June 2015 and 30 June The historical amalgamated Statement of Cash Flows should be read in conjunction with the Notes to the financial information set out in Section 4.9. FASTER ENTERPRISES LTD PROSPECTUS 82

97 4.7 Historical Amalgamated Pro Forma Statement of Cash Flows Set out below is the historical Amalgamated Pro Forma Statement of Cash Flows for the half-year ended 31 December 2015 and the years ended 30 June 2015 and 30 June The Amalgamated Pro Forma Statement of Cash Flows has been prepared to illustrate the results of the Company for the half-year ended 31 December 2015 and the years ended 30 June 2015 and 30 June 2014, assuming the completion of the transactions summarised in Note 2 in Section 4.9, and taking into account the adjustments as set out below. Audited Audited Audited Half-year ended Year ended Year ended 31-Dec Jun Jun-14 $ $ $ CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 71, , ,160 Payments to suppliers and employees (213,612) (134,886) (89,215) Interest received Interest paid (110,650) (173,613) (52,172) Net cash used in operating activities (252,726) (102,948) (39,097) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of investment property Payment of purchase of investment property (50,981) (2,083,017) (1,075,762) Payment for investments in associates 918,144 (20) - Payment for purchase of inventories (337,149) (170,937) (79,958) Net cash from investing activites 530,014 (2,253,974) (1,155,720) CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from borrowings 175,875 2,909,161 1,415,825 Proceeds from share issue Net proceeds/(payments) from/(to) beneficiaries (893,689) (885,352) 205,102 Distribution to trust beneficiaries (19,490) (10,358) (4,687) Net cash from financing activities (737,292) 2,013,451 1,616,330 Net Increase/(decrease) in cash held (460,004) (343,471) 421,513 The Amalgamated Pro Forma Statement of Cash Flows has been prepared based on the historical amalgamated audited financial statements of the Company for the half-year ended 31 December 2015 and the historical amalgamated audited financial statements of the Company for the years ended 30 June 2015 and 30 June The adjustments recognised in the Amalgamated Pro Forma Statement of Cash Flows are summarised as follows: deduction of rental income received in relation to the Perth Property as follows: o half-year ended 31 December $3,722; FASTER ENTERPRISES LTD PROSPECTUS 83

98 o year ended 30 June $18,463; and o year ended 30 June $17,081 add back of interest expense recognised in relation to the Perth Property. The add back of interest in relation to the Perth Property was as follows: o half-year ended 31 December $8,216; o year ended 30 June $16,719; and o year ended 30 June $20,241 deduction of proceeds from sale of investment property of $397,829, being the proceeds in relation to the transfer of the 80 Albion Road Property and the Perth Property. The Amalgamated Pro Forma Statement of Cash Flows should be read in conjunction with the Notes to the financial information set out in Section 4.9. FASTER ENTERPRISES LTD PROSPECTUS 84

99 4.8 Amalgamated Pro Forma Statement of Financial Position The Amalgamated Pro Forma Statement of Financial Position as at 31 December 2015, set out below, has been prepared to illustrate the completion of the pro forma transactions set out in Note 2 in Section 4.9 as if they had occurred on 31 December Pro Forma Unaudited Pro Forma Unaudited Transactions Pro Forma Transactions Pro Forma Audited Minimum Minimum Maximum Maximum 31-Dec-15 Raise Raise Raise Raise Notes $ $ $ $ $ ASSETS Current assets Cash and cash equivalents 3 12,708 4,050,000 4,062,708 8,700,000 8,712,708 Inventories 4 1,204,109-1,204,109-1,204,109 Other current assets 5 60, , , , ,940 Loans advanced to related parties 6 2,025,171 (1,255,746) 769,425 (1,255,746) 769,425 Total current assets 3,302,928 2,912,254 6,215,182 7,562,254 10,865,182 Non-current assets Investment property 7 3,873,481-3,873,481-3,873,481 Investments 8 29,370-29,370-29,370 Plant and equipment 9 12,357-12,357-12,357 Total non-current assets 3,915,208-3,915,208-3,915,208 Total assets 7,218,136 2,912,254 10,130,390 7,562,254 14,780,390 LIABILITIES Current liabilities Trade and other payables 10 50,137-50,137-50,137 Borrowings 11 2,781,347 (1,929,084) 852,263 (1,929,084) 852,263 Total current liabilities 2,831,484 (1,929,084) 902,400 (1,929,084) 902,400 Non-current liabilities Borrowings 11 4,849,832 (280,601) 4,569,231 (280,601) 4,569,231 Total non-current liabilities 4,849,832 (280,601) 4,569,231 (280,601) 4,569,231 Total liabilities 7,681,316 (2,209,685) 5,471,631 (2,209,685) 5,471,631 NET ASSETS (463,180) 5,121,939 4,658,759 9,771,939 9,308,759 EQUITY Issued capital ,048,528 6,048,660 10,698,528 10,698,660 Accumulated losses 13 (463,312) (926,589) (1,389,901) (926,589) (1,389,901) TOTAL EQUITY (463,180) 5,121,939 4,658,759 9,771,939 9,308,759 The Amalgamated Pro Forma Statement of Financial Position represents the Audited Amalgamated Statement of Financial Position as at 31 December 2015, and adjusted for the pro forma transactions outlined in Note 2 in Section 4.9 relating to the issue of Shares pursuant to this Prospectus and other transactions. FASTER ENTERPRISES LTD PROSPECTUS 85

100 The historical Audited Amalgamated Statement of Financial Information of the Company at 31 December 2015 has been extracted from the audited amalgamated financial statements of the Company for the half-year ended 31 December The Amalgamated Pro Forma Statement of Financial Position should be read in conjunction with the notes to the financial information. 4.9 Notes to the financial information 1. Statement of significant accounting policies The principle accounting policies adopted in the preparation of the financial information are set out below. Basis of preparation The Directors have prepared the financial report on the basis that the Company is a non-reporting entity because there are no users dependent on general purpose financial reports. This financial report is therefore a special purpose financial report that has been prepared in order to meet the needs of members. The Company is a for-profit entity for financial reporting purposes under Australian Accounting Standards. The financial statements have been prepared in accordance with the relevant Australian Accounting Standards and the significant accounting policies disclosed below, which the Director have determined are appropriate to meet the needs of members. Such accounting policies are consistent with the previous period unless stated otherwise. The financial statements have been prepared on an accruals basis and are based on historical costs unless otherwise stated in the notes. The amounts presented in the financial statements have been rounded to the nearest dollar. The following is a summary of the material accounting policies adopted by the company in the preparation of the financial report. (a) Principles of amalgamation The amalgamated financial statements incorporate the assets, liabilities and results of entities included within the amalgamated group as at the end of the reporting period. Where amalgamated entities have entered or left the amalgamated group during the year, the financial performance of those entities is included only for the period of the year that they were considered to be part of the amalgamation. In preparing the amalgamated financial statements, all inter-company balances and transactions between entities in the amalgamated group have been eliminated on amalgamation. FASTER ENTERPRISES LTD PROSPECTUS 86

101 The amalgamation comprises the following entities: Amalgamated Entities Faster Enterprises Ltd Faster (Carnegie) Properties Pty Ltd Wu Family Trust Coolyah Properties Trust (b) Property, plant and equipment Property, plant and equipment including freehold land and buildings, are carried at cost unless otherwise stated. Depreciable assets are depreciated over their useful lives. Depreciation Depreciation is calculated on either a straight line or diminishing value basis over the useful life of property, plant and equipment (excluding freehold land). The depreciation method and useful life of assets is reviewed regularly to ensure they are appropriate. (c) Trade and other receivables Receivables are recognised at their transaction price, less any provision for impairment. Trade receivables are based on normal credit terms and do not bear interest. (d) Cash and cash equivalents Cash and cash equivalents comprises cash on hand, demand deposits and short-term investments which are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. Bank overdrafts also form part of cash equivalents and are presented within current liabilities on the balance sheet. (e) Inventories Land and capitalised development costs held for resale is stated at the lower of cost and net realisable value. Cost comprises purchase costs and other fees relating to the acquisition of land. Land costs are apportioned to revenue on a square metre basis. Costs incurred in development of land for resale are capitalised. Attributable costs of development are released to the profit and loss account when lots have been settled. (f) Revenue and other income Sales revenue is recognised at the point of sale. Amounts disclosed are net of returns and discounts. Other revenue is recognised when it is received or when the right to receive payment is established. FASTER ENTERPRISES LTD PROSPECTUS 87

102 (g) Trade and other payables Trade payables are recognised at their transaction price. Trade payables are obligations on the basis of normal credit terms and do not bear interest. (h) Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables in the balance sheet are shown inclusive of GST. (i) Income tax The income tax expense for the year comprises current income tax expense. The company does not apply deferred tax. Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted as at reporting date. Current tax liabilities are therefore measured at the amounts expected to be paid to the Australian Taxation Office. (j) Investments in associates Associates are all entities over which the amalgamated group has significant influence but not control or joint control. This is generally the case where the amalgamated group holds between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the amalgamated group s share of the post-acquisition profits or losses of the investee in profit or loss, and the group s share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates are recognised as a reduction in the carrying amount of the investment. When the amalgamated group s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity. Unrealised gains on transactions between the amalgamated group and its associates are eliminated to the extent of the amalgamated group s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity accounted investees have been changed where necessary to ensure consistency with the policies adopted by the amalgamated group. FASTER ENTERPRISES LTD PROSPECTUS 88

103 The carrying amount of equity-accounted investments is tested for impairment. (k) Going concern The financial statements have been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and discharge of liabilities in the normal course of business. As disclosed in the financial statements, the amalgamated entity incurred a loss of $27,089 and had net cash outflows from operating activities of $257,220 for the half year ended 31 December As at that date the amalgamated entity had net liabilities of $463,180. These factors indicate significant uncertainty as to whether the amalgamated entity will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. The Directors believe that there are reasonable grounds to believe that the amalgamated entity will be able to continue as a going concern, after consideration of the following factors: The amalgamated entity has been restructured into a company subsequent to year end and the newly formed company intends on listing on the Australian Securities Exchange (ASX). The listing is planned to take place in September 2016 and will aim to raise a minimum of $5 million. The amalgamated entity has issued $1,516,600 in convertible notes. The convertible notes are expected to be converted to Shares as part of the listing on the ASX. Accordingly, the Directors believe that the amalgamated entity will be able to continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the financial report. The financial report does not include any adjustments relating to the amounts or classification of recorded assets or liabilities that might be necessary if the amalgamated entity does not continue as a going concern. 2. Pro Forma Adjustments The Amalgamated Pro Forma Statement of Financial Position as at 31 December 2015 has been prepared by adjusting the Amalgamated Statement of Financial Position as at that date to reflect the financial effects of the following transactions as if they had occurred at 31 December i) Adjustment for related party loans receivable totalling $1,255,746 that do not form part of the Restructure. These related party loans relate to amounts owing by members of the Wu family to the Coolyah Properties Trust and the Wu Family Trust. The Coolyah Properties Trust and the FASTER ENTERPRISES LTD PROSPECTUS 89

104 Wu Family Trust will not form part of the Group after completion of the Restructure and the benefits associated with these loans are not being assigned to the Group as part of the Restructure. ii) The increase in related party loans by $312,081 as of 31 May 2016, together with the corresponding increase in operating expenses for the period 1 January 2016 to 31 May iii) The conversion of current related party loans as at 31 December 2015 totalling $160,200 and $948,184 to Yong Chao Wu and Coolyah Group Pty Ltd t/s Coolyah Computer Services, into 801,000 and 4,740,920 Shares, respectively, as part of the Debt to Equity Offer. iv) The conversion of non-current related party loans as at 31 December 2015, totalling $592,682, to the Creditors and Yong Chao Wu, into 2,963,410 Shares, as part of the Debt to Equity Offer. v) The issue of a further $695,900 in convertible notes under the Convertible Notes Agreements subsequent to 31 December 2015, together with the recognition of accrued interest costs totalling $36,608, resulting in an adjustment totalling $732,508 to Convertible Notes liabilities. As of 31 May 2016, $118,000 in funds from the issue of further Convertible Notes was receivable by the Company, and $614,508 has been used for operating activities and transaction costs incurred. vi) vii) viii) ix) The conversion of Convertible Notes with a face value of $1,516,600, together with accrued interest of $36,608, into 8,702,323 shares, under the Noteholder Offer. The issue of 50,945,630 Shares to the Coolyah Properties Trust prior to undertaking the Public Offer. The issue of 17,391,285 Shares under the Restructure prior to undertaking the Public Offer. The Public Offer issue of 25,000,000 (minimum subscription) to 50,000,000 (maximum subscription) Shares at an issue price of $0.20 per Share, to raise a minimum of $5,000,000 and a maximum of $10,000,000 before expenses of the capital raising. The pro forma adjustments assume that the Public Offer is fully subscribed. All Shares issued pursuant to the Prospectus will be issued as fully paid. x) Cash costs of undertaking the Public Offer of $950,000 (minimum subscription) to $1,300,000 (maximum subscription). FASTER ENTERPRISES LTD PROSPECTUS 90

105 3. Cash and cash equivalents Unaudited Unaudited Audited Pro Forma Pro Forma 31-Dec-15 Minimum Maximum $ $ $ Cash and cash equivalents 12,708 4,062,708 8,712,708 Cash at 31 December ,708 12,708 Adjustments arising in the preparation of the Pro Forma Statement of Financial Position are summarised as follows: Proceeds from the issue of 25,000,000/50,000,000 Shares in relation to the Public Offer pursuant to the Prospectus (note 2(ix)) 5,000,000 10,000,000 Costs of undertaking the Public Offer (note 2(x)) (950,000) (1,300,000) 4,050,000 8,700,000 Pro Forma Balance 4,062,708 8,712, Inventories Unaudited Unaudited Audited Pro Forma Pro Forma 31-Dec-15 Minimum Maximum $ $ $ Inventories 1,204,109 1,204,109 1,204,109 Inventories in the unaudited pro forma comprises work in progress as at 31 December 2015 in relation to the 78 Albion Road Property (at cost). The property is currently under construction and accordingly, will incur further costs to complete the construction of three townhouses. Charter Keck Kramer has assessed a market value of $2,750,000 "As if Complete", that is, on the basis that the townhouses will be completed in accordance with plans and specifications provided to Charter Keck Kramer, to a high standard and in accordance with that outlined in the valuation report. This market value has been included in Section 2.3. Charter Keck Kramer specifically noted that any significant deviation in respect of style, layout, design or construction standards may diminish the value as set out in the valuation report. The valuation report is also subject to the issuing of an Occupancy Permit for each residence. 5. Other current assets Unaudited Unaudited Audited Pro Forma Pro Forma 31-Dec-15 Minimum Maximum $ $ $ Other current assets 60, , ,940 Other current assets at 31 December ,940 60,940 Adjustments arising in the preparation of the Pro Forma Statement of Financial Position are summarised as follows: Amounts receivable in relation to convertible notes issued subsequent to 31 December 2015 under the Convertible Notes Offer (note 2(v)) 118, , , ,000 Pro Forma Balance 178, ,940 Other current assets in the unaudited pro forma comprises: Solicitor trust account 20,000 20,000 GST receivable 38,294 38,294 Other receivables 2,646 2,646 Amounts receivable in relation to convertible notes issued subsequent to 31 December 2015 under the Convertible Notes Offer (note 2(v)) 118, ,000 Pro Forma Balance 178, ,940 FASTER ENTERPRISES LTD PROSPECTUS 91

106 6. Loans advanced to related parties Unaudited Unaudited Audited Pro Forma Pro Forma 31-Dec-15 Minimum Maximum $ $ $ Loans advanced to related parties 2,025, , ,425 Loans advanced to related parties at 31 December ,025,171 2,025,171 Adjustments arising in the preparation of the Pro Forma Statement of Financial Position are summarised as follows: Adjustment for related amounts receivable that do not form part of the Restructure (note 2(i)) (1,255,746) (1,255,746) Loans advanced to related parties in the unaudited pro forma comprises: Faster Properties Investments Pty Ltd 769, ,435 Pro Forma Balance 769, , Investment property Unaudited Unaudited Audited Pro Forma Pro Forma 31-Dec-15 Minimum Maximum $ $ $ Investment property 3,873,481 3,873,481 3,873,481 Investment property in the unaudited pro forma comprises: Land 2,172,950 2,172,950 Buildings at cost 1,827,456 1,827,456 Less accumulated depreciation (126,925) (126,925) Pro Forma Balance 3,873,481 3,873,481 The carrying value of land (at cost) in the unaudited pro forma comprises: Ellingworth Parade Property 116, ,959 Carnegie Property 1,218,112 1,218,112 Nunawading Property 837, ,879 2,172,950 2,172,950 The carrying value of buildings (at cost), less accumulated depreciation in the unaudited pro forma comprises: Ellingworth Parade Property 478, ,785 Carnegie Property 1,081,888 1,081,888 Nunawading Property 139, ,858 1,700,531 1,700,531 Pro Forma Balance 3,873,481 3,873,481 Charter Keck Kramer has assessed the market values of the Ellingwoth Parade, Carnegie and Nunawading Properties to be $625,000, $2,300,000 and $1,000,000, respectively, totalling $3,925,000 (refer Section 2.3). The carrying values of the investment properties totalling $3,873,481 as set out above, have been recognised in the pro forma at cost. FASTER ENTERPRISES LTD PROSPECTUS 92

107 8. Investments Unaudited Unaudited Audited Pro Forma Pro Forma 31-Dec-15 Minimum Maximum $ $ $ Investments 29,370 29,370 29,370 Investments in the unaudited pro forma comprises: Investment in associate Share of net profit of Ferntree Gully Unit Trust 29,350 29,350 Share of net loss of Faster Properties Investments Pty Ltd - - Pro Forma Balance 29,370 29,370 The properties comprising 1-3/794 Burwood Highway and 4-7/1849 Fern Tree Gully Road, Ferntree Gully, are held by the Ferntree Gully Unit Trust. Charter Keck Kramer has assessed a market value of $13,350,000 in relation to the properties held by the Ferntree Gully Unit Trust, and the Group's interest after the Restructure of $2,668,665 (before associated liabilities), has been included in Section 2.3. The pro forma balance of $29,370 has been assessed as the Group's equity interest in the Ferntree Gully Unit Trust as at 31 December 2015, after the Trust's associated liabilities. The property comprising 1-3 Rooks Road, Nunawading is held by Faster Properties Investment Pty Ltd. Charter Keck Kramer has assessed a market value of $3,000,000 in relation to the property held by Faster Properties Invesment Pty Ltd, and the Group's interest after the Restructure of $1,000,000 (before associated liabilities), has been included in Section 2.3. Faster Properties Investment Pty Ltd disclosed net losses and net liabilities at 31 December An investment in Faster Properties Investment Pty Ltd of $nil has therefore been recognised in the pro forma balance at 31 December Plant and equipment Unaudited Unaudited Audited Pro Forma Pro Forma 31-Dec-15 Minimum Maximum $ $ $ Plant and equipment 12,357 12,357 12,357 Plant and equipment in the unaudited pro forma comprises: Plant and equipment 3,480 3,480 Less accumulated depreciation (2,701) (2,701) Furniture and fittings 23,518 23,518 Less accumulated depreciation (11,940) (11,940) 11,578 11,578 Pro Forma Balance 12,357 12, Trade and other payables Unaudited Unaudited Audited Pro Forma Pro Forma 31-Dec-15 Minimum Maximum $ $ $ Trade and other payables 50,137 50,137 50,137 Trade and other payables in the unaudited pro forma comprises: Other creditors 47,106 47,106 Interest payable 3,031 3,031 Pro Forma Balance 50,137 50,137 FASTER ENTERPRISES LTD PROSPECTUS 93

108 11. Borrowings Unaudited Unaudited Audited Pro Forma Pro Forma 31-Dec-15 Minimum Maximum $ $ $ Current borrowings 2,781, , ,263 Current borrowings at 31 December ,781,347 2,781,347 Adjustments arising in the preparation of the Pro Forma Statement of Financial Position are summarised as follows: The issue of a further $695,900 in Convertible Notes subsequent to 31 December 2015 under the Convertible Note Agreements, and adjustment of accrued interest of $36,608 (note 2(v)) 732, ,508 The conversion of unsecured current related party loans of $160,200 due to Yong Chao Wu into Shares under the Debt to Equity Offer (note 2(iii)) (160,200) (160,200) The conversion of unsecured current related party loans of $948,184 due to Coolyah Group Pty Ltd t/a Coolyah Computer Services into Shares under the Debt to Equity Offer (note 2(iii)) (948,184) (948,184) The conversion of Convertible Notes under the Noteholder Offers (note 2(vi)) (1,553,208) (1,553,208) (1,929,084) (1,929,084) Pro Forma Balance 852, ,263 Current borrowings in the unaudited pro forma comprises: Secured Bank overdraft 3,948 3,948 Bank loans 764, ,227 Lease liability 28,868 28, , ,043 Unsecured Ferntree Gully Unit Trust 55,220 55,220 55,220 55,220 Pro Forma Balance 852, ,263 Unaudited Unaudited Audited Pro Forma Pro Forma 31-Dec-15 Minimum Maximum $ $ $ Non-current borrowings 4,849,832 4,569,231 4,569,231 Non-current borrowings at 31 December ,849,832 4,849,832 Adjustments arising in the preparation of the Pro Forma Statement of Financial Position are summarised as follows: Increase in non-current related party loans to 31 May 2016 (note 2(ii)) 312, ,081 Conversion of unsecured non-current related party loans to the Creditors and Yong Chao Wu, into Shares under the Debt to Equity Offer (note 2(iv)) (592,682) (592,682) (280,601) (280,601) Pro Forma Balance 4,569,231 4,569,231 Non-current borrowings in the unaudited pro forma comprises: Secured Bank loans 3,025,002 3,025,002 Lease liability 44,229 44,229 FASTER ENTERPRISES LTD PROSPECTUS 94 3,069,231 3,069,231 Unsecured Yong Chao Wu 1,500,000 1,500,000 1,500,000 1,500,000 Pro Forma Balance 4,569,231 4,569,231 As set out in the Use of funds table at Section 10.7, the loan payable to Yong Chao Wu of $1,500,000 will be repaid from funds raised under the Public Offer.

109 12. Issued capital Minimum Maximum Number of Number of ordinary ordinary shares $ shares $ Issued capital at 31 December Adjustments arising in the preparation of the Pro Forma Statement of Financial Position are summarised as follows: Total amalgamated issued share capital at 31 December Less shares on issue in Faster (Carnegie) Properties Pty Ltd, Wu Family Trust and Coolyah Properties Trust (120) - (120) - Shares to be issued to Coolyah Properties Trust prior to undertaking the Public Offer (note 2(vii)) 50,945,630-50,945,630 - Shares to be issued under the Restructure Deed prior to undertaking the Public Offer (note 2(viii)) 17,391,285-17,391,285 - Shares issued under the Debt to Equity Offer (notes 2(iii) and 2(iv)) 8,505,330 1,701,066 8,505,330 1,701,066 Adjustment for related party loans receivable that do not form part of the Restructure (note 2(i)) - (1,255,746) - (1,255,746) Shares issued under the Noteholder Offers (note 2(vi)) 8,702,323 1,553,208 8,702,323 1,553,208 Fully paid ordinary shares issued in relation to the Public Offer at $0.20 per share pursuant to the Prospectus (note 2(ix)) 25,000,000 5,000,000 50,000,000 10,000,000 Costs of undertaking the Public Offer (note 2(x)) - (950,000) - (1,300,000) Pro Forma Balance 110,544,580 6,048, ,544,580 10,698, Accumulated losses Unaudited Unaudited Audited Pro Forma Pro Forma 31-Dec-15 Minimum Maximum $ $ $ Accumulated losses (463,312) (1,389,901) (1,389,901) Accumulated losses at 31 December 2015 (463,312) (463,312) Adjustments arising in the preparation of the Pro Forma Statement of Financial Position are summarised as follows: Operating costs to 31 May 2016 (funded by the related party loans and Convertible Notes issued) (notes 2(ii) and 2(v)) (926,589) (926,589) (926,589) (926,589) Pro Forma Balance (1,389,901) (1,389,901) Accumulated losses in the unaudited pro forma comprises: Opening balance (416,733) (416,733) Net loss attributable to members of the entity (953,678) (953,678) Distribution to the Wu Family Trust (19,490) (19,490) Pro Forma Balance (1,389,901) (1,389,901) 14. Investments in associates Name of entity Amazon Investment (Aust) Pty Ltd ATF the Ferntree Gully Unit Trust Equity holding Equity holding Class of Audited Pro Forma Country of shares 31-Dec Dec-15 Incorporation Ordinary 20.00% 20.00% Australia Faster Properties Investments Pty Ltd Ordinary 33.33% 33.33% Australia FASTER ENTERPRISES LTD PROSPECTUS 95

110 15. Related party disclosure (a) The Directors of the Company at the Prospectus Date are: Mr Frank Licciardello Mr Norman Wu Mr Barry Moshel Mr Weiping Chen (b) (c) Directors holdings of shares, directors remuneration and other directors interests are set out in Section 7 of this Prospectus. There have been no related party transactions other than the directors transactions set out in Section 7 and those relating to material contracts set out in Section 9 of this Prospectus. FASTER ENTERPRISES LTD PROSPECTUS 96

111 5. INVESTIGATING ACCOUNTANT S REPORT FASTER ENTERPRISES LTD PROSPECTUS 97

112 FASTER ENTERPRISES LTD PROSPECTUS 98

113 FASTER ENTERPRISES LTD PROSPECTUS 99

114 FASTER ENTERPRISES LTD PROSPECTUS 100

115 FASTER ENTERPRISES LTD PROSPECTUS 101

116 6. KEY RISKS 6.1 Introduction There are a number of risks, some specific to the Group and some of a general nature, which may both individually or in combination materially and adversely affect the future operating and financial performance of the Company, its investment returns and the value of the Shares. Many of these risks are outside the control of the Company. There can be no guarantee that the Group will achieve its objectives or that any forward-looking statements or forecasts will eventuate. This Section describes the areas which the Company believes are the major risks associated with an investment in the Company. This is not an exhaustive list and should be considered in conjunction with other information disclosed in this Prospectus. You should have regard to your own investment objectives and financial circumstances, and seek professional guidance from your stockbroker, solicitor, accountant or other independent professional adviser before deciding whether to invest. The business activities of the Group are subject to risk factors of both a specific and general nature. If any of the risks associated with the Group materialise, then the business, results of operations, financial condition and prospects of the Group could be materially and adversely affected, which could result in the loss of all or part of your investment. The principal risk factors are described below. While some of these risks can be mitigated by the use of appropriate safeguards and systems, many are outside the control of the Company and cannot be mitigated. Before deciding whether to invest in the Company s Shares, prospective investors should carefully consider the risk factors described below, together with all other information contained in this Prospectus. If any of these risks and uncertainties, together with the possible additional risks and uncertainties of which the Directors are currently unaware or which they consider not to be material in relation to the Group s business, actually occur, then the Group s business, financial position, the amount of work able to be performed with the funds raised from the Public Offer or operating results could be materially and adversely affected. In addition, potential investors should be aware that the value of the Company's Shares on the ASX might rise and fall depending on a range of factors that affect the market price of Shares. These include local, regional and global economic conditions and sentiment towards equity markets in general. The Shares issued under this Prospectus carry no guarantee with respect to profitability, payment of dividends, return of capital or the price at which they may trade on the ASX. FASTER ENTERPRISES LTD PROSPECTUS 102

117 6.2 Specific risks relating to the Group Limited historical or consolidated data The Company on its own has limited operating and financial history and the Restructure has not yet been completed, which may make it difficult for investors to assess the Company s past performance or performance as a consolidated group. There can be no assurance that the Group will achieve profitability in the future Property market risks The majority of the Group s assets are real property. Investors will therefore be exposed to property market risks. The value of the Group s assets may fluctuate and will be influenced by a number of ongoing factors such as: a downturn in the property market in general; general economic conditions such as interest rates and capitalisation rates; increases in supply or falls in demand for property; changes in market rental rates; fluctuating occupancy levels; the pricing of any competing properties; tenants defaulting; and increased competition from new or existing properties and property developers. The value of, and returns from, properties owned by the Group may fluctuate depending on property market conditions. Demand for property may change as investor preferences for particular sectors and asset classes change over time and can be influenced by general economic factors such as interest rates and share market cycles. There is a risk that the value of an asset may fall below the outstanding debt associated with that property in certain circumstances Property development risk The Group s business strategy includes identifying, analysing and investing in property development projects. Property development projects have a number of inherent risks including: a risk that appropriate planning consents and/or regulatory approvals are not obtained or, if obtained are not properly adhered to; a risk that development costs escalate beyond those originally anticipated; a risk of project delays due to factors beyond the control of the Group; a risk that a contractor appointed to implement the property development does not perform their role to a satisfactory standard or breaches their contract; FASTER ENTERPRISES LTD PROSPECTUS 103

118 a risk of competing property development projects adversely affecting the overall return achieved by the projects undertaken by the Group because they provide competitive alternatives for potential purchasers and tenants; a risk that warranty claims may arise subsequent to a development that the Group may be liable for; a risk that the property does not sell; a risk that market conditions change during any development; and a risk that asbestos or environmental contamination is identified at a development site (increasing the remediation and development costs). Although some of the risks can be mitigated, it is not possible to remove entirely the risks inherent in property development Property investment risk The Group s operating cash flow will be influenced by, among other things, income received from its property investment portfolio. Changes in market conditions for investment properties may impact the Group s assets held for investment, including: vacancy rates; rental rates; competition from other property owners; the financial circumstances of tenants; and tenant default Financial risk The Group relies on obtaining finance for its acquisitions of properties and the costs of development. There is a risk that the Company will be unable to obtain finance on commercially acceptable terms, such as interest rates, financial covenants and security, or to re-finance existing debt facilities on terms similar to those previously negotiated. If a financing facility cannot be entirely refinanced on expiry, the Group may be required to raise additional capital or realise assets for less than their fair value which would impact on the Group s future cash flows Interest rate risks Most of the Group s assets will be highly geared and interest on loans will be one of the Group s major expenses. Interest rates can rise and fall and may be subject to varied and unpredictable influences both globally and domestically. FASTER ENTERPRISES LTD PROSPECTUS 104

119 Risks in future acquisitions or investments The Group may acquire additional properties and make investments (debt or equity) in property development projects in the future. As the details of any future properties and investments are unknown, there is risk that such acquisitions or investments may have a detrimental effect on the Group. The timing of these acquisitions or investments and the requirement to outlay funds may impact on the ability of the Company to make any distributions in the periods that these acquisitions or investments are made Reliance on key personnel The Group s future success will be heavily reliant on the efforts, abilities, experience and expertise of key management personnel. The loss of key management personnel may adversely affect the Groups future financial performance. In particular, the Company s founder and CEO, Yong Chao Wu is considered very important to the future success of the Group, having had significant involvement and knowledge of the business. In the unlikely event that Yong ceases to be involved in the Company, the Group s performance could be adversely affected Completion risk Completion of the Restructure is conditional on the satisfaction of a number of conditions precedent. The conditions precedent under the Restructure Deed are: the Company successfully raising a minimum of $5,000,000 under the Public Offer; the passing of the Sole Shareholder Resolutions; the Company obtaining any necessary consents and approvals from third parties; and the Company receiving conditional approval from the ASX for the Listing Application. In order of the Restructure to occur, the Company will need to obtain consent from certain financers (including Westpac). There is a risk that the Group may not be able to meet all of the conditions precedent under the Restructure Deed. In the event that these conditions precedent are not satisfied or waived in accordance with requirements of the Restructure Deed, then the Company will not proceed with the Offers and will refund all Application Moneys received Risks associated with capital structure After the Restructure, Yong Chao Wu will hold between approximately 51% and 63% of the Shares (depending on the amount raised under the Public Offer) and will have a controlling interest in the Company. Yong s interests may differ from other investors. FASTER ENTERPRISES LTD PROSPECTUS 105

120 Going concern As disclosed in the financial statements set out in Section 4.3, Section 4.6 and Section 4.8, the amalgamated entity incurred a loss of $27,089 and had net cash outflows from operating activities of $257,220 for the half year ended 31 December As at that date, the amalgamated entity had net liabilities of $463,180. In the 5 months to 31 May 2016, the amalgamated entity has also accumulated losses (relating to operating costs) of $926,589 (see Section 4.9, note 13). These factors indicate significant uncertainty as to whether the Group will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. Notwithstanding the above, the Directors are of the view that there are reasonable grounds to believe that the Group will be able to continue as a going concern, for the reasons set out in Section 4.9 (note 1(k)) Market conditions The market price of the Shares can fall (as well as rise) and may be subject to varied and unpredictable influences both globally and domestically Economic conditions General economic conditions, movements in interest and inflation rates and currency exchange rates may have an adverse effect on the Company s activities, as well as on its ability to fund those activities Environmental matters The discovery of, or incorrect assessment of costs associated with, environmental contamination on any of the Group s projects could have an adverse effect on the profitability and timing of receipt of revenue from that project Minority interests The Group will hold a minority interest in some of its investments (including the Ferntree Gully Unit Trust and the Rooks Road Property). The Group will have limited control over the operations and decision making processes relating to these properties and investments. FASTER ENTERPRISES LTD PROSPECTUS 106

121 6.3 General risks of an investment in the Company General investment risk The price at which the Shares may be quoted from time to time on the ASX could increase or decrease due to a number of factors, including: general economic conditions, including business investment, interest rates, exchange rates, inflation and taxation; changes to government policy, legislation or regulation; variations in the Australian and overseas markets for listed stocks; the nature of the market in which the Group operates; general operational and business risks; and acts of terrorism or the outbreak or escalation of military conflicts. It is the nature of equity markets that a company s share price is subject to wide fluctuations, which may not reflect the underlying value of the company Future capital needs There is no guarantee that acceptable resources or funds will be found in the future. The lack of capital could have a material adverse impact on the Company and its prospects General tax risks A change to the current taxation regime in Australia may affect the Company and the Shareholders Government Changes in legislation and government policy in Australia and internationally (including taxation and monetary policies and corporation laws) could materially affect the operating results of the Group Laws and regulations Laws may unexpectedly change, and could have an impact on the operational activities of the Group Application of and changes to accounting policies Accounting standards and policies may change in the future. Such changes may have an adverse impact on future reported financial results. FASTER ENTERPRISES LTD PROSPECTUS 107

122 Risk of Shareholder dilution In the future, the Company may elect to issue additional Securities to fund the operations of the Company. While the Company will be subject to the constraints of the Listing Rules regarding the percentage of its capital it is able to issue within a 12 month period (other than where exceptions apply), Shareholders may be diluted as a result of the allotment of additional Securities in the future No guarantee in respect of investment The above list of risk factors should not be taken as an exhaustive list of the risks faced by the Company or by investors in the Company. The above factors, and others not specifically referred to above, may materially affect the financial performance and position of the Company and the value of the Shares following the Offers. The Shares issued under the Offers carry no guarantee in respect of profitability, dividends, return of capital or the price at which they may trade on the ASX. Furthermore, there is no guarantee that the Shares will remain continuously quoted on the ASX, which could impact the ability of prospective Shareholders to sell their Shares. Potential investors should consult their professional adviser before deciding whether to apply for Shares under any of the Offers. FASTER ENTERPRISES LTD PROSPECTUS 108

123 7. KEY PEOPLE, INTERESTS AND BENEFITS 7.1 Key people Board of directors and company secretary The Board and senior management team have been selected for their relevant skills, expertise and experiences. As at the Prospectus Date, the Board comprises: Frank Licciardello (Non-Executive Chairman); Norman Wu (Non-Executive Director); Barry Moshel (Non-Executive Director); and Weiping Chen (Non-Executive Director). Wing Kee Cheng is the Company Secretary. Director Biography Francesco (Frank) Licciardello Non-Executive Chairman Frank Licciardello has extensive experience in the finance sector. He is an executive director and owner of Sanston, a boutique corporate advisory and investment banking firm in Melbourne, and several other private entities. He also serves as the chairman of Voltage IP Limited (ASX: VIP) and Sino- Excel Energy Limited (ASX:SLE) and is a director of Elk Orthobiologics Limited and Westar Industrial Limited (ASX:WSI). Previously, Frank has held many CFO and company secretary positions for both public and private organisations and between 2006 and 2011 was the Group Managing Director and CEO of a public company listed on the ASX. He graduated with a Bachelor of Business, with a major in Accounting and minor in Law from Victoria University of Technology. He is a Member of the Australian Institute of Company Directors and Australian Society of Certified Practising Accountants. The Board considers that Frank is not an independent director because of his association with Sanston. FASTER ENTERPRISES LTD PROSPECTUS 109

124 Norman Wu Non-Executive Director Norman Wu is the son of Yong Chao Wu, the founder and Chief Executive Officer of the Company. Norman is currently completing his undergraduate studies in a Bachelor of Commerce at the University of Melbourne. Norman has been involved with the Company and the Wu family s property business since its inception. He has been heavily involved in all aspects of the business. Norman is the only Director that is fluent in both Chinese and English. The Company considers this to be an important characteristic given the likelihood of the Company conducting some business activities in China (as well as to assist with communicating with Chinese-speaking Shareholders). The Board considers that Norman is not an independent director because of his association with Yong (who will be a substantial holder of Shares after the allotments under the Offers). Barry Moshel Non-Executive Director Barry Moshel is an experienced lawyer having practised in the law for more than 30 years. Barry's experience has included acting as in-house legal counsel for public companies after which he established a private practice and consultancy specialising in commercial and property law and legal advice work. Barry holds a Bachelor of Laws from Melbourne University and Bachelor of Economics from Monash University. The Board considers that Barry is not an independent director because of his role as a legal service provider to the Group. Weiping Chen Non-Executive Director Weiping Chen has a broad range of experience in real estate. He has over 15 years of experience in a range of industrial management and executive roles in the real estate industry, including general manager and managing directors at different real estate development and construction companies in China. The Board considers that Weiping Chen is the only independent director. FASTER ENTERPRISES LTD PROSPECTUS 110

125 Senior management The key senior management of the Company as at the Prospectus Date is as follows: Yong Chao Wu (Chief Executive Officer) Wing Kee Cheng (Financial Controller) Executive Yong Chao Wu Chief Executive Officer Biography Yong Chao Wu is an entrepreneur with significant property development and investment experience. He is the founder of the Company. Yong has a bachelor degree from the Victorian University of Technology in computer science and has worked as a senior software engineer. In addition to running and owning a computer company for more than 15 years in Box Hill, Yong has also engaged in real estate investments and management in Australia for over 20 years. Wing Kee Cheng Financial Controller Wing Kee Cheng has close to 20 years of experience working in the finance sector (including in wealth management, investment banking and compliance). He has previously held senior positions at Standard Chartered Bank, ABN AMRO, UBS and HSBC in Hong Kong, and has worked for Hong Kong Exchange and Clearing Limited. Wing Kee graduated with a Masters of Applied Finance from the University of Melbourne and a Masters of Laws from the University of Hong Kong. FASTER ENTERPRISES LTD PROSPECTUS 111

126 Key consultant Consultant Experience Brett Diston Real Estate Adviser Brett Diston is the director of Ray White Commercial Vic-Nunawading. With a commercial real estate career spanning over 12 years, his expertise covers all areas of commercial sales, leasing and property management. His most recent achievements are: Winner - Commercial Salesperson of the Year REIV Awards for Excellence 2015 Winner - Commercial Salesperson of the Year REIV Awards for Excellence 2014 Winner - Commercial Salesperson of the Year REIV Awards for Excellence 2013 Winner - Commercial Property Manager of the Year REIV Awards for Excellence Remuneration of directors, key employees and consultants Directors remuneration Under the Constitution, the Directors decide the total amount that is paid to each Non-Executive Director as remuneration for their services as a Director. However, the total amount of fees paid to all Non-Executive Directors for their services must not exceed in aggregate in any financial year the amount fixed by the Shareholders in general meeting. The amount fixed by the Company in general meeting is currently $300,000 per annum. The Company has entered into directorial services agreements with each of the current Non- Executive Directors. These agreements commence on the listing of the Company on the ASX. Accordingly, no remuneration was paid to any Non-Executive Director in the period from the Company s incorporation on 9 February 2015 to 30 June Directorial services agreements As noted above, the Company has entered into directorial services agreements with each of the current Non-Executive Directors (Directorial Services Agreements). Frank Licciardello (as Non-Executive Chairman) will receive a salary/fee of $60,000 per year (plus any applicable superannuation and GST). Norman Wu, Barry Moshel and Weiping Chen (each as a Non- FASTER ENTERPRISES LTD PROSPECTUS 112

127 Executive Director) will each receive a salary/fee of $28,000 per year (plus any applicable superannuation and GST). In addition, the Company will reimburse the relevant Director for all reasonable travel, accommodation and other expenses that they may incur in connection with the performance of their duties as a Director. The Directorial Services Agreements will terminate when the relevant Non-Executive Director ceases to be a Director in accordance with the Constitution, such as where the Director: resigns; is absent from 3 consecutive Directors meeting without special leave of absence; becomes of unsound mind; becomes bankrupt; or dies. If a Non-Executive Director is terminated for any reason before the first anniversary of their appointment to the Board, the relevant Director will be entitled to a payment equivalent to 3 months worth of salary/fees (plus any applicable superannuation and GST). After the first anniversary of their appointment to the Board, this termination payment will increase to 6 months worth of salary/fees (plus any applicable superannuation and GST) CEO employment agreement Yong Chao Wu has entered into a CEO employment agreement with the Company. Yong will receive a base salary of $200,000 per year (plus any statutory superannuation requirement). Other benefits afforded under Yong s CEO employment agreement include exclusive use of a car, payment of membership subscriptions and fees for professional development activities and bonus payments as follows: $50,000 (before tax and superannuation deductions) if the Company was admitted to the Official List on or before 30 June 2016; $200,000 (before tax and superannuation deductions) if, at the close of trading on the third anniversary of the date the Company is admitted to the Official List, the Shares are priced at $0.50 or more per Share; and an amount equal to 20% of his base salary for the relevant Financial Year, if the Group achieves a consolidated net profit, after tax, in any Financial Year. Yong may elect for any bonus payment (other than any amount attributable to tax or superannuation that the Company is required by law to withhold) to be paid to him in the form of FASTER ENTERPRISES LTD PROSPECTUS 113

128 Shares. The payment of any bonus may be subject to shareholder or other approvals (or compliance with any regulatory procedures), in which case the Company must use reasonable endeavours to obtain such approvals (or ensure the necessary regulatory procedures have been complied with) before the payment of any such bonus. In addition, the Company will reimburse Yong for all reasonable travel, accommodation, car maintenance expenses and other expenses that he may incur in connection with the performance of his duties as Chief Executive Officer. Yong s CEO employment agreement can be terminated by the Company or Yong by giving 6 months notice (or, in the case of termination by the Company, payment of 6 months salary in lieu of notice). Yong s employment may also be terminated immediately by the Company for matters relating to misconduct, default, bankruptcy, refusal or failure to comply with reasonable directions of the Group, failure to perform his duties due to intoxication or non-prescription drugs, if he is prohibited by law from managing a company, the commission of any serious or indictable criminal offence and engaging in conduct which brings or may bring any company in the Group into disrepute. Related party issues Yong is the majority shareholder (holding 97% of the issued shares), sole director and sole company secretary of Coolyah Properties Pty Ltd. This company (in its capacity as trustee of the Coolyah Properties Trust) is the Company s sole shareholder as at the Prospectus Date. Yong s spouse and 2 children (including Norman Wu, a Director) hold the remaining 3% of the issued shares in Coolyah Properties Pty Ltd (with each of them holding 1%). Yong (along with other family members) is also a beneficiary of the Coolyah Properties Trust. Yong is therefore a related party of the Company, and the fees and other benefits being provided to Yong under his CEO employment agreement with the Company would constitute the giving of a financial benefit to a related party of the Company under Chapter 2E of the Corporations Act. Accordingly, shareholder approval will be sought before the end of the Offer Period under section 208 of the Corporations Act for the giving of those financial benefits. In any event, the Directors have resolved that they are of the view that the fees and benefits to be given under the CEO employment agreement are reasonable remuneration in the circumstances of the Company and Yong (including the responsibilities involved in his employment) Financial controller employment agreement Wing Kee Cheng has entered into an employment agreement with the Company under which he will act as financial controller for the Company. Under this employment agreement, he will receive a base salary of $100,000 per year plus any superannuation entitlements Office manager employment agreement Monica Wu has entered into an employment agreement with the Company under which she will act as office manager for the Company. Under this employment agreement, Monica will receive a base salary of $30,000 per year plus any superannuation entitlements. FASTER ENTERPRISES LTD PROSPECTUS 114

129 Related party issues Monica Wu is the daughter of Yong Chao Wu, who is the majority shareholder, sole director and sole company secretary of Coolyah Properties Pty Ltd (which is the Company s sole shareholder as at the Prospectus Date). Monica also holds 1% of the issued shares in Coolyah Properties Pty Ltd. Monica is therefore a related party of the Company, and the fees and other benefits being provided to Monica under her employment agreement with the Company would constitute the giving of a financial benefit to a related party of the Company under Chapter 2E of the Corporations Act. Accordingly, shareholder approval will be sought before the end of the Offer Period under section 208 of the Corporations Act for the giving of a financial benefit. In any event, the Directors have resolved that they are of the view that the fees and benefits to be given under the employment agreement are reasonable remuneration in the circumstances of the Company and Monica (including the responsibilities involved in her employment) Deeds of Access, Indemnity and Insurance The Company has entered into Deeds of Access, Indemnity and Insurance with each Director and company secretary. The terms of each deed requires the Company to: indemnify the relevant Director against certain liabilities incurred as an officer of the Company or any other company in the Company s group; maintain Directors and Officers insurance for the benefit of the relevant Director in relation to acts and omissions of the relevant Director in their capacity as an officer of the Company; and give the relevant Director access to documents for the purpose of any claim where the Director is a party Directors interests Directors are not required under the Constitution to hold any Shares. The interests of the current Directors in Securities issued by the Company (following completion of the Offers) are expected to be as set out below: Director Norman Wu Frank Licciardello Barry Moshel Weiping Chen Securities 69,592,257 Shares Nil Nil 3,350,000 Shares Directors or their related parties may subscribe for further Shares under the Public Offer. Directors may hold their interests in Securities shown above directly or through holdings by companies or trusts. FASTER ENTERPRISES LTD PROSPECTUS 115

130 The Shares listed against Norman Wu s name include the Shares that are to be issued to Yong Chao Wu (or entities associated with Yong Chao Wu) under the Restructure. In relation to those associated entities, under the Restructure, Shares will be issued to two discretionary/family trusts associated with Yong Chao Wu, Norman Wu and the Wu family in general. Broadly speaking, the beneficiaries of those discretionary/family trusts are Yong and Yong s family members and relatives (including his spouse, children (including Norman and Monica Wu), parents, grandparents, grandchildren and siblings). Accordingly, Norman Wu is a beneficiary of the two discretionary/family trusts that will be issued with Shares under the Restructure, and so will have an indirect interest in those Shares. The Shares listed against Weiping Chen s name are the Shares that are to be issued to him and his spouse under the Debt to Equity Offer. Further, since November 2015 a family trust associated with Weiping Chen has held a 33.33% interest in the entity which owns the Rooks Road Property (being Faster Properties Investment Pty Ltd). Weiping Chen (together with his spouse) is a beneficiary of that family trust. That 33.33% interest in Faster Properties Investment Pty Ltd will not be transferred to the Group under the Restructure and will remain held by Weiping Chen s family trust. Frank Licciardello is a director of Sanston. The terms of the Sanston Mandate (and the consideration payable to Sanston for its work as corporate adviser to the Group) are described further in Section 9.4. Barry Moshel is the Group s legal adviser in relation to property-related matters. The terms of Barry s retainer letter (and the consideration payable to Barry for his work as the Group s legal adviser) are described further in Section 9.5. Other than as set out above or elsewhere in this Prospectus, no: Director or proposed Director of the Company; person named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus; promoter of the Company; or underwriter to the Offer or a financial services licensee named in this Prospectus as a financial services licensee involved in the Offer, holds at the time of lodgement of this Prospectus with ASIC, or has held in the two years before the lodgement of this Prospectus with ASIC, an interest in: the formation or promotion of the Company; property acquired or proposed to be acquired by the Company in connection with its formation or promotion, or in connection with the Offers; or the Offers, and no amount (whether in cash, Shares or otherwise) has been paid or agreed to be paid, nor has any benefit been given or agreed to be given, to any such persons for services in connection with the FASTER ENTERPRISES LTD PROSPECTUS 116

131 formation or promotion of the Company or the Offers or to any Director or proposed Director to induce them to become, or qualify as, a Director. 7.3 Major Shareholders During the 12 month period before the Prospectus Date, all of the Company s voting securities were owned by a foreign entity controlled by Yong Chao Wu and then by Coolyah Properties Pty Ltd as trustee for the Coolyah Properties Trust. Coolyah Properties Pty Ltd is an entity controlled by Yong and the Coolyah Properties Trust is a discretionary trust of which Yong and Norman Wu (and their family members) are beneficiaries. Following completion of the Restructure and the Offers, it is anticipated that Yong will hold, directly or as a beneficiary of associated discretionary trusts, between approximately 51% and 63% of the Shares (depending on the amount raised under the Public Offer), and Norman Wu (a Director of the Company) will, as a beneficiary of the same associated discretionary trusts, hold an indirect interest in approximately 47% to 58% of the Shares (depending on the amount raised under the Public Offer). 7.4 Top 20 Shareholders The Company will announce to the ASX details of its top 20 Shareholders following completion of the Offers and before the Shares commence trading on the ASX. FASTER ENTERPRISES LTD PROSPECTUS 117

132 8. CORPORATE GOVERNANCE 8.1 Overview The Company has adopted a Corporate Governance Register containing a number of charters and policies aimed at creating an appropriate system of control and accountability for the administration of corporate governance. The Board is committed to administering the charters, policies and procedures with openness and integrity. To the extent they are applicable to the Company, the Board has adopted the ASX Corporate Governance Council s Corporate Governance Principles and Recommendations 3rd Edition (ASX Principles and Recommendations). In light of the Company s current size and nature, the Board considers that the current Board is a cost effective and practical method of directing and managing the Company (and will not be forming any additional Board committees). As the Company s activities develop in size and scope, the size of the Board and the implementation of additional corporate governance policies and structures will be reviewed. The Company s main corporate charters, policies and practices as at the Prospectus Date are outlined below and the Company s full Corporate Governance Register is available in the corporate governance information section of the Company s website ( 8.2 Corporate Governance Charters The Board has adopted a Board Charter to formally recognise its responsibilities, functions, powers and authority. The Board Charter also defines other matters that are important for effective corporate governance, including: the roles and responsibilities of the Board; the intentions of the Board regarding its composition; the role and responsibilities of the chairperson; the establishment of committees of the Board; processes for Board meetings; the roles and responsibilities of the chief executive officer and the company secretary; and materiality thresholds regarding when matters must be brought to the direct attention of the chairperson. The Board has also adopted the following additional Charters: Audit and Risk Committee Charter; Remuneration Committee Charter; and FASTER ENTERPRISES LTD PROSPECTUS 118

133 Nomination Committee Charter. As noted above, the Board does not consider its current size or structure (or the operations of the Company) to be of a sufficient magnitude to establish a separate Audit and Risk Committee, Remuneration Committee or Nomination Committee. The Board will carry out the duties of those committees and intends to comply with the terms of the charters contained in the Corporate Governance Register that relate to those committees (as if the Board constituted the relevant committee contemplated by those charters and one of the non-executive Directors was the chairperson of each of the relevant committees). 8.3 Code of Conduct The Board recognises the need to observe high standards of corporate practice and business conduct. Accordingly, the Board has adopted a formal Code of Conduct, which sets out the way the Company intends to conduct its business. The Code of Conduct outlines the framework for ensuring that the Company s decision making process and actions are undertaken in an ethical and accountable manner. In particular, the Code of Conduct sets out the Company s expectations relating to: personal and professional behaviour; conflicts of interest; corrupt conduct; protecting the Group s intellectual property; security of information; use of the Group s resources; public and media communications; discrimination and harassment; and occupational health and safety. All Company Directors, senior executives and employees are required to comply with the Code of Conduct. 8.4 Continuous Disclosure Policy Subject to the exceptions contained in the Listing Rules, the Company will be required to disclose to the ASX any information concerning the Company which a reasonable person would expect to have a material effect on the price or value of the Shares. The Company is committed to observing its disclosure obligations under the Listing Rules and the Corporations Act. The Company has adopted a Continuous Disclosure Policy which establishes procedures which are aimed at ensuring that Directors and management are aware of and fulfil their obligations in relation to the timely disclosure of material price-sensitive information. FASTER ENTERPRISES LTD PROSPECTUS 119

134 The Continuous Disclosure Policy sets out principles relating to disclosure of material information, including that the Company: to reduce the risk of the emergence of a false market in the Shares, will seek to make regular announcements regarding projects and important milestones (even when that information may not strictly be required under the Company s continuous disclosure obligations); will not provide the press, analysts or shareholders with any price sensitive information that has not already been disclosed to the ASX; will not generally respond to market rumours and speculation, except when required by law or requested to do so by the ASX; and will only allow the chairman, the chief executive officer and the company secretary to make public statements on behalf of the Company. 8.5 Diversity Policy The Board has adopted a diversity policy which provides a framework for the Company to achieve, among other things, a diverse and skilled workforce, a workplace culture characterised by inclusive practices and behaviours for the benefit of all staff, improved employment and career development opportunities for women and a work environment that values and utilises the contributions of employees with diverse backgrounds, experiences and perspectives. 8.6 Shareholder Communications Policy The Board s aim is to ensure that Shareholders are provided with sufficient information to assess the performance of the Company and that they are informed of all major developments affecting the state of affairs of the Company relevant to Shareholders in accordance with all applicable laws. The Company has a communications strategy which aims to promote effective communication with Shareholders and encourage effective participation at general meetings. Information will be communicated to Shareholders through the lodgement of all relevant financial and other information with the ASX and publishing information on the Company s website. In particular, the Company s website will contain links to relevant analyst and media briefings (which, where practicable are intended to be webcast or recorded) and copies of the Company s corporate governance policies. All relevant announcements made to the ASX and any other relevant information will be posted on the Company s website promptly following their release to the ASX. 8.7 Securities Trading Policy The Board has adopted a Securities Trading Policy that sets out the guidelines on the sale and purchase of securities in the Company by its key management personnel (including Directors), certain accounting officers and any employees and contractors who have access to the Group s FASTER ENTERPRISES LTD PROSPECTUS 120

135 financial results (Restricted Persons). The Securities Trading Policy explains the types of conduct in relation to dealings in Shares that are prohibited under the Corporations Act. Under the terms of the policy, buying or selling Shares generally is not permitted at any time by any person who possesses inside information or where short-term or speculative trading is involved. The policy also generally provides that notification to the Company is required before any dealing takes place. Key management personnel and other managers designated by the Board must not deal in Shares during black-out periods, which include the following: from 15 June each year until 24 hours after the day on which the full year financial results for the Company have been released to the ASX; from 15 December each year until 24 hours after the day on which the interim financial results in respect of the previous 6 month period are released to the ASX; and the periods from 15 December, 15 March, 15 June and 15 September each year until the beginning of trading on the first trading day after the day on which any required quarterly reporting has been released to the ASX in respect of the preceding calendar quarter. 8.8 Other policies In addition to the charters and policies discussed above, the Company has also adopted the following additional policies: Performance Evaluation Policy; Risk Management Policy; and Auditor Selection and Rotation Policy. 8.9 Departures from ASX Principles and Recommendations Principle Response PRINCIPLE 1 LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT Recommendation 1.1 Complies. A listed entity should disclose: (a) (b) the respective roles and responsibilities of its board and management; and those matters expressly reserved to the board and those delegated to management. The Board has adopted a Board Charter which sets out the respective roles and responsibilities of the Board and senior management. The Board s responsibilities include: the appointment of the chairperson, company secretary, chief executive officer, the senior management team and key staff members; FASTER ENTERPRISES LTD PROSPECTUS 121

136 Principle Recommendation 1.2 A listed entity should: (a) (b) undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director. Response providing input into, review and final approval of the Group s direction, strategies, business objectives and targets; reviewing, approving and monitoring significant business transactions; monitoring the Group s financial performance by reviewing and approving budgets, assessing the Group s performance against budgets and monitoring the adequacy and integrity of financial and other reporting processes; ensuring that adequate internal control systems are in place and complied with; and ensuring corporate accountability to Shareholders. The chief executive officer is responsible for running the affairs of the Group under the delegated authority of the Board and for implementing policies and strategies set by the Board. The responsibilities of the company secretary include facilitating the Group s corporate governance process and ensuring that the Board processes and procedures run efficiently and effectively. Other managers employed or engaged by the Company will be required to support the chief executive officer to implement the running of the general operations of the Company. The Board Charter includes guidance on the materiality of matters that need to be brought to the direct attention of the chairperson. Complies. The Company has conducted background checks in relation to the Directors. These checks involved having the Directors complete relevant questionnaires and statutory declarations in relation to their background and suitability to become Directors of the Company and carrying out insolvency searches. As at the Prospectus Date, the Company has also received police checks in respect of all of the Directors. It is the intention of the Company that detailed checks be carried out in relation to future Board candidates. FASTER ENTERPRISES LTD PROSPECTUS 122

137 Principle Recommendation 1.3 A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment. Recommendation 1.4 The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board. Recommendation 1.5 A listed entity should: (a) (b) (c) have a diversity policy which includes requirements for the board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the entity s progress in achieving them; disclose that policy or a summary of it; and disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with the entity s diversity policy and its progress towards achieving them and either: (1) the respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined senior executive for these purposes); or (2) if the entity is a relevant employer under the Workplace Gender Equality Act, the entity s most recent Gender Equality Indicators, as defined in and published under that Act. Recommendation 1.6 A listed entity should: (a) (b) have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; and disclose, in relation to each reporting period, whether a performance evaluation was Response Complies. Employment contracts or service agreements have been entered into with all Directors and senior executives referred to in Section 7.1. Details of these arrangements have been summarised in Section 7.2 of this Prospectus. Complies. The Board Charter sets out the roles and responsibilities of the company secretary. The Board Charter specifies that the company secretary is accountable directly to the Board through the chairperson on all matters relating to the proper functioning of the Board. Partially complies. The Board has adopted a Diversity Policy requiring the Board to set measurable objectives for achieving gender diversity and requiring annual assessment. A copy of the Diversity Policy is included in the Company s Corporate Governance Register and is available to members of the public through the Company s website. However, the Company has not yet made any determination on the appropriate measureable objectives that the Company will target or reported on any of those objectives. The Company intends to implement processes to comply with Recommendation 1.5 in the future. Partially complies. The Board has adopted a Performance Evaluation Policy which has been included in the Corporate Governance Register and disclosed on the Company s website. The policy requires the Board to undertake annual performance reviews of the Board, its committees and individual Board members. As at the Prospectus Date, no reviews have been undertaken as the Board is newly FASTER ENTERPRISES LTD PROSPECTUS 123

138 Principle undertaken in the reporting period in accordance with that process. Recommendation 1.7 Response established. The Company intends to evaluate performance in accordance with the Performance Evaluation Policy in the future and disclose for each future reporting period whether an evaluation has been undertaken. Partially complies. A listed entity should: (a) (b) have and disclose a process for periodically evaluating the performance of its senior executives; and disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process. PRINCIPLE 2 - STRUCTURE THE BOARD TO ADD VALUE Recommendation 2.1 The Board has adopted a Performance Evaluation Policy which has been included in the Corporate Governance Register and disclosed on the Company s website. The policy requires the Board to undertake annual performance reviews of the chief executive officer and other senior managers. As at the Prospectus Date, no reviews have been undertaken. The Company intends to evaluate performance in accordance with the Performance Evaluation Policy in the future and disclose for each future reporting period whether an evaluation has been undertaken. Does not presently comply. The board of a listed entity should: (a) (b) have a nomination committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or if it does not have a nomination committee, disclose that fact and the processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively. The Board has not and is unlikely to establish a separate Nomination Committee in the near future. Given the proposed size and composition of the Board, the Board believes that there would be no efficiencies gained by establishing a separate Nomination Committee. Accordingly, the Board will perform the role of the Nomination Committee. Items that would usually be required to be discussed by a nomination committee will be discussed and deliberated by the Board. To assist the Board in fulfilling its functions, the Board has adopted a Nominations Committee Charter which describes the role, functions and responsibilities of the Board when it convenes as the Nomination Committee. FASTER ENTERPRISES LTD PROSPECTUS 124

139 Principle Recommendation 2.2 A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership. Recommendation 2.3 A listed entity should disclose: (a) (b) (c) the names of the directors considered by the board to be independent directors; if a director has an interest, position, association or relationship of the type described in Box 2.3 of the Principles and Recommendations but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and the length of service of each director. Recommendation 2.4 A majority of the board of a listed entity should be independent directors. Recommendation 2.5 The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity. Recommendation 2.6 A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively. PRINCIPLE 3 ACT ETHICALLY AND RESPONSIBLY Recommendation 3.1 A listed entity should: Response Does not presently comply. The Board members have a broad range of experience, expertise, skills, qualifications and contacts relevant to the Group and its business. The Company has adopted a Nomination Committee Charter that requires the Board (when it convenes as the Nomination Committee) to formulate a Board skills matrix, setting out the mix of skills and diversity that the Board is looking to achieve in its membership. The Board intends to develop this skills matrix as the operations of the Group progress and develop. Complies. As at the Prospectus Date, Weiping Chen is the only independent director and was appointed in December Norman Wu is the son of Yong Chao Wu, who will be a substantial holder of Shares. Norman is also a beneficiary of two discretionary trusts which will be issued with Shares under the Restructure. Norman has been a director since the incorporation of the Company in February Frank Licciardello is a director and shareholder of Sanston, which has been appointed as a corporate adviser to the Group, and Barry Moshel is a provider of legal services to the Group. Frank and Barry became directors of the Company in December Does not presently comply. As described above, there will only be one independent director after completion of the Offers. Does not presently comply. As noted above, Frank Licciardello is not considered to be an independent director. Frank Licciardello is expected to remain as a director and is not the Company s chief executive officer. Complies. The processes for the induction, training and professional development of Board members is contained in the Nomination Committee Charter adopted by the Board. Complies. FASTER ENTERPRISES LTD PROSPECTUS 125

140 Principle Response (a) have a code of conduct for its directors, senior executives and employees; and The Company has adopted the Code of Conduct described in Section 8.3 of this Prospectus. The Code of Conduct is included in the Company s (b) disclose that code or a summary of it. Corporate Governance Register and is available on the Company s website. PRINCIPLE 4 SAFEGUARD INTEGRITY IN CORPORATE REPORTING Recommendation 4.1 Does not presently comply. The board of a listed entity should: (a) (b) have an audit committee which: (1) has at least three members, all of whom are non-executive directors and a majority of whom are independent directors; and (2) is chaired by an independent director, who is not the chair of the board, and disclose: (3) the charter of the committee; (4) the relevant qualifications and experience of the members of the committee; and (5) in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or if it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner. Recommendation 4.2 The board of a listed entity should, before it approves the entity s financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively. The Board has not and is unlikely to establish a separate Audit Committee in the near future. Given the proposed size and composition of the Board, the Board believes that there would be no efficiencies gained by establishing a separate Audit Committee. Accordingly, the items that would usually be required to be discussed by an Audit Committee will be discussed and deliberated by the Board. To assist the Board in fulfilling its functions, the Board has adopted an Audit and Risk Committee Charter which describes the role, functions and responsibilities of the Board when it convenes as the Audit and Risk Committee. The Company has established procedures for the selection, appointment and rotation of its external auditor. The Board is responsible for the initial appointment of the external auditor and the appointment of a new external auditor when any vacancy arises (as recommended by the Audit and Risk Committee, if created in the future). Candidates for the position of external auditor will be assessed based on their skill, knowledge, independence and value for money. The Company s policies require its external auditors to be rotated and replaced in accordance with the Corporations Act. Complies. The approach suggested by Recommendation 4.2 is consistent with the terms of the Audit and Risk Committee Charter included in the Company s Corporate Governance Register. FASTER ENTERPRISES LTD PROSPECTUS 126

141 Principle Recommendation 4.3 A listed entity that has an AGM should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit. Response Complies. The Company s Shareholder Communication Policy requires that the Company s auditor be requested to attend the AGM and Shareholders will be entitled to ask questions of the Company s auditor. PRINCIPLE 5 MAKE TIMELY AND BALANCED DISCLOSURE Recommendation 5.1 Complies. A listed entity should: (a) (b) have a written policy for complying with its continuous disclosure obligations under the Listing Rules; and disclose that policy or a summary of it. The Company has adopted the Continuous Disclosure Policy summarised in Section 8.4. This policy is contained in the Company s Corporate Governance Register and is available to members of the public through the Company s website. PRINCIPLE 6 RESPECT THE RIGHTS OF SECURITY HOLDERS Recommendation 6.1 Complies. A listed entity should provide information about itself and its governance to investors via its website. Recommendation 6.2 A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors. Recommendation 6.3 A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders. Recommendation 6.4 A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically. The Company s Corporate Governance Register is available to members of the public through the Company s website. The Company also intends to post other information regarding its governance on its website (including ASX announcements). Complies. The Company has adopted the Shareholder Communications Policy described in Section 8.6. The Company s communications strategy aims to promote effective communication with Shareholders and encourage effective participation at general meetings. Complies. The Company has adopted the Shareholder Communications Policy described in Section 8.6. This policy is contained in the Company s Corporate Governance Register and is available to members of the public through the Company s website. Does not currently comply, but intends to comply in the future. It is intended that Shareholders will be given the opportunity to receive communications from the Company electronically. FASTER ENTERPRISES LTD PROSPECTUS 127

142 Principle PRINCIPLE 7 RECOGNISE AND MANAGE RISK Recommendation 7.1 The board of a listed entity should: (a) have a committee or committees to oversee risk, each of which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity s risk management framework. Recommendation 7.2 The board or a committee of the board should: (a) (b) review the entity s risk management framework at least annually to satisfy itself that it continues to be sound; and disclose, in relation to each reporting period, whether such a review has taken place. Response Does not presently comply. The Board has not and is unlikely to establish a separate Risk Committee in the near future. Given the proposed size and composition of the Board, the Board believes that there would be no efficiencies gained by establishing a separate Risk Committee. Accordingly, the items that would usually be required to be discussed by a Risk Committee will be discussed and deliberated by the Board. To assist the Board in fulfilling its functions, the Board has adopted an Audit and Risk Committee Charter which describes the role, functions and responsibilities of the Board when it convenes as the Audit and Risk Committee. Complies. The Company has adopted a Risk Management Policy. The arrangements to be put in place by the Board to monitor risk management include: monthly reporting by senior management to the Board in respect of operations and the financial position and performance of the Company; preparation of quarterly rolling forecasts by senior management for the Board; and the development of a risk register which provides a framework for systematically understanding, identifying and analysing the types of business risks to the Company and forming an action plan in respect of those risks. The Risk Management Policy requires that the Company s risk management system be reviewed annually to ensure that it continues to be sound. FASTER ENTERPRISES LTD PROSPECTUS 128

143 Principle Recommendation 7.3 A listed entity should disclose: (a) (b) if it has an internal audit function, how the function is structured and what role it performs; or if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes. Recommendation 7.4 A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks. Response Does not presently comply. The Board will perform the role of Audit and Risk Committee. When the Board convenes as the Audit and Risk Committee it will carry out those functions which are delegated to it in the Company s Audit and Risk Committee Charter, which include reviewing the Company s internal audit procedures and accounting control systems. Due to the nature and size of the Company s proposed operations, the expense of an independent internal auditor is not considered to be appropriate. Complies. The Company has considered its economic, environmental and social sustainability risks by way of internal review and has concluded that it is not subject to material economic, environmental and social sustainability risks. The Board intends to reassess this position after completion of the Offers. PRINCIPLE 8 REMUNERATE FAIRLY AND RESPONSIBLY Recommendation 8.1 Does not presently comply. The board of a listed entity should: (a) have a remuneration committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive. Recommendation 8.2 A listed entity should separately disclose its policies and practices regarding the remuneration of nonexecutive directors and the remuneration of executive directors and other senior executives. The Board has not and is unlikely to establish a separate Remuneration Committee in the near future. Given the proposed size and composition of the Board, the Board believes that there would be no efficiencies gained by establishing a separate Remuneration Committee. Accordingly, the Board will perform the role of the Remuneration Committee. Items that would usually be required to be discussed by a remuneration committee will be discussed and deliberated by the Board. To assist the Board in fulfilling its functions, the Board has adopted a Remuneration Committee Charter which describes the role, functions and responsibilities of the Board when it convenes as the Remuneration Committee. Does not currently comply, but intends to comply in the future. The Company intends to include details of remuneration, including the Company s policy on remuneration, in the Remuneration Report which is to form of part of the Company s Annual Report. FASTER ENTERPRISES LTD PROSPECTUS 129

144 Principle Recommendation 8.3 A listed entity which has an equity-based remuneration scheme should: (a) (b) have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and disclose that policy or a summary of it. Response The Board has not established a Remuneration Committee or Nominations Committee. Therefore, the Board will be responsible for determining and reviewing compensation arrangements for the Directors and executive officers. The Board will assess the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by reference to relevant market conditions (with the overall objective of encouraging the retention of an experienced and high quality Board and executive team). Complies. The Company does not currently have any equitybased remuneration schemes (although the Chief Executive Officer is entitled to elect to receive certain bonus payments in the form of scrip see Section 7.2.3). Nevertheless, the Company s Securities Trading Policy includes prohibitions on Directors, employees and others from entering any transaction designed to limit the economic risk of holding any unvested shares, options or performance rights issued by the Company. FASTER ENTERPRISES LTD PROSPECTUS 130

145 9. MATERIAL CONTRACTS 9.1 Master restructure deed Restructure of interests in real estate properties As at the Prospectus Date, the Company s chief executive officer, Yong Chao Wu, holds interests in various real estate properties through his associated companies and trusts. Yong and his associated companies and trusts have entered into the Restructure Deed to undertake a restructure of certain companies, assets and loans. Under the Restructure, the following key steps are required to occur: An entity associated with Yong Chao Wu is to subscribe for, and the Company is to issue to that entity, 50,945,630 Shares at a price of $ per Share. An additional 17,391,285 Shares are to be issued to entities associated with Yong as consideration for the property interests that are to be transferred to the Group. In relation to the Albion Road Property: o the rights to the sale proceeds relating to 2 of the lots at the Albion Road Property are to be transferred to FE Albion Pty Ltd (a wholly owned subsidiary of the Company to be incorporated as part of the Restructure) with the majority of those sale proceeds being used to repay loans owing to Westpac; o the remaining unsold lot at the Albion Road Property will be transferred to FE Albion Pty Ltd; and o FE Albion Pty Ltd will assume all obligations to repay all loans relating to the Ellingworth Parade Property. The Ellingworth Parade Property will be transferred to FE Ellingworth Pty Ltd (a wholly owned subsidiary of the Company to be incorporated as part of the Restructure) and FE Ellingworth Pty Ltd will assume all obligations to repay all loans relating to the Ellingworth Parade Property. A 33.33% interest in the shares in Faster Properties Investment Pty Ltd (the entity that owns the Rooks Road Property) will be transferred to FE (Commercial) Pty Ltd (a wholly owned subsidiary of the Company to be incorporated as part of the Restructure). A 19.99% interest in the units of the unit trust (and 19.99% interest in the shares in the trustee company) which owns the Ferntree Gully Property will be transferred to FE (Commercial) Pty Ltd. All of the shares in Faster (Carnegie) Properties Pty Ltd (the entity that owns the Carnegie Property) will be transferred to (FE Hotels) Pty Ltd (a wholly owned subsidiary of the Company to be incorporated as part of the Restructure). A loan from Bankwest relating to the Nunawading Property will be repaid in full using funds loaned by Yong, the property will be transferred to FE Nunawading Hotel Pty Ltd (a wholly owned subsidiary of the Company to be incorporated as part of the Restructure) and FASTER ENTERPRISES LTD PROSPECTUS 131

146 Nunawading Hotel Pty Ltd will assume all obligations to repay all outstanding loans relating to the Nunawading Property. A loan owing to an entity associated with Yong in respect of the Nunawading Property and 2 loans owing to 2 unrelated parties in respect of the Rooks Road Property will be transferred to Yong. After the completion of the Restructure, the Group s corporate and asset holding structure will be as follows: A separate deed of indemnity has been entered into under which Yong and certain associated entities indemnify the Group Companies in respect of tax and stamp duty payable by the Group Companies, to the extent that such tax or stamp duty relates to the period before the completion of the Restructure or Listing or arises as a result of or in connection with the Restructure or Listing (but with a carve-out for stamp duty arising from the Restructure and Listing, up to the amount of stamp duty referred to and provided for in Section 10.7 of the Prospectus). Consideration for transfer of interests in real estate properties to the Group Under the Restructure Deed, in consideration for the transfer to the Group of interests in the various real estate properties (whether by way of transfer of the relevant property or transfer of the underlying units in the trust or shares in the company which holds the relevant property), the Company will be issuing 17,391,285 Shares to Yong and his associated entities. The value of the consideration to be given in respect of each property will be based on (as applicable): the value of the relevant property calculated using the Independent Property Expert s valuation of that property in March/April 2016, less the amount of any outstanding balance of, and accrued but unpaid interest on, any bank debt owing in relation to that property; or the value of the relevant shares or units applicable to the relevant property. FASTER ENTERPRISES LTD PROSPECTUS 132

147 The value of shares or units applicable to a particular property will be the value determined by the Directors based on the value of that property (being the only asset of the relevant company or unit trust) calculated using the Independent Property Expert s valuation of that property in March/April 2016, less the amount of any outstanding balance of, and accrued but unpaid interest on, any bank debt owing in relation to that property. The number of Shares to be issued by the Company in each case will be calculated by taking the value of the property, unit or share (as the case may be) as calculated above, and then dividing by $0.20 per Share. Set out in the table below is a breakdown of the property values, bank debt values and consideration values relating to each property and the number of Shares to be issued under the Restructure: Property Value of property based on Independent Property Expert s valuation as at March/April 2016 Outstanding bank loans (based on outstanding loan balances as at 31 May 2016) % Group interest post Restructure Consideration value Number of Shares to be issued by the Company (at $0.20 per share) Albion Road $2,750,000 $1,744,000* % $1,006,000 5,030,000 Property Ellingworth Parade $625,000 $390, % $235,000 1,175,000 Property Carnegie Property $2,300,000 $1,610, % $690,000 3,450,000 Nunawading $1,000,000 $764, % $235,773 1,178,865 Property Rooks Road $3,000,000 $1,950, % $349,965 1,749,825 Property Ferntree Gully Property $13,350,000 $8,540, % $961,519 4,807,595 Total $23,025,000 $14,998,227 $3,478,257 17,391,285 * Includes drawdowns requested at (or soon after) 31 May Conversion of debts After completion of the restructure steps under the Restructure Deed, each of the Group Companies set out in the table below will be indebted to the following non-bank creditors: Group Company Creditor Amount of debt as at 31 May 2016 FE Albion Pty Ltd Yuegui Shi $260,000 FE Albion Pty Ltd Qiaoji Duan $450,000 Faster (Carnegie) Properties Pty Ltd Yong Chao Wu $1,128,051 FE Nunawading Hotel Pty Ltd Yong Chao Wu $945,734 Faster Properties Investments Pty Ltd Yong Chao Wu 428,976 Company Yong Chao Wu ($11,694) FASTER ENTERPRISES LTD PROSPECTUS 133

148 Yuegui Shi and Qiaoji Duan have agreed to the conversion of their respective debts into Shares at a rate of $0.20 per Share under the Debt to Equity Offer. Yong Chao Wu has agreed to the conversion of his total debt owing by the Group Companies, less the amount of $1,500,000 (which is to be repaid by the relevant Group Companies from the funds raised under the Public Offer (see Section 10.7)), into Shares at a rate of $0.20 per Share under the Debt to Equity Offer. Therefore, the Creditors and Yong Chao Wu (in aggregate) have agreed to convert approximately $1,701,066 of debt owing by the Group Companies into Shares at a rate of $0.20 per Share (i.e. a total of approximately 8,505,330 Shares). Further: Yuegui Shi has directed the Company to issue all of the Shares to be issued to her under this debt-to-equity conversion to Runjun Jiang; and Yong has directed the Company to issue some of the Shares to be issued to him under this debtto-equity conversion to certain parties, with the balance of Shares to be issued to him. Consequentially, the following people will be issued Shares under the Debt to Equity Offer (and are the only eligible Applicants under the Debt to Equity Offer): Creditor/Nominee Number of Shares to be issued under the Debt to Equity Offer Runjun Jiang 1,300,000 Qiaoji Duan 2,250,000 Ling Chen 350,000 Yuyan Wang 350,000 Weiping Chen 3,000,000 Yong Chao Wu 1,255,330 Total 8,505,330 The conversion of the debts owing to Yong by the Group Companies is provided for in the Restructure Deed. The Creditors and Nominees (other than Yong) are not parties to the Restructure Deed. However, they have each entered into separate letter agreements in respect of the conversion of the debts. The Debt to Equity Offer has been included in this Prospectus to ensure that the Shares to be issued on conversion of the relevant debts owing by the relevant Group Companies are issued with the disclosure required under Chapter 6D of the Corporations Act. FASTER ENTERPRISES LTD PROSPECTUS 134

149 Conditions precedent Completion of the Restructure is subject to and conditional on the satisfaction of the following conditions: the Company obtaining consent from third parties (including Westpac) to the Restructure; the Company obtaining Shareholder approval for the giving of financial benefits to related parties under section 208 of the Corporations Act (being part of the shareholder approval to be given under the Sole Shareholder Resolutions); the Company successfully raising at least $5 million under the Public Offer; and the Company receiving conditional approval from the ASX that it will be admitted to the Official List of the ASX following completion of the Restructure. Completion Completion of the Restructure is to take place after the satisfaction of all of the conditions precedent set out above, but completion of the Pre-Offer Restructure Steps will take place before (or simultaneously with) the allotment of Shares under the Public Offer. There is a risk that the Group may not be able to meet all of the conditions precedent under the Restructure Deed. In the event that these conditions precedent are not satisfied or waived in accordance with the requirements of the Restructure Deed, then the Company will not proceed with the Offers and will refund all Application Moneys received. Related party issues Yong Chao Wu is the majority shareholder (holding 97% of the shares), sole director and sole company secretary of Coolyah Properties Pty Ltd. This company (in its capacity as trustee of the Coolyah Properties Trust) is the Company s sole shareholder as at the Prospectus Date. Yong (along with other family members) is also a beneficiary of the Coolyah Properties Trust. Yong and his associated entities are therefore related parties of the Company, and the issue of 50,945,630 Shares at $ per Share and the consideration to be given by the Group to Yong and his associated entities for the transfer of properties, shares and units under the Restructure Deed (being the issue of approximately 17,391,285 Shares) could constitute the giving of financial benefits to related parties of the Company under Chapter 2E of the Corporations Act. The conversion and repayment of the debts owing to Yong could also constitute the giving of a financial benefit to a related party of the Company under Chapter 2E of the Corporations Act. Further, Weiping Chen is a director of the Company and Ling Chen is his spouse (as that term is defined under the Corporations Act). Accordingly, they are both related parties of the Company. The conversion of the debt owing to Weiping Chen into 3,000,000 Shares and the issue of 350,000 Shares to Ling Chen (as directed by Yong Chao Wu in relation to the conversion of debts owing to FASTER ENTERPRISES LTD PROSPECTUS 135

150 Yong) could also constitute the giving of financial benefits to related parties of the Company under Chapter 2E of the Corporations Act. Accordingly, shareholder approval will be sought before the end of the Offer Period under section 208 of the Corporations Act for the giving of those financial benefits by way of the Sole Shareholder Resolutions. In respect of the debt to equity conversions, the Directors have confirmed that they are of the view that the terms of the debt to equity conversions were negotiated on an arm s length basis because the conversion of debt to equity will be at the Offer Price. 9.2 Convertible Note Agreements In November 2015, the Company entered into Convertible Note Agreements with the Round 1 Noteholders (Round 1 Convertible Note Agreements). Between December 2015 and February 2016, the Company entered into further Convertible Note Agreements with the Round 2 Noteholders (Round 2 Convertible Note Agreements). In April 2016, the Company entered into further Convertible Note Agreements with the Round 3 Noteholders (Round 3 Convertible Note Agreements). The Noteholders are the only eligible Applicants under the Noteholder Offer. The key terms of the Convertible Note Agreements include: Number of Convertible Notes issued The Round 1 Noteholders have subscribed for and a total of 3,595,000 Round 1 Convertible Notes have been issued by the Company. The Round 2 Noteholders have subscribed for and a total of 1,533,000 Round 2 Convertible Notes have been issued by the Company. The Round 3 Noteholders have subscribed for and a total of 2,455,000 Round 3 Convertible Notes have been issued by the Company. Face value Each Round 1, Round 2 and Round 3 Convertible Note has a face value of $0.20 per note (plus any additional amount that reflects capitalised interest). FASTER ENTERPRISES LTD PROSPECTUS 136

151 Interest rate Interest is payable by the Company on each of the Convertible Notes as follows: Round 1 Convertible Note - at a rate of 8% per annum; Round 2 Convertible Note at a rate of 6% per annum; and Round 3 Convertible Note at a rate of 0% per annum. Conversion The Convertible Notes will automatically convert into Shares if the Company receives conditional approval from the ASX for the Listing Application. On conversion of the Round 1 Convertible Notes, the Company will issue to the relevant noteholder (or an appropriate nominee) that number of Shares that is equal to the number of Round 1 Convertible Notes being converted, multiplied by the face value at the time of conversion, and then divided by $0.16 per note. It is expected that a total of approximately 4,681,413 Shares will be issued to the Round 1 Convertible Noteholders (with a small number of additional Shares resulting from the conversion of accrued interest). On conversion of the Round 2 and Round 3 Convertible Notes, the Company will issue to the relevant noteholder (or an appropriate nominee) that number of Shares that is equal to the number of Convertible Notes being converted, multiplied by the face value at the time of conversion, and then divided by $0.20 per note. It is expected that a total of approximately 4,020,910 Shares will be issued to the Round 2 and Round 3 Convertible Noteholders (with a small number of additional Shares resulting from the conversion of accrued interest). The Noteholder Offer has been included in this Prospectus to ensure that the Shares to be issued on conversion of the Convertible Notes are issued with the disclosure required under Chapter 6D of the Corporations Act. Repayment or redemption If Convertible Notes are not converted into Shares, the Company must redeem those Convertible Notes, on the earlier of the date that is 12 months after the date of the relevant Convertible Note Agreement or the date that is 10 business days after the relevant investor gives the Company an event of default notice. 9.3 Ferntree Gully Unit Trust Deed The Ferntree Gully Unit Trust Deed constituted the Ferntree Gully Unit Trust on 8 August The trustee is Amazon Investment (Aust) Pty Ltd ACN Following the Restructure, the unit holders in the Ferntree Gully Unit Trust will be Haopeng Zhang Pty Ltd ACN as trustee for the Zhang Family Trust (which will hold 80% of the units in the unit trust), Coolyah Properties Pty FASTER ENTERPRISES LTD PROSPECTUS 137

152 Ltd ACN as trustee for the Coolyah Property Trust (which will hold 0.01% of the units in the unit trust) and FE (Commercial) Pty Ltd (which will hold 19.99% of the units in the unit trust). The Ferntree Gully Unit Trust owns 100% of the Ferntree Gully Property. The Group will have a minority 19.99% shareholding in Amazon Investment (Aust) Pty Ltd (i.e. the trustee of the Ferntree Gully Unit Trust). The CEO of the Company, Yong Chao Wu, is also a director and company secretary of that trustee company. Under the Ferntree Gully Unit Trust Deed, the trustee has extensive powers including powers to: Request the unit holders to contribute additional amounts to the trust fund (Trust Fund) in proportion to the number of units held by each unit holder, provided that the total of such contributions do not exceed 50% of the aggregate distribution of net income made during the immediately preceding Financial Year. Make an interim distribution of the net income at any time it thinks fit during any Financial Year. Create and classify additional units. Classify or re-classify existing units. Consolidate all units into units of a larger amount. Sub-divide all units into units of a smaller amount. Take such action as it thinks fit for the adequate protection of any part of the Trust Fund. Purchase, construct, maintain, repair, renovate, reconstruct, develop, improve, transfer, lease, manage, charge, discharge or otherwise deal with any real or personal property. Open bank accounts, draw or issue cheques, apply for and operate any credit card or revolving credit facilities, borrow money, enter into security documents and advance or lend money. Employ others, including the power to pay salaries, superannuation, retirement benefits etc. The trustee is entitled to retain a percentage of the net income of the Trust Fund in each Financial Year as the trustee thinks fit, subject to a cap of 5%. Unit holder benefits and liabilities The Ferntree Gully Unit Trust is established for the benefit of each unit holder in proportion to the units held by them. As noted above, the trustee may (subject to being authorised to do so by the voting unit holders) at any time request the unit holders to contribute additional amounts to the Trust Fund in proportion to the number of units held by each unit holder, provided that such contributions do not exceed 50% of the aggregate distribution of net income made during the immediately preceding Financial Year. Unit holder voting For certain key decisions relating to the unit trust, the trustee must act with the authorisation of a simple majority of unit holders that hold voting units. FASTER ENTERPRISES LTD PROSPECTUS 138

153 The trustee may convene a unit holders meeting whenever it thinks fit. Unit holders holding a total of at least 20% of the voting units may also require the trustee to convene a unit holders meeting. The quorum for a meeting of unit holders is 2 voting unit holders present in person or by proxy and representing, in total, no less than 51% of the voting units. Net income The trustee holds the net income of the Trust Fund on trust for the unit holders in proportion to the number of units held by them. The trustee has sole discretion to make an interim distribution of the net income at any time it thinks fit during any Financial Year. However, the trustee may, with the authorisation of a simple majority of the voting unit holders, accumulate some or all of the net income of the Trust Fund in any Financial Year and that accumulated amount will then form part of the Trust Fund. Trust fund The Trust Fund comprises all amounts received from unit holders on allotment of units to those unit holders, any amounts received on further allotment of units, all moneys, investments and property paid or transferred to the trustee as additions to the Trust Fund, all accumulations of net income and all additions or accumulations on any investments or property forming part of the Trust Fund. The trustee may return capital to the unit holders at any time before termination of the trust. In addition to any distribution of net income referred to above, the trustee may, with authorisation from a simple majority of the voting unit holders, distribute any part of the Trust Fund to the unit holders in proportion to the number of units they hold. Indemnity of trustee from Trust Fund The trustee is entitled to be indemnified from the Trust Fund for any losses or liabilities incurred in the administration of the Trust Fund other than losses resulting from any dishonest or wilful act or omission of the trustee. However, this indemnity is limited to the moneys and property from the Trust Fund. No unit holder, beneficiary or director of the trustee will be personally liable to indemnify the trustee for any such losses or liabilities. 9.4 Sanston Mandate Sanston has been appointed as a corporate adviser to the Group. Sanston is a company controlled by Frank Licciardello. A summary of the key provisions contained within the Sanston Mandate are set out below. Payment and consideration The Company has agreed to pay to Sanston the following: FASTER ENTERPRISES LTD PROSPECTUS 139

154 General Advisory Fee - monthly retainer fee of $5,000 plus GST; Corporate Advisory Fee - monthly retainer fee of $15,000 plus GST; IPO Success Fee - cash fee of $180,000 plus GST (less any amount paid as part of the Corporate Advisory Fee); Management Fee - a management fee of 2% plus GST of the funds raised under the Public Offer (irrespective of whether funds were raised from investors introduced by Sanston or not); and Selling Fee - selling fee of 5% plus GST of the gross amount raised under the Public Offer from investors introduced by Sanston or any of its related entities or employees. In addition to the fees described above, the Company has agreed to reimburse Sanston for certain agreed costs and expenses incurred by Sanston in relation to the Offers. Termination events Sanston may terminate its obligations under the Sanston Mandate by notice to the Company if in Sanston s sole and absolute opinion any of the following events occur before the allotment of Shares under the Offers or such other time specified below: the Australian equity capital market conditions and/or ASX trading conditions are such that they are not conducive to the successful completion of the Sanston Mandate, or other events beyond the control of Sanston are so material and adverse as to make it impracticable or inadvisable to proceed with the new equity issue on the terms and in the manner contemplated in the Sanston Mandate; there is a material adverse effect (including any adverse change in the assets, liabilities, financial position or prospects of the Company as disclosed publicly and/or to Sanston), other than in relation to costs incurred by the Company in relation to the Offers; there is a false or misleading statement or a material omission in the material or information supplied by the Company to Sanston or included in the material presented to Sanston; any material adverse change or disruption occurs in the existing financial markets, political or economic conditions of Australia, Japan, the United Kingdom, the United States of America or the international financial markets, or any material adverse change occurs in national or international political, financial or economic conditions, in each case the effect of which is that it is impracticable to market the new issue or enforce any contract to issue and allot the Shares or that the success of the new issue is likely to be adversely affected; there is introduced, or there is a public announcement of a proposal to introduce, into the parliament of Australia or any State of Australia a new law, or the Reserve Bank of Australia or any Federal or State authority of Australia adopts or announces a proposal to adopt a new policy (other than a law or policy which has been announced before the date of the Sanston Mandate), which does or is likely to prohibit or regulate financial institutions or credit providers, capital issues or stock markets; the ASX gives formal or informal notice that the Shares will not be admitted to trading on the Official List; default by the Company of any term of the Sanston Mandate; FASTER ENTERPRISES LTD PROSPECTUS 140

155 any of the warranties or representations by the Company in the Sanston Mandate are or become materially untrue; a Director or proposed director of the Company is charged with an indictable offence or is disqualified from managing a corporation under the Corporations Act; ASIC issues, or threatens to issue, a proceeding, hearing or investigation in relation to the Offers; any government agency (including ASIC) commences or announces its intention to commence any public action, hearing or investigation against the Company or any of its Directors in their capacity as a director of the Company; or all the conditions to the Sanston Mandate have not been or will not be satisfied or waived by Sanston. If the Sanston Mandate is terminated by Sanston for cause or by the Company for any reason, then the Company has agreed to pay to Sanston a termination fee of $50,000 plus GST, together with reimbursement of any costs and expenses already incurred. Undertakings and other terms The Company has given an undertaking that, during the 12 month period after the closing date of the Public Offer, it will not offer, sell or market, contract to sell, otherwise dispose of, directly or indirectly, any Shares or any Securities that are otherwise convertible into Shares without the prior written consent of Sanston. Indemnity Except where any losses are directly and solely resulting from the wilful default, fraud or gross negligence of the indemnified parties, the Company has agreed to indemnify Sanston, its associates, related companies, directors, agents and staff against any loss arising directly or indirectly from or in relation to the Offers, the Sanston Mandate or activity referred to in the Sanston Mandate (including breaches of it); any material non-compliance by the Company, its officers or employees with any applicable law, regulation or rule in relation to the Offers, this Prospectus or any document accompanying this Prospectus; any statement, misstatement, misrepresentation, non-disclosure, inaccuracy in or omission from this Prospectus or any document accompanying this Prospectus; any claim that Sanston has liability under the Corporations Act or other laws in relation to the Offers; any review or investigation by ASIC, the ASX or any other governmental authority or agency; and any advertising, publicity, statements and reports in relation to the Offers made by or with the agreement of the Company. Future capital raising The Company has agreed to offer Sanston a corporate advisory role in any further equity capital raising that is undertaken in connection with the Company within 12 months of completion of the Offers, subject to competitive terms in respect of pricing, fees and timing relative to market practices at the time. FASTER ENTERPRISES LTD PROSPECTUS 141

156 Related party issues Sanston is a company controlled by Frank Licciardello who is a Director. Sanston is therefore a related party, and the fees payable to Sanston under the Sanston Mandate with the Company would constitute the giving of a financial benefit to a related party of the Company under Chapter 2E of the Corporations Act. Accordingly, shareholder approval will be sought before the end of the Offer Period under section 208 of the Corporations Act for the giving of a financial benefit by way of the Sole Shareholder Resolutions. In any event, the Directors consider that the terms of the Sanston Mandate were negotiated on an arm s length basis, particularly because they were negotiated and agreed before it was ever contemplated that Frank Licciardello would become a Director of the Company. 9.5 Barry Moshel s retainer letter Barry Moshel is a sole legal practitioner that has been engaged to advise and assist the Group in respect of property related matters under the terms of a retainer letter dated 27 April It is estimated that the fees payable by the Company for the provision of services by Barry Moshel under the retainer letter will be approximately $10,000 (plus GST). Related party issues Barry is a Director of the Company. Barry is therefore a related party, and the fees payable to Barry under his retainer letter with the Company could constitute the giving of a financial benefit to a related party of the Company under Chapter 2E of the Corporations Act. Accordingly, shareholder approval will be sought before the end of the Offer Period under section 208 of the Corporations Act for the giving of a financial benefit by way of the Sole Shareholder Resolutions. In any event, the Directors consider that the terms of Barry s retainer letter were negotiated on an arm s length basis, particularly because they are based on Barry s standard engagement terms, which were negotiated and agreed before it was ever contemplated that Barry would become a Director of the Company. 9.6 Finance facilities The main finance and loan facilities used as part of the Group s operations (or that will be used by the Group following the Restructure) will be as follows: A new loan facility to be entered into between Westpac and FE Ellingworth Pty Ltd under which the following will be provided to Westpac as security: o o o o o a mortgage registered over the Ellingworth Parade Property in favour of Westpac; a PPSR security interest registered by Westpac over FE Ellingworth Pty Ltd; a guarantee from, and a PPSR security interest registered by Westpac over, an entity associated with Yong; a guarantee by Yong supported by a property; and a guarantee by Norman Wu, FASTER ENTERPRISES LTD PROSPECTUS 142

157 subject to Westpac being satisfied with the Group s ability to service this new loan. A commercial loan facility with Westpac to be transferred to FE Ellingworth Pty Ltd, with securities acceptable to Westpac being provided and subject to Westpac being satisfied with the Group s ability to service this loan. A loan facility for $8,540,000 from Westpac to Amazon Investment (Aust) Pty Ltd as trustee for the Ferntree Gully Unit Trust in relation to the purchase of the Ferntree Gully Property. This is an interest only loan. This loan facility is secured by: o a general security agreement by the borrower of all existing and future assets and undertaking of each of Amazon Investment (Aust) Pty Ltd and the Ferntree Gully Unit Trust; o a mortgage by the borrower over the Ferntree Gully Property; and o a $8,540,000 limited guarantee and indemnity by Haopeng Zhang and Yong Chao Wu. This loan is due to expire around September 2016 and will be refinanced after the Restructure. A loan facility for $1,610,00 from Westpac to Faster (Carnegie) Properties Pty Ltd in relation to the purchase of the Carnegie Property. This is an interest only loan. This loan facility is secured by: o a general security agreement by the borrower over all existing and future assets and undertakings; o a mortgage over the Carnegie Property in favour of Westpac; and o a $1,610,000 limited guarantee and indemnity by Yong Chao Wu. This loan is due to expire around June 2017 and may be refinanced (if still required at the relevant time) in the ordinary course of business. A loan facility for $1,950,000 from Westpac to Faster Properties Investment Pty Ltd in relation to the purchase of the Rooks Road Property. This loan facility is secured by: o a guarantee and indemnity limited to $1,950,000 by Yong Chao Wu; o a general security agreement by the borrower over all existing and future assets and undertaking; and o a mortgage over the Rooks Road Property in favour of Westpac. This loan is due to expire around November 2018 and is intended to be refinanced (if still required at the relevant time) in the ordinary course of business. 9.7 Albion Road Property building contract Coolyah Properties Pty Ltd (in its own capacity) has entered into a building contract with Viking Construction Group Pty Ltd for the construction of 3 new townhouses at the Albion Road Property. FASTER ENTERPRISES LTD PROSPECTUS 143

158 The contract is in the form a standard contract from HIA Contracts Online (based on a paper copy version dated August 2013). Under the Restructure Deed, Coolyah Properties Pty Ltd will assign the benefit of this contract to FE Albion Pty Ltd (which will be the owner of this Property after the Restructure - subject to any third party consents being obtained). Until the necessary consents have been obtained to the assignment of the contract, Coolyah Properties Pty Ltd will (among other things) hold the benefit of the contract on trust for FE Albion Pty Ltd, enforce the contract as directed by FE Albion Pty Ltd and continue to pursue all necessary consents and use reasonable endeavours to ensure those consents are obtained as soon as possible. Time for completion of construction Construction of the works under the contract will be completed within 365 days after commencement of works under the contract. This includes estimated time for delays caused by inclement weather, weekends, public holidays, rostered days off and other foreseeable breaks in the continuity of the work (but the builder does have a right to extend the time for completion under the contract in certain circumstances). Contract price The contract price for the construction of the townhouses is $863, plus GST. Only the final progress payment is outstanding. The price may be altered as a result of additional costs caused by any deficiency or conflict within the contract documents, additional building permit fees, variations including those required by the council or registered building surveyor, interest on overdue payments and the actual cost of prime cost items (being certain fixtures and fittings which may be selected after the signing of the contract) and work for which the builder could not give a definite price at the time of signing the contract (e.g. excavation costs). Termination Either party may terminate the contract with written notice to the other party if the other party becomes insolvent or if an equivalent insolvency event has occurred. The builder may terminate the contract if the property owner is in substantial breach of the contract (e.g. failure to make a progress payment) and fails to remedy the breach within 10 days after the builder has given notice of the breach (and the builder is not in substantial breach of the contract). If the contract is terminated by the builder, the builder will be entitled to the payment of the contract price and other amounts payable under the contract, less the cost to the builder of performing the remainder of the building works. 9.8 Albion Road Property contracts of sale As noted in Section of this Prospectus, the current registered proprietor of the Albion Road Property has entered into separate off the plan contracts of sale in respect of the sale of two of the three townhouses being constructed at the property. Both of the contracts contain general conditions in the form of the Form 2 prescribed by the Estate Agents (Contracts) Regulations FASTER ENTERPRISES LTD PROSPECTUS 144

159 On completion of construction, the registered proprietor must lodge a plan of subdivision for registration with Land Victoria so that the Albion Road Property will be subdivided into 3 lots. Under the Restructure the vendor entity must: direct the purchasers under the contracts of sale to pay and apply all sale proceeds first towards the full repayment of the loan owing to Westpac in respect of the Albion Road Property, with the balance of the purchase price to be paid to FE Albion Pty Ltd; and as soon as practicable after the registration of the plan of subdivision with Land Victoria, transfer to FE Albion its title and interest in the unsold lot. Purchase price The purchase price for one lot is $950,000 and for the other lot is $915,000. A 10% deposit has been received under each contract of sale and those funds are currently being held on trust by the vendor s agent. Under each contract of sale, the balance of the purchase price is to be paid on the later of 14 days after the vendor s lawyers notify the purchaser in writing of the registration of the plan of subdivision or 14 days from the date on which the vendor s lawyers notify the purchaser in writing of the issue of the occupancy permit. Termination Under each contract, the vendor may terminate the contract if (among other things): the vendor is refused any permit which is required to enable the subdivision to proceed; any permit contains conditions which the vendor in its sole discretion deems unsatisfactory or unacceptable; the council fails to certify the plan of subdivision for any reason; any requirement imposed on the registration of the plan of subdivision is in the vendor s opinion too onerous to perform; or the plan of subdivision is not registered for any reason. Either party may terminate the contract where: the plan of subdivision has not been registered with the Land Registry within 24 months from the day of sale (the date of which was not specified in the contract); or the other party has defaulted under the contract and has not remedied the default after notice of the default has been given. Special conditions The contracts contain a number of special conditions, including the following: a special condition which allows the vendor to transfer its interest in the title of the property and assign its rights under the contract to a third party, on the proviso that the transferee will assume the vendor s obligations under the contract from the date of assignment; FASTER ENTERPRISES LTD PROSPECTUS 145

160 a requirement on the vendor to enter into a building contract with a builder in respect of the design, building and construction of residential units; a requirement on the vendor to lodge the proposed plan of subdivision with the City of Whitehorse and cause the registration of the plan of subdivision with the Land Registry; an acceptance by the purchaser of the property subject to all existing and proposed restrictions affecting the use, development or enjoyment of the property and shall not make any requisition, objection or claim in respect of those restrictions; a restriction on the purchaser on its exercise of rights of powers as a member of the owners corporation while the vendor remain the owner of the lots in the plan; a restriction on the purchaser from lodging a caveat on the land before settlement; a warranty by the purchaser that in the event the purchaser is a foreign person as defined by the Foreign Acquisitions and Takeovers Act 1975 (Cth), all requirements of that Act have been observed and any loss associated with a breach of this warranty will form the basis of damages recoverable from the purchaser; and a requirement on the purchaser to provide the vendor with a copy of consent, approval or a statement that there are no objections to the purchase of the property by the purchaser under the contract (as may be required) under the Foreign Acquisitions and Takeovers Act 1975 (Cth), and if no such document is provided then the purchaser warrants to the vendor that the purchase of the property is not subject to or conditional on such consent, approval or statement. FASTER ENTERPRISES LTD PROSPECTUS 146

161 10. DETAILS OF THE OFFERS 10.1 The Offers The Offers consist of: the Public Offer which is open to the general public; the Debt to Equity Offer which is made only to the Creditors and Nominees; and the Noteholder Offer which is made only to the Noteholders. The Offers are conditional on the satisfaction of the Conditions of the Offers referred to in Section If the Conditions of the Offers are not satisfied, then no Shares will be issued under any of the Offers and any Application Moneys received under the Public Offer will be returned to the Applicants. The Company reserves the right to close some or all of the Offers before the Closing Date Public Offer This Prospectus invites members of the general public to apply for up to 50,000,000 new Shares at an Offer Price of $0.20 per Share to raise up to $10 million. The Public Offer requires a minimum subscription of 25,000,000 Shares (raising $5 million). In the event that the minimum amount of $5 million is not raised within 3 months after the Original Prospectus Date, no Shares will be issued under the Public Offer and all Application Moneys will be repaid in accordance with the requirements of the Corporations Act. Applications under the Public Offer must be for a minimum amount of $2,000 worth of Shares (10,000 Shares) and thereafter, in multiples of $200 worth of Shares (1,000 Shares). To be eligible to participate in the Public Offer, you must be a resident of Australia (or otherwise approved by the Company to participate in the Public Offer) Debt to Equity Offer Under this Prospectus, the Company offers the Creditors and Nominees up to 8,505,330 new Shares in order to convert approximately $1,701,066 of debt owed by the Company at a rate of $0.20 per Share. A summary of the terms reached with the Creditors to convert this debt is contained in Section 9.1. FASTER ENTERPRISES LTD PROSPECTUS 147

162 Only the Creditors and Nominees may accept the Debt to Equity Offer and a personalised Application Form for the Debt to Equity Offer will be issued to the Creditors and Nominees (together with a copy of this Prospectus) Noteholder Offer Under this Prospectus, the Company offers the Noteholders an aggregate amount of approximately 8,702,323 new Shares. The purpose of the Noteholder Offer is to convert all Convertible Notes issued by the Company into Shares under this Prospectus. A summary of the terms of the Convertible Note Agreements are contained in Section 9.2. Only the Noteholders may accept the Noteholder Offer and a personalised Application Form for the Noteholder Offer will be issued to the Noteholders (together with a copy of this Prospectus) Conditions of the Offers The Offers under this Prospectus are conditional on the satisfaction of each of the following conditions within 3 months after the Original Prospectus Date: completion of the Pre-Offer Restructure Steps under the Restructure Deed; the Company receiving valid applications and subscription moneys (in cleared funds) for no less than $5 million under the Public Offer; and the Company receiving conditional approval from the ASX for the Listing Application. In the event that the Conditions of the Offers are not satisfied, then the Company will not proceed with the Offers and will repay all Application Moneys received under the Public Offer Purpose of the Offers The Public Offer is being conducted to: fund the immediate working capital needs of the Group and its current property development and management business; fund the costs of exploring and expanding into the modular building services market; fund the costs associated with the Restructure; reduce the level of debt of the Group; assist the Company to meet the requirements of the ASX and satisfy Chapters 1 and 2 of the Listing Rules; and provide funds to pursue identified and potential growth opportunities. On completion of the minimum capital raising of $5 million under the Public Offer, the Board believes that the Group will have sufficient funds to achieve these objectives. FASTER ENTERPRISES LTD PROSPECTUS 148

163 The Debt to Equity Offer and the Noteholder Offer are being conducted to reduce the Group s debts and to maximise the portion of the Public Offer proceeds that can be applied to the development of the Group s business Use of funds The Company intends to apply the funds raised from the Public Offer (together with existing cash reserves) during the 12 month period following completion of the Offers as follows: Purpose Minimum subscription ($5,000,000) Percentage of total funds applied Maximum subscription ($10,000,000) Cash reserves of the Group $128,831 $128,831 Funds raised under the Public Offer $5,000,000 $10,000,000 Percentage of total funds applied Total $5,128,831 $10,128,831 Expenses of the Offers $950, % $1,300, % Cost of development of the Carnegie Property Payment of stamp duty associated with the Restructure Repayment of loan relating to the reduction of loan owing to Bankwest $263, % $4,448, % $562, % $562, % $764, % $764, % Reduction of loan owing to Yong Chao Wu $1,500,000 29,25% $1,500, % ASX listing application fee $76, % $83, % Cost of research and exploration of the modular building market $63, % $121, % Working capital $950, % $1,350, % Total funds applied $5,128,831 $10,128,831 The estimates of expenditure set out in this Section 10.7 are based on budgets set by the Directors. The actual level and break-up of expenditure may change on an ongoing basis depending on results obtained. The Company s budgeted revenue for the first full financial year that ends after its listing includes revenue from the sale of the last remaining lot at the Albion Road Property (which will be debt free after completion of the sale of the first 2 lots and the remaining unsold lot is expected to achieve a sale price of approximately $900,000 based on the sale price of the other lots) and rental income from other properties in the Group. The Company s working capital is expected to be at least $1.5 million if the Company s budgeted revenue for the first full financial year that ends after its listing was included in the working capital. If the Company only raises the minimum amount of $5,000,000 under the Public Offer, the amount of funds raised under the Public Offer which would be applied to the cost of the development of the Carnegie Property would significantly be reduced. The Group would still seek to fund around 60-65% of the estimated building cost of $9,500,000 by way of debt from one or more of the big 4 banks in Australia. The remaining building costs could be funded in a number of ways, including some or all of the following: FASTER ENTERPRISES LTD PROSPECTUS 149

164 by applying the sale proceeds from the remaining unsold lot of the Albion Road Property; further borrowing from banks using other unencumbered Group assets as collateral; entering into pre-sale contracts for the apartments to be constructed at the Carnegie Property, which could be used to secure further funding from banks; entering into joint venture arrangements with builders or other interested parties who could contribute to the construction costs; and further issues of equity or convertible notes, subject to obtaining any necessary regulatory and shareholder approvals. The Group also intends to fund the development of the Nunawading Property by adopting some or all of the avenues listed above at the appropriate time. However, it is expected that the development of the Nunawading Property would not commence until some time after the development of the Carnegie Property has commenced. Further, in the event that the Company only raises the minimum amount of $5,000,000 under the Public Offer, it is also likely that the Group would reduce/defer some of the spending on its proposed research and exploration of the modular building market, by limiting its initial activities to preliminary research with minimal cost. The Group would then need to undertake further capital raisings if and when it decided to proceed with capital investments and other more costly research activities in an endeavour to expand into the modular building market (subject to obtaining any necessary regulatory and shareholder approvals). As with any budget, intervening events and new circumstances have the potential to impact the ultimate way funds will be applied. The Board reserves the right to alter the way funds are applied in these circumstances. It is also possible that any future acquisitions by the Company may exceed the current or projected financial resources of the Company and it is expected that these acquisitions would be funded by project finance and/or equity issues (subject to Shareholder approvals as required). FASTER ENTERPRISES LTD PROSPECTUS 150

165 10.8 Capital structure Immediately following completion of the Offers, the number of Shares on issue is expected to be as set out in the table below: Assuming $5million raised under the Public Offer Percentage of Shares on issue Assuming $10million raised under the Public Offer Percentage of Shares on issue Existing Shares % % Shares issued under Restructure Shares to be issued under this Prospectus 68,336, % 68,336, % Public Offer 25,000, % 50,000, % Debt to Equity Offer 8,505, % 8,505, % Noteholder Offer 8 8,702, % 8,702, % Shares following completion of Offers 110,544, ,544,580 The Company has issued a total of 7,583,000 Convertible Notes under the Convertible Note Agreements described in Section 9.2. It is expected that all Convertible Notes will be converted into Shares under the Noteholder Offer. Details of the Company s Securities (other than Shares) are detailed in the table below Before completion of Offers After completion of Offers Options Nil Nil Convertible Notes 7,583,000 Nil 10.9 How to apply for Shares under the Offers To participate in the Public Offer, the Application Form for the Public Offer attached to or accompanying this Prospectus must be completed in accordance with the instructions accompanying the Application Form and be accompanied by a cheque or bank cheque drawn and payable on an Australian bank. 8 The number of Shares to be issued under the Noteholder Offer will increase depending on the amount of interest capitalised in accordance with the terms of the Convertible Note Agreements. FASTER ENTERPRISES LTD PROSPECTUS 151

166 Any cheques must be made payable to Faster Enterprises Ltd - IPO Account and should be crossed Not Negotiable. Applicants should ensure that cleared funds are available at the time the Application is lodged, as dishonoured cheques will result in the Application being rejected. Alternatively, the Application Moneys can be transferred to the Company s bank account (details of which are below): Account name: Faster Enterprises Ltd - IPO Account BSB: Account number: SWIFT: WPACAU2S Instructions for completing Application Forms relating to the Debt to Equity Offer and the Noteholder Offer are contained in the relevant Application Forms. Completed Application Forms and accompanying cheques must be received by the Company before 5.00pm (AEST) on the Closing Date at: By delivery: Faster Enterprises Ltd G02, 8 Ellingworth Parade Box Hill VIC 3128 If you pay the Application Moneys into the Company s bank account, you should use the name of the Applicant (as specified in your Application Form as the transfer reference) and cleared funds must be received into the Company s bank account before 5.00pm (AEST) on the Closing Date. By submitting an Application, you are offering to subscribe for Shares in the amount specified in the Application Form on the terms and conditions set out in this Prospectus and the Application Form. An Application by an Applicant is irrevocable and may not be varied or withdrawn by the Applicant except as required by law. The Company may choose to accept or reject Applications from Applicants in the Company s absolute discretion Allocation and allotment of Shares Subject to the Conditions of the Offers being satisfied, the allotment of Shares to Applicants under the Offers will occur as soon as possible after the Closing Date, following which holding statements will be dispatched as required by the ASX. Applicants who sell the Shares before they receive their holding statement will do so at their own risk. The Company has the right to allocate the Shares under the Offers. The Company may reject any Application or allocate any investor fewer Shares than applied for under the Offers. If an Application FASTER ENTERPRISES LTD PROSPECTUS 152

167 under the Public Offer is not accepted, or is accepted in part only, the relevant part of the Application Moneys will be refunded. Interest will not be paid on Application Moneys refunded Application Moneys to be held in trust The Application Moneys will be held in a separate bank account on behalf of Applicants until the Shares are allotted. If the minimum subscription is not achieved within 3 months after the Prospectus Date, the Application Moneys will be refunded in full without interest, and no Shares will be allotted pursuant to this Prospectus Brokerage commissions and stamp duty payable by Applicants No brokerage, commission or stamp duty is payable by Applicants on an acquisition of Shares under the Public Offer, the Debt to Equity Offer or the Noteholder Offer Quotation of Shares Within 7 days after the Original Prospectus Date, the Company lodged the Listing Application with the ASX. If approval for the Listing Application is not granted by the ASX within 3 months after the Original Prospectus Date (or such other period varied by ASIC), then the Company will not allot or issue any Shares pursuant to the Offers and will repay all Application Moneys received under the Public Offer without any interest, as soon as practicable. The fact that the ASX may approve the Listing Application is not to be taken in any way as an indication of the merits of the Company or the Shares offered pursuant to this Prospectus CHESS The Company will be participating in the ASX s Clearing House Electronic Sub-register System (CHESS) and will comply with the Listing Rules and the ASX Settlement Operating Rules. CHESS is an electronic transfer and settlement system for transactions in securities quoted on the ASX under which transfers are effected in an electronic form. When the Shares become approved financial products (as defined in the ASX Settlement Operating Rules), holdings will be registered in one of two registers, being an electronic CHESS sub-register or an electronic issuer sponsored sub-register. FASTER ENTERPRISES LTD PROSPECTUS 153

168 For all successful Applicants, the Shares of a Shareholder who is a participant in CHESS or a Shareholder sponsored by a participant in CHESS will be registered on the CHESS sub-register. All other Shares will be registered on the issuer sponsored sub-register. Following the allotment of Shares under the Offers, Shareholders will be sent a holding statement that sets out the number of Shares allotted to them under this Prospectus and provide details of a Shareholder s Holder Identification Number (for Shareholders who elect to hold shares on the CHESS sub register) or the Securityholder Reference Number (for Shareholders who elect to hold their shares on the issuer sponsored sub-register). Shareholders will subsequently receive statements showing any changes to their shareholding. Share certificates will not be issued Ranking Shares issued pursuant to this Prospectus will rank equally in all respects with existing Shares. Full details of the rights attaching to the Shares are contained in the Company s Constitution, a summary of which is set out in Section The Constitution is available for inspection, without a charge, during normal business hours at the Company registered office Underwriting The Offers under this Prospectus are not underwritten Broker commissions and handling fees Sanston, the company appointed as the corporate adviser to the Group, will pay a commission at a negotiated rate with Sanston where a dealer has introduced an Applicant and indicated that introduction by completion of the broker code section of the Application Form. The commission will be paid by Sanston to the relevant dealer within 21 business days after allotment of the Shares on the presentation of a tax invoice to Sanston Restrictions on distribution No action has been taken to register or qualify this Prospectus, the Shares or the Offers, or to permit a public offering of the Shares, in any jurisdiction outside Australia. This Prospectus does not constitute an offer or invitation to apply for Shares in any jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or invitation. This Prospectus may not be released or distributed in the United States. Each Applicant and each person on behalf of whom the Applicant is acting will be taken to have represented, warranted and agreed as follows: FASTER ENTERPRISES LTD PROSPECTUS 154

169 they understand that the Shares have not been, and will not be, registered under the US Securities Act or the securities laws of any state or other jurisdiction of the United States and may not be offered, sold or resold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act and applicable securities laws of states or other jurisdictions in the United States; they are not in the United States and are not acting on behalf of a person in the United States; they have not sent and will not send this Prospectus or any other material relating to the Offers to any person in the United States; and they will not offer or sell the Shares in the United States or in any other jurisdiction outside Australia, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act and in compliance with all applicable laws in the jurisdiction in which the Shares are offered and sold. FASTER ENTERPRISES LTD PROSPECTUS 155

170 11. ADDITIONAL INFORMATION 11.1 Rights and liabilities attaching to Shares The rights and liabilities attaching to ownership of the Shares arise from a combination of the Constitution, statute, the Listing Rules and general law. A summary of the principal rights, liabilities and obligations attaching to the Shares and a description of other material provisions of the Constitution are set out below. This summary is not exhaustive nor does it constitute a definitive statement of the rights and liabilities of Shareholders. The summary assumes that the Listing Application is approved by the ASX Voting at a general meeting At a general meeting of the Company, every Shareholder present in person or by proxy, representative or attorney has 1 vote on a show of hands and, on a poll, 1 vote for each Share held. On a poll, partly paid shares confer a fraction of a vote in proportion to the amount paid up on the share Meetings of Shareholders Each Shareholder is entitled to receive notice of, attend and vote at meetings of the Company and to receive all notices, accounts and other documents required to be sent to Shareholders under the Constitution, the Corporations Act and the Listing Rules. At least 28 days notice of a meeting must be given to Shareholders Dividends Subject to the Constitution, the Corporations Act and the Listing Rules, the Board may: resolve to pay dividends to Shareholders; fix the amount of the dividend; and fix the time for determining entitlements to the dividend and the timing and method of payment. The person entitled to a dividend on a Share is entitled to the entire dividend if the Share is fully paid or a proportionate amount if the Share is partly paid. A dividend may only be paid in accordance with the Corporations Act. FASTER ENTERPRISES LTD PROSPECTUS 156

171 Transfer of Shares Subject to the Constitution and the Corporations Act, Shares may be transferred by a proper transfer effected in accordance with the ASX Settlement Operating Rules or by a written instrument of transfer which complies with the Constitution or by any other method permitted by the Corporations Act, the Listing Rules or the ASX Settlement Operating Rules. The Board may refuse to register a transfer of shares where permitted to do so under the Listing Rules. The Board must refuse to register a transfer of shares when required by the Corporations Act, the Listing Rules or the ASX Settlement Operating Rules Issue of further Shares Subject to the Constitution, the Corporations Act, the Listing Rules and the ASX Settlement Operating Rules and any rights and restrictions attached to a class of shares, the Directors may decide to issue, or grant options in respect of, further shares on such terms and conditions (including preferential, deferred or special rights, privileges or conditions, or restrictions) as the Directors resolve Winding up If the Company is wound up, then subject to the Constitution, the Corporations Act, the Listing Rules and the ASX Settlement Operating Rules and any special resolution or preferential rights or restrictions attached to a class of shares, each Shareholder has the right to participate in the repayment of paid up capital through the distribution of any surplus assets or profits of the Company Unmarketable parcels Subject to the Corporations Act, Listing Rules and the ASX Settlement Operating Rules, the Company may sell the Shares of a Shareholder who holds less than a marketable parcel of shares Variation of class rights At present, the Company s only class of shares on issue are ordinary shares. Subject to the Corporations Act and the terms of issue of a class of shares, the rights attaching to any class of shares may be varied or cancelled: with the consent in writing of the holders of three quarters of the issued shares included in that class; or by a special resolution passed at a separate meeting of the holders of those shares. FASTER ENTERPRISES LTD PROSPECTUS 157

172 In either case, in accordance with the Corporations Act, the holders of not less than 10% of the votes in that class of shares, the rights of which have been varied or cancelled, may apply to a court of competent jurisdiction to exercise its discretion to set aside such a variation or cancellation Dividend reinvestment plan, dividend selection plan and bonus share plan The Constitution authorises the Directors, on any terms and at their discretion, to establish a dividend reinvestment plan (under which any shareholder may elect that the dividends payable by the Company be reinvested by subscription for Securities), a dividend selection plan (whereby any shareholder may elect to receive a dividend paid in whole or in part out of a particular fund or reserve or out of profits derived from a particular source, or to forego any dividends and to receive instead some other entitlement, including Shares) and an employee incentive plan (whereby Securities of the Company may be provided for the benefit of employees or Directors) Directors number The minimum number of Directors is 3 and the maximum is fixed by the Directors but may not be more than 7. Directors are elected at annual general meetings of the Company Directors voting Questions arising at a meeting of the Board will be decided by a majority of votes of the Directors present at the meeting and entitled to vote on the matter. In the case of an equality of vote on a resolution, the chairperson of the meeting has a casting vote Directors remuneration The Directors, other than the Executive Directors, will be paid by way of fees for services, the maximum aggregate sum as may be approved from time to time by the Company in general meeting. The Constitution also makes provision for the Company to pay all properly incurred expenses of Directors in attending meetings and carrying out their duties Powers and duties of Directors The Directors may exercise all powers and do all things that are within the Company s power Indemnities To the extent permitted by law, the Company indemnifies each officer of the Company or its related bodies corporate against any losses, liabilities, costs, charges and expenses incurred by the person acting in that capacity. FASTER ENTERPRISES LTD PROSPECTUS 158

173 To the extent permitted by law, the Company may insure an officer of the Company or its related bodies corporate against a liability incurred by that person as an officer of that company, unless the liability arises out of conduct involving wilful breach of duty in relation to the Company or a contravention of sections 182 or 183 of the Corporations Act. To the extent permitted by law, the Company may also insure such an officer for costs and expenses incurred by that person in defending or resisting proceedings, whatever the outcome Capitalising profits Subject to the Corporations Act, the Listing Rules, the ASX Settlement Operating Rules and any rights or restrictions attached to any shares or class of shares and any special resolution of the Company, the Directors may capitalise and distribute profits or other amounts available for distribution among those Shareholders who would be entitled to receive dividends and in the same proportions Alteration of share capital Subject to the Corporations Act, the Listing Rules and the ASX Settlement Operating Rules, the Company may alter its share capital Preference shares The Company may issue preference shares including preference shares which are liable to be redeemed or converted to ordinary shares Alteration of Constitution The Constitution can only be amended by special resolution passed by at least three quarters of Shareholders present (whether in person or by proxy) and entitled to vote at a general meeting of the Company. The Company must give at least 28 days written notice of a general meeting of the Company Interests of experts and advisers No interest except as disclosed Other than as set out below or elsewhere in this Prospectus, no expert, promoter, underwriter or any other person named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus, nor any firm in which any of those persons is or was a partner nor any company with which any of those persons is or was associated, has now or at any time within 2 years before lodgement of this Prospectus with ASIC: FASTER ENTERPRISES LTD PROSPECTUS 159

174 any interest in the formation or promotion of the Company or in any property acquired or proposed to be acquired by the Company in connection with its formation or promotion or in connection with any of the Offers; and been paid or received, or agreed to be paid or receive, any benefits for any services rendered in connection with the formation or promotion of the Company or any of the Offers Interests of advisers The Company has engaged the following professional advisers in connection with the Offers who have consented to be named in this Prospectus: Corporate Adviser Sanston has acted as a corporate adviser to the Group. The Company estimates that it will pay Sanston approximately $905,000 (plus GST) for these services. During the 2 years preceding lodgement of this Prospectus with ASIC, Sanston received fees of approximately $100,000 (plus GST) from the Company. Legal adviser Sierra Legal has acted as legal adviser to the Company in relation to the Offers. The Company estimates that it will pay Sierra Legal approximately $253,000 (plus GST) for these services. Further amounts may be paid to Sierra Legal in accordance with its normal, time-based charges. During the 2 years preceding lodgement of this Prospectus with ASIC, Sierra Legal did not receive any other fees from the Company for legal services. Investigating Accountant RSM has acted as Investigating Accountant and has prepared the Investigating Accountant s Report included in Section 5 and has performed work in relation to due diligence enquiries. The Company estimates that it will pay RSM approximately $18,000 (plus GST) for these services. During the 2 years preceding lodgement of this Prospectus with ASIC, RSM received fees of $4,300 (plus GST) from the Company for advisory services. The Company further estimates that it will pay RSM Australia (a related entity of RSM) approximately $98,000 (plus GST) for services provided in connection with the Offers. During the 2 years preceding lodgement of this Prospectus with ASIC, RSM Australia received fees of $57,000 (plus GST) from the Company for assurance and tax advisory services. Further amounts may be paid to RSM and RSM Australia in accordance with their respective normal, time-based charges. Frost & Sullivan Frost & Sullivan has been engaged by the Company to prepare the Independent Market Report included in Section 3. The Company has paid Frost & Sullivan $20,000 (plus GST) for these services. FASTER ENTERPRISES LTD PROSPECTUS 160

175 Charter Keck Cramer Charter Keck Cramer has been engaged by the Company to prepare the Independent Property Valuation Reports referred to Section 2. The Company has paid Charter Keck Cramer $17,000 (plus GST) for these services Consents and disclaimers of responsibility Written consents to the issue of this Prospectus have been given and, at the time of lodgement of this Prospectus with ASIC, had not been withdrawn by the following parties: Sanston has given and, at the time of lodgement of this Prospectus with ASIC has not withdrawn, its consent to be named in this Prospectus as corporate adviser to the Group in the form and context in which it is named. Sanston takes no responsibility for any part of this Prospectus other than any reference to its name. RSM has given, and at the time of lodgement of this Prospectus with ASIC has not withdrawn, its consent to be named in this Prospectus as the Investigating Accountant in the form and context in which it is named, and its consent to the inclusion of the Investigating Accountant s Report in the form and context in which it is included. RSM takes no responsibility for any part of this Prospectus other than the Investigating Accountant s Report. Sierra Legal has given, and at the time of lodgement of this Prospectus with ASIC has not withdrawn, its consent to be named in this Prospectus as the Company s legal adviser in relation to the Offers in the form and context in which it is named. Sierra Legal takes no responsibility for any part of this Prospectus other than any reference to its name. Automic Pty Ltd has given, and at the time of lodgement of this Prospectus with ASIC has not withdrawn, its consent to be named in this Prospectus as the Company s share registry in the form and context in which it is named. Automic Pty Ltd has not taken part in the preparation of any part of this Prospectus other than the recording of its name as share registry to the Company. Automic Pty Ltd has not authorised or caused the issue of and expressly disclaims any responsibility for any part of this Prospectus. RSM Australia has given, and at the time of lodgement of this Prospectus with ASIC has not withdrawn, its consent to be named in this Prospectus as the Company s auditor in the form and context in which it is named. RSM Australia has not authorised or caused the issue of and expressly disclaims any responsibility for any part of this Prospectus. Frost & Sullivan has given, and at the time of lodgement of this Prospectus with ASIC has not withdrawn, its consent to be named in this Prospectus and to the inclusion of its Independent Market Report in the form and context in which it is named and to the inclusion in this Prospectus of statements said to be based on statements made in the Independent Market Report. Frost & Sullivan takes no responsibility for any part of this Prospectus other than the FASTER ENTERPRISES LTD PROSPECTUS 161

176 Independent Market Report and the statements in this Prospectus that are stated to be based on the Independent Market Report. Charter Keck Cramer has given, and at the time of lodgement of this Prospectus with ASIC has not withdrawn, its consent to be named in this Prospectus the Independent Property Expert and to the inclusion in this Prospectus of statements said to be based on statements made in the Independent Property Valuation Reports. Charter Keck Cramer has not authorised or caused the issue of and expressly disclaims any responsibility for any part of this Prospectus Ownership restrictions The sale and purchase of Shares in the Company is regulated by Australian laws that restrict the level of ownership or control by any one person (either alone or in combination with others). This Section contains a general description of these laws Corporations Act The takeover provisions in Chapter 6 of the Corporations Act restrict acquisitions of shares in listed companies, and unlisted companies with more than 50 shareholders, if the acquirer s (or another party s) voting power would increase to above 20%, or would increase from a starting point that is above 20% and below 90%, unless certain exceptions apply. The Corporations Act also imposes notification requirements on persons having voting power of 5% or more in the Company The Foreign Acquisitions and Takeovers Act Under Australia s foreign investment review framework, which includes the Foreign Acquisitions and Takeovers Act 1975 (Cth) and the Foreign Acquisitions and Takeovers Fees Imposition Act (2015) (Cth), their associated regulations, and Australia s Foreign Investment Policy, the Treasurer has the power to block foreign investment proposals or apply conditions to the way proposals are implemented to ensure that they are not contrary to the national interest. In general, proposals by a foreign person to acquire an interest in Australian land (which includes acquiring an interest in an Australian land corporation) must be reported to Australia s Foreign Investment Review Board for examination by the Treasurer. An exemption applies if: the relevant Australian land corporation is or will be listed for quotation in the official list of a stock exchange (whether or not in Australia); after the acquisition, the foreign person (alone or with its associates) holds an interest of less than 10% in the Australian land corporation; and FASTER ENTERPRISES LTD PROSPECTUS 162

177 the foreign person is not in a position to influence or participate in the central management or control of the Australian land corporation, or to influence, participate in or determine the policy of the Australian land corporation. Further information on the Australian Government s foreign investment screening requirements is detailed in Australia s Foreign Investment Policy, available at Litigation and claims As at the Prospectus Date, so far as the Directors are aware, there is no current or threatened civil litigation, arbitration proceedings or administrative appeals, or criminal or governmental prosecutions of a material nature in which any Group Company is directly or indirectly concerned and which are likely to have a material adverse impact on the business or financial position of the Company Taxation The acquisition and disposal of Securities will have tax consequences, which will differ depending on the individual financial affairs of each investor. All potential investors in the Company are urged to obtain independent financial advice about the consequences of acquiring Securities from a taxation viewpoint and generally. It is the responsibility of all persons to satisfy themselves of the particular taxation treatment that applies to them in relation to the Offers, by consulting their own professional tax advisers. To the maximum extent permitted by law, the Company, its officers and each of their respective advisers accept no liability and responsibility with respect to the taxation consequences of subscribing for Securities under this Prospectus Governing law This Prospectus and the contracts that arise from the acceptance of Applications are governed by the laws applicable in Victoria, Australia and each Applicant submits to the exclusive jurisdiction of the courts of Victoria, Australia Electronic prospectus A copy of this Prospectus can be downloaded from the Company s website located at If you are accessing the electronic version of this Prospectus for the purpose of making an investment in the Company, you must be an Australian resident and must only access this Prospectus from with Australia. FASTER ENTERPRISES LTD PROSPECTUS 163

178 There is no facility for the Offers to be accepted electronically or by applying online. Securities will not be issued under the electronic version of this Prospectus. The Corporations Act prohibits any person passing onto another person an Application Form unless it is attached to a hard copy of this Prospectus or it accompanies a complete and unaltered version of this Prospectus. You may obtain a hard copy of this Prospectus free of charge by contacting the Company. The Company reserves the right not to accept an Application Form from a person if it has reason to believe that when that person was given access to the electronic Application Form, it was not provided together with the electronic Prospectus and any relevant supplementary or replacement prospectus, or any of those documents were incomplete or altered. 12. DIRECTORS AUTHORISATION This Prospectus is authorised by each Director and each person listed in this Prospectus as a proposed Director. Each of those persons consent to the lodgement of this Prospectus with ASIC. Signed by Norman Wu, a Director of the Company, pursuant to section 351 of the Corporations Act, for the purposes of lodgement of this Prospectus with ASIC. Norman Wu Director FASTER ENTERPRISES LTD PROSPECTUS 164