26 May 2011

Shadforth and Snowball Merger Creates New Force in Financial Advice and Wealth

Management

The Boards of Snowball Group Limited (Snowball) (ASX:SNO) and Shadforth Financial Group Holdings

Limited (Shadforth) are pleased to announce that they have agreed the terms of a friendly merger,

unanimously recommended by both companies’ Boards. The transformational merger will be effected by a

takeover bid made by Snowball to acquire all of the ordinary shares of Shadforth.

The deal will bring together two leading non-aligned and vertically integrated financial advice groups,

creating a new force in wealth management with more than $14.3 billion in funds under advice,

administration and management; multiple advice business models and 188 financial advisers nationally.

The merged entity will look to combine the Shadforth and Outlook employee adviser models, maintain and

grow the “franchised” and affinity partner advice channels, add new adviser channels and leverage the

merged group’s combined wealth management infrastructure. The merged entity will also adopt a new

head company brand as part of the integration plan.

The business will stand as an attractive client alternative to the wealth management offerings of banks and

industry funds, by providing them with the benefits that scale and breadth can deliver to financial advice and

implementation solutions, such as portfolio management and administration.

Merger highlights

• 100% scrip: 2.15 Snowball shares for each Shadforth share, resulting in the issue of approximately

515.7m new Snowball shares

• Shadforth shareholders will own 71% of the merged entity on completion

• Conditional on 90% acceptance by Shadforth shareholders, which Snowball has agreed not to waive

unless it has obtained 80% acceptances

• 33% of the shares issued to Shadforth shareholders will be free from escrow on completion

• Plan for a structured sell down post FY11 results to enhance liquidity

• Balance of the remaining shares issued (67%) will be escrowed and released over two years

In support of the transaction, the existing Shadforth directors have agreed to accept the offer for their

shares within 2 weeks from the opening of the offer period in the absence of a superior proposal or Bidder

Adverse Event1. The Directors represent 13.2% of Shadforth shares on issue.

The merger is expected to be 6–8% EPS dilutive to Snowball shareholders in FY12 (before one off transaction

and integration costs). The parties expect to achieve moderate cost and migration synergies in 2012,

growing to about $5m by 2013. The merged group will also have a strong balance sheet and be well

positioned to pursue EPS accretive acquisitions, with several transactions at term sheet or at advanced due

diligence stage.

1 As defined in the Bid Implementation Deed

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Commenting on the merger the chairman of Snowball, Mr Eric Dodd, said: “This is a transformational deal

and will provide a solid platform for the merged group to build further scale and deliver growth in the

rapidly changing wealth management sector”.

The chairman of Shadforth, Mr Sam Gannon, said that the board of directors had carefully considered

Shadforth’s options and was unanimously recommending the merger with Snowball2.

“This is a unique opportunity to bring together two like minded and client focussed organisations that will be

well positioned to pursue organic and acquisition growth opportunities as a truly non-aligned financial

advice group,” Mr Gannon said.

All of the current directors of Snowball and Shadforth will be directors of the merged entity after the

transaction. Mr Dodd will remain as chairman. Shadforth chairman, Mr Gannon, will be deputy chairman.

Tony Fenning from Shadforth will be Managing Director of the new Group and Tony McDonald from

Snowball an Executive Director and the Group CEO.

Mr McDonald said the merged group will become a pre-eminent, non-aligned ‘pillar’ in financial advice that

will deliver material benefits to clients, shareholders, advisers and staff.

“Snowball will now have the scale and enhanced expertise that the merger brings to provide financial advice

across several different client segments and via a broad range of adviser channels.”

“The merged entity will also have a broader range of suitable strategies to meet the final FoFA (Future of

Financial Advice) requirements.”

Mr Fenning said the deal provides a firm base for further organic and inorganic growth.

“We have multiple client segments, advice channels and advice implementation solutions. We will be able to

use our scale to drive growth and to access margins across the value chain. We will also be uniquely placed

to drive further industry consolidation.”

“One of the attractions of the merger is the diversity of the advice business models that underpin a leading

national advice and wealth management business with employee, franchised and third party advice

channels.

“Snowball and Shadforth share a number of common values and cultural attributes, including a shared focus

on staff and clients, and a common approach to financial advice and business principles.”

About Snowball

Snowball is a non-aligned, ASX listed financial advice group with $5.7 billion in client funds under advice,

administration and management. Through its two key advice business models, Outlook Financial Solutions

and Western Pacific Financial Group, Snowball has 40 employed advisers and 51 franchised advisers

nationally.

Snowball is advised by Investec Bank (Australia) Limited and Baker & McKenzie.

2 Subject to no superior proposal and no Bidder Adverse Event as defined in the attached Bid Implementation Deed

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About Shadforth

Shadforth is the largest non-aligned employee model advice business in Australia with more than 141

employee financial advisers, professional staff and general insurance specialists and 17,000 client groups.

Shadforth has $8.6 billion in client and third party funds under advice, administration and management.

It is focussed on high net worth clients and provides the full spectrum of financial advice,

portfolio and investment management, life insurance, general insurance, mortgage broking and lending

services, corporate superannuation and stockbroking services.

Shadforth is advised by PricewaterhouseCoopers Securities Ltd and Clayton Utz.

Bid Implementation Deed and Timetable

The parties have entered into a Bid Implementation Deed dated 26 May 2011 (BID). A copy of the BID is

attached to this release, which sets out the terms and conditions of the merger in full. A brief summary of

the key terms is included in Appendix 1.

It is expected that the Bidder’s and Target’s statements will be despatched to Shadforth shareholders on 6

June 2011, with the offer opening on that date. The Bidder’s Statement will be available on the Snowball

website and on the ASX.

Given the scale of the proposed merger, the Snowball Board deemed it appropriate to seek an ASX ruling

relating to a potential shareholder vote. The ASX has provided the company with confirmation that no

shareholder vote is required under ASX Listing Rule 11.1.

The offer is scheduled to close on 8 July 2011 (subject to Snowball's discretion to extend it in accordance

with the Corporations Act) with a compulsory acquisition period, if required, to commence shortly

afterwards, subject to Snowball achieving a minimum acceptance level of 90% and satisfaction or waiver of

other conditions outlined in the Bidder’s Statement.

For further information please contact:

Investors

Snowball Shadforth

Tony McDonald Tony Fenning

Managing Director Managing Director

02 9250 1500 02 9919 8888

Media

Cannings Corporate Communications

Michael Mullane 0414 590296

John Hurst 0418 708663

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APPENDIX 1

Conditions

The transaction will be subject to the conditions to be set out in Snowball's Bidder’s Statement and which are contained

in the BID. In summary, the conditions will be:

• Snowball obtaining a relevant interest in at least 90% (by number) of issued Shadforth shares

• between the date of this announcement and the end of the offer period, no person (other than Snowball) acquiring

a relevant interest in 10% or more of Shadforth's shares

• all regulatory approvals and consents required to permit the merger are obtained

• there being no action by a government agency adversely affecting the takeover (other than an application to, or an

order of, ASIC or the Takeovers Panel)

• no material adverse effect occurring in relation to Shadforth

• Shadforth not undertaking specified material transactions

• no third party rights under any material agreement (including financial commitments) being triggered as a result of

the merger

• Shadforth not making any distributions to its shareholders

• no prescribed occurrences

• Escrow terms attached to the shares offered by Snowball will be set out in the Bidder’s Statement and are set out

in full in the BID

Exclusivity

From the date of the BID until close of the offer (or the BID is otherwise terminated), each party has agreed to "no

shop" restrictions that prevent it from soliciting, inviting, encouraging or initiating any negotiations or discussions, or

entering into any agreement with a view to obtaining any expression of interest, offer or proposal from any other

person in relation to a Competing Proposal (as that term is defined in the BID).

Each party has also agreed to "no-talk" restrictions which prevent it from entering into or participating in any

discussions with any person regarding a Competing Proposal, or granting access to that party's non-public information.

The "no-talk" restriction does not apply to the extent Shadforth or Snowball receives a bona fide Competing Proposal

(which was not obtained in breach of the "no shop" restrictions), and the relevant Board believes in good faith that a

refusal to respond would be a breach of fiduciary or statutory duties.

Shadforth has also given Snowball a right to match any other Competing Proposal made in respect of Shadforth within

5 days.

Break fees

Shadforth has agreed to pay a break fee of $1.3 million to Snowball in certain limited circumstances, including where

Shadforth directors fail to support or recommend the bid, or where a Competing Proposal for Shadforth is pursued or

recommended or is successful (in each case except where a Bidder Adverse Event has occurred). The break fee will also

be payable where Snowball terminates the BID as a result of a material breach by Shadforth of its obligations.

Snowball has also agreed to pay a break fee of $1.3 million to Shadforth in certain circumstances, including where

Snowball does not make or withdraws the offer, Shadforth terminates the BID a result of a material breach by

Snowball, or Snowball recommends a Competing Proposal for it and its bid for Shadforth lapses.

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