Notice of General Meeting

Level 18, 37 St Georges Terrace, PERTH 6000 PO Box 3151, Adelaide Terrace, PERTH 6832 Telephone: +61 08 9221 9111 Facsimile: +61 08 9221 9011 E-mail: [email protected]

NOTICE OF GENERAL MEETING

EXPLANATORY STATEMENT (incorporating Independent Expert’s Report)

and

PROXY FORM

FOR THE GENERAL MEETING OF CASH CONVERTERS INTERNATIONAL LIMITED TO BE HELD AT WEST AUSTRALIAN CLUB 101 ST GEORGES TERRACE, PERTH, WESTERN AUSTRALIA 29 OCTOBER 2009 COMMENCING AT 10.00 AM (WESTERN AUSTRALIAN TIME)

ABN 39 069 141 546 www.cashconverters.com

Level 18, 37 St Georges Terrace, PERTH 6000 PO Box 3151, Adelaide Terrace, PERTH 6832 Telephone: +61 08 9221 9111 Facsimile: +61 08 9221 9011 E-mail: [email protected]

NOTICE OF GENERAL MEETING

Notice is hereby given that a General Meeting of Cash Converters International Limited will be held at 10.00 am (Western Australian time) on 29 October 2009 at:

West Australian Club 101 St Georges Terrace Perth Western Australia 6000

Information regarding the resolution set out below is contained in the Explanatory Statement which accompanies and forms part of this Notice of General Meeting. The Explanatory Statement also contains an Independent Expert’s Report in relation to the resolution.

AGENDA

SPECIAL BUSINESS - INVESTMENT BY EZCORP

To consider, and if thought fit, pass the following resolution as an ordinary resolution:

“That for the purposes of item 7 of section 611 of the Corporations Act, and for all other purposes, the acquisition by EZCORP, Inc. of 108,218,000 fully paid ordinary shares in the capital of the Company (as described in the Explanatory Statement accompanying this Notice of General Meeting), and the issue of those shares by the Company, is approved.”

OTHER BUSINESS

To deal with any other business which may be brought forward in accordance with the Constitution and the Corporations Act.

By Order of the Board – 18 September 2009.

D.R. Groom, A.C.M.A., F.C.P.A., F.C.I.S. Company Secretary

Members entitled to attend and vote at the General Meeting In accordance with the Company’s constitution and the Corporations Regulations 2001 (Cwlth), the Board has determined that the members entitled to attend and vote at the meeting shall be those persons who are recorded in the register of members of the Company at 10.00 am (Perth time) on 27 October 2009.

Proxies A member entitled to attend and vote at the General Meeting is entitled to appoint not more than two proxies. Where more than one proxy is appointed each proxy may be appointed to represent a specified proportion of the member’s voting rights but if the appointment does not specify the proportion or number of votes that the proxy may exercise, each proxy may exercise half the member’s votes. A proxy need not be a member of the Company. Forms to appoint proxies and the Power of Attorney (if any) under which they are signed must be received by the Company at its registered office, or the address or fax number set out below, not less than 48 hours before the time of the meeting. Proxy forms may be sent by post to PO Box 3151, Adelaide Terrace, Perth, Western Australia 6832 or by fax to +61 8 9221 9011 or delivered by hand to Level 18, 37 St Georges Terrace, Perth, Western Australia. A form of proxy is enclosed with this notice. Additional forms will be supplied by the Company on request.

ABN 39 069 141 546 www.cashconverters.com 1 Level 18, 37 St Georges Terrace, PERTH 6000 PO Box 3151, Adelaide Terrace, PERTH 6832 Telephone: +61 08 9221 9111 Facsimile: +61 08 9221 9011 E-mail: [email protected]

EXPLANATORY STATEMENT

This Explanatory Statement has been prepared to provide shareholders with material information to enable them to make an informed decision on the business to be conducted at the General Meeting of Cash Converters International Limited (‘Company’) to be held on 29 October 2009.

The Directors recommend shareholders read this Explanatory Statement in full before making any decision in relation to the resolution.

INVESTMENT BY EZCORP

On 18 August 2009 the Company announced that it had entered into a Subscription Agreement with EZCORP, Inc. (‘EZCORP’) to make a placement of 108,218,000 Shares to EZCORP at an issue price of A$0.50 per Share to raise approximately $54.1 million (before transaction costs). The Placement was subject to (among other things) EZCORP being satisfied with its due diligence examination in relation to the Company. EZCORP has now confirmed that its due diligence investigations have been satisfactorily completed.

As explained below, shareholder approval is required (by way of the resolution to be considered at the General Meeting) before the Placement may proceed because the shares issued to EZCORP under the Placement will represent 30% of the fully diluted capital of the Company.

The Company intends to use the proceeds of the Placement to accelerate the acquisition of stores from Cash Converters franchisees and to fund the growth of the Safrock loan book.

The Independent Expert has concluded that the acquisition of Shares by EZCORP is not fair but is reasonable to non-associated shareholders. The Independent Expert’s conclusions, and the recommendations of the Directors of the Company, are described further below.

If the Placement is approved by shareholders, the Board of Directors of the Company will then appoint to the Board two nominees of EZCORP. It has also been agreed that if and when the position of Chairman of the Board of the Company becomes vacant, one of EZCORP’s nominees may fill that position. These rights to have two directors and to fill the position of chairman upon a vacancy shall continue for as long as EZCORP holds more than 20% of the Shares. The two nominees put forward by EZCORP are Mr William Love and Mr Joseph Beal (each of whom are described further below).

Requirement for approval Except as provided by Chapter 6 of the Corporations Act, section 606(1) of the Corporations Act prohibits a person from acquiring a “relevant interest” in issued voting shares in a company if, after the acquisition, that person’s or someone else’s “voting power” increases beyond 20%, or increases from a starting point above 20% and below 90%.

If the Placement proceeds, EZCORP’s voting power in the Company will increase from 0% to 30%.

Item 7 of section 611 of the Corporations Act provides that section 606(1) of the Corporations Act does not apply to an acquisition of relevant interests in a company’s voting shares if the acquisition is approved previously by a resolution passed at a general meeting of the company where no votes are cast in favour of the resolution by the person proposing to make the acquisition or their associates. The exception is also conditional on the provision to shareholders of all information known to the person proposing to make the acquisition or their associates, or known to the company, that was material to the decision on how to vote on the resolution.

Approval is being sought under item 7 of section 611 of the Corporations Act to enable EZCORP to acquire 108,218,000 Shares pursuant to its rights under the Subscription Agreement, which will give it voting power of 30%. The resolution must be approved by more than 50% of the shareholders present and voting at the meeting in person or by proxy.

As required by ASIC Regulatory Guide 74 (“Acquisitions agreed to by shareholders”), the Company commissioned KPMG Corporate Finance (Aust) Pty Ltd to prepare an Independent Expert’s Report as to whether the acquisition of Shares by EZCORP under the

ABN 39 069 141 546 www.cashconverters.com 2

EXPLANATORY STATEMENT cont’d

Placement is fair and reasonable to non-associated shareholders. The Independent Expert has concluded that the acquisition of Shares by EZCORP is not fair but is reasonable to non-associated shareholders. The Independent Expert’s conclusion that the acquisition of Shares by EZCORP is not fair is on the basis that the proposed issue price of A$0.50 per share is lower than the Independent Expert’s assessed fair value for Shares at the date of its report of between $0.69 and $0.76 per Share inclusive of a full premium for control. Despite this, the Independent Expert has concluded that, in the absence of a superior offer, the acquisition of Shares by EZCORP is reasonable as there are sufficient reasons for shareholders to approve the acquisition by EZCORP. The Independent Expert’s Report is an important document and should be read in full before deciding how to vote on the resolution.

ASX Listing Rule 7.1 provides, in summary, that a listed company may not issue equity securities in any 12 month period which exceed 15% of the number of issued ordinary securities at the beginning of the 12 month period, except with the prior approval of shareholders in general meeting. Although the Placement will exceed the limits prescribed by ASX Listing Rule 7.1, if approval is given for the purposes of item 7 of section 611 of the Corporations Act the Placement will fall within Exception 16 in ASX Listing Rule 7.2, so approval under ASX Listing Rule 7.1 will not be required.

Who is EZCORP? EZCORP is a US company with its corporate headquarters in Austin, Texas. EZCORP’s Class A Non-Voting Common Stock is listed on the NASDAQ Stock Market with a market capitalisation of approximately US$611 million (as at 31 August, 2009).

As at 30 June 2009, EZCORP operated a total of 897 company-owned stores in the USA and Mexico, consisting of 370 pawnshops in the USA, 47 pawnshops in Mexico and 480 US signature loan stores.

For over 10 years, EZCORP has also had a substantial investment in Albermarle & Bond Holdings PLC, which is one of the largest pawnbrokers in the United Kingdom with shares listed on AIM, the alternative investment market operated by the London Stock Exchange.

Terms of the Subscription Agreement Under the Subscription Agreement, the Company has agreed to issue 108,218,000 Shares to EZCORP at $0.50 per Share, which will result in the Company receiving $54,109,000 in subscription funds (before transaction costs).

In summary, completion of the Placement is conditional on: (a) EZCORP being satisfied with its due diligence investigations in relation to the Company (EZCORP has confirmed to the Company that this condition has been satisfied); (b) there being no material adverse change in relation to the Company; (c) there being no material breach of the warranties given by the Company under the Subscription Agreement; (d) all required approvals under the Corporations Act and the ASX Listing Rules being obtained; (e) all necessary authorisations, consents, orders, or approvals of any governmental entity being obtained, and all necessary declarations and filings with any governmental entity being made; and (f) all required authorisations and approvals being obtained and all regulatory waiting periods imposed either expiring or being terminated.

Prior to the issue of Shares to EZCORP, the Company must procure that the Board of Directors of the Company appoints EZCORP’s two nominees (Mr William Love and Mr Joseph Beal) to the Board of Directors of the Company.

The Company has also agreed that: (a) with effect from completion of the Placement, there shall be no more than five Directors of the Company; (b) for so long as EZCORP holds at least 20% of the Shares: (i) EZCORP shall have the right to appoint and maintain in office two nominee directors on the Board of Directors of the Company (and, if those nominees are removed, to appoint replacement nominees); and (ii) if the position of Chairman of the Board of Directors of the Company becomes vacant, the position must be offered to one of EZCORP’s nominee directors, who may accept the position in his or her sole discretion; and (c) if, notwithstanding the limit referred to above, the number of Directors is increased to more than five, then EZCORP may appoint additional nominee directors to maintain its proportional representation.

The Subscription Agreement also contains provisions relating to warranties (given by the Company and EZCORP), confidentiality, public announcements and provisions to facilitate the satisfaction or (where applicable) waiver of the conditions precedent to the Placement.

ABN 39 069 141 546 www.cashconverters.com 3

EXPLANATORY STATEMENT cont’d

EZCORP’s nominee directors Upon completion of the Placement (if approved by shareholders), the Company will appoint Mr William Love and Mr Joseph Beal as EZCORP’s nominees on the Board of Directors of the Company. Once appointed, they will hold office until the next general meeting of the Company, at which point shareholders will have an opportunity to vote on their re-election.

Further information about Mr Love and Mr Beal is set out below:

Mr William Love, age 60, has served as an independent director of EZCORP since October 1, 2008, and has served as chairman of the audit committee of the EZCORP board of directors since November 2008. Mr Love is a licensed Certified Public Accountant and a Certified Valuation Analyst, and since January 1993 has practiced public accounting in the Austin, Texas based William C. Love accounting firm. From 1972 to 1993, Mr Love worked with the accounting firm of KPMG Peat Marwick and its predecessors, including appointments as Partner in Charge of Audit, Partner in Charge of Tax and Managing Partner of its Austin, Texas office.

Mr Joseph Beal, age 64, has served as an independent director of EZCORP since August 2009. Until his retirement in January 2008, Mr Beal was the general manager and chief executive officer of the Lower Colorado River Authority, a Texas conservation and reclamation district with over $1 billion in annual revenues, over $3 billion in assets and more than 2,200 employees. Mr Beal joined LCRA in 1995 to lead its Water Services division, and was appointed by the LCRA board in January 2000 to become its eighth general manager and chief executive officer. Before joining LCRA, Mr Beal was senior vice president and chief operating officer at Espey Huston & Associates, an international engineering and environmental consulting firm based in Austin. Mr Beal serves on the Compensation Committee of EZCORP’s board of directors.

What happens if the Placement is not approved If shareholders do not approve the acquisition of Shares by EZCORP, the Placement will not proceed and the Subscription Agreement will automatically terminate. This means that the Company will not have access to the $54.1 million (before transaction costs) which it proposes to use to accelerate the acquisition of stores from Cash Converters franchisees and to fund the growth of the Safrock loan book. In such circumstances, the Company will continue to pursue its policy of store acquisitions and the growth of the Safrock loan book as it has been doing but the pace of growth will depend upon available capital and will be slower than it would have been if the Placement had proceeded.

Additional information In addition to the information set out above, item 7 of section 611 of the Corporations Act and ASIC Regulatory Guide 74 (“Acquisitions agreed to by shareholders”) require that certain information be set out in the notice of meeting and explanatory statement to approve an acquisition for the purposes of item 7 of section 611. The required information (to the extent not already set out in the Notice of General Meeting, this Explanatory Statement or the Independent Expert’s Report) is set out below:

(a) The approval is being obtained in respect of EZCORP, but the approval will also cover persons who gain a relevant interest in the Company by way of EZCORP’s acquisition of Shares, and associates of those persons or EZCORP who will obtain voting power in the Company equivalent to that held by EZCORP. As at the date of this Explanatory Statement, MS Pawn Limited Partnership, MS Pawn Corporation and Phillip Ean Cohen will obtain a relevant interest in the Company through the acquisition by EZCORP, and they and their associates (along with EZCORP and its controlled bodies corporate and associates) will obtain voting power in the Company through the acquisition by EZCORP. None of the entities referred to in this paragraph (a) will be entitled to vote on the resolution.

(b) As at the date of this Explanatory Statement, none of EZCORP or its associates has a relevant interest in Shares or voting power in the Company. If 108,218,000 Shares are issued to EZCORP pursuant to its rights under the Subscription Agreement, this would give EZCORP and its associates voting power of 30% in the Company.

(c) The funds raised through the Subscription Agreement will be used to accelerate the acquisition of stores from Cash Converters franchisees and to fund the growth of the Safrock loan book. The Safrock loan book grew by 55% to $21.4 million in the 2009 financial year and the Company needs to be in a position to fund similar growth levels in Australia during the 2010 financial year. The Company also needs to be sufficiently funded to launch the Safrock loan product in the United Kingdom in the 2010 financial year. During the 2009 financial year, the Company acquired 15 franchised stores at a cost of $11.98 million and now has a solid platform from which to accelerate the rate of acquisitions going forward. This will require funding in excess of this 2009 financial year amount.

(d) If shareholders approve the acquisition by EZCORP, it is proposed that the Placement will be completed within seven days after the date of the general meeting.

ABN 39 069 141 546 www.cashconverters.com 4

EXPLANATORY STATEMENT cont’d

(e) To the extent that EZCORP and its associates are able to exert control over the operation of the Company, EZCORP has informed the Company that its and its associates’ current intentions in relation to the Company are: (i) not to make any major changes to the business of the Company or to redeploy any of its fixed assets; (ii) not to make any further injections of capital into the Company (other than possibly pursuant to share purchase plans, rights issues or other pro-rata issues of securities); (iii) not to require any change to the employment of the present employees of the Company (except the changes to the Board of Directors of the Company referred to above); (iv) not to transfer any property between the Company, EZCORP or any of their associates; and (v) not to change significantly the financial or dividend policies of the Company.

(f) No current Director of the Company has an interest in the resolution to approve the acquisition by EZCORP other than as a shareholder in the Company.

(g) The Independent Expert has prepared a report (taking into account, among other things, the requirements of ASIC Regulatory Guide 74 (“Acquisitions agreed to by shareholders”) and ASIC Regulatory Guide 111 (“Content of expert reports”)) which accompanies this Explanatory Statement. That report concludes that the acquisition of Shares by EZCORP pursuant to its rights under the Subscription Agreement is not fair but is reasonable to non-associated shareholders. The Independent Expert’s conclusion that the acquisition of Shares by EZCORP is not fair is on the basis that the proposed issue price of A$0.50 per share is lower than the Independent Expert’s assessed fair value for Shares at the date of its report of between $0.69 and $0.76 per Share inclusive of a full premium for control. Despite this, the Independent Expert has concluded that, in the absence of a superior offer, the acquisition of Shares by EZCORP is reasonable as there are sufficient reasons for shareholders to approve the acquisition by EZCORP. The Independent Expert’s report is an important document and the Company recommends that shareholders read that document in full before deciding how to vote on the resolution.

(h) As at the date of the Notice of General Meeting, except as set out in the Notice of General Meeting, this Explanatory Statement and the Independent Expert’s Report, there is no other information known to EZCORP or its associates, the Company, or the Directors of the Company, that is material to the decision on how to vote on the resolution to approve the acquisition by EZCORP.

Directors’ Recommendation:

The Directors of the Company approved the proposal to put the resolution to approve the acquisition by EZCORP to shareholders.

The Board of Directors of the Company, with the exception of Mr Paul Cowan, recommends that non-associated shareholders approve the acquisition by EZCORP because it believes that the funds raised pursuant to the Placement will allow the Company to accelerate the acquisition of stores from Cash Converters franchisees and to fund the growth of the Safrock loan book, and that to raise funds on the terms set out in the Subscription Agreement for these purposes is in the best interests of the Company. The Board has also had regard to the Independent Expert’s opinion that the acquisition of Shares by EZCORP pursuant to its rights under the Subscription Agreement is not fair but is reasonable to non-associated shareholders. Having considered the Independent Expert’s conclusions, the Board, with the exception of Mr Paul Cowan, believes that the advantages of the Placement outweigh the disadvantages and that the Placement is in the best interests of the Company as a whole.

Mr Paul Cowan, a non-executive Director nominated to the Board by River Capital Pty Ltd (one of the Company’s shareholders) has advised the Board that he believes the terms of the proposed Placement to be unfair, as has the Independent Expert, as it will provide EZCORP with a controlling interest in the Company without any control premium being paid, and will lessen the prospect of shareholders receiving a takeover premium in the future. Specifically, Mr Cowan believes that the issue price of $0.50 per share fails to incorporate a control premium, and reflects a discount of between 27.5% and 34.2% to the valuation range (inclusive of a full premium for control ) determined by the Independent Expert.

Given the Subscription Agreement provides there shall be no more than five Directors upon completion of the proposed Placement, Mr Cowan has also advised the Board that subject to the successful completion of the Placement on the terms provided herein by no later than 15 November 2009, he would resign as a Director of the Company.

As a consequence of Mr Cowan’s intended resignation on completion of the Placement, Mr Cowan has advised the Board that he currently believes that it is not appropriate for him to make any further comments relating to the acquisition of Shares by EZCORP. Additionally, given that Mr Cowan does not hold a relevant interest in the shares held by River Capital Pty Ltd, Mr Cowan has advised that he is unaware, as at the date of this Explanatory Statement, as to how River Capital Pty Ltd intends to vote in relation to the resolution.

ABN 39 069 141 546 www.cashconverters.com 5

EXPLANATORY STATEMENT cont’d

GLOSSARY

ASIC means the Australian Securities & Investments Commission.

ASX means ASX Limited.

Company or Cash Converters means Cash Converters International Limited ABN 39 069 141 546.

Corporations Act means the Corporations Act 2001 (Cwlth).

Explanatory Statement means this explanatory statement, and incorporates the Independent Expert’s Report.

EZCORP means EZCORP, Inc., a corporation incorporated in the State of Delaware, USA, and having its corporate headquarters in Austin, Texas, USA.

Independent Expert means KPMG Corporate Finance (Aust) Pty Ltd ABN 43 007 363 215, the author of the Independent Expert’s Report.

Independent Expert’s Report means the report prepared by the Independent Expert in relation to the Placement, which report forms part of this Explanatory Statement and which is set out in the Appendix.

Notice of General Meeting means the notice of general meeting which accompanies this Explanatory Statement.

Placement means the proposed issue of 108,218,000 Shares to EZCORP pursuant to the Subscription Agreement.

Safrock loan book means the asset comprised by the total amount receivable from borrowers to whom Safrock loans have been made by Safrock Finance Group Pty Ltd and its related companies, all of whom are wholly owned subsidiaries of the Company.

Share means a fully paid ordinary share in the capital of the Company.

Subscription Agreement means the Subscription Agreement between the Company and EZCORP dated 17 August 2009.

US or USA means United States of America.

ABN 39 069 141 546 www.cashconverters.com 6 ABCD KPMG Corporate Finance (Aust) Pty Ltd ABN: 43 007 363 215 Australian Financial Services Licence No. 246901 Telephone: +61 8 9263 7171 235 St Georges Terrace Facsimile: +61 8 9263 7151 Perth WA 6000 www.kpmg.com.au

GPO Box A29 Perth WA 6837 Australia

The Directors Cash Converters International Limited Level 18, Citibank House 37 St Georges Terrace Perth WA 6000

16 September 2009

Dear Sirs

Independent expert report & Financial services guide

1 Introduction

Cash Converters International Limited (Cash Converters or the Company) is an Australian public company listed on the Official List of ASX Limited (ASX) and on the main board of the London Stock Exchange (LSE). Cash Converters’ principal business is the ownership and franchising of retail and financial services stores, which operate as retailers of second hand goods and suppliers of financial products, including pawn broking and provision of short-term loans and cash advances. Cash Converters and its franchisees operate a network of close to 500 stores in Australia, the United Kingdom (UK), the United States (US), Europe and South East Asia. As at 15 September 2009, Cash Converters had a closing market capitalisation of approximately 155.3 million.1

On 18 August 2009, Cash Converters announced that it had entered into a Subscription Agreement with EZCORP Inc (EZCORP), pursuant to which EZCORP has agreed to subscribe, in cash, for an equity issue of approximately 108.2 million new fully paid ordinary shares in the Company at $0.50 per share, to raise approximately $54.1 million (the Proposed Placement). The terms of the Proposed Placement are discussed more fully in Section 5 of this report.

Following completion of the Proposed Placement EZCORP will hold a 30 percent interest in the expanded issued capital of Cash Converters.

EZCORP is a US public company listed on the National Association of Securities Dealers Automated Quotations (NASDAQ). EZCORP is a provider of credit services to individuals who do not have cash resources or access to credit to meet their short-term cash needs. As at 15 September 2009, EZCORP had a closing market capitalisation of approximately United States dollars (US$) 640.8 million (approximately $742.2 million 2).

1 All amounts denominated in Australian dollars ($) unless specifically noted otherwise. 2 Based on an exchange rate of A$1:US$0.8634 as at 15 September 2009.

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Cash Converters is now seeking approval from its shareholders not associated with EZCORP (the non- associated shareholders) for the Proposed Placement. The specific terms of the resolution to be approved by the non-associated shareholders is set out in the Explanatory Statement to which this report is attached.

In order to assist the non-associated shareholders in assessing the merits or otherwise of the Proposed Placement, the directors of Cash Converters have appointed KPMG Corporate Finance (Aust) Pty Ltd (KPMG) to prepare an independent expert report (IER) to state whether or not, in our opinion, the Proposed Placement is fair and reasonable to the Company’s non-associated shareholders.

2 Scope of our report

Section 606 of the Corporations Act 2001, as amended (the Act) provides a general prohibition against any person holding 20 percent or less in the voting shares of a public company increasing their relevant interest to greater than 20 percent. However, item 7 of section 611 of the Act provides an exemption to this general prohibition where the increase is approved in general meeting by shareholders of the Company.

Following the successful completion of the Proposed Placement EZCORP will increase its relevant interest in the Company from nil to 30 percent. Accordingly, the directors of Cash Converters are seeking the approval of the non-associated shareholders pursuant to item 7 of section 611 of the Act for the Proposed Placement to proceed.

ASX Listing Rule 7.1 provides that subject to certain exceptions, a company must not without the prior approval of its shareholders, issue equity securities during any 12 month period if the number of those securities exceeds 15 percent of the total ordinary securities on issue at the commencement of that 12 month period. Although the Proposed Placement exceeds the limits prescribed by ASX Listing Rule 7.1, we have been advised that in the event approval is given by the non-associated shareholders for the purpose of item 7 of section 611 of the Act, the Proposed Placement will fall within Exception 16 in ASX Listing Rule 7.2, such that separate approval under ASX Listing Rule 7.1 is not required.

Although in the current circumstances there is no legal requirement for an IER to be prepared under section 611, in order to ensure that the non-associated shareholders are provided sufficient information upon which to assess the merits or otherwise of the Proposed Placement, the directors of Cash Converters have commissioned KPMG to prepare an independent expert report assessing the fairness and reasonableness of the Proposed Placement.

The Act does not define the term ‘fair and reasonable’ however, Regulatory Guide 111 ‘Content of expert reports’ (RG 111) issued by the Australian Securities and Investments Commission (ASIC) provides that each of these criteria be assessed individually and not as a compound phrase.

2 © 2009 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG. ABCD Cash Converters International Limited Independent expert report & Financial services guide 16 September 2009

In this regard, RG111 provides that:

• an offer is ‘fair’ if the value of the consideration being offered is equal to or greater than the value of the securities the subject of the offer. This comparison is required to be made assuming an acquisition of 100 percent of the ‘target’ and irrespective of whether the consideration is scrip or cash (paragraph 10)

• an offer is ‘reasonable’ if it is ‘fair’ (paragraph 11)

• an offer may be reasonable if, despite not being fair, but after considering other significant factors, shareholders should accept the offer in the absence of any higher bid before the close of the offer (paragraph 11).

This report has been prepared by KPMG for inclusion with Cash Converters’ Explanatory Statement to accompany the Notice of Meeting to convene a meeting of the non-associated shareholders in or around October 2009. The purpose of the meeting will be to seek the approval of the non-associated shareholders for the Proposed Placement to proceed.

The sole purpose of this report and its attached appendices is to express the opinion of KPMG as to whether the Proposed Placement is fair and reasonable to the non-associated shareholders. This report should not be used for any other purposes or by any other party.

2.1 Factors considered in forming our opinion

In forming our opinion as to whether the Proposed Placement is fair and reasonable, we have considered, amongst others, the following matters:

• the assessed value of Cash Converters’ shares on a 100 percent control basis compared to the consideration to be provided under the Proposed Placement, being $0.50 cash for each new Cash Converters share to be issued

• historical trading prices and liquidity of Cash Converters’ shares on ASX and LSE

• the interest in Cash Converters being acquired, other control related issues and any conditions associated with the Proposed Placement

• the intended use and need for the funds that may be raised from the Proposed Placement

• the likelihood of an alternative offer for Cash Converters

• the consequences if the Proposed Placement is not successful

• other advantages and disadvantages that may impact the non-associated shareholders.

3 © 2009 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG. ABCD Cash Converters International Limited Independent expert report & Financial services guide 16 September 2009

3 Summary and conclusion

The Proposed Placement is not fair but reasonable to Cash Converters’ shareholders

In our opinion, having assessed the fairness and reasonableness of the Proposed Placement to Cash Converters shareholders, and in the absence of a superior proposal, we consider the Proposed Placement to be not fair but reasonable to the Company’s shareholders.

As with any transaction involving a change of control, a key consideration for Cash Converters shareholders is whether the Proposed Placement includes a premium for control. Based on our range of assessed fair values for a Cash Converters share and the trading price for the Company’s shares on ASX immediately prior to the announcement of the Proposed Placement, EZCORP is not paying a control premium for the 30 percent interest it will receive.

However, this lack of premium should be considered in the context that:

• Cash Converters is trading around its highest level for the past two years

• the proposed issue price represents a premium of between 4.2 percent and 31.6 percent to the volume weighted average price (VWAP) for a Cash Converters share when measured at various points over the 12 months prior to the date of the announcement of the Proposed Placement

• Cash Converters recently went to the market seeking to raise $15 million in equity, but was only able to raise $5 million ($4.75 million net of costs) at an issue price of $0.40 per share, representing a discount of 3.6 percent to the prevailing market price. Discussions with management (comprising Mr Peter Cumins, Managing Director, Mr Michael Cooke, Group Legal Counsel, and Mr Ralph Groom, Company Secretary / Group Financial Controller) indicated that, whilst various parties were prepared to subscribe for increased levels of equity, this was subject to a discount to market prices in excess of that contemplated under the Proposed Placement

• whilst, EZCORP will have a position of significant influence in relation to the future strategy and direction of the Company by virtue of its 30 percent relevant interest in the voting capital of the Company and having two seats out of five at a Board level, EZCORP will not have free and unfettered control.

Management’s expectation is that access to the large pool of funds that will become available to the Company following completion of the Proposed Placement will enable it to significantly accelerate its corporate strategies and thereby maximise the benefit of favourable market conditions in relation to the growth of its store network and short-term loan book portfolio, particularly in the UK. Cash Converters shareholders will have the opportunity to participate pro-rata in any upside that is expected to be generated by the enlarged Company.

It is also noted that Cash Converters and EZCORP have similar operational backgrounds, with both operating in the second hand goods and short-term lending markets, albeit in distinctly different

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geographical regions. As a major international market participant, EZCORP possess know-how, expertise and experience in the operation of the corporate store concept and, consequentially, the potential to share knowledge brings a commercial logic to the alliance. Furthermore, with a significant shareholding in Cash Converters, EZCORP will be incentivised to ensure the alliance with the Company succeeds.

The principal matters that KPMG has taken into consideration in forming our opinion are summarised below and discussed in more detail in the remainder of this report.

The Proposed Placement is not fair as the proposed issue price lies below our range of assessed fair values for a Cash Converters share, inclusive of a full premium for control

We have assessed the current fair value of Cash Converters, inclusive of a full premium for control3, as lying in the range of $174.5 million to $192.5 million, or between approximately $0.69 and $0.76 per fully diluted Cash Converters share, as summarised in the table below.

Table 1: Summary of assessed fair market value of Cash Converters Assessed values Low High $M $M Store operations 75.0 80.0 Financing 104.0 117.0 179.0 197.0 Less: Acquisition / fit out costs (4.5) (4.5) Total equity value 174.5 192.5 Number of ordinary shares - millions 252.5 252.5 Value per Cash Converters share (fully diluted) - $ 0.69 0.76 Source: KPMG analysis

As the proposed issue price of $0.50 per Cash Converters share lies below our range of assessed fair values inclusive of a full premium for control, we consider the Proposed Placement to be not fair.

In the absence of a superior offer, the Proposed Placement is reasonable despite being “not fair” as there are sufficient reasons for shareholders to approve the Proposed Placement

The Proposed Placement may still be considered reasonable if, despite being “not fair”, there are sufficient reasons for shareholders to approve the Proposed Placement in the absence of a superior offer. In determining the Proposed Placement is reasonable we had regard to the following principal matters.

3 RG 111.10 requires in the circumstances of the Proposed Placement, that the fairness of the transaction be assessed based on the value of the Company inclusive of a full premium for control.

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Principal advantages

Approval of the Proposed Placement will enable Cash Converters to accelerate its strategic initiatives In recent times, Cash Converters has embarked upon a strategy to acquire existing franchise stores and also roll out new stores in both Australia and the UK, which the Company expects will enable it to:

• respond more nimbly to any changes in regulatory requirements around the provision of consumer credit products

• grow its second hand goods offerings both in-store and on-line

• more importantly, facilitate the wider distribution and deeper market penetration of its micro lending products.

Completion of the Proposed Placement will provide Cash Converters with a significant pool of funds to grow its business at a more rapid rate than otherwise would likely be the case. In our view, completion of the Proposed Placement will, in effect, facilitate achievement, at an advantageous point in the economic cycle for the Company, of the strategic initiatives Cash Converters was pursuing prior to the announcement of the Proposed Placement, within a much quicker timeframe than Cash Converters would otherwise be able to achieve.

Approval of the Proposed Placement will provide Cash Converters with a strategic and financially robust cornerstone investor EZCORP has advised the Company that its long-term intentions in relation to Cash Converters are, inter alia, to:

• work with Cash Converters’ management to develop the business of Cash Converters in Australia and overseas

• support Cash Converters in developing its business in corporate store ownership and operation.

Given EZCORP’s significant equity investment in the Company, EZCORP will be incentivised to ensure the alliance with the Company succeeds, whilst the non-associated shareholders will participate in any benefits that may be realised from the alliance with EZCORP.

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Approval of the Proposed Placement will improve Cash Converters’ net asset position and cash reserves Completion of the Proposed Placement will result in a cash injection of approximately $54.109 million into the Company, which will improve the net asset position attributable to Cash Converters’ shareholders by approximately 62 percent to $141.3 million and increase the net asset backing of the Company’s shares from $0.35 to $0.39.

The Proposed Placement may increase the liquidity of Cash Converters’ shares As a result of the strengthening in the Company’s financial position, its increased market capitalisation, the demonstrated support of a strategic investor and growth over time in the Company’s scale, this may result in an increased following by market commentators and investors, which should translate into an increased level of liquidity in the Company’s shares, all other things being equal.

Conversely, given EZCORP’s stated intentions to be a long-term strategic holder in Cash Converters, the likelihood of a takeover bid being received from a third party may be reduced, as any bid would require the acceptance of EZCORP in order to be successful.

Principal disadvantages

EZCORP is not paying a premium to acquire its stake in Cash Converters Based on:

• our assessed fair market value for a Cash Converters share of between $0.69 and $0.76 per share, inclusive of a full premium for control, the closing price for a Cash Converters share on the day prior to the announcement of the Proposed Placement of $0.53 per share and on the day prior to the date of this report of $0.615 per share,

• the proposed issue price under the Proposed Placement of $0.50 per share,

EZCORP is not paying a premium for control.

We have also separately considered the post-transaction assessed fair value of a Cash Converters share, excluding any premium for control, assuming the Proposed Placement is successful, reflecting that shareholders will continue to hold portfolio interests in the Company post the proposed Placement. This analysis implies a range of assessed fair values of between $0.50 and $0.54 for a portfolio shareholding in Cash Converters.

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Table 2: Premium/discount of consideration over historical trading prices Period prior to Cash Converters EZCORP % Premium/discount 18 August 2009 VWAP consideration $ $ 1 month 0.48 0.50 4.2% 3 months 0.46 0.50 8.7% 6 months 0.43 0.50 16.3% 12 months 0.38 0.50 31.6% Source: IRESS and KPMG analysis

In considering this it is important to note that:

• whilst under RG111 we are required to assess the fairness of the transaction assuming it involved the acquisition of a 100 percent interest in Cash Converters, EZCORP is in fact only acquiring a 30 percent interest in the Company and will only be entitled to nominate two directors out of five. Accordingly, EZCORP will not have free and unfettered control over the affairs of the Company. In these circumstances we would not consider it to be commercially appropriate to expect an acquirer to pay a full premium for control

• existing shareholders will be entitled to 70 percent of the expanded capital base of Cash Converters. Accordingly, existing shareholders will participate pro rata in any benefits that may be realised from the acceleration of Cash Converters’ strategic plan as a result of deploying the consideration being received from EZCORP.

Completion of the Proposed Placement will result in a dilution of the existing shareholders’ interests in Cash Converters Approval of the Proposed Placement will result in a dilution of existing Cash Converters shareholders interests in the existing business and net assets of the Company from 100 percent to 70 percent. However, shareholders will also obtain a 70 percent interest in the equity injection made by EZCORP and any benefits that may accrue from the Proposed Placement.

Other key considerations

Cash Converters has been unsuccessful in the recent past in its pursuit of alternative sources of equity Based on the outcome of the Company’s recent equity raising activities, it is unlikely that the Company would be able in the current market to raise equity funding of the size contemplated by the Proposed Placement on terms equal to or more favourable to those being offered. The proposed issue price being paid by EZCORP of $0.50 per new Cash Converters share represents a 25 percent increase to the $0.40 issue price of the placement completed by the Company in July 2009 and is free of costs, however, we note this placement was completed prior to the final results for the year ended 30 June 2009 and the Company’s budgeted result for the year ending 30 June 2010 being made known to the market.

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In this context we also note that we consider having regard to the processes already undertaken that the likelihood of an alternative superior proposal is unlikely.

Management believes that EZCORP would be unwilling to accept less than a 30 percent interest in Cash Converters Management has advised that they have previously explored the option of EZCORP taking an interest in Cash Converters of less than 30 percent, but that this option was not supported by EZCORP. Accordingly it is management’s view that, in the event approval for the Proposed Placement is not secured, there is a strong possibility that EZCORP will withdraw its offer to subscribe for equity entirely.

Whilst shareholders could reject the Proposed Placement in the hope that EZCORP will either accept a lower relevant interest in the Company and/or improve the issue price per share, in our opinion there is a real risk that EZCORP would refuse to do so. Failure by shareholders to approve the Proposed Placement may result in EZCORP reconsidering its willingness to become a shareholder in Cash Converters. Furthermore, given the low level of interest and the disappointing results of the recent equity raising completed by the Company, there is no certainty that an alternative equity participant willing to offer improved terms would be able to be identified. In this regard, we note that no alternative offer has emerged in the period subsequent to the announcement of the Proposed Placement.

The Directors, with the exception of Mr Paul Cowan, have indicated that they intend to recommend approval of the Proposed Placement We are advised that as at the date of this report each of the Directors of Cash Converters, with the exception of Mr Paul Cowan, has recommended acceptance of the Proposed Placement and intends to vote their shares in favour of the Proposed Placement.

Mr Paul Cowan, a non-executive director nominated to the Board by River Capital Pty Ltd (River Capital), one of the Company’s shareholders, has advised the Board that he believes the terms of the Proposed Placement to be unfair as it will provide EZCORP with a controlling interest in the Company without any control premium being paid, and will lessen the prospect of shareholders receiving a takeover premium in the future.

Given the Subscription Agreement provides there shall be no more than five directors upon completion of the Proposed Placement, Mr Cowan has also advised the Board that subject to the successful completion of the Proposed Placement on the terms provided herein by no later than 15 November 2009, that he will resign as a director of the Company.

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not hold a relevant interest in the shares held by River Capital, Mr Cowan has advised that he is unaware, as at the date of this report, as to how River Capital intends to vote in relation to the resolution.

Our opinion is based solely on information available as at the date of this report as set out in Appendix 2. We note that we have not undertaken to update our report for events or circumstances arising after the date of this report other than those of a material nature which would impact upon our opinion. We refer readers to the limitations and reliance on information section as set out in Section 6.3 of our attached report.

The Company considers it has good prospects in the absence of the Proposed Placement In the event the Proposed Placement is not approved, management has indicated that the Company will still remain listed on ASX and LSE and the Company will continue to pursue its policy of store acquisitions and the growth of the Safrock loan book.

The pace of growth will depend upon available capital and will likely require the raising of additional equity capital from the market in the future. Having regard to current market conditions and the current stage of Cash Converters’ acquisition programme there is a real prospect that equity raisings will be required to be conducted more regularly, for lower amounts and at higher cost than contemplated under the Proposed Placement. In addition, this is also likely to require increased management time.

4 Other matters

In forming our opinion, we have considered the interests of the non-associated shareholders as a whole. This advice therefore does not consider the financial situation, objectives or needs of individual shareholders in Cash Converters. It is not practical or possible to assess the implications of the Proposed Placement on individual shareholders as we do not know their specific financial circumstances.

KPMG’s opinion should not be construed to represent a recommendation as to whether or not Cash Converters’ non-associated shareholders should approve the Proposed Placement. The decision of the non-associated shareholders as to whether or not to approve the Proposed Placement is a matter for individuals based on, amongst other things, their risk profile, liquidity preference, investment strategy and tax position. Individual shareholders should therefore consider the appropriateness of our opinion to their specific circumstances before acting on it.

As an individual’s decision to vote for or against the proposed resolutions may be influenced by his or her particular circumstances, we recommend that individual shareholders consult their financial and/or taxation adviser.

Our report has also been prepared in accordance with the relevant provisions of the Act and other applicable Australian regulatory requirements. We recommend residents of foreign jurisdictions who are entitled to receive this report and who are uncertain as to the consequences of this, seek their own independent professional advice.

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This report has been prepared solely for the purpose of assisting the non-associated shareholders in considering the Proposed Placement. We do not assume any responsibility or liability to any other party as a result of reliance on this report for any other purpose.

Neither the whole nor any part of this report or its attachments or any reference thereto may be included in or attached to any document, other than the Explanatory Statement to be sent to Cash Converters’ non- associated shareholders in relation to the Proposed Placement, without the prior written consent of KPMG as to the form and context in which it appears.

The foregoing is a summary of KPMG’s opinion as to the merits or otherwise of the Proposed Placement and should be considered in conjunction with and not independently of the information set out in the balance of our report and appendices as attached.

Yours faithfully

Jason Hughes Ian Jedlin Executive Director Executive Director

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Contents

Financial services guide 13

5 Outline of the Proposed Placement 15

6 Scope of the report 16

7 Industry sector outlook 18

8 Profile of Cash Converters 19

9 Profile of EZCORP 38

10 Valuation of Cash Converters 46

11 Impact of the Proposed Placement 62

12 Assessment of the Proposed Placement 66

Appendix 1 - KPMG disclosures 74

Appendix 2 - Sources of information 76

Appendix 3 - Profile of second hand goods industry 78

Appendix 4 - Profile of short-term lending industry 81

Appendix 5 - Description of companies selected for comparison 86

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Financial services guide Dated 16 September 2009 KPMG Corporate Finance (Aust) Pty Ltd ABN 43 007 363 215 (KPMG or we or us or our as appropriate) has been engaged to issue general financial product advice in the form of a report to be provided to you. Financial Services Guide In the above circumstances we are required to issue to you, as a retail client, a Financial services guide (FSG). This FSG is designed to help retail clients make a decision as to their use of the general financial product advice and to ensure that we comply with our obligations as financial services licensees. This FSG includes information about: • Who we are and how we can be contacted • The services we are authorised to provide under our Australian Financial Services Licence, Licence No: 246901 • Remuneration that we and/or our staff and any associates receive in connection with the general financial product advice • Any relevant associations or relationships we have • Our complaints handling procedures and how you may access them. Financial services we are licensed to provide We hold an Australian Financial Services Licence, which authorises us to provide financial product advice in relation to: • Interests in managed investments schemes (excluding investor directed portfolio services) • Securities (such as shares and debentures). We provide financial product advice by virtue of an engagement to issue a report in connection with a financial product of another person. Our report will include a description of the circumstances of our engagement and identify the person who has engaged us. You will not have engaged us directly but will be provided with a copy of the report as a retail client because of your connection to the matters in respect of which we have been engaged to report. Any report we provide is provided on our own behalf as a financial services licensee authorised to provide the financial product advice contained in the report. General Financial Product Advice In our report we provide general financial product advice, not personal financial product advice, because it has been prepared without taking into account your personal objectives, financial situation or needs. You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on the advice. Where the advice relates to the acquisition or possible acquisition of a financial product, you should also obtain a product disclosure statement relating to the product and consider that statement before making any decision about whether to acquire the product.

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5 Outline of the Proposed Placement

On 18 August 2009, Cash Converters announced that it had entered into a Subscription Agreement with EZCORP pursuant to which EZCORP has agreed to subscribe, in cash, for an equity issue of 108.218 million new fully paid ordinary shares in the Company at an issue price of $0.50 per share, to raise $54.109 million.

Cash Converters had indicated that the proceeds from the Proposed Placement will be used principally to accelerate the purchase of Cash Converters stores from existing franchisees and to increase the size of the Company’s loan book.

5.1 Conditions Precedent

The Proposed Placement is subject to the satisfaction of several conditions precedent, including:

• EZCORP being satisfied with its due diligence investigations in relation to the Company

• there being no material adverse change in relation to the Company

• there being no material breach of warranties given by the Company under the Subscription Agreement

• all required authorisations and approvals being obtained and all regulatory waiting periods imposed either expiring or being terminated.

5.2 Board of Directors

The Subscription Agreement provides that upon completion of the Proposed Placement, there shall be no more than five directors of the Company. EZCORP shall have the right, so long as it holds at least 20 percent of the issued capital of Cash Converters, to appoint and maintain in office two nominee directors (including the right to remove any director so appointed and, upon their removal, to appoint a replacement in such director’s place).

If, notwithstanding the above, the number of the Company’s directors increases to more than five, then EZCORP has the right under the Subscription Agreement to appoint such number of additional nominee directors as is necessary to maintain its proportional representation on the Board.

The Subscription Agreement also provides that if the position of Chairman of the Board becomes vacant at any time after completion of the Proposed Placement, provided that EZCORP holds at least 20 percent of the issued share capital of Cash Converters, the position of Chairman of the Board will be offered to one of EZCORP’s nominee directors.

As set out in the Explanatory Statement it is proposed that Mr William Love and Mr Joseph Beal will be appointed as EZCORP’s nominees to the Board of the Company. Given the Subscription Agreement provides there shall be five directors of the Company on completion of the Proposed Placement, Mr Paul Cowan has advised the Board of the Company that subject to the successful completion of the Proposed Placement on the terms provided in the Subscription Agreement by no later 15 November 2009, that he will resign from the current Board.

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6 Scope of the report

This report has been prepared by KPMG for inclusion in the Explanatory Statement to accompany the Notice of Meeting to be sent to the non-associated shareholders convening a meeting in or around October 2009. The purpose of the meeting will be to seek approval for the Proposed Placement by the non-associated shareholders.

6.1 Purpose

Section 606 of the Act provides a general prohibition to any person who is entitled to 20 percent or less of the voting capital in a company from increasing their relevant interest to greater than 20 percent. Item 7 of section 611 provides an exemption to this general prohibition if, in general meeting, a majority of the non-associated shareholders pass an ordinary resolution approving the transaction.

Although EZCORP does not currently hold an interest in the voting capital of Cash Converters, it will, pursuant to the terms of the Proposed Placement, obtain a 30 percent interest in the expanded issued capital of the Company if the Proposed Placement is approved. Accordingly, the directors of Cash Converters are seeking the approval of the non-associated shareholders pursuant to item 7 of section 611 of the Act for the Proposed Placement to proceed.

ASX Listing Rule 7.1 provides that subject to certain exceptions, a company must not without the prior approval of its shareholders, issue equity securities during any 12 month period if the number of those securities exceeds 15 percent of the total ordinary securities on issue at the commencement of that 12 month period. Although the Proposed Placement exceeds the limits prescribed by ASX Listing Rule 7.1, if approval is given by the non-associated shareholders for the purposes of item 7 of section 611 of the Act, we are advised that the Proposed Placement will fall within Exception 16 in ASX Listing Rule 7.2, such that approval under ASX Listing Rule 7.1 is not required.

Whilst in the current circumstances there is no legal requirement for an IER to be prepared under section 611, in order to ensure that the non-associated shareholders are provided sufficient information upon which to assess the merits or otherwise of the Proposed Placement, the directors of Cash Converters have commissioned KPMG to prepare an independent expert report assessing the fairness and reasonableness of the Proposed Placement.

RG 111 states that in considering whether a transaction is fair and reasonable for the purpose of item 7 of section 611, the expert should analyse the transaction as though it was a takeover bid under Chapter 6 of the Act where the effect on the company’s shareholding is comparable to a takeover bid.

In this regard, RG 111 requires the expert, in forming their assessment as to whether a transaction is fair and reasonable, to analyse each criteria individually and not as a compound phrase (paragraph 9).

In this context, RG 111 provides that:

• an offer is ‘fair’ if the value of the consideration being offered is equal to or greater than the value of the securities the subject of the offer (paragraph 10)

• an offer is ‘reasonable’ if it is ‘fair’ (paragraph 11)

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• an offer may be ‘reasonable’ if, despite not being fair, but after considering other significant factors, shareholders should accept the offer in the absence of any higher bid before the close of the offer (paragraph 11).

RG 111.10 provides that in assessing fairness for the purpose of section 611, the expert is required to compare the value of the consideration to be provided against the securities the subject of the offer, assuming 100 percent ownership of the target. In other words, we are required to assess the value of Cash Converters assuming EZCORP is acquiring 100 percent of the issued capital of the Company, notwithstanding it will in fact only acquire a 30 percent interest in Cash Converters.

6.2 Basis of assessment

In forming our opinion on the Proposed Placement we have had regard to the following factors:

• comparing the assessed value of a Cash Converters share on a 100 percent control basis with the consideration under the Proposed Placement

• historical trading prices and liquidity of Cash Converters’ shares on ASX and LSE

• the interest in Cash Converters being acquired, other control related issues and any conditions associated with the Proposed Placement

• the intended use of the funds that may be raised from the Proposed Placement

• the likelihood of an alternative offer emerging having regard to the Company’s recent experience in raising capital

• the consequences if the Proposed Placement is not successful

• other advantages and disadvantages that may impact the non-associated shareholders.

Further, RG 111.23 notes that an issue of shares for cash may have other benefits that should be considered in determining whether the transaction is reasonable including:

• the provision of new capital to exploit business opportunities

• a reduction in debt and interest payments

• a needed injection of working capital.

6.3 Limitations and reliance on information

In preparing this report and arriving at our opinion, we have considered the information detailed in Appendix 2 of this report. Nothing in this report should be taken to imply that KPMG has verified any information supplied to us, or has in any way carried out an audit of the books of account or other records of Cash Converters for the purposes of this report.

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Further, we note that an important part of the information base used in forming our opinion is comprised of the opinions and judgements of management. In addition, we have also had discussions with management in relation to the nature of the Company’s business operations, its specific risks and opportunities, its historical results and its prospects for the foreseeable future. This type of information has been evaluated through analysis, enquiry and review to the extent practical. However, such information is often not capable of external verification or validation. However, it is our view that all material information that we have relied upon in forming our opinion is reasonable for that purpose.

We have no reason to believe that any material facts have been withheld from us but do not warrant that our inquiries have revealed all of the matters which an audit or extensive examination might disclose. The statements and opinions included in this report are given in good faith, and in the belief that such statements and opinions are not false or misleading.

The information provided to KPMG included prospective/budgeted financial information prepared by the management of Cash Converters. Whilst KPMG have relied upon this prospective/budgeted information in preparing this report, Cash Converters remains responsible for all aspects of this prospective/budgeted information. Achievement of prospective/budgeted results is not warranted or guaranteed by KPMG. Prospective/budgeted results are by their nature uncertain and are dependent on a number of future events that cannot be guaranteed. Actual results may vary significantly from the prospective/budgeted results relied on by KPMG. Any variations from prospective/budgeted results may affect our valuation and opinion.

The opinion of KPMG is based on prevailing market, economic and other conditions at the date of this report. Conditions can change over relatively short periods of time. Any subsequent changes in these conditions could impact upon our opinion. We note that we have not undertaken to update our report for events or circumstances arising after the date of this report other than those of a material nature which would impact upon our opinion.

6.4 Disclosure of information

In preparing this report, KPMG has had access to all financial information considered necessary in order to provide the required opinion. Cash Converters has requested KPMG limit the disclosure of some commercially sensitive information relating to Cash Converters and its subsidiaries. This request has been made on the basis of the commercially sensitive and confidential nature of the operational and financial information. As such, the information in this report has been limited to the type of information that is regularly placed in the public domain.

7 Industry sector outlook

In forming our opinion regarding the Proposed Placement, we have had regard to the general economic and industry conditions affecting Cash Converters. Set out in the appendices to this report are brief profiles of:

• the retail second hand goods industry

• the short-term lending industry.

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8 Profile of Cash Converters

8.1 Corporate background

The first Cash Converters second hand retail store was opened in November 1984 by founder Mr Brian Cumins. The chain expanded to seven stores over the next four years before commencing the establishment of a franchise network, with two franchised stores opened in Perth in June 1988. Expansion into other Australian states began in 1990. The Company entered the UK market in 1991 and later expanded elsewhere in Europe and internationally.

Cash Converters was incorporated in Western Australia on 21 April 1995. On 30 November 1995, the Company was listed on the main board of the LSE. Cash Converters was admitted to the Official List of ASX on 12 February 1997. Today, Cash Converters and its franchisees operate a network of close to 500 stores in Australia, the UK, Europe and South-East Asia, however, the Company generates almost all of its revenues from the 272 corporate and franchised stores located in Australia and the UK. Cash Converters also offers certain financial services including pawn broking and the provision of short-term loans and cash advances.

For the year ending 30 June 2009, approximately 49 percent of Cash Converters’ operating revenue was generated by corporate store revenue, with the balance split between personal loan interest and establishment fees (22 percent), cash advance commission and other fees (13 percent) and other operating revenues (16 percent). In comparison in the year ended 30 June 2008, only approximately 27 percent of Cash Converters’ operating revenue was comprised of corporate store revenue. This shift in revenue profile reflects the Company’s recent strategy of acquiring existing franchised stores from franchisees and the development of new stores in under represented territories.

8.2 Corporate structure

The corporate structure of Cash Converters is set out below. Figure 1: Cash Converters' corporate structure

Cash Converters

100% 100% 59% 100% 100% 100% 100%

Cash Converters Cash Converters Pty Safrock Finance Cash Converters CCUK Holdings Plc CCUSA Limited MON-E Pty Ltd (Cash Advance) Pty Ltd Group Ltd (Stores) Pty Ltd Ltd

100% 26% 100%

Cash Converters CCUK Ltd Finance Corporation CCUSA Inc Ltd

Source: Cash Converters’ management

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8.3 Business Operations

Cash Converters’ operations are predominately located within Australia and the UK, with revenues from these two countries representing over 99 percent of Cash Converters’ total consolidated revenue. Based on Cash Converters’ management reporting system, the consolidated entity comprises the following main business segments:

• Store operations (comprising Cash Converters Pty Ltd, Cash Converters (Stores) Pty Ltd, Cash Converters (Cash Advance) Pty Ltd, CCUK Ltd and CCUSA Inc)

• Financing (comprising MON-E Pty Ltd (MPL), Safrock Finance Group Ltd (Safrock) and Cash Converters Finance Corporation Ltd (CCFCL)).

We note that two of the Company’s subsidiaries, CCUK Holdings Plc and CCUSA Ltd, are holding companies that conduct no operations.

Store operations Cash Converters’ Store operations business segment involves:

• the sale of franchises for the retail sale of second hand goods

• the sale of master licences for the development of franchises in countries around the world

• the Company’s corporate stores in Australia and the UK

• an online Cash Converters “Webshop”.

Franchising of retail stores One of Cash Converters’ business streams is as a franchisor of ‘Cash Converters’ branded second hand goods retail stores. The majority of the Company’s franchisees pay a fixed weekly fee, indexed for inflation, regardless of turnover. The remaining franchisees pay an agreed weekly fee that increases annually on the anniversary date the store opened by a pre-agreed amount. Further revenues are earned through royalty payments by sub-franchisors, franchise renewal fees and support service fees from the franchisee network.

Following its establishment in Australia, the franchise system was chosen by Cash Converters as a way to facilitate international expansion and allow effective management of cultural and commercial differences in various countries. In addition, use of the franchise concept ensures strong management commitment from the franchisee. The franchisee is granted the right to use the ‘Cash Converters’ trademark and business systems.

Cash Converters is the international master franchisor. Licenses for the franchise rights of a country are sold to a sub-franchisor who is responsible for developing each country and selling franchises to individual franchisees.

Corporate stores Corporate stores are those stores owned by Cash Converters. Cash Converters’ current operational focus is to grow its number of corporate stores through the acquisition of existing franchised stores from franchisees and

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the opening of new stores in the UK and Australia. Cash Converters believes that acquisitions of franchised stores and the development of new stores in under represented territories presents a significant opportunity for the Company to grow both its revenue and earnings in the future.

During the year ended 30 June 2009 Cash Converters purchased 15 formerly franchised stores, with eight stores acquired in Australia and seven stores acquired in the UK, for total consideration of approximately $12.0 million. Additionally, Cash Converters opened a new corporate store in the UK during the year ended 30 June 2009

Cash Converters funded the above acquisitions and new store opening through a combination of borrowings and available cash resources. The Company believes the addition of these stores to the existing corporate store network in the UK and Australia:

• enables it to respond more nimbly to changes in market conditions and legislative changes

• enhance the distribution of its micro-lending products

• creates economies of scale and efficiencies

• may progress the Cash Converters’ online auction site, as the Company’s corporate stores are dedicated to the development of the e-commerce website.

As at 26 August 2009, Cash Converters owned 21 stores in the UK and 17 stores in Australia. We note that Cash Converters’ eight-store network in Victoria, together with its existing management team, forms the core of Cash Converters’ Australian corporate store network.

Online Cash Converters “Webshop” Cash Converters has recently developed an online Cash Converters “Webshop” in the UK and Australia, where customers can acquire a selection of in-store merchandise listed by participating retail stores. Since its inception, sales in the UK have exceeded Great British Pound (GBP) 0.5 million and 50 UK stores now trade through this site. In Australia progress in growing the Cash Converters “Webshop” has been slower, principally due to the delayed take-up of the new online system by franchisees.

Financing Cash Converters’ Financing business segment was originally established to provide loans to existing franchisees within Australia, for the development of their businesses. From October 2006, this business segment was substantially expanded with the acquisition of MPL and Safrock.

MPL MPL provides the MON-E internet software platform and related support services to Cash Converters’ franchised and corporate stores (together Cash Converters’ outlets) in Australia (except for South Australia), which enables the facilitation of cash advances and short-term loans to customers. MPL generates the vast majority of its ordinary revenue through providing MON-E internet software and support services to Cash Converters’ outlets.

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Initially, the principal area of trade for Cash Converters’ outlets was the buying and selling of second-hand goods, and providing loans against goods offered as security. However, with the introduction of the MON-E system in August 1999, there was a change in focus to include the cash advance business as a major part of Cash Converters’ strategic direction.

Under MPL’s business model, MPL supplies the tools and support services for Cash Converters’ outlets to conduct a short-term lending business, with the actual lender of the money being the Cash Converters’ outlets and not MPL. The characteristics of the short-term loans are:

• the loans are usually repaid within four weeks

• the loans are essentially unsecured, with the customer’s regular income being the asset that is measured

• a loan range of $50 to $1,000 is available to suitably qualified customers

• as at 30 June 2009, the average loan amount was approximately $282

• the fee the lender charges for a cash advance is 35 percent of the principal loaned. This fee is not time based and compensates the lender for the high risk and unsecured nature of the loan.

The characteristics of the MON-E system itself are:

• operators receive training in risk assessment to enable them to evaluate each borrower and the software requires the operator to enter customer identification, proof of address and proof of income information

• the system recommends a maximum loan limit (approximately 15 percent of the customer’s one-month take home pay) based on the payslip information entered. The operator does have some flexibility with regard to this limit

• after the customer’s repayment schedule has been input, the system arranges for direct debits to occur to the customer’s bank account at agreed dates (as per signed agreements between the customer and the Cash Converters’ outlet).

Services MPL offers Cash Converters’ outlets as part of the MON-E system are:

• help desk support

• training, follow up audits and support

• infrastructure and platform support

• ongoing legal compliance checking

• Australia wide infrastructure to ensure that customers can be serviced at any Cash Converters’ outlet in Australia that has the MON-E system. This customer portability allows for loans and payment transactions to be carried out at any participating location with real-time data updates.

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Up until December 2008, MPL charged a flat fee equal to 28 percent of the standard customer fee collected by the lender. For a short-term loan against which the lender charged the 35 percent customer fee (which is not time based), this equated to 9.8 percent of every dollar loaned and subsequently collected. However, in December 2008 MPL renegotiated with lenders the licence fees it charges, such that MPL now charges all stores fees on a sliding scale which enables the franchisees to enjoy reduced fees as they increase their volume of lending.

In Queensland, New South Wales (NSW) and the Australian Capital Territory (ACT), the relevant State Governments have introduced a 48 percent per annum cap on all consumer credit loans, inclusive of fees and charges (refer to Appendix 4 for further details). In these territories, store franchisees have been licensed by Cash Converters to act as finance brokers for various lenders and MPL provides a software support system to the lenders and the franchisees. The franchisees pay licence fees to Cash Converters and receive brokerage fees from borrowers.

In South Australia and the Northern Territory, Cash Converters has granted a licence to Quickdraw Financial Solutions Pty Ltd (Quickdraw), which is owned by South Australian Cash Converters franchisees, to provide to the franchisees in those territories the services which MPL provides elsewhere and Quickdraw pays Cash Converters a royalty for this licence.

Cash Converters has advised that as from 1 July 2009, the operations of MPL have been transferred from Perth to the offices of Safrock in Queensland to achieve cost savings.

Safrock Safrock specialises in the provision of secured and unsecured personal loans and operates its business from Australian Cash Converters’ outlets located throughout Australia. The current legislative environment in relation to short-term loans in Queensland, NSW and the ACT reduces Safrock’s economic returns in these States, where a 48 percent per annum cap on fees, interest and charges applies.

Using Cash Converters’ outlets as its agents, Safrock provides personal loans to Cash Converters’ outlets’ customers. Safrock’s business model is to deliver fast, easy and short-term personal loans that mainstream lending institutions do not service.

Safrock presently markets two products, being:

• unsecured loans of $1,000 to $2,000

• secured loans from $2,000 to $5,000.

Unsecured loans usually have a term of between four to nine months, secured loans usually have a term of one to two years. Safrock has advised that unsecured loans account for approximately 95 percent of its loans (in terms of numbers) due to the lack of competition in this area. GE Finance Australasia Pty Ltd and banks offer secured loans at lower rates and thus are more competitive in this market niche.

Safrock derives income from the interest it charges on loans, which varies from State to State due to different legislative requirements, and an establishment fee for each new loan granted and each existing loan refinanced. In Queensland, NSW and the ACT a brokerage arrangement/system operates, which is similar to the one managed by MPL, except with Safrock the lender is Cash Converters (and not a related party set up by the

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franchisee/broker). Costs consist of commissions paid to franchisees for each successful or refinanced loan and commissions paid to an external entity responsible for promoting the loans and providing in-store staff training.

CCFCL CCFCL provides working capital loans to the Australian franchise network. The average loan is for $150,000, with an interest rate of 12 percent per annum, and the loan is secured against the assets of the franchised store.

8.4 Financial performance

Cash Converters’ audited consolidated financial results for the two years ended 30 June 2007 and 2008, unaudited consolidated financial result for the year ended 30 June 2009 and budgeted consolidated financial result for the year ending 30 June 2010 are set out below.

Table 3: Summary of Cash Converters' historical and budgeted financial performance Audited Audited Unaudited Budgeted Year ended Year ended Year ended Year ending 30 June 2007 30 June 2008 30 June 2009 30 June 20108 $000 $000 $000 $000 Total operating revenue 45,980 74,406 94,398 115,960 Employee benefits expense (7,291) (13,011) (19,711) (20,930) Changes in inventories (7,630) (16,745) (23,972) (32,097) Agents fees and commissions (3,544) (5,710) (4,942) (5,455) Other expenses (10,613) (16,150) (20,643) (28,495) EBITDA1 16,902 22,790 25,130 28,983 Depreciation and amortisation (770) (882) (1,162) (1,412) EBIT2 16,132 21,908 23,968 27,571 Net finance revenue/(expense) 578 (309) (660) (1,343) Operating profit before income tax 16,710 21,599 23,308 26,228 Income tax expense (5,079) (6,424) (7,153) (8,133) NPAT3 11,631 15,175 16,155 18,095 Revenue growth - % 103.2 61.8 26.9 22.8 EBITDA margin1 - % 36.8 30.6 26.6 25.0 EBIT margin2 - % 35.1 29.4 25.4 23.8 NPAT margin3 - % 25.3 20.4 17.1 15.6 Interest cover – times4 n/a 73.8 38.1 21.6 Basic earning per share – cents5 5.3 6.3 6.8 7.2 Diluted earnings per share – cents 5.1 6.1 6.7 Closing 30 June share price - $ 0.70 0.23 0.42 Dividend payout ratio6 - % 47.2 47.6 44.3 Dividend yield7 - % 3.6 13.0 7.1 Amount of dividend franked - % 100.0 100.0 100.00 Notes: 1 EBITDA means Earnings Before Interest, Tax, Depreciation and Amortisation. EBITDA margin is calculated as EBITDA divided by total operating revenue. 2 EBIT means Earning Before Interest and Tax. EBIT margin is calculated as EBIT divided by total operating revenue.

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Table 3: Summary of Cash Converters' historical and budgeted financial performance (continued) 3 NPAT means Net Profit After Tax. NPAT margin is calculated as NPAT divided by total operating revenue. 4 Interest cover is calculated as EBITDA divided by net financing expense. 5 Basic earning per share for the budgeted year ending 30 June 2010 is based on budgeted NPAT and the number of shares on issue as at 26 August 2009. 6 Dividend payout ratio is calculated as dividend per share divided by basic earning per share. 7 The dividend yield has been calculated using the closing share price as at the end of the financial period. 8 The 2010 Budget has been prepared on the basis that the Proposed Placement is not completed.

Source: Cash Converters’ 2008 Annual Report, Appendix 4E for the year ended 30 June 2009 and 2010 Budget

In relation to Cash Converters’ historical and budgeted financial performance we note other expenses for the year ended 30 June 2009, included, inter alia, bad debts of approximately $4.8 million, operating lease expenses of approximately $3.9 million, bank charges of approximately $0.8 million and motor vehicle and travel costs of approximately $1.1 million.

We also note that the budgeted results set out above and the analysis of the Company’s business segments below do not include any benefit from the Proposed Placement.

Store operations Cash Converters’ Store operations business segment financial results for the three years ended 30 June 2007, 2008 and 2009 and budgeted financial result for the year ending 30 June 2010 are summarised below.

Table 4: Store operations’ historical and budgeted financial performance Audited Audited Unaudited Budgeted Year ended Year ended Year ended Year ending 30 June 2007 30 June 2008 30 June 2009 30 June 2010 $000 $000 $000 $000 Operating revenue 23,368 43,912 65,559 82,492 Operating revenue growth 24.3% 87.9% 49.3% 25.8% Operating expenses (20,414) (38,413) (56,507) (72,801) EBITDA 2,954 5,499 9,052 9,691 EBITDA margin1 12.6% 12.5% 13.8% 11.7% Depreciation and amortisation (645) (745) (1,023) (1,303) EBIT 2,309 4,754 8,029 8,388 Net interest revenue/(expense) 512 (455) (844) (1,367) Operating profit before income tax 2,821 4,299 7,185 7,021 Income tax expense (858) (1,286) (2,206) (2,179) NPAT 1,963 3,013 4,979 4,842

Source: Cash Converters’ management

In relation to Store operations’ historical and budgeted financial performance we note:

• The significant revenue growth for the 2008, 2009 and 2010 financial years is due to Cash Converters’ strategy of acquiring previously franchised stores and opening new stores.

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• Operating expenses are expected to generally increase in accordance with Store operations’ growth in operating revenue.

• Management has advised that the slight increase in Store operations’ EBITDA margin for 2009 is partly due to currency fluctuations of the Australian dollar against the GBP, resulting in an increase in the Australian dollar value of GBP denominated franchise fees. In 2010, Cash Converters has budgeted for the Australian dollar to appreciate against the GBP.

• The increase in interest expense in 2009 and budgeted 2010 is consistent with the Company borrowing funds to acquire previously franchised stores in these years.

The historical and budgeted breakdown of Store operations’ operating revenue are summarised below.

Table 5: Store operations’ historical and budgeted operating revenue Audited Audited Unaudited Budgeted Year ended Year ended Year ended Year ending 30 June 2007 30 June 2009 30 June 2009 30 June 2010 $000 $000 $000 $000 Weekly franchise fees 7,637 7,598 7,651 7,566 Retail wholesale sales 5,435 6,676 5,309 4,351 Cheque cashing commission 1,324 1,146 1,081 986 Corporate store revenue 4,077 23,623 46,497 64,917 Computer levy 1,505 1,412 1,614 1,437 Financial services commission 487 602 699 460 Other revenue 2,903 2,855 2,708 2,775 Total operating revenue 23,368 43,912 65,559 82,492 Corporate stores as at 30 June 6 21 37 42 Average revenue per corporate store – ($000)1 1,687 1,603 1,623 Notes: 1 Calculated as corporate store revenue divided by average number of corporate stores for the year.

Source: Cash Converters’ management

The most significant trend in Store operations’ revenue has been growth in corporate store revenue. This growth is largely attributable to Cash Converters’ strategy of acquiring formerly franchised stores and opening new stores. Over the two years ended 30 June 2009, Cash Converters acquired 28 formerly franchised stores and opened three new stores. In the absence of the Proposed Placement, Cash Converters’ expects to acquire/open a further five stores in the period to 30 June 2010.

Cash Converters’ has advised that despite its continuing acquisition programme of previously franchised stores, the consequential fall in franchise fees has been mitigated by:

• the Company continuing to open new franchised stores

• certain UK stores not previously paying fees (due to fee advantages given to them in the initial years of the franchise agreement), now being required to pay fees

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• franchise fees increasing in line with inflation.

Financing operations Cash Converters’ Financing business segment financial results for the three years ended 30 June 2007, 2008 and 2009 and budgeted financial result for the year ending 30 June 2010 are summarised below.

Table 6: Financing operations’ historical and budgeted financial performance Audited Audited Unaudited Budgeted Year ended Year ended Year ended Year ending 30 June 2007 30 June 2008 30 June 2009 30 June 2010 $000 $000 $000 $000 Operating revenue 22,612 30,494 28,839 33,468 Operating revenue growth 491.4% 34.9% -5.4% 16.1% Operating expenses (8,664) (13,203) (12,761) (14,176) EBITDA 13,948 17,291 16,078 19,292 EBITDA margin 61.7% 56.7% 55.8% 57.6% Depreciation and amortisation (125) (137) (139) (109) EBIT 13,823 17,154 15,939 19,183 Net interest revenue 66 146 184 24 Operating profit before income tax 13,889 17,300 16,123 19,207 Income tax expense (4,221) (5,138) (4,947) (5,954) NPAT 9,668 12,162 11,176 13,253

Source: Cash Converters’ management

In relation to Financing’s historical and budgeted financial performance we note:

• Operating revenue increased significantly in the 2008 financial year as it included the first full year of revenues for MPL and Safrock.

• EBITDA margin declined in 2009 partly due to the reduced fees MPL now receives from lenders following the renegotiation of the service provider agreement in December 2008. Revenues are expected to increase in 2010 reflecting the budgeted continued expansion of Safrock’s loan book, whilst EBITDA margin is budgeted to slightly increase in 2010 partly due to the savings the Company expects to generate from the transfer of the operations of MPL to the Queensland offices of Safrock.

• During the 2009 financial year, 14 stores in Queensland adopted an alternative software package for cash advances, in breach of their franchise agreements, for approximately eight months of the year. Cash Converters has advised this adversely impacted NPAT. The 14 Queensland stores are now again utilising MPL’s software package in accordance with their franchise agreements, following resolution of the dispute by an independent arbitrator.

• Cash Converters has advised that it believes the National Consumer Credit Protection Bill (the Bill), introduced into Federal Parliament in June 2009, will not have a material impact on Financing’s budgeted results for 2010. The major requirement of the Bill is to ensure that loan providers are licensed, practice responsible lending and properly train and supervise people who act on their behalf. Cash Converters has advised it already has systems in place to satisfy most of the requirements of the Bill. Assuming the Bill is

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passed into law with no changes to timelines, the new legislation will be effective from 1 January 2010 (with a 12-month transition period for some elements).

• We note that the Australian Federal Government is also planning a second phase of legislation for the national regulation of consumer credit. It is not certain what will be included in this legislation, although the Federal Government has stated it will examine State and Territory approaches to interest rate caps. Given the phase two legislation is not expected to be in place until after mid-2010, there is expected to be no impact on Financing’s 2010 budgeted results.

The historical and budgeted breakdown of Financing’s operating revenue are summarised below.

Table 7: Financing operations’ historical and budgeted operating revenue Audited Audited Unaudited Budgeted Year ended Year ended Year ended Year ending 30 June 2007 30 June 2008 30 June 2009 30 June 2010 $000 $000 $000 $000 Personal loan interest and establishment fees earned by Safrock 12,240 19,368 20,620 25,805 Cash advance commission and other fees earned by MPL 9,989 10,780 7,932 7,471 Other operational revenue1 383 346 287 192 Total operating revenue 22,612 30,494 28,839 33,468 Average Safrock loan book during the year2 13,492 16,020 22,4883 Revenue per average Safrock loan book dollar ($)3 1.44 1.29 1.15 NPAT per average Safrock loan book ($) 0.90 0.70 0.59 Notes: 1 Comprises interest received by CCFCL on working capital loans and customer default fees received by Safrock. 2 Calculated as the average of Safrock’s loan book at the end of each month. 3 Calculated as personal loan interest and establishment fees divided by average Safrock loan book during the year. 4 Calculated as Financing’s NPAT divided by average Safrock loan book during the year.

Source: Cash Converters’ management

Cash Converters has advised that the 26 percent decrease in MPL revenue to approximately $7.9 million in 2009 was due to:

• the decrease in fees the Company negotiated with lenders in December 2008

• 14 stores in Queensland adopting an alternative software package for cash advances for approximately eight months of the year, resulting in no fees from those stores during this time.

For 2010, Cash Converters has advised MPL’s budgeted revenue will be positively impacted by the 14 Queensland stores agreeing to again utilise MPL’s software package, but will be negatively impacted by the decreased fee structure with lenders being in place for the entire year.

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We note Safrock’s revenue is budgeted to increase by approximately 25 percent in 2010 reflecting:

• stores being incentivised to promote the product more strongly, as Cash Converters now pays the stores an upfront commission for arranging the loan (rather than over the life of the loan as was previously the case)

• Cash Converters increasing its focus and marketing spend on promoting the product.

Cash Converters expects a slight decrease in cash advance commission and other fees from MPL in 2010 due to the full year impact of the sliding fee scale the Company has recently negotiated with lenders to promote increased volumes.

8.5 Financial position

Cash Converters’ historical audited consolidated net assets as at 30 June 2007 and 2008 and historical unaudited consolidated net assets as at 30 June 2009 are set out below. Table 8: Summary of Cash Converters' consolidated financial position Audited Audited Unaudited 30 June 2007 30 June 2008 30 June 2009 $000 $000 $000 Cash assets 14,750 16,322 7,003 Receivables 16,350 19,442 31,752 Inventories 772 3,307 6,959 Prepayments 50 282 853 Total current assets 31,922 39,353 46,567 Receivables 1,934 1,950 1,369 Plant and equipment 1,313 2,580 4,633 Goodwill and intangibles 43,975 53,527 60,347 Deferred tax assets 1,589 1,851 1,867 Total non-current assets 48,811 59,908 68,216 Total assets 80,733 99,261 114,783 Payables 4,474 6,743 8,367 Interest bearing liabilities 1,049 4,539 3,942 Current tax liabilities 3,810 2,748 3,298 Deferred establishment fees 1,306 1,399 1,311 Provisions 454 823 1,128 Total current liabilities 11,093 16,252 18,046 Interest bearing liabilities 530 7,690 12,978 Deferred tax liabilities 1,153 1,273 1,269 Total non-current liabilities 1,683 8,963 14,247 Total liabilities 12,776 25,215 32,293 Net assets 67,957 74,046 82,490 Shares on issue (000s) 240,312 238,6864 240,010 Net assets per share (cents) 28.3 31.0 34.4 Net tangible assets per share1 (cents) 10.0 8.6 9.2

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Table 8: Summary of Cash Converters' consolidated financial position (continued) Audited Audited Unaudited 30 June 2007 30 June 2008 30 June 2009 $000 $000 $000 Gearing2 – times n/a n/a 0.12 Total tangible assets3/ Total liabilities – times 2.9 1.8 1.7 Notes: 1 Net tangible assets is net assets less goodwill and intangibles. 2 Gearing is net borrowings (interest bearing liabilities minus cash assets) divided by net assets. 3 Total tangible assets are total assets less goodwill and intangibles. 4 Reduction in shares on issue reflects the outcome of a share buy back programme undertaken by the Company during the year.

Source: Cash Converters’ 2008 Annual Report and Appendix 4E for the year ended 30 June 2009

We make the following observations in relation to Cash Converters’ historical financial position:

• Gearing has increased (with cash assets decreasing and interest bearing liabilities increasing) since 30 June 2007 partly due to:

- the acquisition of Safrock and MPL in 2006

- the acquisition of previously franchised stores in Australia and the UK

- the growth in the loan book of Safrock to $21.5 million as at 30 June 2009

- the Company’s policy to continue with dividend payments.

• Increases in many account balances (such as receivables, inventories, plant and equipment and payables) since 30 June 2007 is consistent with Cash Converters’ corporate store acquisition strategy. These stores are now owned and operated by Cash Converters.

• The goodwill and intangibles account balance predominantly relates to Cash Converters’ acquisition of MPL, Safrock and previously franchised stores.

• We note that subsequent to 30 June 2009, Cash Converters completed a placement of 12.5 million shares at an issue price of $0.40 each to raise gross proceeds of $5.0 million. After deducting transaction costs of 5.0 percent, the impact of this raising is to increase cash on hand by $4.75 million, with an associated improvement in the Company’s net asset and gearing position.

8.6 Summary of cash flow statements

Cash Converters’ audited consolidated cash flows for the two years ended 30 June 2007 and 2008 and unaudited cash flows for the year ended 30 June 2009 are set out below.

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Table 9: Summary of Cash Converters' cash flow statements Audited Audited Unaudited Year ended Year ended Year ended 30 30 June 2007 30 June 2008 June 2009 $000 $000 $000 Receipts from customers 38,142 66,831 79,373 Payments to suppliers and employees (27,047) (51,320) (70,804) Interest received 7,338 11,264 14,473 Interest and costs of finance paid (163) (945) (1,130) Income tax paid (3,781) (7,209) (6,613) Net operating cash flows 14,489 18,621 15,299 Net cash paid for acquisitions of controlled entities (8,747) (15,786) (11,035) Sale of plant, equipment and inventories - 7 - Purchase of plant and equipment (894) (760) (1,504) Loans repaid by non-related entities 21 29 2 Instalment credit loans repaid by franchisees 201 248 258 Net increase in personal loans (5,202) (2,671) (7,504) Net investing cash flows (14,621) (18,931) (19,783) Dividends paid (5,254) (7,229) (7,180) Repayment of borrowings (400) (2,180) (3,395) Capital element of finance lease payments (111) (136) (182) Proceeds from borrowings - 12,426 7,349 Unsecured deposits repaid (4,435) - - Share issue costs (1,222) - - Issue of shares 18,310 - - Buy-back of shares by controlling entity - (1,246) (355) Redemption of unsecured notes (98) - (217) Issue of unsecured notes by controlled entity 292 67 205 Net financing cash flows 7,082 1,702 (3,775) Net increase/(decrease) in cash 6,950 1,392 (8,259) Cash at the beginning of the period 7,209 14,171 15,285 Exchange rate variations 12 (278) (681) Cash at the end of the period 14,171 15,285 6,345

Source: Cash Converters’ 2008 Annual Report and Cash Converters’ Appendix 4E for the year ended 30 June 2009

In relation to Cash Converters’ consolidated cash flow statements set out above, cash at the end of the period is net of bank overdrafts and includes cash on hand and deposits held at call with banks or financial institutions.

8.7 Taxation Revenue tax losses Cash Converters has advised that it does not have any carry forward revenue tax losses.

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Capital tax losses Cash Converters has advised that it currently has capital tax losses available to it based on its 30 June 2009 tax return of approximately $9.1 million (the benefit of which at 30 percent is $2.7 million), which have not been brought to account. Cash Converters has advised that based on its current corporate strategy it does not expect to be in a position to realise the benefit of these capital losses in the foreseeable future.

8.8 Franking credits

As at 26 August 2009, Cash Converters’ had approximately $14.6 million in franking credits available to the Company which can be utilised in paying future dividends.

8.9 Contingent liabilities

Whilst we have been advised by management that there are no material contingent liabilities outstanding, we note there is a level of contingent liabilities arising from the business activities of the group. In the course of its normal business, the Company occasionally receives claims and writs for damages and other matters arising from its operations.

We also note that Cash Converters’ head entity provides guarantees for some of its wholly owned subsidiaries.

8.10 Contractual obligations and commitments

Management has advised us that it does not have any material contractual obligations and commitments as at 26 August 2009.

8.11 Share capital and ownership

Cash Converters currently has on issue approximately 252.5 million ordinary fully paid shares. Cash Converters’ top ten shareholders as at 26 August 2009 are set out below.

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Table 10: Cash Converters' top ten shareholders as at 26 August 2009 No. ordinary shares % of issued 000s capital HSBC Custody Nominees (Australia) Ltd 19,203 7.6 J P Morgan Nominees Australia Ltd 16,533 6.5 Alli Nominees Pty Ltd 11,976 4.7 Benos Nominees Pty Ltd 10,916 4.3 Hosking Financial Investments Pty Ltd 10,765 4.3 RBC Dexia Investor Services Australia Nominees Pty Ltd 9,073 3.6 Rand Holdings Pty Ltd 6,242 2.5 Australian Executor Trustees Ltd 5,438 2.2 Mrs Heather Janette Hubbard and Mr Russel Leonard Tyrrell 4,164 1.7 Fawngrove Pty Ltd 4,137 1.6 Total number of shares held by the top 10 shareholders 98,447 39.0 Other shareholders 154,063 61.0 Total shareholders 252,5101 100.0 Notes: 1 Includes 12.5 million shares placed by the Company in July 2009 at an issue price of $0.40 each. Source: Cash Converters’ share registry as at 26 August 2009

Substantial shareholders notices have been received by the Company from the parties set out below. Table 11: Substantial shareholders No. ordinary % of issued shares capital 000s River Capital Growth Fund1 17,413 7.3 Rand Holdings Pty Ltd ATF Safrock Finance Unit Trust (Rand)2 14,951 6.2 Notes: 1 The registered holder of these securities is HSBC Custody Nominees (Australia) Ltd 2 The registered holders of these securities are Rand, Fawngrove Pty Ltd (Graziers Family Trust), Create-a- design Pty Ltd (The Hellie Family Trust), Tralar Pty Ltd (The Rainbow Trust), Peter Bernard Wessels Family Trust and Frederick Edward Shaw (Shaw Investment Trust). Source: Substantial shareholder notices lodged with ASX

We note that on 10 December 2008, Cash Converters announced to ASX that it would commence a buy-back of its shares commencing 28 December 2008. The buy-back will be open for a 12-month timeframe, with a maximum number of shares to be purchased of 23.7million. No shares have yet been purchased under this buy- back.

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Set out below is summary of movements in Cash Converters’ ordinary fully paid shares over the last five years. Table 12: Summary of movements in Cash Converters’ ordinary fully paid shares Date Description of capital raising Shares issued/ (repurchased) ‘000 30-Jun-04 Balance 130,160 10-Dec-04 – 15-Mar 05 Ordinary shares issued pursuant to the exercise of unquoted options 16,000 01-Aug-06 Placement of ordinary shares issued at $0.40 per share to fund the acquisition of MPL and Safrock 18,750 25-Sep-06 Placement of ordinary shares issued at $0.40 per share to fund the acquisition of MPL and Safrock and to raise additional working capital 8,276 06-Oct-06 Placement of ordinary shares issued at $0.40 per share paid to fund the acquisition of MPL and Safrock, as approved by shareholders on 29 September 2006 40,875 18-Oct-06 Issue of ordinary shares at $0.40 per share as part consideration for the acquisition of MPL and Safrock 26,250 01-Jul-07 - On-market buy back of ordinary shares 30-Jun-08 (4,458) 25-Oct-07 Ordinary shares issued to the vendors of Safrock on achievement of an EBIT hurdle to 30 June 2007 2,833 01-Jul-08 - On-market buy back of ordinary shares 30-Jun-09 (1,509) 08-Dec-08 Ordinary shares issued to the vendors of Safrock on achievement of an EBIT hurdle to 30 June 2008 2,833 22-Jul-09 Placement of ordinary shares issued at $0.40 per share 12,500 26-Aug-09 Current balance 252,510

Source: Cash Converters’ company announcements

8.12 Share price and volume history ASX The chart below shows Cash Converters’ daily closing share price on ASX in the period since 1 February 2008 to 17 August 2009, being the last trading day prior to the announcement of the Proposed Placement, along with the daily volume of shares traded on ASX as a percentage of total issued capital.

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Figure 2: Cash Converters' historical closing share price and volume of shares traded on ASX

0.60 2.4% Daily volume a percentage traded as capital of issued

0.50 2.0%

0.40 1.6%

0.30 1.2%

0.20 0.8% Closing share price ($) Closing share price

0.10 0.4%

0.00 0.0% Feb-08 May-08 Aug-08 Nov-08 Feb-09 May-09 Aug-09

Volume traded Closing share price

Source: Bloomberg Cash Converters’ share price generally traded down between February 2008 to July 2008, closing within a range of $0.23 on 27 June 2008 to $0.38 on 7 February 2008. Since October 2008, the Company’s share price has exhibited an overall positive trend, closing at $0.53 on the last trading day prior to the announcement of the Proposed Placement. Since the announcement of the Proposed Placement, Cash Converters’ shares have closed between $0.545 on 19 August 2009 and $0.615 on 15 September 2009. The closing price of a Cash Converters share on the day prior to the date of this report was $0.615.

Significant announcements made by Cash Converters since 30 June 2008 to 17 August 2009 that may have had an impact on its recent share price include:

• 11 August 2009 – Cash Converters announced the acquisition of a UK franchised store in Barnsley for GBP 662,212, which represented an EBIT multiple of approximately 3 times.

• 8 July 2009 – Cash Converters announced that it had resolved to raise up to $5 million through the issue of 12.5 million shares at an issue price of $0.40 per share to institutional and sophisticated investors, with funds raised to be used in the purchase of franchised stores and to increase Safrock’s loan book.

• 30 June 2009 – Cash Converters provided an update on its operations for the six-months ending 30 June 2009, with significant items including that:

- Company owned stores had increased to 37

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- Safrock’s loan book had increased from approximately $15.5 million as at 31 December 2008 to approximately $21.5 million as at 29 June 2009.

• 23 February 2009 – Cash Converters released its results for the half-year ended 31 December 2008, showing an increase in revenue and NPAT from ordinary activities on the previous corresponding period by approximately 24 percent and 9 percent respectively.

• 10 December 2008 - Cash Converters announced that it would commence a new on-market share buy-back over a 12-month period commencing on 28 December 2008, with the intention of buying back up to 23.7 million ordinary shares.

• 9 December 2008 – Cash Converters made a final announcement regarding the conclusion of the share buy-back which commenced on 10 December 2007, pursuant to which the Company had purchased approximately 6.0 million ordinary shares at total consideration of approximately $1.6 million.

• 28 November 2008 – Cash Converters released its 2008 AGM presentation, in which it reported an updated NPAT forecast for the Company for the 2009 financial year of approximately $13.1 million (an increase of approximately $1.1 million over that included in the Company’s announcement on 17 April 2008).

• 23 September 2008 – Cash Converters announced that it had acquired three franchised stores in the UK for approximately $2.9 million, funded by both internal cash resources and bank borrowings.

• 27 August 2008 – Cash Converters released its results for the year ended 30 June 2008, showing increased revenue and NPAT on the previous corresponding year of approximately 63 percent and 31 percent respectively.

Trading liquidity on ASX An analysis of the volume of trading in Cash Converters shares on ASX in the 12-month period to the last trading day prior to the announcement of the Proposed Placement with EZCORP is set out below. Table 13: Trading liquidity in Cash Converters’ shares on ASX pre-announcement Period up to Closing share Closing share VWAP Cumulative As a % of total and including price low price high volume issued capital 17 August 2009 $ $ $ 000s 1 day 0.53 0.53 0.53 156 0.1% 1 week 0.49 0.54 0.52 2,561 1.0% 1 month 0.47 0.54 0.48 10,224 4.1% 3 months 0.41 0.54 0.46 31,172 12.8% 6 months 0.30 0.54 0.43 58,641 24.3% 12 months 0.22 0.54 0.38 85,941 35.5%

Source: IRESS

Cash Converters’ shares on ASX have exhibited relatively limited liquidity in recent times, with only approximately 35.5 percent of total shares on issue being traded on ASX over the 12 months prior to the announcement of the Proposed Placement, with an average daily traded volume of approximately 0.33 million shares.

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An analysis of the volume of trading in Cash Converters’ shares on ASX in the period from 18 August 2009 (inclusive) to the close of business on the day prior to the date of this report is set below. Table 14: Trading liquidity in Cash Converters’ shares on ASX post-announcement Period from Closing share Closing share VWAP Cumulative As a % of total 18 August 2009 to price low price high volume issued capital 15 September 2009 $ $ $ 000s 21 trading days 0.55 0.62 0.56 13,267 5.3%

Source: IRESS

Significant announcements made by Cash Converters from 18 August 2009 to 15 September 2009 that may have had an impact on its recent share price include:

• 26 August 2009 – Cash Converters released its Appendix 4E for the period ended 30 June 2009. Cash Converters announced a record net profit of approximately $16.2 million, up 6.5 percent on the previous year.

• 18 August 2009 – Cash Converters announced the Proposed Placement with EZCORP.

Trading liquidity on LSE An analysis of the volume of trading in Cash Converters’ shares on LSE in the 12-month period to the last trading day prior to the announcement of the Proposed Placement with EZCORP is set out below. Table 15: Trading liquidity in Cash Converters’ shares on LSE pre-announcement Period up to Closing share Closing share VWAP Cumulative As a % of total and including price low price high volume issued capital 17 August 2009 GBP GBP GBP 000s 1 day1 - - - - - 1 week 0.24 0.28 0.28 19 0.0% 1 month 0.24 0.28 0.24 151 0.1% 3 months 0.21 0.28 0.24 206 0.1% 6 months 0.14 0.28 0.22 313 0.1% 12 months 0.10 0.28 0.19 483 0.2% Note: 1 No Cash Converters’ shares were traded on LSE on the day prior to the announcement of the Proposed Placement.

Source: Bloomberg

Cash Converters’ shares on LSE have exhibited extremely limited liquidity in recent times, with only approximately 0.2 percent of total shares on issue being traded on LSE over the 12 months prior to the announcement of the Proposed Placement, with an average daily traded volume of only approximately 2,000 shares.

An analysis of the volume of trading in Cash Converters’ shares on LSE in the period from 18 August 2009 (inclusive) to the close of business on the day prior to the date of this report is set below.

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Table 16: Trading liquidity in Cash Converters’ shares on LSE post-announcement Period from Closing share Closing share VWAP Cumulative As a % of total 18 August 2009 to price low price high volume issued capital 15 September 2009 GBP GBP GBP 000s 21 trading days 0.27 0.29 0.29 38 0.0% Source: Bloomberg

8.13 Options over unissued shares

Cash Converters has advised it currently has no options on issue over unissued shares of the Company.

9 Profile of EZCORP

9.1 Corporate background

Formed in 1989, EZCORP is a provider of credit services to individuals who do not have cash resources or access to credit to meet their short-term cash needs. EZCORP provides options to these individuals to obtain short-term cash through:

• non-recourse loans collateralised by personal property

• short-term unsecured loans

• purchase of the customer’s merchandise

• fee based credit services for customers seeking loans.

EZCORP also sells used merchandise, consisting primarily of collateral forfeited as a result of its pawn broking operations. Headquartered in Texas in the US, the company’s shares are traded on NASDAQ. As at 30 June 2009, EZCORP operated a total of 897 company owned stores in the US and Mexico.

Additionally, EZCORP holds approximately 30 percent of the issued capital of Albemarle & Bond Holdings Plc (Albemarle & Bond), a company listed on the LSE. Albemarle & Bond operates in over 115 locations in the UK, offering pawn broking, short-term loans, check cashing and retail jewellery.

9.2 Operations

EZCORP manages its business operations in three segments, being EZPAWN US, EZMONEY and Empeño Fácil. A description of each segment is set out below.

EZPAWN US The EZPAWN US segment comprised 370 pawn shops as at 30 June 2009, each of which operates in the US. These pawn stores offer non-recourse loans collateralised by tangible personal property (also known as pawn loans). As at 30 September 2008, the number of pawn loans outstanding was approximately 757,000, representing an aggregate principal balance of approximately US$75.9 million. By 30 June 2009, the aggregate principal balance had increased to approximately US$94.6 million. Generally these loans last between 60 days and 120 days and earn interest of approximately 20 percent per month, or 240 percent per annum. The average

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pawn loan typically ranges between US$80 and US$100, but varies depending on the valuation of each item pawned.

Collateral taken by EZPAWN shops for pawn loans usually consists of tangible personal property, generally jewellery, consumer electronics, tools, sporting goods and musical instruments. Approximately 65 percent of EZPAWN’s pawn loan collateral is jewellery, with approximately 90 percent of the amount being gold jewellery. EZPAWN does not evaluate the creditworthiness of a pawn customer, but relies on the estimated resale value of the collateral and the perceived probability of the loan’s repayment. EZPAWN generally lends from 25 percent to 65 percent of the pledged property’s estimated resale value depending on an evaluation of these factors. The sources of EZPAWN’s determination of the resale value of collateral includes computerised valuation software, gold values, internet retail and auction sites, catalogues, newspaper advertisements and previous sales of similar merchandise.

EZPAWN holds the collateral through the duration of the loan. The customer generally has the option of renewing or extending the loan. In the case of a loan default (i.e. the customer does not repay, extend or renew the loan), the collateral goods become inventory in the pawn stores for resale. To a lesser extent, store inventories are also acquired through the purchase of customer’s merchandise.

The gross profit achieved by EZPAWN on sales of inventory depends primarily on the pawn shop’s assessment of the loan or purchase value at the time the property is either accepted as loan collateral or purchased. Improper value assessment in the lending or purchasing process can result in lower margins or reduced marketability of the merchandise.

A small number of the pawn stores also offer different varieties of uncollateralised loans which are more generally associated with the company’s EZMONEY stores.

EZMONEY This business segment incorporates the 480 EZMONEY stores (as at 30 June 2009) which EZCORP operates in the US that provide:

• short-term non-collateralised loans (often called short-term loans)

• fee based credit services to customers seeking loans (often call instalment loans).

Short-term loans are small, very short-term, unsecured loans. EZMONEY grants short-term loans on minimal credit checks and charges higher fees (to cover the higher risks involved).

As at 30 June 2009, short-term loans were available in 295 EZMONEY stores, with customers being able to obtain short-term loans, with principal amounts up to US$1,500, but averaging approximately US$550. Terms of these short-term loans are generally less than 30 days, and average about 18 days, with due dates corresponding with the customers’ next payday. EZCORP typically earns a fee of 20 percent of the loan amount for this loan credit service.

In connection with EZCORP’s credit services, unaffiliated lenders to EZCORP offer customers two types of loans. EZMONEY does not make, fund or participate in the loans made by the lenders, but earns a fee for assisting customers in obtaining credit. However, if a credit service customer defaults on the loan, EZMONEY

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pays the lender the principal and accrued interest due under the loan and an insufficient funds fee. EZMONEY then attempts to collect the unpaid principal, interest and insufficient funds fee from the borrower.

As at 30 June 2009, the instalment loans were available in 89 EZMONEY stores. Instalment loans typically carry terms of about five months, with ten equal instalment payments due on customers’ paydays. Instalment loan principal amounts range from US$1,525 to US$3,000 and average about US$2,100. With each semi- monthly or bi-weekly instalment payment, EZCORP earns a fee of 10 percent of the initial loan amount. As at 30 June 2009, short-term loans comprised 97 percent of the balance of loans brokered through EZCORP’s credit services and instalment loans comprised the remaining three percent.

Empeño Fácil This business segment accounts for pawn related activities in EZCORP’s 47 stores in Mexico. In Mexico, pawn service charges range from 13 percent to 20 percent, with a majority of the pawn loans earning 18 percent net of applicable taxes. The total Mexico pawn loan term is 40 days, consisting of the primary term and grace period.

EZCORP’s revenues split by segment for the nine months ended 30 June 2009 are set out in the figure below. Figure 3: EZCORP’s revenue for the nine months ended 30 2009 split by segment

EZPAWN EZMONEY Empeño Fácil

Source: EZCORP’s 30 June 2009 Quarterly Report EZCORP’s assets split by segment as at 30 June 2009 are set out in the figure below.

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Figure 4: EZCORP’s assets split by segment as at 30 June 2009

EZPAWN EZM ONEY Empeño Fácil

Source: EZCORP’s 30 June 2009 Quarterly Report

9.3 Financial performance

EZCORP’s historical audited consolidated financial performance for the three years ended 30 September 2006, 2007 and 2008 and unaudited consolidated financial performance for the nine months ended 30 June 2009 are summarised below. Table 17: EZCORP’s historical financial performance Audited Audited Audited Unaudited Year ended Year ended Year ended 9 mths ended 30 Sep 06 30 Sep 07 30 Sep 08 30 Jun 09 US$000 US$000 US$000 US$000 Sales revenue 177,424 192,987 232,560 234,902 Pawn service charges 65,325 73,551 94,244 92,777 Loan fees 71,840 104,347 128,478 100,075 Total operating revenue 314,589 370,885 455,282 427,754 Loan bad debt (17,897) (28,508) (37,150) (23,327) Cost of sales (106,873) (118,007) (139,402) (147,816) Gross profit 189,819 224,370 278,730 256,611 Other revenue and income 1,263 1,330 2,121 4,901 Operating expenses (111,738) (128,602) (153,420) (151,955) Administration costs (27,749) (31,749) (40,458) (29,892) Gain/(loss) on disposal of assets 7 72 (939) 967 EBITDA 51,602 65,421 86,034 80,632

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Table 17: EZCORP’s historical financial performance (continued) Audited Audited Audited Unaudited Year ended Year ended Year ended 9 mths ended 30 Sep 06 30 Sep 07 30 Sep 08 30 Jun 09 US$000 US$000 US$000 US$000 Depreciation and amortisation (8,610) (9,812) (12,354) (9,471) EBIT 42,992 55,609 73,680 71,161 Finance income 2,953 4,599 4,819 3,420 Finance expense (441) (281) (428) (1,102) Profit before tax 45,504 59,927 78,071 73,479 Income tax expense (16,245) (22,053) (25,642) (25,946) NPAT 29,259 37,874 52,429 47,533 Total operating revenue growth - % 46.7 17.9 22.8 EBITDA margin - % 16.4 17.6 18.9 18.9 EBIT margin - % 13.7 15.0 16.2 16.6 NPAT margin - % 9.3 10.2 11.5 11.1 Basic earning per share – US$ 0.74 0.92 1.27 1.01 Diluted earnings per share – US$ 0.69 0.88 1.21 1.00 Closing share price – US$ 12.89 13.47 18.80 10.78 Source: EZCORP’s 2008 Annual Report and 30 June 2009 Quarterly Report

EZCORP’s NPAT for the nine months ended 30 June 2009 increased approximately 30 percent to approximately US$47.5 million, compared to approximately US$36.4 million for the nine months ended 30 June 2008. Total operating revenues for the nine month period increased approximately 29 percent over the prior year period to approximately US$427.8 million with pawn service charges up approximately 38 percent, sales revenue (merchandise and jewellery scrapping) up approximately 38 percent and loan fees (short-term loan and credit service fees) up approximately 5 percent. EZCORP acquired 78 pawn stores in the December 2008 quarter, with these stores contributing total revenues of approximately US$71.8 million and net income of approximately US$6.1 million since acquisition.

9.4 Financial position

EZCORP’s historical audited consolidated financial position as at 30 September 2006, 2007 and 2008 and unaudited consolidated financial position as at 30 June 2009 are summarised below. Table 18: EZCORP’s historical consolidated financial position Audited Audited Audited Unaudited 30 Sep 06 30 Sep 07 30 Sep 08 30 Jun 09 US$000 US$000 US$000 US$000 Cash and cash equivalents 29,939 22,533 27,444 46,546 Pawn and short-term loans outstanding 52,747 65,556 83,061 103,423 Trade and other receivables 12,614 16,105 18,161 22,150 Inventories 35,616 37,942 43,209 57,141 Other assets 11,092 15,110 20,041 30,675 Total current assets 142,008 157,246 191,916 259,935 Goodwill 768 16,211 24,376 100,742

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Table 18: EZCORP’s historical consolidated financial position (continued) Audited Audited Audited Unaudited 30 Sep 06 30 Sep 07 30 Sep 08 30 Jun 09 US$000 US$000 US$000 US$000 Cash and cash equivalents 29,939 22,533 27,444 46,546 Pawn and short-term loans outstanding 52,747 65,556 83,061 103,423 Trade and other receivables 12,614 16,105 18,161 22,150 Inventories 35,616 37,942 43,209 57,141 Other assets 11,092 15,110 20,041 30,675 Total current assets 142,008 157,246 191,916 259,935 Goodwill 768 16,211 24,376 100,742 Investment in affiliate 19,275 35,746 38,439 34,784 Property, plant and equipment 29,447 33,806 40,079 49,752 Other assets 6,360 8,177 13,910 26,982 Total non current assets 55,850 93,940 116,804 212,260 TOTAL ASSETS 197,858 251,186 308,720 472,195 Trade and other payables 22,579 25,592 29,425 33,958 Loans and borrowings - - - 10,000 Other 1,890 6,783 2,573 5,591 Total current liabilities 24,469 32,375 31,998 49,549 Loan and borrowings - - - 27,500 Other 3,249 2,886 3,672 3,352 Total non current liabilities 3,249 2,886 3,672 30,852 TOTAL LIABILITIES 27,718 35,261 35,670 80,401 NET ASSETS 170,140 215,925 273,050 391,794 A class non voting shares on issue – 000s 37,542 38,363 38,564 45,682 B class voting shares on issue – 000s 2,970 2,970 2,970 2,970 Net asset backing per share – US$1 4.20 5.22 6.57 8.05 Net tangible asset backing per share – US$1 4.18 4.83 5.99 5.98 Note 1: Calculated using the total of EZCORP’s class A non voting shares and class B voting shares. Source: EZCORP’s 2008 Annual Report and EZCORP’s 30 June 2009 Quarterly Report

We make the following observations in relation to EZCORP’s historical financial position:

• Goodwill increased since 30 September 2008 reflecting EZCORP’s acquisitions of:

- twenty Mexican pawnshops from MMFS Intl SA de CV for approximately US$15.5 million on 22 October 2008

- the operating assets of 11 pawnshops in the Las Vegas and Nevada areas for approximately US$34.4 million on 13 November 2008

- Value Financial Services Inc (VFS) for approximately US$108.1 million on 31 December 2008, a provider of secured, non-recourse loans (pawn loans) and related services for customers in exchange

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for pledged tangible personal property items such as jewellery, electronic equipment, sporting equipment, musical instruments and other items.

• Loans and borrowings increased in the period to 30 June 2009 reflecting US$40.0 million borrowed to partly fund the VFS acquisition. The US$40.0 million term debt requires quarterly principal payments of US$2.5 million, which commenced in April 2009.

9.5 Cash flow analysis

EZCORP’s audited consolidated cash flows for each of the years ended 30 September 2006, 2007 and 2008 and unaudited consolidated cash flows for the nine months ended 30 June 2009 are summarised below. Table 19: Summary of EZCORP’s historical consolidated cash flows Audited Audited Audited Unaudited Year ended Year ended Year ended 9 mths ended 30 Sep 06 30 Sep 07 30 Sep 08 30 Jun 09 US$000 US$000 US$000 US$000 Net income 29,259 37,874 52,429 47,533 Depreciation and amort isation 8,610 9,812 12,354 9,471 Short-term loan loss pro vision 2,221 5,353 8,691 6,295 Deferred taxes 3,724 (2,636) (5,291) 626 Share-based compensati on 1,397 3,627 3,719 2,753 Income from investmen t in affiliate (2,433) (2,945) (4,342) (3,163) Service charges and fees receivable / (payable) 213 (2,948) (1,835) 768 Inventory (772) (411) (874) 905 Accounts payable and ac crued expenses 3,524 2,903 4,088 (4,663) Excess tax benefit from stock-based compensation (1,084) (916) (552) (1,724) Income taxes 435 6,248 (4,103) 3,566 Other (1,856) (2,552) (1,940) (3,517) Net cash provided by o perating cash flows 43,238 53,409 62,344 58,850 Loans made (216,194) (260,316) (344,450) (317,064) Loans repaid 122,948 150,017 207,718 204,806 Recovery of pawn loan principal through sale of collateral 89,556 96,207 110,211 113,040 Additions to property an d equipment (11,052) (13,742) (18,159) (14,350) Acquisitions (2,194) (23,201) (15,467) (41,002) Investment in affiliate - (13,408) (15) - Dividends from affiliate 969 1,274 1,760 1,634 Proceeds from sale of assets 66 259 - 1,062 Net cash used in invest ing activities (15,901) (62,910) (58,402) (51,874) Proceeds from exercise of stock options and warrants 4,350 1,462 417 4,907 Proceeds from borrowings - - - 40,000 Repayment of borrowin gs (7,000) - - (32,885)

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Table 19: Summary of EZCORP’s historical consolidated cash flows Audited Audited Audited Unaudited Year ended Year ended Year ended 9 mths ended 30 Sep 06 30 Sep 07 30 Sep 08 30 Jun 09 US$000 US$000 US$000 US$000 Other 1,084 633 552 104 Net cash provided by/(use d in) financing activities (1,566) 2,095 969 12,126 Net increase/(decrease) in cash and cash equivalents 25,771 (7,406) 4,911 19,102 Cash and cash equivalent s at the beginning of the year 4,168 29,939 22,533 27,444 Cash and cash equival ents at the end of the year 29,939 22,533 27,444 46,546 Source: EZCORP’s 2008 Annual Report and 31 March 2009 Quarterly Report

In the nine months ended 30 June 2009, EZCORP repaid borrowings of approximately US$32.9 million. Upon acquiring VFS on 31 December 2008, EZCORP assumed all VFS’s outstanding debt of approximately US$30.4 million and immediately following the acquisition, EZCORP repaid and terminated VFS’s outstanding bank debt of approximately US$30.1 million. The remaining US$0.3 million of debt assumed, comprising outstanding debentures, was retired by EZCORP in January 2009.

9.6 Directors

The Board of Directors of EZCORP is set out in the table below Table 20: EZCORP board of directors Director Position Sterling Brinkley Chairman Joseph Rotunda President and Chief Executive Officer Dan Tonissen Senior Vice President and Chief Financial Officer Gary Matzner Non-Executive Director Thomas Roberts Non-Executive Director Richard Sage Non-Executive Director Joseph Beal Non-Executive Director William Love Non-Executive Director

Source: EZCORP’s 2008 Annual Report and company announcement dated 27 August 2009

9.7 Share price and volume history

The chart below depicts EZCORP’s daily closing share price on NASDAQ in the period since 1 January 2008 to 17 August 2009, along with the daily volume of shares traded on NASDAQ as a percentage of total issued capital.

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Figure 5: EZCORP daily closing price and volume of shares traded on NASDAQ

20.00 16.0% Daily volume a percentage traded as capital of issued

18.00 14.0% 16.00 12.0% 14.00 10.0% 12.00

10.00 8.0%

8.00 6.0% 6.00 Closing share price (US$)Closing share price 4.0% 4.00 2.0% 2.00

0.00 0.0% Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09

Volume traded Closing share price

Source: Bloomberg

EZCORP’s share price exhibited a high degree of volatility over the period from January 2008 to 17 August 2009, ranging from US$9.58 on 9 March 2009 to US$18.80 on 30 September 2008. Since the announcement of the proposed transaction with Cash Converters, EZCORP’s shares have closed between US$12.23 on 18 August 2009 and US$13.46 on 28 August 2009. The closing price of an EZCORP share on the day prior to the date of this report was US$13.17.

10 Valuation of Cash Converters

10.1 Valuation methodology

The value of Cash Converters has been derived by aggregating the fair market value of the Company’s two business units, being Store operations and Financing, together with the assessed realisable value of any surplus assets and deducting non-trading liabilities.

In conducting our assessment of the fair value of Cash Converters’ business units we have considered a range of valuation methods. RG111 states that it is generally appropriate for an independent expert to consider, amongst other methods of valuation, the following commonly applied valuation methodologies:

• application of earnings multiples

• discounted cash flow (DCF) analysis

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• asset-based methodologies

• current trading prices on ASX

• alternative acquirer.

Each of these valuation methodologies has application in different circumstances and should be selected having regard to the particular circumstances of the company or business unit being valued and the industry in which it operates.

Capitalisation of Future Maintainable Earnings The capitalisation of maintainable earnings methodology is commonly used to value industrial companies with established profitable businesses that have an earnings profile sufficiently stable to enable an assessment of their on-going earnings potential to be made.

This methodology involves the capitalisation of a business’ earnings at a multiple that reflects the risks of the business and the income stream that it generates. Application of this methodology requires the determination of three key factors:

• an appropriate range of capitalisation multiples

• future maintainable earnings (FME)

• the value of surplus assets and liabilities.

The capitalisation of earnings method is appropriate where the earnings of the business are sufficient to justify a value exceeding the value of the company’s underlying net assets.

As the Company’s Store operations and Financing business units have established a record of relatively stable and profitable operations and can reasonably be expected to continue indefinitely, all other things being equal, we have adopted the capitalisation of FME as our primary valuation method for valuing both these business units. Given the nature of Store operations and Financing, we have valued both these business units on a capitalisation of NPAT approach.

DCF The DCF technique has a strong theoretical basis, valuing a business on the net present value of its future cash flows. It requires an analysis of future cash flows, the capital structure and costs of capital and an assessment of the residual or terminal value of the business remaining at the end of the discrete forecast period.

This technique is particularly appropriate for start up companies and companies that have, or are expected to experience, periods of negative cash flows. This technique is also commonly used in relation to valuing mining and other projects with finite lives. Application of this technique generally requires a five-year minimum period of analysis. In addition, a sensitivity analysis for variations in key assumptions adopted needs to be performed. Whilst an application of the discounted cash flow technique should not give a materially different result to that resulting from a capitalisation of the maintainable future earnings of the business, in valuing industrial companies application of this methodology requires the estimation of the company’s on-going value that falls

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outside of the discrete forecasting period. Even in situations where a cash flow forecast has been prepared over an extended period, the on-going value often represents a high proportion of an industrial company’s assessed value and therefore can often be largely a de-facto of the capitalisation of earnings approach.

Cash Converters has prepared cash flow forecasts for its two business units in the absence of the Proposed Placement for the five years ending 30 June 2014, accordingly we have considered the discount rate implied by our assessed range of values determined by application of the capitalisation of FME methodology as a cross- check.

Asset based methodology The value achievable by adopting this methodology is estimated by determining the net realisable value of the assets after repayment of debt. Consequently this method may ignore the ability of the asset base of the business to generate ongoing future earnings at a level sufficient to justify a value in excess of its assets on realisation. Costs associated with the sale of the assets are deducted as part of this assessment. Inherent difficulties with this technique include the valuation of intangible assets which may not be recorded on the balance sheet of the business.

The asset based methodology is not considered appropriate for valuing Cash Converters as:

• the Company has a significant amount of its value underpinned by intangible assets, such as brand names, licenses, know-how, franchise fees, software and interest revenue

• both of the Company’s business units have an established track record of profitable operations on an ungeared basis and have prospects for continued earnings growth and positive cash flow generation.

Trading prices Prices at which a company’s shares have traded on ASX can provide an objective measure of the value of that company (before any premium for control) on the basis that market prices are assumed to incorporate the influence of all publicly available information on the company, its prospects, future earnings and risk.

Given the relatively limited liquidity in recent trading of Cash Converters shares we do not believe this to be the most appropriate valuation methodology for the purpose of valuing the fully diluted equity of Cash Converters. However, whilst we have not adopted this as our prime methodology, we have considered recent trading prices in Cash Converters’ shares in light of our assessed values determined by capitalisation of FME and in considering the reasonableness of the Proposed Placement.

Alternative Acquirer This valuation method considers the premium that an alternative acquirer (who as a result of potential economies of scale, reductions in competition, synergy with existing operations or other factors) is prepared to pay for the businesses.

We are advised that the directors of Cash Converters are not aware of any other offers, formal or otherwise, for Cash Converters as a whole or either of the Company’s individual businesses units other than that received from EZCORP.

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10.2 Summary of assessed values

We have assessed the fair market value of the fully diluted equity in Cash Converters, in the absence of the Proposed Placement, to lie in the range of $174.5 million to $192.5 million, inclusive of a premium for control, which equates to an assessed fair market value per fully diluted Cash Converters share of between approximately $0.69 and $0.76.

As noted previously, pursuant to the requirements of RG 111, we are required to assess the fairness of the Proposed Placement as if it were a takeover offer for the whole of the issued capital of Cash Converters. That is, the assessed fair value of Cash Converters should be calculated assuming the ‘allottee’, EZCORP, is acquiring a 100 percent controlling interest in Cash Converters. Accordingly, our range of assessed fair values represents the value of a 100 percent controlling interest in Cash Converters, even though EZCORP is only acquiring a 30 percent interest in the Company.

We have assessed the value of Cash Converters by aggregating the estimated market value of the two business units, being Store operations and Financing, and deducting non-trading liabilities. We also considered the value of assets considered to be surplus to the business operations of the Company. The value of equity in Cash Converters has been assessed in the absence of the Proposed Placement, that is without any increase in earnings which may result from accelerating the Company’s strategic initiatives (being the acquisition of franchised stores and increasing the size of Safrock’s loan book), and on the basis of fair market value, that is, the value that would be negotiated between a knowledgeable and willing, but not anxious buyer, and a knowledgeable and willing, but not anxious seller, acting in an arm’s length transaction, where both buyer and seller are fully informed.

Set out in the table below is a summary of the range of fair values at which Cash Converters’ shares have been assessed.

Table 21: Summary of assessed fair market value of Cash Converters Assessed values Low High $M $M Store operations 75.0 80.0 Financing 104.0 117.0 179.0 197.0 Add: Surplus assets - - Less: Acquisition / fit out costs (4.5) (4.5) Total equity value 174.5 192.5 Number of ordinary shares - millions 252.5 252.5 Value per Cash Converters share (fully diluted) - $ 0.69 0.76 Source: KPMG analysis

KPMG’s valuation range of $0.69 to $0.76 per share compares to:

• the closing price of $0.615 for a Cash Converters share on the day prior to the date of this report, representing a premium of between approximately 12 percent and 24 percent

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• the $0.53 closing price for a Cash Converters’ share immediately prior to the date of the announcement of the Proposed Placement, representing a premium of between approximately 30 percent and 43 percent.

Premium for control It is generally acknowledged that in order to acquire a 100 percent controlling interest in a listed company, the acquirer must pay a premium over and above the price at which shares in the target are trading on ASX prior to the announcement of the takeover bid. This premium reflects the benefits the acquirer achieves through holding a 100 percent controlling interest in contrast to a portfolio shareholding. Our valuation provides a valuation of 100 percent of Cash Converters.

The benefits of holding a 100 percent controlling interest typically may include:

• full and unfettered access to cash flows of the business

• control over dividend decisions

• control over voting at shareholder meetings and, in particular, decisions requiring special resolutions, and composition of the Board of Directors

• absolute control over the future direction of the company without the need to have regard to prejudicing the interest of minority shareholders

• ability to group tax losses.

In order to assess a reasonable range for implied acquisition premia in Australia, we have previously analysed data over the period 1 May 1999 to 30 April 2009. A data set of 479 takeovers was sourced from Connect 4, constituting successful bids, where data on implied market values and two, five and twenty-day premia were available. The value of takeovers (friendly and hostile) ranged from approximately $0.3 million to $22.0 billion over this period, with an average of approximately $663 million, after excluding those transactions considered to be outliers based on the size of their premium relative to others in the data set and those with negative premia.

Including all 479 transactions, our analysis indicated that twenty-day acquisition premia ranged from those with negative premia to 4,954 percent, with an average and median of approximately 39.6 percent and 15.5 percent respectively.

Excluding those transactions considered to be outliers, the average and median premia are approximately 23.1 percent and 17.4 percent respectively. We also note that less than 20 percent of those takeovers reviewed, excluding outliers, had premia greater than 40 per cent.

It is apparent from our review of these transactions that there is a wide dispersion of observed acquisition premia. This is not unexpected given that acquisition premia can be affected by a wide range of factors, including:

• market speculation prior to the official announcement of a takeover

• the level of pre-existing ownership by the offeror

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• the level of operating synergies and/or special benefits that may exist to an offeror

• the impact of contested/hostile takeovers

• the liquidity of the stock prior to the offer

• the level of gearing employed by the target company.

Having considered these factors and the nature of the distribution of our observed data, we consider, on balance, that it reasonable to suggest that in Australia, successful transactions are typically likely to complete within an acquisition premium range of 25 percent to 40 percent.

We note that the range of premia implied by our range of assessed fair market values for Cash Converters generally approximates the range of premia typically observed in takeovers in Australia.

The differential between our range of assessed values and the trading price for a Cash Converters share on ASX may also reflect, amongst other factors, KPMG’s access to Cash Converters’ management and additional information not normally available to the market in relation to the Company’s operations, forecasts, strategies and plans for the future.

10.3 Future Maintainable Earnings

FME is considered to be that level of average earnings which the business could be expected to maintain in real terms ignoring short-term economic fluctuations. Estimation of FME requires consideration of, inter alia, historical and forecast performance and non-recurring and/or abnormal items that may have or are expected to impact performance.

As such, in determining an appropriate level of FME for Cash Converters, we have had primary regard to:

• the historical financial performance/normalised actual earnings for the three years ended 30 June 2007, 2008 and 2009 in respect of the Company’s Store operations and Financing business units

• Cash Converters’ budgeted results for the year ending 30 June 2010

• the outcome of discussions with management in relation to the Company’s medium term strategy for the future operation of each business unit in the absence of the Proposed Placement

• the level of robustness of the principal operating assumptions underpinning the budgeted financial information prepared by the Company in respect of the year ending 30 June 2010

• the outlook for the industries in which the business units operate, along with the outlook for the domestic and global economies as a whole.

Having regard to the above, and in particular to the Company’s earnings outlook, we consider that an appropriate level of future maintainable NPAT for Cash Converters’ Store operations to be in the order of $5.0 million. We consider a future maintainable NPAT in respect of Financing operations to be in the order of $13.0 million as set out below.

51 © 2009 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG. ABCD Cash Converters International Limited Independent expert report & Financial services guide 16 September 2009

Table 22: Future maintainable NPAT by business unit Business unit Future maintainable NPAT $ million Store operations 5.0 Financing 13.0 Source: KPMG analysis

In considering an appropriate FME for the business units of Cash Converters we considered, inter alia:

• Store operations’ NPAT results for each period only reflect the partial benefit of stores purchased throughout the year, in particular 2008 and 2009 when 15 and 16 stores were acquired respectively. In contrast only five stores are budgeted to be acquired / opened during 2010.

• Financing’s NPAT result for 2009 includes the adverse impact of the 14 stores in Queensland who, in breach of their franchise agreements, adopted an alternative software package for cash advances for approximately eight months of the year. The 14 Queensland stores are now again utilising MPL’s software package in accordance with their franchise agreements following resolution of the dispute by an independent arbitrator.

10.4 Capitalisation multiples

The primary approach used by purchasers of a business in determining an appropriate capitalisation multiple is often a comparison of the implied multiples paid in acquisition transactions involving companies comparable to the target. However, where there is a lack of either sufficient market information or directly comparable transactions to be able to complete a meaningful analysis, it is necessary to infer an appropriate multiple from other means.

We also note that even where market information is available in relation to comparable transactions, a wide range of implied multiples may result from any consideration of historical transaction multiples, reflecting inter alia:

• the individual business characteristics of the target, including its growth prospects

• the level of synergies and cost savings available to purchasers

• the special benefits available and/or strategic value of the target to the individual acquirer

• whether the acquisition is competitive

• general prevailing market and economic conditions at the time of acquisition.

An alternative approach to determining an appropriate capitalisation multiple is to review the multiples at which comparable companies trade on the stockmarket, recognising that these multiples reflect trading in small portfolio interests and therefore may not include a premium for control that would attach to a 100 percent interest in the relevant company.

52 © 2009 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG. ABCD Cash Converters International Limited Independent expert report & Financial services guide 16 September 2009

In determining an appropriate range of forecast capitalisation multiples for each of Cash Converters’ business units we have had primary regard to the following principal indicators:

• the level of FME being capitalised in the context of recent historical and short-term prospective earnings

• recent historical and forecast NPAT trading multiples of comparable ASX and foreign listed companies

• the risk factors faced by Cash Converters in achieving prospective earnings in the absence of the Proposed Placement, in particular, the current uncertainty surrounding the impact of any future legislative changes governing the conduct of consumer credit / micro lending providers

• the prospects for continued future growth in earnings

• where available, acquisition multiples implied by recent transaction evidence

• the specific characteristics, challenges and circumstances of Cash Converters’ individual business units.

The forecast NPAT capitalisation multiples we have used in determining the value of the operating business units of Cash Converters, inclusive of a premium for control, are summarised below.

Table 23: Capitalisation multiples selected Range of forecast NPAT multiples Low High Store operations 15.0 16.0 Financing 8.0 9.0 Source: KPMG analysis

Store operations Transaction evidence Whilst we have been able to identify a number of relevant transactions over the past three years, these have generally comprised either private interests or divisions of larger entities, with little or no publicly disclosed information in relation to transaction metrics. As disclosed in the table below, those transactions where sufficient information is available indicate a wide range of historical NPAT multiples. Accordingly, we do not consider current transaction evidence provides any meaningful guidance as to appropriate capitalisation multiples from recent corporate transactions.

Table 24: Transaction multiples – Store operations

Target Date Acquirer Value Implied historical NPAT multiple million times Herbert Brown & Son Ltd 17-Jul-07 Albemarle & Bond GBP 30.9 11.4 VFS 31-Dec-08 EZCORP US$108.1 25.8 Source: Mergermarket, Zephyr and Company Announcements

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Trading multiples of comparable listed companies Having regard to the principal nature of Cash Converters’ Store operations, being a franchisor and owner of domestic and international second-hand goods stores, we do not consider any domestic or international listed companies to be directly comparable to the Company’s Store operations. However, in order to provide guidance for the assessment of an appropriate capitalisation multiple, we have considered a selection of Australian listed companies involved in:

• the franchising of business operations

• the retail of consumer goods.

The outcome of our analysis of the trading multiples of those listed companies selected for comparison are set out in the table below.

Table 25: Analysis of companies selected for comparison – Store operations NPAT multiple Market 2009 2010 Capitalisation1 Historical2 Forecast3 Company $ million Times Times Australia Cash Converters4, 5, 6 142.7 8.8 n/a Clive Peters7 40.6 25.5 200.2 Harvey Norman 3,367.5 14.8 14.3 JB Hi-Fi 1,912.3 20.2 16.5 The Reject Shop 340.6 17.9 15.6 The Warehouse Group 1,030.1 16.6 15.0 Average (excluding outliers) 17.4 15.4 Median (excluding outliers) 17.3 15.3 Notes 1 Market capitalisation as at 26 August 2009. The market capitalisation for the international comparable companies have been converted to Australian dollars at the relevant prevailing spot rate on 26 August 2009. 2 Based on most recent annualised NPAT as at 26 August 2009. 3 Based on forecast NPAT as reported on Bloomberg as at 26 August 2009. 4 Based on unaudited NPAT for the year ended 30 June 2009. 5 As it is not possible to determine with any great accuracy the amount of Cash Converters overall market capitalisation attributable to Store operations versus Financing, we have excluded Cash Converters’ prima facie multiples from our calculation. 6 N/a means not available. 7 Excluded as an outlier. Source: Bloomberg and Comparable Companies’ Annual Reports and Company Announcements Profiles of the abovementioned companies are set in out in Appendix 5 to this report. General observations in relation to the abovementioned analysis of companies are set out below:

• the abovementioned multiples have been derived from share market prices which comprise trading in smaller, portfolio shareholdings and therefore may not include any premium for control

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• none of the companies are directly comparable to Cash Converters’ Store operations in terms of target market, product sector, market focus, competitive environment, strategy and stage of development

• whilst Cash Converters’ Store operations competes directly against a number of the abovementioned companies, particularly in relation to those providing retail goods to the Australian domestic market, the earnings streams for a number of companies are principally derived from different market offerings, market segments and wider geographical markets to Cash Converters

• Harvey Norman, which, like Cash Converters, franchises its operations, is currently trading on a lower multiple than those companies that own/operate all their own retail stores

• several of the companies considered have a significantly larger market capitalisation than Cash Converters and a number are significantly larger than Cash Converters in terms of scale of operations, geographical footprint, etc. This scale difference is even more pronounced if Cash Converters’ Store operations and Financing businesses are considered on an individual basis. It is generally accepted that larger companies often will, all other things being equal, trade at a premium to smaller like companies reflecting in part the benefits of size in matters such as market share, purchasing power, economies of scale and perceptions of financial robustness

• as we have adopted a future rather than historical maintainable earnings for Store operations, to ensure consistency it is necessary to apply a forecast rather than historical capitalisation multiple. We note that, in general, forecast multiples are usually at a discount to historical multiples reflecting their forward looking nature and therefore increased risk of achievement and expectation in relation to individual company growth prospects.

Having regard to each of the foregoing and reflecting:

• Cash Converters’ growth strategy will to a certain degree be influenced by its future success in repurchasing formerly franchised stores, the continuing success of which is unable to be predicted with any certainty over the long term

• there is some uncertainty as to the impact of the growth of internet usage on the demand for second hand goods stores in the future. We note Cash Converters has recognised this as a potential issue and is seeking to consolidate/promote internet purchasing within its business model, however the future success of this initiative has a degree of uncertainty attracting to it given it is still largely at an embryonic stage

• whilst Cash Converters is confident of the success of its UK strategy, any operations conducted in a foreign jurisdiction can be considered to attract additional risk over and above those from operating solely in a domestic market, whilst also recognising that greater geographical diversification may help to mitigate overall economic cycle risk to a certain extent

• there appears to be good prospects for continued growth in Store Operation’s earnings as Cash Converters continues its Company owned store strategy by purchasing franchised stores and opening new stores. We note however that the actual growth rate realised by Store operations, in the absence of the Proposed Placement, will depend upon the future availability of funding to expand its corporate store chain,

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we have determined an appropriate capitalisation multiple for Store operations’ future maintainable NPAT, inclusive of a premium for control, to be in the range of 15.0 times to 16.0 times.

Financing operations Transaction evidence Whilst we have been able to identify a number of relevant transactions over the past three years, these have generally comprised either private interests or divisions of larger entities, with little or no publicly disclosed information in relation to transaction metrics. Accordingly, we have been unable to determine any meaningful guidance as to appropriate capitalisation multiples from recent corporate transactions.

Table 26: Transaction multiples – Financing operations Target Date Acquirer Value Implied historical NPAT multiple $ million times Ace Cash Express Inc 15-Oct-06 JLL Partners 420.8 15.4 Source: Mergermarket, Zephyr and Company Announcements

Trading multiples of listed companies selected for comparison purposes As with Store operations, having regard to the principal nature of Financing’s operations, we do not consider any domestic or international listed companies to be directly comparable to Cash Converters’ Financing operations. However, in order to provide guidance for the assessment of an appropriate capitalisation multiple for Financing, we have considered a selection of Australian and international listed companies involved in:

• provision of short-term cash advances

• development and provision of software platforms to clients.

The outcome of our analysis of the trading multiples of those listed companies selected for comparison are set out in the table below.

Table 27: Analysis of companies selected for comparison – Financing operations NPAT multiple Market 2009 2010 Capitalisation1 Historical2 Forecast3 Company $ million Times Times Cash Converters 142.7 8.84, 5 n/a5, 6 Short-term lending Australia Flexigroup Ltd 379.8 11.6 9.9 International Advance America, Cash Advance Centres Inc 443.5 10.2 9.1 Albemarle & Bond Holdings Plc 224.2 14.1 10.6 Cash America International Inc 995.5 10.9 9.0 Cattles Plc 71.0 n/a6 n/a6 Dollar Finanacial Corporation 483.6 7.8 8.9

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Table 27: Analysis of companies selected for comparison – Financing operations (continued) NPAT multiple Market 2009 2010 Capitalisation1 Historical2 Forecast3 Company $ million Times Times EZCORP Inc 787.0 10.9 9.6 First Cash Financial Services Inc 693.7 15.0 13.9 QC Holdings Inc 128.2 6.1 n/a6 Cash Store Financial Services Inc 167.7 8.4 n/a6 World Acceptance Corporation 518.7 6.7 6.8 Average – Short-term lending (excl. outliers) 10.0 9.7 Median – Short-term lending (excl. outliers) 10.2 9.1 Credit Software Australia Admerex Ltd 4.5 n/a6 n/a6 Reckon Ltd 203.7 16.8 14.6 Technology One Ltd 274.1 19.4 14.7 International Finzsoft Solutions Ltd 1.1 n/a6 n/a6 First Cash Financial Services Inc 693.7 15.0 13.9 Cybersource Corporation 1,339.9 82.67 20.47 nFinanSe Inc 4.4 n/a6 n/a6 US Dataworks Inc 10.7 n/a6 n/a6 Average – Credit Software (excl. outliers) 17.1 14.4 Average – Credit Software (excl. outliers) 16.8 14.6 Average - All (excl. outliers) 11.8 11.1 Median - All (excl. outliers) 10.9 10.1 Notes 1 Market capitalisation as at 26 August 2009. The market capitalisations for the international comparable companies have been converted to Australian dollars at the relevant prevailing spot rate on 26 August 2009. 2 Based on most recent annualised NPAT as at 26 August 2009. 3 Based on forecast NPAT as reported on Bloomberg as at 26 August 2009. 4 Based on unaudited NPAT for the year ended 30 June 2009. 5 As it is not possible to determine with any great accuracy the amount of Cash Converters overall market capitalisation attributable to Store operations versus Financing, we have excluded Cash Converters’ prima facie multiples from our calculation. 6 N/a means not available. 7 Excluded as an outlier. Source: Bloomberg and Comparable Companies’ Annual Reports and Company Announcements Profiles of the abovementioned companies are set in out in Appendix 5 to this report. General observations in relation to the abovementioned analysis of companies are set out below:

• the abovementioned multiples have been derived from share market prices which comprise trading in smaller, portfolio shareholdings and therefore may not include any premium for control

• none of the companies are directly comparable to Cash Converters’ Financing operations in terms of target market, product sector, market focus, competitive environment, strategy and stage of development

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• whilst Cash Converters’ Financing operations compete directly against a number of the abovementioned companies, particularly in relation to those providing short term cash advances, the earnings streams for a number of companies are principally derived from different market segments and geographical markets to Cash Converters

• each of the above mentioned international companies involved in short-term lending is subject to widely different economic market conditions and regulatory regimes to Cash Converters. We note that at present there is some uncertainty as to the final outcome of the Federal Government’s current review of domestic consumer credit regulation. Whilst Cash Converters believes it is well placed to satisfy most of the requirements of the National Consumer Credit Protection Bill introduced into Parliament in June 2009, the requirements of the anticipated second phase of legislation is not known, and therefore represents an uncertainty to the future performance of Cash Converters not necessarily faced by a number of the companies selected for comparison purposes. However, we also note certain economic commentary indicates that although a national interest rate cap will likely be introduced, it is unlikely to be an extreme piece of legislation

• companies that provide short term cash advances in the short-term lending industry tend to trade on lower multiples than comparable software companies. Short-term lending is seen to be the principal area for growth by Cash Converters

• several of the companies considered have a larger market capitalisation than Cash Converters and a number are significantly larger than Cash Converters. This scale difference is even more pronounced if Cash Converters’ Financing and Store operations businesses are considered on an individual basis. As noted previously, it is generally accepted that larger companies often will, all other things being equal, trade at a premium to smaller like companies

• as we have adopted a future rather than historical maintainable earnings for Financing, to ensure consistency it is necessary to apply a forecast rather than historical capitalisation multiple. We note that, in general, forecast multiples are usually at a discount to historical multiples reflecting their forward looking nature and expectation in relation to individual company growth prospects.

Having regard to each of the foregoing and reflecting:

• Financing’s operations are to a degree dependant upon Cash Converters’ stores (both franchised and Company owned) utilising its software/technology and acting as its agent, Financing’s prospects for future growth are closely linked to the expansion of both the number of Cash Converters stores and the organic expansion of the Safrock loan book

• whilst Cash Converters is confident of the success of its UK strategy, any operations conducted in a foreign jurisdiction can be considered to attract additional risk over and above those from operating solely in a domestic market whilst also recognising that greater geographical diversification will help to mitigate overall business risk to a certain extent

• in the absence of any major regulatory reform, there appears to be good prospects for continued growth in Financing’s earnings, particularly if Cash Converters can continue to successfully expand Safrock’s loan book both through organic growth and through the roll out into existing and newly established stores, both in Australia and the UK,

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we have determined an appropriate capitalisation multiple for Financing’s future maintainable NPAT, inclusive of a premium for control, to be in the range of 8.0 times to 9.0 times.

Net surplus assets / liabilities Surplus assets and liabilities represent those assets and non-trading liabilities that are not required in order for the Company to continue to realise its principal source of earnings. Management has advised that the Company does not currently hold any surplus assets or liabilities.

Provision for acquisition / fit out costs Cash Converters has advised it expects to incur approximately $4.5 million in relation to acquisition / fit out costs of new stores in 2010, which have not been included in its trading or budgeted results. We have deducted these costs to reflect they will be required to be incurred in order to derive the budgeted profit result for the Company.

Tax losses Given the current uncertainty as to the ultimate realisation of the capital tax losses, discussed in Section 8.7 above, we have not ascribed a value to these tax losses for the purpose of our valuation.

Franking credits Since July 1987, Australia has had a dividend imputation tax system in place, which aims to remove the double taxation effect of dividends paid to investors. In this regard, personal tax imposed on investors on dividend income is reduced to the extent that those dividends are paid out of profits which have already been subject to corporate tax. This reduction is received in the form of a franking credit.

Cash Converters estimates that it has approximately $14.6 million in franking credits available to the Company which can be utilised in paying future dividends. In recent years, there has been considerable debate in respect of how dividend imputation should be reflected in determining value. While it is generally accepted that investors may place some value on imputation, to what extent remains contentious. To date, there is no clear agreement upon the issue of what, if any, adjustment to values is required for the availability of franking credits. In particular, there has been no clear evidence to date that acquirers of businesses are prepared to pay a premium in respect of existing franking credits. We have not included any value for franking credits in our assessed fair value of a Cash Converters share.

Contingent liabilities Management has represented to us that they are not aware of any contingent liabilities that have the potential to materially impact the financial position or financial performance of the Company. As such, we have not made any adjustment to our range of assessed values for outstanding litigation matters.

Litigation Management has advised to us that they are not aware of any litigation matter that has the potential to materially impact the financial position or financial performance of the Company. As such we have not made any adjustment to our range of assessed values for outstanding litigation matters.

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10.5 Valuation cross-check – DCF

As a high-level cross-check to value, we have considered the value of Cash Converters using the DCF methodology. KPMG has been provided with high-level ungeared cash flow models for both Store operations and Financing for the five years ending 30 June 2014, prepared by Cash Converters’ management as a business-planning tool for the Company’s operations. Cash Converters prepared both cash flow models using high-level assumptions regarding revenue, operating expenses and capital expenditure requirements. Further, both cash flow models do not extend beyond the year ending 30 June 2014. Given the uncertainties regarding the high-level assumptions and the cash flow models’ restricted forecast period, we are of the view the level of subjectivity inherent in this DCF analysis is too great to enable it to be relied upon as a primary valuation methodology, however we consider it useful as a high-level cross-check as to the reasonableness of the values estimated by reference to the capitalisation of earnings methodology.

Store operations Principal assumptions included in the high-level DCF analysis for Store operations include:

• growth in operated stores from 37 as at 30 June 2009 to 58 as at 30 June 2014

• store acquisition / fit out costs of $17.3 million

• compound average growth (CAG) in operating revenue over the period to 2014 of 7.5 percent per annum

• CAG in EBITDA of 6.3 percent per annum

• total capital expenditure of $7.5 million

• at the end of the discrete forecast period we have assumed a terminal growth in perpetuity of 2.5 percent per annum.

Based on our range of values for Store operations (net of acquisition / fit out costs) of between $70.5 million to $75.5 million and Cash Converters high-level DCF analysis, the implied discount rate to derive a similar range of assessed fair market values is in the order of 10.0 percent to 10.5 percent per annum

Financing Principal assumptions included in the high-level DCF analysis for Financing include:

• growth in the Safrock loan book of 11.6 percent to $24.0 million

• CAG in operating revenue over the period to 2014 of 9.1 percent per annum

• CAG in EBITDA of 6.9 percent per annum

• no capital expenditure required

• at the end of the discrete forecast period we have assumed a terminal growth in perpetuity of 2.5 percent per annum.

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Based on our range of values for Financing of between $104.0 million to $117.0 million and Cash Converters high-level DCF analysis, the implied discount rate to derive a similar range of assessed fair market values is in the order of 15.4 percent to 17.1 percent per annum.

Having regard to the different risks inherent in each business operation we do not consider the above ranges of discount rates to be unreasonable. We also note that the relationships between the discount rate ranges is consistent with observed forecast multiples for each business segment, with companies principally undertaking Store operations trading at higher multiples than those involved in Short-term Lending and Credit Software.

10.6 Valuation cross-check – Recent share market trading

Set out below is a comparison of our assessed fair value of $0.69 to $0.76 per Cash Converters’ share compared to the VWAP at which the Company’s shares have recently traded on ASX over various intervals immediately prior to the announcement of the Proposed Placement. We note that during the three months prior to the announcement of the Proposed Placement, Cash Converters’ share price has traded within the range of $0.41 to $0.54 per share. In the period since the announcement of the Proposed Placement, Cash Converters’ share price has traded within the range of $0.545 to $0.615 per share. Figure 6: Range of assessed fair market values relative to recent VWAPs on ASX prior to the announcement of the Proposed Placement

1.00

0.90

0.80 High

0.70 Low

0.60 30% 43% 33% 47% 42% 57% 49% 64%

0.50

$ per share $ per 0.40

0.30

0.20

0.10

0.00 Closing price prior to VWAP VWAP VWAP announcement 1 week 1 month 3 months

Source: Bloomberg and KPMG analysis As illustrated in the figure above, our range of assessed fair values for a Cash Converters share, sits above recent market prices for a Cash Converters share as quoted on ASX, principally reflecting that market prices observed on ASX represent portfolio shareholdings and may not include any premium for control.

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As noted previously, premiums for control in takeovers in Australia are often observed to be in the range of 25 percent to 40 percent. We note that the premium implied by our range of assessed fair market values for a Cash Converters share, inclusive of a control premium, is generally consistent with the range of premiums typically observed in Australian takeovers, albeit towards the top end of the range.

It should be noted, however, observed premia will vary from case to case and will reflect, in part, the acquirer’s view as to the level of the cost savings and other benefits that may be realised by combining the operations of the target with its own infrastructure, and also by the existence of potential competitors who wish to acquire the target.

Furthermore, given the limited level of liquidity in Cash Converters shares we consider that this cross-check should be considered to provide only a broad indicator as to the reasonableness of our range of assessed fair market values.

11 Impact of the Proposed Placement

11.1 Dilutionary impact

Cash Converters currently has approximately 252.5 million fully paid ordinary shares on issue. EZCORP and its associated entities do not currently hold any shares in Cash Converters and accordingly do not have any voting power in the Company as at the date of this report.

As set out in the table below, based on the terms of the Proposed Placement, non-associated shareholders will hold approximately 70 percent of the issued capital in the Company, assuming the Proposed Placement is successfully completed. Table 28: Pro-forma capital structure Number of shares Non-associated shareholders 000s % Cash Converters shares currently on issue 252,510 100.0 Issue of Cash Converters shares to EZCORP 108,218 0.0 Pro-forma number of shares on issue 360,728 70.0

Source: The Subscription Agreement, Cash Converters’ latest Appendix 3B as at the date of this report and KPMG analysis

11.2 Financial implications Financial position To illustrate the impact of EZCORP acquiring a 30 percent interest in Cash Converters, we have set out below an unaudited pro-forma financial position for Cash Converters based on its unaudited balance sheet as at 30 June 2009 and:

• reflecting the outcome of the $4.75 million capital raising, net of costs, completed by the Company in July 2009

• assuming the Proposed Placement is successful.

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We note that the Company’s acquisition of the previously franchised Barnsley store in August 2009 for GBP 662,212 has not been included in the table below, as we were unable to determine the impact of the acquisition on the Company’s balance sheet accounts other than cash (for example, the effect on plant and equipment, and goodwill and intangibles). Table 29: Pro-forma balance sheet assuming the Proposed Placement is successful Unaudited Capital Adjusted Proposed Pro-forma 30 June 09 raising1 Placement 30 June 09 $000 $000 $000 $000 $000 Cash assets 7,003 4,750 11,753 54,109 65,862 Receivables 31,752 31,752 31,752 Inventories 6,959 6,959 6,959 Prepayments 853 853 853 Total current assets 46,567 4,750 51,317 54,109 105,426 Receivables 1,369 1,369 1,369 Plant and equipment 4,633 4,633 4,633 Goodwill and intangibles 60,347 60,347 60,347 Deferred tax assets 1,867 1,867 1,867 Total non-current assets 68,216 68,216 68,216 Total assets 114,783 4,750 119,533 54,109 173,642 Payables 8,367 8,367 8,367 Interest bearing liabilities 3,942 3,942 3,942 Current tax liabilities 3,298 3,298 3,298 Deferred establishment fees 1,311 1,311 1,311 Provisions 1,128 1,128 1,128 Total current liabilities 18,046 18,046 18,046 Interest bearing liabilities 12,978 12,978 12,978 Deferred tax liabilities 1,269 1,269 1,269 Total non-current liabilities 14,247 14,247 14,247 Total liabilities 32,293 32,293 32,293 Net assets 82,490 4,750 87,240 54,109 141,349 Ordinary shares on issue - 000s 240,010 12,500 252,510 108,218 360,728 Net assets per share - $ 0.34 0.35 0.39 Net tangible assets per share - $ 0.09 0.11 0.23 Gearing – times 0.12 0.06 -0.35 Total tangible assets / Total liabilities – times 1.7 1.8 3.5 Source: Cash Converters’ Appendix 4E for the year ended 30 June 2009 and KPMG analysis

We make the following observations in relation to Cash Converters’ pro-forma financial position:

• Cash Converters’ net asset position is expected to increase by approximately 62 percent to $141.3 million as a result of successful completion of the Proposed Placement

• Cash Converters’ net assets per share are expected to increase from $0.35 per share to $0.39 per share

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• the 108.2 million fully paid ordinary shares to be issued to EZCORP at an issue price of $0.50 each exceeds the adjusted net asset value of a Cash Converters share prior to the announcement of the Proposed Placement.

• Cash Converters is expected to be in a net cash position immediately following completion of the Proposed Placement.

11.3 Impact on market value per share

As required by RG 111, in order to provide an indication of the value of the Company after the Proposed Placement, assuming it is successful, we have set out below for illustrative purposes only, hypothetical, indicative calculations as to the extent to which, in theory, the value of Cash Converters could be re-rated if the Proposed Placement is successful and where the market accepts the assessed fair values for a share in Cash Converters, inclusive of a premium for control, as determined by us in section 10 of this report. Table 30: Hypothetical indicative values of potential re-rating of shares in the expanded Cash Converters post completion of the Proposed Placement Assessed values Low High $000 $000 Total equity value (pre Proposed Placement, based on a 100 percent controlling interest) 174,500 192,500 Add: Proceeds from placement shares 54,109 54,109 Total equity value (post Proposed Placement, based on a 100 percent controlling interest) 228,609 246,609 Number of ordinary shares pre Proposed Placement (000) 252,510 252,510 Add: Shares issued to EZCORP pursuant to the placement (000) 108,218 108,218 Number of ordinary shares post Proposed Placement (000) 360,728 360,728 Value per fully diluted Cash Converters share (based on a 100 percent controlling interest) - $ 0.63 0.68 Value per fully diluted Cash Converters share (based on a portfolio interest) - $ 1 0.50 0.54 Notes: 1 This value per fully diluted Cash Converters share incorporates a reduction of 20 percent to recognise that each Cash Converter shareholder other than EZCORP will continue to hold a portfolio shareholding in the expanded Company following completion of the Proposed Placement. The discount of 20 percent equates to a premium of control incorporated in our values of 25 percent. Source: KPMG analysis

The indicative calculations above have been based on:

• a simple assumption that the fair value of 100 percent of the equity in Cash Converters will increase by approximately $54.1 million, being the net funding to be provided by EZCORP under the Proposed Placement. We note that such an assumption is simplistic, as Cash Converters’ earnings, risk and growth profile will change as the Company uses the $54.1 million of funding to accelerate the expansion of its corporate store chain and to increase the size of Safrock’s loan book. To the extent the funds result in a significant increase in the Company’s earnings per share, we would expect the Company to be positively re-rated

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• the post placement issued capital of Cash Converters, which will increase by the approximate 108.2 million fully paid ordinary shares to be issued to EZCORP.

11.4 Board of Directors

Upon successful completion of the Proposed Placement, EZCORP shall have the right (which is preserved so long as it holds at least 20 percent of the issued capital of Cash Converters), to appoint and maintain in office two nominee directors, including the right to remove any director so appointed and, upon their removal, to appoint a replacement in such director’s place.

As set out in the Explanatory Statement, Cash Converters will appoint Mr William Love and Mr Joseph Beal as EZCORP’s nominees on the Board of the Company upon completion of the Proposed Placement. Given the Subscription Agreement provides there shall be five directors of the Company, Mr Paul Cowan has agreed to resign from the current Board, subject to the successful completion of the Proposed Placement on the terms provided herein by no later than 15 November 2009.

11.5 Cash Converters’ management

In accordance with discussions held between Cash Converters and EZCORP, the existing management team of Cash Converters will continue to be responsible for and manage the day to day operations of the Company, under the direction of Cash Converters’ Board. The Company will also continue to operate from its Australian headquarters.

11.6 EZCORP’s intentions regarding Cash Converters

EZCORP has indicated to the Company that its intention in relation to the Company, following the implementation of the Proposed Placement, is to be a long term, strategic shareholder. Further, Cash Converters understands that EZCORP’s current intentions in relation to the Company are:

• not to make any major changes to the business of the Company or to redeploy any of its fixed assets

• not to make any further injections of capital into the Company (other than possibly pursuant to share purchase plans, rights issues or other pro-rata issues of securities)

• not to require any change to the employment of the present employees of the Company (except the changes to the Board of Directors of the Company referred to above)

• not to transfer any property between the Company, EZCORP or any of their associates

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• not to change significantly the financial or dividend policies of the Company.

11.7 Voting rights and control

As noted previously, EZCORP will acquire a 30 percent interest in the expanded issued capital of Cash Converters, which will entitle EZCORP to a similar relevant interest in the voting rights of the Company. In addition, consistent with its status as to the major shareholder of the Company, EZCORP will be entitled to nominate two directors to the Board of Cash Converters. Accordingly, having regard to both its shareholding in the Company and its Board representation, EZCORP will be in a position to significantly influence the future direction and strategy of the Company, however it will not control Cash Converters and will require the support of other shareholders/directors to implement any ordinary resolutions requiring shareholder/Board approval. We note, however, that EZCORP will have the ability to block any special resolutions put by the Company, which require a 75 percent majority.

12 Assessment of the Proposed Placement

Our assessment of the key issues that the non-associated shareholders should have regard to in deciding whether to approve the Proposed Placement are set out below.

12.1 The Proposed Placement is not fair as the proposed issue price lies below our range of assessed fair values for a Cash Converters share inclusive of a full premium for control

We have assessed the current fair value of Cash Converters, inclusive of a full premium for control in the range of $174.5 million to $192.5 million, or between $0.69 and $0.76 per fully diluted Cash Converters share.

As the proposed issue price of $0.50 per Cash Converters share lies below our range of assessed fair values, the Proposed Placement is not fair.

12.2 In the absence of a superior offer, the Proposed Placement is reasonable despite being “not fair” as there are sufficient reasons for shareholders to approve the Proposed Placement

Under RG 111 the Proposed Placement may still be considered reasonable if, despite being “not fair”, there are sufficient reasons for shareholders to approve the Proposed Placement in the absence of a superior offer. In determining the Proposed Placement is reasonable we had regard to the following principal matters.

Advantages

Approval of the Proposed Placement will enable Cash Converters’ to accelerate its strategic initiatives Historically Cash Converters’ principal source of revenue has been from the collection of franchising fees. Commencing in 2006 with the acquisition of Safrock and MPL, the Company has sought to diversify its earnings stream through the development and distribution of high return micro-lending products. Today, approximately 31 percent of Cash Converters’ operating revenue is sourced from micro-lending activities.

In recent times, Cash Converters has embarked upon a strategy to acquire existing franchise stores and also roll out new stores in both Australia and the UK, which the Company expects will enable it to:

• respond more nimbly to any changes in regulatory requirements around the provision of consumer credit products

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• grow its second hand goods offerings both in-store and on-line

• more importantly, facilitate the wider distribution and deeper market penetration of its micro lending products.

Whilst in the absence of the Proposed Placement, the Company considers that it has good prospects for continued growth through pursuit of this strategic initiative, the speed of its development and growth will be potentially be limited by the on-going need for funds to underwrite its expansion programme. In the absence of the Proposed Placement, this funding is expected to come from a mixture of free cash flow from operations and, where available, ad hoc equity and/or debt raisings (although we note that based on the Company’s recent disappointing equity raising, where it sought to raise $15 million but was only able to raise $5.0 million - $4.75 million net of cash - at an issue price of $0.40 per share, representing a discount of 3.6 percent to the prevailing market price, there must be some uncertainty as to the Company’s ability to raise significant levels of equity funding outside of the Proposed Placement on terms equal to or more favourable than those contemplated under the Proposed Placement).

Completion of the Proposed Placement will provide Cash Converters with a significant pool of funds to grow its business at a more rapid rate than otherwise would likely be the case. We note that in 2009 Cash Converters grew the size of its loan book by 55 percent, requiring a “lock-up” of funds of $21.5 million, whilst also completing the purchase of 15 stores for a combined consideration of $12.0 million.

Having regard to the prevailing economic conditions, particularly in the UK, the Company believes that the availability of funds from the Proposed Placement will enable it to take advantage of the availability of prime locations and relatively low site rentals for leasehold properties and to grow its micro-lending product distribution at an advantageous point in the business cycle, which may not be available, at least to the same extent, in the event the Company is required to slow its level of investment due to the availability of funding and timing issues.

In our view, completion of the Proposed Placement will facilitate achievement of the strategic initiatives Cash Converters was pursuing prior to the announcement of the Proposed Placement, within a much quicker timeframe than Cash Converters would otherwise be able to achieve.

Approval of the Proposed Placement will provide Cash Converters with a strategic and financially robust cornerstone investor If the Proposed Placement proceeds, EZCORP will own 30 percent of the expanded Cash Converters. A significant factor in Cash Converters entering into the agreement with EZCORP was its view that, with EZCORP as a major shareholder, the Company would be able to leverage off EZCORP’s financial strength, track record and experience.

EZCORP is a significant US company that is well funded and well placed to provide funding to Cash Converters. For the year ended 30 September 2008, EZCORP reported an audited consolidated net profit of approximately US$52.4 million (approximately $65.0 million) on consolidated operating revenue of US$455.3 million (approximately $564.7 million). As at 30 June 2009, EZCORP held cash and cash equivalents totalling US$46.5 million (approximately $57.7 million) and total debt of US$37.5 million (approximately $46.5 million).

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As a major international pawn shop owner/operator, EZCORP possesses know-how, expertise and experience in the operation of a corporate store chain, from which Cash Converters and all of its key stakeholders stand to benefit. In our opinion, there is a commercial logic to the alliance, and with a significant shareholding in Cash Converters, EZCORP will be incentivised to ensure the alliance with the Company succeeds, whilst the non- associated shareholders will participate in any benefits that may be realised from the alliance with EZCORP.

EZCORP has advised the Company that its long-term intentions in relation to Cash Converters are, inter alia to:

• work with Cash Converters’ management to develop the business of Cash Converters in Australia and overseas. EZCORP has indicated it also intends to support Cash Converters’ management in the implementation of its strategic initiative to grow the Company’s business by acquiring franchised stores and increasing the size of Safrock’s loan book

• support Cash Converters in developing its business in corporate store ownership and operation. EZCORP also sees opportunities to grow Cash Converters’ capabilities.

Approval of the Proposed Placement will improve Cash Converters’ net asset position and cash reserves

Based on the unaudited management accounts of Cash Converters as at 30 June 2009, and after adjusting for the capital raising completed by the Company in July 2009, the Company had net assets attributable to its shareholders of approximately $87.2 million, representing a net asset backing per share of approximately $0.35. Completion of the Proposed Placement will result in a cash injection of approximately $54.109 million into the Company, which will improve the net asset position attributable to Cash Converters’ shareholders by approximately 62 percent to $141.3 million and increase the net asset backing of the Company’s shares to $0.39.

The Proposed Placement may increase the liquidity of Cash Converters’ shares

As a result of the strengthening in the Company’s financial position, its increased market capitalisation, the demonstrated support of a strategic investor and growth over time in the Company’s scale, this may result in an increased following by market commentators and investors.

Cash Converters is currently included toward the lower end of Standard & Poor’s S&P - ASX 300 index. All other things being equal, the increase in the Company’s market capitalisation should move the Company towards the top end of this market index.

We would expect any increase in investor interest should also result in an increased level of liquidity in the Company’s shares.

Conversely, the Proposed Placement will provide EZCORP with voting interests in the Company of 30 percent. Given EZCORP’s stated intentions to be a long-term strategic holder in Cash Converters, the likelihood of a takeover bid being received from a third party may be reduced, as any bid would require the acceptance of EZCORP in order to be successful. As this could in turn reduce the prospect of shareholders receiving a takeover premium in the future, this may reduce the attractiveness of the Company to some investors, adversely impacting liquidity.

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Given the Proposed Placement does not involve the issue of shares to shareholders upon the acquisition of another company and has been announced in the market for some time, we would not expect approval of the Proposed Placement to create a significant overhang in the market for Cash Converters shares.

Disadvantages

EZCORP is not paying a premium to acquire its stake in Cash Converters We have assessed the fair market value for a Cash Converters shares of between $0.69 and $0.76 per share, inclusive of a full premium for control, which compares to the proposed issue price of $0.50 for the shares to be issued to EZCORP under the Proposed Placement. We also note that the issue price lies below both the closing price for a Cash Converters share on the day prior to the announcement of the Proposed Placement of $0.53 per share and on the day prior to the date of this report of $0.615 per share.

In contrast, the issue price of $0.50 per Cash Converters share represents a premium to the VWAP at which Cash Converters shares traded at various points in the period leading up to the announcement of the Proposed Placement. Table 31: Premium/discount of consideration over historical trading prices Period prior to Cash Converters EZCORP % Premium/discount 18 August 2009 VWAP consideration $ $ 1 month 0.48 0.50 4.2% 3 months 0.46 0.50 8.7% 6 months 0.43 0.50 16.3% 12 months 0.38 0.50 31.6% Source: IRESS and KPMG analysis

As noted previously, takeovers transactions in Australia are typically completed with an implied acquisition premium in the order of 25 percent to 40 percent to the pre-trading equity price of the target, based on our analysis of publicly available data.

In considering this it is important to note however that:

• whilst we are required under RG111 to assess the fairness of the transaction assuming it involved the acquisition of a 100 percent interest in Cash Converters, EZCORP is in fact only acquiring a 30 percent interest in the Company and will be entitled to nominate two directors out of five. Accordingly, EZCORP will be in a position to exert a significant degree of influence on the future operations and strategies of Cash Converters, it will not have free and unfettered control over the affairs of the Company. In these circumstances we would not consider it to be commercially appropriate to expect an acquirer to pay a full premium for control

• following completion of the Proposed Placement, existing Company shareholders will be entitled to 70 percent of the expanded capital base of Cash Converters. Accordingly, existing shareholders will

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participate pro rata in any benefits that may be realised from the acceleration of Cash Converters’ strategic plan as a result of deploying the consideration being received from EZCORP.

Other key considerations

Cash Converters has been unsuccessful in the recent past in its pursuit of alternative sources of equity The most recent capital raising conducted by Cash Converters was a share placement completed during July 2009, which raised $5.0 million (before $0.25 million in costs) through the issue of 12.5 million shares at $0.40 per share, representing a discount to the prevailing market price from Cash Converters at the time of 3.6 percent.

Management has advised that they had originally sought to raise $15 million and undertook a series of road shows to broking houses around Australia in support of this, however as a result of a lack of interest for an equity raising of this quantum without a discount to the prevailing market price for Cash Converters shares, the equity raising was scaled back to $5 million and was supported by a single broking house.

We note that the proposed issue price being paid by EZCORP of $0.50 per new Cash Converters share represents a 25 percent increase to the issue price of the July 2009 placement and is free of costs, however, we note this placement was completed prior to the final results for the year ended 30 June 2009 and the Company’s budgeted result for the year ending 30 June 2010 being made known to the market. We also note that whilst the Proposed Placement represents a discount to the closing share price for a Cash Converters share on the day prior to the announcement of the Proposed Placement of 5.7 percent, it represents a premium of between 4.2 percent and 31.6 percent to the VWAP for a Cash Converters’ share measured at various points over the 12 months to the date of announcement of the Proposed Placement.

As noted previously, given the low level of interest and the disappointing results of the recent equity raising completed by the Company, there is no certainty that an alternative equity participant(s) willing to offer improved terms would be able to be identified. In this regard, no alternative offer has emerged in the period subsequent to the announcement of the Proposed Placement.

We also note that the proposed issue price of the shares to EZCORP is greater than the issue price of any share issues completed by Cash Converters in the past two years.

Management believes that EZCORP would be unwilling to accept less than a 30 percent interest in Cash Converters Management has advised that they have previously explored the option of EZCORP taking an interest in Cash Converters of less than 30 percent, but that this option was not supported by EZCORP. Accordingly it is Management’s view that, in the event approval for the Proposed Placement is not secured, there is a strong possibility that EZCORP will withdraw its offer to subscribe for equity entirely.

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We note that EZCORP has held a 30 percent strategic shareholding in Albermarle & Bond, a company listed on the Alternative Investment Market in the UK for a extended period. Albermarle & Bond is one of the largest pawnbrokers in the UK, which provides anecdotal evidence that the level of shareholding being sought in Cash Converters by EZCORP is consistent with EZCORP’s general investment approach.

It is not unusual for Placements to be completed at a discount to prevailing market prices Our research indicates that it is not unusual for placements to be completed at a discount, sometimes significant, to a company’s prevailing market price. Recent examples of placements completed in the retail and diversified financials sectors of the Australian market place are set out in the table below. Table 32: Recent placements completed in the retail and diversified financials sectors of the Australian market place Company Date Placement Last closing Premium / announced price price prior to (discount) announcement prior to announcement

OnCard International Ltd 18-Aug-09 $0.200 $0.180 11.1% Euroz Ltd 17-Aug-09 $0.900 $1.335 -32.6% Aurora Sandringham Dividend Income 14-Aug-09 $1.090 $1.080 0.9% Trust Quickflix Ltd 11-Aug-09 $0.050 $0.049 2.0% Aurora Infrastructure Buy-Write Income Trust 11-Aug-09 $8.260 $8.000 3.3% Wilson HTM Investment Group Ltd 31-Jul-09 $0.780 $1.050 -25.7% Bisan Ltd 21-Jul-09 $0.050 $0.050 0.0% Cash Converters International Ltd 8-Jul-09 $0.400 $0.415 -3.6% Mercury Brands Ltd 6-Jul-09 $0.010 $0.014 -28.6% Count Financial Ltd 2-Jul-09 $1.330 $1.320 0.8% Quickflix Ltd 29-Jun-09 $0.050 $0.079 -36.7%

Source: Bloomberg and Connect 4

EZCORP could, at least in theory, acquire a similar strategic interest in Cash Converters in the absence of the Proposed Placement, albeit over an extended period. Section 606 of the Act, provides a general prohibition to any person with a relevant interest of 20 percent or more of the voting capital of a company from increasing their interest in the absence of a takeover offer. There

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are, however, various exemptions to this rule set out in Section 611 of the Act, including the acquisition of up to three percent of a Company’s issued share capital within any six-month period.

Accordingly, in the absence of the Proposed Placement, it is conceivable that EZCORP could enter the market to acquire the same number of shares currently proposed to be issued under the Proposed Placement. However, we note that given the level of liquidity in Cash Converters shares, it is likely this would be required to be achieved over an extended period of time, which, in our opinion, is unlikely to be attractive to EZCORP.

The practical impact of this if it did happen would however be that:

• EZCORP would be required to pay the prevailing share price at the relevant time, which, whilst currently at a premium to the proposed issue price, will be subject to future movements in the Company’s share price

• more importantly, the funds paid by EZCORP to acquire shares on-market would remain outside of the Company and would be to the benefit only of those shareholders from which EZCORP acquired additional Cash Converters shares and not pro-rata to Company shareholders as a whole.

Mr Paul Cowan, a non-executive director nominated to the Board by River Capital, one of the Company’s shareholders, has advised the Board that he believes the terms of the Proposed Placement to be unfair as it will provide EZCORP with a controlling interest in the Company without any control premium being paid, and will lessen the prospect of shareholders receiving a takeover premium in the future.

As a consequence of Mr Cowan’s intended resignation on completion of the Proposed Placement, Mr Cowan has advised the Board that he currently believes that it is not appropriate for him to make any further comments relating to the acquisition of shares by EZCORP. Additionally, given Mr Cowan does not hold a relevant interest in the shares held by River Capital, Mr Cowan has advised that he is unaware, as at the date of this report, as to how River Capital intends to vote in relation to the resolution.

The Company considers it has good prospects in the absence of the Proposed Placement In the event the Proposed Placement is not approved, Management has indicated that the Company will still remain listed on ASX and LSE and the Company will continue to pursue its policy of store acquisitions and the growth of the Safrock loan book.

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Appendix 1 – KPMG disclosures Qualifications

The individuals responsible for preparing this report on behalf of KPMG are Mr Jason Hughes and Mr Ian Jedlin.

Jason Hughes is a Partner in the KPMG Partnership and an Executive Director in KPMG. Jason is an Associate of the Institute of Chartered Accountants in Australia, a Fellow of the Financial Services Institute of Australasia and holds a Bachelor of Commerce from the University of Western Australia. Jason has extensive experience in the preparation of independent expert reports and corporate valuations.

Ian Jedlin is a Partner in the KPMG Partnership, an Executive Director in KPMG and Partner in Charge of KPMG’s National Valuations Group. Ian is an Associate of the Institute of Chartered Accountants in Australia, a Fellow of the Financial Services Institute of Australasia and holds a Master of Commerce from the University of New South Wales. Ian has over 19 years experience in the preparation of independent expert reports.

Messrs Hughes and Jedlin were assisted in the preparation of this report by other staff of KPMG as required.

Disclaimers

It is not intended that this report should be used or relied upon for any purpose other than KPMG’s opinion as to whether the Proposed Placement is fair and reasonable. KPMG expressly disclaims any liability to any Cash Converters shareholder who relies or purports to rely on the report for any other purpose and to any other party who relies or purports to rely on the report for any purpose whatsoever.

Other than this report, neither KPMG nor the KPMG Partnership has been involved in the preparation of the Explanatory Statement to which this report is attached or any other document prepared in respect of the Proposed Placement. Accordingly, we take no responsibility for the content of the Explanatory Statement as a whole or other documents prepared in respect of the Proposed Placement.

Independence

KPMG is entitled to receive a fee in the order of $70,000, excluding GST, for the preparation of this report. Except for these fees, KPMG has not received and will not receive any pecuniary or other benefit whether direct or indirect for or in connection with the preparation of this report.

The aggregate of these fees is not material to either KPMG or the KPMG Partnership either on a national or individual Perth office basis.

Employees of KPMG, the KPMG Partnership and its affiliated entities may hold securities in Cash Converters. However, no individual involved in the preparation of this report, or review thereof, holds a direct interest in the securities of Cash Converters. With the exception of these matters, neither KPMG or the KPMG Partnership will receive any other benefits, whether directly or indirectly, for or in connection with the making of this report.

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During the course of this engagement, KPMG provided draft copies of this report to management of Cash Converters for comment as to factual accuracy, as opposed to opinions, which are the responsibility of KPMG alone. Changes made to this report as a result of these reviews have not changed the opinion reached by KPMG.

Consent

KPMG consents to the inclusion of this report in the form and context in which it is included with the Explanatory Statement to be issued to the non associated shareholders of Cash Converters. Neither the whole nor the any part of this report nor any reference thereto may be included in any other document without the prior written consent of KPMG as to the form and context in which it appears.

Indemnity

Cash Converters has agreed to indemnify and hold harmless KPMG, the KPMG Partnership and/or KPMG entities related to the KPMG Partnership against any and all losses, claims, costs, expenses, actions, demands, damages, liabilities or any other proceedings, whatsoever incurred by KPMG, the KPMG Partnership and/or KPMG entities related to the KPMG Partnership in respect of any claim by a third party arising from or connected to any breach by Cash Converters of the Company’s obligations. Cash Converters has also agreed that KPMG, the KPMG Partnership and/or KPMG entities related to the KPMG Partnership shall not be liable for any losses, claims, expenses, actions, demands, damages, liabilities or any other proceedings arising out of reliance on any information provided by you or any of your representatives, which is false, misleading or incomplete. The Company has agreed to indemnify and hold harmless KPMG, the KPMG Partnership and/or KPMG entities related to the KPMG Partnership from any such liabilities we may have to you or any third party as a result of reliance by KPMG, the KPMG Partnership and/or KPMG entities related to the KPMG Partnership on any information provided by you or any of your representatives, which is false, misleading or incomplete.

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Appendix 2 – Sources of information

In preparing this report we have been provided with and considered the following sources of information:

Publicly available information:

• Cash Converters’ Annual and Half-year financial statements, including the Company’s Appendix 4E for the year ended 30 June 2009

• various other Cash Converters’ ASX company announcements

• EZCORP’s 2008 Annual Report and 30 June 2009 Quarterly Report

• various other EZCORP company announcements

• comparable companies’ Annual and Half-year financial statements

• comparable companies’ company announcements

• Subscription Agreement

• Draft Notice of General Meeting, Explanatory Statement and Proxy Form

• various broker and analyst reports

• various press and media articles

• various reports published by IBISWorld Pty Ltd, the Australian Federal Government, the NSW Office of Fair Trading, Consumer Credit Legal Service (Vic), Consumer Action Law Centre, Cash Converters and Policis

• financial information from IRESS, Bloomberg and Connect 4 (we note that IRESS, Bloomberg and Connect 4 have not provided consent to the use of the reference in this report which will accompany the Explanatory Statement)

• acquisition data, sharemarket data and related information on Australian and international listed companies

• various economic and industry analysis prepared by brokers, market commentators and government agencies

• company websites

Non-public information

• Cash Converters’ shareholder register

• Cash Converters’ June 2009 management accounts

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• Cash Converters’ budget for the year ending 30 June 2010

• Cash Converters’ cash flow models/forecasts for the Company and its two business units, being Store operations and Financing, for the five years ending 30 June 2014

In addition, we have had discussions with certain Cash Converters’ directors and its management.

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Appendix 3 – Profile of retail second hand goods industry

Industry Overview

Businesses in this industry are involved in purchasing second hand goods from the general public and selling these goods back to consumers. There is usually little or no development or improvement of the goods in this process. Some types of goods commonly traded in this manner include electrical items, furniture, clothing, jewellery and books.

IBISWorld estimates the antique and used goods retailing industry collected approximately $2,248 million in revenue in Australia in the year ended 30 June 2008. The industry has experienced moderate growth in the last five years, as shown by the chart below. Figure A3-1: Second hand goods industry revenue

2,500

2,000

1,500

1,000

Industry revenue ($ millions) ($ revenue Industry 500

0 2003 2004 2005 2006 2007 2008 Year ended 30 June

Source: IBISWorld

In the same time period, the number of establishments involved in the retailing of second hand goods has fallen year on year. This is largely due to the consolidation of industry players driven by the increasing popularity of the internet as an avenue to source and buy second hand goods. The trend of falling establishment numbers is observable in the chart below.

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Figure A3-2: Second hand goods industry establishments

5,500

5,000

4,500

4,000 Number of establishments

3,500 2003 2004 2005 2006 2007 2008 Year ended 30 June

Source: IBISWorld

Demand

The demand for general used goods such as furniture, electrical goods and clothing is counter-cyclical. As household disposable incomes increase, consumers will prefer to purchase new items. When incomes are low consumers tend to turn to the option of buying second hand goods.

Similarly, the incentive for consumers to pawn their items for cash is stronger in times when their incomes are low.

In contrast, the demand for antique and collectable used goods will move in line with changes in income. As this is non-essential spending, wealthier consumers tend to purchase goods of this sort. The demand for collectable items is strongly influenced by the occurrence of special events, such as the Olympic Games.

The prevalence and popularity of internet auction sites has seen demand for used goods and collectable goods generally increase. Websites such as eBay provide a secure, convenient and anonymous medium to shop for goods of this nature.

Supply

IBISWorld describes the level of industry concentration as low, with the majority of the market made up of small independent operators selling a diverse range of goods. Numerous antique and second hand goods retailers are family businesses which only operate in their local area. Nevertheless, over the last five years

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concentration levels have been rising due to a consolidation of players (with the number of establishments down approximately 12 percent over the five years ended 30 June 2008). The key factor driving the consolidation activity has been the increasing popularity of internet auction sites such as eBay.

During 2009, IBISWorld describes the level of competition in the industry as medium to increasing. Internet auction sites have provided a significant and growing level of competition for second hand goods retailers. These have been very popular with consumers, as they can conveniently search for rare items, research and compare prices, and make purchases securely. In addition, websites such as eBay provide a much lower cost medium for buyers and sellers to trade in used goods. For these reasons, the business of second hand goods retailers has been adversely affected by the growth in online auction trade.

Recent industry performance

According to IBISWorld estimates, the antique and used goods retailing industry has experienced real growth in revenue averaging 4.7 percent per year for the five years ended 30 June 2007. In the year ended 30 June 2008, the industry experienced real revenue growth of 5.8 percent. This growth has occurred in more advantageous economic circumstances, with lower economic growth and rising unemployment generally associated with growth in second hand goods. With the current deterioration in the economic climate, this growth is expected to continue with the pawn industry historically flourishing in times of economic downturn.

The second hand goods industry will continue to face growing competition from internet auction sites as internet security and reliability increases.

Regulation

There are low levels of regulation in the second hand goods industry.

For a business to sell used goods, it must be a licensed second hand dealer. Operating as a second hand dealer without a valid license will attract a fine in most States of Australia. The licensing of second hand dealers is handled by the Department of Fair Trading in each State or its equivalent.

The requirement to be licensed, and other regulation, is contained in the Second-Hand Dealers and Pawnbrokers Act in a number of States.

Industry outlook

The forecast from IBISWorld is that in the five years ending 30 June 2014, the industry will experience an average annualised rise in gross product of 3.8 percent per annum. This compares to IBISWorld’s forecast of average annualised growth in total Australian Gross Domestic Product of 2.7 percent per annum over the same period.

IBISWorld predicts that over this period enterprise numbers are likely to fall by an average annualised rate of 0.4 percent per annum due to the increasing popularity of internet auction sites and the consolidation in the industry this is likely to create.

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Appendix 4 – Profile of short-term lending industry

Industry Overview

The short-term lending industry is a small industry operating on the fringe of the larger consumer credit industry. The short-term lending industry provides loans ranging in value from $100 to $2,000. Recent research conducted by the Consumer Action Law Centre indicates that 40 percent of short-term loans are for $500 or more and 14 percent are for $1,000 or more. Loans tend to be for short periods of time (normally two to four weeks) and will attract comparatively high rates of interest or substantial fees and charges. There is no restriction on the use of the loan and funds are typically used to pay bills or cover day-to-day living expenses. Repayment of the loan and associated fees, charges and interest is typically arranged through a direct debit to the borrower’s bank account.

Loans of this type can be described using a number of different terms, including short-term lending, cash advance, short-term loan, fringe credit and micro lending. In this section, the term short-term lending will be used for consistency.

The Consumer Action Law Centre has noted that lending of small amounts for personal use has become increasingly popular in Australia, mirroring similar trends in other Western industrialised nations. The US, UK and Canada have all experienced comparable growth in the provision and use of short-term lending. The industry has gone from being non-existent in the mid-1990s to having substantial numbers of outlets in each of the countries listed above.

Demand

The key clientele of short-term lending providers are low-income workers. A report by independent research consultants states that 49 percent of short-term borrowers earn less than $35,000 per annum. The report set out that six in 10 borrowers live in households where no individual is in full time employment and three in 10 borrowers have no alternative credit options. In most cases, short-term borrowers are repeat customers, with US data suggesting most short-term borrowers take out more than seven short-term loans each year.

Growth in the demand for these financial services has been strong, as noted by the Consumer Action Law Centre. This trend has been driven by a number of factors, including:

• deregulation of the mainstream finance industry and withdrawal of services offered to lower income groups

• stagnating or declining real incomes amongst low income workers

• increasing incidence of casual and part-time work

• increasing use of credit amongst all groups

• increasing levels of household debt and bankruptcy.

Other key contributors to demand are that these loans will often be available to any customer regardless of credit history, can be used for any purpose, do not require security and can be obtained through a quick and simple process.

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Supply

The provision of short-term lending has greatly increased in line with the popularity of the service. Numerous small operators have largely provided these short-term lending services. Larger banks such as the Commonwealth Bank and ANZ have minimum loan amounts ranging from $3,000 to $5,000, removing them as competitors in this area.

In May 2008, National Australia Bank Ltd (NAB) launched a Small Loans Pilot. The two-year pilot is a partnership between NAB and Mobile Finance Pty Ltd (trading as Money Fast), who provide small personal loans of between $1,000 and $5,000 for a 12-month term.

Other sources of cash and credit are also perceived by customers of short-term lenders to be less attractive. Pawn broking is seen as a last resort and associated with desperation. Credit cards have the disadvantages of no fixed repayment date and excessive credit limits that could be easily reached. Some customers also try to avoid loans from friends and family as it deprives them of independence and reveals their financial situation to others.

There are a number of alternatives for people in severe financial hardship, however, these are not as well known or promoted through media campaigns. These alternatives include Centrelink advance payments, ‘no interest loan schemes’ offered by community groups, assistance from charities such as the Salvation Army and the NAB’s ‘step up’ loan with no fees and charges and low interest.

Short-term lenders first appeared in the US in the mid 1990s. The first Australian operation began in Queensland in December 1998. Since then, the Consumer Action Law Centre has observed that the industry has experienced strong growth.

Regulation

The activities of short-term lenders have come under substantial governmental and media scrutiny in recent years, primarily as a result of high interest rates and the economic impact upon low-income earners.

Another criticism of providers of short-term cash loans is that they fail to assess the capacity of customers to repay debt. This results in increasing debt levels at high interest rates for people who cannot afford to make repayments. In combination with the potential for rollover or back-to-back loans, this can mean that customers are caught in a debt spiral.

A Senate Community Affairs References Committee reported that interest rates on short-term lending can be up to 2,000 percent per year and that a typical short-term loan of $200 over two weeks could attract fees, charges and interest equating to 522 percent per year. A Griffith University paper estimated that the average annual percentage rate for a short-term loan to be 805 percent per annum.

State-based Regulation In 2001, the Queensland Government imposed restrictions on loans not exceeding 62 days. These specified that any fee or charge could not exceed five percent of the amount of credit and any interest rate could not exceed 24 percent per year. Any loans not meeting these requirements would be regulated by the Uniform Consumer Credit Code (the Credit Code). The Credit Code required disclosure of the fees and charges payable as well as an assessment of a consumer’s capacity to repay the loan. In 2008, the Queensland Government implemented

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legislation that put a 48 percent cap on interest rates (including fees and charges) on all consumer credit loans in the State.

In 2001, the NSW Government required short-term lenders providing loans for less than 62 days to include all fees and charges into the calculation of an annual percentage rate that could not exceed 48 percent. In March 2006, the calculation and cap was extended to all consumer credit loans, regardless of duration. The Australian Capital Territory (ACT) has introduced similar legislation to that of NSW.

The Victorian Government also imposes a 48 percent cap similar to that of Queensland, NSW and the ACT. However, consumer advocacy groups have criticised the Victorian legislation for failing to include all associated fees and charges into the calculation of the annual rate. Consumer advocacy groups such as the Consumer Credit Legal Service (Vic) are pushing for the 48 percent cap in Victoria to cover all interest, fees and charges in a similar way to the regulation in Queensland, NSW and the ACT. They argue that the exclusion of fees and charges creates an easily exploitable loophole allowing lenders to effectively charge a rate over the statutory limit. Examples of this modification are visible in arrangements such as those where borrowers are charged no interest, but the imposition of fixed fees results in a significant annualised percentage cost.

In relation to Western Australia, South Australia and Tasmania, no legislation currently exists that caps loan interest rates.

National Consumer Credit Protection Reform In early 2008, the Australian State Governments agreed that the Australian Federal Government should adopt responsibility for the national regulation of consumer credit. The stated purpose was to create uniform laws, as opposed to the current State-based regulation that operates inconsistently across eight jurisdictions, and in the process provide the opportunity for lawmakers to strengthen or modify existing legislation.

The Australian Federal Government plans to take control of the regulation of credit from the States and Territories in two stages (and with two pieces of legislation). The draft legislation for the first stage was introduced into Federal Parliament in June 2009. The major impact of the Bill is to ensure that loan providers are licensed, practice responsible lending and properly train and supervise people who act on their behalf. The Bill also gives ASIC broad ranging powers in relation to administering and enforcing the new law.

In order to satisfy the requirement of responsible lending, lenders will have to consider if a loan is suitable for a consumer, and if the consumer has the capacity to pay, before providing the loan. As a result, there will be obligations on credit providers and licensees providing credit assistance to make reasonable enquiries about a consumer’s financial situation and to take reasonable steps to verify the consumer’s financial situation and capacity to repay. Such legislation could actually increase some industry participants’ competitive advantage because these systems may already be in place.

Assuming that the Bill is passed into law with no changes to the timelines, the licensing process will commence on 1 January 2010. Before 1 January 2010, all persons engaging in credit activities will need to be registered with ASIC and must apply for this registration between 1 November 2009 and 31 December 2009. They will then have six months, between 1 January 2010 and 30 June 2010, to apply for an Australian Credit Licence. All persons who engage in credit activities for the first time on or after 1 January 2010 must apply for and receive an Australian Credit Licence before commencing business.

83 © 2009 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG. ABCD Cash Converters International Limited Independent expert report & Financial services guide 16 September 2009

The second piece of legislation is not due to be drafted / introduced into Federal Parliament until mid 2010 and is the legislation that may include interest rate caps. Given that lawmakers tend to conclude that microlending is a necessary part of the economy, certain economic commentary indicates that although a national interest rate cap will probably be introduced, it is unlikely to be an extreme piece of legislation. In any event, most States and Territories already have interest rate caps in place as set out above. Other areas identified by the Federal Government as potentially requiring national regulation under the second phase include reducing predatory or undesirable lending practices, such as unsolicited credit card limit extension offers, and possible regulation of reverse mortgages.

The response of short-term lenders to criticism of excessive charges has been that the rates are reasonable when considering the establishment and administration cost of the loans. As these costs are largely inelastic relative to the loan amount and loan term, fees and charges when annualised become extremely high for a short-term loan of a small amount. Cash Converters argued in its May 2009 ‘Response to the Public Exposure of National Consumer Credit Protection Bill 2009’ that the imposition of annualised capping may result in an unviable service, as returns may not actually cover the underlying cost of providing the short term loan.

Industry outlook

The short-term lending industry faces opportunities and threats in the future, especially in the current economic environment. With other lenders less inclined to lend in the current recessionary economic environment and a greater number of people in financial distress, short-term lenders are likely to see an increase in demand for their services. However, like the mainstream lenders, short-term lenders are seeing a greater number of defaults on loans.

Short-term lenders also face threats in terms of the regulation of the industry. Many consumer advocacy groups are pushing for amendments to the 48 percent interest cap on short-term loans. These groups are pushing for the cap to be inclusive of all fees and charges. These amendments would substantially cut into the profitability of short-term lenders. Many economic commentators predict that under the proposed changes, many short-term lenders would withdraw from the market.

Software to facilitate short-term lending

An important part of the provision of short-term lending is in software support. Short-term lenders require software to facilitate the input of information regarding the customer’s identification, payslips and proof of address. It is also helpful if the system designed can suggest a maximum lending amount based on the input information, and record repayment configuration and arrange for direct debits to take place at the agreed times. Further services offered in this area can include support such as help desk services, training, auditing and compliance checks.

A number of key influences on software development include:

• growth in the wider short-term lending industry. Increasing demand for short-term lending services will be the largest driver for demand of software facilitating the provision of short-term lending

• rate of change of technology. Quickly improving technology is beneficial to the extent that it can lower costs, but it also means that software producers must continually update their products to offer a high quality service offering and remain competitive

84 © 2009 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG. ABCD Cash Converters International Limited Independent expert report & Financial services guide 16 September 2009

• development of technology infrastructure. Improvements to infrastructure such as the broadband network will allow greater effectiveness and efficiency in networking and communication

• threat of outsourcing. IBISWorld identify labour as the biggest cost component for software developers. As a result, many customers with software development needs are looking to other countries with high skills and lower wages (in particular China and India) to have their project needs met.

As a result of the youth of the short-term lending industry and the presence of only a few large players in the market, there are few providers of software to facilitate short-term lending. However, if short-term lending is to continue to expand, this situation may change. In addition, short-term lenders may look to use generic software or engage other systems designers to meet their software requirements.

85 © 2009 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG. ABCD Cash Converters International Limited Independent expert report & Financial services guide 16 September 2009

Appendix 5 – Description of companies selected for comparison

Table A5-1: Description of companies selected for comparison - franchise and discount retail

Companies selected for comparison – Franchise and discount retail

Australian Clive Peeters Ltd (Clive Clive Peeters retails a wide range of electrical appliances. Clive Peeters Peeters) products include dishwashers, ovens, rangehoods, refrigerators and freezers. EZCORP EZCORP owns and operates pawn shops that serve as sources for consumer credit and retail previously-owned merchandise. EZCORP operates in the US. First Cash Financial First Cash operates pawn stores. First Cash’s stores lend money on the Services Inc (First Cash) collateral of pledged personal property and retail previously-owned goods acquired through loan forfeitures. First Cash also operates cheque cashing stores and provides software to third-party operators in the cheque cashing industry. Harvey Norman Holdings Harvey Normans is a holding company for companies and trusts in a third party Ltd (Harvey Norman) franchise agreement. The franchises operate stores under the name “Harvey Norman Discounts”, selling homewares and electrical goods. Harvey Norman also provides advisory and advertising to the franchises. In addition, Harvey Norman provides consumer finance and has property investments. JB Hi-Fi Ltd (JB Hi-Fi) JB Hi-Fi is a music and electronic goods retailer in Australia. JB Hi-Fi operates stores at sites located in most Australian States. Products include consumer electronics, car sound systems, music and DVDs. The Reject Shop Ltd (The The Reject Shop operates discount retail stores in Victoria, NSW, South Reject Shop) Australia and the ACT. The Reject Shop’s discount stores offer a variety of merchandise such as apparel, housewares, leisure, personal care and hardware and furniture. The Warehouse Group Ltd The Warehouse Group operates general merchandise and stationery supply (The Warehouse Group) retail stores throughout New Zealand.

Table A5-2: Description of companies selected for comparison - short-term lending

Companies selected for comparison – Short-term lending

Australian FlexiGroup Ltd FlexiGroup provides retail point of sale lease and retail finance for information (FlexiGroup) technology equipment and electrical applicances. FlexiGroup’s products include desktop and laptop computers, computer peripherals and software, audio visual equipment and white goods and brown goods.

International Advance America Cash Advance America Cash provides short-term cash advance services to middle- Advance Centres Inc income working individuals in the US. (Advance America Cash)

86 © 2009 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG. ABCD Cash Converters International Limited Independent expert report & Financial services guide 16 September 2009

Companies selected for comparison – Short-term lending Albemarle & Bond Albemarle & Bond provides pawn brokering services. Albemarle & Bond through its subsidiaries provide pawnbroking, cheque cashing services, retail jewellery sales and unsecured lending. Albemarle & Bond operates in the UK. Cash America International Cash America provides specialty finance services to individuals in the US, the Inc (Cash America) UK and Sweden. Cash America offers secured non-recourse loans, also known as pawn loans. Cash America also provides cheque cashing services and rental services through its subsidiaries. Cattles Plc (Cattles) Cattles operates a financial services company. Through its subsidiaries, Cattles provides consumer credit, instalment loans, hire purchase credit, debt collection, reinsurance, investigation services and a number of corporate services including financing and leasing. Through the Lewis Group Ltd, Cattles provides debt collection and investigation services. Dollar Financial Corp Dollar Financial provides cheque-cashing, short-term consumer loans, money (Dollar Financial) orders and money transfers through its network of company-operated stores. Dollar Financial operates in the US, Canada and the UK. EZCORP EZCORP owns and operates pawn shops that serve as sources for consumer credit and retail previously-owned merchandise. EZCORP operates in the US. First Cash First Cash operates pawn stores. First Cash’s stores lend money on the collateral of pledged personal property and retail previously-owned goods acquired through loan forfeitures. First Cash also operates cheque cashing stores and provides software to third-party operators in the cheque cashing industry. QC Holdings Inc. (QC QC Holdings offers short-term loans in the US. QC Holdings also offers other Holdings) consumer financial services such as cheque cashing, title loans, money orders and money transfers. The Cash Store Financial Cash Store operates retail cash stores. Cash Store acts as a broker to facilitate Services Inc (Cash Store). short-term advance services to consumers who don’t have access to traditional banks. Cash Store also provides private label debit cards. World Acceptance Corp World Acceptance operates a small-loan consumer finance business. World (World Acceptance) Acceptance offers short-term loans, related credit insurance and ancillary products and services to individuals. World Acceptance generally serves individuals with limited access to other sources of consumer credit from banks, savings and loans, other consumer finance businesses, and credit cards.

TableA5-3: Description of companies selected for comparison - credit software

Companies selected for comparison – Credit software

Australian Admerex Ltd (Admerex) Admerex develops a retail banking software system designed to deliver core operating systems for non-banking financial institutions, smaller banking institutions and credit unions. Admerex also provides on-line banking functions and products and distributes a range of information service software products.

87 © 2009 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG. ABCD Cash Converters International Limited Independent expert report & Financial services guide 16 September 2009

Companies selected for comparison – Credit software Reckon Ltd (Reckon) Reckon distributes, publishes, supports and markets financial management software in Australia. Reckon’s products are developed locally or republished under license. Reckon’s software targets personal financial management and financial planning and are sold under the “Quicken” brand. Technology One Ltd Technology One is a developer and distributor of financial management and (Technology One) accounting software with operations in Australia and New Zealand. Technology One also develops software for the higher education sector. Technology One’s products include “Finance One”, “Student One”, “Sales One”, “People One”, “Proclaim One” and “Retail One”.

International Finzsoft Solutions Ltd Finzsoft is a software development company that provides software services to (Finzsoft) clients and offers recruitment fulfilment services. Finzsoft also develops a financing and banking software that offers lending and deposit activities for finance companies, building societies and small banks. First Cash Financial First Cash operates pawn stores. First Cash’s stores lend money on the Services Inc (First Cash) collateral of pledged personal property and retail previously-owned merchandise acquired through loan forfeitures. First Cash also operates cheque cashing stores and provides software to third-party operators in the cheque cashing industry. CyberSource Corporation CyberSource develops and provides real-time, or on-demand e-commerce (CyberSource) transaction services. Through its internet commercial suite, CyberSource offers services to online merchants for global payment processing, fraud prevention, tax calculation, export compliance, territory management , delivery address verification and fulfilment management. nFinanSe Inc (nFinanSe) nFinanSe develops and supports debit card programs in conjunction with processing. nFinanSe has developed the nFinanSe Network, a point of sale and personal computer based software platform that connects retail merchants with multiple stored value prepaid card processors and issuing banks. US Dataworks, Inc (US US Dataworks develops, markets, and supports electronic cheque processing Dataworks) software and services for the financial services industry. US Dataworks customer base includes financial institutions, credit card companies and government institutions in the US. US Dataworks has strategic alliances with CheckFree Corp and Thomson Financial Publishing.

88 © 2009 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG. Level 18, 37 St Georges Terrace, PERTH 6000 PO Box 3151, Adelaide Terrace, PERTH 6832 Telephone: +61 08 9221 9111 Facsimile: +61 08 9221 9011 E-mail: [email protected]

FORM OF PROXY

I/We (Block Capitals please) of being (a) member(s) of the above-named Company hereby appoint the Chairman of the Meeting, or (see Note 2)

as my/our proxy to vote for me/us on my/our behalf at the General Meeting of the Company to be held at 10.00 am (Western Australian time) on 29 October 2009 and at any time to which that meeting is postponed or adjourned.

Dated this day of 2009

Signature(s)

If the member is a company, then this document must be executed in accordance with the company’s Constitution. Affix common seal here if Sole Director & Sole Company Secretary …………………………………………………… required or

Director ……………………………………………………. Director/Company Secretary …………………………………………

If the member is an individual or joint holders (all joint holders are required to sign):

Signature ……………………………………………………. Signature …………………………………………………………..

Please indicate with an ‘X’ in the spaces below how you wish your vote to be cast.

RESOLUTIONS FOR AGAINST ABSTAIN*

Approval of acquisition of shares by EZCORP, Inc.

*If you mark the abstain box, you are directing your proxy NOT to vote on that resolution on a show of hands or on a poll and that your shares are NOT to be counted in computing the required majority on a poll.

ABN 39 069 141 546 www.cashconverters.com

Level 18, 37 St Georges Terrace, PERTH 6000 PO Box 3151, Adelaide Terrace, PERTH 6832 Telephone: +61 08 9221 9111 Facsimile: +61 08 9221 9011 E-mail: [email protected]

NOTES

1 All members are entitled to attend and vote at the meeting, whether or not they have returned a form of proxy.

2 If any other proxy is preferred, delete the words “the Chairman of the Meeting or,” insert the name of the proxy you wish to appoint and initial the alteration.

3 In the case of a corporation this proxy form must be executed in accordance with section 127 of the Corporations Act 2001 (Cwlth) or under the hand of an officer or attorney duly authorised in writing.

4 A proxy need not be a member of the Company.

5 In the case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted with the exclusion of the votes of the other joint holders and for this purpose seniority shall be determined by the order in which the names stand in the Register.

6 If this form of proxy is returned duly signed but without any indication as to how the person appointed proxy shall vote, he will exercise his discretion as to how he votes and as to whether or not he abstains from voting. The Chairman intends to vote undirected proxies in favour of the resolution.

7 A member entitled to attend and vote at a general meeting is entitled to appoint not more than two proxies to attend and vote instead of the member. If a member appoints two proxies, neither proxy shall be entitled to vote on a show of hands. Where more than one proxy is appointed each proxy may be appointed to represent a specified proportion of the member’s voting rights but if the appointment does not specify the proportion or number of votes that the proxy may exercise, each proxy may exercise half the members votes.

8 Proxy forms (duly completed), to be valid, must be deposited, together with any Power of Attorney under which they are signed, or a certified copy thereof, at the registered office of the Company (Level 18, 37 St George’s Terrace, Perth WA 6000) or sent by post to PO Box 3151, Adelaide Terrace, Perth, Western Australia 6832 or by fax to +61 8 9221 9011 so as to be received by not later than 10.00am on 27 October 2009 (Forty eight (48) hours before the time of the meeting).

9 Any alterations made in this form of proxy should be initialled.

10 Appointment of a proxy will not preclude a member from attending and voting in person should he or she subsequently decide to do so.

ABN 39 069 141 546 www.cashconverters.com