Crowe Horwath Corporate Finance Ltd ABN 95 001 508 363 AFSL 239170 Member Crowe Horwath International DWL:GR 27 January 2012 The Directors Fidelis Investment Limited GPO Box 2085 BRISBANE QLD 4001 Level 16, 120 Edward Street Brisbane QLD 4000 Australia GPO Box 736 Brisbane QLD 4001 Australia Tel: +61 7 3233 3555 Fax: +61 7 3233 3567 www.crowehorwath.com.au A WHK Group Firm Dear Sirs INDEPENDENT ACCOUNTANT S REPORT REVIEW OF PROSPECTIVE FINANCIAL INFORMATION Introduction Crowe Horwath Corporate Finance Ltd (CHCF) has been engaged by Fidelis Investment Limited, responsible entity of the Fidelis Eagleview Income Fund (Fund), to review certain financial information in relation to the Fund. This financial information (Financial Information) comprises (refer attached): A pro-forma cashflow and distribution forecast of the fund for the year ending 30 June 2012, 30 June 2013 and 30 June 2014. A pro-forma balance sheet of the Fund as at 2 May 2012. A pro-forma source and application of funds statement as at 2 May 2012. Sensitivity analysis table on interest rate movements. A pre-tax equivalent forecast cash distribution table. The Financial Information is to be included in a Product Disclosure Statement (PDS) to be issued by Fidelis Investment Limited (Responsible Entity) on or about 30 January 2012. CHCF s review of the Financial Information is in the form of this independent accountant s report (Report). This Report will not be included in the PDS however will be made available to potential investors. CHCF expressly disclaims any assumption of responsibility for reliance on this Report or on the Financial Information to which it relates for any purpose other than that for which it was prepared. Review of Financial Information Scope of review In the course of reviewing the Financial Information, CHCF has had regard to: Australian Standard on Assurance Engagements ASAE 3000 Assurance Engagements Other than Audits or Reviews of Historical Financial Information ; Australian Auditing and Assurance Standard APES 345 Reporting on Prospective Financial Information Prepared in Connection with a Disclosure Document ; and Auditing and Assurance Standard AUS 804 The Audit of Prospective Financial Information. Our review is a limited assurance engagement and we provide a negative level of assurance. Crowe Horwath Corporate Finance Ltd is a member of Crowe Horwath International, a Swiss verein (Crowe Horwath). Each member firm of Crowe Horwath is a separate and independent legal entity. Crowe Horwath Corporate Finance Ltd and its affiliates are not responsible or liable for any acts or omissions of Crowe Horwath or any other member of Crowe Horwath and specifically disclaim any and all responsibility or liability for acts or omissions of Crowe Horwath or any other Crowe Horwath member. 2012 Crowe Horwath Corporate Finance Ltd Liability Limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of financial services licensees.
Directors Responsibility The responsibility for the preparation and presentation of the Financial Information, including the best estimate assumptions on which it is based and adequate disclosures in the PDS, is that of the directors of the Responsible Entity (Directors). This includes the selection and application of accounting policies, the maintenance of adequate accounting records and the provision of supporting documentation and other sources of information sufficient to permit CHCF to verify the underlying assumptions used by the directors. CHCF s Responsibility CHCF s procedures have consisted primarily of enquiry and comparison and other such analytical review procedures CHCF has considered necessary. These procedures included discussions with the Responsible Entity s management to form an opinion as to whether anything has come to CHCF s attention which causes CHCF to believe that the best-estimate assumptions do not provide a reasonable basis for the preparation of the financial information and whether, in all material respects, the financial information is properly prepared on the basis of the best-estimate assumptions, are presented fairly in accordance with the recognition and measurement principles prescribed in Accounting Standards, other mandatory professional reporting requirements in Australia, and the accounting policies of the Fund disclosed in the PDS, so as to present a view of the Fund which is consistent with our understanding of the Fund s future operations. CHCF s review of the Financial Information, which is based on best estimate assumptions, is substantially less in scope than a reasonable assurance engagement conducted in accordance with ASAE 3000 or an audit examination conducted in accordance with Australian Auditing Standards. A review of this nature provides less assurance than a reasonable assurance engagement or an audit. CHCF has not performed a reasonable assurance engagement or an audit and accordingly, does not express a positive assurance statement or an audit opinion on the Financial Information. Conclusion on the Financial Information Based on CHCF s review of the Financial Information, which is not a reasonable assurance engagement or an audit, nothing has come to CHCF s attention which causes it to believe that: the best estimate assumptions underlying the Financial Information, when taken as a whole, do not provide a reasonable basis for the preparation of the Financial Information; in all material respects, the Financial Information is not properly compiled on the basis of the best estimate assumptions and presented fairly in accordance with the recognition and measurement principles (but not all of the disclosure requirements) prescribed in applicable Accounting Standards in Australia and other mandatory professional reporting requirements in Australia and the Accounting Policies; and the Financial Information is unreasonable. The underlying best estimate assumptions are subject to significant uncertainties and contingencies, often outside the control of the Directors. If events do not occur as forecast, actual results and distributions achieved by the Fund may vary significantly from the Financial Information. Accordingly, CHCF does not confirm or guarantee the achievement of the prospective Financial Information, as future events, by their very nature, are not capable of independent substantiation. Investors should consider the statement of risks and the sensitivity analysis set out in Section 4 and Section 6.6, respectively of the PDS. 2
Subsequent events Apart from the matters dealt with in the Report, and having regard to the scope of this Report and the information provided by the Directors, to the best of CHCF s knowledge and belief no material transaction or event outside of the ordinary business of the Fund not described in the PDS has come to CHCF s attention that would require comment on, or adjustment to, the information referred to in this Report or that would cause such information to be misleading or deceptive. Other Matters Independence CHCF does not have any interest in the outcome of the PDS other than in connection with the preparation of this Report, for which professional fees will be received. CHCF further confirms that, at the time of the preparation of the Report, it was not aware of any business relationship or financial interest of a material nature that CHCF has with the Responsible Entity or any associates thereof, that could reasonably be regarded as capable of affecting its ability to provide an independent opinion. Indemnities The Directors have agreed to indemnify and hold harmless CHCF and their respective directors and staff from any claims arising out of misstatement or omission of any material information provided to CHCF by the Fund or the Directors. Consent CHCF has consented to the Report being made available to investors at www.fidelisgroup.com.au/eagleview in the form and context in which it is included. At the date of this Report, this consent has not been withdrawn. General Advice Warning This Report has been prepared to provide potential investors with general information only and does not take into account the objectives, financial situation or needs of any specific investor. It is not intended to take the place of professional advice and investors should not make specific investment decisions in reliance on the information contained in this report. Before acting or relying on any information, an investor should consider whether it is appropriate for their circumstances having regard to their objectives, financial situation or needs. Financial Services Guide Investors are advised to read the attached financial services guide (FSG) in conjunction with this Report. The FSG is designed to assist retail clients in their use of any general financial product advice contained in our Report. Yours faithfully Crowe Horwath Corporate Finance Ltd ABN 95 001 508 363 Australian Financial Services Licence No: 239170 Liability Limited by a scheme approved under Professional Standards Legislation other than for acts or omissions of financial services licensees Enc Appendix A: Financial Services Guide, Appendix B: Financial Information. 3
Appendix A: Financial Services Guide Dated 27 January 2012 General Advice Independent Accountant s Report This Financial Services Guide is designed to help retail clients make a decision as to their use of the relevant general financial product advice; to ensure that we comply with our obligations as a financial services licensee; and to provide you with information on: how we and our associates are paid any potential conflict of interest we may have our internal and external dispute resolution procedures and how you can access them. Introduction Crowe Horwath Corporate Finance Ltd ACN 001 508 363 has been engaged to issue general financial product advice in the form of an Independent Accountant s Report (Report) for inclusion in a disclosure or other document in relation to the issuing of a financial product. Who is responsible for the financial services provided to me? Crowe Horwath Corporate Finance Ltd holds an Australian Financial Services Licence No. 239170 and is responsible for the financial services provided by it and its Authorised Representatives, including authorising the distribution of this Financial Services Guide. Crowe Horwath Corporate Finance Ltd is wholly owned by WHK Pty Ltd and operates as part of the business advisory and professional accounting practice of Crowe Horwath Brisbane. General Financial Product Advice In the Report we provide general financial product advice, not personal financial product advice, because the advice has been prepared without taking into account your personal objectives, financial situation or needs. You should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. What kinds of financial services are you authorised to provide to me? We are authorised to provide advice on, and deal in, the following classes of financial products to wholesale and retail clients: 1) Provide financial product advice for the following classes of financial products: a) derivatives; and b) securities. 2) Deal in a financial product by: a) issuing, applying for, acquiring, varying or disposing of a financial product in respect of the following classes of financial products: i) derivatives, b) applying for, acquiring, varying or disposing of a financial product on behalf of another person in respect of the following classes of products: i) derivatives; and ii) securities. 4
Independent Accountant s Reports We provide financial product advice by issuing the Report in connection with a financial product of another person or entity. Our Report includes a description of the circumstances of our engagement and identifies the person or entity who has engaged us. You have not engaged us directly but you will be provided with a copy of the Report due to your connection to the matters in respect of which we have been engaged to report. Any report we provide is provided on our own behalf as an Australian Financial Services Licensee authorised to provide the financial product advice contained in the Report. Do you have any relationships or associations with financial product issuers? Crowe Horwath Corporate Finance Ltd and any of its associated entities may at any time provide professional or financial services to financial product issuers in the ordinary course of our business. How is Crowe Horwath Corporate Finance Ltd paid to produce an Independent Accountant s Report? We will charge a fee in the vicinity of $5,000 excluding GST for providing this Report. This fee will be paid by the person or entity which engages us to provide the Report. The fee has not affected the opinion we have expressed in the Report. Except for this fee, neither Crowe Horwath Corporate Finance Ltd, nor any of its principals, employees or related entities, receives any pecuniary benefit or other benefit, directly or indirectly, for or in connection with the provision of the Report. Does Crowe Horwath Corporate Finance Ltd get paid for referring clients to invest in the products associated with your Independent Accountant s Reports? We do not pay commissions or provide any other benefits to any person for referring clients to us in connection with the Report that we are engaged to provide. We do not receive commissions or any other benefits for referring clients in connection with the underlying financial product and/or financial service that is the subject of the reports we are engaged to provide. Do I pay for the financial services provided? You do not pay us a fee for the production of the Report. It is the responsibility of the person or entity which engaged our services to produce the Report to meet this cost. Who can I complain to if I have a complaint about the financial services provided? If you have any complaint about the service provided to you, you should take the following steps: 1) Contact us and tell us about your complaint 2) If your complaint is not satisfactorily resolved within three business days, please contact the Complaints Officer on (07) 3233 3555, or put your complaint in writing and send it to us at: The Complaints Officer Crowe Horwath Corporate Finance Ltd GPO Box 736 BRISBANE QLD 4001 3) If you still do not get a satisfactory outcome you can contact the Financial Ombudsman Service (FOS) of which Crowe Horwath Corporate Finance Ltd is a member. FOS can be contacted on 1300 780 808 or you can write to them at GPO Box 3, Melbourne, Victoria 3001. The Australian Securities & Investments Commission (ASIC) has a freecall Infoline on 1300 300 630 which you may also use to make a complaint or obtain information about your rights. If you have any further questions about the financial services Crowe Horwath Corporate Finance Ltd provides, please contact our office on (07) 3233 3555. 5
Appendix B: Financial Information (i) Cashflow and Distribution Forecast OPERATING ACTIVITIES Net Income Note 2 May - 30 June 2012 2013 FY 2014 FY 37 Eagleview Place, Eagle Farm 1 104,516 654,409 680,586 Interest Income 2 233 1,350 1,215 Other Income / Expense Management fees 3 (7,316) (45,809) (47,641) Deferred Management fees 4 2,780 23,133 8,099 Other Fund Expenses 5 (5,408) (38,702) (39,863) Borrowing Costs 6 (40,967) (253,440) (253,440) Net Cash Inflow / (Outflow) 53,838 340,942 348,956 FINANCING ACTIVITIES Distributions (unitholders) 7 (53,838) (340,942) (348,956) Applications 8 4,035,000 - - Borrowing costs 9 (14,344) - - Proceeds/(repayment) of borrowings 10 3,960,000 - - Net Cash Inflow / (Outflow) 7,926,818 (340,942) (348,956) INVESTING ACTIVITIES Building Acquisition 11 (7,200,000) - - Costs of Acquisition 12 (634,193) - - Costs of PDS 13 (112,119) - - Capital Expenditure 14 - (4,000) (4,000) Net Cash Inflow / (Outflow) (7,946,312) (4,000) (4,000) Cash on hand at beginning of period - 34,344 30,345 Total Cash Flow for the Period 34,344 (4,000) (4,000) Cash on hand at end of period 34,344 30,345 26,345 Distribution Percentages 15 8.25% * 8.45% 8.65% *Annualised Notes 1 Represents rent received from the Property. The Tenant pays for all property expenses. 2 Interest income calculated at 4.5% on working capital. 3 Management fees are 7% of net rental received from the Property. 4 A portion of management fees have been deferred over the first 3 years. These fees will be paid to us over the remaining term of the Fund. 5 These include expenses such as registries, custodian, audit, property valuations etc. 6 This represents the cost of the Fund's borrowings from the CBA. 7 Forecast distributions to Unitholders based upon cashflow generated by operating activities. 8 Proceeds received from this Offer. 9 Costs associated with establishing the loan with the CBA. 10 Proceeds received from the CBA pursuant to the Fund's debt facility. 11 The purchase price of the Property. 12 All other costs associated with acquiring the Property including fees, stamp duty and due diligence. 13 The costs of preparing and disseminating this PDS. 14 Expenditure to meet capital requirements for the building. 15 The distributions (see note 7) as a percentage of total applications (see note 8). 6
(ii) Pro-forma Balance Sheet Upon Note Settlement Assets Cash 1 34,344 Properties 37 Eagleview Place, Eagle Farm 2 7,200,000 Borrowing costs 3 14,344 Total Assets 7,248,688 Liabilities Interest Bearing Loan 4 3,960,000 Total Liabilities 3,960,000 Net Assets 3,288,688 Equity Contributed Equity 5 4,035,000 Equity raising costs 6 (112,119) Retained earnings 7 (634,193) Total Equity 3,288,688 Net Tangible Assets (NTA) per unit 8 0.81 Notes 1 Cash on hand available as working capital. 2 The purchase price and value of the Property as per the independent valuation. 3 Costs associated with establishing the loan with the CBA. 4 A debt liability owed to the CBA pursuant to the Fund's debt facility. 5 The number of $1 Units issued to Unitholders in the Fund. 6 Costs of issuing this PDS. 7 All other costs associated with acquiring the Property including fees, stamp duty and due diligence are immediately taken to retained earnings. 8 The NTA per unit is calculated by dividing 'net assets less borrowing costs' by 'total Units'. 7
(iii) Sources and Application of Funds Sources of Funds Equity proceeds 1 4,035,000 Proceeds from Borrowings 2 3,960,000 Total source of funds 7,995,000 Application of Funds 37 Eagleview Place, Eagle Farm 3 7,200,000 Acquisition fee 4 216,000 Due diligence costs 5 34,800 Government charges 6 383,393 Loan establishment costs 7 14,344 PDS issue costs 8 112,119 Fund working capital 9 34,344 Total application of funds 7,995,000 Notes 1 Proceeds received from this Offer. 2 Proceeds received from the CBA pursuant to the Fund's debt facility. 3 The purchase price and value of the Property as per the independent valuation. 4 Our fee for acquiring the Property. 5 Due diligence costs associated with acquiring the Property. 6 Government costs associated with acquiring the Property including stamp duty and title registration. 7 Costs associated with establishing the loan with the CBA. 8 Costs associated with issuing this PDS. 9 Cash on hand available as working capital. 8
(iv) Sensitivity Analysis Interest Rate Movements -0.15% -0.25% 0.15% 0.25% Forecast Distribution (%) 2 May - 30 June 2012 (annualised) 8.40% 8.50% 8.11% 8.01% 8.25% 2013 FY 8.60% 8.69% 8.30% 8.20% 8.45% 2014 FY 8.80% 8.89% 8.50% 8.40% 8.65% (v) Forecast Distributions 2 May - 30 June 2012 (Annualised) 2013 FY 2014 FY Average Forecast Cash Distribution 8.25% 8.45% 8.65% 8.53% Pre-tax equivalent 10% 8.81% 8.95% 9.06% 8.99% Pre-tax equivalent 15% 9.14% 9.24% 9.30% 9.26% Pre-tax equivalent 25% 9.93% 9.95% 9.88% 9.92% Pre-tax equivalent 30% 10.41% 10.38% 10.23% 10.31% Pre-tax equivalent 46.5% 12.63% 12.36% 11.86% 12.15% 9