MYOB BUSINESS MONITOR:

MYOB BUSINESS MONITOR: THE VOICE OF AUSTRALIAN BUSINESS OWNERS & MANAGERS December 2017 report Page 1

BUSINESS PERFORMANCE Almost three in ten Australian business operators expected the economy to improve over the next 12 months In the November 2017 Business Monitor survey on which this report is based, 29% of Australian small and medium business owners and managers (herein known as operators ) expected the Australian economy to improve over the next 12 months. Over one in three operators (34%) expected the economy to decline, while 35% expected the economy to remain about the same. The results showed an improvement over May 2017 when only 25% of Australian operators expected to see an improvement. The most optimistic operators were: Finance and insurance businesses (52% expected an improvement compared to only 21% of construction and trades businesses) Operators who had experienced increased revenue in the preceding 12 months (44%) Franchisors (39%) Operators with a website (34%) 1% 3% 2% 3% 2% 3% 3% 2% 3% 3% 20% 21% 26% 31% 32% 33% 33% 35% 34% 35% 32% 31% 26% 11% 7% 7% 7% 8% OCT 15 APR 16 NOV 16 MAY 17 NOV 17 Decline significantly Decline slightly Remain the same Improve slightly Improve significantly Don t know Business conditions remained steady Operators reported similar levels of revenue performance over the previous 12 months as the last survey with 26% reporting an increase in revenue compared to 28% in the previous survey. A similar proportion (27%) reported a decrease in annual revenue, while a further 44% said revenue had been steady and 3% were unsure. Operators more likely to report an increase in revenue over the last 12 months included: Franchisors (40%) Start-ups (39%) Exporters (39%) and importers (36%) Tourism related businesses (37%) Metropolitan based operators (30%) Operators with a website (30%) 39% 39% 36% 38% 38% 41% 39% 39% 34% 34% 34% 31% 26% 26% 30% 30% 31% 30% 20% 21% 25% 27% 18% 18% 18% JUL 09 NOV 09 MAR 10 OCT 10 Changes in revenue - previous 12 months MAR 11 SEPT 11 FEB 12 MAY 12 Revenue up FEB 13 AUG 13 FEB 14 AUG 14 Revenue down FEB 15 OCT 15 APR 16 NOV 16 MAY 17 28% 26% 27% 27% NOV 17 Page 2

Expected revenue over the next 12 months and sales in the pipeline for the next three months both static While two in five operators (40%) expected their revenue to remain the same over the next 12 months, the proportion of operators expecting their revenue to increase was 33%. A further of operators expected a decline in revenue over the next 12 months. The results indicate no change over the last three waves. Operators more likely to expect an increase in revenue over the next 12 months included: Operators whose revenue was up in the previous 12 months (68%) Start-ups (57%) and establishing businesses (42%) Franchisors (54%) Exporters and importers (52% each) Finance and insurance businesses (49%) Gen X operators (43%) Businesses with a website (41%) Metropolitan based operators (39%) In terms of the shorter term three-month pipeline, 40% of operators commented they had the same amount of sales/work in the pipeline for the November to January period. The proportion of operators stating they had more in their pipeline remained steady at 40%. Fewer than one in five operators (18%) felt they had less in the pipeline. The results indicate no change over the last three waves. Operators more likely to state they had more work/sales in their pipeline in the next three months included: Operators whose revenue was up in the previous 12 months (65%) Medium businesses (64%) Franchisors (60%) Exporters (59%) and importers (58%) Start-ups (55%) Gen Y operators (54%) Operators with a business website (53%) New South Wales operators (46%) 37% 46% 48% 43% 41% 15% 12% 12% 14% 14% JUL 09 NOV 09 MAR 10 Expected changes in revenue - next 12 months OCT 10 MAR 11 32% 30% 29% 30% 25% 34% 32% 33% 20% 18% SEPT 11 FEB 12 MAY FEB 13 12 Revenue up AUG 13 28% 31% 34% 35% 33% 27% 21% FEB 14 AUG FEB 15 OCT 15 APR 16 NOV 14 16 Revenue down 37% 37% 28% 33% 29% 31% 29% 30% 28% 33% 36% 36% 38% 34% 29% 21% 26% 30% Sales/work in the pipeline - next 3 months 28% 27% 28% 27% 21% 20% MAY 17 NOV 17 39% 41% 40% 18% 18% NOV 09 MAR 10 OCT 10 MAR 11 SEPT 11 FEB 12 MAY 12 FEB 13 AUG 13 FEB 14 AUG 14 FEB 15 OCT 15 APR 16 NOV 16 MAY 17 NOV 17 Total more Total less Page 3

Expectations by location and industry type As can be seen in the tables below, regional areas and construction and trades businesses were less positive about the economy and their business, while finance and insurance businesses were more positive. Expectations by location % expecting Australian economy to improve in the next 12 months % expecting increase in revenue in next 12 months % reporting more in pipeline for next 3 months Total AU 29% 33% 40% New South Wales 30% 36% 46% Victoria 27% 35% 39% Queensland 30% 32% 39% South Australia 29% 25% 32% Western Australia 32% 32% Metro 32% 39% 44% Regional/Suburban 27% 29% 35% Rural 25% 43% Green = Significantly higher than total Red = Significantly lower than total Expectations by industry type Agribusiness Business, prof. & property services Construction & trades Finance & insurance Manufacturing & wholesale Retail & hospitality Transport, postal & warehousing % expecting economy to improve 28% 30% 21% 52% 30% 21% 37% in next 12 months % expecting increase in revenue 16% 38% 49% 43% 39% 15% in next 12 months % reporting more in pipeline for next 3 months 42% 39% 40% 48% 44% 44% 32% Green = Significantly higher than total Red = Significantly lower than total Page 4

Investment intentions show emphasis on margins, amount paid to employees and product proliferation. In this wave, there were six areas of business in which operators were most likely to increase their focus/investment in the next 12 months: Prices and margins on products/services sold (26%) The amount paid to employees () Number or variety of products or services offered () Customer retention strategies () Sales of products and services online () Customer acquisition strategies (21%) Key changes in terms of focus on investment from the previous wave were as follows: Number and variety of products or services offered has declined from 28% to this wave Focus on customer retention strategies has declined from 26% to this wave The dollar value of online marketing and advertising has declined from 25% to 20% this wave The number of full time employees has declined from 15% to 11% this wave Key differences Key differences were noted across several areas, including age and size of the business. As seen in the tables overleaf, Gen X and Gen Y operators, start-ups and establishing businesses and manufacturing and wholesale businesses were more likely to increase focus/investment in the next 12 months across several areas. Baby Boomers, established businesses and construction and trades businesses were much less likely to be investing. In addition, small businesses were also much more likely to be investing in online marketing (31%) and increasing the number of part time or casual employees (25%). New South Wales based operators, operators with a website or social media site, operators whose revenue was up in the preceding 12 months, importers and exporters, franchisors, cloud computing users and operators involved in the tourism industry were all more likely to be increasing their investment across a range of issues. Where businesses plan to increase investment Nov 17 May 17 Nov 16 Apr 16 Oct 15 Feb 15 Your prices and margins on product/services sold Amount you pay the employees Number or variety of products or services offered Focus on customer retention strategies Sales of products/services online Focus on customer acquisition strategies The $ value of online marketing and advertising Investment in IT systems & processes Sales of products/services offline Working with business advisers to enhance your business The $ value of offline marketing and advertising Number of part time or casual employees Number of full time employees 26% 29% 30% 26% 28% 25% 25% 28% 28% 26% 26% 26% 28% 27% 27% 21% 26% 21% 25% 29% 20% 20% 25% 21% 20% 20% 21% 21% 20% 17% 20% 21% 18% 20% 17% 18% 18% 18% 18% 20% 16% 14% 18% 17% 11% 12% 14% 15% 12% 14% Page 5

Planned increase in focus/investment by age of business and age of operator Total Start ups Establishing Maturing Established Gen Y Gen X Baby Boomers Traditionlists Prices/margin on products/ services 26% 39% 28% 20% 28% 31% 20% 28% Amount employees are paid 32% 31% 17% 31% 29% 17% 27% No. or variety of products offered 42% 30% 26% 12% 31% 28% 18% 8% Customer retention strategies 32% 30% 14% 27% 20% 20% 16% Sale of products/services online 37% 30% 14% 27% 29% 17% 12% Customer acquisition strategies 21% 34% 25% 27% 13% 27% 13% Value of online marketing 20% 32% 29% 10% 27% 18% 6% Investment in IT systems/ processes 20% 30% 27% 12% 25% 17% 10% Sale of products/services offline 32% 17% 12% 21% 25% 14% 17% Working with business advisors 40% 9% 26% 12% 13% Value of offline marketing 17% 28% 16% 10% 12% 8% No. of part time/casual staff 16% 28% 27% 15% 7% 9% 8% No. of full time employees 11% 15% 21% 9% 2% 15% 5% 2% Green = Significantly higher than total Red = Significantly lower than total Page 6

Planned increase in focus/investment by industry type Agribusiness Business, prof. & property services Construction & trades Finance & insurance Manufacturing & wholesale Retail & hospitality Transport, postal & warehousing Prices/margin on products/services 16% 25% 31% 12% 45% 29% Amount employees are paid No. or variety of products offered 31% 21% 17% 33% 37% 28% 21% 12% 14% 16% 44% 39% Customer retention strategies 17% 17% 15% 21% 39% 26% 26% Sale of products/services 20% 14% 17% 39% 38% online Customer acquisition strategies 26% 15% 15% 25% 38% 26% 29% Value of online marketing 14% 20% 12% 9% 34% 27% 18% Investment in IT systems/ processes 14% 17% 27% 28% 16% 4% Sale of products/services 11% 18% 14% 20% 36% 25% 20% offline Working with business advisors 14% 17% 21% 27% 13% Value of offline marketing No. of part time/casual staff 9% 10% 14% 25% 17% 18% 11% 15% 12% 12% 21% 7% No. of full time 11% 14% 8% 12% 16% 9% 0% employees Green = Significantly higher than total Red = Significantly lower than total Page 7

The cost of utilities, particularly for South Australian operators, and fuel prices were key pressures this wave When asked what elements of the business environment operators expected to cause an extreme amount or quite a lot of pressure on their business in the next 12 months, two issues emerged as the top business pressures: cost of utilities, particularly in South Australia and fuel prices. The pressure experienced by the cost of utilities also significantly increased this wave from 31% last wave to 41% this wave. Key differences for the two major pressures are detailed below. Cost of utilities was a greater pressure for: Agribusinesses (58%) and retail and hospitality businesses (49%) South Australian operators (58%) Rural (53%) and regional based operators (46%) Operators who reported a revenue fall in the previous year (52%) Baby Boomers (49%) Established businesses (48%) Fuel prices were a greater pressure for: Agribusinesses (64%), transport, postal & warehousing (51%) and construction and trades businesses (43%) Rural based operators (47%) Operators who reported a revenue fall in the previous year (44%) The remaining pressures were more likely to be significant to similar types of operators, that is, operators that were experiencing significantly more pressure than others. These included: Gen Y operators Operators with a website or social media site Franchisors Importers and exporters Tourism-related businesses Manufacturing and wholesale businesses Operators who reported a revenue fall in the previous year Cloud computing users Establishing businesses Other differences noted included interest rates being a higher pressure for sole operators, cost of online technologies being a greater pressure for Victorian based operators and retaining existing customers being a greater pressure for retail and hospitality businesses. Pressure Points (% extreme / a lot) Cost of utilities Fuel prices Late payments from customers Cashflow Profitability & price margins Attract new customers Competitive activity Interest rates Time spent meeting tax obligations Cost of online technologies Retain existing customers Upgrading hardware or other equipment Exchange rates Access to finance/funding/overdraft Upgrading IT software, systems or processes 31% 31% 34% 25% 29% 17% 26% 31% 26% 26% 27% 29% 21% 27% 29% 27% 27% 28% 26% 25% 25% 28% 26% 17% 27% 15% 20% 25% 16% 16% 16% 21% 17% 20% 12% 15% 13% 12% 17% 14% 15% 18% 15% 20% 14% 18% 17% 11% 13% 13% 18% Nov 17 May 17 Nov 16 Apr 16 Oct 15 41% Page 8

Pressure points by industry are shown in the table below. Pressure points by industry Agribusiness Business, prof. & property services Construction & trades Finance & insurance Manufacturing & wholesale Retail & hospitality Transport, postal & warehousing Cost of utilities such as electricity, gas & water 58% 33% 42% 34% 48% 49% 47% Fuel prices 64% 21% 43% 17% 42% 32% 51% Late payments from customers 30% 34% 42% 17% Cash flow 32% 26% 34% 42% 30% 25% Price margins & profitability 41% 25% 27% 16% 43% 34% 39% Attracting new customers 18% 28% 20% 14% 44% 39% 25% Competitive activity 9% 18% 44% 35% 40% Interest rates 27% 28% 25% 18% 35% 27% Time spent meeting your tax obligations 38% 20% 20% 20% 33% 30% 34% Online technology costs 35% 21% 21% 17% 40% 31% 10% Retaining existing customers 6% 17% 14% 34% 36% 35% Updating hardware or other equipment 18% 20% 15% 12% 32% 21% 12% Exchange rates 20% 20% 16% 26% 36% 16% 3% Access to finance/ funding/overdraft 17% 18% 15% 10% 25% 20% 17% Updating IT software, systems or processes 18% 14% 15% 21% 5% Green = Significantly higher than total Red = Significantly lower than total Page 9

ONLINE ACTIVITY & THE DIGITAL ECONOMY One-third of operators using online accounting and bookkeeping solutions While two-thirds of operators (67%) were using email and 63% were using online banking, one-third (33%) were using an online solution for their accounting and bookkeeping. A further 25% of operators were accepting instant payments. Results were similar to the previous wave. The table on the following page details the usage of these online tools by industry. Key differences were as follows: Retail and hospitality operators were much more likely to be connecting with customers using social media (38%), accepting instant payments (37%), and having an online sales platform (25%). Manufacturing and wholesale operators were more likely to use online document sharing (36%), be using online external communications (31%), an online sales platform (30%) and modifying their website to improve online search results (). Finance and insurance operators were more likely to be using an online CRM (27%). Business professional and property services businesses were more likely to be using online external communications tools (28%) and internal communications tools (13%). Online technologies used Nov 16 May 17 Nov 17 E-mail 71% 65% 67% Use online banking 66% 61% 63% Accounting / Bookkeeping 32% 33% 33% Accepting instant payments e.g. (EFTPOS, ApplePay, PayPal, a 28% 27% 25% shopping cart or mobile app etc) Document sharing e.g. Dropbox, Google Drive 27% Connect with customers using social media Saving file backups to the cloud 21% 20% 21% Payroll (employee payments, leave entitlements, PAYE etc.) 20% 20% External communications (online tools for conference calls etc.) e.g. 15% 15% 18% WebEx, Go To Meeting, Skype Customer Relationship Management (sales, marketing, support and 18% 17% 16% feedback etc.) Sales platform 13% 12% 15% Modify your website to improve online search results or purchase 14% 12% 14% online advertising or key words (SEO and SEM) Staff rostering and work allocation 9% 10% 10% Internal communication (online tools for employees to communicate 8% 9% 8% e.g. Yammer, Lync, Campfire, Hipchat) Enterprise Resource Planning (tracking business resources such as 5% 8% 7% cash, materials, production capacity etc.) Have internet access but do not do any / not interested in any of above activities 8% 8% 9% Significant increase since last wave Significant decrease since last wave Page 10

Tools by industry type Agribusiness Business, prof. & property services Construction & trades Finance & insurance Manufacturing & wholesale Retail & hospitality Transport, postal & warehousing E-mail 51% 63% 69% 76% 71% 73% 71% Use online banking 48% 62% 67% 66% 62% 63% 66% Accounting / Bookkeeping 331% 32% 35% 40% 41% 30% 32% Accepting instant payments e.g. EFTPOS, PayPal, ApplePay 14% 20% 29% 37% Document sharing e.g. Dropbox, Google Drive 14% 25% 29% 36% 21% 8% Connect with customers using social media 20% 17% 12% 32% 38% 29% Saving file backups to the cloud 8% 21% 21% 30% 29% 16% 12% Payroll (employee payments, leave entitlements, PAYE etc.) 14% 18% 17% 20% 21% 26% 11% External communications (online tools for conference calls etc.) 6% 28% 6% 28% 31% 9% 5% Customer Relationship Management (sales, marketing, support and feedback etc.) 9% 15% 11% 27% 18% 15% Sales platform 14% 12% 8% 30% 25% 13% Modify your website to improve online search results or purchase online advertising or key 6% 16% 12% 10% 18% 5% words (SEO and SEM) Staff rostering and work allocation 3% 9% 10% 12% 9% 11% 5% Internal communication (online tools for employees to communicate) Enterprise Resource Planning (tracking business resources) Have internet access but do not do any / not interested in any of above activities Green = Significantly higher than total 0% 13% 7% 10% 10% 6% 3% 3% 7% 7% 10% 11% 8% 0% 4% 9% 0% 3% 10% 20% Red = Significantly lower than total Page 11

Some of the other key differences noted are detailed below: Start-ups were more likely to connect with customers using social media (34%), save file back-ups to the cloud (31%) and use an online ERP system (15%), while established businesses were more likely to have Internet access but not be interested in any of the online tools (12%) Baby Boomers were much more likely to be using email (84%) and online banking (79%) compared to Gen Y operators (47% and 41% respectively) and Gen X operators (58% and 55% respectively). Females were more likely to use online accounting software (39%), connect with customers using social media (28%), use online payroll () and use an online sales platform (20%). Sole operators were much less likely to use online tools including online accounting software (30%), connect with customers using social media (21%), have online payroll (14% compared to 40% of small business and 64% of medium businesses) and modify their website to improve online search results (11%). Almost half Australian operators have a website Almost half (46%) of operators had a website this wave, a similar result to the same time last year. In addition, one third of operators (33%) had a social media site, and the proportion of operators without any online presence also remained relatively constant at 34%. Gen Y (76%) and Gen X operators (71%) were much more likely to have an online presence, while Traditionalists (37%) and Baby Boomers (52%) were less likely to have an online presence. As well as older operators, other operators more likely to be laggards, included: Proportion of Australian businesses with an online presence 61% 51% 57% 59% 62% 60% 59% 50% 39% 39% 38% 36% 38% 38% 38% 42% 44% 47% 42% 43% 48% 46% 47% 43% 41% 20% 27% 31% 41% 41% 36%34% 37% 26% 29% 29% 32% 33% Agribusinesses (66%) and construction and trades businesses (43%) had no online presence Rural businesses (54%) Non-users of cloud computing (50%) Established businesses (51%) Sole operators (38%) Males (37%) Mar 10 Oct 10 Mar 11 Sept 11 Feb 12 May 12 Feb 13 Aug 13 Feb 14 Aug 14 Feb 15 Oct 15 Apr 16 Oct 16 Website Social media site No online presence Nov 17 Page 12

Key differences by industry, operator age and size of business are shown below. Total Gen Y Gen X Baby Boomers Traditionalists Sole operators Micro Small Medium Do not have an online presence 34% 45% 59% 38% 34% 11% 15% Only have a business website 29% 33% 31% 26% 25% 31% 43% 38% Only have a social media site for business Have both a business website & a social media site for business 16% 11% 4% 13% 16% 0% 17% 20% 18% 16% 9% 13% 20% 25% 44% Don t know 4% 5% 6% 3% 4% 5% 2% 5% 3% Green = Significantly higher than total Red = Significantly lower than total Do not have an online presence Only have a business website Only have a social media site for business Have both a business website & a social media site for business Agribusiness Business, prof. & property services Construction & trades Finance & insurance Manufacturing & wholesale Retail & hospitality Transport, postal & warehousing 66% 27% 43% 37% 15% 41% 17% 37% 37% 38% 21% 18% 15% 14% 20% 15% 10% 17% 21% 3% 16% 9% 9% 35% 34% 10% Don t know - 6% 4% 2% 1% 4% 10% Green = Significantly higher than total Red = Significantly lower than total Page 13

Respondents using social media were also asked which sites they were using to connect to customers. As can be seen, Facebook was by far the most frequently used social media site (81%), followed by LinkedIn (29%) and Instagram (28%). Instagram was more likely to be mentioned by start-ups (44%) and Gen Y operators (39%). Operators with an online presence were asked which of several business changes had occurred as a result of having an online presence. As can be seen in the table below, having a business website was perceived to enable a more professional brand image (41%) and generated more customer leads or enquiries. Having a social media site allowed more interactions with customers (45%) and generated more customer enquiries and leads in general (41%). Results were similar to the same time last year. Social media sites used (n=448) Facebook 81% LinkedIn 29% Instagram 28% YouTube Twitter 20% Snapchat 8% Pinterest 8% Impact of online presence Result of having a business website April 2016 (n=459) Nov 2016 (n=496) Nov 2017 (n=481) Result of having a social media site April 2016 (n=329) Nov 2016 (n=331) Nov 2017 (n=365) Enabled your business to have a more professional brand image 41% 44% 41% 30% 33% 29% Generated more customer enquiries or leads in general 45% 46% 39% 40% 43% 41% Made it easier for customers to do business with you 34% 40% 37% 33% 33% 32% Allowed more interaction with customers 34% 35% 35% 45% 49% 45% Enabled you to compete better with your competitors 27% 28% 32% 27% 31% 27% Increased revenue or income in general 28% 31% 28% 25% Enabled access to more markets 26% 29% 27% 26% 29% Allowed you to sell online to customers 20% 27% 20% 27% Increased your appeal to younger customers 17% 20% 25% 33% 32% Enabled you to compete internationally/opened your market to international customers 16% 16% 20% 17% 15% 15% Increased your appeal to younger employees 10% 13% 13% 21% 16% Has not benefitted my business 9% 10% 10% 11% 12% 12% Green = Significantly better than website/social media site Significant increase since last wave Red = Significantly lower than website/social media site Significant decrease since last wave Page 14

Pace of technology perceived as about right for Australian operators Over half the operators surveyed (57%) found the pace of technology innovation to be about right, while the proportion stating it was too slow (20%) was equivalent to the proportion stating it was too fast (). Results were similar to the previous wave. Operators more likely to state that the pace of technology was too fast included: - Traditionalists (36%) - Franchisors (32%) - Retail and hospitality businesses (26%) - Exporters (29%) and importers (26%) - Tourism-related businesses (31%) Businesses with a social media site were more likely to state that the pace of technology was too slow (31%). 57% 57% Speed of technology change 4% 3% 3% 4% 4% 16% 20% 20% 60% 59% 57% 20% 17% 20% 17% Oct 15 Apr 16 Nov 16 May 2017 Nov 17 Don t know Too slow more investment is needed in this area About right for my needs Too fast I struggle to keep up Page 15

Satisfaction levels with Internet cost and speed remained steady Under half the operators surveyed reported being satisfied with both Internet speed and cost (45% and 42% respectively), a similar proportion to the last two years. The following operators were more likely to be dissatisfied with the speed of their Internet: - Rural businesses (46%) - Baby Boomers (40%) - Queensland operators (37%) - Micro businesses (35%) - Established businesses (35%) The following operators were more likely to be dissatisfied with the cost of their Internet: - Rural businesses (41%) - Baby Boomers (36%) Satisfaction with speed and cost of Internet 48% 47% 49% 49% 52% 48% 44% 45% 28% 29% 26% 25% 26% 26% 27% 21% Dissatisfaction with speed Dissatisfaction with cost 46% 46% 47% 45% 47% 42% 45% 42% 27% 27% 30% 29% 25% 26% Satisfaction with speed Satisfaction with cost FEB 14 AUG 14 FEB 15 OCT 15 APR 16 NOV 16 MAY 17 NOV 17 Page 16

SPECIAL TOPIC: SHARING ECONOMY The Sharing Economy was seen to have little impact on operators to date Impact of Sharing Economy Over two-thirds of operators (69%) stated they had seen no impact from the sharing economy on their business, with 18% stating the impact to date had been positive and 9% stating it had been negative. The results were similar to the survey conducted last year when this question was last asked. 2017 4% 6% 69% 15% 4% 3% Operators more likely to state the impact of the sharing economy had been positive included: - Franchisors (56%) - Exporters (46%) and importers (39%) - Tourism-related businesses (45%) - Small businesses (37% compared to 10% of micro businesses) - Gen Y operators (31%) and Gen X operators (27%) compared to 7% of Baby Boomers and 5% of Traditionalists. - Metropolitan based operators (28% compared to 11% of regional and 4% of rural based operators) - Start-ups (27%) and establishing businesses (26%) - New South Wales based operators () 2016 1% 4% 73% Very negative No impact Very positive impact 11% Some negative impact Some positive impact Don t know 7% 4% Almost two in five operators have participated in the sharing economy Participation in sharing economy Almost two in five operators (39%) had used the services of an Uber driver or rented a place on Air BNB or similar, compared to 31% the same time last year. The proportion of operators who had supplemented their income through the sharing economy also increased this wave from 14% to 18%. The proportion of operators using a sharing economy platform to enhance businesses operations (20%) or as a separate form of income () was also around one in five operators. These two questions were not asked in the previous wave. Gen Y and Gen X operators, New South Wales and metropolitan based operators, importers, exporters, franchisees, franchisors and establishing businesses were much more likely to have participated in the sharing economy. Used the services of an Uber driver, Uber eats or rented a place on Air BNB or similar Supplemented your income by renting your home via Air BNB, working as an Uber driver or similar Used a sharing economy platform to enhance your business operations Used a sharing economy platform as a separate form of income n/a n/a 2017 2016 18% 14% 20% 31% 39% Page 17

SPECIAL TOPIC: FLEXIBLE WORKFORCE A flexible workforce has many positives for a business Operators were asked several questions about flexible working. As can be seen from the chart below not offering flexible work wasn t causing problems it was still relatively easy to attract new employees and operators were not losing staff if they didn t provide enough flexibility. However, operators were also more likely to agree that: Flexible work arrangements led to more productive and engaged employees (49% agreed; 10% disagreed) Employees with multiple career experiences brought a different perspective to their business (40% agreed; 11% disagreed) They benefited from hiring employees with multiple career experiences even if they stayed only a short time (37% agreed; 17% disagreed) They benefited from having casually employed millennials (35% agreed; 16% disagreed) Adjustments had been made to accommodate flexible working (35% agreed; 15% disagreed) Flexible Working We find more flexible work arrangements leads to more productive and engaged employees We find employees who have multiple career experiences bring a different perspective to our business model We benefit from hiring employees who have multiple career experiences even if they stay with us for a short time It benefits our business to have millennial employees who work with us on a casual arrangement We ve adjusted our business model to accommodate for this new flexible way of working We are offering more contract and part time work options for new and existing staff -10% -11% -17% -16% -15% - 49% 40% 37% 35% 35% 29% We find it difficult to attract new employees into full time positions We are losing staff because they want more flexibility than we can offer -35% -30% 18% Total Disagree Total Agree Micro businesses were less likely to agree with all statements (particularly in comparison to small businesses), except for losing staff due to not offering flexibility. Page 18

SPECIAL TOPIC: CASHLESS SOCIETY AND THE BLACKMARKET Cash made up only of all transactions as the move to a cashless society takes hold On average, cash made up only of all transactions, although higher levels were recorded amongst Gen Y operators (33% compared to 17% of Baby Boomers), establishing businesses (30% compared to 18% of established businesses), retail and hospitality businesses (33%) and agribusinesses (31%) compared to 15% of finance and insurance and 16% of business, professional and property services, exporters (34%) and importers (32%). Operators were strongly in agreement that the banks were making too much profit from the cashless society (68% agreed) and that the use of cash in their business was decreasing (59% agreed). Maturing businesses (78%), regional based operators (75%) and Baby Boomers (74%) were more likely to agree that the banks were making too much profit from the cashless society, while micro businesses were more likely to agree that the use of cash in their business was decreasing (65%). Cashless Society Other key differences noted in the move to the cashless economy were as follows: - Gen Y operators were more likely to be planning for the move to a cashless economy (46% I believe banks are making too much profit out of the cashless economy agreed compared to only 18% of traditionalists) - Finance and insurance businesses were more likely to agree that the concept of a cashless The use of cash in our business is society was irrelevant to their business (54% agreed), as did exporters (55%) and importers decreasing (52%) - Gen Y operators were more likely to agree that the financial cost of handling cash was higher I believe the cashless economy is being forced upon my business compared to cashless operations (46% agreed compared to 27% of Baby Boomers), as did metropolitan based operators (40% compared to 20% of rural based operators) and business, Cash gives me more freedom to run professional and property services businesses (48% compared to 25% of construction and the business how I like trades businesses) - Gen Y operators were more likely to agree that cash gave them more freedom to run their The concept of a cashless society is - irrelevant to our business business how they liked (51% agreed compared to 39% of Baby Boomers), as did sole operators (47% compared to 36% of micro businesses), manufacturing and wholesale (57%), construction We are starting to plan now for the and trades businesses (51%) and New South Wales based operators (49%) -18% move to a cashless society - Retail and hospitality (57%) and regional based operators (51%) were more likely to agree that The financial cost of handling cash the cashless society was being forced on their business -18% costs more compared to cashless operations -7% -11% -16% -16% 68% 59% 47% 43% 41% 38% 34% Total Disagree Total Agree Page 19

Cash-in-hand transactions still relatively common for newer businesses Operators were asked the extent they believed cash-in-hand transactions were common in their industry. Just under a quarter of operators thought they were relatively common () and a similar proportion thought they were relatively uncommon (), with the average on the 0 10 scale being 5.1. Operators who identified higher commonality of cash-in-hand payments and other forms of tax avoidance in their industry included: - Gen Y (average 6.2) and Gen X operators (average 5.7) - Start-ups and establishing businesses (average 6.0 compared to an average of 4.3 for established businesses) - Construction and trades businesses (average 5.8 compared to 4.1 for finance and insurance businesses) Very uncommon Cash-in-hand transactions frequency 13% 6% 6% 4%3% 9% 11% 14% 13% 5% 6% 11% Blackmarket Very common Don t know Tax avoidance particularly by larger companies was perceived as an issue, but the majority did not consider themselves to be a party to this Big companies were seen by operators as the biggest tax avoiders (71% agreed with this statement), and even more so by maturing businesses (81%), retail and hospitality businesses (81%), Baby Boomers (78% agreed compared to 59% of Gen Y operators) and Queensland (78%) and regional based operators (75%). Big companies are the biggest tax avoiders in Australia The Government should concentrate more on stopping businesses avoid tax Cash in hand payments to avoid tax are still very common in Australia Cash in hand payments are a legitimate way of doing business in Australia -7% -9% -12% -31% 36% 60% 58% 71% Sixty percent of operators also agreed that the Government should concentrate more on stopping businesses avoid tax with Baby Boomers (68%) and established businesses (66%) most likely to agree. I feel entitled to occasionally take cash jobs given I pay so much tax already Not declaring occasional cash payments is not a big deal -42% -44% On the other hand, 58% of operators agreed that cash in hand payments were still very common in Australia, although only 36% agreed that they were a legitimate way of doing business. I claim deductions whether they are legitimate or not to make sure I get a refund Everyone cheats the tax system a bit so I can too -56% -51% 21% Gen Y and Gen X operators, metropolitan based operators and business, professional and property services businesses were more likely to agree with the remaining statements around cash payments. Total Disagree Total Agree Page 20

SPECIAL TOPIC: TAKING A STANCE ON SOCIAL ISSUES Younger operators more likely to take a stance on social issues Operators were divided as to whether businesses should take a stance on social issues such as marriage equality and diversity, but there were significant differences by the age of the operator. Gen Y operators were much more likely to agree that businesses should take a stance (55% agreed), while Traditionalists (agree: 4%; disagree: 68%) and Baby Boomers (agree: 21%; disagree: 50%) were more likely to disagree. Should businesses take a stance on social issues? 14% 28% 8% 5% Other operators more likely to agree that businesses should take a stance on social issues were as follows: - Franchisors (66%) and franchisees (45%) - Exporters (58%) and importers (54%) - Tourism related businesses (55%) - Start-ups (43%) and establishing businesses (40%) compared to 15% of established businesses - Business, professional and property services (41% compared to 21% of construction and trades businesses) - Metropolitan based operators (40% compared to 18% of rural and of regional based operators) - Businesses with a website (39%) or social media site (36%) - Females (36% compared to 28% of males) - New South Wales operators (36% compared to of Queensland operators) - Sole operators (34% compared to of micro businesses) Strongly disagree Disagree Neither agree nor disagree Agree Strongly agree Don't know Page 21

GOVERNMENT Level of satisfaction with Federal Government s support of small business steady The level of satisfaction with the Federal Government s support of small business remained steady this wave at 27% compared to 28% the previous wave. Dissatisfaction levels were also unchanged (32% compared to 30%), while 39% of operators stated they were neither satisfied nor dissatisfied. Higher dissatisfaction was noted by rural operators (47% compared to 28% of metropolitan based operators) and Baby Boomers (40% compared to 25% of Gen X and Gen Y operators). Satisfaction levels with State Government declined this wave after an increase last wave Satisfaction with the level of support from State Government declined this wave from 27% last wave back to this wave. Correspondingly, dissatisfaction levels also increased from 34% to 37%. 39% 21% JUL 09 48% 56% 52% 57% 54% 49% 31% 38% 29% 21% 14% 14% 17% 11% 14% 16% NOV 09 Perceptions of Federal Government support of small business MAR 10 OCT 10 SEPT 11 FEB 12 MAY 12 FEB 13 AUG 13 Total dissatisfied 32% 37% 30% 32% 33% 32% 33% 27% 30% 26% 20% 28% 27% FEB 14 AUG 14 Total satisfied FEB 15 OCT 15 APR 16 NOV 16 Perceptions of State Government support for SMEs MAY 17 NOV 17 Dissatisfaction levels were highest amongst rural operators (56% compared to 31% of metropolitan based operators), South Australian (53%) and Queensland based operators (47%), Traditionalists (57%) and Baby Boomers (49% compared to 20% of Gen Y and 29% of Gen X operators), established businesses (48%), micro businesses (43%) and males (40%). 43% 46% 53% 46% 50% 51% 49% 43% 40% 36% 33% 34% 30% 38% 40% 34% 37% 17% 12% 18% 14% 15% 16% 17% 25% 27% 29% 28% 21% 27% NOV 09 MAR 10 OCT 10 MAR 11 SEPT 11 FEB 12 MAY 12 FEB 13 AUG 13 FEB 14 AUG 14 FEB 15 OCT 15 APR 16 NOV 16 MAY 17 NOV 17 Total satisfied Total dissatisfied Page 22

Keeping the instant tax write-off, simplification of BAS and reducing the company tax rate to 25% were viewed favourably by operators Keeping the instant tax write-off of assets under $20k (64%), simplifying the GST reporting process (64%) and reducing the company tax rate to 25% for businesses under $10m revenue (63%) gained the most support from operators. At the other end of the scale, the introduction of paid parental leave for all businesses with a revenue over $5m (29%, and up from last wave), the removal of the threshold at which GST were collected on goods purchased from abroad () was more likely to cause operators to vote against the party proposing it. Gen Y operators were less likely to vote for several of the nominated policies, but were much more supportive of the introduction of a paid parental leave levy on all businesses over $5m revenue (42%). The views of Baby Boomers and Traditionalists tended to be opposite. There were also some notable differences by business type: Policies or initiatives that business operators would vote for/against For Against Keeping the $20,000 instant asset tax write-off for businesses under $2m 64% 11% revenue Policies that significantly simplify the GST/BAS reporting process 64% 11% Reducing the company tax rate from 27.5% to 25% for businesses under $10m 63% 11% revenue Assigning a proportion of Government procurement contracts to small 56% 12% businesses More Federal Government investment in transport infrastructure in our major 56% 11% States and cities Increased Federal Government funding for skills, training and apprenticeship 55% 11% programs The establishment of an incentive bonus for businesses employing people over 54% 10% age 50 Increased Government funding for innovation, research and development by 53% 11% Australian businesses Offering a wage subsidy for employing young Australians 49% 13% Exempting FBT on the purchase of work-related portable electronic devices 48% 13% The introduction of a Director Identification Number for all business owners to 46% 15% reduce the likelihood of transfer of assets from one company to another to avoid tax Remove the threshold at which GST is collected on goods purchased from abroad 39% Retail and hospitality businesses were more supportive of reducing the company tax rate (72%) Introducing a paid parental leave levy for all businesses with revenue over $5m 26% 29% Manufacturing and wholesale businesses were more supportive of establishing an incentive bonus for employing people over 50 (65%), offering a wage subsidy for young Australians (61%) and removing the threshold at which GST is collected from goods overseas (51%) Page 23

About the study The MYOB Business Monitor researches business performance and attitudes regarding areas such as profitability, cash flow, pipeline work, technology usage and the government. This report presents the summary findings for key indicators from the MYOB Business Monitor comprising a national sample of 1,010 business owners, managers and directors (operators), conducted from October 19 November 11, 2017. The businesses participating in the online survey were both nonemploying and employing businesses. All data has been weighted by industry type, location and number of employees, which are in line with the Australian Bureau of Statistics (ABS - Counts of Australian businesses, including entries & exits - 8165.0). This research report was prepared by Gundabluey Research and fieldwork was completed by Colmar Brunton (a Millward Brown Company) for Amy Kirkwood, Public Relations & Corporate Communications Manager Australia, MYOB Australia (amy.kirkwood@myob.com http://myob.com.au Industry Weighting No. Agribusiness* 1 9% 35 Construction & trades 17% 155 Finance & insurance* 1 9% 59 Manufacturing & wholesale 8% 72 Professional & business services 27% 293 Retail & hospitality 11% 129 Transport & warehousing* 1 6% 40 Other industries** 2 (incl. in total results) 14% 227 TOTAL 100% 1010 Location Weighting No. New South Wales 33% 335 Victoria 26% 266 Queensland 20% 207 South Australia 7% 68 Western Australia 10% 99 Other 4% 35 TOTAL 100% 1010 Number of employees/business type Weighting No. 0 employees/sole traders 61% 613 1-4 employees/micro business 28% 279 5-19 employees/small business 9% 94 20-199 employees/medium business* 2 2% 24 TOTAL 100% 1010 The generations were categorised as follows: Generation Y: 18 34 years of age Generation X: 35 49 years of age Baby boomers: 50 69 years of age Traditionalists: 70+ years of age Length of time in business was categorised as per the following: Start up: in business fewer than 2 years Establishing: 2 to 5 years Maturing: 5 to 10 years Established: 10+ years 1 Caveat: There is high margin of error of +/-15% @ 50% on these small bases 2 Other Industries, which have been combined to minimise their margin of error, include these sectors: Communication Services; Cultural & Recreational Services; Education; Electricity, Gas & Water Supply Services; Health & Community Services; Mining; and Personal & Other Services Page 24