FEDERAL COURT OF AUSTRALIA

Bradgate (Trustee) v Ashley Services Group Limited [2017] FCA 1591

ORDERS

THE COURT ORDERS THAT:

Pleadings

1.    Pursuant to s 33K of the Federal Court of Australia Act 1976 (Cth) (FCAA), the Applicant have leave to amend the group definition contained in the Originating Application and Amended Statement of Claim in the form contained at Schedule F and G to these orders.

2.    Pursuant to r 8.21 of the Federal Court Rules 2011 (Cth) (FCR), the Applicant have leave to amend the Originating Application in the form contained at Schedule F to these orders.

3.    Pursuant to r 16.53 of the FCR, the Applicant have leave to amend the Amended Statement of Claim in the form contained at Schedule G to these orders.

4.    The applicant is to file and serve the Further Amended Statement of Claim and the Amended Originating Application by 15 December 2017.

Mediation

5.    Pursuant to s 53A(1) of the FCAA, the Court refers these proceedings to mediation which is to occur by no later than 13 July 2018.

6.    The mediation is to be conducted by a mediator agreed between the parties, with such agreement to occur by no later than 9 February 2018. If the parties cannot agree to a mediator by this date, the mediator is to be National Operations Registrar Lagos.

Notices

7.    Pursuant to s 33J of the FCAA, 4.00pm on 30 March 2018 is fixed as the date before which a Group Member (as defined in the Further Amended Statement of Claim) may opt out of this proceeding or register to participate in this proceeding in accordance with these Orders (Deadline).

8.    Pursuant to s 33X and s 33Yof the FCAA, the form and content of the notice set out in:

a.    Schedule A to these Orders is approved (Opt Out Notice);

b.    Schedule B to these Orders is approved (Registration and Opt Out Notice); and

c.    Schedule C to these Orders is approved (Cover Letter).

9.    Pursuant to s 33X(5) of the FCAA and in accordance with these Orders:

a.    notice of the terms as set out in the Opt Out Notice are to be given to Group Members who have entered into a litigation funding agreement with IMF Bentham Limited as at the time of filing of the Further Amended Statement of Claim (Existing Registered Group Members); and

b.    notice of the terms as set out in the Registration and Opt Out Notice is to be given to all other Group Members (Other Group Members).

Distribution of the Opt Out Notice

10.    Pursuant to s 33Y(3) of the FCAA, the Opt Out Notice is to be sent by IMF Bentham Limited on or before 8 January 2018 to the Existing Registered Group Members by ordinary post or e-mail to their last known postal or e-mail address.

11.    The Opt Out Notice may be amended by the Applicant before it is emailed, posted, displayed or published in order to correct any website or email address or telephone number or other non-substantive error.

Distribution of the Registration and Opt Out Notice

12.    Pursuant to s 33Y(3) of the FCAA, the Registration and Opt Out Notice is to be given to the Other Group Members according to the following procedure (the costs of Link Marketing Services Limited and its subsidiary Link Digicom (Link) are to be invoiced to and paid by the Applicant):

a.    the Respondent shall cause its share registry service provider, Link, to send the Registration and Opt Out Notice and Cover Letter (as applicable) in accordance with the requirements set out in the protocol in Schedule E (Link Protocol);

b.    to the extent applicable and to facilitate its intents and purposes, the Respondent’s solicitors are to comply with the requirements set out in the Link Protocol;

c.    by 15 December 2017, the Respondent shall provide a copy of this order 12 including the Link Protocol to Link;

d.    should the Respondent become aware of any actual or potential non-compliance with the Link Protocol, the Respondent is to notify the Applicant within 2 business days of so becoming aware. The Applicant and the Respondent are directed to advise the Court of such non-compliance by email to the Associate to Wigney J;

e.    by 14 January 2018, IMF Bentham Limited will enable a registration portal to be created on their website for Other Group Members to register their details and obtain the Registration and Opt Out Notice via e-mail or post; and

f.    by 14 January 2018, the solicitors for the Applicant will cause the Registration and Opt Out Notice to be displayed on their website and to remain for the period to the Deadline.

13.    On or before 8 January 2018, the District Registrar of the New South Wales District Registry of the Federal Court of Australia cause the Opt Out Notice, the Further Amended Statement of Claim, Defence to the Amended Statement of Claim, and the most current iterations of the Cross-Claims and Defences to the Cross-Claims to be:

a.    posted on the Federal Court of Australia website; and

b.    made available for inspection at the District Registry of the Federal Court of Australia in Melbourne, Sydney, Canberra, Brisbane, Adelaide, Perth, Hobart and Darwin;

for the period to the Deadline.

14.    In addition to order 13, on or before 14 January 2018, the District Registrar of the New South Wales District Registry of the Federal Court of Australia cause the Registration and Opt Out Notice to be:

a.    posted on the Federal Court of Australia website; and

b.    made available for inspection at the District Registry of the Federal Court of Australia in Melbourne, Sydney, Canberra, Brisbane, Adelaide, Perth, Hobart and Darwin;

for the period to the Deadline.

Registration and Opt Out

15.    Subject to Order 19, by the Deadline, Other Group Members who wish to participate in the distribution of any amount agreed in settlement of this proceeding must register by completing and submitting the registration form as annexed to the Registration and Opt Out Notice as Annexure 2 to Schedule B (Group Member Registration Form) via:

a.    email to IMF Bentham Limited at 402770@imf.com.au; or

b.    post to IMF Bentham Limited at PO Box Z5106, St Georges Terrace, Perth WA 6831;

(Collectively, New Registered Group Member).

16.    In completing the Group Member Registration Form, and in order to register for the purpose of Order 15 above, each Other Group Member will be required to submit:

a.    the group member’s name and address and/or email address;

b.    any relevant Holder Identification Number (HIN) or Security Reference Number (SRN) on the ASX associated with that group member;

c.    the number of Ashley Services Group Limited securities acquired by that group member:

i.    pursuant to the document the Respondent lodged with ASIC on 7 August 2014 titled “Prospectus for the offer of 59.5 million shares at an issue price of $1.66 per share to raise a total of $98.7 million”; and/or

ii.    otherwise during the Relevant Period (as defined in the Further Amended Statement of Claim);

d.    the number of Ashley Services Group Limited securities disposed of by that group member during the Relevant Period (as defined in the Further Amended Statement of Claim);

e.    for each acquisition of Ashley Securities acquired during the Relevant Period, all details regarding the acquisition, including in respect of each such acquisition:

i.    the date of acquisition;

ii.    the quantity of securities acquired; and

iii.    the consideration paid (including brokerage);

f.    for each disposal of Ashley Securities during the Relevant Period, all transaction information regarding the disposal, including in respect of each such disposal:

i.    the date of disposal;

ii.    the quantity of securities disposed; and

iii.    the consideration received (net of brokerage); and

g.    either documentary evidence in support of the matters the subject of items (c) to f or a statutory declaration in the form as set out in the Registration and Opt Out Notice declaring as to the truth and accuracy of the matters the subject of item (c) to f above.

17.    Pursuant to s 33ZF of the FCAA, subject to further order, any Group Member who wishes to opt out of this proceeding must, before the Deadline, deliver an opt out form to the New South Wales District Registry of the Federal Court of Australia.

18.    If, on or before the Deadline, the solicitors for any party to the proceeding or IMF Bentham Limited receive a notice purporting to be an opt out form referable to this proceeding, the solicitors or IMF Bentham Limited must file the notice in the New South Wales District Registry of the Federal Court of Australia within 14 days after receipt, and the notice shall be treated as an opt out notice received by the Court at the time it was received by the solicitors or IMF Bentham Limited.

Other orders in aid of mediation

19.    Pursuant to section 33ZF of the FCAA, and subject to any further order of the Court, any Other Group Member who by the Deadline does not register or opt out of the proceedings in accordance with the manner provided for in these Orders (Unregistered Group Member):

a.    will remain a group member for all purposes of this proceeding; and

b.    shall not, without leave of the Court, be permitted to seek any benefit pursuant to any in-principle settlement (subject to the approval of the Court) of this proceeding reached at the mediation scheduled to commence prior to 13 July 2018, or within 2 months after the first day of that mediation.

20.    Nothing in Order 19 precludes any Unregistered Group Member from having their claims considered at any mediation or settlement that takes place at some future time, if no in-principle settlement of this proceeding is reached at the mediation scheduled to commence prior to 13 July 2018, or within 2 months after the first day of that mediation.

21.    The solicitors for the Applicant, the solicitors for the Respondent and the solicitors for the Cross-Respondents each have leave to inspect the Court file and copy any Opt Out notices filed.

22.    Pursuant to s 33ZF of the FCAA:

a.    the Applicant’s solicitors will deliver to the Respondent’s and each of the Cross Respondents’ solicitors (in electronic form) deidentified trading data for group members (Trading Data) as follows:

i.    by 28 February 2018, for the Existing Registered Group Members;

ii.    by 27 April 2018, for all New Registered Group Members;

b.    the Trading Data must contain:

i.    a unique identification number for each Existing Registered Group Member and New Registered Group Member; and

ii.    the information of the kind set out in Orders 16.c to 16.f above; and

c.    liberty is reserved to the solicitors for the Applicant to amend the Trading Data referred to in Orders 22.a and b above, if it appears that there has been an omission or inclusion resulting in an error.

23.    The costs of and incidental to the procedure set out in Orders 1 to 22.c above are costs in the proceeding. For the avoidance of doubt, answering enquiries by group members and members of the public in relation to the each of the notices referred to in these Orders is work incidental to Orders 7 to 22.c above.

24.    Pursuant to s 33ZF of the FCAA:

a.    by 9 February 2018, in accordance with rule 20.16 of the Federal Court Rules 2011 (Cth) the Respondent and Cross-Respondents are to give initial verified discovery of documents within the categories listed in Schedule D; and

b.    discovery is to be provided electronically in accordance with a document management protocol agreed between the parties;

25.    The matter be listed for a case management hearing at 9.30am on Tuesday 31 July 2018.

26.    Liberty to apply.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

SCHEDULE A

FEDERAL COURT OF AUSTRALIA

ASHLEY SERVICES GROUP CLASS ACTION

NOTICE OF RIGHTS TO OPT OUT OF THE CLASS ACTION

WARNING: YOU MAY ALSO SHORTLY RECEIVE ANOTHER NOTICE TITLED “NOTICE OF RIGHTS TO PARTICIPATE IN SETTLEMENT RESULTING FROM MEDIATION OR OPT OUT” – YOU SHOULD IGNORE THAT NOTICE. AS YOU HAVE ALREADY SIGNED A FUNDING AGREEMENT WITH IMF BENTHAM YOU NEED TO ONLY CONSIDER THIS NOTICE

1. WHY IS THIS NOTICE IMPORTANT?

A class action has been commenced in the Federal Court of Australia by Richard John Findlay Bradgate as Trustee of the Bradgate Superannuation Fund (Mr Bradgate) against Ashley Services Group Limited (Ashley) (Federal Court Proceedings numbered NSD2074/2016).

The claim arises out of allegedly misleading statements and material omissions made in Ashley’s prospectuses issued prior to its listing, and allegedly misleading conduct and failures to comply with continuous disclosure obligations by Ashley which occurred after its listing, which caused loss and damage to Ashley shareholders who acquired Ashley shares pursuant to Ashley’s prospectus dated 7 August 2014 or in the period from 21 August 2014 to 26 April 2015 (Relevant Period).

The Federal Court has referred this class action to mediation which is to occur by no later than 13 July 2018 (Mediation) and has ordered that this notice be published for the information of persons who are members of the class and who have entered into a litigation funding agreement with IMF Bentham Limited as at the time of filing of the Further Amended Statement of Claim on 15 December 2017 in this action.

You should read this notice carefully. Any questions you have concerning the matters contained in this notice should not be directed to the court. If there is anything in it that you do not understand, you should seek legal advice.

2. WHAT IS A CLASS ACTION?

A class action is an action that is brought by one person (referred to as the "Applicant") on his or her own behalf and on behalf of a class of people against another person (referred to as the "Respondent") where the Applicant and the group members have the same or similar claims against the Respondent.

Group members in a class action are not individually responsible for the legal costs associated with bringing the class action. In a class action, only the Applicant is responsible for the costs.

Group members are "bound" by the outcome in the class action, unless they have opted out of the proceeding. A binding result can happen in two ways: a judgment following a trial, or a settlement at any time. If there is a judgment or a settlement of a class action, group members will not be able pursue the same claims and may not be able to pursue similar or related claims against the respondent in other legal proceedings. Group members should note that:

(a)    in a judgment following trial, the Court will decide various common factual and legal issues in respect of the claims made by the Applicant and group members. Group members will be bound by those findings, whether or not they are favourable to them (unless they are appealed). Importantly, if there are other proceedings between a group member and the respondent, neither of them will be permitted to raise arguments in that proceeding which are inconsistent with a factual or legal issue decided in the trial of common issues in the class action. This means that if the issues are resolved against the Applicant, group members will be unable to pursue claims they have which are the same as the Applicant’s claims, and will not be able to pursue other claims which are dependent upon common issues which have been resolved against the Applicant; and

(b)    in a settlement of a class action, where the settlement provides for compensation to group members it is likely to extinguish all rights to compensation which a group member might have against the respondent which arise in any way out of the events or transactions which are the subject-matter of the class action.

If you consider that you have claims against a respondent which are based on your individual circumstances or otherwise additional to the claims described in the class action, then it is important that you seek independent legal advice about the potential binding effects of the class action before the deadline for opting out (see below).

3. WHAT IS THIS CLASS ACTION?

This class action is brought by Mr Bradgate on his own behalf and on behalf of all persons who are “Group Members” as defined in the Further Amended Statement of Claim (refer to Section 5 below as to whether you are a Group Member).

Mr Bradgate alleges in the Further Amended Statement of Claim that Ashley’s prospectuses contained misleading statements and omissions primarily concerning its forecast financial results for the 2015 financial year (FY15). Mr Bradgate’s key allegations include that the prospectuses contained misleading statements, and omitted to disclose material information concerning risks to the future revenue to be derived by Ashley from a business known as ASG Integracom, both arising from a proposed government reform known as “Tools for Your Trade” program, and from the actual trading performance of the business.

It is further alleged that Ashley failed to disclose the above information or risks to the Australian Securities Exchange (ASX) until the end of the Relevant Period, giving rise to breaches of Ashley’s continuous disclosure obligations under the ASX Listing Rules.

Ashley denies the allegations and has also filed cross-claims against Holmes Management Group Pty Limited and its directors at the relevant time, Deloitte Touch Tohmatsu, Deloitte Corporate Finance Pty Limited and Grant Thornton Corporate Finance Pty Limited (together the “Cross-Respondents”). Grant Thornton Corporate Finance Pty Limited has also filed a cross-claim against Ashley.

4. WHAT IS ‘OPT OUT’?

The Applicant in a class action does not need to seek the consent of group members to commence a class action on their behalf or to identify a specific group member. However, group members can cease to be group members by opting out of the class action. An explanation of how group members are able to opt out is found below in the section 9(b) headed “How you can opt out of the class action?”

5. ARE YOU A GROUP MEMBER?

You are a Group Member if you:

(a)    acquired fully paid ordinary shares in Ashley Services Group Limited ACN 094 747 510 (Ashley Shares), pursuant to the Offer (as defined in paragraph 27 of the Further Amended Statement of Claim) or otherwise acquired Ashley Shares in the Relevant Period; and

(b)    with the exception of Andrew Douglas Shrimpton and Dean Shrimpton, were not during the Relevant Period, and are not, any of the following:

(i)    a related party (as defined by s 228 of the Corporations Act 2001 (Cth)) of Ashley;

(ii)    a related body corporate (as defined by s 50 of the Corporations Act 2001 (Cth)) of Ashley;

(iii)    an associated entity (as defined by s 50AAA of the Corporations Act 2001 (Cth)) of Ashley;

(iv)    a director, an officer, or a close associate (as defined by s 9 of the Corporations Act 2001 (Cth)) of Ashley; or

(v)    a judge or the Chief Justice of the Federal Court of Australia or a Justice or the Chief Justice of the High Court of Australia; and

(c)    have suffered loss or damage by reason of the conduct of Ashley pleaded in the Further Amended Statement of Claim.

You have been identified as a Group Member because as at the date of the filing of the Further Amended Statement of Claim on 15 December 2017, you have entered into a litigation funding and management agreement with IMF Bentham Limited and a retainer with William Roberts Lawyers in relation to this class action and have provided information to IMF Bentham Limited indicating that you meet the above criteria.

If you believe you are not a Group Member, you should contact William Roberts Lawyers on (02) 9552 2111 or email bill.petrovski@williamroberts.com.au or seek your own legal advice without delay.

6. WILL YOU BE LIABLE FOR LEGAL COSTS?

You will not become liable for any legal costs simply by remaining as a Group Member for the determination of the common questions.

Your rights and obligations under the litigation funding and management agreement with IMF Bentham Limited and the retainer with William Roberts Lawyers will not change if you simply do nothing.

You should be aware that the Court may, at any time, but usually in considering a settlement approval, vary your and IMF’s entitlements under the litigation funding and management agreement should it consider that it is in the interest of you and other group members to do so.

7. WHAT WILL HAPPEN IF YOU CHOOSE TO REMAIN A GROUP MEMBER?

Unless you opt out in accordance with the procedure set out in section 9(b) below, you will be bound by:

(a)    any settlement agreement reached (whether through the Mediation or otherwise); and

(b)    the outcome of this class action as determined by the Court (if there is no settlement).

If a settlement agreement is reached at the Mediation (or within 2 months after the first day of the Mediation) and if the Court approves the settlement, the only Group Members who will be eligible for a share of any settlement monies will be:

(a)    persons like you, being those who at the date of the filing of the Further Amended Statement of Claim, entered into a litigation funding and management agreement with IMF Bentham Limited in relation to this class action; and

(b)    persons who have not entered into such an agreement with IMF Bentham Limited but have registered their interest to participate in the distribution of any amount agreed in settlement of this class action in accordance with the orders of the Court.

If a settlement agreement is not reached at the Mediation (or within 2 months after the first day of the Mediation), then this class action will continue and you will remain a Group Member in the class action (unless you opt out in accordance with the procedure in section 9(b)).

If you do not opt out and this class action is successful, you and other eligible Group Members will be entitled to share in the benefit of any order, judgment or settlement, although in some cases you may have to satisfy certain conditions before your entitlement arises. If this class action is unsuccessful or is not as successful as you might have wished, you will not be able to sue on the same claim in any other proceedings.

8. WHAT WILL HAPPEN IF YOU CHOOSE TO OPT-OUT?

If you opt out of this class action, you will no longer be:

(a)    a Group Member in this class action; or

(b)    bound by the outcome of this class action (whether achieved through settlement or judgment) or entitled to share in the benefit of any order, judgment or settlement in the class action. However, you will be at liberty to bring your own claim against the Respondent or any of the Cross-Respondents, provided that you issue Court proceedings within the time limit applicable to your claim.

If you wish to bring your own claim against Ashley or any of the Cross-Respondents, you should seek your own legal advice about your claim and the applicable time limit prior to opting out.

NOTE: You should note that your litigation funding and management agreement with IMF Bentham Limited and your retainer with William Roberts Lawyers contain terms as to your rights and obligations in the event that you opt out of this class action.

9. WHAT GROUP MEMBERS NEED TO DO

(a) How you can remain a group member?

If you wish to remain a Group Member there is nothing you need to do at the present time. Unless a settlement occurs, Mr Bradgate will continue to bring the proceeding on your behalf up to the point where the Court determines the substantial common issues of law and fact arising out of the claims of the Group Members.

(b) How you can opt out of the class action?

If you do not wish to remain a Group Member you must opt out of this class action by completing the below enclosed "Opt out notice", then returning it to the Registrar of the Federal Court of Australia at the address on the form. The Notice must reach the Registrar by no later than 4.00pm on 30 March 2018, otherwise it will not be effective.

Again notably, your litigation funding and management agreement with IMF Bentham Limited and your retainer with William Roberts Lawyers contain terms as to your rights and obligations in the event that you choose to opt out of this class action.

You should complete and submit the below “Opt Out Notice” if:

(i) you qualify as a Group Member and you wish to opt out of the class action; or

(ii) you believe that you have been incorrectly identified as a Group Member, because you do not meet the criteria set out above in Section 5 headed "Are you a Group Member".

Each Group Member seeking to opt out should fill out a separate form. If you are opting out on behalf of a company or business please provide your name, the name of the company or business and your position within the company or business (e.g. director or partner).

10. WHERE CAN YOU OBTAIN COPIES OF RELEVANT DOCUMENTS?

Copies of relevant documents, including the Amended Originating Application, the Further Amended Statement of Claim, the Defence to the Amended Statement of Claim and the Statements of Cross-Claims against the Cross-Respondents and Defences thereto, may be obtained by:

(a)    inspecting them between 9am and 5pm at the offices of William Roberts Lawyers in Sydney, Melbourne and Brisbane, contact details for which are available from www.williamroberts.com.au or by calling (02) 9552 2111; or

(b)    inspecting them on the Federal Court website: www.fedcourt.gov.au.

11. FURTHER INFORMATION

Please consider the above matters carefully. If there is anything of which you are unsure, you should contact William Roberts Lawyers on (02) 9552 2111 or email Mr. Bill Petrovski at bill.petrovski@williamroberts.com.au or seek your own legal advice. You should not delay in making your decision.

Form 35

Rule 9.34

Opt out notice

No.    NSD2074 of 2016

Federal Court of Australia

District Registry: New South Wales

Division: General

Richard John Findlay Bradgate as Trustee of the Bradgate Superannuation Fund

Applicant

Ashley Services Group Limited (ACN 094 747 510)

Respondent/Cross Claimant/Cross Respondent to the Fourth Cross Claim

Holmes Management Group Pty Ltd (ACN 164 551 526)

Carl Holmes

Marie Holmes

Cross Respondents to First Cross Claim

Deloitte Touche Tohmatsu

Deloitte Corporate Finance Pty Ltd (ACN 003 833 127)

Cross Respondents to Second Cross Claim

Grant Thornton Corporate Finance Pty Ltd (ACN 003 265 987)

Cross Respondent to Third Cross Claim/Cross Claimant to the Fourth Cross-Claim

To:    The Registrar Federal Court of Australia, New South Wales District Registry Level 17, Law Courts Building Queens Square, Sydney NSW 2000

The person named below as a group member in this representative proceeding gives notice under section 33J of the Federal Court of Australia Act 1976 that the group member is opting out of the representative proceeding.

If you are signing as the solicitor or representative of the group member:

Date:      

_______________________________________

SCHEDULE B

FEDERAL COURT OF AUSTRALIA

ASHLEY SERVICES GROUP CLASS ACTION

NOTICE OF RIGHTS TO :

1. WHY IS THIS NOTICE IMPORTANT?

A class action has been commenced in the Federal Court of Australia by Richard John Findlay Bradgate as Trustee of the Bradgate Superannuation Fund (Mr Bradgate) against Ashley Services Group Limited (Ashley) (Federal Court Proceedings numbered NSD2074/2016).

The claim arises out of allegedly misleading statements and material omissions made in Ashley’s prospectuses issued prior to its listing, and allegedly misleading conduct and failures to comply with continuous disclosure obligations by Ashley which occurred after its listing. Such conduct is alleged to have caused loss and damage to Ashley shareholders who acquired Ashley shares pursuant to Ashley’s prospectus dated 7 August 2014 or in the period from 21 August 2014 to 26 April 2015 (Relevant Period).

You are a Group Member of this class action if you:

(a)    acquired fully paid ordinary shares in Ashley Services Group Limited ACN 094 747 510 (Ashley Shares), pursuant to the Offer (as defined in paragraph 27 of the Further Amended Statement of Claim) or otherwise acquired Ashley Shares in the Relevant Period; and

(b)    with the exception of Andrew Douglas Shrimpton and Dean Shrimpton, were not during the Relevant Period, and are not, any of the following:

(i)    a related party (as defined by s 228 of the Corporations Act 2001 (Cth)) of Ashley;

(ii)    a related body corporate (as defined by s 50 of the Corporations Act 2001 (Cth)) of Ashley;

(iii)    an associated entity (as defined by s 50AAA of the Corporations Act 2001 (Cth)) of Ashley;

(iv)    a director, an officer, or a close associate (as defined by s 9 of the Corporations Act 2001 (Cth)) of Ashley; or

(v)    a judge or the Chief Justice of the Federal Court of Australia or a Justice or the Chief Justice of the High Court of Australia; and

(c)    have suffered loss or damage by reason of the conduct of Ashley pleaded in the Further Amended Statement of Claim.

You should read this notice carefully as it concerns your rights if you are a Group Member of this class action. Any questions you have concerning the matters contained in this notice should not be directed to the court. If there is anything in it that you do not understand, you should seek legal advice.

(A) Participation in Settlement

The Federal Court has referred this class action to mediation which is to occur by no later than 13 July 2018 (Mediation).

Some Group Members (being those who have entered into a litigation funding agreement with IMF Bentham Limited) as at 15 December 2017 are automatically eligible to receive a share of settlement monies that may result from the Mediation (or a settlement within 2 months of the first day of the Mediation). Those Group Members are considered Registered Group Members.

If you are not a Registered Group Member at the time this notice was issued and you wish to have your claim considered at the Mediation and receive a share of settlement monies resulting from any settlement reached at the Mediation (or a settlement reached within 2 months of the first day of the Mediation), you must apply to register and become a New Registered Group Member by:

(a)    completing and submitting the enclosed “Group Member Registration Form”; and

(b)    providing all information and documents required as set out in this form.

Importantly:

(a)     the Group Member Registration Form must reach IMF Bentham Limited by no later than 4pm on 30 March 2018; and

(b)     if you do not register your interest in accordance with this notice, you will not, without the permission (leave) of the Court, be entitled to seek any benefit pursuant to any settlement of this proceeding at the Mediation (or within 2 months after the first day of the Mediation).

Your options are set out in detail in Section 6 below headed “What are your options?”

(B) Opt Out

If you do not wish to remain a Group Member you must opt out of this class action by completing an "Opt Out Notice" in the form shown at Annexure 1 to this notice, then you must return it to the Registrar of the Federal Court of Australia at the address on the form. IMPORTANT: the Notice must reach the Registrar by no later than 4.00pm on 30 March 2018, otherwise it will not be effective.

Your options are set out in detail in Section 6 below headed “What are your options?”

2. WHAT IS A CLASS ACTION?

A class action is an action that is brought by one person (referred to as the "Applicant") on his or her own behalf and on behalf of a class of people against another person (referred to as the "Respondent") where the Applicant and the group members have the same or similar claims against the Respondent.

Group members in a class action are not individually responsible for the legal costs associated with bringing the class action. In a class action, only the Applicant is responsible for the costs.

Group members are "bound" by the outcome in the class action, unless they have opted out of the proceeding. A binding result can happen in two ways: judgment following a trial, or a settlement at any time. If there is a judgment or a settlement of a class action, group members will not be able pursue the same claims and may not be able to pursue similar or related claims against the respondent in other legal proceedings. Group members should note that:

(a)    in a judgment following trial, the Court will decide various common factual and legal issues in respect of the claims made by the Applicant and group members. Group members will be bound by those findings, whether or not they are favourable to them (unless they are appealed). Importantly, if there are other proceedings between a group member and the respondent, neither of them will be permitted to raise arguments in that proceeding which are inconsistent with a factual or legal issue decided in the trial of common issues in the class action. This means that if the issues are resolved against the Applicant, group members will be unable to pursue claims they have which are the same as the Applicant’s claims, and will not be able to pursue other claims which are dependent upon common issues which have been resolved against the Applicant; and

(b)    in a settlement of a class action, where the settlement provides for compensation to group members it is likely to extinguish all rights to compensation which a group member might have against the respondent which arise in any way out of the events or transactions which are the subject-matter of the class action.

If you consider that you have claims against a respondent which are based in your individual circumstances or otherwise additional to the claims described in the class action, then it is important that you seek independent legal advice about the potential binding effects of the class action before the deadline for opting out (see below).

3. WHAT IS THIS CLASS ACTION?

This class action is brought by Mr Bradgate on his own behalf and on behalf of all persons who are “Group Members” as defined in the Further Amended Statement of Claim (refer to Section 5 below as to whether you are a Group Member).

Mr Bradgate alleges in the Further Amended Statement of Claim that Ashley’s prospectuses contained misleading statements and omissions primarily concerning its forecast financial results for the 2015 financial year (FY15). Mr Bradgate’s key allegations include that the prospectuses contained misleading statements, and omitted to disclose material information concerning risks to the future revenue to be derived by Ashley from a business known as ASG Integracom, both arising from a proposed government reform known as “Tools for Your Trade” program, and from the actual trading performance of the business.

It is further alleged that Ashley failed to disclose the above information or risks to the Australian Securities Exchange (ASX) until the end of the Relevant Period, giving rise to breaches of Ashley’s continuous disclosure obligations under the ASX Listing Rules.

Ashley denies the allegations and has also filed cross-claims against Holmes Management Group Pty Limited and its directors at the relevant time, Deloitte Touch Tohmatsu, Deloitte Corporate Finance Pty Limited and Grant Thornton Corporate Finance Pty Limited (together the “Cross-Respondents”). Grant Thornton Corporate Finance Pty Limited has also filed a cross-claim against Ashley.

4. WHAT IS ‘OPT OUT’?

The Applicant in a class action does not need to seek the consent of group members to commence a class action on their behalf or to identify a specific group member. However, group members can cease to be group members by opting out of the class action. An explanation of how group members are able to opt out is found below in Section 6(b) headed “Opt out of this class action”.

5. ARE YOU A GROUP MEMBER OF THIS CLASS ACTION?

You are a Group Member if you:

(a)    acquired fully paid ordinary shares in Ashley Services Group Limited ACN 094 747 510 (Ashley Shares), pursuant to the Offer (as defined in paragraph 27 of the Further Amended Statement of Claim) or otherwise acquired Ashley Shares in the Relevant Period; and

(b)    with the exception of Andrew Douglas Shrimpton and Dean Shrimpton, were not during the Relevant Period, and are not, any of the following:

(i)    a related party (as defined by s 228 of the Corporations Act 2001 (Cth)) of Ashley;

(ii)    a related body corporate (as defined by s 50 of the Corporations Act 2001 (Cth)) of Ashley;

(iii)    an associated entity (as defined by s 50AAA of the Corporations Act 2001 (Cth)) of Ashley;

(iv)    a director, an officer, or a close associate (as defined by s 9 of the Corporations Act 2001 (Cth)) of Ashley; or

(v)    a judge or the Chief Justice of the Federal Court of Australia or a Justice or the Chief Justice of the High Court of Australia; and

(c)    have suffered loss or damage by reason of the conduct of Ashley pleaded in the Further Amended Statement of Claim.

If you are unsure whether or not you are a Group Member, you should contact William Roberts Lawyers on (02) 9552 2111 or email bill.petrovski@williamroberts.com.au or seek your own legal advice without delay.

6. WHAT ARE YOUR OPTIONS?

If you consider that you are a Group Member in this class action, you must choose from one of the following three options.

6(a) Option 1 – Register your interest to participate in any settlement reached at the Mediation (or 2 months after the first day of the Mediation)

If you wish to receive a share of any settlement monies resulting from a settlement at the Mediation (or a settlement within 2 months after the first day of the Mediation), you must:

(i)    complete and send the enclosed “Group Member Registration Form” at Annexure 2 to this notice either via email to IMF Bentham Limited at 402770@imf.com.au or by post to IMF Bentham Limited PO Box Z5106, St Georges Terrace, Perth WA 6831; and

(ii)    provide all information and documents required as set out in the form;

so that the Group Member Registration Form reaches IMF Bentham Limited by 4.00pm on 30 March 2018 (Deadline).

IMPORTANT: If your completed Group Member Registration Form fails to reach IMF Bentham Limited by the Deadline, you will not be entitled to receive a share of any settlement monies resulting from a settlement at the Mediation (or a settlement within 2 months after the first day of the Mediation).

The information and documents you provide must be complete, accurate and legible. If you are unable to provide the documents requested, you may provide a statutory declaration declaring as to the truth and accuracy of all information you provide on the Group Member Registration Form.

Once you submit the Group Member Registration Form and the required documentation in accordance with the above, you will become a New Registered Group Member.

The information and documents you provide will be used by William Roberts Lawyers and all or some of it may be provided to Ashley or the Cross-Respondents prior to the Mediation to enable the parties to have sufficient information about all the claims to settle this class action.

If a settlement agreement is reached at the Mediation (or within 2 months after the first day of the Mediation), New Registered Group Members will be contacted at the address provided on the Group Member Registration Form and informed of the terms of the settlement (which will be subject to Court approval). Only Registered Group Members and New Registered Group Members will be eligible for a share of any settlement monies.

If a settlement agreement is not reached at the Mediation (or within 2 months after the first day of the Mediation), then this class action will continue and you will remain a group member (unless you opt out in accordance with procedure set out in Section 6(b) below).

6(b) Option 2 – Opt out of this class action

If you opt out of this class action, you will no longer be:

(i)    a Group Member in this class action; or

(ii)    bound by the outcome of this class action (whether achieved through settlement or judgment) or entitled to share in the benefit of any order, judgment or settlement in the class action. However, you will be at liberty to bring your own claim against the Respondent or any of the Cross-Respondents, provided that you issue Court proceedings within the time limit applicable to your claim.

If you wish to bring your own claim against Ashley or any of the Cross-Respondents, you should seek your own legal advice about your claim and the applicable time limit prior to opting out.

If you do not wish to remain a Group Member you must opt out of this class action by completing a " Opt Out Notice" in the form shown at Annexure 1 to this notice, and returning it to the Registrar of the Federal Court of Australia at the address on the form. IMPORTANT: the Notice must reach the Registrar by no later than 4.00pm on 30 March 2018, otherwise it will not be effective.

You should submit the Notice of opting out if:

(i)    you qualify as a Group Member and you wish to opt out of the class action; or

(ii)    you believe that you have been incorrectly identified as a Group Member, because you do not meet the criteria set out in Section 5 headed "Are you a Group Member" above.

Each Group Member seeking to opt out should fill out a separate form. If you are opting out on behalf of a company or business please provide your name, the name of the company or business and your position within the company or business (e.g. director or partner).

If you decide to opt out, you should not complete or return a Group Member Registration Form.

6(c) Option 3 – Do nothing

If you do nothing by the Deadline, that is you do not:

(i)    register by submitting the “Group Member Registration Form” as per option 1 above; or

(ii)    return an opt out notice as per option 2 above;

you will remain a group member but will not, without the leave of the Court, be permitted to seek any benefit pursuant to any in-principle settlement (subject to the approval of the Court) of this class action reached at the Mediation (or within 2 months after the first day of the Mediation).

If you do nothing and a settlement agreement is not reached at the Mediation (or within 2 months of the first day of the Mediation) and approved by the Court, you will remain a Group Member and Mr Bradgate will continue to bring the class action on your behalf up to the point where the Court determines the substantial common issues of law and fact arising out of the claims of the Group Members. In that case, you will be bound by the outcome of the class action. If this class action is successful, you will be entitled to share in the benefit of any order, judgment or settlement in favour of Mr Bradgate, although you may have to satisfy certain conditions before your entitlement arises. If this class action is unsuccessful or is not as successful as you might have wished, you will not be able to sue on the same claim in any other proceedings.

Importantly, in considering your options you should read the note as to common fund orders or funding equalisation orders in section 7 below as these matters may affect your rights and entitlements to proceeds of any settlement.

7. WILL YOU BE LIABLE FOR LEGAL OR OTHER COSTS?

You will not become liable for any legal costs simply by remaining a Group Member for the determination of the common questions or registering to become a New Registered Group Member. However, you should carefully read the important note below concerning your potential obligations to make contributions from any recovery arising from judgement or settlement if any common fund orders or funding equalisation orders are sought and made.

IMPORTANT NOTE AS TO FUNDING EQUALISATION ORDERS OR COMMON FUND ORDERS:

You should be aware that Mr Bradgate or IMF Bentham Limited will likely in the future make an application to the Court that seeks either:

(a)    funding equalisation orders (explained in detail below); or

(b)    common fund orders (explained in detail below).

Funding Equalisation Orders

In this class action, the Group Members fall within two categories:

(a)    Group Members who have already entered into a litigation funding agreement with IMF Bentham Limited (Funded Group Members); and

(b)    Group Members who have not entered into a litigation funding agreement with IMF Bentham Limited (Non-Funded Group Members).

In the event of a successful resolution of their claims, the Funded Group Members are liable to pay to IMF Bentham Limited, from any monies recovered, a share of the legal costs, commission and any other amounts payable under the funding agreements. On the other hand, absent a Court order, the Non-Funded Group Members are not liable to do so.

The Court has in the past recognised in the context of making orders facilitating or approving settlements, that fairness would require that group members who have entered into funding agreements should not end up in a worse position than group members who have not entered into funding agreements. Accordingly, the Court has in the past made what are commonly referred to as “funding equalisation orders”.

Funding equalisation orders have the effect of taking the amount that would have been paid to the litigation funder by Non-Funded Group Members if they had signed funding agreements, and then redistributing that amount amongst all Group Members so as to achieve equality of outcome. In this way equality of outcome is achieved as between the Funded Group Members and Non-Funded Group Members. Such orders effectively require Non-Funded Group Members to bear part of the cost of funding the proceedings.

A copy of the standard form IMF Bentham Limited funding agreement for this class action may be inspected between 9am and 5pm at the offices of William Roberts Lawyers in Sydney, Melbourne and Brisbane, contact details for which are available from www.williamroberts.com.au or by calling (02) 9552 2111.

Common Fund Orders

A Common Fund Order is a Court order requiring Mr Bradgate and all Group Members to pay a pro rata share of the legal costs, commission and any other amounts payable to IMF Bentham Limited from a common fund made up from any amounts the Group Members and Mr Bradgate receive from any settlement or judgment in the class action.

If Mr Bradgate or IMF Bentham Limited make an application for common fund orders (with other ancillary orders), such application will seek that Mr Bradgate and each Group Member pay to IMF Bentham Limited, on a pro-rata basis, the following amounts from any amounts they receive from any settlement or judgment in the class action:

(a)    an amount equal to their share of the costs and expenses paid or payable (including any conditional cost components of solicitor’s fees) by IMF Bentham Limited in connection with this proceeding (together with any GST for any taxable supply made by IMF Bentham Limited); and

(b)    a funding fee or commission to IMF Bentham Limited in an amount not exceeding 40% of the amount they receive from any settlement or judgment in the class action.

The Court may or may not accept the rate proposed by Mr Bradgate or IMF Bentham Limited and may set a rate that it considers appropriate to apply consistently to Mr Bradgate and all Group Members.

Legal work specific to your claim

Further, if the preparation or finalisation of your personal claim requires work to be done in relation to issues that are specific to your claim, you can engage William Roberts Lawyers or other solicitors to do that work for you. A copy of the terms on which William Roberts Lawyers are acting in the class action may be obtained from them on contact details shown below.

8. WHERE CAN YOU OBTAIN COPIES OF RELEVANT DOCUMENTS?

Copies of relevant documents, including the Amended Originating Application, the Further Amended Statement of Claim, the Defence to the Amended Statement of Claim and the most current iterations of the Statements of Cross-Claim and Defences to such Cross-Claims may be obtained by:

(a)    inspecting them between 9am and 5pm at the offices of William Roberts Lawyers in Sydney, Melbourne and Brisbane, contact details for which are available from www.williamroberts.com.au or by calling (02) 9552 2111; or

(b)    inspecting them on the Federal Court website: www.fedcourt.gov.au.

In addition, a copy of the standard form IMF Bentham Limited funding agreement for this class action may be inspected between 9am and 5pm at the offices of William Roberts Lawyers in Sydney, Melbourne and Brisbane, contact details for which are available from www.williamroberts.com.au or by calling (02) 9552 2111.

9. FURTHER INFORMATION

Please consider the above matters carefully. If there is anything of which you are unsure, you should contact William Roberts Lawyers on (02) 9552 2111 or email Mr. Bill Petrovski at bill.petrovski@williamroberts.com.au or seek your own legal advice. You should not delay in making your decision.

Annexure 1

Form 21

Rule 9.34

Opt out notice

No.    NSD2074 of 2016

Federal Court of Australia

District Registry: New South Wales

Division: General

Richard John Findlay Bradgate as Trustee of the Bradgate Superannuation Fund

Applicant

Ashley Services Group Limited (ACN 094 747 510)

Respondent/Cross Claimant/Cross Respondent to the Fourth Cross Claim

Holmes Management Group Pty Ltd (ACN 164 551 526)

Carl Holmes

Marie Holmes

Cross Respondents to First Cross Claim

Deloitte Touche Tohmatsu

Deloitte Corporate Finance Pty Ltd (ACN 003 833 127)

Cross Respondents to Second Cross Claim

Grant Thornton Corporate Finance Pty Ltd (ACN 003 265 987)

Cross Respondent to Third Cross Claim/Cross Claimant to the Fourth Cross-Claim

To:    The Registrar Federal Court of Australia, New South Wales District Registry Level 17, Law Courts Building Queens Square, Sydney NSW 2000

The person named below as a group member in this representative proceeding gives notice under section 33J of the Federal Court of Australia Act 1976 that the group member is opting out of the representative proceeding.

If you are signing as the solicitor or representative of the group member:

Date:      

_______________________________________

Annexure 2

GROUP MEMBER REGISTRATION FORM

“Ashley Services Group Class Action”

Federal Court of Australia proceeding NSD2074 of 2016

To:    IMF Bentham Limited

    PO Box Z5106, St Georges Terrace, Perth,     WA 6831

Attention: Ewen McNee

The group member named below registers to receive a share of any settlement monies resulting from the Mediation of this representative proceeding or a settlement within 2 months after the first day of the Mediation of this representative proceeding.

If the above space is insufficient, please provide the required information on separate pages.

IMPORTANT: SUPPORTING DOCUMENTS OR STATUTORY DECLARATION REQUIRED

Please provide documentary evidence in support of the information you are providing with this form, including:    

(a) holding statements and/or contract notes if available; and (b) trade information in excel format, if the applicant is claiming on behalf of multiple funds.

If you are unable to provide documentary evidence, please provide a Commonwealth statutory declaration declaring as to the truth and accuracy of the information you are providing with this form. The Commonwealth statutory declaration form is set out at the end of this notice. Alternatively, the form may be downloaded from https://www.ag.gov.au/Publications/Statutory-declarations/Pages/default.aspx

Date:

_________________          ___________________

Signed by, or on behalf            (print name)

of and with authority of,

the Group Member

(as specified above)            

Commonwealth of Australia

STATUTORY DECLARATION

Statutory Declarations Act 1959

Note 1   A person who intentionally makes a false statement in a statutory declaration is guilty of an offence, the punishment for which is imprisonment for a term of 4 years — see section 11 of the Statutory Declarations Act 1959.

Note 2   Chapter 2 of the Criminal Code applies to all offences against the Statutory Declarations Act 1959 — see section 5A of the Statutory Declarations Act 1959.

A statutory declaration under the Statutory Declarations Act 1959 may be made before–

(1) a person who is currently licensed or registered under a law to practise in one of the following occupations:

Chiropractor        Dentist            Legal practitioner

Medical practitioner        Nurse            Optometrist

Patent attorney        Pharmacist            Physiotherapist

Psychologist        Trade marks attorney        Veterinary surgeon

(2) a person who is enrolled on the roll of the Supreme Court of a State or Territory, or the High Court of Australia, as a legal practitioner (however described); or

(3) a person who is in the following list:

Agent of the Australian Postal Corporation who is in charge of an office supplying postal services to the public

Australian Consular Officer or Australian Diplomatic Officer (within the meaning of the Consular Fees Act 1955)

Bailiff

Bank officer with 5 or more continuous years of service

Building society officer with 5 or more years of continuous service

Chief executive officer of a Commonwealth court

Clerk of a court

Commissioner for Affidavits

Commissioner for Declarations

Credit union officer with 5 or more years of continuous service

Employee of the Australian Trade Commission who is:

(a) in a country or place outside Australia; and

(b) authorised under paragraph 3 (d) of the Consular Fees Act 1955; and

(c) exercising his or her function in that place

Employee of the Commonwealth who is:

(a) in a country or place outside Australia; and

(b) authorised under paragraph 3 (c) of the Consular Fees Act 1955; and

(c) exercising his or her function in that place

Fellow of the National Tax Accountants’ Association

Finance company officer with 5 or more years of continuous service

Holder of a statutory office not specified in another item in this list

Judge of a court

Justice of the Peace

Magistrate

Marriage celebrant registered under Subdivision C of Division 1 of Part IV of the Marriage Act 1961

Master of a court

Member of Chartered Secretaries Australia

Member of Engineers Australia, other than at the grade of student

Member of the Association of Taxation and Management Accountants

Member of the Australasian Institute of Mining and Metallurgy

Member of the Australian Defence Force who is:

(a) an officer; or

(b) a non-commissioned officer within the meaning of the Defence Force Discipline Act 1982 with 5 or more years of continuous service; or

(c) a warrant officer within the meaning of that Act

Member of the Institute of Chartered Accountants in Australia, the Australian Society of Certified Practising Accountants or the National Institute of Accountants

Member of:

(a) the Parliament of the Commonwealth; or

(b) the Parliament of a State; or

(c) a Territory legislature; or

(d) a local government authority of a State or Territory

Minister of religion registered under Subdivision A of Division 1 of Part IV of the Marriage Act 1961

Notary public

Permanent employee of the Australian Postal Corporation with 5 or more years of continuous service who is employed in an office supplying postal services to the public

Permanent employee of:

(a) the Commonwealth or a Commonwealth authority; or

(b) a State or Territory or a State or Territory authority; or

(c) a local government authority;

with 5 or more years of continuous service who is not specified in another item in this list

Person before whom a statutory declaration may be made under the law of the State or Territory in which the declaration is made

Police officer

Registrar, or Deputy Registrar, of a court

Senior Executive Service employee of:

(a) the Commonwealth or a Commonwealth authority; or

(b) a State or Territory or a State or Territory authority

Sheriff

Sheriff’s officer

Teacher employed on a full-time basis at a school or tertiary education institution

SCHEDULE C

COVER LETTER

[INSERT DATE]

Dear Claimant,

RE: Class Action against Ashely Services Group Limited (Ashley)

You are receiving this correspondence because, based on the information available, you may have acquired an interest in ordinary shares in Ashley, pursuant to an offer of Ashley shares on the terms set out in its prospectus or otherwise purchased Ashley shares during the period of 21 August 2014 to 26 April 2015 (inclusive). If you did, you may be a group member in the Ashley class action.

The Federal Court has referred this class action to mediation which is to occur by no later than 13 July 2018.

THE DOCUMENT ENCLOSED WITH THIS CORRESPONDENCE PROVIDES YOU WITH INFORMATION CONCERNING YOUR RIGHTS TO:

It is therefore very important that you read the enclosed notice carefully and if you have any questions, please contact Bill Petrovski or Ding Pan, solicitors for the Applicant (Mr Bradgate) on:

Telephone: +61 2 9552 2111;

Email: Bill.Petrovski@williamroberts.com.au; Ding.Pan@williamroberts.com.au

SCHEDULE D

(Categories sought by the applicant from the other parties only)

For the following requested categories of documents for discovery:

Unless otherwise stated, the definitions in the Amended Statement of Claim and Defence to the Amended Statement of Claim apply.

DDC means Due Diligence Committee

Deloitte means the Cross Respondents to the Second Cross Claim

Deloitte Retainers means the DCF Retainer and the DTT Retainer as these terms are defined in the Amended Defence to the Second Cross Claim.

Document/s means any record of information, and includes:

(a)    anything on which there is writing; or

(b)    anything on which there are marks, figures, symbols or perforations having a meaning for persons qualified to interpret them; or

(c)    anything from which sounds, images or writings can be reproduced with or without the aid of anything else; or

(d)    a map, plan, drawing or photograph.

Grant Thornton means the Cross Respondent to the Third Cross Claim

Holmes Parties means the Cross Respondents to the First Cross Claim

Integracom Business means the business conducted by Integracom or ASG Integracom.

PKF means PKF Lawler Corporate Finance Pty Ltd (and its related entities)

Prospectus Forecasts has the meaning ascribed in that expression in paragraph 38 of the Amended Statement of Claim.

Where documents are requested, production of a copy instead of the original is sufficient.

    Schedule E – Link Protocol

1    Scope and definitions

(a)    Link Market Services Limited and its subsidiary Link Digicom (Link) will send the Registration and Opt Out Notice (Notice) contained in Schedule B to the Orders of 8 December 2017 to Notice Recipients (as defined in paragraph 2(a) below).

2    Data requirements

(a)    Notice Recipients is defined as all persons who acquired a legal interest in ordinary shares in Ashley Services Group Limited:

(i)    pursuant to the offer of 59,500,000 Ashley shares at a price of $1.66 per share on the terms set out in Ashley’s prospectus lodged with ASIC on 7 August 2014; and/or

(ii)    at any time during the period 21 August 2014 to 26 April 2015 (inclusive).

(b)    Notice Recipients includes all persons who acquired shares, whether or not they also sold any or all of their shares.

(c)    The term:

(i)    “acquired” means acquisitions via Issuer or CHESS, allotments, escrow conversions, escrow releases, off market transfers or via survivorship; and

(ii)    “person” includes natural persons and entities.

(d)    For the purposes of paragraph 2(a) and (b) above, the register will be “cut” in accordance with the ASX T+3 settlement cycle relevant at that time. Accordingly, the register will be cut to include all trades registered on and from 21 August 2014 to 29 April 2015.

3    Communication

3.1    Multiple interest holders

(a)    Where the register appears to disclose that a custodian or adviser represents more than one Group Member, Link will send a single Notice to that custodian or adviser.

3.2    Email

(a)    The Notice will be sent by email to all Notice Recipients who have provided an email address to Link. The content of:

(i)    the subject line of the e-mail shall read “IMPORTANT: Class Action Against Ashley Services Group Limited”;

(ii)    the body of the e-mail shall read as set out in Schedule C to the Orders of 8 December 2017.

(b)    The Notice will be sent as a PDF attachment to the email.

(c)    The Notice will be sent concurrently to Notice Recipients at 9.30am on 15 January 2018.

(d)    Link’s email server will be programmed to make a total of 3 delivery attempts (if required) over 2 business days.

(e)    If Link receives notification that an email was, or may not have been, delivered after 2 business days, then on 17 January 2018 it will:

(i)    provide Herbert Smith Freehills with an email delivery failure report identifying the email failures or potential failures; and

(ii)    send the Notice by ordinary post in accordance with section 3.3 below to all Notice Recipients identified in the delivery failure report.

(f)    On 18 January 2018, Link will confirm to Herbert Smith Freehills the number of Notices sent by e-mail. Herbert Smith Freehills will provide to William Roberts Lawyers this number (without any information that would reveal the identification details of the Notice Recipient).

3.3    Ordinary post

(a)    The Notice will be sent by ordinary post to all Notice Recipients who:

(i)    have not provided an email address to Link by 15 January 2018; and

(ii)    did not receive, or may or may not have received, the Notice by email in accordance with section 3.1 above on 15 January 2018.

(b)    The Notice will be attached to a cover letter, the content of which shall read as set out at Schedule C to the Orders of 8 December 2017 (Cover Letter).

(c)    The Cover Letter and Notice will be printed, folded into DL and placed into a DLX non-window faced envelope with the name and address of the Notice Recipients inkjet printed on the front.

(d)    On 18 January 2018, Link will confirm to Herbert Smith Freehills the number of Notices sent by ordinary post. Herbert Smith Freehills will provide William Roberts Lawyers with this number (without any other information that would reveal the identification details of the Notice Recipient).

4    General Compliance with this Protocol

(a)    In the event that Link becomes aware that they are unable to comply with any requirements under this protocol, they are to notify Herbert Smith Freehills in writing within 24 hours of so becoming aware.

(b)    In the event that Link becomes aware that they have failed to comply with any requirements under this protocol, they are to notify Herbert Smith Freehills in writing within 24 hours of so becoming aware.

Schedule F

Form 19

Rule 9.32

Amended on 8 December 2017 pursuant to order of the Court made on 8 December 2017

Amended Originating application starting a representative proceeding under Part IVA of the Federal Court of Australia Act 1976

No.    NSD2074 of 2016

Federal Court of Australia

District Registry: New South Wales

Division: General

RICHARD JOHN FINDLAY BRADGATE AS TRUSTEE OF THE BRADGATE SUPERANNUATION FUND

Applicant

ASHLEY SERVICES GROUP LIMITED ACN 094 747 510

Respondent

To the Respondent

The Applicant applies for the relief set out in this application.

The Court will hear this application, or make orders for the conduct of the proceeding, at the time and place stated below. If you or your lawyer do not attend, then the Court may make orders in your absence.

You must file a notice of address for service (Form 10) in the Registry before attending Court or taking any other steps in the proceeding.

Time and date for hearing:

Place: Federal Court of Australia

Date:      

Details of claim

Terms defined in the Further Amended Statement of Claim carry the same meaning when used in this Amended Originating Application.

1.    On the grounds stated in the accompanying Further Amended Statement of Claim, the Applicant claims on behalf of the Bradgate Superannuation Fund, and on behalf of Group Members:

a.    An order pursuant to section 729(1) of the Corporations Act 2001 (Cth) (CA) that the Respondent pay compensation for the loss and damage caused by its contraventions of section 728(1) of the CA;

aa. An order for compensation pursuant to section 1317HA(1) of the CA;

b.    An order for compensation Damages pursuant to:

i.    Section 1041I(1) of the CA; or

ii.    Section 12GF(1) of the Australian Securities and Investment Commission Act 2001 (ASIC Act); or

iii.    Section 236 of the Australian Consumer Law set out in Schedule 2 of the Competition and Consumer Act 2010 (Cth) (ACL), and as applicable pursuant s 28 of the Fair Trading Act 1987 (NSW);

c.    Interest, including interest on statutory compensation on any statutory compensation awarded;

d.    Costs;

e.    Such further order as the Court determines is appropriate.

Questions common to claims of group members

2.    The questions of law or fact common between the claims of the Applicant and the Group Members are:

a.    whether the Respondent made the following representations:

i.    the Prospectus Forecasts;

ii.    the Prospectus Forecast Basis Representations;

b.    whether the Respondent knew or ought reasonably to have obtained the following information at the time it authorised the issue of the Pathfinder Prospectus, the Initial Prospectus and/or the Replacement Prospectus:

i.    the Integracom EBIT Information;

ii.    the TFYT Funding Change Risk Information;

iii.    the Integracom Funding Change Effect Information;

c.    whether the Respondent contravened section 728(1) of the CA by making the Prospectus Forecasts and Prospectus Omissions;

d.    whether the Respondent contravened sections 1041H of the CA, 12DA(1) of the ASIC Act and/or section 18 of the ACL by making and omitting to correct:

i.     the Prospectus Forecasts; and/or

ii.    the Prospectus Forecast Basis Representations;

e.    whether the Respondent contravened section 674(2) of the CA by omitting to disclose to the ASX:

i.    the Integracom EBIT Information;

ii.    the TFYT Funding Change Risk Information;

iii.    the Integracom Funding Change Effect Information; and

f.    whether any and if so, what conduct by the Respondent in contravention of statutory norms had the effect that prices for its securities were higher than their true value and/or the market price that would have prevailed but for the Market Contraventions and, if so:

i.    to what extent;

ii.    whether statutory compensation is recoverable by the Applicant and some or all of the Group Members; and

iii.    the correct measure of the statutory compensation for which the Respondent may be liable to the Applicant and some or all of the Group Members.

Representative Action

3.    The Applicant brings this application as a representative party under Part IVA of the Federal Court of Australia Act 1976 (Cth).

4.    The Group Members to whom this proceeding relates are those persons referred to in paragraph 1 of the Further Amended Statement of Claim, being persons who or which:

a.    acquired fully paid ordinary shares in Ashley Services Group Limited ACN 094 747 510 (Ashley Shares), pursuant to the Offer (as defined in paragraph 27 of the Further Amended Statement of Claim) or otherwise acquired Ashley Shares in the Relevant Period; and

b.    have as at the date of the commencement of this proceeding entered into a litigation funding and management agreement with IMF Bentham Limited ACN 067 298 088. with the exception of Andrew Douglas Shrimpton and Dean Shrimpton, were not during the Relevant Period, and are not, any of the following:

(i)    a related party (as defined by s 228 of the Corporations Act 2001 (Cth)) of Ashley;

(ii)    a related body corporate (as defined by s 50 of the Corporations Act 2001 (Cth)) of Ashley;

(iii)    an associated entity (as defined by s 50AAA of the Corporations Act 2001 (Cth)) of Ashley;

(iv)    a director, an officer, or a close associate (as defined by s 9 of the Corporations Act 2001 (Cth)) of Ashley; or

(v)    a judge or the Chief Justice of the Federal Court of Australia or a Justice or the Chief Justice of the High Court of Australia; and

c.    have suffered loss or damage by reason of the conduct of Ashley pleaded in the Further Amended Statement of Claim.

Applicant’s address

The Applicant’s address for service is:

Place: William Roberts Lawyers

    Level 22, 66 Goulburn Street

Sydney, NSW 2000

The Applicant’s address is:

    32 Augusta Road

    Fairlight, NSW 2094

Service on the Respondent

It is intended to serve this application on the Respondent.

Date: 30 November 2016 8 December 2017

Schedule G

Form 17

Rule 8.05(1)(a)

Amended on 8 December 2017 pursuant to an order of the Court made on 8 December 2017

FURTHER AMENDED STATEMENT OF CLAIM

No.    NSD2074 of 2016

Federal Court of Australia

District Registry: New South Wales

Division: General

RICHARD JOHN FINDLAY BRADGATE AS TRUSTEE OF THE BRADGATE SUPERANNUATION FUND

Applicant

ASHLEY SERVICES GROUP LIMITED ACN 094 747 510

Respondent

TABLE OF CONTENTS

A.    INTRODUCTION    3

A.1    The Applicant and the Group Members    3

A.2    The Respondent    4

A.3    The Respondent’s Directors    5

B.    ASHLEY AND INTEGRACOM    7

B.1    Ashley    7

B.2    Integracom    7

B.3    Acquisition of Integracom by Ashley    8

C.    THE INITIAL PUBLIC OFFERING    9

C.1    The Offer Documents    9

C.2    The Disclosures in the Offer documents concerning the Acquisition of Integracom    13

C.3    Statements in the Offer documents concerning the financial impact of the Acquisition of Integracom    15

C.4    Other Statements in the Offer Documents    16

D.    Significance of Integracom to Ashley    18

D.1    Financial significance of Integracom to Ashley    18

E.    ASHLEY’S TRUE FINANCIAL POSITION    20

E.1    Dependency of the Training business on government funding    20

E.2    Government funding and reforms relevant to the Training business    21

E.3    Impact of government funding reforms on the Training business    30

E.4    Information which Ashley knew or ought reasonably to have obtained    32

F.    PROSPECTUS CONTRAVENTIONS    38

F.1    Introduction    38

F.2    Misleading Statement in the Replacement Prospectus    38

F.3    Omissions from the Replacement Prospectus    39

F.4    The Prospectus Contraventions    39

G.    OTHER CONTRAVENTIONS    39

G.1    Misleading or deceptive conduct    39

G.2    Continuous Disclosure Contraventions    41

H.    CONTRAVENING CONDUCT CAUSED LOSS    42

H.1    No transaction case in respect of the Prospectus Contraventions    42

H.2    Market-based causation    43

H.3    Reliance    45

H.3    Loss or damage suffered by the Applicant and Group Members    47

SCHEDULE OF DEFINED TERMS    49

A.    INTRODUCTION

A.1    The Applicant and the Group Members

1.    This proceeding is commenced as a representative proceeding pursuant to Part IVA of the Federal Court of Australia Act 1976 (Cth) by the Applicant as trustee of the Bradgate Superannuation Fund, and on behalf of all persons who or which:

(a)    acquired fully paid ordinary shares in Ashley Services Group Limited ACN 094 747 510 (Ashley Shares), pursuant to the Offer (as defined in paragraph 27 of this Further Amended Statement of Claim) or otherwise acquired Ashley Shares in the Relevant Period; and

(b)    have as at the date of the commencement of this proceeding entered into a litigation funding and management agreement with IMF Bentham Limited ACN 067 298 088, with the exception of Andrew Douglas Shrimpton and Dean Shrimpton, were not during the Relevant Period, and are not, any of the following:

(i)    a related party (as defined by s 228 of the Corporations Act 2001 (Cth)) of Ashley;

(ii)    a related body corporate (as defined by s 50 of the Corporations Act 2001 (Cth)) of Ashley;

(iii)    an associated entity (as defined by s 50AAA of the Corporations Act 2001 (Cth)) of Ashley;

(iv)    a director, an officer, or a close associate (as defined by s 9 of the Corporations Act 2001 (Cth)) of Ashley; or

(v) a judge or the Chief Justice of the Federal Court of Australia or a Justice or the Chief Justice of the High Court of Australia; and

(c)    have suffered loss or damage by reason of the conduct of Ashley pleaded in the Further Amended Statement of Claim.

(Group Members).

2.    The Applicant acquired Ashley Shares pursuant to the Offer, and held those shares throughout the period from 21 August 2014 to 26 April 2015 (Relevant Period).

Particulars

Details of the particular transaction are set out below.

3.    As at the date of the commencement of this proceeding, the group, on whose behalf this proceeding is brought, comprised more than seven persons.

A.2    The Respondent

4.    Ashley is and at all material times was:

(a)    incorporated pursuant to the Corporations Act 2001 (Cth) (CA) and capable of being sued;

(b)    a person for the purposes of:

(i)    s 728(1) of the CA;

(ii)    s 1041H of the CA;

(iii)    s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act);

(iv)    s 18 of the Australian Consumer Law set out in Schedule 2 of the Competition and Consumer Act 2010 (Cth), as applicable pursuant to:

A.    s 12 of the Australian Consumer Law and Fair Trading Act 2012 (VIC);

B.    s 28 of the Fair Trading Act 1987 (NSW);

C.    s 16 of the Fair Trading Act 1989 (QLD);

D.    s 6 of the Australian Consumer Law (Tasmania) Act 2010 (TAS);

E.    s 19 of the Fair Trading Act 2010 (WA);

F.    s 14 of the Fair Trading Act 1987 (SA);

G.    s 7 of the Fair Trading (Australian Consumer Law) Act 1992 (ACT); and/or

H.    s 27 of the Consumer Affairs and Fair Trading Act (NT),

(individually, or together, the ACL); and

(c)     the consolidated reporting entity for Ashley and its controlled entities.

5.    From 21 August 2014, Ashley has been:

(a)    included in the official list (Official List) of the financial market operated by Australian Securities Exchange Limited (ASX);

(b)    subject to and bound by the Listing Rules of the ASX (ASX Listing Rules);

(c)    a listed disclosing entity within the meaning of s 111AL(1) of the CA;

(d)    an entity, the securities of which are ED securities for the purposes of s 111AE of the CA; and

(e)    obliged by ss 111AP(1) and/or 674(1) of the CA and/or ASX Listing Rule 3.1 to, once it is, or becomes aware of, any information concerning Ashley that a reasonable person would expect to have a material effect on the price or value of Ashley Shares, tell the ASX that information immediately (unless the exceptions in ASX Listing Rule 3.1A apply).

A.3    The Respondent’s Directors

6.    Mr Ross John Shrimpton (Ross Shrimpton):

(a)    was appointed an Executive Director of Ashley on 12 October 2000, and remained in that office at all material times including the Relevant Period;

(b)    was the Managing Director of Ashley at all material times including the Relevant Period; and

(c)    was a member of the Audit and Risk Management Committee from 30 June 2014 to a date unknown to the applicant (but before 30 June 2015).

7.    Mr Peter Turner (Turner) was, during the period 31 July 2014 to 1 October 2015:

(a)    a Non-Executive Director of Ashley;

(b)    the Non-Executive Chairman of Ashley; and

(c)    the Chairman and later a member of the Audit and Risk Management Committee, and a member of the Nomination Committee.

8.    Mr Vincent Fayad (Fayad):

(a)    was during the period 31 July 2014 to 30 November 2014:

(i)    an Executive Director of Ashley; and

(ii)    the Interim Chief Financial Officer of Ashley; and

(b)    was a Non-Executive Director of Ashley during the period from 1 December 2014 to 1 October 2015; and

(c)    was Chairman of the Audit and Risk Management Committee from a date unknown to the applicant (but sometime after 30 June 2014) to 1 October 2015.

9.    The Honourable Simon Crean (Crean) was, during the period 31 July 2014 to 1 October 2015:

(a)    a Non-Executive Director of Ashley; and

(b)    the Chairman of the Nomination Committee and a member of the Audit and Risk Management Committee.

10.    Mr Marc Ross Shrimpton (Marc Shrimpton):

(a)    was a Director of Ashley during the period 1 June 2014 to 31 July 2014; and

(b)    was an Alternate Director of Mr Ross Shrimpton from 31 July 2014.

11.    [NOT USED]

12.    By reason of the matters pleaded in paragraphs 6 to 10 11, any information which any of Messrs Ross Shrimpton, Turner, Fayad, Crean, or Marc Shrimpton (collectively, Ashley’s Directors) became aware of, or which ought reasonably to have come into his possession in the course of the performance of his respective duties was information of which Ashley was aware (as awareness is defined in ASX Listing Rule 19.12).

B.    ASHLEY AND INTEGRACOM

B.1    Ashley

13.    At all material times, Ashley carried on business as an integrated non-government provider of training (Training business) and labour hire services throughout Australia, through its subsidiaries and brands.

Particulars

Replacement Prospectus, p 7.

Ashley’s Annual Report 2014 published and lodged with the ASX on or around 26 September 2014, p. 3.

14.    At all material times, Ashley’s primary source of revenue in relation to its Training business was Commonwealth and State Government funding schemes and fee-for-service arrangements.

Particulars

Replacement Prospectus, p 11.

B.2    Integracom

15.    At all material times, Integracom Management Group Pty Limited ACN 121 173 877, as trustee of the Integracom Unit Trust (Integracom) was a private education provider specialising in delivering telecommunications and electronic security training to the corporate and public market throughout Australia.

Particulars

Replacement Prospectus, pp. 22, 35, 37, 58.

16.    At all material times, Integracom’s primary source of revenue in relation to its business was Commonwealth and State Government funding schemes and fee-for-service arrangements.

Particulars

See pp 11; also definition of ‘Training’ in Replacement Prospectus, p. 140 and pp. 35, 37.

B.3    Acquisition of Integracom by Ashley

17.    In and from April 2014, Ashley and Integracom commenced working together to optimise integration of their respective businesses.

Particulars

Replacement Prospectus at p 22.

18.    On 24 June 2014, a Unit Sale and Purchase Agreement (USPA) was entered into between:

(a)    Integracom Holdings Pty Limited, a wholly owned subsidiary of Ashley (as Purchaser);

(b)    Ashley (as Purchaser Guarantor);

(c)    Holmes Management Group Pty Ltd as trustee of the Holmes Family Trust (as Seller), being the beneficial owner of 100% of the units in the Integracom Unit Trust; and

(d)    Carl and Marie Holmes (as seller guarantors and warrantors),

19.    Under the USPA:

(a)    Holmes Management Group Pty Ltd agreed to sell 100% of the units in the Integracom Unit Trust to Integracom Holdings Pty Limited, on terms that at the completion of the USPA, ASG Integracom (Aust) Pty Limited ACN 153 558 457 (ASG Integracom), a wholly owned subsidiary of Ashley, was to become the trustee of the Integracom Unit Trust, and carry on Integracom’s business (Acquisition); and

(b)    Integracom Holdings Pty Limited agreed to pay consideration of $31.8 million (initial cash payment) plus Ashley Shares to be issued the value of $10 million, plus certain adjustments, plus an earnout in three instalments of $5 million each in respect of FY2015, FY2016 and FY2017 (payable 50% in Ashley Shares and 50% in Ashley Shares or cash at the election of Holmes Management Group Pty Ltd).

20.    Pursuant to the USPA, inter alia, it was a condition precedent that:

(a)    Ashley undertake an initial public offering of Ashley Shares;

(b)    Carl Holmes (the founder, sole director and ultimate beneficial owner of Integracom) enter into a three year executive service agreement with ASG Integracom to take effect immediately following completion of the initial public offering pursuant to a three year employment contract; and

(c)    Ashley be satisfied with certain due diligence information disclosed by Integracom.

C.    THE INITIAL PUBLIC OFFERING

C.1    The Offer Documents

21.    At a time presently unknown to the Applicant before 28 July 2014, Ashley issued a draft prospectus (Pathfinder Prospectus), pursuant to s 734(9) of the CA, to certain institutional investors and brokers through Evans & Partners and Cannacord Genuity as joint bookrunners, underwriters and lead managers (Joint Bookrunners).

22.    By the Pathfinder Prospectus, Ashley invited expressions of interest from potential investors in Ashley Shares to participate in an offer of Ashley Shares to raise funds on the terms set out in the Pathfinder Prospectus (which reflected the terms pursuant to which an offer was later anticipated to be made by a prospectus to be issued under s 709 of the CA).

Particulars

The facts, matters and circumstances on which the Applicant relies to allege that Ashley, by the Pathfinder Prospectus, invited expressions of interest as alleged in paragraph 22 include:

(i)    the pleading at paragraph 21 of the Amended Statement of Claim;

(ii)    the two offers contained in the Pathfinder Prospectus (page 19 of the Pathfinder Prospectus and using the defined terms contained therein):

(A)    the Broker Firm Offer, which consisted of an offer of Shares to eligible sophisticated and retail investors in Australia and New Zealand who received a firm allocation from their Syndicate Broker; and

(B)    the Institutional Offer, which consisted of an offer to Institutional Investors in Australia and a number of other eligible jurisdictions to bid for Shares;

(iii)    in respect of the Broker Firm Offer, Ashley’s invitation to eligible investors to complete an Application form, as set out in the section “How do I apply for Shares?” at page 20 of the Pathfinder Prospectus:

“Broker Firm Applicants may apply for Shares by completing a valid Application Form attached to or accompanying this Prospectus, and lodging it with the Syndicate Broker who invited them to participate in the Offer.”

(iv)    in respect of the Broker Firm Offer, the facts referred to in the detailed outline contained in paragraph 6.10 (page 107) of the Pathfinder Prospectus; and

(v)    in respect of the Institutional Offer, the facts referred to in the detailed outline contained in paragraph 6.11 (page 108) of the Pathfinder Prospectus.

23.    On or about 1 August 2014, Ashley lodged a prospectus (Initial Prospectus) with the Australian Securities and Investments Commission (ASIC).

24.    On or about 7 August 2014, Ashley lodged with ASIC a document which replaced the Initial Prospectus, entitled “Prospectus for the offer of 59.5 million shares at an issue price of $1.66 per share to raise a total of $98.7 million” (Replacement Prospectus), which Ashley also:

(a)    made available to the Joint Bookrunners to provide to potential investors in Ashley Shares (including to persons to whom the Pathfinder Prospectus had previously been provided);

(b)    published in electronic form on the website www.ashleyservicesgroup.com.au/prospectus; and

(c)    made paper copies available to any person in Australia who called the “Share Registry” on 1300 361 735 (within Australia) or (+61) 1300 361 735 (outside Australia).

25.    Each of the Pathfinder Prospectus and the Initial Prospectus was substantially in identical terms to the Replacement Prospectus.

Particulars

A differences between the Pathfinder Prospectus and both the Initial Prospectus and the Replacement Prospectus is that the Pathfinder Prospectus did not disclose the final issue price per Ashley Share ($1.66), but rather that it would be in the range of $1.56 to $1.76. This had consequential impacts on the market capitalisation at issue price and the Price Earning Ratio disclosed in the Pathfinder Prospectus.

Annexure A to this Amended Statement of Claim contains a summary of the differences between each of the Pathfinder, Initial and Replacement Prospectuses.

26.    On or about 1 August 2014, Ashley:

(a)    applied to the ASX for admission of Ashley to the Official List, and quotation of Ashley Shares on the ASX;

(b)    lodged with the ASX:

(i)    Appendix 1A (“ASX Listing Application and Agreement”) (Appendix 1A); and

(ii)    “Information Form and Checklist” (Information Form),

(together, Pre-Quotation Disclosure), as required by ASX Listing Rule 1.7, in order to apply for admission to the official list; and

(c)    as part of the Pre-Quotation Disclosure:

(i)    lodged with the ASX the Replacement Prospectus (as required by Item 4 of the Information Form);

(ii)    confirmed that all information that a reasonable person would expect to have a material effect on the price or value of Ashley Shares was included in or provided with the Pre-Quotation Disclosure (as required by Item 43 of the Information Form); and

(iii)    by deed poll warranted that the information and documents required by the Appendix 1A, including the information and documents referred to in the Information Form were true and complete (as required by cl 4 of the Appendix 1A).

27.    By the Replacement Prospectus Ashley:

(a)    made an offer of 59,500,000 Ashley Shares (Offer) at a price of $1.66 per Ashley Share (Offer Price) on the terms set out in the Replacement Prospectus, to potential investors in Ashley Shares in Australia and New Zealand (and to certain institutional investors outside of Australia); and

(b)    disclosed that:

(i)    within seven days after the date of the Replacement Prospectus, Ashley would apply to the ASX for admission of Ashley to the Official List, and quotation of Ashley Shares on the ASX (such disclosure being required by s 711(5) of the CA);

(ii)    allotment of Ashley Shares would occur on 20 August 2014;

(iii)    Ashley Shares would be listed on the ASX, and would commence trading on the ASX:

(A)    on a deferred settlement basis on 21 August 2014; and

(B)    on a normal settlement basis on 26 August 2014.

28.    By reason of the matters pleaded in paragraphs 21 to 27:

(a)    the Pathfinder Prospectus was, from a time no later than on or about 28 July 2014, available to the market of potential investors in Ashley Shares (in that at that time, that market comprised only those persons to whom the Pathfinder Prospectus was sent); and

(b)    the Replacement Prospectus was, from a time no later than 7 August 2014, or alternatively, the time when Ashley was admitted to the Official List of the ASX, publicly available to the market of potential investors in Ashley Shares.

C.2    The Disclosures in the Offer documents concerning the Acquisition of Integracom

29.    The Replacement Prospectus stated that the Offer was being conducted for purposes, including to:

(a)    raise capital to fund the acquisition of Integracom (approximately $31.8 million);

(b)    allow existing shareholders in Ashley to realise a portion of their investment in Ashley (approximately $41.6 million);

(c)    repay bank debt and provide working capital (approximately $17.9 million); and

(d)    pay the costs of undertaking the Offer (approximately $7.4 million).

Particulars

Replacement Prospectus at pp.10, 104.

30.    The Replacement Prospectus stated that Ashley had entered into a conditional agreement to acquire the business of Integracom concurrently with the IPO.

Particulars

Replacement Prospectus at p. 7.

31.    The Replacement Prospectus stated that:

(a)    Integracom had a market leading position delivering vocational training to the telecommunications industry (which industry the directors of Ashley believed was a sector with long term growth for Ashley because of skills shortages and mandatory training requirements), and that the acquisition of Integracom provided Ashley with a market leading position in this sector;

(b)    Integracom was a Western-Australian based business which operated nationally (having operations and training facilities in all six states), specialising in training for the telecommunications and electronic security sectors; and

(c)    Integracom was one of the largest providers of accredited telecommunications training in Australia, based on the number of enrolments expected in FY2014F.

Particulars

Replacement Prospectus at pp. 7, 22.

32.    The Replacement Prospectus stated that:

(a)    upon completion of the IPO, Ashley would merge Integracom’s business with Ashley’s existing telecommunications training business; and

(b)    upon completion of the IPO, Integracom would form the core of Ashley’s telecommunications training services marketed under the brand “ASG Integracom”.

Particulars

Replacement Prospectus at pp. 22, 37.

33.    The Replacement Prospectus disclosed the terms of USPA referred to in paragraphs 18 to 20 above.

Particulars

Replacement Prospectus at pp. 63, 104, 114.

34.    The Replacement Prospectus stated that:

(a)    Ashey and Integracom had been working together since April 2014 to optimise post-acquisition integration of the businesses; and

(b)    Ashley and Integracom had begun joint initiatives in relation to corporate telecommunications in April 2014.

Particulars

Replacement Prospectus at pp. 22, 37.

35.    The Replacement Prospectus stated that at the completion of the Offer and the Acquisition, Holmes would:

(a)    enter into a three-year employment contract with ASG Integracom; and

(b)    become one of Ashley’s “key executives”, specifically “Director, ASG Integracom Company” and “executive of Ashley Services’ Western Australian Training business”.

Particulars

Replacement Prospectus, pp. 7, 18, 58, 115, 116.    

C.3    Statements in the Offer documents concerning the financial impact of the Acquisition of Integracom

36.    For the purposes of the Replacement Prospectus, Ashley referred to Integracom as comprising part of its Training business.

Particulars

See definition of ‘Training’ in Replacement Prospectus, p. 140; also pp. 35, 37.

37.    For the purposes of preparing the financial statements and forecasts in the Replacement Prospectus, Ashley:

(a)    included Integracom into the pro forma historical income statements during the financial years 2011, 2012, 2013 and the six months to 31 December 2013, as well as the pro forma historical balance sheet as at 31 December 2013, as if it were owned by Ashley at that time; and

(b)    included Integracom in the pro forma income statement for the twelve-month period ending 30 June 2014 (FY2014) utilising:

(i)    Integracom’s unaudited results for the 10 months to 30 April 2014; and

(ii)    Integracom’s current trading performance up until the date of the Replacement Prospectus (Integracom Trading Performance Information), to prepare the forecast for the two months ending 30 June 2014 as if Integracom were owned by Ashley at that time.

Particulars

In relation to (a), Replacement Prospectus p 63.

In relation to (b), Replacement Prospectus pp. 64 (Notes 1 and 2, Table 1), 65 (Note 1, Table 3), 79 (para. 3.11.3).

38.    The Replacement Prospectus stated that on a pro forma consolidated basis (assuming that the Acquisition and Offer had taken place):

(a)    the revenue derived by Ashley from the Training business (including ASG Integracom) was forecast to increase from $41.5m in FY2014F to $55.1m in FY2015F (being an increase of $13.6m (32.9%)), driven by an increase of approximately 3,500 enrolments and an increase in average course fees;

(b)    enrolments in Ashley’s Training business (including ASG Integracom) were forecast to increase from 19,663 in FY2014F to 23,115 in FY2015F (being an increase of 17.6%);

(c)    Ashley’s total forecast consolidated revenue was forecast to increase from $285.1m in FY2014 to $319.5m in FY2015F (being an increase of $34.4m (12%));

(d)    the EBITDA derived by Ashley from the Training business (including ASG Integracom) was forecast to increase from $16.8m in FY2014F to $24.5m in FY2015F (being an increase of $7.7m (45.8%));

(e)    Ashley’s total forecast consolidated EBITDA was forecast to increase from $22.8m in FY2014F to $31m in FY2015F (being an increase of $8.2m (36%));

(f)    Ashley’s Net Profit After Tax But Before Amortisation (NPATA) was forecast to increase from $15m in FY2014F to $20.5m in FY2015F (being an increase of $5.5m (36.6%)),

(Prospectus Forecasts).

Particulars

Replacement Prospectus, pp. 6, 13, 64, 66, 82.

C.4    Other Statements in the Offer Documents

39.    The Replacement Prospectus contained the following statements:

(a)    if any Commonwealth or State government decides to reduce funding to the VET sector generally, this could have a material adverse impact on Ashley’s earnings and financial position (p 15);

(b)    any change in the government funding which affects the distribution of public funding to the VET or training sector would affect the competitive position of the Training business (including ASG Integracom), and could have a material adverse effect on Ashley’s earnings and financial position (p 98);

(c)    funding arrangements are modified by Commonwealth and State governments from time to time. For example, the Commonwealth Government replaced the Tools for Your Trade Payment of $5,500 with the Trade Support loans of up to $20,000 in July 2014 (p 30) (TFYT Impact Prospectus Statement);

(d)    the AAIP (which included the Tools for Your Trade Payment) contains incentives and personal benefits, including payments to employers and the individual being trained (p 30);

(e)    the key drivers of Training business revenue are the number of enrolments and revenue per qualification. These two drivers are in turn, dependent upon a number of factors including the amount of State and Commonwealth government funding available for the VET sector, and the eligibility of employees and/or students for government funding including State and Commonwealth government funding (p 72); and

(f)    the Training business (including ASG Integracom) has experienced significant historical growth in course enrolments from FY2011 to FY2013 and has forecast material growth from FY2013 to FY2015F. This growth can be attributed to factors that include the implementation of a demand driven model in certain Australian States and acquisitions of complementary training businesses (such as ASG Integracom) (p 34).

40.    The Replacement Prospectus contained an Investigating Accountant’s Report (IAR) prepared by Grant Thornton Corporate Finance Pty Ltd (Grant Thornton), which stated, inter alia, that:

(a)    Grant Thornton had reviewed the Forecast Financial Information (being the pro forma and statutory forecast consolidated statement of comprehensive income for the years ending 30 June 2014 and 30 June 2015, and the pro forma and statutory forecast consolidated statement of cash flows for the years ending 30 June 2014 and 30 June 2015);

(b)    based on Grant Thornton’s review, which is not an audit, and based on an investigation of the reasonableness of the Directors’ best estimate assumptions giving rise to the Forecast Financial Information, nothing had come to Grant Thornton’s attention which caused Grant Thornton to believe that:

(i)    the Directors’ best estimate assumptions did not provide a reasonable basis for the preparation of the Forecast Financial Information; and

(ii)    the Forecast Financial Information was not prepared on the basis of the best estimate assumptions,

(Grant Thornton Opinion).

D.    Significance of Integracom to Ashley

D.1    Financial significance of Integracom to Ashley

41.    At the time that the Pathfinder Prospectus, Initial Prospectus and Replacement Prospectus (Offer Documents) were issued, by reason of the matters pleaded in paragraph 38 above in Ashley’s pro forma consolidated financial forecasts for FY2015F (assuming that the Acquisition and Offer had taken place):

(a)    the revenue forecast to be derived by Ashley from the Training business (including ASG Integracom) represented 17.2% of Ashley’s total forecast consolidated revenue in FY2015F ($55.1m/$319.5m); and

(b)    the EBITDA forecast to be derived by Ashley from the Training business (including ASG Integracom) represented 79% of Ashley’s total forecast consolidated EBITDA in FY2015F ($24.5m/$31m).

Particulars

Subparagraph (a) is derived from subparagraph 38(a) and 38(c).

Subparagraph (b) is derived from subparagraph 38(d) and 38(e).

42.    Further, at the time that the Offer Documents were issued, in Ashley’s pro forma consolidated financial forecasts for FY2015F (assuming that the Acquisition and Offer had taken place):

(a)    the revenue derived from ASG Integracom was $22.8m (representing 41.4% of revenue forecast to be derived from Ashley’s Training business, and 7.1% of total forecast consolidated revenue, in FY2015F); and

(b)    the EBITDA forecast to be derived by Ashley from ASG Integracom was $13.3m (representing 54.3% of EBITDA forecast to be derived from Ashley’s Training business, and 42.9% of total forecast consolidated EBITDA).

Particulars

The proportion of the forecast revenue and EBITDA contained in the forecasts in the Replacement Prospectus attributable to ASG Integracom was disclosed by Ashley in an announcement to the ASX dated 27 April 2015 entitled “Market update and FY15 Earnings Guidance”.

43.    Further, at the time that the Offer Documents were issued:

(a)    of the funds proposed to be raised by the Offer, approximately 32% was for the purchase of the Integracom business (being $31.8m of $98.7m);

(b)    Integracom was worth at least $41.8m, which represented approximately 17% of the market capitalisation of Ashley based on the Offer Price, and the number of Ashley Shares that would be issued following the Offer.

Particulars

As to (a), paragraph 29(a) is repeated. The percentage in (a) is derived by dividing the total value of the cash payment made by Ashley for purchase of the Management Integracom business (being $31.8m) by the total amount of the funds raised by the Offer (being $98.7m) and multiplied by 100.

The percentage in (b) is derived by dividing the total amount payable to purchase Integracom (being $31.8m in cash and $10m in Ashley Shares) by the market capitalisation of Ashley based on the Offer Price (Replacement Prospectus pp.6 and 104).

44.    By reason of the matters pleaded in paragraphs 41 to 43, at the time the Offer Documents were issued:

(a)    the Acquisition of ASG Integracom was a significant reason for Ashley making the Offer;

(b)    ASG Integracom was forecast to make a significant contribution to the future financial performance of Ashley’s Training business, and Ashley; and

(c)    ASG Integracom, on a pro forma basis, represented and was forecast to continue to make a significant proportion of the valuation of Ashley based upon the Offer price.

45.    By reason of the matters pleaded in paragraph 41 to 44, information which was likely to, or there was a material risk might, have a material effect on revenue which was derived by ASG Integracom (including by that part of ASG Integracom representing what was formerly Integracom) (Integracom Adverse Financial Impact Information) was:

(a)    information which was likely to, or there was a material risk might, have a material adverse impact on Ashley’s operations, earnings and financial position (Ashley Adverse Financial Impact Information); and

(b)    by reason of (a), information that investors and their professional advisers would reasonably require to make an informed assessment of the assets, liabilities, financial position and performance, profits and losses and prospects of Ashley within the meaning of s 710(1) of the CA (Ashley Relevant Information).

E.    ASHLEY’S TRUE FINANCIAL POSITION

E.1    Dependency of the Training business on government funding

46.    As at the time the Offer Documents were issued:

(a)    a significant proportion of the revenue generated from Ashley’s Training business (including ASG Integracom) was derived from Commonwealth and State government funding, such that if any government decided to reduce funding to the VET sector generally, or in sectors where the Training business operated, this could have a material adverse impact on Ashley’s earnings and financial position; and

(b)    any change in the government funding which affects the distribution of public funding to the VET or training sector would affect the competitive position of the Training business (including ASG Integracom), and could have a material adverse effect on Ashley’s earnings and financial position,

(together, Training Business Funding Risks).

Particulars

Pathfinder, Initial and Replacement Prospectuses, p.15 (Section 1.4), p.98 (Sections 5.2.1(1) and (4)).

47.    As at the time the Offer Documents were issued, by reason of the matters pleaded in paragraphs 41 to 45 and/or 46, information which was likely to, or there was a material risk might, have a material effect on Commonwealth or State government funding to ASG Integracom (Integracom Adverse Funding Impact Information), was:

(a)    information which was likely to, or there was a material risk might, have a material adverse impact on the funding of Ashley’s Training business (Ashley Adverse Funding Impact Information); and

(b)    by reason of sub-paragraph (a), Integracom Adverse Financial Impact Information; and

(c)    information which was:

(i)    Ashley Adverse Financial Impact Information; and

(ii)    Ashley Relevant Information.

E.2    Government funding and reforms relevant to the Training business

48.    From 1 July 2005 until on or around 30 June 2009, the Commonwealth Government implemented the Social Security Amendment (Extension of Youth Allowance and Austudy Eligibility to New Apprentices) Act 2005 (2005 Funding Act).

Particulars

The term ‘implemented’ means “caused to come into effect and operation and thereafter, acted in accordance with”.

49.    The 2005 Funding Act extended various tax-free payments to new apprentices, relevantly including:

(a)    a payment of $500 upon the successful completion of their first and second years of apprenticeship training (Commonwealth Trade Learning Scholarship) in trade occupations listed in the Department of Employment and Workplace Relations National Skills Shortage (DEWR Skills Shortage List); and

(b)    a voucher of $800 to spend on a tool kit, if undertaking certain trades listed in the DEWR Skills Shortage List, known as the ‘Tools for Your Trade’ initiative (TFYT Voucher),

(together, the 2005 Funding Initiatives).

50.    The purpose of the 2005 Funding Act, including the 2005 Funding Initiatives, was to assist new apprentices with extra help during the initial years of their training while their wages are generally at their lowest.

Particulars

Revised Explanatory Memorandum, Social Security Amendment (Extension of Youth Allowance and Austudy Eligibility to New Apprentices) Bill 2005, see “Outline”.

51.    From 1 July 2007 until on or around 30 June 2009, the Commonwealth Government implemented the Social Security Amendment (Apprenticeship Wage Top-Up For Australian Apprentices) Act 2007 (2007 Funding Act).

52.    The 2007 Funding Act extended tax-free payments to apprentices totalling $2,000, comprising payments of $500 at the 6, 12, 18 and 24 month points of their training (or the part-time equivalent), to new apprentices under thirty in a trade occupation identified as experiencing skills shortages and listed on the Migration Occupations in Demand List (Apprenticeship Wage Top Up and 2007 Funding Initiative).

53.    The purpose of the 2007 Funding Act and the 2007 Funding Initiative, was to acknowledge that the first and second year of an apprenticeship can be particularly difficult, when wages are at their lowest, and to assist new apprentices during this period.

Particulars

Explanatory Memorandum, Social Security Amendment (Apprenticeship Wage Top-Up For Australian Apprentices) Bill 2007, see “Outline”.

54.    From 1 January 2010 until 30 June 2014, the Commonwealth Government implemented the Social Security and Other Legislation Amendments (Australian Apprentices) Act 2009 (2009 Funding Act).

55.    The 2009 Funding Act, inter alia, made an administrative change to the way in which apprenticeships were funded by extending and combining the 2005 and 2007 Funding Initiatives (being the Commonwealth Trade Learning Scholarship, the TFYT Voucher and the Apprenticeship Wage Top-Up) into one payment known as the TFYT Payment.

56.    A purpose of the 2009 Funding Act and the TFYT Payment was to ease the financial burden for Australian apprentices undertaking apprenticeships in areas of national skills shortage.

Particulars

Explanatory Memorandum, Social Security and Other Legislation Amendment (Australian Apprentices) Bill 2009, see “Outline”.

57.    Between 1 January 2010 and 31 December 2010, the TFYT Payment totalled $3,800 to be made directly to apprentices in skills shortage trades (and in all agriculture occupations and, in rural and regional areas, horticulture occupations), over the life of their apprenticeship, comprising five tax-free payments of $800 at the 3, 12 and 24 month periods of full-time training (or equivalent part time), with a further $700 at the 36-month mark and at completion.

Particulars

2009-2010 Commonwealth Government Budget, Part 2: Expense Measures, Education Employment and Workplace Relations, accessed at http://www.budget.gov.au/2009-10/content/bp2/html/bp2_expense-11.htm

58.    Between 1 January 2011 and 30 June 2014, the TFYT Payment was increased to $5,500, comprising five tax-free payments of $1,000 at the 3, 12 and 24 month periods of full time training (or equivalent part time), with a further $1,200 at the 36-month mark and a completion payment of $1,500.

Particulars

2010-2011 Commonwealth Government Budget, Part 1: Expense Measures, Education Employment and Workplace Relations (2011 Commonwealth Budget), accessed at http://www.budget.gov.au/2010-11/content/myefo/html/appendix_a_12.htm

59.    The 2011 Commonwealth Budget stated that the TFYT Payment “provides financial support for the costs incurred by apprentices while undertaking their training and is expected to lead to an increase in commencements and completions.”

Particulars

2011 Commonwealth Budget, Part 1: Expense Measures, Education Employment and Workplace Relations, accessed at http://www.budget.gov.au/2010-11/content/myefo/html/appendix_a_12.htm

60.    On 12 March 2012, Deloitte Access Economics prepared a report titled ‘Econometric Analysis of the Australian Apprenticeships Incentives Program (Deloitte Report) commissioned by the Department of Education, Employment and Workplace Relations, to conduct an econometric analysis of the Australian Apprenticeships Incentive Program, of which the TFYT Payment formed a part.

61.    The Deloitte Report found that:

(a)    the take-up rate by eligible Australian apprentices of the TFYT Payment was approximately 87% (p.45);

(b)    none of the analysed incentives were proven to have a negative impact on commencements (p.47);

(c)    it could not test the impact of the TFYT Voucher because the data was not available (p.79); and

(d)    it could not test the impact of the TFYT Payment on commencements due to the lack of a control group (p.79),

(together, the Deloitte TFYT Payment Information).

62.    On 13 May 2014, the Commonwealth Government announced in its Budget Paper that it would, inter alia, cease the TFYT Payment from 1 July 2014, and instead provide financial assistance to apprentices in skills shortage trades through a ‘Trade Support Loans Programme’ pursuant to which eligible apprentices could access loans up to $20,000 over four years, which they would need to repay once they reached a prescribed income threshold (TFYT Payment Reform).

Particulars

Replacement Prospectus, p 30. Budget Measures Budget Paper No. 2, 2014-15 dated 13 May 2014, pp.162, 172-173

63.    In June 2014, the Commonwealth Government introduced the Trade Support Loans Bill 2014 (TFYT Payment Reform Bill) into Parliament in order to give legislative effect to the TFYT Payment Reform.

Particulars

On 4 June 2014, the TFYT Payment Reform Bill was introduced into and debated in the House of Representatives.

On 26 June 2014, the TFYT Payment Reform Bill was introduced into and debated in the Senate.