Billabong : Notice of AGM/Proxy Form and Annual Reports

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ASX ANNOUNCEMENT‌

ANNUAL GENERAL MEETING AND ANNUAL REPORTS

GOLD COAST, 16 October 2015: The attached following documents will be despatched to shareholders today:

• Chair's Letter

• Notice of Meeting

• Explanatory Memorandum

• Proxy Form

• Full Financial Report and Shareholder Review

TRACEY WOOD

COMPANY SECRETARY

BILLABONG INTERNATIONAL LIMITED ABN 17 084 923 946

NOTICE OF ANNUAL GENERAL MEETING 2015 AND EXPLANATORY MEMORANDUM

Notice is given that the 2015 Annual General Meeting of Billabong International Limited is to be held at 10.00am (Queensland time) on Tuesday, 24 November 2015 at the Gold Coast Convention and Exhibition Centre, Level 1, Meeting Room 5, 2684-2690 Gold Coast Highway, Broadbeach, Queensland.

This is an important document and requires your immediate attention. If you are in any doubt as to how to deal with this document, please consult your financial, legal, tax or other professional adviser immediately.

BILLABONG INTERNATIONAL LIMITED

ABN 17 084 923 946

16 October 2015

Dear Fellow Shareholder,

I am pleased to extend to you an invitation to participate in the 2015 Annual General Meeting of Billabong International Limited ('Billabong' or the 'Company').

The meeting will commence at 10.00am (Queensland time) on Tuesday, 24 November 2015 at the Gold Coast Convention and Exhibition Centre, Level 1, Meeting Room 5, 2684-2690 Gold Coast Highway, Broadbeach, Queensland.

I'm pleased to report that 2014 - 15 has been a year of successful rebuilding with Billabong returning to full-year profit for the first time since 2011. The Group also returned to full-year EBITDA growth for the first time since 2008. We have seen our largest brands grow in some of our largest markets. This result has been achieved in large part by having a team uniformly focused on the global implementation of our seven-part turnaround strategy.

In particular, we have prioritised four key projects being Omni Channel, Sourcing & Supply Chain, Distribution & Logistics and Concept to Customer, which when fully implemented, will provide the platforms to underpin the further growth of our world-class brands.

As detailed in the 2015 Annual Report a substantial amount has been achieved and our CEO Neil Fiske and I look forward to reporting to you further at the 2015 Annual General Meeting.

This booklet includes the Notice for the 2015 Annual General Meeting and the Explanatory Memorandum. A Proxy Form accompanies this booklet. I encourage you to read this booklet carefully as it contains important information and will assist you in making informed decisions.

This booklet and Billabong's Annual Report are available on the website www.billabongbiz.com. Only shareholders who have elected to receive either an Annual Report or an Annual Review will receive a copy of Billabong's Annual Report by post.

If you are attending the meeting, please bring your Proxy Form with you to assist us in the efficient processing of your registration. Registration will commence at 9.00 am. If you are unable to attend, you may appoint a proxy to vote for you at the meeting by completing the Proxy Form that accompanies this booklet. If you intend to appoint a proxy, please return the completed Proxy Form in accordance with the directions on the form by

and, where this consolidation results in a fraction of a share or an option being held, the Company be authorised to round that fraction up to the nearest whole share or option.

By Order of the Board

Tracey Wood Company Secretary

NOTES TO THE NOTICE OF ANNUAL GENERAL MEETING

Proxies

If you are unable to attend the meeting, you are encouraged to appoint a proxy to attend and vote on your behalf. If you wish to appoint a proxy, please complete the Proxy Form that accompanies this booklet.

Shareholders are notified that:

• a member who is entitled to attend and cast a vote at the meeting may appoint a proxy to attend and vote for the member;

• the appointment may specify the proportion or number of votes that the proxy may exercise;

• a member who is entitled to cast two or more votes at the meeting may appoint up to two proxies and may specify the proportion or number of votes each proxy is entitled to exercise. If you appoint two proxies and the appointment does not specify the proportion or number of votes each proxy may exercise, each proxy may exercise half of the votes; and

• a proxy may be an individual or a body corporate and need not be a member of the Company. If a shareholder appoints a body corporate as proxy, the body corporate will need to ensure that it appoints an individual as corporate representative and provides satisfactory evidence of that appointment.

  
  

  You can direct your proxy how to vote by following the instructions on the Proxy Form. Shareholders are encouraged to direct their proxy how to vote on each item of business.

  
  

  If a proxy is instructed to abstain from voting on an item of business, they are directed not to vote on your behalf, and on a poll or on a show of hands, the shares that are the subject of the proxy appointment will not be counted in calculating the required majority.

  
  

  Any directed proxies that are not voted on a poll at the meeting by a shareholder's appointed proxy will automatically default to the Chair of the meeting, who is required to vote proxies as directed on a poll.

  
  

  If you intend to appoint a Director (other than the Chair) or other member of the Key Management Personnel ('KMP') or their closely related parties as your proxy, you must ensure that you direct them how to vote on Resolutions 3 and 4, otherwise they will not be able to cast a vote as your proxy on those items.

  
  

  If you have appointed the Chair of the meeting as your proxy (or he becomes your proxy by default), he can be directed how to vote by ticking the relevant boxes next to each item on the Proxy Form (i.e. 'for', 'against' or 'abstain'). If you do not direct the Chair how to vote on Resolutions 3 and 4, by completing and submitting the Proxy Form you will be taken to have expressly authorised the Chair to vote your proxies as he sees fit even though Resolutions 3 and 4 are connected directly or indirectly with the remuneration of a member of the KMP.

  
  

  The Chair of the meeting intends to vote all undirected proxies in favour of each item of business.

  
  

  The Proxy Form must be received by the Company or the Company's share registry, Computershare Investor Services Pty Limited, by 10.00 am (Queensland time) on Sunday, 22 November 2015.

  
  

  The completed Proxy Form may be:

• mailed to the Company's share registry, Computershare Investor Services Pty Limited, at GPO Box 242, Melbourne, Victoria, 3001, Australia; or

• faxed to Computershare Investor Services Pty Limited on 1800 783 447 or +61 3 9473 2555; or

• submitted online to the Company's share registry by visiting the website, www.investorvote.com.au. You will need your Securityholder Reference Number or Holder Identification Number and Control Number as shown on your Proxy Form. You will be taken to have signed the Proxy Form if you lodge it in accordance with the instructions on the website; or

• submitted by scanning the QR code on the front of the accompanying Proxy Form with your mobile device and inserting your postcode; or

• submitted online by visiting www.intermediaryonline.com (for Intermediary Online Subscribers only (Custodians)).

  Voting Exclusion Statements

  
  

  For all resolutions that are directly or indirectly related to the remuneration of a member of the KMP of the Company (being Resolutions 3 and 4), the Corporations Act 2001 (Cth) ('Corporations Act') restricts a member of the KMP and their closely related parties from voting in their own right and / or as proxies (where the appointment does not specify the way the proxy is to vote on the resolution) or in any other capacity in certain circumstances in respect of such resolutions.

  
  

  Closely related party is defined in the Corporations Act and includes a spouse, dependant and certain other close family members, as well as any companies controlled by a member of the KMP.

  
  

  The KMP of the Company are those persons having authority and responsibility for planning, directing and controlling the Company's activities either directly or indirectly. It includes all Directors (executive and non executive) and selected members of the management team. The KMP of the Company during the financial year ended 30 June 2015 are set out on page 22 of the Remuneration Report for the year ended 30 June 2015 contained in the Company's 2014 - 15 Full Financial Report.

  
  

  The following voting exclusions specifically apply under the ASX Listing Rules and the Corporations Act.

  
  

  Resolution 3 - Remuneration Report

  
  

  The Company will disregard any votes cast on Resolution 3:

• by or on behalf of a member of the KMP, whose remuneration is included in the Remuneration Report for the year ended 30 June 2015, and their closely related parties (regardless of the capacity in which the vote is cast); or

• as a proxy by a person who is a member of the KMP at the date of the meeting and their closely related parties,

  
  

  unless the vote is cast as a proxy for a person entitled to vote on Resolution 3:

• in accordance with a direction on the Proxy Form; or

• by the Chair of the meeting in accordance with an express authority to exercise the proxy as the Chair sees fit.

  
  

  Resolution 4 - Award to Mr. Neil Fiske under the Billabong International Limited Executive Incentive Plan

  
  

  The Company will disregard any votes cast on Resolution 4:

• by or on behalf of Mr. Neil Fiske and any of his associates (regardless of the capacity in which the vote is cast); or

• as a proxy by a person who is a member of the KMP at the date of the meeting and their closely related parties,

  
  

  unless the vote is cast as a proxy for a person entitled to vote on Resolution 4:

• in accordance with a direction on the Proxy Form; or

• by the Chair of the meeting in accordance with an express authority to exercise the proxy as the Chair sees fit.

  
  

  Further details in respect of the resolutions to be put to the meeting are set out in the accompanying Explanatory Memorandum.

  
  

  Entitlement to vote

  
  

  The time for the purposes of determining voting entitlements pursuant to regulation 7.11.37 of the Corporations Regulations will be 7.00 pm (Sydney time) on Sunday, 22 November 2015.

  
  

  Approval thresholds

  
  

  In this Notice of Meeting, the resolutions proposed as an ordinary resolution will be passed if more than 50% of the votes cast by shareholders entitled to vote on each such ordinary resolution are in favour of the resolution.

  EXPLANATORY MEMORANDUM

  
  

  This Explanatory Memorandum is dated 16 October 2015 and forms part of the Notice of Meeting.

  
  

  The purpose of this Explanatory Memorandum is to provide shareholders with information that the Board believes to be material to shareholders in deciding whether or not to approve the resolutions detailed in the Notice of Meeting. To assist shareholders, the voting recommendations detailed below are as follows:

  
  

  • Resolutions 1 - 5: vote IN FAVOUR

    
    

    Financial Report and Directors' and Auditor's Reports

    
    

    As required by section 317 of the Corporations Act, the financial statements for the financial year ended 30 June 2015 together with the statement and report by the Directors and the report by the auditor will be laid before the meeting.

    
    

    Shareholders will be provided with a reasonable opportunity to ask questions about, and make comments on, the reports and Billabong's management, business, operations, financial performance and business strategies.

    
    

    Shareholders will also be given a reasonable opportunity during this item to ask a representative of Billabong's auditors, PricewaterhouseCoopers, questions relevant to the conduct of the audit, the preparation and content of the Auditor's Report, the accounting policies adopted by Billabong in relation to the preparation of the financial statements and the independence of the auditor in relation to the conduct of the audit. However, there will be no formal resolution put to the meeting in relation to this matter.

    
    

    Shareholders can access a copy of the 2014 - 15 Full Financial Report on Billabong's website at www.billabongbiz.com.

    
    

    Resolutions 1 and 2 - Re-election of Directors

    
    

    In accordance with Article 6.3(i) of the Company's Constitution, Dr. Ian Pollard and Mr. Howard Mowlem retire and, being eligible, offer them- selves for re-election.

    
    

    Resolution 1 - Re-election of Dr. Ian Pollard

    
    

    Dr. Ian Pollard, having been appointed as a Non-Executive Director of Billabong on 24 October 2012, retires in accordance with Article 6.3(i) of the Company's Constitution. Being eligible, Dr. Pollard offers himself for re-election.

    
    

    Dr. Pollard is an actuary, Rhodes Scholar and a Fellow of the Australian Institute of Company Directors. He has held a wide range of senior business roles including as Chair of Just Group Limited and of Corporate Express Australia Limited and as a Director of OPSM Group Limited and of DCA Group Limited, which he founded.

    
    

    He is currently Chair of RGA Reinsurance Company of Australia Limited, a director of Milton Corporation Limited and of SCA Property Group and an executive coach with Foresight's Global Coaching.

    With an extensive background in corporate finance, strategic investment and retail Dr. Pollard has chaired several public company audit committees and was a member of the ASX Corporate Governance Implementation Review Group from 2003 to 2007.

    
    

    He is currently a member of the Audit and Risk Committee, Human Resource and Remuneration Committee, Class Action Committee and chairs the Nominations Committee.

    
    

    Resolution 2 - Re-election of Mr. Howard Mowlem

    
    

    Mr. Howard Mowlem, having been appointed as a Non-Executive Director on 24 October 2012, retires in accordance with Article 6.3(i) of the Company's Constitution. Being eligible, Mr. Mowlem offers himself for re-election.

    
    

    Mr. Mowlem is experienced in many segments of the international retail industry and specifically in Asia. From 2001 to 2010 he was Chief Financial Officer of Dairy Farm International Holdings Limited, a Hong Kong based retail company operating over 5,000 stores across Asia with turnover in excess of US$10 billion. Prior to this Mr. Mowlem held various senior financial positions over a 12 year period with the Coles Myer Group. He brings extensive experience in corporate finance, mergers and acquisitions, financial reporting, treasury, tax, investor relations, audit and governance.

    
    

    He is currently a member of the Nominations Committee, the Human Resource and Remuneration Committee and chairs the Audit and Risk Committee.

    
    

    Board Recommendation

    The Board (in each case, in the absence of the relevant Director), unani- mously recommends that shareholders vote in favour of the re-elections of Dr. Pollard and Mr. Mowlem. The Chair of the Meeting intends to vote undirected proxies in favour of each of Resolutions 1 and 2.

    
    

    Resolution 3 - Remuneration Report

    
    

    Section 250R of the Corporations Act requires that shareholders vote on whether or not the Remuneration Report should be adopted. In accordance with the Corporations Act, this vote is advisory only and the outcome will not be binding on the Directors or the Company.

    However, the Directors will have regard to the outcome of the vote and any discussion on this item of business when setting the Company's remuneration policies.

    
    

    Shareholders should note that under the Corporations Act, if 25% or more of votes that are cast are voted against the adoption of the Remuneration Report at two consecutive annual general meetings, shareholders will be required to vote at the second of these annual general meetings on a resolution (a spill resolution) that another

    meeting be held within 90 days at which all of the Company's Directors (other than the Chief Executive Officer and Managing Director who may, in accordance with the ASX Listing Rules, continue to hold office indefinitely without being re-elected to the office) must be re-elected.

    The Remuneration Report is set out on pages 19-43 of the Directors' Report in the Company's 2014 - 15 Full Financial Report.

    
    

    The Remuneration Report:

  • explains the Company's remuneration reward framework for its executives and key management team;

  • discusses how the remuneration reward framework aligns reward with achievement of strategic and financial objectives and creation of value for shareholders; and

  • sets out the remuneration arrangements in place for each Director and for the Company's executives and key management team.

    
    

    A reasonable opportunity will be provided for discussion of the Remuner- ation Report at the meeting.

    
    

    A voting exclusion statement applies to this item of business, as set out in the Notice of Meeting.

    
    

    Board Recommendation

    The Board unanimously recommends that shareholders vote in favour of Resolution 3. The Chair of the Meeting intends to vote undirected proxies in favour of Resolution 3.

    
    

    Resolution 4 - Issue to Mr. Neil Fiske under the Billabong International Limited Executive Incentive Plan

    
    

    Overview of grant of Performance Rights under the Long Term Incentive (LTI) component of remuneration for the CEO and MD

    
    

    The Billabong International Limited Executive Incentive Plan ('Plan') forms a key element of the Company's incentive and retention strategy for senior executives.

    The primary objectives of the Human Resource and Remuneration Committee and the Board in setting Mr. Fiske's remuneration and providing him with equity based long term incentives under the Plan for the 2015 - 16 financial year are to:

  • focus Mr. Fiske on Billabong's long term performance and drive long term shareholder value creation;

  • align Mr. Fiske's remuneration outcomes with shareholder interests; and

  • provide Mr. Fiske with remuneration that is competitive and aligned with Australian market practice, while recognising that Billabong is a global company and the need to take account of international market practice, particularly in North America.

It is proposed that a grant of Performance Rights be made to Mr. Fiske as the long term incentive ('LTI') component of his remuneration, under the terms of the Plan. For the 2015 - 16 financial year, Mr. Fiske will be entitled to receive an LTI grant of 125% of his total fixed remuneration in the form of performance rights, which are subject to performance conditions. A summary of the key terms of the LTI grant is set out below.

Why is shareholder approval being sought?

The ASX Listing Rules require shareholder approval in order for a director to be issued equity securities in the Company. Accordingly, shareholders are asked to approve the grant of Performance Rights to Mr. Fiske on the terms and conditions set out below.

LTI - Summary of the key terms of the grant of Performance Rights

A brief overview of the key terms of the proposed grant is set out below.

Details of the LTI grant

The Board proposes to grant Mr. Fiske up to USD $1,181,250 worth of Performance Rights over shares in the Company in respect of the 2015 - 16 financial year. This grant represents the long term incentive component of Mr. Fiske's remuneration package ('LTI grant') in respect of the 2015 - 16 financial year. The value of the LTI grant is calculated as 125% of Mr. Fiske's total fixed remuneration in USD, which will be converted to AUD using the 12 month average FX rate in effect on the date of the grant. Mr. Fiske's remuneration arrangements are disclosed in the Remuneration Report and shareholders approved the terms of his 2014 - 15 financial year long term incentive at the 2014 Annual General Meeting. The actual number of Performance Rights to be granted to Mr. Fiske will be calculated following the AGM by dividing the LTI grant value in AUD by the allocation price. The allocation price of Performance Rights will be calculated as the volume weighted average market price of the Company's shares over the five day period commencing on the day normal trading starts, in accordance with the Indicative Timetable. Each Performance Right is a right to acquire one share in the Company, subject to the achievement of the performance conditions set out below. Performance Rights do not carry any dividend or voting rights.

Date of grant

If shareholder approval is obtained, the Performance Rights will be granted to Mr. Fiske shortly after the Annual General Meeting but, in any event, within 12 months after the date of the meeting.

Performance hurdles

The Performance Rights are subject to two performance hurdles, which are independent and will be tested sepa- rately. The Board will determine at the time of grant the number of Performance Rights in two equal tranches, one of which will be subject to the relative total shareholder return ('TSR') hurdle ('Relative TSR Hurdle') and the other will be subject to the earnings per share ('EPS') performance hurdle ('EPS Hurdle').

1. Relative TSR Performance

   
   

   Consistent with previous periods, 50% of the Performance Rights will be subject to the Relative TSR Hurdle. Broadly, TSR is a method of calculating the return shareholders would have earned if they had held a notional number of shares over a period of time. TSR measures the growth in the Company's share price together with the value of dividends during the period, assuming that all those dividends are re-invested into new shares.

   
   

   The Relative TSR Hurdle for the proposed grant of Performance Rights compares the Company's TSR perfor- mance over the Performance Period against the TSR performance over the same period of a group of comparator companies. The group of comparator companies will comprise approximately 25 ASX listed companies within

   an appropriate market capitalisation range in the 'Consumer Discretionary' industry sector and four selected U.S. listed peer companies, being Pacific Sunwear of California Inc, Tilly's Inc, V.F. Corporation and Zumiez Inc. The Board believes that this group of comparator companies appropriately reflects Billabong's direct competitors for capital and sales. To further ensure that the mix of comparator companies is aligned with Billabong's situation and geographic business mix, the comparator companies will be weighted such that the ASX listed companies will have a weighting of 100% each and the four selected US listed peer companies will have a weighting of 200% each (i.e., the ASX listed companies will be counted once in the comparator group and the US peer companies will be counted twice).

   
   

   The Board may adjust the comparator group to take into account events including but not limited to takeovers, mergers or de-mergers that might occur during the Performance Period and may determine how share price performance will be measured through such events.

   
   

   The percentage of Performance Rights subject to the Relative TSR Hurdle that vest, if any, will be determined by reference to the percentile ranking achieved by Billabong over the Performance Period, compared to the other entities in the comparator group as follows:

   
   

   Relative TSR of Billabong ranked against	Performance Rights subject to Relative
   the comparator group	TSR Hurdle that vest (%)

   
   

   75th percentile or above	100%
   Between 50th and 75th percentile	Progressive pro rata vesting from 50% to 100%
   50th percentile	50%
   Below 50th percentile	0%

   
   

2. EPS performance

As in previous periods, 50% of the Performance Rights will be subject to the EPS Hurdle. Broadly, EPS measures the earnings generated by the Company attributable to each share on issue. The EPS Hurdle measures the EPS achieved in the final year of the Performance Period.

The EPS Hurdles for the 2015 - 16 issue of Performance Rights have been set by the Board at stretch and threshold performance. Due to the current capital structure of the Company, the Board has selected an EPS Hurdle approach that is based on the Board approved three year Long Range Plan, similar to the approach used in 2014 - 15. These targets are robust, but will not be reported until the end of the performance period in order not to provide anything which could be misinterpreted as future earnings forecasts. The Board will disclose Billabong's performance against the EPS Hurdles at the conclusion of the Performance Period.

The percentage of Performance Rights subject to the EPS Hurdle that vest, if any, will be determined by reference to EPS achieved over the Performance Period compared to the threshold and stretch targets, as follows:

The Board retains a discretion to adjust the EPS Hurdle to ensure that Mr. Fiske is neither advantaged nor disadvan- taged by matters outside management's control that affect EPS (for example, by excluding one-off non-recurrent items or the impact of significant acquisitions or disposals).
Performance Period and vesting	The Performance Period will be the three year period commencing 1 July 2015 and ending 30 June 2018. For the purposes of the TSR portion of the grant, the average share price in the three month period preceding and including each of 1 July 2015 and 30 June 2018 will be utilised. Following the end of the Performance Period, the performance hurdles will be tested and the Board will determine the extent to which the Performance Rights vest. Any Performance Rights that do not vest following testing of the performance hurdles at the end of the Performance Period will lapse.
Allocation of shares	Following testing of the applicable performance conditions and determination of the level of vesting of Performance Rights, one fully paid share in the Company will be allocated in relation to each Performance Right which vests. The Company's obligation to allocate shares on vesting may be satisfied by issuing new shares, acquiring shares on market or transferring shares from the employee share trust.
Trading restrictions	Shares allocated on vesting of Performance Rights will not be subject to any further trading restrictions, subject to complying with the Company's Securities Trading Policy.
Price payable for securities	No amount will be payable in respect of the allocation of Performance Rights, nor in respect of any shares granted upon vesting of the Performance Rights.
Cessation of employment	If Mr. Fiske ceases employment with the Company before the end of the Performance Period, his unvested Performance Rights will lapse. In exceptional circumstances (for example, ill health and death or other circumstances approved by the Board), the Board may in its absolute discretion, determine the applicable treatment of the performance rights, which may include that some or all of the unvested Performance Rights do not lapse and are tested at the end of the Perfor- mance Period or vest at the time of cessation, based on the portion of the Performance Period that has elapsed at the time of cessation and the degree to which the performance conditions have been achieved.
Securities Received Since Last Approval	At the 2014 AGM, shareholders approved a grant of performance rights to Mr Fiske in respect of the 2014 - 15 financial year under the Executive Incentive Plan. Since the 2014 AGM (being the date of the last approval), 1,909,645 performance rights were granted to Mr Fiske. The grant was made on 2 December 2014, and no amount was payable for the grant.
Other information	No other director of the Company is eligible to participate in the Plan or any other employee incentive scheme of the Company. No loans are involved in the proposed grant of performance rights to Mr Fiske. Under ASX Listing Rule 7.1, every listed entity has the ability to issue 15% of its issued capital without security holder approval in a 12 month period. When an entity issues or agrees to issue securities under ASX Listing Rule 7.1 without security holder approval, that issue or agreement to issue uses up part of the 15% available under that rule. However, if approval is given under ASX Listing Rule 10.14, approval will not be required under ASX Listing Rule 7.1. This means that the Performance Rights granted to Mr. Fiske and any shares issued pursuant to this approval will not use up part of the 15% available under ASX Listing Rule 7.1.

Equal to or greater than the stretch EPS target	100%
Greater than the threshold EPS target, up to the stretch EPS target	Progressive pro rata vesting from 50% to 100% (i.e. on a straight line basis)
Equal to the threshold EPS target	50%
Less than the threshold EPS target	0%

Billabong's achieved EPS in the final year of the Performance Period

Performance Rights subject to EPS Hurdle that vest (%)

A voting exclusion statement applicable to Resolution 4 is set out in the Notice of Meeting.

Board Recommendation

The Board (with Mr. Fiske abstaining) recommends that shareholders vote in favour of Resolution 4. The Chair of the Meeting intends to vote undirected proxies in favour of Resolution 4.

Resolution 5 - Share Consolidation

Background and rationale

Resolution 5 seeks shareholder approval to consolidate the number of shares and options on issue through the conversion of every 5 shares into 1 share and every 5 options into 1 option (Consolidation). If the Consolidation is approved, it will take effect in accordance with the Indicative Timetable.

The Consolidation will make the number of shares on issue more appropriate for the size of the Company and is expected to make an investment in the Company's securities more attractive to institutional and other investors.

Fractional entitlements and taxation

Not all shareholders and option holders will hold a number of shares and options that can be evenly consolidated on a 1 for 5 basis. Where a fractional entitlement occurs, the directors will round that fraction up to the nearest whole share and option.

Shareholders and option holders are advised to seek their own advice on the taxation implications of the Consolidation and neither the Company, nor the directors (or the Company's advisers) accept any responsibility for the taxation implications for individual shareholders and option holders arising from the Consolidation.

Holding statements

From the date of the Consolidation, all holding statements for shares and options will cease to have any effect, except as evidence of entitlement to a certain number of shares and options on a post-Consolidation basis. After the Consolidation is approved, the Company will arrange for new holding statements for shares and options to be issued to holders of those shares and options in accordance with the Indicative Timetable.

It is the responsibility of each shareholder and option holder to check the number of shares and options held by them.

Effect on capital structure

If the Consolidation is approved by shareholders, the 990,370,034 shares on issue as at the date of this Notice of Meeting will be reduced by approxi- mately 792,296,027 to approximately 198,074,007. The Consolidation will not result in any unpaid amounts on the shares.

Pre-Consolidation	Post-Consolidation
Shares	990,370,034	198,074,007

As the consolidation applies equally to all shareholders, the Consolidation will have no effect (subject to rounding entitlements) on the percentage interest of each individual shareholder in the Company.

The value of each share is expected to increase as a result of the Consolidation. However, assuming no other market movements or impacts occur which affect the price of the shares, the aggregate value of all shares held by an individual shareholder is not expected to be affected by the Consolidation.

Effect on options

The Company currently has 73,356,145 options on issue. Each option is exercisable for one share. In accordance with ASX Listing Rule 7.22.1, in a consolidation of capital, the number of options must be consolidated in the same ratio as the ordinary capital and the exercise price must be amended in inverse proportion to that ratio.

The breakdown of options on issue as at the date of this Notice of Meeting, and their proposed treatment pursuant to the Consolidation is set out in the table below:

Pre-Consolidation		Post-Consolidation
Option expiry date	Number	Exercise Price	Number	Exercise Price
31 October 20151	314,503	$11.08	62,901	$55.40
16 July 2020	42,259,790	$0.50	8,451,958	$2.50
3 December 2020	29,581,852	$0.50	5,916,371	$2.50
31 January 2024	1,200,000	$0.60	240,000	$3.00
Total options on issue	73,356,145		14,671,230

Effect on employee rights

Under the terms of the relevant plans or grants, all employee and executive incentive rights, executive performance shares and shares held pursuant to the Exempt Employee Share Plan (which are ordinary shares currently on issue) will be consolidated on the same basis.

Indicative Timetable

If approved by shareholders, the Effective Date of the Consolidation will be 26 November 2015. The following is an indicative timetable (subject to change) of the key events:

Key Event	Indicative Date
Annual General Meeting	24 November 2015
Notification to ASX that Consolidation is approved	24 November 2015
Last day for trading in pre-consolidated securities	25 November 2015
Trading in the consolidated securities on a deferred settlement basis commences (Effective Date)	26 November 2015
Last day to register transfers on a pre-consolidation basis	30 November 2015
Registration of securities on a post-consolidation basis	1 December 2015
Despatch of new holding statements	1 December 2015
Deferred settlement trading ends	7 December 2015
Normal trading starts	8 December 2015

Board Recommendation

The Board unanimously recommends that shareholders vote in favour of Resolution 5. The Chair of the Meeting intends to vote undirected proxies in favour of Resolution 5.

1 These 314,503 options will expire on 31 October 2015.