Missing Inventory in Shanghai Bonded Warehouse – Update

10 November 2020 NZX Limited Wellington Update: Missing (presumed stolen) Inventory in Shanghai Bonded Warehouse QEX Logistics Limited (QEX) wishes to provide the market with an update on the ongoing investigations into the inventory missing, and presumed stolen, from the Shanghai bonded warehouse. Value of missing inventory QEX has undertaken a thorough assessment of the missing inventory, including a comprehensive review of purchase and sales transactions throughout the current financial year. As a result of this assessment, the Company concludes that the value of the missing inventory is $4.3 million. Potential impact on financial performance and financial position QEX will not be in a position to conclusively determine the impact of the lost goods on QEX's financial performance for the six months ended 30 September 2020 and its financial position as at that date, until such time as it has finalised its half year result which is due for release to the market on 30 November 2020. However, from an accounting perspective, the loss of inventory with a value of $4.3 million will reduce current assets, total assets, retained earnings and total equity by $3.1 million, on the basis that the loss is tax deductible. A loss of that quantum will also increase before tax expenses by $4.3 million, reducing EBITDA and net profit before tax by the same amount. Ongoing investigations QEX is actively pursuing several avenues to determine the exact circumstances leading to the removal of these goods from the Shanghai premises. This includes working closely with China Customs and authorities. QEX will keep the market updated with any developments that arise from these ongoing investigations. The legal team acting for QEX in China continue to explore all available avenues of legal recourse against third parties in China in relation to this loss of inventory. The Company's previously communicated insurance position remains unchanged at this point in the investigation process, with coverage for the loss incurred unlikely under any policy of insurance. QEX will update the market with any material developments relating to legal or insurance matters. Continuity of trade and inventories QEX continues to trade normally and is able to meet customer demand from current inventories. The Company has been working closely with customers to ensure their ongoing needs are met. ENDS Authority for this announcement Ronnie XUE Chief Executive Officer ronnie.x@qexpress.co.nz Date of release: 10 November 2020 End CA:00362941 For:QEX Type:MKTUPDTE Time:2020-11-10 09:57:34