Financial Services Guide and Independent Expert’s Report in relation to the Proposed Demerger of Treasury Wine Estates Limited by Foster’s Group Limited Grant Samuel & Associates Pty Limited (ABN 28 050 036 372) 17 March 2011 GRANT SAMUEL & ASSOCIATES LEVEL 6 1 COLLINS STREET MELBOURNE VIC 3000 T: +61 3 9949 8800 / F: +61 3 99949 8838 www.grantsamuel.com.au Financial Services Guide Grant Samuel & Associates Pty Limited (“Grant Samuel”) holds Australian Financial Services Licence No. 240985 authorising it to provide financial product advice on securities and interests in managed investments schemes to wholesale and retail clients. The Corporations Act, 2001 requires Grant Samuel to provide this Financial Services Guide (“FSG”) in connection with its provision of an independent expert’s report (“Report”) which is included in a document (“Disclosure Document”) provided to members by the company or other entity (“Entity”) for which Grant Samuel prepares the Report. Grant Samuel does not accept instructions from retail clients. Grant Samuel provides no financial services directly to retail clients and receives no remuneration from retail clients for financial services. Grant Samuel does not provide any personal retail financial product advice to retail investors nor does it provide market-related advice to retail investors. When providing Reports, Grant Samuel’s client is the Entity to which it provides the Report. Grant Samuel receives its remuneration from the Entity. In respect of the Report in relation to the proposed demerger of Treasury Wine Estates Limited by Foster’s Group Limited (“Foster’s”) (“the Foster’s Report”), Grant Samuel will receive a fixed fee of $700,000 plus reimbursement of out-of-pocket expenses for the preparation of the Report (as stated in Section 8.3 of the Foster’s Report). No related body corporate of Grant Samuel, or any of the directors or employees of Grant Samuel or of any of those related bodies or any associate receives any remuneration or other benefit attributable to the preparation and provision of the Report. Grant Samuel is required to be independent of the Entity in order to provide a Report. The guidelines for independence in the preparation of Reports are set out in Regulatory Guide 112 issued by the Australian Securities & Investments Commission on 30 October 2007. The following information in relation to the independence of Grant Samuel is stated in Section 8.3 of the Foster’s Report: “Grant Samuel and its related entities do not have at the date of this report, and have not had within the previous two years, any shareholding in or other relationship with Foster’s that could reasonably be regarded as capable of affecting its ability to provide an unbiased opinion in relation to the Proposed Demerger. Grant Samuel advises that in November 2009 it was engaged by Foster’s to conduct preliminary work to allow Grant Samuel to prepare an independent expert’s report for Foster’s should such a report be required. In addition, Grant Samuel group executives hold less than 2,500 shares in aggregate in Foster’s. Grant Samuel commenced analysis for the purposes of this report in November 2010 prior to the announcement of the Proposed Demerger. This work did not involve Grant Samuel participating in the formulation of the Proposed Demerger. Grant Samuel’s only role has been the preparation of this report. Grant Samuel had no part in the formulation of the Proposed Demerger. Its only role has been the preparation of this report. Grant Samuel will receive a fixed fee of $700,000 for the preparation of this report. This fee is not contingent on the outcome of the Proposed Demerger. Grant Samuel’s out-of-pocket expenses in relation to the preparation of the report will be reimbursed. Grant Samuel will receive no other benefit for the preparation of this report. Grant Samuel considers itself to be independent in terms of Regulatory Guide 112 issued by the ASIC on 30 October 2007.” Grant Samuel has internal complaints-handling mechanisms and is a member of the Financial Ombudsman Service, No. 11929. If you have any concerns regarding the Foster’s Report, please contact the Compliance Officer in writing at Level 19, Governor Macquarie Tower, 1 Farrer Place, Sydney NSW 2000. If you are not satisfied with how we respond, you may contact the Financial Ombudsman Service at GPO Box 3 Melbourne VIC 3001 or 1300 780 808. This service is provided free of charge. Grant Samuel holds professional indemnity insurance which satisfies the compensation requirements of the Corporations Act, 2001. Grant Samuel is only responsible for the Report and this FSG. Complaints or questions about the Disclosure Document should not be directed to Grant Samuel which is not responsible for that document. Grant Samuel will not respond in any way that might involve any provision of financial product advice to any retail investor. GRANT SAMUEL & ASSOCIATES PTY LIMITED ABN 28 050 036 372 AFS LICENCE NO 240985 Table of Contents 1 Details of the Proposed Demerger................................................................................................................1 2 Scope of the Report........................................................................................................................................3 2.1 Purpose of the Report ........................................................................................................................3 2.2 Basis of Evaluation .............................................................................................................................3 2.3 Sources of the Information ................................................................................................................4 2.4 Limitations and Reliance on Information ........................................................................................5 3 Profile of Foster’s...........................................................................................................................................7 3.1 Background.........................................................................................................................................7 3.2 Business Operations ...........................................................................................................................9 3.3 Financial Performance.....................................................................................................................11 3.4 Financial Position .............................................................................................................................14 3.5 Cash Flow..........................................................................................................................................16 3.6 Taxation ............................................................................................................................................17 3.7 Capital Structure and Ownership...................................................................................................17 3.8 Share Price Performance.................................................................................................................18 4 Background on Proposed Demergers ........................................................................................................20 4.1 Rationale ...........................................................................................................................................20 4.2 Market Evidence ..............................................................................................................................22 5 Impact of the Proposed Demerger .............................................................................................................25 5.1 Impact on Structure and Ownership..............................................................................................25 5.2 New Foster’s......................................................................................................................................27 5.3 Treasury Wine Estates.....................................................................................................................36 6 Evaluation of the Proposed Demerger.......................................................................................................46 6.1 Summary...........................................................................................................................................46 6.2 Background on the Proposed Demerger ........................................................................................49 6.3 Advantages and Benefits..................................................................................................................50 6.4 Disadvantages, Costs and Risks ......................................................................................................61 6.5 Taxation Issues .................................................................................................................................67 6.6 Alternatives to the Proposed Demerger..........................................................................................69 6.7 Partly Paid Shareholders.................................................................................................................70 6.8 Shareholder Decision .......................................................................................................................71 7 Impact on Creditors ....................................................................................................................................72