valuation report - ck life sciences proprietor australian executor trustees (sa) limited purpose of...

Valuation Report Pooles Rock Vineyard and Winery De Beyer’s Road Pokolbin, NSW

Regenal Investments Pty Limited

31 December 2010 Ref: VADEL 3642

Pooles Rock Vineyard and Winery, De Beyer’s Road, Pokolbin, NSW Executive Summary (continued)

Valuation Details Instructing Party

Bonita Ho

Planning and Investment Manager

CK Life Sciences Int'l Inc

2 Dai Fu Street

Tai Po Industrial Estate

New Territories, Hong Kong

Reliant Party(s) Regenal Investments Pty Limited as Nominee of CK Life Sciences Int’l Inc

Registered Proprietor Australian Executor Trustees (SA) Limited

Purpose of Report Major Transaction Purposes

Interest Valued Freehold fee simple on both a vacant possession and an encumbered basis (subject to the existing lease).

Date of Valuation 31 December 2010

Date of Inspection 7 December 2010

Valuation – Date of Issue In accordance with your written instructions dated 2 December 2010, our inspection of the subject property as at 7 December 2010 and the requested date of valuation as at 31 December 2010, we confirm that this valuation certificate has been provided as at 31 December 2010 (Date of Valuation).

We have assumed that there will be no change to the property or the market between the date of issue and the date of valuation. Should we become aware of any relevant market information that may impact on the value of the property, up to and including 31 December 2010, we at our own discretion reserve the right to review and possibly amend the valuation analysis contained herein.

Property Overview The subject property comprises a modern winery facility with an estimated processing capacity in the order of 2,500 tonnes together with a recently constructed restaurant and small vineyard holding located in the heart of the Lower Hunter Wine and Tourism region.

The property has been structurally improved to a high standard with the new restaurant facility sited so diners can enjoy uninterrupted views across a dam to the vineyard and beyond. In addition to the restaurant and winery facility the property has the benefit of a modern barrel store, modern high clearance implement shed and workshop, cellar door sales outlet and four bedroom dwelling. The improvements on the property are well landscaped and have been developed in harmony with the surroundings.

The property is currently leased to PRW Leasing Pty Ltd for a term of 10 years and 2 days commencing 21 November 2004 and expiring 22 November 2014.

Total Area 20.98 hectares

Total Plantings 9.30 hectares

Winery Capacity 2,500 tonnes

Local Government Area Cessnock City Council

Zoning 1 (v) Rural (Vineyards)


Major Issues • The events of early 2008 including the initial sub-prime fallout in the United States and subsequent Global Financial Crisis (GFC) created

uncertain times for both the equities and property markets in Australia which impacted to varying degrees upon a variety of market participants. The initial impact was focussed on the Listed Property Trust sector operating assets within the major commercial, industrial, retail and infrastructure sectors. While a degree of uncertainty still remains within these markets, the magnitude is notably less than thatevident throughout 2008 and the majority of 2009. Improving levels of general market activity over recent times appears to have resulted in growing investor confidence, albeit shallower than that experienced prior to the GFC. The rural property market has typically lagged theexperiences of the other major markets and traditionally has not displayed their volatility. However there have been some very substantial collapses within the managed investment scheme sector in particular that have dampened investor confidence. The very rapid tightening of credit availability that resulted from the GFC remains an issue within the Australian rural property market with LVR requirements causing a general pull back in many regional markets.

• In light of the improving levels of market activity evidenced in CBD and major regional real estate sales and leasing markets over more recent times, we note that investment returns for good quality assets with secure cash flows in many instances appear to have stabilised,and in some instances are showing signs of tightening. However, in contrast to this observation we note poorer quality assets and particularly those with considerable existing vacancy and / or short term major tenant expiry continue to be priced by the shallower marketon an opportunistic basis, and thereby remain at risk of a prolonged period of softer yields. The same can be said for rural property markets where although transactions are rarely measured or negotiated on a yield basis, quality land types have retained more demand and hencetended to hold values ahead of less productive, secondary land types.

• The subject property comprises a modern winery facility that we have calculated to have a processing capacity in the order of 2,500 tonnes and this valuation is based on the assumption that all plant and equipment required to achieve this tonnage remains with the property and forms part of this valuation.

• The property is currently under contract for sale for the consideration of $5,000,000. We have been supplied a copy of the executedcontract.

• The property is currently leased to PRW Leasing Pty Ltd for a term of 10 years.

• The lease commenced on 21 November 2004 and expires on 22 November 2014 with an option to renew for two periods of five years.

• The current annualised rental as advised by Challenger Wine Trust is $861,171.72 per annum excluding GST.

• Rent reviews are performed annually and the rent is increased by CPI per annum capped at 4% as at the date of the lease anniversary.

• The rentals are paid monthly in advance in 12 equal instalments.

• In preparing this valuation, we have also calculated a vacant possession value (unencumbered value) of the property ignoring the current lease and in this instance we have assumed that the fruit produced on the property will be saleable under contract at current district average prices.

• In preparing this valuation we have relied on winery throughput figures and vineyard yields supplied by the registered proprietors and the lessee. The figures supplied in our opinion appeared reasonable.

• Water for vineyard and winery purposes is sourced under WAL 17544 allowing the license holder access to 122 mega litres of water. 120 mega-litres is from Middle Creek to be utilised for vineyard irrigation purposes and a further 2 mega litres for industrial (winery) purposes. In addition Australian Executor Trustees hold Hunter Wine Company Private Irrigation District licence number 259 allowing 50,000 kl for irrigation purposes.


Key Assumptions • This valuation is made on the assumption that there are no actual or potential contamination issues.

• For 10 year discounted cashflow purposes we have assumed that the lessee will renew the lease at market rates.

• The winery wastewater treatment system is compliant with all of the necessary government departments and agencies.

• The operation of the property as a winery with complementary cellar door sales, restaurant and residential facilities complies with the localplanning controls.

Valuation Criteria Initial Yield Reversionary Yield

Capitalisation Rate 16.00% Capitalisation Rate 12.00%

Rounded Value $5,400,000 Rounded Value $5,400,000

Discounted Cash Flow Inputs Discounted Cash Flow Outputs

Cash Flow Term 10 years Discounted Terminal Value $1,471,327

Discount Rate 13.50% NPV of Cash Flows $4,221,486

Sum of Cash Flows $5,692,812

less Acquisition Costs ($301,892)

Net Present Value $5,390,921

Rounded DCF Value $5,400,000

Valuation Conclusions Adopted Value $5,400,000

Passing Initial Yield 15.95%

Equivalent Initial Yield 15.95%

Equivalent Reversionary Yield 11.98%

Internal Rate of Return (including capex) 13.46%

Internal Rate of Return (excluding capex) 13.46%

Vacant Possession Valuation Conclusions

Land 20.98ha. @ average $40,000/ha.

$ 839,200

Structural Improvements & siteworks – Added Value $2,454,977

Estimated residual attributable to insitu plant and equipment, accessories, goods, furniture, office equipment, licences and any site goodwill

$1,670,000

Estimated Market Value (Rounded) $5,000,000


Valuation Unencumbered Vacant Possession Basis

$5,000,000– GST Exclusive

(FIVE MILLION DOLLARS)

Leased Basis


(FIVE MILLION FOUR HUNDRED THOUSAND DOLLARS)

Colliers International Consultancy and Valuation Pty Limited

Angus Barrington-Case, AAPI

Certified Practising Valuer

B Bus Prop (Val), NSW Licence No 7259

16 December 2010 (Date of Signing Report)

This report has been verified by Alex Thamm National Director, Rural Agribusiness

NOTE: This Executive Summary must be read in conjunction with the attached report and the details contained therein.

Contents

1 Introduction .................................................................................................. 3 1.1 Instructions ..................................................................................... 3 1.2 Information Sources ....................................................................... 3 1.3 Basis and Purpose of Valuation ..................................................... 4 1.4 Pecuniary Interest .......................................................................... 4 1.5 Date of Valuation ............................................................................ 4 1.6 Valuation Date of Issue .................................................................. 5

2 Location ....................................................................................................... 5 3 Title Particulars ............................................................................................ 7

3.1 Title Reference ............................................................................... 7 3.2 Encumbrances, Easements and Interests ...................................... 7

4 Site Particulars ............................................................................................. 8 4.1 Site Details ..................................................................................... 8 4.2 Site Identification ............................................................................ 9

5 Planning Controls ........................................................................................ 10 5.1 Zoning ............................................................................................ 10 5.2 Planning Approval .......................................................................... 10

6 Environmental Issues .................................................................................. 11 6.1 Site Contamination ......................................................................... 11 6.2 EPA Priority Sites Register ............................................................. 11 6.3 Waste Water Management ............................................................. 11 6.4 Asbestos Products ......................................................................... 12

7 Improvements .............................................................................................. 12 7.1 General Comments ........................................................................ 12 7.2 Sundry Improvements .................................................................... 15 7.3 Condition and Repair ...................................................................... 15

8 Tenancy Details ........................................................................................... 16 8.1 Tenancy Information ....................................................................... 16 8.2 Lease Expiry Profile and Weighted Lease Duration ....................... 16 8.3 Pending Rental Reviews ................................................................ 16 8.4 Goods and Services Tax (GST) ..................................................... 17

9 Winery Plant and Equipment ....................................................................... 17 10 Pastures and Plantings ................................................................................ 18 11 Water and Drainage ..................................................................................... 19 12 Market Commentary .................................................................................... 20

12.1 Economic Overview ........................................................................ 20 12.2 Australian Wine Industry Overview ................................................ 22 12.3 Local Vineyard Market Overview .................................................... 24 12.4 Market Sales Evidence ................................................................... 25

13 Financial Details .......................................................................................... 30 13.1 Income ............................................................................................ 30 13.2 Outgoings ....................................................................................... 30

14 Valuation Methodology ................................................................................ 31 14.1 Vacant Possession Value............................................................... 31

14.2 Encumbered Value ......................................................................... 34 14.3 Discounted Cashflow Approach (DCF) .......................................... 36 14.4 Valuation Conclusions .................................................................... 40

15 Additional Requests ..................................................................................... 41 15.1 Reasonable Selling Period ............................................................. 41 15.2 Probable Purchaser Groups ........................................................... 41 15.3 Contract Price ................................................................................. 41 15.4 Valuation Certificate ....................................................................... 41

16 Valuation ...................................................................................................... 42

Appendices

A. CICV Standard Terms of Business B. Letter of Instruction C. Title Search D. Water Licence E. Planning Regulations F. Valuation Calculations G. Valuation Certificate

Regenal Investments Pty Limited Pooles Rock Vineyard and Winery, De Beyer’s Road, Pokolbin, NSW 31 December 2010 3

1 INTRODUCTION

1.1 INSTRUCTIONS

We have received written instructions from Bonita Ho, CK Life Sciences Int’l. Inc, dated 2 December 2010, to determine the Market Value of Pooles Rock Wines, via Pokolbin, NSW on behalf of Regenal Investment Pty Limited in accordance with the Hong Kong Stock Exchange’s regulatory requirements to determine the current market value for major transaction purposes as at 31 December 2010. Our valuation has been prepared in accordance with the Australian Property Institute (API) Valuation Standard. We have assumed that the instructions and subsequent information supplied contain a full and frank disclosure of all information that is relevant. Furthermore, we have prepared our valuation in accordance with our standard Terms of Business as previously provided to you and as appended at Appendix A. The authenticity of this report and valuation contained herein may be confirmed by telephoning the signatory or the Valuation Director at the issuing office. A copy of the Letter of Instruction is attached at Appendix B.

1.2 INFORMATION SOURCES

Our valuation conclusions have been reached after reviewing financial and tenancy information provided by Challenger Wine Trust. The information reviewed and supplied includes, although is not limited to, the following:

• Tenancy schedule, dated 2 December 2010;

• Copy of viticultural report;

• Historical yield data; and

• Other relevant information.


1.3 BASIS AND PURPOSE OF VALUATION

The subject property in our opinion is likely to be regarded as a leased investment. Consequently, in adopting this definition of value we are of the opinion that it is consistent with the definition of Market Value defined by International Valuation Standards Committee (IVSC) and endorsed by the Australian Property Institute (API). "Market Value” is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion." This valuation report is provided by CICV and not by any other company in the Colliers International Group. The valuation report has been prepared major transaction purposes and should not be relied upon for any other purpose or by any person other than Regenal Investments Pty Limited. CICV accepts no responsibility for any statements in this report other than for the stated purpose. This report is issued on the basis that no liability attaches to the companies in the Colliers International Group other than CICV in relation to any statements contained in the valuation report.

1.4 PECUNIARY INTEREST

We advise that the Valuer nominated within this report is authorised under the relevant laws of New South Wales to practice as a Valuer and has had in excess of five (5) years continuous experience in the valuation of similar property to the subject. Further, we confirm that the nominated Valuer does not have a pecuniary interest that could conflict with the proper valuation of the property, and we advise that this position will be maintained until the purpose for which this valuation is being obtained is completed.

1.5 DATE OF VALUATION

31 December 2010 based upon our inspection of 9 December 2010. Due to possible changes in market forces and circumstances in relation to the subject property the report can only be regarded as representing our opinion of the value of the property as at the date of valuation, which has been based on appropriate assumptions determined as at the date of signing of report.


1.6 VALUATION DATE OF ISSUE

In accordance with your written instructions dated 2 December 2010, our inspection of the subject property as at 7 December and the requested date of valuation as at 31 December 2010, we confirm that in accordance with your instructions this final valuation report has been provided as at 31 December 2010 (Date of Valuation). Having regard to the prevailing market volatility and a lack of directly comparable sales evidence, we confirm our view of the market value as at the Date of Issue only, however should we become aware of any relevant market information that may impact on the value of the property, up to and including 31 December 2010, we at our own discretion reserve the right to review and possibly amend the valuation analysis contained herein

2 LOCATION

The property is located in the northern eastern quadrant of the intersection of McDonalds and De Beyer’s Roads in the Pokolbin vineyard area of the Lower Hunter Valley Region of NSW, approximately 10 kilometres north of the township of Cessnock. The property has a small frontage to McDonalds Road with the main access to the property from De Beyer’s Road, a metal surfaced road of good quality that runs in a predominantly easterly direction from its intersection with McDonalds Road. A limited range of services and facilities are available within the Pokolbin area, however a modest range of services and facilities is available within Cessnock with a more extensive range available within the township of Maitland, approximately 35 kilometres east of the property and a significant range of services available within the city of Newcastle, approximately 66 kilometres east of the property. The Hunter Valley wine growing area has around 1,821 hectares under vine and is the focus of the thriving and growing tourism industry. In addition to the vineyards and wineries, there are fine restaurants, motels, cabins, guest houses and galleries, while wine related tourism has also created opportunities for other attractions such as the historic Marthaville Arts and Crafts Centre, Wollombi Village, the Richmond Main Mining Museum and the Richmond Vale Railway.


The property’s location is depicted on the map overleaf.

Source : © 2010 Google Maps


3 TITLE PARTICULARS

3.1 TITLE REFERENCE

Title Details

Search Date 7 December 2010

Local Government Area Cessnock

Parish Pokolbin

County Northumberland

Legal Description Volume / Folio Registered Proprietor Area(ha)

Allotment 1 within Deposited Plan 1139240 1 / 1139240 Australian Executor Trustees (SA) Limited 20.98

3.2 ENCUMBRANCES, EASEMENTS AND INTERESTS

We highlight the following notations on Titles: Certificate of Title Description

Land Excludes minerals and is subject to the reservations and conditions in favour of the Crown see Crown Grants.

• Registered Easement DP262076 for water supply purposes.

• Registered Lease AB112758 to PRW Leasing Pty Limited Expires 22/11/2014.

• Variation of Lease AD962454.

• Registered Mortgage AD396455 to National Australia Bank Limited.

• Registered Mortgage AE927910 to National Australia Bank Limited.

• Registered Easement DP1151268 for water supply purposes.

We are of the opinion that the current easements noted on the title do not adversely affect the market value of the property. A copy of the relevant Title Search is contained within Appendix C. For the purpose of this valuation we have assumed there are no easements, rights of way or encroachments except those shown on the title or mentioned in the valuation. It should be noted that we have been instructed to value only a portion of the aforementioned titles as per the proposed plan of division provided by the instructing party.


4 SITE PARTICULARS

4.1 SITE DETAILS

Dimensions and Area The subject property comprises an irregular shaped land holding comprising a single allotment having atotal southerly frontage to De Beyer’s Road of approximately 829 metres, an eastern boundary to anadjoining property of approximately 331 metres with the remainder of the boundaries being of irregular shape.

The property has a total land area of 20.98 hectares.

We confirm that we have not independently checked these measurements on site and have relied onthe diagram contained within the proposed plan of subdivision.

Topography and Soils The property is considered to be gently undulating in nature and slopes from a high point near the winery to a creek that forms portion of the north western boundary of the allotment. In addition severaldrainage lines form swales that run in a predominantly east west direction and act to move water alongheadlands between the vineyard blocks to Middle Creek.

Soils on the property generally comprise red clay/clay loams with heavy textured soils in the lower partsof the vineyard and according to the vineyard report provided by Challenger Wine Trust, all soils aresuitable for vineyard development.

Climate The Hunter Valley is regarded as one of Australia’s premium wine growing regions and is characterisedby hot humid summers and cool winters, with the predominant rainfall months being January, Februaryand March.

Major climatic issues within the region are hail storms that have the potential to severely damage crops at times.

Access Access to the structural improvements located on the subject property is taken from De Beyer’s Road, ametal surfaced road of good quality that runs in a predominantly easterly direction from its intersection with McDonalds Road.

Internal access throughout the property is by way of gravel and bitumen surfaced roadways togetherwith grassed tracks throughout the vineyard area of the property.

Utilities We understand the property is connected to utilities services including three phase electricity, water andtelephone, and improvements are connected to septic effluent systems.


4.2 SITE IDENTIFICATION

The site has been identified by reference to the Deposited Plan and extends from De Beyer’s Road as delineated on the image in blue.

Source : ©2010 Google Maps

We have physically identified the boundaries of the property and whilst there does not appear to be any encroachments, we are not qualified surveyors and no warranty can be given without the provision of an identification survey.


5 PLANNING CONTROLS

5.1 ZONING


Zoning 1(V) Rural (Vineyards) Zone

Objectives The objectives of this zone are:

(a) to maintain prime viticultural land and enhance the economic and ecological sustainability of theVineyards District, and

(b) to encourage appropriate tourist development consistent with the rural and viticultural character ofthe Vineyards District, and

(c) to minimise conflict between viticultural and non-viticultural land uses by ensuring sympathetic location and design of those uses, and

(d) to enable continued rural use of land which is complementary to the viticultural character of land within this zone, and

(e) to protect the water quality of receiving streams and to reduce land degradation, and

(f) to actively promote the need to conserve and enhance the biodiversity of the Vineyards District, and

(g) to conserve the aboriginal archaeology and european heritage of the Vineyards District.

Heritage Listing Our research indicates that the subject property is not heritage listed.

Native Title Our research indicates that the subject property is not subject to any native title claim.

We are unaware of any proposals to amend the current zoning from our discussions with council.

5.2 PLANNING APPROVAL

We have not sighted any planning permits or building permits in relation to the construction of the improvements, we assume that appropriate permission has been granted by the relevant statutory authority in relation to the existing improvements on site. A copy of the zoning guidelines is contained with Appendix D.


6 ENVIRONMENTAL ISSUES

6.1 SITE CONTAMINATION

A visual site inspection has not revealed any obvious areas of pollution or contamination with no obvious defects in the waste water management system noted on our physical inspection of the property. The property has been used for wine grape processing for a number of years. During the course of these activities, it is likely that various materials including chemicals for wine making, cleaning and weed control, fuel and oil, and organic and other matter associated with the wine making process have been used within and generated on the subject land. Inappropriate treatment of these materials could give rise to site contamination issues. While no obvious signs of contamination were noted during our inspection, we advise that we are not experts in the detection or quantification of environmental problems, and accordingly have not carried out a detailed environmental investigation. We have also not been provided with any site or soil surveys dealing with potential contamination in the preparation of this report. Therefore, this valuation is made on the assumption that there are no actual or potential contamination issues effecting: i) the value or marketability of the property; or ii) the site. Verification that the property is free from contamination and has not been effected by pollutants of any kind should be obtained from a suitably qualified environmental professional. Should subsequent investigation say that the site is contaminated, this valuation will require revision.

6.2 EPA PRIORITY SITES REGISTER

The property is not listed within the EPA's Priority Sites Register dated December 1999 or the List of Issued Certificates and Statements of Environmental Audit July 2002. The fact that the site is not currently listed on the Registers does not preclude it from being added at any time, should any future investigation warrant its inclusion. Should any problem be known or arise then the valuation should be referred back to us for comment and possible amendment.

6.3 WASTE WATER MANAGEMENT

The winery waste water is treated on the site and the system in place is described as follows. Waste water from throughout the winery drains to two sumps where large solids settle. The liquid waste water is then pumped into a plastic lined dam where it is aerated and then in turn pumped to a secondary dam for further aeration. It is from this dam that water is pumped and utilised for grounds irrigation purposes with the excess used to irrigate a woodlot situated on an adjoining allotment currently owned by the lessee and purchaser. The solid waste that is collected in the first dam is carted off site for disposal.


Discussions with representatives of the Cessnock Shire Council have indicated that to the best of their knowledge all approvals in relation to waste water treatment are current and the registered proprietors have all the required licences in place for the current operations of the property.

6.4 ASBESTOS PRODUCTS

We have not sighted any form of Asbestos Register in relation to the subject property. Our site inspection did not reveal any obvious signs of asbestos products, however we cannot certify the site free of contamination. We recommend that if the parties whom wish to rely on this report have any concerns in relation to potential asbestos contamination, they should request the owner to commission a survey and to prepare an Asbestos register. Should such a survey detect installed asbestos products, we recommend that the details of that survey be provided to us in order that we may consider any potential implications to our assessment and effect amendment to our report, should that be necessary.

7 IMPROVEMENTS

7.1 GENERAL COMMENTS

All of the structural improvements located on the subject property are depicted and described as follows: Restaurant

Approximately 470 square metres in gross building area and being of a modern designcomprising two separate linked buildings of steel, masonry, timber and glass construction withconcrete flooring and ‘colorbond’ roof cladding. The first building houses the kitchen and services area together with the main restaurant eating area that opens out onto a large timberdeck having an area of approximately 171 square metres. The second connected buildingcomprises a lounge area with separate bar facilities, open fire, polished concrete flooring and full height windows that provide patrons uninterrupted views across the second aeration damto the vineyard.

Overall this facility provides an attractive modern simplistic setting for diners and is linked to the main cellar door sales facility via a covered walkway having an area of approximately 211square metres of steel framed construction.

In addition, a portico is located at the rear of the restaurant and has an area of approximately37 square metres. Car parking is available at the rear of the restaurant facility adjacent theportico and is gravel surfaced.


Winery

Approximately 1,123 square metres in area of steel framed construction with ‘colorbond’ roofand wall cladding, epoxy coated concrete flooring that is profiled and drained. Attached to the side of the winery building are two steel framed lean-to structures having a total area ofapproximately 168 square metres each having concrete flooring and ‘colorbond’ roofing.

Barrel Store

Approximately 440 square metres in area of insulated panel wall construction with concretedwarf walls, insulated ‘colorbond’ roofing and double reinforced drained concrete flooring.Located inside the barrel store is a temperature controlled cool room of sandwich panel construction with external plant. The barrel store is fitted with dual high speed automaticallycontrolled roller curtains and we have been advised that the barrel store has a capacity ofapproximately 1,000 barrels.

Cellar Door Sales

Approximately 227 square metres in area of cement block construction with corrugated ironroof cladding, timber windows, and a mixture of slate and concrete flooring. This building isdisposed as a cellar door sales area, tasting room and large rear storage area.

Old Cellar

Approximately 480 square metres in area together with an attached verandah having an area of approximately 52 square metres. This building is of brick and galvanised iron constructionwith a triple gable corrugated iron roof, concrete flooring and sliding door access.


Dry Store

Approximately 148 square metres in area of steel frame construction with ‘colorbond’ roof and wall cladding, concrete flooring, and roller door access.

Equipment Shed

This building appears to have been recently constructed and has an approximate area of 316square metres. It is of high clearance steel frame construction with ‘colorbond’ roof and wall cladding and concrete flooring with four single roller door access points. Attached to the building is a lean-to extension having an area of 33 square metres and being of steel framed ‘colorbond’ clad construction, bunded concrete flooring to a height of 1.2 metres andcontaining a fuel tank.

Manager’s House

Approximately 200 square metres in equivalent area of timber frame weatherboardconstruction, corrugated iron roof cladding, and timber flooring. This house is disposed as 4 bedrooms, 2 bathrooms, kitchen/meals area, dining/living room, TV room, laundry andpassageway.

Laboratory

Approximately 107 square metres in equivalent area of timber framed timber clad constructionwith corrugated iron roof cladding, timber flooring and timber windows. Overall this building isconsidered to be in poor condition.


Office

Approximately 146 square metres in area of timber framed timber clad construction withcorrugated iron roof cladding, timber flooring, and timber windows. This building is considered to be in poor condition.

7.2 SUNDRY IMPROVEMENTS

Sundry improvements on the subject property include a mixture of bitumen and gravel roadways, two gravel carparks and boundary fencing.

7.3 CONDITION AND REPAIR

We are not aware of any notices currently issued against the property and we have made no enquiries in this regard. Expert opinion has not been sought in respect to the building structure or the plant and equipment, however our limited enquiries have not revealed any major defects. The improvements are considered to be in reasonable condition for their age, unless other wise noted. We have assumed that the property complies with the appropriate statutory, building and fire safety regulations. We have also assumed that there is no timber infestation, asbestos or other defect and have made no investigations for them nor have we undertaken a structural survey or tested the building services.


8 TENANCY DETAILS

8.1 TENANCY INFORMATION

A summary of the lease is as follows: Poole’s Rock Winery, Pokolbin, NSW

Lessee PRW Leasing Pty Ltd

Use Vineyard & Winery

Lease Commencement Date 21-Nov-04

Term 10 years & 1 day

Lease Expiry Date 21-Nov-14

Option 5+5

Area 20.98 ha (Total area)

Passing Rent $861,172 per annum

Review Structure Annual to CPI capped at 4%

8.2 LEASE EXPIRY PROFILE AND WEIGHTED LEASE DURATION

Average Lease Duration 3.89 years

Weighted Lease Duration by Area 3.89 years

Weighted Lease Duration by Income 3.89 years

8.3 PENDING RENTAL REVIEWS

A rental review was due on 21 November 2010, however this has been withheld because of the contract. We have been advised the following: Upon settlement of the contract, the rental from 1 October 2010 will reduce to $500,000 per annum or,in the event settlement hasn’t occurred by 17 January 2011 the rental will remain the same and the 21 November 2010 rent increase will be enforced.


8.4 GOODS AND SERVICES TAX (GST)

We note that the property would be considered a Going Concern under the Australian Taxation Office Ruling GSTR 2002/5, and as such would not attract GST on the sale price. In this regard we further advise that this valuation is a GST exclusive market valuation, on the basis that the property would be sold as a Going Concern. This valuation is based on the assumption that any GST levied or imposed on or in respect of any supply made under or in accordance with both the current and future leases, that the amounts payable for that supply will be increased by the amount of GST so levied or imposed. If this assumption is found to be incorrect, or if the party on whose instruction this valuation is provided wishes our valuation to be based on a different assumption, then this valuation should be referred back to the Valuer for comment and in appropriate cases, amendment. Even where a lease appears to address the issue of GST, the Valuer expresses no view as to whether the provisions of the lease entitle the lessor to pass on the GST to the lessee, as to do so would require the Valuer to express a legal expert opinion. The Valuer recommends that before relying on the valuation the parties should undertake a legal audit of all contracts affecting the property including lease documentation and to check the results against the assumptions made within the valuation report.

9 WINERY PLANT AND EQUIPMENT

The existing winery facility has a self contained capacity to process in the order of 2,500 tonnes of wine grapes annually. In addition to the major items of plant, there are numerous sundry items that are integral in the operation of the facility as a winery. These include pumps, hoses, fittings, cat walking, stairs and laboratory equipment.

Bucher RPX 100 Press RDV & mixing tank


10 PASTURES AND PLANTINGS

The vineyard plantings on the subject property are limited to approximately 9.5 hectares of Shiraz varying in age from the 1920’s through to 2003.

Overall we are of the opinion that the plantings add more value to the property aesthetically than commercially. Trellising throughout the vineyard varies from treated pine end and intermediate posts inter-dispersed with steel grape stakes through to sawn timber end post with metal star post intermediates. All of the vines are grown on a single cordon with some blocks being VSP trained. At date of inspection the vines appeared in good health.


11 WATER AND DRAINAGE

Water for irrigation purposes is sourced from Middle Creek under Water WAL 17544 held in the name of Australian Executor Trustees SA Ltd. The current licence entitles the holder in any one year commencing 1 July to take up to the license volume of 122 mega-litres of water comprising 120 mega-litres for the irrigation of vines and 2 mega-litres for industrial (winery) purposes from Middle Creek. In addition Australian Executor Trustees hold licence 259 enabling the lessee to source 50 megs of water from the Hunter Valley Wine Country Private Irrigation District. Hunter Valley Wine Country water is delivered to the property from a private pipeline system and is stored in a holding dam located on an adjoining allotment to be held under a different ownership structure. The dam holds enough water for one irrigation cycle. Pumping infrastructure lifts water from the dam and in turn the water is filtered and delivered to individual blocks using drip irrigation. We have assumed that easements will be created to protect the water supply to the property from the dam on allotment 4 and the supply of treated waste water to the woodlot on allotment 3. A copy of the water licence is contained in Appendix E.


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-06

Nov

-06

May

-07

Nov

-07

May

-08

Nov

-08

May

-09

Nov

-09

May

-10

Nov

-10

Cas

h R

ate

(%)

Reserve Bank of Australia Official Cash Rate

Cash rate 10 Year Average

Source: RBA / Colliers International Research

2.8%RBA's Target Range

2% - 3%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

Sep

-97

Mar

-98

Sep

-98

Mar

-99

Sep

-99

Mar

-00

Sep

-00

Mar

-01

Sep

-01

Mar

-02

Sep

-02

Mar

-03

Sep

-03

Mar

-04

Sep

-04

Mar

-05

Sep

-05

Mar

-06

Sep

-06

Mar

-07

Sep

-07

Mar

-08

Sep

-08

Mar

-09

Sep

-09

Mar

-10

Sep

-10

Annu

al C

hang

e in

CPI

Consumer Price Index (CPI)Annual Change - Headline Inflation

Source: ABS / Colliers International Research

12 MARKET COMMENTARY

12.1 ECONOMIC OVERVIEW

Cash Rate Increases

In a surprise move, the Reserve Bank of Australia (RBA) decided to increase the official cash rate by 25 basis points to 4.75% during their monthly board meeting in November 2010. The majority of economists had expected the RBA to maintain the cash rate at 4.50% due to the inflation rate being kept within the RBA’s target range of 2% to 3%. The RBA’s decision was based on the view that the global economy grew faster than trend over the year to mid 2010. From its November statement the RBA says, “The turmoil in financial markets earlier in the year has abated, though sentiment remains fragile.the economy is now subject to a large expansionary shock from the high terms of trade and has relatively modest amounts of spare capacity. Looking ahead, notwithstanding recent good results on inflation, the risk of inflation rising again over the medium term remains”.

Inflation Remains Low

Australia’s CPI was 0.7% over the September quarter to yield an annual increase of 2.8%, just below the upper limit of the RBA’s target range. The average RBA underlying CPI was 0.6% over the quarter and 2.5% for the year. The RBA will continue to focus on the strength and anticipated longevity of the pressures that are sustaining the annual rate at the top end of the target range, including the strength of the employment market. The most significant price rises this quarter were for tobacco (+7.0%), water and sewerage (+12.8%), electricity (+6.0%), property rates and charges (+6.2%) and rents (+1.1%). The most significant offsetting price falls were for automotive fuel (-3.7%), vegetables (-5.4%), pharmaceuticals (-3.9%), audio, visual and computing equipment (-2.7%) and soft drinks, waters and juices (-1.8%).


-2%

-1%

0%

1%

2%

3%

4%

5%

6%

Jun-

99

Dec

-99

Jun-

00

Dec

-00

Jun-

01

Dec

-01

Jun-

02

Dec

-02

Jun-

03

Dec

-03

Jun-

04

Dec

-04

Jun-

05

Dec

-05

Jun-

06

Dec

-06

Jun-

07

Dec

-07

Jun-

08

Dec

-08

Jun-

09

Dec

-09

Jun-

10

Cha

nge

from

pre

viou

s pe

riod

Gross Domestic Product (GDP)Seasonally Adjusted

Quarterly Change Annual Change


5.1%

10 Year Average5.4%

0%

1%

2%

3%

4%

5%

6%

7%

8%

Sep

-99

Mar

-00

Sep

-00

Mar

-01

Sep

-01

Mar

-02

Sep

-02

Mar

-03

Sep

-03

Mar

-04

Sep

-04

Mar

-05

Sep

-05

Mar

-06

Sep

-06

Mar

-07

Sep

-07

Mar

-08

Sep

-08

Mar

-09

Sep

-09

Mar

-10

Sep

-10

Une

mpl

oym

ent

Rate

National Unemployment RateSeasonally Adjusted


Australian Dollar Overtakes US Dollar

The Australian dollar has continued to go from strength to strength, reaching a record high of 101.76 US cents in overseas trade on the morning of 5 November 2010 (AEST), its highest point since the currency was floated in 1983. This recent rise in the currency and the push above parity was mainly attributable to the November RBA Board meeting raising the official cash interest rate. The strength of the Australian dollar has come from the ongoing growth in commodity prices and trade which has stabilised the Australian economy while uncertainly still remains over the strength of the United States economy as the American Federal Reserve begins to release further stimulus measures.

GDP Growth Accelerates

Australian National Accounts data for the June Quarter 2010, show that GDP continued to accelerate, growing by a stronger than expected 1.2% on a seasonally adjusted basis. This result has reinforced Australia’s position as one of the best performing economies in the developed world. Notably, private consumption provided the largest contribution to growth during the quarter. This is a timely shift away from the recent phase of reliance on public expenditure to stimulate economic growth. While this is an enviable result by world standards, Australia’s future economic growth will continue be influenced by conditions in the US, Europe and mostly Asia. Australia remains well positioned to accommodate coal and ore demand from the rapidly urbanising China and from India. Access Economics forecasts GDP growth of 3.5% for 2011.

Unemployment Rate Heads Towards 5%

In further evidence that the national economy is performing strongly, the latest Labour Force data shows that, in seasonally adjusted terms, national employment rose by 49,500 persons in September 2010, well above market expectations. Despite this increase in employment the unemployment rate remained steady at 5.1% as the participation rate rose by 0.2% to 65.6%. A key result within the release was the increase of 55,800 full time jobs during the month, further emphsisingthe high levels of employer confidence currently in the domestic economy.


12.2 AUSTRALIAN WINE INDUSTRY OVERVIEW

The Australian wine industry is currently experiencing some challenging times with the following factors contributing to varying levels of optimism across the industry: • The wine industry has experienced a level of insecurity in both demand and supply over the preceding

24 months. • Figures released by The Winemakers Federation of Australia show the 2010 wine grape crush yielded

approximately 1.53 million tonnes, which is below the five-year average of 1.68 million tonnes, bringing it to a level closer to current demand. The Winemakers Federation of Australia’s estimate of red intake is 817,000 tonnes or 53% of the total crush and the white intake is estimated to be 715,500 tonnes or 47% of total crush. The 2010 crush was shorter than industry experts anticipated. History tends to suggest that when annual grape crushes have been around the 2010 level (close to equilibrium) buying competition from wineries can occur throughout harvest. Unfortunately for grape growers this was not the case for 2010. This lack of buying activity may be due to low financial returns being experienced in the industry. In the event a similar scenario occurs for the 2011 vintage we may see this increased profitability in the industry flow through to property transactions.

• According to publications released by Australian Bureau of Agricultural and Resource Economics (ABARE), Australia has approximately 162,000 hectares of grape vines in production. For the year ending 30 June 2010 approximately 7,000 hectares were removed from mainly inland warm climate regions and 13,000 hectares not harvested. We expect to see additional vines removed in the short to medium term as a result of poor economic prospects in the industry.


• There has been a limited amount of voluntary market activity occur throughout the major Australian wine growing regions in the past twelve to eighteen months. Large wine companies including Australia Vintage Limited, Constellation Wines Australia (CWAU), Fosters Wine Estates (FWE) and Lion Nathan to name a few have or are in the process of divesting a number of assets and reviewing their business structures. The reviews have placed a substantial volume of assets on the market which are largely a result of balance sheet driven decisions. This flood of assets to the market has resulted in buyers being awash with choice. Our research has revealed that in some instances transactions have occurred at rates indicative of vacant land values for their respective locations given the lack of returns able to be generated from these assets.

• In May 2010 Fosters the largest vineyard owner (circa 9,000ha), announced plans to pursue a demerger of their Beer and Wine business (Treasury Wine Estates), creating separately listed businesses. No decision on timing or structure of the demerger has been announced. In September 2010 Foster’s announced it had received an unsolicited expression of interest from an international private equity firm to acquire the wine assets of Treasury Wine Estates for a cash consideration of between $2.3 billion and $2.7 billion for 100% of the assets. The proposal was rejected. As at 30 June 2010, Treasury Wine Estates had sold 22 of the 36 vineyards identified for sale, with total sale proceeds of $59.5 million which is well below the purported book value of circa $200 million for all the assets offered for sale.

• In addition to the above large wine companies, many small to medium wine companies both prominent and secondary locations have offered assets for sale with mixed results. We also are aware of some industry participants who have received pressure to maintain financing covenants at suitable levels. Broad estimates have revealed that over the past two years in excess of $750 million worth of wine industry assets has been offered for sale nationally of varying sizes, locations and price points. A figure which is well above normal market conditions prior to the GFC.

• The recent uncertain times that are being experienced globally are contributing to a decrease in profits and the value of exports as well as excess supply and growth in global competition. Our currency (AUD) is currently trading at around parity with the US dollar (Nov’10) up from a low of $US0.61 (October 08). The very high Australian dollar has contributed to eroding export profits and the price competitiveness of Australian wine exports on the overseas market. According to The Australian Wine and Brandy Corporation in the year ending June 2010, the volume of Australian wine exported increased 3.3% to 775 million litres, primarily made up of bulk wine. The total value was AUD$2.17 billion in the year ended June 2010. Factors that contributed to the volume growth were stock clearing through opportunistic bulk wine exports priced at below $1AUD per litre and an increase in branded bulk wine packaging offshore, particularly in the UK and US.

• Australia is still the fourth largest exporter of wine in the world and the sixth largest producer accounting for about 5% of world production.

• Tightened trading conditions in the domestic retail market as a consequence of retail consolidation (Coles and Woolworths further expand their retail liquor and hotel markets). Producers have had margins squeezed in order to gain shelf space and reduced margins at the retail end have flowed through to affect grape prices at winery intake level. This is a phenomenon that is impacting on wine companies in most developed markets. Its impacts are not confined to the wine industry with other agricultural and horticultural producers also suffering.

• Further to the tightening trading conditions, supermarkets are now launching their own low cost price products without the need of capital infrastructure. This is largely a result of the oversupply and depressed fruit prices as well as the consortiums existing retail and supply chain networks.


• The water supply situation appears to somewhat have abated as a result increased rainfall across the Murray Darling Basin and other major wine growing regions. Water allocations in many irrigation areas are already significantly higher than the whole of the 2009/10 irrigation season and will continue to rise throughout the 2010/11 irrigation season if inflows continue to be positive.

In addition to the previous issues discussions with many growers have revealed that 2010 grape prices are down by as much as 50% in some regions with the average being in the order of 30%. As a consequence of these price reductions the Wine Grape Growers Australia are warning that there may be a mass exodus from the industry because of a lack of profitability within the sector.

12.3 LOCAL VINEYARD MARKET OVERVIEW

The current market for property in the Hunter Valley appears to be dictated by the land use, location and standard of development. In this regard we comment that the current demand for both lifestyle and agricultural land uses appears to be quite strong within the lower Hunter Valley Wine region. Discussions with local agents have disclosed that a majority of this interest is from non local buyers looking to move into the district as well as people employed in the various mines within the upper and lower Hunter Valley regions. Despite this we have been advised by local agents that at present there is little demand for vineyards within the region and those that have transacted have sold at rates close to grazing values. This phenomenon is largely a consequence of the prevailing low returns on fruit sales. Analysis of recent land sales within the Pokolbin region has shown the underlying land values to range from circa $25,000 to $100,000 per hectare with those at the upper end generally comprising rural residential style allotments.


12.4 MARKET SALES EVIDENCE

In assessing the market value of the subject property, we have considered a number of sales transactions including the evidence outlined below.

Lot 26 Broke Road, Pokolbin

Sale Date March 2010 Capital Value $25,942/ha

Sale Amount $420,000 Summation Analysis:

Site Area 16.19 ha Site Improvements (say) $20,000

Vendor Private Land $24,706 /ha

Purchaser Private Water

Comments

The property comprises a rural residential property located in the foothills of lower Hunter Valley to the west of Pokolbin. The property comprises approximately 10 hectares of cleared grazing land with the remainder being moderately to densely timbered especially towards the north western corner of the property. Analysis of the sale after allowances for fencing and waters shows a rate of about $24,706/ha for a rural residential type block.

294 O’Connors Road, Pokolbin

Sale Date June 2010 Capital Value $76,161/ha

Sale Amount $1,000,000 Summation Analysis:


Vendor Private Land – vines $50,000 /ha

Purchaser Private Land -other $44,684 /ha

Comments

This property is improved with a small vineyard and orchard having a combined area of about 2.5 hectares. We are not sure of the breakup but it is not considered to be of a commercially viable size. The property is also improved with a large dwelling and associated shedding improvements. Analysis of the sale after making an allowance of $50,000 per hectare for the plantings and $400,000 for the structural improvements show a rate of $44,684 per hectare for the remainder of the land.


534 Oakey Road, Pokolbin

Sale Date August 2010 Capital Value $55,000/ha


Site Area 40 ha Site Improvements (say) $420,000

Vendor Private Land – vines $50,000 /ha

Purchaser Private Land -other $39,236 / ha

Comments

The property is located diagonally across the road from Drayton Wines and is improved with about 11.22 hectares of vines and 10.20 hectares of orchard. Structurally the property is improved with a 2 storey stone dwelling that appears in average condition. Analysis of the sale after making an allowance of $400,000 for the structural improvements and $50,000 per hectare for the plantings shows a rate of $39,236 for the remaining land

240 Old North Road, Pokolbin

Sale Date March 2010 Capital Value $148,221/ha



Vendor Private Land $98,814/ha

Purchaser Private

Comments

This property is improved with a small vineyard having an area of around 2.5 hectares. Structurally the property is improved with a large residential dwelling with the remainder of the land suitable for grazing or lifestyle attributes. The property does enjoy the benefits of good views across the valley to the South west. Overall we are of the opinion that that the vines add limited commercial value to the property as a whole. Analysis of the sale after making an allowance of $500,000 for the structural improvements shows a rate of $98,814/ha for the land inclusive of plantings


1946 Broke Road, Pokolbin

Sale Date December 2009 Capital Value $441,628/ha


Site Area 13.02 ha Site Improvements and business

$5,000,000


Purchaser Private Passing Rent $458,844 per annum

Comments

The “Pepper Creek Centre” comprises a mixed use accommodation, retail and restaurant facility located within the heart of the lower Hunter Valley. The property is improved with a main residence, two accommodation cottages, a retail complex with six tenancies and a detached reception centre and chapel. At the date of transaction all of the retail tenancies were occupied and the passing rent was $458,844 per annum. It must be noted two of the tenancies were due to expire in March 2010. Our estimate of value apportionment is land $750,000, lease, buildings and site goodwill $5,000,000.

We have been advised that the property had a net passing income of $571,291 which indicates a passing yield of 9.94%.

1596 Broke Road, Pokolbin

Sale Date May 2010 Capital Value $237,000/ha



Vendor Private Land $820,000

Purchaser Private Business & Plant $740,000

Comments

This property comprises Oakvale wines and is disposed as a winery, re-developed cellar door sales and coffee shop. We have been advised the winery has a self contained capacity of about 270 tonnes. The property sold as a going concern operation with a turn over of about $1,350,000 producing a net profit in the order of $368,000. Analysis of the sale shows a value in the order of $1,630,000 for the land and buildings with about $740,000 attributable to the plant and equipment and business goodwill.


Winery Sales

Property Name Sale Date Sale Price Site Area (ha)

Capacity

Langton Winery Mt Barker, WA

June 2009 $6,965,000 (advised as attributable to

the winery)

229 Crushing 5,000 tonnes

Storage 6,037,972 litres

Analysis

$1,200 per tonne of capacity inclusive of plant and equipment (excluding surplus land and vineyards).

Earnings multiplier 4.9 times which equates to 20.41% capitalisation of EBITDA.

Comment

This property is located approximately 9 kilometres north of Mount Barker within Western Australia’s Great Southern viticultural region.

This property was part of Constellation Wines Australia and was sold as part of their asset restructuring programme which began in mid 2008. In addition to the winery the property had extensive vineyard holdings as well as a managers residence, cellar door sales, barrel hall and numerous other houses. The winery sold with a processing agreement in place back to CWA. The winery was equipped with four presses, 1,067 tonnes of fermentation capacity and about 6 million litres of storage. It is our understanding that the property had been developed to a high standard and was well equipped at the date of transaction.

12 Wilderness Road, Rothbury

Sale Date April 2010 Capital Value $117,370/ha


Site Area 40.47 ha Site Improvements $2,426,500


Purchaser Private Stock $300,000

Comments

This property comprises Wandin Valley Estate Winery a well known small winery and guest house facility in the Upper Hunter valley. The property is improved with a 200 tonne winery, small vineyard and olive grove, five architecturally designed villas, cricket ground with English style pavilion and a function centre. It is our understanding that approximately $300,000 worth of stock transacted in the sale. The property is considered to be very well presented. Analysis of the sale after making an allowance of $300,000 for the stock and applying a rate of $50,000 per hectare for the land shows a value of $2,426,500 may be attributable to the structural improvements.


Property Name Sale Date Sale Price Site Area (ha)

Capacity

Palandri Wines Margaret River, WA

May 2008 $8,000,000 29.85 Crushing 4,500 tonnes

Self Contained 3,600 tonnes

Analysis

$1,900 per tonne of self contained capacity inclusive of plant and equipment (excluding surplus land and restaurant component)

Earnings Multiplier 6.2 times which equates to 16.13% capitalisation of EBITDA.

Comment

This property has Bussell Highway frontage and is located approximately 25 kilometres north of Margaret River.

This property was sold under receivership circumstances to Global Wine Holdings, one of the largest shareholders in the business. It is our understanding that a number of other assets including wine stocks were also purchased by Global Wine Holdings under a complicated arrangement.

The structural improvements include a substantial main cellardoor and restaurant building which overlooks well landscaped gardens and lawns together with small vineyard. It is of our opinion that the excess land component together with other buildings contributed significantly to the value and we have made an allowance of $1,100,000 for the other land and restaurant buildings. According to the Palandri web site the winery has a capacity of 4,500 tonnes however it is our understanding that the self contained capacity is closer to 3,600 tonnes. Analysis of the sale on a self contained capacity after making allowances for the excess land and restaurant buildings equates to a rate in the order of $1,900 per tonne.

Prince Hill Winery Mudgee, NSW

July 2010 $2,300,000 102.39 Self Contained 4,500 tonnes Storage 3,500,000 litres

Analysis

$511 per tonne of self contained capacity inclusive of plant and equipment.

Earnings Multiplier 3.8 times which equates to 26.32% capitalisation of EBITDA.

Comment

This property is located approximately 15km south east of Mudgee, which in turn is located approximately 250km north west of Sydney. The property was sold in a very poor market (we have been advised that an offer of $5 million dollars was rejected about 18 months prior to sale) and was purchased by a syndicate of Asian investors who since sale have leased the cafe. The property is improved with a 10 year old 3,000 tonne self contained winery with 3.5 million litres of storage and a further 84,000 litres of fermentation. The property is structurally improved with a modern cafe, cellar door, bottling hall, barrel hall and vineyard.

Analysis of the sale on a self contained capacity shows a rate in the order of $444 per tonne of processing capacity after making a token allowance of $300,000 for the restaurant and vineyard.

In addition we note that the contract for sale of the Poplars Winery has recently fallen through as a result of the purchaser not being able to seek a favourable finance arrangement. The details of this failed transaction are confidential however, we are aware of the following details:

• Forced sale/receivership transaction. • Included some Chardonnay Lodge assets. • Winery value apportionment estimated at $500 to $550 per tonne processing capacity (12,000

tonnes). • Superior level of building improvements to the subject, including extensive barrel storage. • Failed purchaser has existing wine business and was looking to use the facility for expansion.


Sales Conclusion

Overall rates per tonne of self contained processing capacity have ranged from $511 (Prince Hill, Mudgee) to $1,900 (Palandri Wines). There are no recent sales of wineries of a comparable scale to the subject that we were able to identify. However we are of the opinion the Langton transaction may be the most relevant pointer to value levels in the current market. The Langton winery is larger in size and was sold as part of Constellations divestment of wine assets. Overall the winery is considered to be located in a similar type tourist wine region however would be subjected to possibly less volumes of tourist traffic. Despite this we are of the opinion that this facility transacted in a slightly better market. The Mudgee sale is the most recent transaction of a commercial size winery that we are aware of. It is our opinion that this facility is located in an inferior wine region with substantially less volumes of passing traffic. We are also of the opinion that the purchaser bought this property on favourable terms with many potential market participants caught sitting on their hands. In determining a probable “in use” value for the subject facility we feel that on a rate per tonne of processing capacity the value of the winery sits at a similar rate to the Langton sale. Normally we would expect a facility like the subject to transact at a higher rate per tonne of processing capacityity than the Langton property because of its size, however, we feel that the market has slumped further since the Langton transacted occurred and consequently have adopted a similar rate on a per tonne of processing capacity.

13 FINANCIAL DETAILS

13.1 INCOME

The current annualised income is $861,172. It should be noted that this figure has been provided by Challenger Listed Investments Limited. In undertaking this valuation assignment we were unable to locate any comparable rental evidence for vineyards or properties of a similar nature. As a consequence of the lack of available rental evidence we have assessed the rental as a percentage of vacant possession value. We are of the opinion that the market would require a yield of 10% for a property of this nature in this location with this lease covenant. The current passing rental equates to approximately 17.22% of vacant possession value and as such we are of the opinion that the property is over rented.

13.2 OUTGOINGS

In the case of the subject property all of the outgoings are paid by the lessee and as such the passing rent is a purely net rental.


14 VALUATION METHODOLOGY

14.1 VACANT POSSESSION VALUE

Winery Assessment

In approaching the task of determining the probable market value of the subject winery facility we have assessed the asset on the assumption of its continued existing use. Under this assumption, appropriate fixed and moveable plant equipment and accessory items, goods, chattels, services, insitu licensing and possible site goodwill are assumed as being all in place for the efficient conduct of the operation. We have approached the valuation task using three different methodologies in order to cover the most likely approaches that market participants may adopt in determining a fair purchase price. Our primary methods of valuation have been the Summation (sum of parts), rate per tonne of processing capacity (Direct Comparison), and Income approaches.

Summation Assessment

Under the Summation approach we have assessed the value attributable to the land, buildings, services, site improvements and fixed and moveable plant equipment and accessory items, goods, chattels, furniture and effects, services, insitu licensing and possible site goodwill. Our calculations indicate an insitu existing use in the order of $1,670,000 may be attributable to the plant and equipment. For the purpose of insolating the value attributable to the winery we have assumed that it is situated on a 8.39 hectare parcel. We have separately assessed the balance of the property as vineyards and surplus land. Our assessment of the likely apportionment of the various components of the subject winery is set out in the following table.

Land 8.39ha. @ average $40,000/ha.

$ 335,600

Structural Improvements & siteworks – Added Value $ 779,880

Estimated residual attributable to insitu plant and equipment, accessories, goods, furniture, office equipment, licences and any site goodwill

$1,670,000

TOTAL LAND, BUILDINGS AND PLANT & EQUIPMENT $2,785,480

Estimated Market Value (Rounded) $2,800,000

A more comprehensive breakdown of our calculations is contained in the Appendices. As previously discussed, the subject winery contains substantial plant, equipment and other items. The brand and business does not form part of this valuation however we regard some goodwill as being likely to attach to the site, by virtue of the Poole’s Rock name and its central location within the Lower Hunter Region.


Direct Comparison Rate Per Tonne of Processing Capacity

Our secondary method of valuation is the direct comparison approach. From the sales evidence we have had particular regard for the sale of the Langton Winery and Function Centre together with the sale of the Mudgee Winery. Therefore we are of the opinion that on a rate per tonne of capacity the subject would reasonably be expected to fall between these two rates being $511 and $1,900. We have not been provided with any financial statements in relation to the subject facility. We have however carried out some analysis of the imputed income capability of the winery assuming it operates at its capacity. We have calculated the processing capacity of the subject winery as being its aggregated fermentation and tank storage capacity expressed in tonnes at a conversion rate of 750 litres of juice per tonne of grapes processed. We have treated the sales used in evidence in the same manner. We have calculated that the subject winery has a total self contained processing capacity of 2,500 tonnes. Our determined value of $2,800,000 equates to a rate of $1,160 per tonne of processing capacity which falls within the aforementioned range and therefore within disclosed market parameters.

Income Approach

The basis on which this method has been undertaken is that the likely use a party purchasing the subject winery would apply would be the crushing and processing of grapes to various stages for a contract rate on behalf of external growers and wine companies. We have assumed for the purpose of this report that such agreements are able to be negotiated. In assessing reasonable contract processing charges and costs we have held discussions with several winery operators and have determined processing charges may range from in excess of $1,000 per tonne for smaller batches in the Hunter Valley through to $200 to $500 per tonne for larger, more efficient processors handling large batches in warmer climate regions. Such charges would generally relate to processing through to racking off gross lees stage or clarified white wine stage. Processing costs are expected to range from $400 through to $700 per tonne depending on the size of the facility and the batch that is being processed. Because of the number of variables associated with potential processing schedules and subsequent fee generation, we have adopted an average fee of $650 per tonne as being reasonable assuming processing through to ex gross lees or white wine equivalent will be carried out with all product stored on-site. On this basis we have estimated the capacity of the subject facility to be the total available tank and fermenter space converted to tonnes (2,500 tonnes). Costs have been adopted at $580 per tonne to allow for some contingencies. In terms of contract storage we have calculated the 90.0% of the tank storage (allowing for 10.0% working space) may be available for wine storage. Our industry enquiries disclosed that a reasonable average charge may be in the vicinity of $0.08 cent per litre per month and we have allowed for tank occupancy of 9 months of the year to provide for some contingencies in unused tank space as well as allowance for vintage.


We have applied an earnings multiple of 2.5 times imputed earnings before income tax depreciation and amortisation. This equates to a 40% capitalisation of imputed EBITDA. Our income approach produces a market value estimate of $2,900,000. Our adopted value of $2,800,000 under the summation approach produces an earnings multiple of 2.45 or 40.88% In addition it should be noted that this method of valuation assumes that the winery will run at or close to its maximum crushing capacity every year. Our calculations are summarised in the following table:

Winery Income – processing fees Say 2,500 tonnes @ $650/tonne

$1,625,000

Storage 1,296,654 litres @ $0.08/litre

$ 933,591

Barrel Storage 1,000 Barrels @ $4.00/Barrel /month

$ 36,000

GROSS INCOME $2,594,591

Less Operating Costs @ $580/tonne ($1,450,000)

NET INCOME $1,144,591

ESTIMATE OF MARKET VALUE $2,900,000

Equates to a Capitalisation Rate of 39.47%

Equates to an Earnings Multiple of 2.5X

For the purpose of this valuation we have adopted a value for the winery component of $2,900,000 Full calculations are contained in Appendix F

Vacant Possession Value Remainder of the Property

In determining the vacant possession value of the remainder of subject property in this instance we have deemed it appropriate to utilise a combination of the direct comparison and summation method of valuation. We have drawn our estimates of the market value of the vineyard based on the market evidence described in this report, to which we have then added what we consider to be appropriate values for the structural improvements and the balance of the land, to determine an overall market value of the subject property. We regard this method as being consistent with that likely to be engaged by purchasers in the market place. The structural improvements include a modern restaurant facility with extensive decking, undercover walkway and large carpark. Further structural improvements include a four bedroom timber frame dwelling. In determining a vacant possession value we have made the assumption that the fruit produced on the property would be saleable at district average prices.


Below are the summary valuation calculations for the subject property. Detailed calculation schedules are set out within the appendices at the rear of this report. Land including Mature Plantings 12.59 ha. x $40,000/ha $ 503,600

Structural Improvements $1,675,097

Total $2,178,697

Total (Rounded) $2,180,000 The unencumbered value equates to a total of $5,000,000.

14.2 ENCUMBERED VALUE

In determining the current market value of the property on an encumbered (leased) basis we have examined the available market evidence together with alternative forms of investment and applied this analysis to both the traditional capitalisation approach (reversionary and initial yield basis) and the discounted cashflow approach. These approaches have in turn been checked by the direct comparison approach, analysed on a rate per hectare of land area. The central premise of this approach is that the adopted capitalisation rate is derived from the yields indicated by sales of similar leased agricultural property investments. There has been a distinct lack of yield evidence derived from comparable sales as the majority of agricultural properties do not sell on a leased basis. In determining an appropriate reversionary or market yield we have had regard to returns from other classes of property investment. We summarise returns from various property asset classes as follows: CBD Office buildings – Prime 7.50% to 9.00% CBD Office buildings – Secondary 9.00% to 10.50% Industrial – Prime 8.25% to 10.00% Industrial – Secondary 10.50% to 12.00% Retail – Neighbourhood 7.00% to 10.00% In relation to comparisons with other forms of agricultural investment there is evidence that supports yields in the order of 7.50% to 10.00% however this is for small parcels of land that are utilised mainly for cereal cropping purposes and not comparable in terms of size, use or affordability to the subject. The capitalisation of net income approach has been undertaken by applying a yield to both the potential fully let passing net income (initial yield) and the potential reversionary net income (reversionary yield). To the value derived, adjustments have been made for any relevant rental reversions including letting up allowances for vacant space, incentives, leasing fees, capital expenditure and other appropriate capital allowances.


Detailed below are the definitions of yields used in our assessment of the valuation for the subject property:

Passing Initial Yield The net passing income for the property divided by the sale price or the adopted value.

Equivalent Initial Yield The net passing income for the property plus the market income across any vacancies, divided by the sale price or the adopted value.

Equivalent Reversionary Yield The assessed net market income divided by the sum of the sale price or the adopted value plus any capital adjustments to the core value such as letting up allowances, capital expenditure and present value of reversions.

We have adopted a core capitalisation rate of 12.00% after taking into consideration the current rent, location of the property and the water security.

REVERSIONARY YIELD BASIS (Market Rents)

Pooles Rock $500,000

Market Income $500,000

Add Recoverable Outgoings $0

Total Gross Market Income $500,000

Less Outgoings $0.00 per m² $0

Net Market Income $500,000

$0

Less Vacancy Allowance 0.00% $0

Net Income $500,000

Capitalised at 11.750% 12.000% 12.250%

Capitalised Value $4,255,319 $4,166,667 $4,081,633

PV Rental Shortfall / (Overage) ($1,233,550) ($1,227,972) ($1,222,441)

Other Adjustments $0 $0 $0

Total Adjustments ($1,233,550) ($1,227,972) ($1,222,441)

Assessed Capital Value as at 31 December 2010 $5,488,869 $5,394,639 $5,304,074

Rounded Reversionary Capitalisation Value $5,400,000


14.3 DISCOUNTED CASHFLOW APPROACH (DCF)

We have also determined the market value of the subject property through the use of DCF analysis. The DCF approach involves the discounting of the net cash flow on a monthly basis over the assumed cash flow period at an appropriate rate to reflect risk to derive a market value. The net cash flow comprises the cash inflows less the cash outflows over the cash flow period, with the addition of the terminal value in the final cash flow period. Cash inflows comprise income from the property adjusted to reflect actual rental income, speculative rental income and rental growth, whilst cash outflows comprise outgoings adjusted to reflect anticipated inflation, lease incentives and leasing and marketing fees. The terminal value is determined by the capitalisation of the imputed net market income in the month after the final cash flow period with allowances for any relevant capital adjustments. The projected income stream reflects the anticipated growth, or otherwise, inherent in a property investment based upon the physical, tenancy or market characteristics related to that property. In addition to projected outgoings and allowances, future capital expenditure is reflected in the cash flow. The future values quoted for property, rents and costs are projections only formed on the basis of information currently available to us and are not representations of what the value of the property will be as at a future date. This information includes the current expectations as to property values and income that may not prove to be accurate. Having regard to the above factors we have prepared a 10 year cash flow projection for the subject property in which we have assumed that the property is sold at the commencement of the eleventh year of the cash flow. The cash flow has been prepared based upon the following assumptions.


Growth Rates

Year Commencing Vineyard (Gross Face)

Vineyard (Gross

Effective)

Vineyard (Net Face)

Vineyard (Net

Effective)

Inflation (CPI)

Statutories Operational

2011 0.00% 0.00% 0.00% 0.00% 3.14% 4.14% 4.14%

2012 0.00% 0.00% 0.00% 0.00% 3.01% 4.01% 4.01%

2013 2.70% 2.70% 2.70% 2.70% 2.70% 3.70% 3.70%

2014 2.37% 2.37% 2.37% 2.37% 2.37% 3.37% 3.37%

2015 2.53% 2.53% 2.53% 2.53% 2.53% 3.53% 3.53%

2016 2.73% 2.73% 2.73% 2.73% 2.73% 3.73% 3.73%

2017 2.54% 2.54% 2.54% 2.54% 2.54% 3.54% 3.54%

2018 2.23% 2.23% 2.23% 2.23% 2.23% 3.23% 3.23%

2019 2.51% 2.51% 2.51% 2.51% 2.51% 3.51% 3.51%

2020 2.68% 2.68% 2.68% 2.68% 2.68% 3.68% 3.68%

2021 2.65% 2.65% 2.65% 2.65% 2.65% 3.65% 3.65%

Compounded 10 Years 2.03% 2.03% 2.03% 2.03% 2.64% 3.64% 3.64%

1st 5 Years Compounded 1.51% 1.51% 1.51% 1.51% 2.75% 3.75% 3.75%

2nd 5 Years Compounded 2.54% 2.54% 2.54% 2.54% 2.54% 3.54% 3.54%

An inherent assumption in the DCF is that the property is sold on the open market at the end of Year 10 of the cash flow. In determining the terminal yield we have given consideration to forecast market trends, the perceived marketability of the property at the terminal date and assumptions regarding income and capital expenditure of the property through our cash flow horizon. The terminal capitalisation rate is then applied to the net operating income in the 11th year which we have then discounted back to the date of valuation.

Terminal Value

An inherent assumption in the DCF is that the property is sold on the open market at the end of Year 10 of the cash flow. In determining the terminal yield we have given consideration to forecast market trends, the perceived marketability of the property at the terminal date and assumptions regarding income and capital expenditure of the property through our cash flow horizon. The terminal capitalisation rate is then applied to the net operating income in the 11th year which we have then discounted back to the date of valuation. Terminal Capitalisation Rate 11.500%

Relationship of Terminal Yield to Reversionary Yield +25.00 basis points

Gross Terminal Value $5,313,067

Net Terminal Value $5,225,402

Terminal Initial Yield 11.34%

Terminal Reversionary Yield 11.50%

Capital Value $253,244 ha


Acquisition and Disposal Costs

Acquisition Costs Disposal Costs

Legal Fees 0.10% Legal Fees 0.10%

Due Diligence 0.00% Agents Fees 1.50%

Stamp Duty 5.50% Marketing Costs 0.05%

Other 0.00% Other 0.00%

Total 5.60% Total 1.65%

In determining an appropriate discount rate we have had regard to internal rates of return from other classes of property investment. We summarise returns from various property asset classes as follows: CBD Office 9.00% to 10.00% Industrial 9.00% to 10.50% Retail 9.00% to 10.00% This compares with owner occupied agricultural operations, with returns summarised as follows: Piggeries 11.00% to 14.00% Broilers 11.00% to 15.00% Dairies 12.00% to 16.00% We consider that the risk associated with the cashflow of a horticultural or viticultural investment property of this nature is more akin to the specialised agricultural assets as listed above. We have therefore adopted a discount rate of 13.50% for the subject property.


Discounted Cash Flow Summary

The discounted cash flow analysis is summarised in the following table.

Year Commencing Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-2017 Jan-2018 Jan-2019 Jan-2020

Vineyard $878,754 $905,863 $932,753 $921,120 $525,335 $533,215 $541,214 $549,332 $559,955 $594,571

Total Income $878,754 $905,863 $932,753 $921,120 $525,335 $533,215 $541,214 $549,332 $559,955 $594,571

Net Income Before

Capital Expenditure $878,754 $905,863 $932,753 $921,120 $525,335 $533,215 $541,214 $549,332 $559,955 $594,571

Agents Fees $0 $0 $0 $31,481 $0 $0 $0 $0 $35,630 $0

Capital Expenditure

(Budgeted &

General)

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Income After

Capital Expenditure $878,754 $905,863 $932,753 $889,640 $525,335 $533,215 $541,214 $549,332 $524,325 $594,571

Terminal Value $5,313,067

Disposal Costs ($87,666)

Net Cash Flow $878,754 $905,863 $932,753 $889,640 $525,335 $533,215 $541,214 $549,332 $524,325 $5,819,973

Adopted Value @

13.500% $5,400,000

Acquisition Costs $302,400

Adopted Value

before Acquisition

Costs

$5,702,400

Running Yield -

Before Capex &

Adjustments

16.27% 16.78% 17.27% 17.06% 9.73% 9.87% 10.02% 10.17% 10.37% 11.01%

Running Yield -

After Capex &

Adjustments

16.27% 16.78% 17.27% 16.47% 9.73% 9.87% 10.02% 10.17% 9.71% 11.01%

Running Yield -

Before Capex & incl.

Adjustments

16.27% 16.78% 17.27% 16.47% 9.73% 9.87% 10.02% 10.17% 9.71% 11.01%

Running Yield -

After Capex,

Adjustments & incl.

Acquisition Costs

15.41% 15.89% 16.36% 15.60% 9.21% 9.35% 9.49% 9.63% 9.19% 10.43%


Discounted Cash Flow Conclusions

DCF Outputs

Discounted Terminal Value $1,471,327

NPV of Cash Flows $4,221,486

Sum of Discounted Cash Flows $5,692,812

Less Acquisition Costs ($301,892)

Net Present Value $5,390,921

Rounded DCF Value $5,400,000

14.4 VALUATION CONCLUSIONS

Valuation Approach Valuation Figure

Initial Yield Approach $5,400,000

Reversionary Yield Approach $5,400,000

Discounted Cash Flow Approach $5,400,000

Adopted Value $5,400,000

Our adopted value of $5,400,000 reflects the following:

Passing Initial Yield 15.95%

Equivalent Initial Yield 15.95%

Equivalent Reversionary Yield 11.98%

Internal Rate of Return (including capital expenditure) 13.46%

Internal Rate of Return (excluding capital expenditure) 13.46%

Direct Comparison $257,388 ha

Projected Running Yields

Year 1 2 3 4 5 6 7 8 9 10

Before Capex & Adjustments 16.27% 16.78% 17.27% 17.06% 9.73% 9.87% 10.02% 10.17% 10.37% 11.01%

After Capex & Adjustments 16.27% 16.78% 17.27% 16.47% 9.73% 9.87% 10.02% 10.17% 9.71% 11.01%

Before Capex & incl. Adjustments

16.27% 16.78% 17.27% 16.47% 9.73% 9.87% 10.02% 10.17% 9.71% 11.01%

After Capex, Adjustments & incl. Acquisition Costs

15.41% 15.89% 16.36% 15.60% 9.21% 9.35% 9.49% 9.63% 9.19% 10.43%


We consider that the resultant Initial yields, Internal Rate of Return and the Direct Comparison are reflective of the characteristics of the subject property, the current market fundamentals. Full valuation calculations are contained in Appendix F.

15 ADDITIONAL REQUESTS

15.1 REASONABLE SELLING PERIOD

It is our opinion the reasonable selling period for the property in the order of six months. Despite this we are unable to predict future market conditions and as such, you should not assume this assessment of selling period would remain unchanged should market conditions alter.

15.2 PROBABLE PURCHASER GROUPS

In our opinion, the most likely purchaser of the subject property would be from the following groups: • Institutional or syndicate(s) of investors seeking an income producing investment, or • Existing wine industry players seeking a facility within the region. • The current lessee.

15.3 CONTRACT PRICE

Challenger Wine Trust has provided us with an executed copy of the contract of for the consideration of $5,000,000.

15.4 VALUATION CERTIFICATE

As requested we have supplied a valuation certificate compliant with the Hong Kong Stock Exchange’s Regulatory Requirements. This certificate may be included in the Major Transaction Circular to be dispatched to the shareholders of CKLS on or before 31 December 2010. A copy of the Certificate is attached at Appendix G.


16 VALUATION

We assign the following value to the subject property as at 31 December 2010 and subject to the existing leases, comments, terms, conditions and assumptions contained within and annexed to our report, in fee simple and assuming the property is free of encumbrances, restrictions or other impediments of an onerous nature which would affect value: Unencumbered Vacant Possession Basis


(FIVE MILLION DOLLARS)

Leased Basis


(FIVE MILLION FOUR HUNDRED THOUSAND DOLLARS)

Finally, and in accordance with our normal practice, we confirm that this report is confidential to Regenal Investments Pty Limited for major transaction purposes. No responsibility is accepted to any third party and neither the whole of the report or any part or reference thereto may be published in any document, statement or circular nor in any communication with third parties without our prior written approval of the form and context in which it will appear. Colliers International Consultancy and Valuation Pty Limited

Angus Barrington-Case, AAPI Certified Practising Valuer B Bus Prop (Val), NSW Licence No 7259 16 December 2010 (Date of Signing Report)

APPENDIX ACICV Standard Terms of Business

Colliers International Consultancy and Valuation Pty Limited Terms and Conditions

1

IT IS AGREED AS FOLLOWS:

1. DEFINITIONS ‘Confidential information’ means information that:

(a) Is by its nature confidential; (b) Is designated by Us as confidential; (c) You know or ought to know is confidential; (d) and includes, without limitation:

(i) Information comprised in or relating to any of Our intellectual property in the Services or any reports or certificates provided as part of the Services; and

(ii) The Quotation annexed hereto.

‘Currency Date’ means, in relation to any valuation or consultancy report, the date as at which our professional opinion is stated to be current.

‘Fee’ means the amount agreed to be paid for the Services as set out in the Quotation.

‘Parties’ means You or Us as the context dictates. ‘Quotation’ means the written quote provided by Us in relation to the Services.

‘Services’ means the valuation or consultancy services provided pursuant to these Terms and Conditions and the Quotation, and includes any documents, reports or certificates provided by Us in connection with the services.

‘We’, ‘Us’, ‘Our’ means Colliers International Consultancy and Valuation Pty Limited (ABN 88 076 848 112).

‘You’, ‘Your’ means the entity engaging Us to perform the Services as set out in the Quotation.

2. PERFORMANCE OF SERVICES

2.1. We will provide the Services in accordance with:

(a) The Terms and Conditions contained herein; and (b) The required provisions of the current Australian Property

Institute Professional Practice standard.

3. CONDITION OF THE PROPERTY 3.1. In undertaking the Services We will have regard to the

apparent state of repair, condition and environmental factors in relation to the property based upon a visual inspection, but We will not (and are not qualified to) carry out a structural, geotechnical or environmental survey. We will not inspect those parts of the property that are unexposed or inaccessible.

3.2. We will assume that there is no timber infestation, asbestos or

any other defect (unless advised otherwise) and that the property is compliant with all relevant environmental laws. It is Your responsibility to provide reports to Us that are relevant to these issues.

3.3. We will not undertake a detailed inspection of any plant and

equipment or obtain advice on its condition or suitability.

3.4. We recommend that You engage appropriately qualified persons to undertake investigations excluded from the Services.

3.5. No responsibility will be accepted either to You or to any third

party for loss or damage that may result directly or indirectly from the condition of the property.

4. ENVIRONMENT AND PLANNING 4.1. We will obtain only verbal town planning information. It is Your

responsibility to check the accuracy of this information by obtaining a certificate under the appropriate legislation.

4.2. State or Federal Laws may require environmental audits to be

undertaken before there is a change of land use. You will provide such audits to Us where they are required. We will not advise You whether such audits are required or obtain such audits. If You do not provide Us with such audits We will perform the Services on the assumption that such audits are not required.

5. BUILDING AREAS AND LETTABLE AREAS 5.1. Where a survey is provided to Us for consideration, We will

assume that information contained in the survey is accurate and has been prepared in accordance with the Property Council of Australia (PCA) Method of Measurement.

5.2. If You do not provide Us with a survey, We will estimate building and/or lettable areas based only upon available secondary information (including but not limited to building plans, Deposited Plans, and our own check measurements). Such estimates do not provide the same degree of accuracy or certainty as would be provided by a survey prepared by an appropriately qualified professional in accordance with the Property Council of Australia (PCA) Method of Measurement.

5.3. Where such a survey is subsequently produced which differs

from the areas estimated then You will refer the valuation or consultancy advice back to Us for comment or, where appropriate, amendment.

6. OTHER ASSUMPTIONS 6.1. Unless otherwise notified by You, We will assume:

(a) there are no easements, mortgages, leases, encumbrances,

covenants, caveats, rights of way or encroachments except those shown on the Title; and

(b) all licences and permits can be renewed and We will not make any enquiries in this regard.

6.2. Where third party expert or specialist information or reports

are provided to Us or obtained by Us in connection with the Services (including but not limited to surveys, quantity surveyors reports, environmental audits, structural/dilapidation reports), We will rely upon the apparent expertise of such experts/specialists. We will not verify the accuracy of such information or reports.

7. VALUATION FOR FIRST MORTGAGE SECURITY 7.1. Where the Services are provided for mortgage purposes, You

agree that You will not use the valuation or consultancy report where the property is used as security other than by first registered mortgage.

7.2. We reserve the right, at Our absolute discretion, to determine

whether or not to assign Our valuation to any third party. Without limiting the extent of Our discretion, We may decline a request for assignment where:

(a) the proposed assignee is not a major recognised lending

institution (such as a major bank); (b) the assignment is sought in excess of 3 months after the date

of valuation; (c) We consider that there has been a change in conditions which

may have a material impact on the value of the property; (d) the proposed assignee seeks to use the valuation for an

inappropriate purpose (including in a manner inconsistent with Your agreement at clause 7.1); or

(e) Our Fee has not been paid in full.

7.3. Where We decline to provide an assignment on either of the bases at 7.2(b) or (c), We may be prepared to provide an updated valuation on terms to be agreed at that time.

7.4. In the event that You request us to assign Our valuation and

We agree to do so, You authorise Us to provide to the assignee a copy of these Terms and Conditions, the Quotation and any other document, including instructions provided by You, relevant to the scope of Our Services.

8. ESTIMATED SELLING PRICE 8.1. Where You instruct Us to provide an Estimated Selling Price,

You agree that the Services:

(a) are limited to the provision of a opinion based upon Our knowledge of the market and informal enquiries.

(b) We are not required to carry out a full inspection of the property; any inspection of comparable properties; a search on Title(s) or other enquiries as to encumbrances, restrictions or impediments on Title(s); or other investigations which would be required for a formal valuation.

(c) provide an indicative figure only which is not suitable for use for any purpose other than as general information or guide as to sale expectations. It is not suitable to be relied upon for the purpose of entry into any transaction.

8.2. No responsibility will be accepted either to You or to any third

party for loss or damage that may result from the issue of such an Estimated Selling Price.

Colliers International Consultancy and Valuation Pty Limited Terms and Conditions

2

9. CURRENCY OF VALUATION 9.1. Due to possible changes in market forces and circumstances

in relation to the subject property the Services can only be regarded as relevant as at the Currency Date.

9.2. Where You rely upon Our valuation or consultancy report after

the Currency Date, You accept the risks associated with market movement between the Currency Date and the date of such reliance.

9.3. Without limiting the generality of 9.2, You should not rely upon

Our valuation or consultancy report:

(a) after the expiry of 3 months from the Currency Date; (b) where circumstances have occurred during that period which

may have a material effect on the value of the property or the assumptions or methodology used in the valuation or consultancy report.

10. MARKET PROJECTIONS 10.1. Any market projections incorporated within our Services

including, but not limited to, income, expenditure, associated growth rates, interest rates, incentives, yields and costs are projections only, and may prove to be inaccurate. Accordingly, such market projections should be interpreted as an indicative assessment of potentialities only, as opposed to certainties.

10.2. Where Our Services include market projections such

projections require the dependence upon a host of variables that are highly sensitive to varying conditions. Accordingly, variation in any of these conditions may significantly affect these market projections.

10.3. Where market projections form part of Our Services, We draw

your attention to the fact that there will be a number of variables within acceptable market parameters that could be pertinent to Our Services and the projections adopted are representative of only one of these acceptable parameters.

11. YOUR OBLIGATIONS 11.1. You warrant that the instructions and subsequent information

supplied by You contain a full and frank disclosure of all information that is relevant to Our provision of the Services.

11.2. You warrant that all third party expert or specialist reports

provided to Us by You for the purpose of Us providing the Services are provided with the authority of the authors of those reports.

11.3. You authorise and licence us to incorporate Your intellectual

property within our report(s).

11.4. You will not release any part of Our valuation or consultancy report or its substance to any third party without Our written consent. Such consent will be provided at Our absolute discretion and on such conditions as We may require including that a copy of these Terms and Conditions be provided to such third party. This clause shall not apply to persons noted as recipients in Your prior instruction to Us or in the Quotation provided that You shall provide any such recipient with a copy of these Terms and Conditions.

11.5. If You release any part of the valuation or consultancy advice

or its substance with our written consent, You agree: a) to inform the other person of the terms of our consent; and b) to compensate Us if You do not do so. We have no responsibility to any other person even if that person suffers damage as a result of any other person receiving this valuation or consultancy advice.

11.6. You must pay our Fees within 14 days of the date of a

correctly rendered invoice. Fees that remain unpaid for a period of 30 days or more will attract an administration charge of 2% of the total of the invoice calculated per month or part thereof.

11.7. We reserve the right to reconsider or amend the valuation or

consultancy advice, or the Fee set out in our Quotation to You if:

(a) Certificates, surveys, leases, side agreements or related

documentation that were not provided to Us prior to the provision of the Services are subsequently provided, and contain matters that may affect the value of the advice; or

(b) Where subsequent site inspections made in relation to any of the matters raised in clause 3 materially affect or may alter the value of the property the subject of the Services.

12. CONFIDENTIALITY 12.1. You must not disclose or make any of the Confidential

Information available to another person without Our written consent.

12.2. If consent to disclose the Confidential Information is provided

by Us, You agree to abide by any additional terms and conditions that We may apply to that disclosure.

13. PRIVACY 13.1. We may obtain personal information about You in the course

of performing Our Services. We respect Your privacy. The Privacy Amendment (Private Sector) Act, 2001 requires Us to advise You that we will only obtain information that is necessary to assist us in the course of performing Our Services. If it is necessary for Us to engage third parties, we will inform these parties that they are not to disclose any personal information about You to any person or organisation other than Us.

1.1 A copy of Our Privacy Policy can be obtained by contacting

Our Chief Privacy Officer.

14. SUBCONTRACTING

14.1. We may subcontract or otherwise arrange for another person to perform any part of the Services or to discharge any of Our obligations under any part of these Terms and Conditions, with Your consent.

15. LIABILITY 15.1. You agree to release Us and hold Us harmless from all liability

to You for or in respect of any loss, damage, costs and expenses of whatsoever kind which we have or may have or, but for the operation of this Clause, might have had arising from or in any way connected with the Services or the use of the Services or any part of them. This release shall be complete and unconditional except in the case of gross negligence or wilful misconduct by Us in the provision of the Services.

15.2. You agree that You will fully indemnify Us for and in respect of

all loss, liability, costs and expenses of whatsoever kind which We may suffer or incur arising from or in any way connected with any breach by You of Clause 11 or Clause 12. This indemnity shall include but not be limited to loss, liability, costs and expenses which we may suffer or incur in respect of any claims, actions, proceedings, disputes or allegations made against Us or to which we are a party.

16. ENTIRE AGREEMENT 16.1. No further agreement, amendment or modification of these

Terms and Conditions shall be valid or binding unless made in writing and executed on behalf of the Parties by their duly authorised officers.

16.2. If there is an inconsistency between these Terms and

Conditions and the Quotation, any letter of instruction from You, or other specific request or information, the other specific request or information shall prevail to the extent of the inconsistency.

APPENDIX BLetter of Instruction

APPENDIX CTitle Search

LAND AND PROPERTY INFORMATION NEW SOUTH WALES - TITLE SEARCH ------------------------------------------------------------

FOLIO: 1/1139240 ------

SEARCH DATE TIME EDITION NO DATE ----------- ---- ---------- ---- 7/12/2010 5:38 PM 4 11/5/2010

LAND ---- LOT 1 IN DEPOSITED PLAN 1139240 AT POKOLBIN LOCAL GOVERNMENT AREA CESSNOCK PARISH OF POKOLBIN COUNTY OF NORTHUMBERLAND TITLE DIAGRAM DP1139240

FIRST SCHEDULE -------------- AUSTRALIAN EXECUTOR TRUSTEES (SA) LIMITED (T AE927909)

SECOND SCHEDULE (6 NOTIFICATIONS) --------------- 1 LAND EXCLUDES MINERALS AND IS SUBJECT TO RESERVATIONS AND CONDITIONS IN FAVOUR OF THE CROWN - SEE CROWN GRANT(S) 2 DP262076 EASEMENT FOR WATER SUPPLY 3 METRES WIDE APPURTENANT TO THE PART SHOWN SO BENEFITED IN TITLE DIAGRAM 3 AB112758 LEASE TO PRW LEASING PTY LIMITED EXCLUDING LAND IN LEASE 3550799. EXPIRES: 22/11/2014. OPTION OF RENEWAL: TWO TERMS OF 5 YEARS. AD962454 VARIATION OF LEASE AB112758 4 AD396455 MORTGAGE TO NATIONAL AUSTRALIA BANK LIMITED 5 AE927910 MORTGAGE TO NATIONAL AUSTRALIA BANK LIMITED 6 DP1151268 EASEMENT FOR WATER SUPPLY 3 METRE(S) WIDE AND VARIABLE APPURTENANT TO THE LAND ABOVE DESCRIBED

NOTATIONS --------- UNREGISTERED DEALINGS: NIL

*** END OF SEARCH ***

AdelAgriVADEL3642 PRINTED ON 7/12/2010

Espreon hereby certifies that the information contained in this document has been provided electronically bythe Registrar-General in accordance with Section 96B(2) of the Real Property Act, 1900.

*Any entries preceded by an asterisk do not appear on the current edition of the Certificate of Title.Warning: The information appearing under notations has not been formally recorded in the register.

APPENDIX DTown Planning Guidelines

APPENDIX EWater Licence

Espreon Online Information System


FOLIO: WAL17544 ------

SEARCH DATE TIME EDITION NO DATE ----------- ---- ---------- ---- 14/12/2010 12:05 PM - -

CERTIFICATE OF TITLE HAS NOT ISSUED

WARNING NOTE: INFORMATION ON THIS REGISTER IS NOT GUARANTEED

TENURE TYPE: CONTINUING

HOLDER(S) --------- POOLE'S ROCK WINES PTY LIMITED AUSTRALIAN EXECUTOR TRUSTEES (SA) LIMITED AS TENANTS IN COMMON IN EQUAL SHARES (WB AF515544)

ENCUMBRANCES (3 ENCUMBRANCES) ------------ 1 SECURITY INTERESTS IN THE WATER ENTITLEMENT REPLACED BY THIS ACCESS LICENCE THAT WERE REGISTERED OR CAPABLE OF BEING REGISTERED WITH LPI OR ASIC BEFORE THE COMMENCEMENT DATE OF THIS LICENCE 1/8/2009 MAY BE RECORDED ON THIS LICENCE WITHIN THREE YEARS FROM THE COMMENCEMENT DATE. SEE NOTES. 2 OWNERSHIP OR THIRD PARTY INTERESTS REGISTERED UNDER THE REAL PROPERTY ACT 1900 OR THE CORPORATIONS ACT 2001 MAY BE UNRESOLVED. PENDING RESOLUTION, DEALINGS MAY NOT BE REGISTERED. REFER TO NSW OFFICE OF WATER. FOR POSSIBLE INTERESTS RECORDED UNDER THE REAL PROPERTY ACT 1900 IT IS ADVISED TO SEARCH 1/262076, 2/559523, 95/755252. 3 TERM TRANSFER: NIL

NOTATIONS --------- LICENCE CERTIFICATE NOT ISSUED. DEALINGS MAY NOT BE REGISTERED. SEE NOTES. UNREGISTERED DEALINGS: NIL

ACCESS LICENCE DETAILS ---------------------- CATEGORY: UNREGULATED RIVER

SHARE COMPONENT: SHARE - 122 UNITS WATER SOURCE - BLACK CREEK WATER SOURCE WATER SHARING PLAN - HUNTER UNREGULATED AND ALLUVIAL WATER SOURCES 2009

END OF PAGE 1 - CONTINUED OVER

AdelAgriValsVADEL3642 PRINTED ON 14/12/2010

Espreon hereby certifies that the information contained in this document has been provided electronically bythe Registrar-General in accordance with Section 96B(2) of the Real Property Act, 1900.*Any entries preceded by an asterisk do not appear on the current edition of the Certificate of Title.Warning: The information appearing under notations has not been formally recorded in the register.

Espreon Online Information System


FOLIO: WAL17544 PAGE 2 ------

ACCESS LICENCE DETAILS (CONTINUED) ---------------------- EXTRACTION COMPONENT: TIMES/RATES/CIRCUMSTANCES - ANY TIME OR RATE EXTRACTION FROM - RIVER, LAKE OR SURFACE WATER RUNOFF EXTRACTION ZONE - WHOLE WATER SOURCE

NOMINATED WORKS: WORK APPROVAL NUMBER(S) - 20CA206434 INTERSTATE TAGGING ZONE - NIL

CONDITIONS ---------- LICENCE CONDITIONS FORM A PART OF THIS LICENCE AND AFFECT THE SHARE AND EXTRACTION COMPONENTS. CONDITION STATEMENTS ARE AVAILABLE FROM NOW

NOTES ----- A WATER LICENCE INFORMATION SHEET IS AVAILABLE FROM THE NSW OFFICE OF WATER (NOW) AND SHOULD BE REFERRED TO IN INTERPRETING THIS LICENCE. NOW WEBSITE WWW.WATER.NSW.GOV.AU, PHONE 1800 353 104, EMAIL [email protected] NOW REFERENCE NUMBER: 20AL206433 PREVIOUS WATER ACT LICENCE NUMBER(S): 20SL061438.

*** END OF SEARCH ***

AdelAgriValsVADEL3642 PRINTED ON 14/12/2010

Espreon hereby certifies that the information contained in this document has been provided electronically bythe Registrar-General in accordance with Section 96B(2) of the Real Property Act, 1900.*Any entries preceded by an asterisk do not appear on the current edition of the Certificate of Title.Warning: The information appearing under notations has not been formally recorded in the register.

APPENDIX FValuation Calculations

Colliers International Consultancy & Valuation Pty Limited

Pooles Rock Wines, De Beyers Road, Pokolbin NSW

VALUATION DETAILS

Valuation Date Cash Flow Model DateInterest Valued Freehold Interest Purpose of Valuation

CORE VALUATION ASSUMPTIONS

Financial DetailsGross Passing Income (Fully Let) Adopted Gross Market IncomeOutgoings (pa) Outgoings (pa)Net Passing Income (Fully Let) Adopted Net Market Income

Passing Income is $361,172 above current market levels

Total HectaresVineyard Ha

Net GrossAverage Passing Vineyard Rental* $41,047/ha $41,047/haAverage Market Vineyard Rental $23,832/ha $23,832/ha*Passing rental averages are based on the proportion of occupied area.

Global AssumptionsAgents Leasing Fees (Gross) 12.00% Refurb Allowance - Initial Expiries $0/haRenewal Leasing Fee (Gross) 6.00% Refurb Allowance - Secondary Expiries $0/haVacancy Allowance 0.00% Acquisition Costs

Disposal Costs

Vineyard OtherLease Term 5 years Lease Term 5 yearsLetting Up - Market 0 months Letting Up - Market 6 months

20.98 ha

Major Tranaction

5.60%1.65%

-$500,000$861,172

31 December 2010

20.98 ha

$500,000

1 January 2011

Valuation Calculations Summary

$861,172-

g p g pRetention Probability (Letting Up & Leasing Fees) 100.0% Retention Probability (Letting Up & Leasing Fees) 0.0%Letting Up - Applied 0 months Letting Up - Applied 6 monthsRenewal Probability (Incentives) 100.0% Renewal Probability (Incentives) 100.0%Reviews Reviews

Traditional Valuation Approach Discounted Cash Flow ApproachCore Initial Capitalisation Rate 16.000% Cash Flow TermCore Reversionary Capitalisation Rate 12.000% Terminal Capitalisation Rate 11.500%Pending Vacancies Allowances within 12 months Terminal Allowances & Reversions within 12 monthsCapital Expenditure Allowances for 12 months Discount Rate 13.500%Rental Reversions (PV) 10 Yr Rental Growth 2.03%

(compounded) 2.03%

VALUATION CONCLUSIONS

Traditional Valuation Approach Discounted Cash Flow ApproachInitial Yield Approach Discounted Terminal Value 26%Reversionary Yield Approach NPV of Cash Flows 74%

Sum of Discounted Cash FlowsLess Acquisition CostsNet Present ValueRounded DCF Value

ADOPTED VALUE

(FIVE MILLION FOUR HUNDRED THOUSAND DOLLARS )

RESULTANT YIELDS AND IRR'S ON ADOPTED VALUE

Direct Comparison Terminal Initial Yield 11.34%Passing Initial Yield Terminal Reversionary Yield 11.50%Equivalent Initial Yield Terminal Capital Value Equivalent Reversionary Yield Rate of Increase in Capital Value -0.16%Average Lease Duration IRR (Incl. Capex) 13.46%Weighted Lease Duration by Area IRR (Excl. Capex) 13.46%Weighted Lease Duration by Income 10.93%Total Capital Expenditure (Nominal) 12.50%% of Adopted Value (Nominal) 0.00% 13.11%

$0

$5,692,812($301,892)

Vineyard (Net Face)

$4,221,486

$5,400,000

$5,400,000

Vineyard (Gross Face)

-

7 Year IRR (incl. Capex)

$253,244 per Ha

$5,390,921

$1,471,327

3.89 years3 Year IRR (incl. Capex)5 Year IRR (incl. Capex)

3.89 years

Fixed at 1.5%

15.95%

10 years+25.00 bps

15.95%

Current tenants at expiry/market review with subsequent leases at 12 months

$5,400,000

$5,400,000 - GST Exclusive

$257,388 per Ha

3.89 years

11.98%

Non-Winery Buildings

Building Area CalculationsTotal Area

Sqm $psm ReplacementReplacement

costValue $/sqm Total value

Restaurant 470.43 4,100 1,928,763 $2,870 $1,350,134Deck 171.30 250 42,825 $175 $29,978Portico 37.44 650 24,336 $455 $17,035Walkway 211.00 300 63,300 $210 $44,310Equipment Shed 316.00 400 126,400 $280 $88,480Lean to 32.76 225 7,371 $158 $5,160House 200.00 1,400 280,000 $700 $140,000

$1,675,097

LandVineyard & Vacant land 12.59 ha 40,000 $/ha $503,600

$503,600

Total $2,178,697Total Rounded $2,180,000

Winery Buildings

Building Area CalculationsTotal Area

Sqm $psm ReplacementReplacement

costValue $/sqm Total value

Valuation Calculations Schedule :Poole's Rock Winery, PokolbinValuation Date 31/12/2010

gBarell Store 441.00 1,000 441,000 $500 $220,500Cool Room 36.00 650 23,400 $325 $11,700Weigh Shed 22.32 150 3,348 $30 $670Winery 1,123.00 550 617,650 $220 $247,060Concrete & Hardstand 3,800.00 100 380,000 $30 $114,000Refridgeration Canopy 168.00 150 25,200 $75 $12,600Cellar Door 227.00 600 136,200 $240 $54,480Verandah 52.00 75 3,900 $30 $1,560Dry Store 148.00 175 25,900 $70 $10,360Laboratory 107.00 550 58,850 $28 $2,943Office 145.75 550 80,163 $28 $4,008Carpark & Roadways $100,000

6,270 $779,880

LandWinery 8.39 40,000 $/ha $335,600

Total land & buildings $1,115,480

Plant & Equipment $1,670,000

Total $2,785,480Total Rounded $2,800,000

Combined Total Rounded $5,000,000

APPENDIX GValuation Certificate

Colliers International Consultancy and Valuation Pty Limited | ABN 88 076 848 112

Level 10, Statewide House 99 Gawler Place Adelaide SA 5000

GPO Box 2243 Adelaide SA 5001 www.colliers.com.au

MAIN +61 8 8305 8888 DIRECT +61 8 8305 8858 FAX +61 8 8385 0258 MOB +61 438 384 485 EMAIL [email protected]

Ref: VADEL3642 16 December 2010 The Directors Regenal Investments Pty Limited c/- Thomsons Lawyers Level 25, 264 George Street SYDNEY NSW 2000 Dear Sirs Subject Property: Pooles Rock Winery, Pokolbin, NSW, Australia In accordance with the instructions from Regenal Investments Pty Limited (“the Company”) to value the property interests of CK Life Sciences Int’L (Holdings) Inc (CKLS), the “Target Company” in Australia, we confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing the market value of such property interests as at 31 December 2010 (referred to as the “date of valuation”). It is our understanding that this valuation is for major transaction purposes. This valuation extract, which is an extract from our full valuation report, explains the basis and methodology of valuation, and clarifies our assumptions made, title investigation of properties and the limiting conditions. It has been prepared specifically for use by the Company and CKLS in meeting the disclosure requirements of CKLS to/with the Hong Kong Stock Exchange. However full particulars in relation to the valuation process are set forth in our full valuation report and this valuation extract should be read in conjunction with that document. Basis of Valuation The subject property in our opinion is likely to be regarded as a leased investment. Consequently, in adopting this definition of value we are of the opinion that it is consistent with the definition of Market Value defined by International Valuation Standards Committee (IVSC) and endorsed by the Australian Property Institute (API). "Market Value” is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion."

2

This valuation extract provided by Colliers International Consultancy & Valuation Pty Limited (CICV) and not by any other company in the Colliers International Group. This valuation extract has been prepared for major transaction purposes and should not be relied upon for any other purpose or by any person other than Regenal Investments Pty Limited. CICV accepts no responsibility for any statements in this report other than for the stated purpose. This valuation extract is issued on the basis that no liability attaches to the companies in the Colliers International Group other than CICV in relation to any statements contained in the valuation extract. Date of Issue In accordance with your written instructions dated 2 December 2010, our inspection of the subject property as at 7 December 2010 and the requested date of valuation as at 31 December 2010, we confirm that this valuation extract has been provided as at 31 December 2010 (Date of Valuation). We have assumed that there will be no change to the property or the market between the date of issue and the date of valuation. Should we become aware of any relevant market information that may impact on the value of the property, up to and including 31 December 2010, we at our own discretion reserve the right to review and possibly amend the valuation analysis contained herein. Qualification and Warning CICV has been engaged by Regenal Investments Pty Limited to provide a valuation of Pooles Rock Winery, NSW. Regenal Investments Pty Limited and CKLS wish to include the valuation extract in the Major Transaction Circular of CKLS (the Circular) to the Hong Kong Stock Exchange and have requested CICV to consent to the inclusion of this valuation extract. CICV consents to the inclusion of this valuation extract in the Circular and to being named in the Circular, subject to the condition that Regenal Investment Pty Limited include this Qualification and Warning:-

i. This valuation extract has been prepared for Regenal Investment Pty Limited only and for the specific purposes outlined within the Instruction section of this report and cannot be relied upon by third parties.

ii. This valuation extract is a summary of the valuations of the aforementioned properties as at 31 December 2010 and has not been prepared for the purpose of assessing the property as an investment opportunity.

iii. CICV makes no representation or recommendation to a Recipient in relation to the valuation of the property or the investment opportunity contained in this valuation extract.

iv. Recipients must seek their own advice in relation to the investment opportunity contained in this valuation extract.

3

v. The events of early 2008 including the initial sub-prime fallout in the United States and subsequent Global Financial Crisis (GFC) created uncertain times for both the equities and property markets in Australia which impacted to varying degrees upon a variety of market participants. The initial impact was focussed on the Listed Property Trust sector operating assets within the major commercial, industrial, retail and infrastructure sectors. While a degree of uncertainty still remains within these markets, the magnitude is notably less than that evident throughout 2008 and the majority of 2009. Improving levels of general market activity over recent times appears to have resulted in growing investor confidence, albeit shallower than that experienced prior to the GFC. The rural property market has typically lagged the experiences of the other major markets and traditionally has not displayed their volatility. However there have been some very substantial collapses within the managed investment scheme sector in particular that have dampened investor confidence. The very rapid tightening of credit availability that resulted from the GFC remains an issue within the Australian rural property market with LVR requirements causing a general pull back in many regional markets.

CICV has prepared this valuation extract on the basis of, and limited to, the financial and other information (including market information and third party information) referred to in the valuation extractand contained in the full valuation report. We have assumed that the third party information is accurate, reliable and complete and confirm that we have not tested the information in that respect. Liability Disclaimer In the case of advice provided in this valuation extract and our full valuation report which is of a projected nature, we must emphasise that specific assumptions have been made by us which appear realistic based upon current market perceptions. It follows that any one of our associated assumptions set out in the text of this valuation extractmay be proved incorrect during the course of time and no responsibility can be accepted by us in this event. This valuation extract has been prepared subject to the conditions referred to in our Qualification & Warning. CICV has prepared this valuation extract which appears in the Circular. CICV were involved only in the preparation of this valuation extract and the valuation referred to herein, and specifically disclaim any liability to any person in the event of any omission from, or false or misleading statement included in the Circular, other than in respect of the valuation and this valuation extract. We confirm that this valuation extract may be published in the Circular.

4

The valuation is current as at the date of the valuation only. The value assessed herein may change significantly and unexpectedly over a relatively short period as a result of general market movements or factors specific to the particular property. We do not accept liability for losses arising from such subsequent changes in value. Without limiting the generality of the above comment, we do not assume any responsibility or accept any liability where this valuation is relied upon after the expiration of three months from the date of the valuation, or such earlier date if you become aware of any factors that have any effect on the valuation. CICV confirms that it does not have a pecuniary interest that would conflict with its valuation of the property. Property Description Address Pooles Rock Winery, Pokolbin, NSW

Brief Description The subject property comprises a modern winery facility with an estimated processing capacity in the order of 2,500 tonnes together with a recently constructed restaurant and small vineyard holding located in the heart of the Lower Hunter Wine and Tourism region.

The property has been structurally improved to a high standard with the new restaurant facility sited in a way so diners can enjoy uninterrupted views across a dam to the vineyard and beyond. In addition to the restaurant and winery facility the property has the benefit of a modern barrel store, modern high clearance implement shed and workshop, cellar door sales outlet and four bedroom dwelling. The improvements on the property are set in well landscaped surrounds and have been developed in harmony with the surroundings.

The property is leased to PRW Leasing Pty Ltd for a term of 10 years and 2 days commencing 21 November 2004 and expiring 22 November 2014.

Zoning 1(V) Rural (Vineyards) Zone Cessnock Shire Council

Lessee PRW Leasing Pty Limited

Rent $861,171.72 per annum excluding GST

Lease Expiry Date 22 November 2014

Rent Review CPI Capped at 4%

Option Two rights of renewal of five years each

Property Classification Held for sale

Certificate of Title Title Details

Search Date 7 December 2010


Parish Pokolbin

County Northumberland

Legal Description Volume / Folio Registered Proprietor Area(ha)

Allotment 1 within Deposited Plan 1139240 1 / 1139240 Australian Executor Trustees (SA) Limited 20.98

5

Site Contamination A visual site inspection in consideration of the past land uses has not revealed any obvious pollution or contamination. The property has been used for Winery purposes for many years. During these activities, chemicals in the would have been stored and applied to the land as well as fuel and oils stored on the land. These activities could have given rise to low level contamination similar to that found in the district and reflected in the prices paid generally for land in the area. We are not aware of the fully details with regard to usage of the site prior to the current use, however, we have no cause to believe that the site has been contaminated. We advise that we are not experts in the detection or quantification of any environmental problems, and accordingly have not carried out a detailed environmental investigation. Therefore, this valuation is made on the assumption that there are no actual or potential contamination issues affecting: i) the value or marketability of the property; ii) the site. Verification that the property is free from contamination and has not been affected by pollutants of any kind should be obtained from a suitably qualified environmental professional. Should subsequent investigation say that the site is contaminated, this valuation will require revision. At the time of inspection there were no signs of visible site contamination. We are unaware of any past or proposed use of the land that could create potential liabilities under the environmental use protection legislation. We have not been provided with an environmental audit report of this site. Building Materials We have not sighted any form of Asbestos Register in relation to the subject property. Our site inspection did not reveal any obvious signs of asbestos products, however we cannot certify the site free of contamination. We recommend that if the parties whom wish to rely on this report have any concerns in relation to potential asbestos contamination, they should request the owner to commission a survey and to prepare an Asbestos register.

6

Building Condition and Utility We are not aware of any notices currently issued against the property and we have made no enquiries in this regard. Expert opinion has not been sought in respect to the building structure or the plant and equipment, however our limited enquiries have not revealed any major defects. The improvements are considered to be in reasonable condition for their age. We have assumed that the property complies with the appropriate statutory, building and fire safety regulations. We have also assumed that there is no timber infestation, asbestos or other defect and have made no investigations for them nor have we undertaken a structural survey or tested the building services. Valuation We assign the following value to the subject property as at 31 December 2010 and subject to the existing leases, comments, terms, conditions and assumptions contained within and annexed to our report, in fee simple and assuming the property is free of encumbrances, restrictions or other impediments of an onerous nature which would affect value: Encumbered $5,400,000 – GST Exclusive (FIVE MILLION FOUR HUNDRED THOUSAND DOLLARS) Colliers international Consultancy and Valuation Pty Limited

Angus Barrington-Case, AAPI Certified Practising Valuer B Bus Prop (Val), NSW Licence No 7259 16 December 2010 (Date of Signing Report)

7

Summary of Valuation

Property Market value in existing state as at 31 December 2010

Pooles Rock Winery, Pokolbin, NSW, Australia $5,400,000

8

Valuation Extract Property Description Particulars of Occupancy Market Value in existing state

as at 31 December 2010

Pooles Rock Winery, Pokolbin, NSW, Australia

The subject property comprises a modern winery facility with an estimated processing capacity in the order of 2,500 tonnes together with a recently constructed restaurant and small vineyard holding located in the heart of the Lower Hunter Wine and Tourism region.

The property has been structurally improved to a high standard with the new restaurant facility sited in a way so diners can enjoy uninterrupted views across a dam to the vineyard and beyond. In addition to the restaurant and winery facility the property has the benefit of a modern barrel store, modern high clearance implement shed and workshop, cellar door sales outlet and four bedroom dwelling. The improvements on the property are set in well landscaped surrounds and have been developed in harmony with the surroundings.

The property is currently leased

to PRW Leasing Pty Ltd for a term of 10 years and 2 days commencing 21 November 2004 and expiring 22 November 2014.

The property is currently tenanted with the current term expiring on the 22 November 2014.

The tenant has two rights of renewal of five years each.

$5,400,000

CONTACT DETAILS MOB 61 438 384 485 DIR 08 8305 8858 FAX 08 8385 0258 Colliers International Consultancy and Valuation Pty Limited ABN 88 076 848 112 Level 10, Statewide House, 99 Gawler Place Adelaide SA 5000 www.colliers.com.au COPYRIGHT Colliers International.

Colliers International Consultancy & Valuation offers a range of valuation services in the following specialist areas:

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