Reject Shop : Entitlement Offer Booklet

2 Summary of Offer and Key Dates

2.1 Summary of Entitlement Offer

Subject to the Corporations Act, ASX Listing Rules and other applicable laws, TRS reserves the right to vary the times and dates of the Entitlement Offer, including extending the Entitlement Offer or accepting late applications, either generally or in particular cases, without notice. You cannot, in most circumstances, withdraw your application once it has been accepted.

All times and dates in this Entitlement Offer Booklet refer to AEDT.

Enquiries

If you have any questions, please call the TRS Offer Information Line on 1300 365 969 (within Australia) or +61 1300 365 969 (outside Australia) between 8:30am and 5:30pm (AEDT), Monday to Friday during the offer period. Alternatively, consult your stockbroker, accountant or other independent professional adviser.

You may also download a copy of your Entitlement and Acceptance Form from www.rejectshop.com.au. To use this facility you will need internet access and your Holder

3

4 Important Information

This Entitlement Offer Booklet and the accompanying information (together the

'Information') have been prepared by TRS. No party other than TRS has authorised or caused the issue of this Information, or takes responsibility for, or makes any statements, representations or undertakings in this Information. TRS, the Underwriter, the sub- underwriters and each of their respective affiliates, officers, employees agents and advisors, to the maximum extent permitted by law, expressly disclaim all liabilities, including, without limitation, liability for negligence in respect of, make no representations regarding, and take no responsibility for, any part of the Information and make no representation or warranty, express or implied, as to the currency, accuracy, reliability or completeness of information in this document. No person other than TRS is authorised to give any information or make any representation in connection with the Entitlement Offer which is not contained in the Information. Any information or representation not so contained may not be relied upon as being authorised by TRS or any person associated with it in connection with the Entitlement Offer.

You should read this Information carefully and in its entirety before deciding to invest in New Shares. In particular, you should consider the risk factors outlined in the attached Investor Presentation, any of which could affect the operating and financial performance of TRS or the value of an investment in TRS.

Past performance information given in this Information is provided for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance.

Neither the Underwriter nor the sub-underwriters have authorised, permitted or caused the issue, lodgement, submission, dispatch or provision of this Entitlement Offer Booklet, none of them make or purport to make any statement in this Entitlement Offer Booklet and there is no statement in this Entitlement Offer Booklet which is based on any statement by any of them.

1. Not investment advice
   The Entitlement Offer to which this Information relates is being made in reliance on section 708AA of the Corporations Act as notionally modified by the ASIC Instrument.
   The Information is not a prospectus, product disclosure statement or disclosure document under the Corporations Act and has not been lodged with the Australian Securities and Investments Commission ('ASIC'). It is also not financial product advice and has been prepared without taking into account your investment objectives, financial circumstances or particular needs. TRS is not licensed to provide financial product advice in respect of the New Shares.
   The Information does not purport to contain all the information that you may require to evaluate a possible application for New Shares and does not take into account the investment objectives, financial situation or needs of you or any particular investor. This Entitlement Offer Booklet should be read in conjunction with TRS' other periodic statements and continuous disclosure announcements lodged with ASX. You should conduct your own independent review, investigation and analysis of TRS Shares, and should obtain any professional advice you require to evaluate the merits and risks of an investment in TRS before making any investment decision based on your investment objectives.
   You should consider the 'Key Risks' section of the attached Investor Presentation.
2. Eligible Shareholders
   An 'Eligible Shareholder' means a Shareholder who:

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1HFY20 Results

and Fully Underwritten Equity Raising

27 February 2020

Important Notice and Disclaimer

This presentation has been prepared by The Reject Shop Limited (ABN 33 006 122 676) ("The Reject Shop" or "TRS"). By accepting, assessing or reviewing this presentation, or attending any associated presentation or briefing, you agree to be bound by the following conditions.

The information contained in this presentation is in summary form only and is subject to, and should be read in conjunction with, all material that The Reject Shop provides and has announced to the Australian Securities Exchange ("ASX"), which is available at www.asx.com.au.The information in this presentation is of a general nature and does not purport to be complete nor does it contain all the information which a prospective investor may require in evaluating a possible investment in The Reject Shop or that would be required in a prospectus prepared in accordance with the requirements of the Corporations Act 2001 (Cth) ("Corporations Act"). Statements made in this presentation are made only as of the date of this presentation. The information in this presentation remains subject to change without notice.

This presentation has not been, and will not be, lodged with the Australian Securities & Investments Commission ("ASIC"). This presentation has been made available for information purposes only and does not constitute a prospectus or other disclosure document under Australian law, including the Corporations Act.

This presentation is not and does not constitute advice or an offer, solicitation, invitation or recommendation to subscribe for, or purchase, any securities in any jurisdiction, or to any person to whom it would not be lawful to make such an offer or invitation. Neither this presentation nor anything contained in it shall form the basis of any contract or commitment. No action has been taken to register the securities referred to in this presentation or otherwise to permit a public offering of securities, in any jurisdiction outside Australia - please refer to foreign selling restrictions on page 28.

Nothing in this presentation constitutes investment, legal, tax or other advice. Reliance should not be placed on the information or opinions contained in this presentation. This presentation does not take into consideration the investment objectives, financial situation or particular needs of any particular investor. Any decision to subscribe for securities should only be made after undertaking an independent assessment and determination of all information subsequently provided (if any) and after seeking appropriate financial, taxation and legal advice. Investors are encouraged to make an independent assessment of The Reject Shop. Cooling off rights do not apply to the acquisition of securities in The Reject Shop.

An investment in The Reject Shop securities is subject to investment and other known and unknown risks (including the risks set out on pages 23 to 27), some of which are beyond the control of The Reject Shop. The Reject Shop does not guarantee any particular rate of return or the performance of The Reject Shop or its securities, nor does it guarantee the repayment of capital from The Reject Shop or any particular tax treatment.

All references to dollars and cents are to Australian dollars unless otherwise stated and all financial data is presented as at the date of this presentation unless otherwise stated.

1HFY20 Results and Fully Underwritten Equity Raising / 27 February 2020 Page 2

Important Notice and Disclaimer

Though this presentation was prepared with reasonable care and in good faith, neither The Reject Shop, nor its officers, directors, employees, agents, contractors, advisers or any other associated persons (collectively "Associated Persons") represents or warrants in any way, express or implied, that the information, opinions, conclusions or other information contained in this presentation, any of which may change without notice, is fair, accurate, complete, up-to-date or correct. To the maximum extent permitted by law, The Reject Shop and its Associated Persons each expressly disclaims and excludes all liability (including, without limitation, any liability arising from fault or negligence) that may arise from, or is connected to, this presentation, or the use of this presentation, or any other written or oral information provided by or on behalf of The Reject Shop.

This presentation contains certain "forward looking statements". Forward looking statements can generally be identified by the use of forward looking words such as "expect", "anticipate", "likely", "intend", "should", "could", "may", "predict", "plan", "propose", "will", "believe", "forecast", "estimate", "target", "outlook", "guidance", "project", "opinion" and other similar expressions within the meaning of securities laws of applicable jurisdictions and include, but are not limited to, the outcome and effects of the equity raising described in this presentation and the use of proceeds. Indications of, and guidance on, future earnings, financial position and performance, results of operations and projects and business of The Reject Shop are also forward looking statements, and include statements in this presentation regarding the conduct and outcome of the equity raising and the use of proceeds.

Any forecasts and other forward-looking statements set out in this material are based on information available to The Reject Shop as at the date of this presentation, and a number of estimates, projections, assumptions and pro forma adjustments that are subject to known and unknown business, economic and competitive uncertainties, risks and contingencies (including the risks described in this presentation), with respect to future business decisions, which are subject to change and in many cases are outside the control of The Reject Shop and may involve significant elements of subjective judgment and assumptions as to future events which may or may not be correct.

Any forecasts contained in this presentation may vary from actual financial results, and these variations may be material. Similarly, statements about market and industry trends, which are based on interpretations of current market conditions, should be treated with caution. Accordingly, neither The Reject Shop nor its Associated Persons make any representation, guarantee or assurance that the forecast performance in any forecasts or any forward-looking statement, express or implied, in this presentation will be achieved. Except as required by law or regulation (including the ASX Listing Rules), The Reject Shop does not undertake to provide any additional or supplementary information or to revise the material to reflect any new information, change in circumstances, future events or results that arise after release of this presentation.

Past performance, including past security price performance, is not an indicator of future performance, and is given for illustrative purposes only. Investors are cautioned against relying on statements regarding past performance.

This material may not be lawfully published in some jurisdictions or may only be provided to certain persons and you must not view this presentation if to do so would be unlawful in your jurisdiction or may otherwise place The Reject Shop under obligations which it has not complied with.

The equity raising described in this presentation will be fully underwritten by Ord Minnett Limited ("Ord Minnett"). In addition, Ord Minnett is acting as sole lead manager to the equity raising. The equity raising will be sub-underwritten.

1HFY20 Results and Fully Underwritten Equity Raising / 27 February 2020 Page 3

Important Notice and Disclaimer

Neither Ord Minnett nor the sub-underwriters, nor any of their respective affiliates or related bodies corporate, nor any of their respective directors, officers, partners, employees, advisers or agents, have authorised, permitted or caused the issue, submission, dispatch or provision of this presentation and, except to the extent referred to in this presentation, none of them makes or purports to make any statement referred to in this presentation and there is no statement in this presentation which is based on any statement by any of them.

To the maximum extent permitted by law, The Reject Shop, Ord Minnett, the sub-underwriters and each of their respective affiliates and related bodies corporate, and their respective directors, officers, partners, employees, advisers and agents:

• exclude and disclaim all liability for any expenses, losses, damages or costs incurred by you as a result of your participation in the offering of securities referred to in this presentation ("Offer") and the information in this presentation being inaccurate or incomplete in any way for any reason, whether by negligence or otherwise; and
• make no representation or warranty, express or implied, as to the currency, accuracy, reliability or completeness of information in this presentation and, with regards to Ord Minnett and each sub-underwriter, it and its affiliates and related bodies corporate, and their respective directors, officers, partners, employees, advisers and agents, take no responsibility for any part of this presentation.

Ord Minnett and each sub-underwriter and each of their respective affiliates and related bodies corporate, and their respective directors, officers, partners, employees, advisers and agents, make no recommendations as to whether you or your related parties should participate in the Offer nor do they make any representations or warranties to you concerning the Offer, and by receiving this presentation you represent, warrant and agree that you have not relied on any statements made by Ord Minnett or any sub-underwriter or their respective affiliates and related bodies corporate, or their respective directors, officers, partners, employees, advisers and agents, in relation to the Offer and you further expressly disclaim that you are in a fiduciary relationship with any of them.

NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES

This presentation is not for release in the United States or to, or on behalf of, US persons. This presentation, including the information contained in this disclaimer, is not a prospectus and does not constitute an offer to sell, or a solicitation of any offer to buy, shares in the United States or in any other jurisdiction in which, or to any person to whom, such an offer would be illegal. The securities to be offered and sold in the equity raising by The Reject Shop have not been, and will not be, registered under the U.S. Securities Act of 1933 (the "US Securities Act"), or under the securities laws of any state or other jurisdiction of the United States, and may not be offered or sold in the United States unless the securities are registered under the US Securities Act or an exemption from the registration requirements of the US Securities Act is available. This presentation may not be sent to any investors in the United States. Any failure to comply with such restrictions may be a violation of applicable securities laws.

1HFY20 Results and Fully Underwritten Equity Raising / 27 February 2020 Page 4

Executive summary

H2 FY20 UPDATE

• New management team in place, effective January 2020
• Positive comparable sales momentum 2.3% for first eight weeks of H2 FY20

1HFY20 Results and Fully Underwritten Equity Raising / 27 February 2020 Page 6

Summary 1HFY20 financial results

Commentary

Sales & Stores

• Sales grew 0.7%, with comparable store sales for the half +0.5%; Q1: +0.0% (flat), Q2: +0.9%. December comparable store sales grew +1.3%
• Strong trade within Fast Moving Consumer Goods categories was offset by clearance of legacy inventory and increased shrinkage
• 3 new stores, 2 relocations and 4 closures. 356 Stores at end of December 2019

Impact of new Lease Accounting Standard (AASB 16)

• Reduced 1HFY20 Pre-Tax Profit by $2.3m
• Excluding AASB 16 impact, revised NPAT would be $11.1m (up 5.3% on pcp)

1. The post-AASB 16 results for 1HFY20 reflect the adoption of the new Accounting Standard AASB 16 Leases. The Group has adopted AASB 16 using the modified retrospective approach and, as a result, prior period comparatives have not been restated. To allow for prior period comparison, all 1HFY20 results disclosed in this presentation (unless otherwise indicated) are pre application of AASB 16 ("pre-AASB 16") and exclude the impact of AASB 16.

1HFY20 Results and Fully Underwritten Equity Raising / 27 February 2020 Page 8

Comparison 1HFY20 results by key metrics

Commentary

• Sales: Overall Sales grew 0.7%, with comparable store sales for the half +0.5%; 1st quarter +0.0% (flat), and 2nd quarter +0.9%. December (peak trading period) comparable store sales came in at +1.3%
• Gross Profit: 43.1% of sales, slightly down compared to prior year
• Store Expenses: Well controlled in absolute terms and as ratio to sales
• Admin Expenses: Reflecting tight controls over headcount and discretionary spend
• EBITDA margin: Slight improvement of 0.1%

1. 1HFY20 post-AASB 16 numbers have been adjusted above to exclude the effects of the new Lease Accounting Standard AASB 16; further reconciliation of post-AASB numbers to proforma numbers can be found in the next slide "New Lease Accounting Standard"

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New lease accounting standard

1HFY20 Results and Fully Underwritten Equity Raising / 27 February 2020 Page 10

Cashflow and other gearing metrics

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Balance sheet

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Our business and strategic priorities

The Reject Shop is well known across Australia for selling everyday products at low prices across a diverse range of categories

The focus is on running highly efficient, safe, low cost retail stores where team members can have a positive impact by helping customers save every day

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Customers - price, product & promotion

Low prices on everyday products - promoting national brands at everyday low prices supported by private brands at lower prices

Evolve the merchandise offer to focus on everyday products at low prices by:

• Rationalising product ranges, leveraging buying power to deliver low prices and ensuring exceptional product value
• Increasing the range of national brands supported by quality private branded products to improve availability
• Promoting everyday value through improved product execution in-store, catalogues and digital channels

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Operations - place & people

Simple and convenient shopping experience which is efficient and safe for the team to operate

Simplifying the store operating model and creating a more efficient customer shopping experience by:

• Determining the success formula of store location, size and rent to maximise sales and profitability
• Standardising store and product layouts to improve customer flow, navigation and the shopping experience
• Building efficiency into every step of the supply chain to reduce handling costs, improving product availability and allowing the team to serve customers better

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Performance - profit & growth

Growth supported by cost efficiencies - unlocking new growth opportunities to appeal and reach more Australian communities

Sales and profit growth to be delivered through a single-minded focus on:

• Effective inventory management through reducing stock levels and breadth of range; and an increased focus on stock turn
• Simplifying all tasks across the business to reduce operating costs
• Reviewing and investing in the store property portfolio to identify opportunities to take The Reject Shop to more Australian communities and exit sites that are no longer meeting requirements
• Identifying new product categories to improve customer experience and enable growth

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Initiatives underway

1HFY20 Results and Fully Underwritten Equity Raising / 27 February 2020 Page 18

Equity raising overview

1. The Theoretical Ex-Rights Price ('TERP') is the theoretical price at which TRS shares should trade immediately after the ex-date of the Entitlement Offer. TERP is a theoretical calculation only and the actual price at which TRS shares will trade on the ASX immediately after the ex-date for the Entitlement Offer will depend on many factors and may not be equal to the TERP. TERP is calculated by reference to the closing price of TRS shares as traded on the ASX of $3.42 on 26 February 2020, being the last trading day prior to the announcement of the Entitlement Offer.
2. The Volume Weighted Average Price ('VWAP') in this presentation was calculated as the 10 day total value of TRS shares sold on the ASX divided by the total 10 day volume up to and including 26 February 2020.

1HFY20 Results and Fully Underwritten Equity Raising / 27 February 2020 Page 20

Timetable

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Use of proceeds

The net proceeds (after transactions costs) of approximately $24.0m will be used by the new management team to transform the company through a range of actions:

• Working capital flexibility and reduce reliance on banking facilities ($20.0m)
• Fund future growth and business optimisation initiatives ($4.0m), including:
• • Barrier project to reduce theft and shrinkage
  • Fixture changes to simplify the sale of stock in-store

Additionally, the new management team will undertake a number of operational efficiency initiatives, including:

• End to end supply chain review to identify opportunities for greater efficiency and simplicity
• Divesting poor performing categories
• Reducing overall stock levels and rationalisation of the product range
• Developing a merchandise product strategy for national and private brands
• Optimising existing property portfolio through rent renegotiations and site assessments

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Key Risks

1. New and existing store growth

The growth strategy of The Reject Shop is dependent upon its ability to generate growth from its existing stores and to open new stores in accordance with its expansion strategy. Generating growth from existing stores will be dependent on a number of factors, including improving supply chain efficiencies, stock levels and appropriate sourcing of products. The opening of new stores from time to time will depend on the availability of suitable sites and the ability of The Reject Shop to negotiate acceptable lease terms. These factors will therefore impact on the ability of The Reject Shop to successfully implement its growth strategy.

2. Competition

The Reject Shop operates a retail model where price and value are critical to the customers it serves. The market in which The Reject Shop operates is highly competitive and is subject to changing customer demand and preferences, with competition based on a variety of factors including merchandise selection, price, parallel importing, marketing and customer service. The Reject Shop closely monitors price and quality to ensure it maintains its competitive stance. The Reject Shop's financial performance or operating margins could be adversely affected if its competitors develop competitive advantages over it or engage in aggressive product discounting, if new competitors enter the market or if The Reject Shop fails to successfully respond to changes in the market. Market consolidation or future acquisitions could also result in further competition and changes to retail margins and market share, which could negatively impact The Reject Shop's financial performance or operating margins.

3. Consumer discretionary spending

The Reject Shop is exposed to consumer spending patterns but operates an everyday low price proposition and positions itself in convenient locations to maximise sales potential at all times. As many of The Reject Shop's products are discretionary goods, sales levels are sensitive to customer sentiment. The Reject Shop's product range and its financial operation and performance may be affected by changes in consumer disposable incomes, confidence and demand, including as a result of changes to economic outlook and interest rates.

4. Financial performance and costs

The Reject Shop earns the majority of its EBIT and NPAT in the first six months of its financial year. This is due mainly to significant sales attributable to the number of high profile seasonal events in the first half of the financial year. Sustained poor trading performance at any time during major seasonal events, such as Christmas, may have a material impact on the profitability of The Reject Shop. A significant proportion of The Reject Shop's operating costs are fixed in nature. As a result, a significant shortfall in sales during any period could result in an adverse impact on The Reject Shop's profitability. At the same time, The Reject Shop is subject to increases in the cost of operating its business, with annual cost escalations being built into the enterprise agreements in place for its store and distribution centre staff as well as its lease agreements for both stores and distribution centres. While The Reject Shop's increasing scale as well as improving operating efficiencies and strong lease negotiations have to some extent offset some of these cost increases, such increases would also impact on profitability.

The Reject Shop's future financial performance is dependent, to a certain extent, on the level of capital expenditure that is required to maintain its business. Any significant unforeseen increase in the capital and operating costs associated with The Reject Shop's operations would impact its future cash flow and profitability.

5. Financing risks

Part of the proceeds under the Entitlement Offer will be used to reduce The Reject Shop's exposure under a working capital facility with the ANZ Bank from $25m to $10m. This new core facility has a 12 month term and is subject to an annual review by the financier. The company's existing seasonal facility ($20m) remains in place for the period October to December 2020 although the Company will be required to deposit $5m with ANZ when the seasonal facility is being used. While the annual review requirement is consistent with the terms on which the company's bank facilities have been made available in recent years, there is a risk that the financier will not agree to renew its bank facilities with The Reject Shop in the future. Likewise, the bank may only renew such bank facilities on terms which are not acceptable to the company. An inability of The Reject Shop to renew these facilities may affect The Reject Shop's financial performance and position in the future. Further, should The Reject Shop be unable to satisfy the terms, conditions and relevant covenants under its bank facilities, The Reject Shop would be in breach of those facilities and, amongst other things, may need to source funding from alternative sources.

1HFY20 Results and Fully Underwritten Equity Raising / 27 February 2020 Page 23

Key Risks

6. Employment laws

The Reject Shop is mindful of recent instances in the Australian retail and hospitality sectors where there has been non-compliance with statutory and award obligations (including payment obligations) owed by employers to employees. The Reject Shop has processes in place to monitor compliance with employment laws and takes its obligations to its workforce seriously. Notwithstanding this, The Reject Shop is not exempt from the risk of unintentional non-compliance issues arising in relation to employment matters, including matters with respect to underpayment. In particular, given the large scale of The Reject Shop's operations, the significant size of its workforce, the physical dispersion of its workforce, the varying hours of work and other workplace arrangements of its employees, the identification of any historical and systemic non-compliance with employment laws and underpayment of employees has the potential to have a material adverse effect on The Reject Shop's financial position, even if such non-compliance is relatively minor on a case by case basis.

7. Supply risk

The Reject Shop and its suppliers are subject to various risks which could limit The Reject Shop's ability to procure sufficient supply of products. As a consequence of the fact that The Reject Shop relies significantly on imported products from outside Australia, The Reject Shop is exposed to various risks in relation to its supply chain. Outbreaks of pandemics or diseases and, in particular, the recent outbreak of the coronavirus, have the potential to have a detrimental financial impact on The Reject Shop's business. This is particularly relevant given that the majority of the company's imports derive from the PRC.

The Reject Shop believes that it is too early to fully quantify the extent to which the coronavirus may impact on its financial performance. However, the coronavirus outbreak could result in there being sustained closures of businesses that transact with The Reject Shop, as well as delays or cancellations of orders from international suppliers or manufacturers of products to be purchased by The Reject Shop. These closures, delays or cancellations would likely impact on the financial performance of the company.

While The Reject Shop is particularly mindful of the impact of the coronavirus, it also remains focussed on other risks relating to its international supply chain. Other such risks include political instability, increased security requirements for foreign goods, costs and delays in international shipping arrangements, imposition of taxes and other charges as well as restrictions on imports. The Reject Shop is also exposed to risks related to labour practices, environmental matters, disruptions to production and ability to supply, and other issues in the foreign jurisdictions where suppliers operate. More generally, risks which could limit The Reject Shop's ability to procure sufficient supply of products include raw material costs, inflation, labour disputes, union activities, boycotts, financial liquidity, product merchantability, safety issues, natural disasters, disruptions in exports, trade restrictions, currency fluctuations and general economic and political conditions. Any of these risks, individually or collectively, could materially adversely affect The Reject Shop's financial and operational performance.

Separately, there is a risk that any change in The Reject Shop's relationships with key suppliers (including a supplier seeking to terminate the relevant agreement) may result in The Reject Shop being unable to continue to source products from existing suppliers, and in the future, to source products from new suppliers, at favourable prices, on favourable terms, in a timely manner and in sufficient volume. The Reject Shop cannot guarantee that its existing arrangements with key suppliers will be renewed, or renewed on terms similar to their current terms. The loss or deterioration of The Reject Shop's relationships with suppliers, or an inability to negotiate agreements with new suppliers on terms which are not materially less favourable than existing arrangements, may have a material adverse effect on The Reject Shop's financial and operational performance.

8. Property portfolio management

Lease costs represent a significant proportion of the overall operating cost base of The Reject Shop.

The Reject Shop's stores and distribution centres are leased and therefore subject to negotiation at the end of each lease term. While the potential impact of a single store closure is mitigated by the number of stores the business now operates, there is no guarantee any store or distribution centre will be renewed at the end of each lease term on terms acceptable to the business.

The business actively manages its store portfolio against established financial and operational criteria which must be met for both new and existing stores.

Each of The Reject Shop's distribution centres is operated either by The Reject Shop itself or by a third party. In either case, there is a risk that, due to circumstances outside the control of The Reject Shop, stock located at the distribution centre could be damaged, or that access to the distribution centre could be restricted, meaning that such stock is unable to be retrieved. This could have a material adverse effect on The Reject Shop's financial and operational performance.

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Key Risks

9. Merchandising sourcing and management

The Reject Shop relies on its ability to anticipate and meet the needs of its target consumers and purchases products accordingly. Misjudgements in demand and trends or changes in consumer preferences could result in overstocked inventory and the sale of products below originally anticipated selling prices, which may in turn have an adverse impact on cash flows and profitability.

10. Reliance on key personnel

The Reject Shop is reliant on retaining and attracting quality senior executives and other employees who provide expertise, experience and strategic direction in operating the business. The responsibility of overseeing day-to-day operations and the management of The Reject Shop is concentrated amongst a number of key senior personnel. The management team is lead by a new CEO who has recently been appointed to lead the implementation of the latest strategy for the business. The loss of the services of any of those key employees (for any reason whatsoever) or the inability to attract new qualified personnel, could adversely affect The Reject Shop's operations.

Additionally, successful operation of each of The Reject Shop's stores depends on its ability to attract and retain quality employees in each store. The Reject Shop has over 5,300 employees across its stores and distribution centre network. Competition within the Australian retail market, as well as other factors such as changing demographics or employment laws could increase the demand for, and cost of hiring, quality employees. The Reject Shop's financial and operational performance could be materially adversely affected if it cannot attract and/or retain quality employees for its stores.

11. Exchange rate

The Reject Shop relies significantly on imported products (either directly purchased by the business or indirectly through local or overseas wholesalers) and as a result the cost of product and retail sales prices can be subject to movements in exchange rates. The Reject Shop mitigates against movements in exchange rates through the use of forward cover. If The Reject Shop is unable to alter pricing due to uncovered movements in exchange rates, this may have a material impact on its financial performance.

12. Product liability exposure

The Reject Shop purchases and sells over 20,000 different products on an annual basis, all of which must be fit for purpose and compliant with the Australian Consumer Law. Notwithstanding the compliance protocols established by The Reject Shop, there is a risk that a product may breach relevant consumer law, the implication of which could have a material impact on The Reject Shop's business and performance.

The Reject Shop's success in generating profits and increasing its market share is also based on the success of the key brands which it distributes and sells, including third party branded products. Reliance on these key brands has the potential to make The Reject Shop vulnerable to brand or reputational damage from any negative publicity, product tampering or recalls. This may also increase the rise of stock and asset write downs.

13. Occupational health and safety

The Reject Shop has over 5,300 employees across its stores and distribution centre network, as well as thousands of customers who visit its stores nationwide. The business has a National OH&S function, supported by OH&S representatives in appropriate geographic locations (including in all distribution centres) to oversee the application of OH&S policies and Worksafe procedures across the business.

Notwithstanding the above, given that The Reject Shop operates more than 350 stores in Australia, there is always a risk that a personal injury claim or otherwise may occur to a customer or employee due to unforeseen circumstances. Any claim relating to an accident which occurs in any of The Reject Shop's stores could materially affect The Reject Shop's brand and reputation, as well as its businesses, operating and financial performance.

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Key Risks

14. Information technology

The Reject Shop's management information and other IT systems are designed to enhance the efficiency of The Reject Shop's operations. Should these systems not be maintained sufficiently or updated when required, or disaster recovery processes not be adequate, system failures may negatively impact on The Reject Shop's business and performance. There is a risk that a general technological development will involve costs which are disproportionate to previous generation technologies. In the event that The Reject Shop seeks to adopt such technologies

15. Markets and Liquidity

The market price of The Reject Shop Shares will fluctuate due to various factors, many of which are non-specific to The Reject Shop, including the number of potential buyers or sellers of The Reject Shop Limited shares on the ASX at any given time, recommendations by brokers and analysts, Australian and international general economic conditions, inflation rates, interest rates, changes in government, fiscal, monetary and regulatory policies, commodity prices, global geo-political events and hostilities and acts of terrorism, and investor perceptions. In the future, these factors may cause The Reject Shop Shares to trade at a lower price.

In addition, The Reject Shop currently has a small number of substantial shareholders on its share register. There is a risk that these shareholders may sell their shares at a future date. This could cause the price of The Reject Shop shares to decline.

There may be few or many potential buyers or sellers of The Reject Shop shares on the ASX at any given time. This may affect the volatility and/or the market price of The Reject Shop's shares and/or the prevailing market price at which shareholders are able to sell their shares in The Reject Shop, which may be more or less than the share price under the Entitlement Offer.

16. Litigation

The Reject Shop is subject to the usual business risk that litigation or disputes may arise from time to time in course of its business activities. These may include claims, disputes, inquiries and investigations involving customers, employees, landlords, suppliers, government agencies/authorities, regulators or other third parties. There can be no assurance that legal claims will not be made against The Reject Shop, or that The Reject Shop's insurance will be adequate to cover liabilities resulting from any such claims. Any successful claim against The Reject Shop may adversely impact its future financial performance or position as well as its reputation and brand.

17. Domestic and global economic conditions

Changes in the domestic and global economic conditions and outlook, which are outside of The Reject Shop's control, may impact the profitability of The Reject Shop. A downturn in domestic or global economic conditions could adversely affect the financial performance of both The Reject Shop and its customers. Such changes could include, amongst other things, adverse changes in economic growth rates, interest rates, commercial property rents, employment levels, consumer demand, consumer and business sentiment, market volatility, exchange rates, inflation rates, government fiscal, monetary and regulatory policies (including in relation to consumer protections), international economic conditions and employment rates.

18. Changes to accounting standards

Accounting standards may change. This may affect the reported earnings of The Reject Shop and its financial position from time to time.

19. Taxation

Future changes in Australian taxation law, including changes in interpretation or application of the law by the courts or taxation authorities in Australia, may affect the taxation treatment of an investment in shares in The Reject Shop or the holding and disposal of those shares. Further, changes in tax law, or changes in the way tax law is or is expected to be interpreted, in the various jurisdictions in which The Reject Shop operates, may impact the future tax liabilities of The Reject Shop.

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Key Risks

20. Insurance

The Reject Shop maintains insurance coverage in relation to many different aspects of its business. However, there is no guarantee that such insurance will be available in the future on a commercially reasonable basis or that The Reject Shop will have adequate insurance cover against claims made from time to time. If The Reject Shop incurs uninsured losses or liabilities, its assets, profits and prospects may be materially adversely affected. In particular, there is a risk that The Reject Shop may be subject to claims in respect of both historical and future incidents. If such claims arise, there is a risk that The Reject Shop's insurance cover may not adequately protect The Reject Shop against those claims, which may have a material adverse effect on The Reject Shop. Further, The Reject Shop may not be able to recover under its insurance if the company or companies providing the insurance (or any reinsurance) are under financial distress or fail.

21. Business interruption

The Reject Shop operates in over 350 stores across Australia, which is essential to its business operations. Any of these stores, or any of The Reject Shop's distribution centres, could be exposed to damage or interruption, system failures, power or telecommunication providers' failure, fire, flooding, natural disasters, terrorist acts, war, or human error. These events may cause a number of The Reject Shop's stores or distribution centres to close for a period of time and therefore cease operating. Any such events would impact The Reject Shop's ability to operate and could result in business interruption, the loss of customers and/or revenue, brand or reputational damage and weakening of its competitive position, which could therefore adversely affect The Reject Shop's operating and financial performance.

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Foreign Selling Restrictions

This document does not constitute an offer of new ordinary shares (New Shares) of The Reject Shop Limited in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares may not be offered or sold, in any country outside Australia and New Zealand.

This document does not constitute an offer of securities in any jurisdiction in which it would be unlawful. This document has not been, and will not be, approved by or lodged with ASIC or its equivalent regulatory bodies in New Zealand, the United States of America or any other jurisdiction.

It has been made available for information purposes only and does not constitute:

in respect of Australia, a prospectus, short form prospectus, profile statement or offer information statement as those terms are defined in the Corporations Act;

in respect of New Zealand, an investment statement or prospectus under New Zealand law; or

in respect of the United States, a prospectus under the United States Securities Act of 1933 (as amended).

This document does not form part of any offer, invitation or recommendation in respect of securities, or an offer, invitation or recommendation to sell, or a solicitation of an offer to buy, securities in the United States or in any other jurisdiction in which such an offer would be illegal, or to any person to whom, such an offer would be illegal.

The New Shares to be issued under the equity raising described in this document have not been approved or disapproved by the United States Securities and Exchange Commission or by any state securities commission or regulatory authority in the United States, nor have any of the foregoing authorities or any Australian or New Zealand securities commission or other regulatory authority passed on the accuracy or adequacy of this document.

The distribution of this document outside Australia and New Zealand may be restricted by law. Persons who come into possession of information in this presentation who are not in Australia or New Zealand should seek independent advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES

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